Comment by Aurornis | Hacker News Reader

Comment by Aurornis | Hacker News Reader

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Several of the UBI pilot studies included new venture creation (including solo self-employment, not just classic business creation) as part of their measurements. The last few I looked at had zero difference in new business creation between recipients and control group.

A lot of the UBI trials have actually had disappointing results. The arguments usually claim that it’s not a valid test because it wasn’t guaranteed for life, or the goalposts move to claim that UBI shouldn’t be about anything other than improving safety nets.

Unfortunately I think the UBI that many people imagine is a lot higher than any UBI that would be mathematically feasible. Any UBI system that provided even poverty level wages would require significant tax increases to pay for it, far beyond what you could collect from the stereotypical “just tax billionaires” ideal. Try multiplying the population of the US by poverty level annual income and you’ll see that the sum total is a huge number. In practice, anyone starting a business would probably end up paying more in taxes under a UBI scheme than they’d collect from the UBI payments.

I actually did the math for US once, calculating how much more tax it would take to give everyone minimum wage. The resulting tax rate would certainly be fairly high, but not excessively so; several European countries have higher brackets today, and their economy doesn't collapse.

But also, are you accounting for all the means-tested welfare that such a program would replace?

> But also, are you accounting for all the means-tested welfare that such a program would replace?

Multiply the US population by the poverty level annual income ($15.6K) and the resulting number is higher than all US federal tax revenue combined. In other words, tax rates would have to more than double across the board.

Subtracting out existing social programs barely moves the needle. Are you sure you did the math, or were you just assuming?

Yes, I did the math. Wish I still had the spreadsheet.

It's not as simple as multiplying the population. The point is that if everyone gets that check, then you can raise the nominal tax rate much higher but still get the effective tax rate (i.e. income - tax + UBI) in reasonable territory. As I recall I actually went all in and also made it a flat income tax to see how much the UBI offset would work at making it effectively progressive, and that also works out.

The "classical" UBI argument from a liberal point of view (classical liberal, not US liberal) has typically been that UBI would lower the complexity and by extension cost of welfare by removing the needs to means-test. In Europe, UBI was typically more likely to be pushed by (by our standards) centre-right parties.

For this reason, UBI traditionally was seen negatively by the left, who saw it as a means of removing necessary extra support and reduce redistribution.

Heck, Marx even ridiculed the lack of fairness of equal distribution far before UBI was a relevant concept, in Critique of the Gotha Program, when what became the German SPD argued for equal distribution (not in the form of UBI), seemingly without thinking through the consequences of their wording, and specifically argued that "To avoid all these defects, right, instead of being equal, would have to be unequal".

Parts of the mainstream left today has started embracing it, seemingly having forgotten why they used to oppose it.

FWIW I'm far left and in favor of UBI, but one thing to keep in mind is that while it's a simple concept, details (i.e. amounts paid and amounts taxed) matter a lot. There's no reason why UBI can't be redistributive if one desires it to be so - you just use more progressive taxes to fund it.

And, of course, reducing the complexity and cost of welfare ought to be a left wing talking point as well! Again, it depends on what you do with the savings - sure, it can just be taken and used elsewhere, or you could maintain the spending but raise the bar on how much UBI provides.

> Any UBI system that provided even poverty level wages would require significant tax increases to pay for it

Or cutting other things to pay for it, in addition to smaller tax increases. And the costs go down once it's bootstrapped long enough to obtain the long-term economic benefits that grow the economy (which will take a while to materialize).

Honestly, my biggest concern with it is that people will (rightfully) worry that it won't last more than 4-8 years because the subsequent administration will attack it with everything they have, and thus treat it as temporary.

> And the costs go down once it's bootstrapped long enough to obtain the long-term economic benefits that grow the economy (which will take a while to materialize).

This is hypothetical, isn't it?

Depends what you mean.

We have a decent idea of the velocity of money of households at different income levels on the basis of how likely people are to spend all their money vs. holding on to them in ways that may or may not be as effective at stimulating economic activity.

In that sense it is not particularly hypothetical.

In terms of whether people will be more likely to e.g. start a business, that part is a lot more hypothetical. There have been some trials where there seems to have been some effect, but others where it's not clear.

That effect seems very much hypothetical. But that was not part of the classical argument for UBI, and I don't think it's a good idea to use it as an argument for UBI.

> And the costs go down once it's bootstrapped long enough to obtain the long-term economic benefits that grow the economy (which will take a while to materialize).

That's a major claim. Which places under UBI (or in one of the experiments) has that manifested?

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