Split UBI - Split From Breakdown In Civil Order

[Elixir]

You don't learn by simply being given money.

Tell it to Donald Trump.
Sorry, that’s a flippant response.
I agree that people are more likely to act responsibly when they work for the money. But if working only yields enough for bare needs, they’re never going to learn.

 

[Emily Lake]

Let's take a step back and remember that humans are animals. And animals must put forth effort in order to continue their own survival. Animals must forage or hunt for their food, they must migrate or hibernate to survive the winter. They must compete with other animals, even with others of their own species, often in very bloody ways.

Non-human animals don't create machines that can do work for them so that's a pretty silly metaphor.

We don't have machines that can do all of our work. But hey, if you want to tax the ever loving hell out of companies that use automation in order to support incomes for the people those machines have replaced, be my guest.

Nice bit of straw you've got there.

That's a weird response.

I point out that humans, just like other animals, must expend effort to ensure their own survival. Our efforts take a different form, but it's still effort.

You respond by implying that humans can just create machines to do all of our work for us, as if that is somehow an answer that makes sense in any way at all.

And when I respond by pointing out that machines cannot do all of our work, and that replacing human workers with machines has exacerbated income disparity and suggest that you should increase taxes on companies that replace humans with automation... you call it a strawman?

How about this - how about you elaborate on why you think machines is somehow an answer to all of our needs, so that humans don't ever have to expend any effort at all... and then perhaps we can have something to talk about.

 

[Emily Lake]

I find the fixation on the expected overall negative effect of UBI on work effort rather curious. There are plenty of observable examples of people who continue to work even though they have earned millions if not billions of dollars. No one seems to be worried about people reducing the amount of work when they are getting pay raises.

Come on LD, you know better than that. I mean, you literally know better. You understand the marginal value of a dollar, and you understand the ROI involved.

I would love UBI to be a long-term sustainable solution. At the moment, I'm not convinced. I'm not even convinced enough to give it a shot. Here's the deal - if it works, then fantastic. But if it doesn't work... it destroys the entire economy. It destroys the tax base on which it depends, it cannibalizes the entire system.

I know enough that whether an UBI is sustainable is an empirical question that depends on the UBI structure ( which includes how other income support programs are integrated ), the resulting tax structure and the work choices.

Of course it does. Please feel free to outline a structure for UBI that is sustainable, and share your assumptions for the tax structure and the work choices that people are likely to make. It would be helpful if you provide your reasoning for the assumptions around the volume of people that would choose to stop working and what the trade-off points are for those assumptions.

I know projections based on anecdotal evidence are essentially hand- waved assumptions masquerading as analysis.

As opposed to non-projection wishes that masquerade as well-thought-out ideas?

I know that the only way a UBI destroys an entire economy is if the population allows it to do so.

That's one of the more incomprehensible statements I've seen. Can you elaborate on what you're trying to say here?

 

[Emily Lake]

There is an interesting UBI trial in Kenya. Unlike the previous trials which were for a very limited duration, this one is 2 years in to a 12 year trial period. The first set of results are coming out - First Results from World's largest UBI experimentFirst Results from World's largest UBI experiment.)

The latest research on the GiveDirectly pilot, done by MIT economists Tavneet Suri and Nobel Prize winner Abhijit Banerjee, compares three groups: short-term basic income recipients (who got the $20 payments for two years), long-term basic income recipients (who get the money for the full 12 years), and lump sum recipients, who got $500 all at once, or roughly the same amount as the short-term basic income group. Suri and Banerjee shared some results on a call with reporters this week....By almost every financial metric, the lump sum group did better than the monthly payment group. Suri and Banerjee found that the lump sum group earned more, started more businesses, and spent more on education than the monthly group. “You end up seeing a doubling of net revenues” — or profits from small businesses — in the lump sum group, Suri said. The effects were about half that for the short-term $20-a-month group....As you might expect, given how entrepreneurially minded the recipients are, the researchers found no evidence that any of the payments discouraged work or increased purchases of alcohol — two common criticisms of direct cash giving. In fact, so many people who used to work for wages instead started businesses that there was less competition for wage work, and overall wages in villages rose as a result.......And they found one major advantage for monthly payments over lump sum ones, despite the big benefits of lump sum payments for business formation. People who got monthly checks were generally happier and reported better mental health than lump sum recipients. “The lump sum group gets a huge amount of money and has to invest it, and this might cause them some stress,” Suri speculates. In any case, the long-term monthly recipients are happiest of all, and “some of that is because they know it’s going to be there for 12 years ... It provides mental health benefits in a stability sense.”

