Opinion of Universal Basic Income

[ag]

By itself, it's just another band-aid on a cancer patient. Just socialize the means of production instead.

Great idea. It will guarantee that pretty much everybody, except, perhaps, for the top managers - assuming these are corrupt - will live worse than the current poor do. In case you find the incorruptible managers, than you will guarantee that not even they will live well - without any improvement for anybody else. So, if you like a life that is nasty, brutal and short - be my guest, do this.

[ag]

It may be necessary with the advancement of technology.

Bullocks. Technology has nothing to do with it. The luddite argument is no truer today than 200 years back.

[ag]

do you really think it's more plausible that someone was driven to homelessness because they were an alcoholic or that they were driven to alcoholism because of their homelessness?

Alas, at least in rich societies, the former is far more likely to be true.

I am not blaming the poor here. In fact, alcoholism is a disease that derserves treatment - like any mental disease or addiction. But your assertion is, in fact, quite bizarre.

[ag]

Once again: I am all in favor of well-designed anti-poverty programs. But "universal basic income" would be a pro-poverty  program.

[TheDeadFlagBlues]

do you really think it's more plausible that someone was driven to homelessness because they were an alcoholic or that they were driven to alcoholism because of their homelessness?

Alas, at least in rich societies, the former is far more likely to be true.

I am not blaming the poor here. In fact, alcoholism is a disease that derserves treatment - like any mental disease or addiction. But your assertion is, in fact, quite bizarre.

Except it's not bizarre: you are making a statement based on conventional wisdom alone. Just because you are an economist and muon is a legislator does not mean that you understand anything about the psychology of drug dependence or homelessness. The reality is that there are a number of causal factors that are related and disentangling them is very difficult. I believe that a given homeless person was far more likely to be dependent on drugs or alcohol before they were driven to being homeless than a given member of the population but I don't think this number is high enough to merit the hand-wavy claims that you are making. Where is your evidence?

Fwiw, I have evidence, the issue is that I'd have to try very hard to produce journal articles for you because the evidence is contained in the citations of a book I read 3 years ago. I don't remember any of the authors off of the top of my head. Suffice it to say that there have been a number of really illuminating "difference in difference" type case studies conducted that demonstrate that, when given shelter, most of the homeless are pretty employable, sharply curtail drug/alcohol use etc.

I can, however, produce links that quite strongly argue against your points:




These images were taken from a CAP paper titled "On the Streets" which can be read here: https://www.americanprogress.org/issues/lgbt/report/2010/06/21/7983/on-the-streets/

The fact that being LGBT is correlated with homelessness and being LGBT and homeless is correlated with alcoholism is a data point that quite strongly argues against your claim. Do you think that being gay predisposes you to abusing drugs? The answer is, of course not, these people abuse drugs/alcohol at high rates because they're at a higher risk of being sexually or physically assaulted due to their sexual orientation or gender identity and alcohol is a coping device. They were cast out of their families/social networks for their identity and, as a result, have a bad time.

[TheDeadFlagBlues]

Once again: I am all in favor of well-designed anti-poverty programs. But "universal basic income" would be a pro-poverty  program.

Have you ever read about the Mincome experiment or experiments in Namibia or the experiment conducted for Nixon's negative income tax proposal? If not, I can't take anything you write about this topic very seriously because, well, it's not intellectually honest nor is it economics.

The economic case for a universal basic income or a negative income tax is pretty straightforward: it's more efficient and, yet, more expansive than other kinds of targeted welfare programs. It clearly would produce substantial increases in human health, educational attainment and also, strangely enough, decrease incidences of spousal abuse. Considering that it has never been implemented at a national level, we cannot compare its efficacy to conditional cash transfers but I suspect that the wild success of CCTs is largely related to the fact that the money is offered as an almost guaranteed source of income; it's not particularly difficult to provide incentives for people to send their kids to school or to have them have check-ups. Give poor people money without strings attached and I imagine they'd make fairly similar choices.

