• tim wood
    8.7k
    Universal Basic Income, UBI

    What follows is a conjecture about how UBI might work in the US.

    Some assumptions first. That the larger community has decided that it is better to support those who need support than for those same people to be destitute, homeless, hungry, or radically disenfranchised. And that it is important to not cause runaway inflation by diluting value by printing too much money.

    The idea is to give every adult in the US $1000/month. The numbers: 330M people, roughly three quarters of which are adults, times $12,000 equals about $3T dollars. Per year. But how to keep from ruining the dollar?

    Short answer: by sharply increasing both the effective and the marginal tax rates. After WWII, marginal tax rates in the US reached over 90%, with a top effective rate of 70%, until 1964. (The highest current marginal rate is 37%!) And by instituting a federal assets tax. The idea is that if the US government is going to give out $3T per year, it ought to take in somewhat more than $3T per year. But is that possible?

    I think it is. First, giving every adult the money forestalls any question as to who should or should not get the money. But at the same time it would be understood that for adults earning over some certain amount, that money would be taxed at 100%, meaning most of it would be quickly repaid. The rest of the burden would fall onto those who can afford to pay it.

    An offset would be that the cost of many social welfare programs, that in the aggregate is a large amount, could be slashed if not in many cases eliminated.

    Any asset tax would be controversial. I think it's the best and simplest way to address a problem that needs to be solved, and will be solved one way or another. And graduated: the more you have, the greater percent you pay.

    And there are derivative actions government could take, for example in a system of federal price controls. Less spent on this and that program combined with more targeted spending. And more reasonable prices. The active ingredient in my routine eye drops, for example, at .005% solution, retails for about one half of a billion dollars per liter. Seems expensive.

    Social implications? Large. But in my opinion the idea that the ground of the US or any ground of any country, could support both a population and limitless acquisition seemed feasible for a long time because of the wealth of the ground. But no longer. The community of people - even including animals - is now stitched tightly together. Exploitation was never harmless, but now the cost is unsupportable. A rent in the fabric here effects the fabric everywhere.

    And so forth. This a sketch, fwiw,, and no doubt endlessly tweakable. I suppose my question is, is something overlooked even in this sketch, that would make it all simply not doable.
  • Pfhorrest
    4.6k
    If you give everyone an UBI of $X and then tax everyone ($X/mean income)% of their income, it is mathematically guaranteed to be revenue-neutral (and have no effect on the money supply, so no devaluation or inflation). Everyone below the mean income ends up getting more than they pay, and only those above it end up paying more than they get. Because the mean income is around the 75th percentile, this ends up giving a supermajority of people more than it will cost them, while remaining revenue neutral. Even most of those above the mean income don’t make much above the mean income, so the cost to them would be minimal. This is because so much income goes to a tiny fraction of the population, who would bear the brunt of the burden.

    This works for any X less than the mean income. The median income is around half the mean, so we could easily guarantee that nobody ever gets less than what currently half of people make less than, and not only that bottom half but the next quarter would still come out ahead. All without printing a single new dollar.
  • Zophie
    176
    On a related note, will new technology make something like this a necessity at some point, I wonder?
  • BC
    13.1k
    I am generally in favor of a UBI plan, but I do not think it is a sufficient solution to the distribution of wealth we produce.

    Even if a UBI plan were instituted, higher taxation and all, some critical problems remain which would not be addressed.

    1. Now more than ever, we need to make a very rapid transition from fossil fuel energy to solar / wind / hydro / nuclear. This involves a radical reorganization of the economy. If you think COVID-19 was disruptive, the very rapid (or even rapid) transition from fossil to renewable energy will be much more disruptive. Much of the world's wealth production is founded on fossil fuels, and it will take perhaps 30 to 50 years to complete the transition. Will we have enough national income to afford a UBI, or much else?

    2. Current MANDATORY spending (Social Security, Medicare, etc.) and DISCRETIONARY spending (Defense, Health, Education, Housing, etc.) required 4.4 trillion dollars in 2019, which amounts to 21% of GDP. Taxation produced $3.5 trillion dollars, 16.3% of GDP. [Congressional Budget Office figures].

    So, deficit spending.

    Reorganizing spending will be a very painful process. Retirement planning has relied on social security for... about 85 years. Medicare has been in place 55 years. That's just two examples of deeply integrated programs. Many other programs are equally integrated in our social expectations. Unwinding trillion dollar programs won't be a simple process.

    Like I said, I'm generally in favor of UBI, but implementation has to account for other complicated programs.
  • Frank Apisa
    2.1k


    BINGO!