It is too early to generalize and extrapolating the results rural Kenyan villages to more developed regions is problematic, but initially there does not seem to be a negative effect on labor in this sample.

Promising start.

The risk I see with this is that the funds for the UBI are coming from an external source. They're essentially providing it as charitable donations. With a full-fledged and self-sustaining UBI, that funding is coming from taxes. And those taxes are paid by either spending (thus subject to inflationary pressures) or by income taxes (which reduces the take-home income and is sensitive to trade-off decisions).

I'm quite certain that people getting a lump sum can do great things with it, provided it's a useful amount of money (the couple of thousand back in 2008/2009 or whatever was useless). And I'm sure that people receiving a fixed amount of income have less stress. That's never been the question. The question is whether the funding is sustainable. That's something this study doesn't address at all. None performed so far have done so - the funding to supply the income has always come from an external source.

You missed the point that it spurred entrepreneurial activity which generates taxabke income.

Sure. But not enough taxable income to be self-sustaining, right? How much have the charitable contributions reduced now that entrepreneurial activity is generating taxable income that is being fed back into the UBI machine?

 

[Emily Lake]

No animal on the planet is entitled to the needs of survival just because it got born. Without expending some effort in order to ensure their own survival, they die.

The only potential exception to this are zoo animals, deprived of their freedom and kept as entertainment for humans to ogle.

A lot of farm animals, also.

And pets.

In fact, domesticated mammals massively outnumber wild mammals, so in a very real sense, most animals on the planet need not expend effort to survive; They're largely provided for by humans.

And a sizable fraction of humans are provided for by other humans too. Children and the elderly certainly are; And it's highly dubious that rentiers and/or heirs "provide for themselves" in terms of working for their livings.

So not only is appealing to the fact that "the animals don't get handouts" as evidence that people also shouldn't, a logical fallacy (the appeal to nature fallacy); It's also not actually true.

All that is being demonstrated here is that the existence of civilisation and advancement, is strongly correlated to having large numbers of both non-human and human animals living without having to strive.

Which is exactly the opposite of the point Emily is apparently seeking to make.

In a very real sense, civilisation IS the ability to tolerate freeloaders, whether those freeloaders are aristocrats, infants, clergymen, landlords, the sick, politicians, the permanently crippled, the elderly, or domesticated livestock.

Because your pets don't adapt to their environment and alter their behavior at all? I'm sure you dog never barks to remind you that it needs food or walks or anything else. Your cat doesn't follow you around asking for kibble?

You guys really lack an adaptable imagination. You're holding up captive animals who aren't given a choice as an example to support the notion that humans - as a whole species - shouldn't be expected to expend effort in their own survival. There's a song for that.

 

[Emily Lake]

I don’t know! In my opinion, UPI would be great. Just like Reparations - I’m on board. But I simply prioritize so many other issues more than UPI (and reparations). For example, I’d favor increased spending for our schools, infrastructure, higher ed, environmental problems, and etc.

Perhaps we can gather in support of my version of UBI. Instead of just cash, I propose that income transfers from the comfortable to the less-so be in targeted goods and services:

• Free healthcare for all. Freeing employers from a healthcare obligation increases their demand for workers, so is win-win.
• Subsidized child-care, job training, higher education, public transit, food, housing, etc.
• Improved infrastructure, incl. parks and recreation.
• Some of these come with a sort of automatic "means-testing". The rich will want their own schools, their own transit, etc. This reduces the demand for, and hence the cost of these subsidies.

