Worst. Idea. Ever.
I know -- it's a common feature of income support systems, including here in the US.
I don't know whether UBI is going to prove workable or not. But even if it doesn't, if we could just redesign the systems we do have so they never give recipients a disincentive to work more, that would be a huge, huge improvement.
It's already a problem that the benefits are such that net income from an actual job may be negative. But even with that, people might take a temporary job to get the experience. But they cannot afford it, because getting a job cuts the benefit payment instantly, and they can't afford to wait the time that it takes the bureaucracy to resume payments.
https://web.archive.org/web/20160321083817/http://mattbrueni...
What I care about is that the function from income earned to income (including subsidy) received be monotonic. Again, the income tax system (at least in the US) is carefully designed to have this property: when you make enough more money to move into a higher tax bracket, that higher rate is applied only to the amount of your income in excess of the lower bound at which that bracket applies. So the total amount of tax never jumps discontinuously, even though the marginal rate increases. Even though you keep less of your next dollar of earnings the more you make, there's never a point at which earning the next dollar will leave you with less money after tax.
The same should be true even if you're receiving a subsidy. That's all I'm saying.
> Even though you keep less of your next dollar of earnings the more you make, there's never a point at which earning the next dollar will leave you with less money after tax.
The problem is that's not the only thing you want. You also don't want marginal rates of 75%+ for low and middle income people. It's not only that taking a $20K/year job shouldn't cost you $21K/year in benefits, it's that it shouldn't cost you $15K/year in benefits while you now incur more transportation and childcare expenses.
I don't know about you, but I don't think that the problem in the US system is that a family with two senior developers pays too many taxes.
Therefore, on top of a UBI, the only thing that doesn't screw the middle class over is to maintain a progressive tax rate.
> Nothing short of a 50% fixed rate will not be a huge tax break for us in the 1%.
The current highest bracket in the US is 39.6%, which doesn't come into play until you've made more than $400K. The vast majority of "middle class" people pay 28% marginal rates or less -- anyone up to $190K for single or $231K for married filing jointly.
A household making $200K currently pays an effective tax rate of ~22% -- and that's $200K after all the deductions. To meet the same effective tax rate with a flat tax against a $12K/year UBI would require a flat tax rate of 28%.
Moreover, to be in "the 1%" you need household income in excess of $400K.
And most of the actual 1% pay the long-term capital gains rate, currently up to 20%, whereas with a 28% flat tax they would be paying 25 to 28%.
Also, don't you see how callous it is to worry about how a rich person has to pay country club dues, in the context of talking about poor people who struggle to afford food sometimes? Why would your sympathies lie with the person who has all of their basic needs met and is "struggling" only to utilize as many luxury goods (yachts, country clubs, sports cars, box seats) as possible?
However, there are two problems that I see. I suspect there are more.
First is that what you spend is only related to what you make. Specifically, it is relatively easy to find ways to not spend money if you have extra. What this means is that, at an absolute level of what you make, a flat tax actually gives a very easy way for high income people to have a lower tax rate. Turning it into "the more you make, the more you can proportionally keep." Which is sorta antithetical to the idea of the flat tax.
The second problem is essentially the cold start problem. Society is expensive to keep going. There is not much of a way around that. So, the rate will have to be relatively high to get the necessary funds. And this will hit those with low incomes harder than the ones with high.
I don't think either of these are necessarily road blocks to the idea. But, I do think it will necessarily get complicated.
I think you are missing the point. If it is truly a flat tax, the number of dollars you are taxed goes up (in a directly proportional way to the number of dollars you make). So you DO pay more the more you make. It isn't even a logically arguable point.
"a flat tax actually gives a very easy way for high income people to have a lower tax rate.":
-- again that's a completely illogical statement. If it is truly a flat tax *EVERYONE* has the same rate -- that's the very definition of a flat tax.If so, apologies. It is still easier for the wealthy to dodge. But not as easy. (Main way I can think of is that at that level you can often live off the company. I don't think this happens enough to care about. Could be wrong.)
This still doesn't address the cold start problem. If a region needs X dollars and that requires Y rate, how do you ensure that doesn't drown out the poor?