    The UBI is coming...and there will come a day when people will wonder why it took so long to get here.

    My guess is the UBI will get here within the lifetime of people now alive...perhaps even during the lifetime of people who are now adults.

    I'm 83...I won't see it. But I have been an advocate for the UBI for over three decades now.

    It will come...and future people will look at us who now lack it...the way we look at people who thought it okay for grammar school kids to work 6 1/2 days a week digging coal in coal mines.
  • Frank Apisa
    2.1k
    Zophie
    31
    On a related note, will new technology make something like this a necessity at some point, I wonder?
    Zophie

    Do not wonder any longer.

    IT WILL!
  • ssu
    7.9k
    The idea is to give every adult in the US $1000/month. The numbers: 330M people, roughly three quarters of which are adults, times $12,000 equals about $3T dollars. Per year. But how to keep from ruining the dollar?tim wood
    Likely it wouldn't ruin the dollar. A lot of that would be raise the aggregate demand, so what's the problem?

    What basically universal income does is that the threshold to take a job increases. This is obvious even more clear with unemployment benefits. In a welfare state like mine one if paid unemployment benefits to perpetuity (as long as one lives) with the social welfare net paying your rent for a small apartment in the capital or a larger house in the countryside. What really can happen is that it alienates some people not to work, but at least they won't be beggars on the streets and homeless (which is a huge advantage, actually). The logic is quite reasonable: if you go to work at McDonalds, basically you are going to be left with a similar amount of money, but you have far less spare time to uhh.... discuss universal basic income in PF.
  • BC
    13.1k
    Did Finland install its generous social safety early on? My guess is that it did. The US did not. Social Security was not a universal program to start out. Farm labor, maids and servants was left out in order to deny SS to blacks (per the southern block of senators). There were no medical benefits (for 30 years, not until the mid '60s). Unemployment has always been as niggardly and as hard to get as a state wanted to make it. Disability insurance has in various times and places been difficult to qualify for.

    The American social safety net was hard won and not overly generous, but it has nonetheless long since been integrated in people's long-range plans.

    I'm 83...I won't see it. But I have been an advocate for the UBI for over three decades now.Frank Apisa

    73, here. I don't expect to see it in my lifetime, either. I've been on UBI's bandwagon, more or less, for 30 years too, though from the perspective of socialism. It seems to me the "installed base" of safety net programs, tattered and full of holes as they are, will make a UBI difficult to achieve here (if for no other reason that the installed base will serve as an excuse for not doing).
  • Dagny
    27
    I didnt expect the majority of people here who are interested in philosophy to support UBI.
  • Pfhorrest
    4.6k
    It seems to me the "installed base" of safety net programs, tattered and full of holes as they are, will make a UBI difficult to achieve here (if for no other reason that the installed base will serve as an excuse for not doing).Bitter Crank

    That reason aside, I think UBI and the existing tattered net can be integrated together rather easily. Just make UBI-payments-minus-UBI-tax count as income for the purposes of determining income for those other programs. Gradually increase the UBI until those other programs wither away as nobody needs them anymore. Or if people who do need them start falling off of them too soon, adjust their income requirements appropriately to keep those people still on them, until UBI is raised enough that people who fall off of them due to UBI can afford to be off of them.
  • tim wood
    8.7k
    On an annual universal federal asset tax. Benjamin Franklin:

    "Benjamin Franklin died in 1790, however one year earlier he left the equivalent of $4,400 each to the cities of Boston and Philadelphia in his will, under the condition that the money be loaned and invested to young apprentices that had proven worthy of a loan. He stipulated that the cities would have access to a portion of the funds after 100 years and receive the remaining funds after 200 years. When the cities received their balances after 200 years, the combined bequest had grown to $6.5 million!" From online.

    Because of the power of compound interest, banks whose rules for savings accounts that I have read have included in those rules a provision for inactive accounts that they be first reduced by fees, and then closed to zero. Arguably reasonable, for a bank. Edit: or under state law, the accounts transferred to state custody.

    The wealth of quite a few people in the US - the arithmetic of such wealth being such that most Americans, being number illiterate to the point of sometimes failing to distinguish millions from billions, simply have no clue whatsoever as to the scale and significance of modern wealth inequality - is so great that it almost cannot be prevented from exploding. Some years ago a Rothschild descendant defined a rich man as one who could live off the interest on his interest. At a 10% rate of return, that can be achieved with investments of $10M. A lot of people have $10M. The Walton siblings, controlling between $500B to $1T among them, at a modest 3- 5% "earn" around $30B per year. Give or take.

