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Comment by ChrisLomont | Hacker News Reader

Multiple studies of where basic income was tried in the real world found it to reduce work.

For example, "Manitoba, Canada experimented with Mincome, a basic guaranteed income, in the 1970s. In the town of Dauphin, Manitoba, labor only decreased by 13%, much less than expected" [1]. There are plenty of others.

I expect a targeted need use of scarce resources (tax money) is a much better use for helping those who need it, instead of ham handedly giving it regardless of need, thereby shorting those who need it at the benefit of many who do not.

And the current inflation (and previous events where govts gave out decent sums of cash to help short term other econ issues) shows what happens when people get money for free - prices rise to absorb it. The reason being if person X is willing to put in pain Y for product Z, this does not change if you rescale the meaning of money.

Product Z simply rises to cause person to put in the same pain to obtain it.

[1] https://en.wikipedia.org/wiki/Universal_basic_income

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If UBI could be implemented in around the same cost as the welfare programs it replaces, it would have a net zero effect on inflation. The downside of nearly all current forms of welfare (in the U.S.) is that they largely enforce the poverty gap. You get to a point where a small increase in pay causes a large decrease in benefits, and you become trapped unless you can get a large enough pay increase to jump the gap.

The two big ifs are: would UBI be the same cost as current welfare programs, and can we actually get rid of current welfare if we roll out UBI? There is a tremendous amount of overhead involved in current welfare programs, so it's not unreasonable that the first question is could be resolved. Politically, the second issue seems unlikely to be implemented.

>If UBI could be implemented in around the same cost as the welfare programs it replaces, it would have a net zero effect on inflation

It cannot, unless you're ok with screwing those already on such programs. Do the math, and you'll find it is not even close. Welfare programs (unless you include SS) are given to a tiny amount of people - spreading that across a large group of people simply screws those who need it most.

If you include SS, now again you're screwing old people who many times need the money to give it to people capable of work.

>The downside of nearly all current forms of welfare (in the U.S.) is that they largely enforce the poverty gap. You get to a point where a small increase in pay causes a large decrease in benefits, and you become trapped unless you can get a large enough pay increase to jump the gap.

This common claim is not true. There are ample people moving out of such program regularly, and many of them have limited lifetime benefits.

>would UBI be the same cost as current welfare programs,

No. I've been down this set of math lots of times. Do it - all welfare budgets are public, population is public, it's easy to estimate.

You make accepting UBI optional, so if the $1,000 per month or existing services is better for your situation then you get to decide - not the government; e.g. maybe you have 6 kids and food stamps etc you get is way better than the $1,000/month. This way there is also a statistics dashboard that we can see who's choosing what and optimize more precisely.

You force corporations to pay, to not be able to avoid taxes - using a VAT that's customizable so things like diapers have say 0% tax vs. buying ads on Facebook has 80% tax. The nuanced ability to lever different goods and services allows tax to be fine-tuned to cover all costs until the floor quality of life is covered/existing for all.

We can supply everything 90%+ of what people need through automation, the remaining 10% or less will be the engineers and system and machine designers and maintainers - while the 90%+ can focus self-improvement/education, family/community and being creative/artistic etc.

>You force corporations to pay, to not be able to avoid taxes

Economic maxim: "Corporations don't pay taxes, people pay taxes". This means when you think corporation tax is somehow free, you ignore that comes directly from stock prices and wages, i.e., direct income and pensions.

>you get to decide

Historical evidence shows that directed tax cuts and targets are much better multipliers of using tax revenues. Your method has been demonstrated to costing more for the same public outcomes, which is why there are so many directed tax cuts and directed tax spends. They are simply more efficient.

Simply put forth an estimate of what you think various groups need to pay to get what you think people will get with UBI. Once you try to put actual numbers to things, you soon realize it's simply not possible without damaging a lot of vulnerable people.

>We can supply everything 90%+ of what people need through automation

No, we cannot. Unless people take a drastic quality of life cut, and even then, we cannot.