Some of the UBI benefits would be pure cash, but most, while still "universal" in principle, would be targeted as shown.
Libertarians will screech at me to keep gummint's hands off their new-found money: If a couple would prefer to spend this taxpayer largesse on crack cocaine rather than food for their infant, so be it. And the childless who get no benefit from better schools will toss out Marx's "To each according to his needs" and call me a "woke-thinking Jew-loving commie rat inspired by the Khmer Pol Pot." To that I just answer "Calm down, you straw figment lurching and leering inside Swammi's senescent cerebrum!"

I'm all for revising most of our economic structure and our communal benefits. I have somewhat different ideas when it comes to health care, largely because the problem in the US is a bit more complicated. It's not a matter of just eliminating insurance, it's also a matter of addressing the cost of delivery - doctors in the US make a shocking amount of money, hospitals charge exorbitant rates, and I'm not even going to get into the profiteering involved in pharmaceuticals and medical devices & supplies.

But generally speaking, I agree that many basic provisions should be tax funded and available to all citizens. Once that's addressed, I still strongly favor financial assistance for those in need over universal incomes.

- - - - - - - - - - -

Ms. Lake asks if we can afford UBI. There are various ways to address that question arithmetically, but one of the most straightforward is to start with inequality measures like Gini. The following are WorldBank estimates of Gini taken from Wikipedia. I show the U.S., the four highest-Gini countries in Europe, and some other large countries. (I also include Haiti and Laos, as examples of countries with Ginis near that of the U.S.)


Haiti 41.1
Bulgaria 40.5
United States 39.8
Laos 38.8
China 37.1
Montenegro 36.8
Lithuania 36.0
Russia 36.0
Spain 34.9
India 34.2
Japan 32.9
U.K. 32.6
Germany 31.7
South Korea 31.4
France 30.7
Denmark 27.5
Netherlands 26.0

What this list shows is that there is plenty of room for income redistribution without entrepreneurs fleeing for Bulgaria or Haiti in droves. Do UBI's detractors think South Korea, Denmark and Holland are failed socialist states?

I think we might have some miscommunication here - South Korea, Denmark, and Holland don't have UBI, so I don't follow your point.

Google is increasingly reluctant to provide me with simple stats I ask for (though happy to point me to paywalls). But I do find crude estimates of wealth distribution. (I'd use income rather than wealth for this comparison, but make do with what Google presents.)

I do NOT propose the following redistribution. Just use it as arithmetic demonstration that the wealth or income gap CAN be reduced without tragic results.

Google shows me that the top 10% of U.S.'s 130 million households have, on average, almost $4 million in wealth. On a "share of the pie" basis this is about double of 50 years ago, I think. We could take away half of that $4 million and the rich would still be as well off, relatively, as during the Boom of the 1960's. If we taxed away a teeny-tiny 2% of that Top-10% wealth and gave it to the lowest 6% (i.e. households in "poverty"), that works out to $133,000 per impoverished household. (I am NOT suggesting we give out that cash along with free transport to the street-corners where crack is sold. I'm just demonstrating that there is huge room for redistribution measures.)

Taxing wealth isn't really a great idea. Most wealth isn't liquid or even easily accessible, lots of wealth is in physical objects, land ownership, and investments.

 

[Emily Lake]

It makes me frustrated and angry to see the claim that “most people can climb out of being poor” being made by people who have never had to do so.
IME, people making such claims are projecting that poor people are playing on the same field that they are.
THEY’RE NOT.

Some of us actually did climb out of being poor.

Some circumstances create greater barriers - mental health disorders, physical disabilities, those are certainly something that can prevent a person from improving their circumstances.

On the other hand, I get tired of the heart-before-brain approach wherein all poor people are noble victims of an unfair system being kept down by evil Mr. Moneybags.

Some people are poor because of their choices. My sister and I came from the same household, same parents, same welfare-assisted, food-stamp using, literal government cheese eating consumers of neighborhood hand-me-downs and thrift store back-to-school adventures. We've ended up in very different places, because we've made very different choices. My sister's choices have almost always placed short-term enjoyment over long-term stability. FFS, she's 46 years old, and still gets financial support from me and our parents. For christmas, my parents gave her $200, I gave her $100. She has no savings. And while $300 isn't a ton, it's something. But instead of sticking that in her bank account... she went to Kohls and spent it all in a couple of hours.