    We Cannot Afford It. We the people, our title to the wealth of the land being necessarily a kind of ownership in usufruct, but held against our own selves and our own security, cannot any longer afford to see it despoiled, and us ruined, by boundless acquisitiveness and the operation of open-ended mathematical functions. We are the bank in a sense. And the accounts that threaten to destroy us, while not technically inactive, still need to be reduced to manageable and reasonable levels. A system of asset taxes collected over a period of several years would accomplish that reduction.
  • Pfhorrest
    4.6k
    FWIW, I also think that UBI can be sold to even conservative people in a way that I was pleasantly surprised to see the recent $1200 CARES stimulus payments done: it's a refundable tax credit.

    Tell everyone they'll get 25% of the mean income as a refundable tax credit, to offset a 25% tax on their income to fund an UBI. Make tax refunds paid out in monthly installments, and there you go: that tax credit is the UBI, of around $1000-something a month. Everyone below about the 75th percentile sees their taxes go down, and most of them get a monthly tax refund check, with absolutely destitute people getting such a check of over $1000/mo.

    Or you could make it $2000, or $3000, or even about $4000, and the numbers still all work out the same. You just have to make the tax percentages 50%, 75%, or almost 100% to accomplish those numbers, which start to look less feasible. (I personally would aim for about a 50% target, but it's really negotiable).
  • Pfhorrest
    4.6k
    Personally I am opposed to an asset tax strictly speaking, but I am very very strongly in favor of a usury tax. Any money made off of simply owning something and lending it out -- whether that something be cash or land or whatever, so basically any income from interest and rents -- should be taxed at exorbitant rates, up to 100% is fine with me. That will make owning things unprofitable, incentivizing those who make money off of owning things to lend out take their next-best option, selling them off... except nobody else will be buying them for investments anymore, so the only way to tell them off is to sell them on terms that people who need them for their own use can afford. So the rich get two choices: hang on to your usury-generating assets and get all your profits taxed away, or find some way to get those assets into the hands -- into the ownership -- of people who need them for their own use, and escape the tax man. Also, incidentally, millions of poor people enter the ownership class along the way.

    Edit: without affecting people who own things for their own use, e.g. my ex-girlfriend's multi-generational family home in Santa Barbara that is now worth millions of dollars shouldn't be taxed out from under them, because other than owning that home they're not rich. I am very much in favor of people being secure in their ownership of things they actually use, and not having to keep paying the government for the continued right to keep them.
  • tim wood
    8.7k
    so basically any income from interest and rentsPfhorrest
    You're faster on this track than I am, but it seems to me that investments - subject to risk and loss - and renting, are not strictly passive activities. Perhaps I differ from you in that I do not begrudge Bill Gates, or Warren Buffet, or Jeff Bezos their fortunes. Their worth seems proportional to the scale of their operations and achievements. But it seems to be the case that collectively it's too much for the entire system. Ergo taxation. And maybe because both Gates and Buffet are committed to very large investment into the public welfare, they get a break - that any who make similar divestiture get a break. What is fragile, here, and in my opinion worth protecting, is some reward for entrepreneurial accomplishment. But this a matter for the philosophy of the thing, and tweaking.
  • Pfhorrest
    4.6k
    I have no objection to actual equity investment: you spend money on some endeavor in hopes of making more money out of it. All I object to is charging people for the use of something that you then are owed back in full, in addition to the money you charged. If you’re not going to be using it yourself some way and profiting off it from that, your only option to profit should be to sell it off.
  • tim wood
    8.7k
    A bit Old Testament?

    Ezekiel 18:13
    Lends at interest, and takes profit; shall he then live? He shall not live. He has done all these abominations; he shall surely die; his blood shall be upon himself.

    And how do you sell money? Surely you will reckon along with me that cash in hand is more useful and valuable than a promise of cash to be received at some later time.
  • NOS4A2
    8.3k
    The notion of unearned income is fundamentally flawed because income is never unearned.
  • I like sushi
    4.3k
    It has been predicted before but every time new tech has opened up different types of jobs.

    Regardless humans still need a sense of self worth. Most people struggle with that to some degree - hence the ‘bullshit jobs’ thread.
  • Pfhorrest
    4.6k
    I came up with my own objection to rent and interest before ever hearing about the Old Testament version of it (or the contemporary Islamic equivalent thereof). Or of David Ricardo's critique of rent, which was apparently highly influential on Marx in turn.