> If UBI could be implemented in around the same cost as the welfare programs it replaces, it would have a net zero effect on inflation.

UBI is, by definition, Universal (e.g. given to everyone). Welfare programs are highly selective and only apply to a small number of people.

The only way to make them cost the same is to massively reduce the benefits given to the small number of welfare recipients, then give the balance to people who didn't previously qualify for welfare.

That's never going to happen, politically.

UBI is taxable income. You just adjust tax rates slightly to claw it back from those with higher incomes. No extra bureaucracy required, no means testing needed.

Yep, that's the myth of "universal" basic income: It would actually be taxed away for most of the population.

You may get $2,000/month for "free", but most people reading this would see their taxes go up by $30-40K/year to pay for the program. The money has to come from somewhere.

But that doesn't change the fact that if we pump money into a certain demographic, the assets they're buying will go up in price. In this case, it's the lowest cost housing that will go up in price.

> just adjust tax rates slightly

Show us some napkin math. Once you start doing estimates you will realize how untenable these proposals are.

Until you actually write down numbers, it's all pie-in-the sky unicorn dreams.

You can refactor it to net 0. Take n tax brackets. For each tax bracket estimate how much x% income is raised by UBI, then raise the taxes in that bracket to that same x%.

In the $0 income bracket this would be tax_rate:=100% , in the >$100K bracket it might be tax_rate:=1%.

So now your UBI is paid for but it's not doing anything useful.

However, you can now tune your tax brackets "as per usual" to get a more desirable outcome; lowering taxes in the lowest bracket and raising them in the highest.

The new ability you get is that while previously your progressive tax brackets only allowed you to control the upper limit of the income band , you now also have the ability to control the lower limit of the income band.

> There is a tremendous amount of overhead involved in current welfare programs

Take the salaries of the people involved, and divide that over the entire country. Will that suffice? I don't think so, because it isn't as if 25% of the population is involved in distributing welfare.

> If UBI could be implemented in around the same cost as the welfare programs it replaces, it would have a net zero effect on inflation.

Not necessarily. If the government gave everybody a minimum wage extra, landlords could raise their prices further, shops, restaurants, construction firms, etc. would have to increase salaries to maintain lowly paid staff and raise prices, etc. There's a distinct risk of inflation involved in handing out money.

I'm about as anti big government and anti welfare programs as you can get, but the overhead costs of most welfare programs isn't nearly as much as UBI proponents seem to think they are. Food stamps, one of the more inefficient ones, costs about 15 cents in overhead for every dollar in benefits. Most other programs like social security etc. range between half a cent to 5 cents for every dollar of benefits.

UBI without the U is just welfare, which is fine, but it's kind of odd to say that UBI would be better if we just did "thing that makes it by definition no longer UBI."

I totally agree with you on re: inflation, though. Some organization, presumably government, will need to manage any UBI implementation, and government is nothing if not an inefficient allocator of its resources. I worry any broad national UBI system will just raise inflation to absorb the prices, while increases tax on the entire population, and losing a non-trivial percentage of that increase in the transfer.

Assuming we don’t want to MMT / money printer this, to keep a balanced budget, any UBI system would have to be accompanied by an increase in taxes.

These taxes would presumably be very progressive.

This effectively would end up more than negating the effect of UBI on the richer people, thus turning it into a directed welfare program.

UBI and directed welfare are essentially same same.

In US, these taxes wouldn’t be particularly progressive. US taxes are already very progressive, much more so than in Europe. In US, the wealthy already pay overwhelming majority of the tax. If US was to embark on European level governmental spending, it would have to introduce more European-like taxation system, where bulk of the revenue is collected from middle and working class.

20%+ VAT baby.

Exactly, I came to say the same thing. You could pay for UBI with some MMT trick, but you‘d just end up inflating/rescaling all the prices. It would only work as a massive wealth redistribution program where the rich and middle class get heavily taxed. The latter is infinitely more difficult to implement than the former, but technically both would be UBI.