And again, I'm not pushing these problems as show stoppers. Just things that contribute to a complicated solution.
No one is going to refuse a salary bump because it will increase their marginal tax rate.
And moreover, how likely is it that they can increase their hours, but be paid exactly the same hourly wage?
I believe such people are extremely rare and as such this hypothetical disincentive isn't particularly relevant.
By "not worth it", I suppose you mean that he valued the marginal increase in income less than the marginal decrease in free time – which is entirely subjective and different from person to person? I don't see your point.
http://www.learnliberty.org/blog/the-welfare-cliff-and-why-m...
Way to go towards helping people help themselves, encouraging middle class values, responsibility, yadda yadda, all the usual stuff Republicans blather about but don't actually care about.
Taxes should be used to pay for shared resources (roads, police, military,) but paying other people's living expenses? No thanks. America has poor and unemployed, yet Democrats seem to have no problem with illegal immigration which reduces the ability for those poor and unemployed to gets jobs.
1. Poor people on welfare wouldn't be dis-incentivized to work more.
2. It reduces the cost of those programs like welfare that cost a lot in bureaucracy for no gain.
3. Lower income people have money velocity that stimulates the rest of the economy.
> Democrats seem to have no problem with illegal immigration which reduces the ability for those poor and unemployed to gets jobs
Illegal immigration doesn't do that... automation is a big factor in that. If your job is being taken away by an uneducated illegal immigrant then you are not competing for highly paid jobs.
> If I want to donate to charity, I will.
Charity has been shown to be less efficient than just giving money directly to poor people.
Can you provide sources for this? Also, what do you mean "efficient"? If you mean there's no overhead, sure, so long as you don't spend any time trying to determine where the need is and just hand cash to the homeless guy you see on the street, but I care about effectiveness, and that's very likely not going to be "give money to the guy on the street near my office".
GveDirectly is better than most charities (which is mostly just giving money to poor people, but is a charity that does it intelligently). Additionally, the Against Malaria Foundation probably has a higher effectiveness.
The problem with depending 100% on people giving to charity is not that it's worse than depending on them giving money to the poor. It's that it completely ignores the various externalities that can be corrected through taxes and government spending. Would the world be better off if we cut government spending in half and send that money to AMF, GiveDirectly, and similar programs? Sure. But would the world be better off if we just cut government spending and hoped rich people would become more altruistic? Probably not.
To answer your real point. You can never have full employment. There are always going to be people that can't have a job, whether that's due to health, lack of job availability, or a number of other issues. What do you do with these people? They have to eat or die.
The current system design is to provide a a safety net. The alternative is that people resort to crime to survive. Do you think that'd be a better country to live in? Do you have an alternative system?
>How many people have been deported under Obama?
>President Barack Obama has often been referred to by immigration groups as the "Deporter in Chief."
>Between 2009 and 2015 his administration has removed more than 2.5 million people through immigration orders, which doesn’t include the number of people who "self-deported" or were turned away and/or returned to their home country at the border by U.S. Customs and Border Protection (CBP).
>How does he compare to other presidents?
>According to governmental data, the Obama administration has deported more people than any other president's administration in history.
>In fact, they have deported more than the sum of all the presidents of the 20th century.
http://abcnews.go.com/Politics/obamas-deportation-policy-num...
But if you did include the number of people who "self-deported" then you'd find that the total number is not that great under Obama and in fact is lowest since 1970s.
Now, I don't know what these two numbers from DHS reports actually mean and the DHS does not tell me, but I find it peculiar that the number of "returns" under Obama decreased 10-fold, while the number of "removals" doubled. More peculiar that the "returns" had been pretty stable for the past 30 years too, the 2014's 162K returns only had been seen in 1968 before.
https://www.dhs.gov/immigration-statistics/yearbook/2014/tab...
Obama does not initiate self-deportation though, so it's not really relevant to a discussion on the democrat's immigration policy
>I don't know what these two numbers from DHS reports actually mean and the DHS does not tell me
It tells you at the bottom of that link
> Until recent years, most people caught illegally crossing the southern border were simply bused back into Mexico in what officials called "voluntary returns," but which critics derisively termed "catch and release." Those removals, which during the 1990s reached more 1 million a year, were not counted in Immigration and Customs Enforcement's deportation statistics.