Anyways, I'd support a CCT program in the US. I don't particularly care. The point is to redistribute income and wealth in an efficient manner that also increases the growth path a country is on.

edit: I didn't see one of your posts. Um, google "mincome" or read about universal basic income experiments. I think you have the capacity to find this data yourself. It's pretty clear and also quite stunning. If you don't want to believe the data and are searching for reasons to claim that it's implausible, I pity you because this means that you have a very dim view of the poor and also of the human condition. There are reasons to be skeptical of the viability of a negative income tax or a universal basic income in the long-run but none of them are related to the claim that "it would, pretty much, guarantee an existence of a stable underclass, without any education and any experience of employment in generations".

[muon2]

I did a brief search of peer-reviewed studies. This one is from 2009.

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So though both directions of causality are found in the study, one direction was statistically preferred. The article also notes that drug abuse is now bigger than alcohol abuse as a factor leading towards homelessness. I suspect my obsrvations from 10-20 years ago are now dated in regards to alcohol.

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[muon2]

There's an certain irony to the lack of stable employment. During the tech boom of the 1990's it became fashionable for tech sector workers to frequently change jobs. My wife, who consults in that field, once described to me that any tech resume where a person worked more than 3 years at their current company was likely to be put at the bottom of the interview pile. The 401K boom could be traced to the the same set of workers who demanded more portability for retirement income and wouldn't stay long enough to vest in a  traditional plan.

Before long many other industries were copying the tech model, especially in companies that had an exposure to the tech sector. But the 2000's started with the dot com bust and ended with the Great Recession while the new trendy employment model got locked in. Unless a new generation of entrepreneurs makes long-term hires fashionable again, I'm not sure how one returns to the model where most workers expect to spend their career at one location.

[muon2]

There's an certain irony to the lack of stable employment. During the tech boom of the 1990's it became fashionable for tech sector workers to frequently change jobs. My wife, who consults in that field, once described to me that any tech resume where a person worked more than 3 years at their current company was likely to be put at the bottom of the interview pile. The 401K boom could be traced to the the same set of workers who demanded more portability for retirement income and wouldn't stay long enough to vest in a  traditional plan.

Before long many other industries were copying the tech model, especially in companies that had an exposure to the tech sector. But the 2000's started with the dot com bust and ended with the Great Recession while the new trendy employment model got locked in. Unless a new generation of entrepreneurs makes long-term hires fashionable again, I'm not sure how one returns to the model where most workers expect to spend their career at one location.

Right, but I'm not sure that it makes much sense to compare the person who's earning $300 per hour as a consulting data architect to the person who's scraping by as an temp doing secretarial work, or an adjunct commuting between three colleges to earn the equivalent of the minimum wage or less. How are they manifestations of the same phenomenon? On one side you have highly skilled professionals who maintain as much autonomy as possible because they can command the best compensation and working conditions, as well as the most interesting work, by avoiding long-term commitments. On the other are people with minimal autonomy and very little leverage.

There's also an interesting contrast to be drawn with other highly paid, highly trained professionals - I'm thinking chiefly of doctors and lawyers - who are less likely than ever to be working independently. Physicians in particular tend to be very anxious about the level of consolidation in health care and the increased difficulty of maintaining an independent practice.

That's why I thought there was a certain irony. The skilled workers of the then new information economy drove much of the rest of the economy towards the work model they preferred. I doubt it's the model that those same skilled workers would have wished on the old economy if they thought about the result 20 years later.

The traditional professions indeed have seen two directions of movement. On one hand there has been consolidation towards larger groups, but I see doctors and lawyers more frequently changing firms for better work, much as in the tech sector.

[ag]

We already have a growing underclass of people who go through much or all of their adult lives without ever finding stable employment. I don't really understand the objection, because they're already here whether you see them or not.

Well, the objection is that something should be done to get them out of it, should it not? There are many ideas out there that would, at least, try doing it.

[ag]

Once again: I am all in favor of well-designed anti-poverty programs. But "universal basic income" would be a pro-poverty  program.

Have you ever read about the Mincome experiment

You mean, a series of (mostly short-term and not entirely randomized)  1970s studies that pretty much established that giving people cash for not working results in nearly proportional reduction in wage income? Yes, I heard of those. Hard to say how this aids your argument, though

I mean, there is a reason why those studies did not lead to a wide adoption of this policy.

[ag]

I suspect that the wild success of CCTs is largely related to the fact that the money is offered as an almost guaranteed source of income; it's not particularly difficult to provide incentives for people to send their kids to school or to have them have check-ups. Give poor people money without strings attached and I imagine they'd make fairly similar choices.