 

[Emily Lake]

Honestly, I don't get why it's so much to ask for you supporters of UBI to actually lay out the foundations, the assumptions, and to demonstrate the sustainability of your idea.

I think you guys don't believe me when I say that my objection is based on it not being sustainable, not on any principle. If you can show me that it will work, long term, with reasonable and realistic assumptions... I'm your gal, out there with my signs marching to make it happen. But you've got to actually show me, not just give me empty platitudes wrapped in insinuated insults.

 

[ZiprHead]

Taxing wealth isn't really a great idea. Most wealth isn't liquid or even easily accessible, lots of wealth is in physical objects, land ownership, and investments.

And yet banks will let people borrow with that wealth. It's a helluva tax loophole.

Can't afford to pay that tax bill. Sell that second yacht.

 

[laughing dog]

I find the fixation on the expected overall negative effect of UBI on work effort rather curious. There are plenty of observable examples of people who continue to work even though they have earned millions if not billions of dollars. No one seems to be worried about people reducing the amount of work when they are getting pay raises.

Come on LD, you know better than that. I mean, you literally know better. You understand the marginal value of a dollar, and you understand the ROI involved.

I would love UBI to be a long-term sustainable solution. At the moment, I'm not convinced. I'm not even convinced enough to give it a shot. Here's the deal - if it works, then fantastic. But if it doesn't work... it destroys the entire economy. It destroys the tax base on which it depends, it cannibalizes the entire system.

I know enough that whether an UBI is sustainable is an empirical question that depends on the UBI structure ( which includes how other income support programs are integrated ), the resulting tax structure and the work choices.

Of course it does. Please feel free to outline a structure for UBI that is sustainable, and share your assumptions for the tax structure and the work choices that people are likely to make. It would be helpful if you provide your reasoning for the assumptions around the volume of people that would choose to stop working and what the trade-off points are for those assumptions.

I have neither the data, resources or inclination to build a reasonable workable model.
Whether or not an UBI program is “ sustainable” is an empirical question.

That's one of the more incomprehensible statements I've seen. Can you elaborate on what you're trying to say here?

I think it is pretty simple - the only way any UBI program could end up destroying an economy is if the voters stood around and watched the destruction occur and did nothing.

 

[Tigers!]

Honestly, I don't get why it's so much to ask for you supporters of UBI to actually lay out the foundations, the assumptions, and to demonstrate the sustainability of your idea.

Its hard work. There are so many assumptions to be made. The models would be complicated and obtuse. And don't forget the "tall poppy syndrome" - developer of model A will slag off at developer of model B who will bag developer of model C etc. The fact that there is no universal model of a UBI (note the irony in that) says much about whether it would really work in practice.

I think you guys don't believe me when I say that my objection is based on it not being sustainable, not on any principle. If you can show me that it will work, long term, with reasonable and realistic assumptions... I'm your gal, out there with my signs marching to make it happen. But you've got to actually show me, not just give me empty platitudes wrapped in insinuated insults.

Reasonable request but oh so idealistic.

 

[Tigers!]

That's one of the more incomprehensible statements I've seen. Can you elaborate on what you're trying to say here?

I think it is pretty simple - the only way any UBI program could end up destroying an economy is if the voters stood around and watched the destruction occur and did nothing.

If the punters think that they will not be adversely affected by said destruction then they will stand by and do nothing. People are all too willing to ignore what will happen.

 

[Elixir]

Some of us actually did climb out of being poor.

Been there, done that. Been lucky, so not for enough years to establish a spiral. Still enough to become aware of the oppressive conditions that set in on a person, almost as if the whole system is set up to trap people, and reward those who can take advantage of that fact.

 

[Swammerdami]

Ms. Lake asks if we can afford UBI. There are various ways to address that question arithmetically, but one of the most straightforward is to start with inequality measures like Gini. The following are WorldBank estimates of Gini taken from Wikipedia. I show the U.S., the four highest-Gini countries in Europe, and some other large countries. (I also include Haiti and Laos, as examples of countries with Ginis near that of the U.S.)