>Now, the vast majority of border crossers who are apprehended get fingerprinted and formally deported.
>Expulsions of people who are settled and working in the United States have fallen steadily since his first year in office, and are down more than 40% since 2009.
Just putting this out there.
The way capitalism is designed is that not everyone can have a job. So you pay the poor not to starve and come loot your house.
Also, I believe, there was a study suggesting that more equal society is better for everyone involved, including you.
Poverty also inhibits education and I suppose you can figure out why uneducated or lowly educated society is bad.
Umm, because we don't want them to die? And society as a whole benefits from it?
> I am not sure I understand why my labor must pay for others against my wishes.
What gave you the idea you get to decide what taxes are used for?
So some of your earning power really belongs to the community, and should be divided equally among the community, including yourself.
Modern day liberalism has become a religion, where "what should happen" and what's "morally right", and who has "advantage over others" replaces "God's commandments", "sin", and even in the case of affirmative action, "original sin" (being a white male, you are born having others more deserving than you).
And just like any other religion, it's all just a bunch of horse shit.
I'm pretty sure all the business owners who take advantage of illegal immigrants to violate labor laws, pay them pennies compared to what they'd have to pay those 'poor and unemployed' Americans, and generally abuse the heck out them... --all-- vote Republican.
If Trump actually builds a wall that works, a bunch of scummy Republican business owners are going to be screaming bloody murder. Illegal immigration is a problem, but there is a demand side to it and no one ever seems to bring that side up in discussions.
If it were such a great idea for a country, it would have already occurred at a smaller level.
It has. The Svanholm community in Denmark (http://svanholm.dk) raised taxes to 80% for all its members, but in return you free housing, food and all other essentials. They have been doing this successfully since the 70's.
Also, from the english translation: https://translate.googleusercontent.com/translate_c?act=url&...
"It requires personal energy, commitment and desire for self-management in the community to become Svanholmer. Both people with work "out of town" and people who want to work at home on the estate can participate."
This doesn't sound like they just hand out money, and seems likely (I'm just guessing here), that if you don't work you may get kicked out.
This all in all seems a lot different than UBI.
Nothing except the humongous coordination problem involved in doing so. These are exactly the kind of problems that government exists to solve.
1) High income: My personal gross income was among the top 20 % of earners. Thus, high taxes.
2) Poverty: My family's net income after housing expenses was below the threshold of the last-resort income support.
All it took was having three small children, wife not working as the youngest was a newborn thus only the minimal maternity allowance, Helsinki region housing costs and the progressive taxation of "high earners".
The way to get out of it was to take a job abroad for a while. But Finland is my home, even if I hate some parts of the welfare state politics, so I came back.
Negative income tax (more emphasis) + basic income (less emphasis) would be a better system. A negative income tax would encourage people to work. Basic income by itself may just remove some barriers to working but may not result in a change (basic income > costs).
If you were to further lower the costs of labour, you risk stymieing actual economic growth which comes from improvements in efficiency. For instance, why use a machine when you can just hire more people?
Also what would the effect on monetary policy be? If this was funded though an income tax, would the lower savings rates of the poor, put more money in circulation, thus increasing inflation? Could you account for the change in prices driven by an increase in demand from those who's labour isn't actually valuable enough to sustain their consumption.
I don't claim to have the answers to welfare, but I really think that we should aim for a solution that provides as little market distortion as possible. I sincerely think that a negative tax would be a huge unwelcome and ineffective distortion in the labour market.
Isn't that a desirable outcome ? Shouldn't the able bodied person who is working obviously earn more ? Giving people incentive to work not only helps them rise up but also prevents their exploitation in case they try going to underground economy.
> For instance, why use a machine when you can just hire more people?
If people are more efficient business will use people over machines. I don't think machines are be default always a good choice. What matters is the efficiency.
Free market capitalists who otherwise like machines and automation criticize the minimum wage laws for the same reason. Minimum wage laws force business to invest more in automation by outlawing hiring of people who could compete with machines over cost.