Well, there is evidence it is not the case. To begin with, check-ups and school attendance have not been the universal norm even in areas where they were available before. I am not a specialist here, but the specialists do seem to agree there is a heck of a difference.

[TheDeadFlagBlues]

Once again: I am all in favor of well-designed anti-poverty programs. But "universal basic income" would be a pro-poverty  program.

Have you ever read about the Mincome experiment

You mean, a series of (mostly short-term and not entirely randomized)  1970s studies that pretty much established that giving people cash for not working results in nearly proportional reduction in wage income? Yes, I heard of those. Hard to say how this aids your argument, though

I mean, there is a reason why those studies did not lead to a wide adoption of this policy.

Except, the thing is, this was concentrated among two very specific demographics in the case of Manitoba's Mincome experiment: mothers of young children and high schoolers. To my knowledge, there was not a drop-off in "wage income" for other demographics that was statistically significant. When it comes to public policy, exactly which demographic is more affected by increases in non-labor income matters a great deal, no? I don't particularly care if more young people drop out of the labor market to finish their studies or if young mothers drop out of the labor market to raise their kids; this is actually pretty desirable and highlights the benefits of a universal basic income.

Well, no, the reason why there was not a wide adoption of the policy relates to shifts in political power.

[NeverAgain]

I would argue that EITC is a much better anti-poverty program. UBI is a silly goal. Everyone deserved a helpful hand up, not a handout. Giving people "free money" isn't helpful to the real goal of reducing poverty.

[Antonio the Sixth]

snip

Fair point. The thing is, I'm not really concerned with "perverse incentives" because, to be honest, I don't want to encourage people to work. I think people should work if they want to, but I don't subscribe to the visions of society wherein employment should be the ultimate goal of an individual. The current economic system makes it perfectly possible to guarantee everyone a comfortable existence even if a significant share of the workforce doesn't participate, provided sufficient redistribution.

Still, if my estimate was too conservative, let's triple it: still less than 5% of the budget. It would require a few changes to pay for it, but would still be far from having a prohibitive cost.

[muon2]

snip

Fair point. The thing is, I'm not really concerned with "perverse incentives" because, to be honest, I don't want to encourage people to work. I think people should work if they want to, but I don't subscribe to the visions of society wherein employment should be the ultimate goal of an individual. The current economic system makes it perfectly possible to guarantee everyone a comfortable existence even if a significant share of the workforce doesn't participate, provided sufficient redistribution.

Still, if my estimate was too conservative, let's triple it: still less than 5% of the budget. It would require a few changes to pay for it, but would still be far from having a prohibitive cost.

What then is the incentive to work at unskilled or semiskilled positions? If those are not filled, then how does one maintain an economic system that can make that guarantee? Generally those jobs aren't filled out of a sense of personal fulfillment, but to have a better life than one might otherwise have through the income earned. If there is a guarantee of a comfortable existence then what advantage is there to work in a low-paying job that is not personally fulfilling in and of itself?

[DC Al Fine]

snip

Fair point. The thing is, I'm not really concerned with "perverse incentives" because, to be honest, I don't want to encourage people to work. I think people should work if they want to, but I don't subscribe to the visions of society wherein employment should be the ultimate goal of an individual. The current economic system makes it perfectly possible to guarantee everyone a comfortable existence even if a significant share of the workforce doesn't participate, provided sufficient redistribution.

Do I really need to explain to a progressive why regressive tax schemes are a bad idea?

There is no justice in taxing away 100% of the poor's income. It inhibits economic mobility, and creates a disincentive to move beyond the minimum income. If you want to create a permanent underclass, 100% clawback rates are a good start.

Still, if my estimate was too conservative, let's triple it: still less than 5% of the budget. It would require a few changes to pay for it, but would still be far from having a prohibitive cost.

Except your proposal was unworkable due to the clawback rates, and wouldn't have even eliminated poverty. Actual proposals ask for higher incomes and much, much lower clawback rates.

Also, the total budget is a poor basis to compare by. Discretionary spending is a much better basis. Mandatory spending either can't be cut by your specifications (healthcare, interest), or would increase the costs of the income program in a way we can't model (Social Security).