Haiti 41.1
Bulgaria 40.5
United States 39.8
Laos 38.8
China 37.1
Montenegro 36.8
Lithuania 36.0
Russia 36.0
Spain 34.9
India 34.2
Japan 32.9
U.K. 32.6
Germany 31.7
South Korea 31.4
France 30.7
Denmark 27.5
Netherlands 26.0

What this list shows is that there is plenty of room for income redistribution without entrepreneurs fleeing for Bulgaria or Haiti in droves. Do UBI's detractors think South Korea, Denmark and Holland are failed socialist states?

I think we might have some miscommunication here - South Korea, Denmark, and Holland don't have UBI, so I don't follow your point.

No, they don't. And what I am proposing is not the same as UBI either.

I know little about Holland or South Korea, but Denmark has strong welfare-like structures that yield a result which, like my proposal, achieves an income redistribution similar to what UBI provides.

The main point is that these three example countries are all VERY prosperous and achieve that prosperity with a GINI much lower than that of the USA. They avoid the poverty which plagues the USA. (They have fewer multi-millionaires feeding their infants caviar and flying private jets. Is that a problem?) The examples provide evidence that there is financial room in the US for income redistribution which, at the cost of having fewer private jets and caviar baths, would alleviate poverty and raise the standard of living for most Americans.

Taxing wealth isn't really a great idea.

We do agree on that! As I've explained -- TWICE already -- I wanted to use income rather than wealth in that discussion. (Though wealth is a usable proxy when simple back-of-the-envelope calculations are the goal.)

I spent 15 minutes Googling for a table of incomes but Google showed me only stupidities and paywalls. So I used the wealth proxy. (What makes this all silly is that I'll guess I bookmarked or downloaded such a table years ago. But searching through my hundreds of downloads and bookmarks -- which all inhabit a different laptop from the one I post from now -- would take me even longer than the Google effort!)

 

[Swammerdami]

Some of us actually did climb out of being poor.

Been there, done that. Been lucky, so not for enough years to establish a spiral. Still enough to become aware of the oppressive conditions that set in on a person, almost as if the whole system is set up to trap people, and reward those who can take advantage of that fact.

More than a half-century ago, I had my own bout with severe poverty -- hunger pains -- due to psychological issues.

Recently I met an American in his 50's here who's been begging me -- despite that we're almost complete strangers -- for small sums of money. I sent him $40 but that's not enough. (Am I a "sucker"? He does expect to start earning soon.) I think if his situation is that dire $12 isn't going to help. My daughter laughs at me for even considering helping this strange stranger. But yesterday I relented and transferred the further $12 he asked for. I was reminded of the reality of desperation when he messaged me with thanks: "I will get some food now."

 

[Gospel]

I'm not afraid to throw some ideas for how Universal Basic Income (UBI) could function effectively, though I'm aware that my ideas might not align with everyone's views, especially Emily's.

Please bear with me, as I'm merely brainstorming and presenting possibilities for consideration.

• Implement significant cuts in military spending to reallocate funds towards domestic welfare programs, including UBI.
• Substantially reduce current welfare expenditures, complete overhaul them, or end them entirely to free up resources for the UBI initiative.
• Initiate and sign agreements with as many foreign nations as possible, aiming to eliminate opportunities for the wealthy to conceal funds overseas.
• Classify countries that do not sign these financial transparency agreements as 'Financially Hostile Regimes.' Implement policies where financial dealings with these nations are considered a form of tax evasion.
• Introduce a new tax system focused on the value of individual and corporate assets, providing a sustainable source of funding for UBI.
• Offer UBI exclusively to individuals and families whose income falls below a predetermined threshold.
• Ensure the UBI amount is calibrated to be just above the poverty line, sufficient to support basic living standards without discouraging participation in the workforce.

I mean, if we're gonna talk UBI we have to start the discussion somewhere. ¯\_(ツ)_/¯

 

[Emily Lake]

I have neither the data, resources or inclination to build a reasonable workable model.
Whether or not an UBI program is “ sustainable” is an empirical question.