> For example, "Manitoba, Canada experimented with Mincome, a basic guaranteed income, in the 1970s. In the town of Dauphin, Manitoba, labor only decreased by 13%, much less than expected"

The phrasing tries to downplay the number, but 1 in 8 people stopping work is very significant.

> And the current inflation (and previous events where govts gave out decent sums of cash to help short term other econ issues) shows what happens when people get money for free - prices rise to absorb it. The reason being if person X is willing to put in pain Y for product Z, this does not change if you rescale the meaning of money.

Yes: If you give everyone extra money and theoretically nobody quits working, it's hard to argue that the extra money wouldn't just go to rising prices.

We're already seeing this with supply-constrained resources like housing: In hot cities, people will pay whatever they have to in order to outbid their competitors for houses or apartments. Pouring more money into the situation would only make the numbers go up, but the root problem still exists.

Do you know how many people stopped working when automation began?

> Do you know how many people stopped working when automation began?

What do you mean? Labor force participation has been trending upward over the last 100 years, not downward.

For an extreme example, fewer than 10% of married women were in the workforce around 1900. Now it's closer to 3 out of 4 married women in the workforce.

> The phrasing tries to downplay the number, but 1 in 8 people stopping work is very significant.

I agree that seems very significant. Unemployment is considered to be quite high when it's at 8% for instance.

During the pandemic, we've had to pay people monthly cheques because we forced businesses to shut down, and it's been difficult to get people to return to work. Granted, this isn't the same as UBI, and there are conflating factors, but currently, we're in a situation where we have high inflation and a labor shortage. That's not very encouraging.

In my mind, if we want to implement something like UBI, we need a way to control the inflation it might generate. It might also not be realistic to do this until we have something like general purpose robots to counter the labor shortage. Another problem is just how we finance something like this. Increasing taxes on the general population seems like a pretty bad idea. We'd have to fund it through money printing, but again, how do we control the resulting inflation? High sales taxes? Increasing income taxes in the higher brackets would create a situation where it's less worthwhile to work hard.

"shows what happens when people get money for free - prices rise to absorb it"

A - so prices of $40,000 cars have increased becauae people got $2000 or whatever for free? What is that as percentage of wages, 0.5%

How about this massive supply chain and manufacturing disruption, could that somehow be responsible?

B - the wealthy and corporations were getting money for free for 20 years, it's called quanittative easing, and it caused massive inflation of asset prices

> "pain Y for product Z, this does not change if you rescale the meaning of money."

Usually economic theories talk about productivity, resources and velocity of money. This stuff about pain sounds like it came out of a sadistic religious cult.

>How about this massive supply chain and manufacturing disruption, could that somehow be responsible?

That is part of it. Fortunately there are plenty of other examples in US and other country history where money handouts are clearly a driver, so it's not a question of whether or not easy money adds to inflation.

As mot economists put it, all long term inflation is ultimately the result of more money in the system.

>This stuff about pain sounds like it came out of a sadistic religious cult.

Not a rebuttal. If Bob willing to work job X for Y hours to get apartment Z, simply rescaling the value of money (inflation) will not change that Bob is willing to work job X for Y hours to get apartment Z.

Do you think this is not true? That he gets 37 yotobucks or 19 fishcoins or 39801892 bubblenotes is irrelevant. He is willing to trade time and effort for goods. If the value of the currency moves he is still willing to do this.

Free money will not, and historically has not, come without costs.

UBI however would mostly transfer this cost to high-income earners (if financed through taxation) or capital owners (if financed by debt/printing money). Basically it's just a form of progressive taxation with a large safety need (without a means test) at the bottom, which would function as a mechanism to decrease inequality (which some economists believe negatively affects economic growth). Also another factor (and I'm personally not fully convinced on this) is that it would would actually result in higher overall productivity longterm by giving more people the opportunity to invest their time into gaining new skills etc.