I ran some real life proposals that would eliminate poverty through my model and got anywhere from $370 billion to well over $1 trillion. That's between 33% of discretionary spending to over 100%.

[Antonio the Sixth]

I'll just say that calling it a "tax" in this context is highly disingenuous.

Of course my preferred solution would be a much more expansive minimum income with no clawbacks whatsoever, to be funded through hyper-progressive income taxes, but I'd settle for a more restrictive proposal that still does a lot of good if it's more politically feasible.

[DC Al Fine]

I'll just say that calling it a "tax" in this context is highly disingenuous.

'Implied tax rate' then, if you want me to use proper accounting terms. I'm describing how many cents on the next dollar one gets to keep.

Terminology isn't really relevant to my point though. If you think the first dollar of income should have a lower net benefit than the millionth dollar, you should have your socialist card revoked.

[TheDeadFlagBlues]

We already have a growing underclass of people who go through much or all of their adult lives without ever finding stable employment. I don't really understand the objection, because they're already here whether you see them or not.

Well, the objection is that something should be done to get them out of it, should it not? There are many ideas out there that would, at least, try doing it.

What are they, though, and where is the political will to implement them - ideally before we elect more Berlusconi's, more Trumps, more Le Pens, more Orbans?

One other policy that has been mentioned is the EITC. But the scope of something like the EITC is more limited, and it has similar effects on disincentiving work for certain people (or, just as likely, encouraging them to leave more income unreported - which IMO is an under-discussed aspect of declining prime age workforce participation, although maybe it's more studied than I realize), not to mention making it more difficult for the typical person to calculate whether additional work is really worth their while.

You seem to have something different in mind, though. Well, what is it? Let them eat charter schools? Let them eat four-year degrees that lead only to debt, contempt, and underemployment? Maybe yet another half-hearted effort to push the most unskilled, unfocused, and unprepared students into trade schools that they are unlikely to ever finish? Or perhaps yet another healthcare initiative that makes the US healthcare sector into an even more expansive haven for educated Americans who want stable jobs with middle class compensation and can't get then elsewhere? (Let's put a "care manager" in every practice. Let's hire another few grants people at the hospital, every practice needs a team of experts to set up its EHR, etc.)

I agree that the scope of the EITC is inherently limited because it, as a matter of fact, cannot aid those who have been pushed out the labor market and is a fairly useless policy for single mothers because no amount of extra income can change the economics of childcare. However, it's "low hanging fruit" and it ought to be dramatically expanded for childless single earners who are below the poverty line.

Irritating platitudes about "handups not handouts" aside, the EITC is a remarkable policy option.

[jamestroll]

It may be necessary with the advancement of technology.

Bullocks. Technology has nothing to do with it. The luddite argument is no truer today than 200 years back.

Oh sorry for not getting back to you sooner. I have been busy, and unlike AAD, Atlas does not notify you of quotes.

I hardly believe that technology will destroy all jobs. My argument is more on the basis that it created a large difference between the lower and upper classes. New jobs will be created for sure, and some jobs, especially in customer service, should not be automated. That is even if they can be automated. Ever had to deal with automated voice system on the phone? Yea, it sucks.

A universal basic income may need to be explored if the gap between upper and lower classes widen, and if unemployment goes up a bit due to technology. But technology will never destroy jobs at the rate that many Luddite's believe.

[Buffalo Bill]

much simpler solutions that wouldn't benefit Democrat politicians as much

[nicholas.slaydon]

Fantastic Idea that skips over government bureaucracy and guarantee's everybody has a decent standard of living.

[Okay, maybe Mike Johnson is a competent parliamentarian.]

Even though the Luddite position turned out to be misguided in the medium-to-long term, in the immediate term the Industrial Revolution did in fact ruin a lot of people's livelihoods and a lot of communities' local and regional economies. I don't think it's acceptable to leave such people in our own time twisting in the wind just because the labor market will eventually correct itself. (Not that I think ag is suggesting that, but a lot of people with his general outlook do, at least implicitly.)

Relevant.

[Thunderbird is the word]

Freedom policy and a necessity if as automation becomes increasingly widespread and inevitable we want to retain any kind of stable global economy. There's a lot of other benefits also, it would be great for music and the arts as well.