You've got to be kidding. You, an economist, don't have the info needed to even set up a preliminary model... but you're good with supporting something based on what... wishful thinking? And your response is that it's an empirical question whether or not a tax-based system for giving everyone free fucking money is sustainable? FFS, you put sustainable in scare quotes!

Sustainability is a fundamentally important element of any federally funded social benefit. Hell, part of the reason that the rates for ACA coverage are so high is because the government didn't bother to consider whether or not their plans were "sustainable" and ended up reneging on their commitment to fund both risk corridors and the cost-share reduced plans that insurers are still required to offer. When they said "oops, we didn't realize it would cost so much, we're just not going to pay for it", it left insurers having to raise premiums on EVERYONE in order to cover those costs.

That's one of the more incomprehensible statements I've seen. Can you elaborate on what you're trying to say here?

I think it is pretty simple - the only way any UBI program could end up destroying an economy is if the voters stood around and watched the destruction occur and did nothing.

Sure, sure, because voters have so much power over shitty stupid policies and legislation that congress pushes out.

 

[Emily Lake]

Honestly, I don't get why it's so much to ask for you supporters of UBI to actually lay out the foundations, the assumptions, and to demonstrate the sustainability of your idea.

Its hard work. There are so many assumptions to be made. The models would be complicated and obtuse. And don't forget the "tall poppy syndrome" - developer of model A will slag off at developer of model B who will bag developer of model C etc. The fact that there is no universal model of a UBI (note the irony in that) says much about whether it would really work in practice.

I think you guys don't believe me when I say that my objection is based on it not being sustainable, not on any principle. If you can show me that it will work, long term, with reasonable and realistic assumptions... I'm your gal, out there with my signs marching to make it happen. But you've got to actually show me, not just give me empty platitudes wrapped in insinuated insults.

Reasonable request but oh so idealistic.

Of course it's hard work.

I'm just flabbergasted at the number of people who are willing to support a very vague idea with nothing but wishes and happy feelings to support it.

 

[Emily Lake]

Some of us actually did climb out of being poor.

Been there, done that. Been lucky, so not for enough years to establish a spiral. Still enough to become aware of the oppressive conditions that set in on a person, almost as if the whole system is set up to trap people, and reward those who can take advantage of that fact.

Be realistic and honest. How much of it was actually luck - as in truly unaffected by what you did or what choices you made? How much of it was your ability to recognize an opportunity and to reach for it, to make good decisions with the circumstances that came your way?

I've experienced about as much luck as any other person - both good and bad. Looking back, there is one single event that I consider to have been heavily influenced by luck. During my masters program, I had a professor say "You're pretty good at statistics, have you thought about being an actuary"? His description of what an actuary does sounded abysmally boring, and when he first offered to set me up with an internship, I was inclined to say no. My spouse pushed me to take the position, because that internship paid way more than my retail job did, and even if it was only for a year it would be a good thing for us financially.

I ended up liking the career, and it's been good for me. Without that fortuitous interaction with that professor, who happened to be friends with someone at an insurance company... I'd be doing something different. But I doubt I'd be poor. I might not make as much as I do now, but I'm certain I'd be comfortable. Heck, I could even be making more - in a different field, there's a pretty good likelihood that I'd have entered a management track sooner, and would be further up the food chain than I currently am.

It's idiotic to attribute every good thing in one's life to personal effort. It's equally idiotic to attribute every good thing in one's life to pure luck. And it's beyond idiotic to attribute all bad things in one's life to nothing by bad luck. Don't discount the importance of decision making.

 

[laughing dog]

I have neither the data, resources or inclination to build a reasonable workable model.
Whether or not an UBI program is “ sustainable” is an empirical question.

You've got to be kidding. You, an economist, don't have the info needed to even set up a preliminary model... but you're good with supporting something based on what... wishful thinking? And your response is that it's an empirical question whether or not a tax-based system for giving everyone free fucking money is sustainable? FFS, you put sustainable in scare quotes!

My training and experience lead me to the conclusion that my time and effort is better used in other pursuits than to try to persuade someone who thinks “ it is an empirical question” means “ supporting something based on wishful thinking”.

Sure, sure, because voters have so much power over shitty stupid policies and legislation that congress pushes out.

Its called elections.