> UBI however would mostly transfer this cost to high-income earners

Show me your napkin math. I've been all through this so many times that hand-wavy claims are not enough - simple estimates will show you how these claims do not work.

And if it was a simple we getting some more taxes somewhere, do you not think we'd already gather that tax? It's not like there's money that is easily taxable either politically (or sometimes, even economicially).

Sure, if we could magically get more money, and get it from places that are not current places, and ignore all effects of giving such money yo people on inflation and the economy, and get it so that there are zero side effects, maybe you'd be on to something.

But even in that case, it's still wiser to spend this money on better targeted things than simply handing to everyone with no regard who needs it.

> Not a rebuttal

Just like you don't need to rebutt a flat earther theory that ignores basic laws of gravity, no-one needs to rebut an argument that ignores basics of economics.

You are conflating consumer good and assets, you are conflating creation of money and redistribution, you are totally ignoring the three most important factors - velosity of money, productivity and interest rates.

Firstly prices of houses and other assets depend on interest rates, not wages.

Secondly UBI does not do 'rescaling', whatever that means, nor does it create new money, it does redistribution. Redistribution does not cause inflation.

You could have presented an argument that velosity of money would increase so much it could trigger inflation, or that productivity would collapse, but you have provided no such argument, let alone evidence

It doesn't seem to me that apartment rents going up by $n/month when UBI of $n/month rolls out is an impossible proposition, since everyone can afford extra $n. Can you elaborate as to why this wouldn't happen?

You are correct. But as the Mincome report itself noted, some of the people who were most likely to decrease hours were young parents, especially single mothers, and students who returned to school. At least some of that decrease was a positive social outcome, probably.

> Multiple studies of where basic income was tried in the real world found it to reduce work.

Isn't that a good outcome? Humans get more leisure time.

Not for the other group who will have products of their labor "redistributed" to pay for other's leisure time?

Gettting rid of serfdom, debt prisons and endentured servitude all reduced work and caused products of labour to be redistributed. Who said that current distribution of products of labour between Amazok and their workers is optimal?

We all fantasize Bezos and Musk should pay for it, but in reality it will be yet another tax on middle class (e.g. run-of-the-mill senior developer from high CoL area, so from Amazon engineer to (would be ex) Amazon warehouse worker).

Would be even broader than that (run-of-the-mill junior dev in high CoL ara to lower middle class homeowner that fancies early retirement)

If we are getting rid of serfdom why has no one suggested this money goes to third world workers?

If those people aren't getting paid a very high wage, they can reduce their working hours too.

If they are getting paid a very high wage, then they already had the leverage needed to reduce their working hours, and they were choosing not to. They'll still make plenty of money.

> They'll still make plenty of money.

How much is "plenty" and who gets to decide? What if they live in high CoL area? You propose they should sponsor someone else's leisure time instead of buying a house for their family, for example?

That's basically a normal tax question at that point.

Well, yeah, this is exactly what I've been saying in this thread: Any realistic UBI program will be payed by taxes on middle class.

So go use those arguments you already mentioned, about redistribution and buying houses, against current taxes. You can even use the same complaints about freeloaders.

You made it sound like this caused new objections, rather than being one more bout of business as usual tax griping.

You seem to be upset with my arguments for some reason. However, if you read some other comments here and multitude of previous UBI-related discussions, you will see that there are a lot of people who (naively) assume that UBI will be somehow financed by taxes on corporations (from one of the comments: "Really, you'd just want to tax corporations over a certain size that are both highly automated (i.e. high revenue per employee), and have lopsided compensation structures (which could be measured by CEO to median worker pay)."). However, if you want to get a good approximation how modern politicians structure similar programs, then just look at California health care tax proposal (aka "Let's make healthcare free for ourselves and get tech-bros pay for it!").

I'm not upset, I just think that particular argument doesn't support keeping the status quo. And because of that, I don't find it very convincing as an argument against making a change.

And I would prefer not to get into the details of who gets taxed or how to optimally structure a tax today.