This happens anyway in our current system. Someone who's disabled and unable to work already earns less than someone who's working 50 hours a week in a minimum wage job. Negative income exacerbates that.
Politics could become a reason -- the people who are being replaced by machines become a powerful force, have a strong work-based ethic (different from "work ethic"), and care more about their well-being than the overall efficiency of the economy.
Either way, I'm curious to see more adoption of UBI - even if it is a small, homogeneous population. Maybe working class beneficiaries of UBI could dedicate a larger portion of their time to volunteering, or re-training.
However, there would likely be implementation differences in practice as a consequence of their framing.
For example, if you have a negative tax of 25% on income below $40k, unemployed people on $0 income will receive a $10k tax credit. This is equivalent to $10k Basic Income with a 25% tax bracket up to $40k earned income, since in both cases people earning $0 get $10k and people earning $40k get $40k.
You could make it a requirement to work, but then people could just get trivial jobs for $1 just to get the tax credit.
You need to understand how people react to the idea of "not doing anything and still get paid".
Do they give up? Do they get depressed? Do they create things? Does entrepreneurship increase? Violence rate?... These are all interesting questions
That's not what UBI is about at all. UBI is about getting paid no matter what you do. Which could be doing nothing. Or it could be studying or practicing or learning a new career or even working. The fact that UBI doesn't disincentivize spending ones time in a certain way (whether that's economically productive or not) is hugely important.
This is an aspect of where there's a huge misunderstanding about UBI due to competing economic theories. There are some people, a lot of people, who believe very strongly that the economy is fundamentally coercive. And, more so, that coercive economies are natural, beneficial, and overall desirable. A lot of that thinking has certainly been baked in to a lot of conventional wisdom, culture, laws, and regulation in the economy of western countries for centuries. There are other people who believe that the economy is or at least can be fundamentally cooperative, and more importantly that a cooperative economy is more beneficial and desirable and no less natural than a coercive economy. And this is where UBI comes in, because UBI is essentially how you bootstrap a more cooperative economy. One where people work not because they are coerced to participate in toil due to the alternative being starvation and privation but instead because they enjoy the work or are fairly compensated for it and treated well.
refers to "not performing a comercial activity", which means the same thing in my native language.
If you read my whole comment you can clearly see that's my point:
>Do they give up? Do they get depressed? Do they create things? Does entrepreneurship increase? Violence rate?
I think this is a huge factor that isn't getting enough focus. When people's jobs are replaced by automation and they are on UBI, how do they achieve self-worth? A lot of people get their self-worth from their work, even if their job is monotonous and relatively low-skill. We may be able to replace a low-skilled worker's wages with UBI, but we can't replace their feeling of self-worth. Not everyone can become an artist and even if they could, that may not be enough to give them a sense of purpose. In the long run, this may be a much bigger question than whether or not we implement UBI.
It's very easy to describe and administer such a subsidy, but it has a terrible bug, which is obvious and everyone has known about it for decades, but somehow we haven't mustered the will to fix it.
Your argument has a place, but it's tangential to my point.
As long as it's within the law, on paper. If you're taking undocumented work then you're also taking a risk where you might lose your benefits if found out.
I think maybe there is a larger chance for undocumented work in countries like the US. I have an impression that there is a more prevalent culture of cash-in-hand jobs due to the sheer size of the country.
So maybe you react more to the quote than I would because I've always had documented work, whether it was 25%, 50% or 80% it was always documented and known to the government what I was doing so I could always apply for the necessary benefits I was eligible for.
Since I was looking for an advancement in my career (I left the company on good terms and my former boss ended up being one of my references) and not desperately looking for anything that pays, I ended up doing a lot of volunteer work while focused on increasing my skill set a bit and looking for the right opportunity. But I could have just as easily spent that time sitting on my ass.
Sure, some people who are not employed may be raising children or volunteering or doing something else beneficial to society,and encouraging them to work instead would be society's loss. But if we trust in the market economy, those people don't exist, and our real loss is people who are unproductive while on welfare who would be productive given a minimum wage job.