    The religious bans on interest don't also ban rent, BTW, and both medieval Christians and modern Muslims get around it by a weird combination package of "interest-free" loans, insurance, and rent. The ancients seem not to have realized that interest is just a special case of rent, namely rent on money, and it's rent in general that needs banning (or rather, which needs to go unenforced; it's only enabled by legal contracts, and the law could just not recognize those contracts), not just rent on money.

    Anyway, yeah you can't sell money, but you can spend it. If you can't profit from lending your money, you can spend it on something that you hope will generate more money, paying people to do things that you hope will generate profit. That still ends up transferring real wealth from the rich to the poor.

    That's how "capitalism" is naively supposed to work: the rich pay the poor for their work, so the poor get richer and the richer get poorer, unless they're also working just as much. But because of rent and interest, most of what's paid to the poor just gets paid right back to the rich to borrow their wealth, wealth which does not become owned by the poor in exchange for that payment because it's only borrowed. It's rent and interest that break free markets and turn them into exploitative capitalism.
  • Zophie
    176
    What do people do in a world where systems design and maintain themselves, though?
  • Benkei
    7.1k
    What basically universal income does is that the threshold to take a job increases. This is obvious even more clear with unemployment benefits. In a welfare state like mine one if paid unemployment benefits to perpetuity (as long as one lives) with the social welfare net paying your rent for a small apartment in the capital or a larger house in the countryside. What really can happen is that it alienates some people not to work, but at least they won't be beggars on the streets and homeless (which is a huge advantage, actually). The logic is quite reasonable: if you go to work at McDonalds, basically you are going to be left with a similar amount of money, but you have far less spare time to uhh.... discuss universal basic income in PF.ssu

    This effect is always mentioned and I have never ever seen research into it proving it.
  • Punshhh
    2.6k
    I can't remember where I saw it, but I watched an article on how some Norwegian people became depressed, or were loosing motivation because a lot of their needs were provided for. Sorry I can't be more specific.
  • Punshhh
    2.6k
    Have you seen the movie Wall-e. It's a kind of satire of a future where robots do most things.
  • Punshhh
    2.6k

    Yes, and that's why in the UK, a lot of people think the poor are undeserving, idle and should be dispised. While we, the well off, are derserving, indeed entitled to feel superior, to have our wealth because we happened to be in a position to buy property (for example) in an area where house prices became vastly inflated and sold up and bought a number of buy to rent properties in less well off areas and charge extortionate rents from our poor tenants. We worked hard for our privelidge and sense of superiority.
  • I like sushi
    4.3k
    We can only speculate from rough examples in the real world. I would maintain that it comes down to ‘self worth’. With or without a job people need to ‘busy themselves’ in some way.

    I don’t agree, as many would paint it in a black and white manner, that people would simply turn to a life of sloth or turn to a life of personal growth.

    Essentially we’d have leisure time and some would use it for recreational purposes (to literally ‘re-create’ themselves and hone skills etc.,.), but in reality I don’t think they’d be a huge difference in the problems people face and more than likely society would actively seek to deconstruct such economic harmony (meaning freedom of access to resources) to distract themselves from themselves. Some would likely work together, distinct ideas and cultures would flourish, and then these commitments would inevitably clash at some point as ‘resources’ would almost certainly become strained in some way for some period of time.

    The stresses and strains of daily life is most certainly a welcome distraction for everyone to some degree. Having a goal, to get food on the table and pay bills, is a worthy achievement. Many are very happy to do just that and no more so if you took away their ability to look after themselves completely, they’d be forced into a situation where ‘leisure time’ or ‘recreation’ would be the mainstay of their existence. I’m not saying people cannot adapt to this only that they may find such circumstances far less palatable initially than they would otherwise have assumed - the cases of so-called ‘working class’ people winning the lottery eventually returning to their day job are quite clear examples of how expectations play out against reality. The ‘worth’ is often enough about people having a sense of ‘social worth’ and belonging to a group with a common history and understanding of the world.

    Anyway, just scratching at the surface of where such could lead. In terms of a UBI I do think it is a good idea, but not a good idea for everyone. The instance of the virus now has shown the value of something like a UBI being a good idea for society. As a crisis management scheme it seems more than appropriate. In terms of the use of social institutes we can clearly see that reasonable safety nets prevent deaths.

    One thing I am very much in favour of is FREE education. That is not to say I am against private education only that a stable and respected national system of education is a worthy goal (as far as I can see regardless of problems that may inevitably be associated with it).