And I'm not totally sure my visualization in my head is correct, but if everyone is getting $1,000 per month with a high quality of life provided with that, an additional $1,000 per month is weighted much more purchase power wise than in today's model.

That’s the interesting thing. Some people want to be lifetime wage slaves: they will work till they die at a low earnings level. Others would like to make five times as much with five times as much work. Proportionality is what they value.

The problem, apparently, is that you want to force the latter into the former lifestyle. To that, I say no. In fact, you’re not going to get that world.

> The problem, apparently, is that you want to force the latter into the former lifestyle.

No I don't. If I was in charge then for step one I wouldn't change the amount of money those people make at all, I'd try to claw back any productivity gains from the last few decades that aren't going to workers and see how much UBI that can turn into. If I did want to tax someone with 5x income more, it wouldn't be that much more.

>I'd try to claw back any productivity gains from the last few decades

If productivity gains come from capital, not from labor, then trying to take that from rewarding capital will also hurt labor. Over the past few decades a significant amount of productivity gains are from capital investment. Your average worker isn't simply turning out 2x or 3x the goods with the same effort. They have been given a productivity multiplier tool paid for by investment before they set foot on the job.

When it often takes significant tooling and tech investment from an employer to increase productivity, if that stops, we're back to much earlier productivity and level of goods.

Next, over the past few decades, there has been (in the US, likely others) legislation benefiting workers that has a cost to employers, which has also taken up some wage growth, by giving workers other benefits. BLS tracks such things under terms like total cost of employment and total remuneration. If you look at these over historical periods, you can see more places that workers are better off today than in decades past, without it showing up in wages.

There are reasonable causes not all productivity gains are immediately given as wages - not all gains come from workers.

I don't think all that much capital is going to stop investing in companies even if taxes increase, especially if increases are over many areas.

Also, any business that already exists under this setup has the necessary equipment, and any new business should be budgeting for the necessary equipment. Not much should be stuck in a place where they have lots of inefficient employees and can't afford to upgrade and can't secure a loan.

You mean for the machine's labour - progressively more and more as more and more is automated, and where people with their UBI are paying into the system (consumers aren't a fuel leak, they're the largest cog in the wheel) and workers will be getting paid adequately on top of the UBI they'll be getting too?

A concept missed by most is that the buying power of "$1,000"/month grows exponentially as more and more gets automated.

> You mean for the machine's labour - progressively more and more as more and more is automated

How do you propose to finance UBI? All proposals that I've seen assume middle class to pay (for example, "everyone pays percentage of their income and then everyone gets fixed amount of money at the end of the period"), not nebulous machine-automation overlords.

> A concept missed by most is that the buying power of "$1,000"/month grows exponentially as more and more gets automated.

I don't observe housing getting exponentially cheaper "as more and more gets automated". In fact, I believe landlords would capture non-trivial amount of any potential UBI program.

A lowering of work means a lowering of goods means society, including those not working, get less.

Sure, more leisure time is good, but mostly only so if mankind still gets the goods and services they are used to. UBI would not do that.

When national productivity drops a few percent, it's a recession, and people notice the lack of goods and services.

People can already work less. But people also like goods and services.

Does your thinking here work if including automation into the equation?

Why didn't society then collapse when automation began - like textile/garment/fabric manufacturing, etc?

You also seem to be ignoring the other side of productivity - if it drops it's arguably, in part at least, that less people are buying - so there's no funds/fuel for the local system. If UBI had to be spent locally and only on "local" goods - within the ststem - then there's no leak, and instead of fueling China and letting the tank run dry locally - you force fuel to be spent locally. This is why major, credible think tanks estimate an immediate 13%+ increase in GDP with implementing a $1,000/month UBI.

>Does your thinking here work if including automation into the equation?

Yes, I am more of a technologist than anything. Automation is not free, and if a thing can be efficiently automated it is already or will be as soon as it's efficient.

Automation gains in the past have not freed large swaths of workers, simply because as more goods are available people want higher quality of life, absorbing any gains. If you want to live like someone in 1950 you could on a much lower salary than people get now, but people now want bigger houses, more cars, more goods, more entertainment, more of everything.