I recommend you read http://www.occupy.com/article/graeber-phenomenon-bullshit-jo...
Scenario 0) I do nothing, get nothing.
Scenario 1) The government gives me $1000 and I buy $1000 dollars worth of goods and services, so now the economy is better by the net gain of $1000 worth of transactions - i.e. the mutual benefits of trade.
Scenario 2) I have a job, do my job and my employer pays me $1000 dollars. Then I spend that on $1000 worth of goods and services. Now the economy gets the benefits of $1000 worth of trade plus everything that I did for my employer, which is in excess of $1000 according to his calculation.
You compared Scenario 1 to Scenario 0 and said that Scenario 1 is a win, but the context was 1 versus 2, where it's a negative. In scenario 2, the employer could be the government paying me to improve the roads, for example, instead of the government handing me the money they would have paid me. In which case the difference is the improved roads.
Perhaps corporate profits would not have to be so huge and prices could be lowered if the pay for work done was more closely related to the value added.
For that matter, how about all the jobs that nobody necessarily "wants" to do, are low paid, and yet critical to the functioning of societies?
So the benefit of giving that money must provide a gain greater than the deadweight cost. That gain could be non-monetary (a mom raising her kids for example) -- but just the 'spending' doesn't benefit the economy because spending $500 actually cost much more than $500.
Unfortunately taxation itself reduces the incentive to produce and distorts the economy, and the Broken Window Fallacy is still a fallacy.
(BTW, Hacker News is simply terrible at discussing economics. This comment is hardly unique.)
> Broken Window Fallacy
The entire thread and discussion is a bit off-putting but it's worth noting that the question is, as always, what to do about unproductive assets. Nobody is advocating that healthy, able-bodied people should all receive free money from the government. That's why the Broken Window Fallacy is stupid. It's a fallacy against a straw man.
And yes, when it comes to unproductive assets there's good reason to believe that the government should step in and act as the "producer of last of resort." There's always work to be done. The government is never going to run out of money. And, in reality, you're going to end up giving these people money anyways (unless you want to see women and children starving the streets) so you might as well try to see some returns. I've never been a fan of basic income but a Job Guarantee[2] makes perfect sense. Finland would be far better off putting these people to work for the government. Basic income in this form (giving people free money while encouraging them to go to work for private producers) can, ironically, depress wages, unfairly subsidize badly managed firms, and ultimately hurt the economy. Unfortunately westerners are terrified by the spectre of communism so you don't get this sort of large scale public production any more.
[1] http://neweconomicperspectives.org/2011/07/mmp-blog-8-taxes-...
If we consider the goal of society to be increasing overall utility, then someone enjoying their free time is not unproductive because they are producing utility (for themselves). There may be more productive things they could be doing, but we shouldn't ignore that baseline. If the work offered by a Job Guarantee scheme is not producing as much utility for society, then it would be more efficient to just give them the money.
What motivates people to work is MASTERY, AUTONOMY and PURPOSE. This is very different from the profit motive, and is why people contribute to open source and science.
https://m.youtube.com/watch?v=u6XAPnuFjJc
And anyway, why in the 21st century does everyone need to work? Why should wages be the primary mechanism by which living wages trickle down to the plebes?
McDonalds will soon cut its workforce. So will Uber. Thanks to automation.
If you are jealous that someone somewhere is receiving free stuff, realize how much free stuff you have just by being alive in the 21st century!
If you are upset that you'd be taxed for the free stuff -- then make sure that we develop systems to tax machines. Yes you heard me, start taxing the machines.
If people were more free to choose what to do with their time, they'd probably spend more time with their family and study more and contribute more knowledge to society. Instead of working a dead-end job at McDonalds.
If you want to read more about the economics of this, I wrote an article:
The thing you are referring to is called taxes. The more money you make the more taxes you pay and there comes a point that you're paying more in taxes than the amount of the basic income.
Phase outs are a pure scam. Their purpose is to conceal imposing higher marginal rates on low and middle income people so that higher income people can pay lower rates.
That is, if you make below a certain amount, the government gives you money until your income reaches some base level.