    Social success seems to be the main focus for juvenile individuals. Nothing wrong with that, but when this attitude is carried through into old age it upsets me. I feel bad for them. By this I mean the attitude that finding a partner, getting lots of money, and having a degree of social fame (within your group or on a media scale) have become mostly what people initially regard as ‘worth while’ and essential to ‘success’.

    If UBI happens it will happen in Northern Europe first. I cannot honestly see any other countries even considering it, probably even actively opposing it, until it has been established for a few decades and with widespread economic success.

    Without a degree of anarchism any UBI will likely fail. With UBI it seems obvious to me that each individual must take on a greater degree of personal responsibility rather than surrender their autonomy to a so-called ‘higher authority’ - basically freedom doesn’t come for free. Ignoring that would be disastrous.
  • ssu
    7.9k
    Did Finland install its generous social safety early on? My guess is that it did.Bitter Crank
    The positive attitude towards welfare programs started early in the Nordic countries. I guess here it started with a huge land reform which was put actually through by the winners of the civil war, the whites, in 1918. That was the first sign that the classic liberalism (libertarianism) never was so close to heart even for the right-wing in Finland. The Nordic idea (typically referred to Sweden) of the Folkhemmet (the people's home) emerged at the start of the 20th Century and gained popularity especially in the 1920's.

    The equivalent system to the American Social Security was launched in Finland in 1937 (two years after the US system). Unemployment benefits were started to be given in 1917. In the health care sector child health care centers were started first in the 1920's, the maternity packages were started to be given in 1930's and came to be given to all families with newborns from 1949. Universal Health Care started in it's present form I guess in the 1960's. I'd say basically Finland wanted to follow on the steps of Sweden, but WW2 made the plans to be implemented only in the 1960's as the country got more prosperous.
  • ssu
    7.9k
    This effect is always mentioned and I have never ever seen research into it proving it.Benkei
    It is quite true. Long term unemployment creates social exclusion.

    From the point of view of poverty, curbing long-term unemployment is the key. The potential for finding jobs for the long-term unemployed is non-existent. The number of long-term unemployed who have had to fall back on labour market assistance after the maximum period of daily unemployment allowance is already over 100,000. Some of them have no working history because there was no such requirement in the previous basic daily allowance system. According to Santamäki-Vuori, the rise of long-term unemployment is introducing 'inherited poverty' into Finland. Deprivation, gloom and lack of prospects are transmitted to the children of the long-term unemployed and a poor class could be making a comeback into Finnish society. Lack of prospects is an integral element in poverty. A new phenomenon which has emerged side by side with traditional rural poverty is urban poverty, a phenomenon which might well propagate a variety of 'poverty sub-cultures' in Finland, as it has elsewhere.
    (from publication POVERTY AND SOCIAL EXCLUSION IN FINLAND
    IN THE 1990S, MINISTRY OF SOCIAL AFFAIRS AND HEALTH
    HELSINKI 1999)

    Of course, not having any such system creates likely even more and worse problems.
  • NOS4A2
    8.3k


    Why don’t you give them your money, then?
  • ssu
    7.9k
    Btw Finland had an experiment on Universal Basic Income done a few years ago. Here's the results.



    In the end the experiment was rather inconclusive and basically viewed as a failure by some. Why it was only unemployed in the experiment makes it by my reasoning strange if the idea is really universal basic income.

    In the end, the trial only involved people (2000 residents) who were already receiving Finland's standard conditional benefits — things like unemployment benefits, housing allowances, social assistance, and illness compensation that are afforded to unemployed residents by law.

    A control group of unemployed people (around 5,000 residents) continued to receive these services. The treatment group, meanwhile, received a portion (but not all) of the same conditional benefits they had been getting before, in addition to small basic-income payments of 560 euros ($640) per month.

    In 2017, that resulted in the control group receiving 7,300 euros ($8,000) in unemployment benefits and 1,300 euros ($1,400) in social assistance. The treatment group, meanwhile, only received 5,800 euros ($6,400) in unemployment benefits and 940 euros ($1,000) in social assistance that year.

    One participant, Sini Marttinen, told the New York Times that her income only rose by 50 euros ($55) per month during the experiment.

    "They were interested in the question that basically boiled down to: If you replaced conditional unemployment benefits with unconditional unemployment benefits, do you get increased employment?" Stynes said. By the end of the experiment, the basic-income recipients were no more likely to get a job than those in the control group.
  • Punshhh
    2.6k
    My reply was not about my position, but a notional person who had an unearned income.
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