If you think automation will free us all, work on figuring out why all the massive automation gains did not already free large amounts of people from work.

>If UBI had to be spent locally and only on "local" goods - within the ststem - then there's no leak

This completely fails. Consider how good your life would be if you could only have goods you made. Not nice. Then make it people within a mile of you. Better, but still crap. Make it a US state. Better again, but not really anywhere near first world standards.

If you want a first world standard of living, you need goods from around the planet and skilled people from around the planet trading and making and innovating. Buy local simply lowers your quality of life (and everyone, since you'll soon lower the # of specialists that can exist by serving large populations).

>This is why major, credible think tanks estimate an immediate 13%+ increase in GDP with implementing a $1,000/month UBI.

And others have reached the opposite conclusion. Most importantly, the evidence from real world trials is consistent with a smaller, not larger, economy.

> I expect a targeted need use of scarce resources (tax money) is a much better use for helping those who need it

That might be true but it also might not be true. If you add a bunch of rules to the program it can increase the administrative cost a lot and leave you with less money to distribute. I'm not sure if it's true, but when I was a kid I heard that Canada's baby bonus (Canada Child Benefit) was made universal because of this.

Exactly. Part of the appeal of UBI is that it doesn't come with a ton of bureaucratic overhead.

Look up and demonstrate this "ton of bureaucratic overhead". All US programs have efficiency ratings you can find. There is not the overhead you (and UBI people in general) claim.

Pick the system you think is most inefficient, then look up to find admin budget versus money paid out. I've done all this, under the same initial belief you have, and it's simply not true.

And UBI will also require the same overhead to collect and dole out - it is simply a different tax redistribution method than current ones, and will not be zero overhad.

You've made claims up and down this thread that amount to "trust me" or "look it up". None of these are simple factual matters like "What is the capital of Egypt?". There are numerous studies about basic income, all driven by different assumptions and biases. No one knows exactly which one you're referring to when you say "look it up". It's impossible to have a detailed discussion when everyone isn't evaluating the same information.

If you can tell us the % of bureaucratic overhead that's consumed by the US welfare system, then please do so. Otherwise you can simply say nothing.

There's others that have posted the % overhead for various programs in this thread.

There is so much nonsense repeated here that for me to look up everything, which I have done in the past, would not be worth the time. Take a moment to pick one thing I claimed, check it carefully.

> None of these are simple factual matters

How much is spent by any welfare program is a simple fact. The budget spent to administer that is a simple fact. Thus the overhead is a simple fact.

And I have never looked into one and found this massive overhead UBI people claim.

Edit: from the first term I searched for

https://www.cbpp.org/research/romneys-charge-that-most-feder...

And even with throwing all that small overhead into UBI for free, and assuming UBI has zero overhead.... The number are still not going to work, or, as I started with, will screw those already needing assistance.

You're confusing federal programs (like Medicare and Social Security) which tend to be transparent, efficient, and universal with state run programs (like Medicaid, SNAP) that make up the bulk of welfare spending.

You're not going to find a straightforward answer about to the administrative budgets of SNAP or Medicaid.

The person you replied to posted a link in a sibling comment that shows 90% of combined Federal and State SNAP money is spend on food.

From that link:

> Eight percent of total federal- and state-funded costs went for administration, less than 2 percent went for services for beneficiaries, and about 90 percent went for food that beneficiaries purchased.

And social security, a universal program, has administrative costs of 0.6%: https://www.ssa.gov/oact/STATS/admin.html

From your source:

"However, the only two groups who worked significantly less were new mothers, and teenagers working to support their families. New mothers spent this time with their infant children, and working teenagers put significant additional time into their schooling"

Note that 13% is likely the net value, so if this group slowed down, possibly other groups actually started working harder at the same time, compensating for some of the loss.

How much of that labor reduction was second jobs?

Bullshit work?

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