However, their framing leads to different expectations. For example consider a flat income tax of 25% on income less $20k (going negative below that so unemployed people get $5k credit). Raising the negative rate to 50% sounds kind of progressive, since you're giving more to poorer people, but frame it as Basic Income, and yes you're increasing the baseline from $5k to $10k, but you're also implementing a 50% regressive tax band up to $20k earned income.
Another point is that they'll tend to be implemented differently due to framing. Basic Income is likely to be part of the welfare system, and since it's unconditional, you can just register once and receive it in perpetuity. Negative Income Tax is likely part of the tax system, so to get it you potentially need to submit a tax return saying "Earnings: $0" every year, which makes it more embarrassing.
1) something like reducing that payment by $0.50 per $1 earned as an example.
The problem with this particular restriction is jobs that don't pay sufficiently, have wildly varying hours or are pretend part-time to stay under some benefits threshold. The solution can not be subsidize exploitative employers who don't provide a livable wage through UB. These jobs are a net cost to society and plain should not exist.
1. Anyone I know that has received benefits for being unemployed desperately wants to be employed again.
2. In the UK, unless things have changed, you can work up to 16 hours per week while receiving unemployment benefits and I believe the benefits you receive gradually falls with the amount of work you get paid for.
3. If you suddenly lose your job benefits aren't built so that you can maintain your current life style. You likely have car, insurance, and mortgage payments to make and the benefits you're receiving either just get you by or you have to renegotiate some of that debt. Not a situation you want to be in long-term.
How wide is your social network (by this I mean people you actually know and see)? How diverse is it? My experience, living in the Rust Belt in the US, just north of Appalachia, is that many people are more than happy to live on the dole for as long as possible. I chalk some of this up to laziness, and some of it up to the lack of reasonable work.
3. If you suddenly lose your job benefits aren't built so that you can maintain your current life style. You likely have car, insurance, and mortgage payments to make and the benefits you're receiving either just get you by or you have to renegotiate some of that debt. Not a situation you want to be in long-term.
Again, my sense is that your observations are true for some given demographic, but are probably not entirely accurate for people who are truly living at or near the poverty line. Those people may have been working, even steadily, but they probably didn't have a home, and may not have even owned a car.
You are right, of course, that if I lost my job (as a software developer), I'd be okay for three to four months without benefits, but it would be hard to maintain a home and a vehicle after that. That likely goes for many on HN. But we generally aren't the demographic best served by unemployment benefits.
This bug/feature in the welfare system is actually a major motivation behind the UK government's long beleaguered universal credit system, which is meant to support this kind of part-time work. The idea being that a worker should never ever be penalised by the benefits system for working, but should always earn significantly more in work than out of work and working more hours should always result in a net increase in income.
They are trying to do this by unifying almost all benefits (unemployment, disability, housing, child benefits, etc...) under a single administrative umbrella, and then only reduce the net benefit by £0.66 for each £1 earned through work. Its been delayed significantly because it requires a major IT overhaul, and that project has so far been a £1-2 billion black-hole of incompetence by a series of IT consultancies that have all failed to deliver the system needed to merge all these complicated means tested processes together.
Can't recall the specifics but they were not stupid people and I believe they'd done the math correctly.
My father makes so much money that when he's unemployed he actually doesn't really look for a job that urgently. This is because his unemployment benefits are enough for him to pay the bills. He'd like to make money to retire... but he does rest for a few months in between jobs.
I doubt this is a typical situation of someone on unemployment benefits.
The counter-argument of course is that you shouldn't have children if you can't afford to raise them, but the disincentives are there, and as crazy as it sounds people are incentivised to have a lot of children as a method of escaping work.
(Optional sad Futurama parody being: https://en.wikipedia.org/wiki/The_Cyber_House_Rules)
It should never be more beneficial for someone to sit at home than to go out and earn a living.
All the more reason not to discourage them by having them come out financially worse for doing so.
This is modern day slavery. There is nothing universal about this. It if was universal income than you must get that money irrespective of what choices you make in life. Just because you are getting money from government, government puts up a chain around your neck and says you cant work.
In USA such people might turn to underground economy such as drug peddling.