What it would take to actually institute Universal Basic Income

http://qz.com/611644/we-talked-to-five-experts-about-what-it-would-take-to-actually-institute-universal-basic-income/

by prostoalex • 10 years ago

71 102 10 years ago

A basic income can be funded by taxing bad things, things we need less of, such as pollution, financial transactions, and extreme wealth.

Why do we need fewer financial transactions?

com2kid2• 10 years ago

This also neglects that after taxing those things, less of those things will exist, thus decreasing tax revenue.

WalterBright3• 10 years ago

I.e. if pollution is taxed, there'd be less of it? I'd vote for that!

jessriedel2• 10 years ago

He's gesturing at the "finance is evil, we need to tax each transaction" body of thought.

http://www.nytimes.com/2015/07/22/opinion/the-case-for-a-tax...

pbreit3• 10 years ago

Might be referring to High Frequency Trading which is relatively useless. But a tax would unlikely raise much revenue because it would go away.

patio113• 10 years ago

125 million households in US:

@ $1 / year each : Cost less than one of several individual machines in various portions of the federal inventory (mostly things which kill people efficiently).

@ $1,000 / year each : Exceeds combination of all federal spending on healthcare and education.

@ $10,000 / year each: over 1/3rd of total federal tax receipts

@ $30,000 / year each: consumes entire federal budget

JacobAldridge• 10 years ago

I note only 2 of those interviewed actually discussed the financial logistics at all. Matt Breuning throws out there that "10% GDP would be do-able", without really explaining where that $1.677 Trillion is coming from. Is it only existing programs?

And even that figure only works out at approximately $5,000 per US Citizen per year. While worth investigating, I feel that's a far cry from what most people want when they talk about 'basic income'.

[1] Numbers based on what Google spits out when you search for US GDP.

TTPrograms• 10 years ago

For comparison, current Federal welfare spending divided across all households is equivalent to ~$3000/year: http://www.usgovernmentspending.com/us_welfare_spending_40.h...

I think the expectation is that income taxes would increase so that above a certain income level it becomes a net negative or break even at least - in that case it's pretty easy to get $1000 or $2000 / month equivalent for the bottom quarter of households or so.

It's interesting that you describe $1000/year as "Exceeds combination of all federal spending on healthcare and education." given that it would be a savings over current welfare programs - doesn't seem like a very balanced comparison.

forgotpwtomain2• 10 years ago

Please include a source when you cite numbers that could be considered contentious?

patio113• 10 years ago

Source: US federal budget. And 4th grade math. But mostly the budget.

pbreit3• 10 years ago

So the question is, could you get rid of 1/3 of government spending?

massemphasis• 10 years ago

On the other hand, instituting UBI will decrease the people's willingness to accept immigration. The Nordic countries are notoriously homogenous in respect to diversity. A country like the US is extraordinarily far more diverse than something like a Nordic country. Countries like Norway, etc... that institute these welfare programs for their population are also among the least welcoming of immigrants.

If Donald Trump were smart he'd likely pursue the UBI dependent on how much money the US makes versus the number of citizens. This would definitely trigger the same kind of mentality resident in welfare states like the nordic countries to resist immigration.

How would this be addressed in the US? Would it signify a change in the immigration trend in the US?

mc325• 10 years ago

One could mitigate that by setting it up where new citizens have a waiting period before they can qualify --kind of like retirement [where you wait till you qualify]. Same for anyone under 18, they [or legal guardians] receive progressively more as the children grow and need more.

Or alternatively, your qualification follows you as a natural-born citizen of a given country --so you as a Canadian or American, Japanese, etc., receive UBI from your [original] country no matter where you live or move to so you would never qualify for UBI from a new host country blunting the threat of people thinking new immigrants get a free ride from the new host country.

prostoalex4• 10 years ago

Under current rules babies are eligible for more entitlements than older kids up to teenagers just because at that time in life they need more care.

If UBI is replacing existing entitlements, that means taking away food stamps, WIC, free child annual physical / dental / vision exams (under AAC/Obamacare), tax deduction for dependents on 1040, and a host of other programs like free baby formula or car seats.

brandon272• 10 years ago

UBI seems to be presented under the context that every single adult in the country receives a UBI payment every month. Assuming that the UBI is funded through existing taxes/entitlement inlays, why not limit it to only those who need it or would ordinarily qualify for some kind of social assistance? (i.e. Unemployed/low income + retirees)

streptomycin• 10 years ago

It could have a phase out, and many proposals indeed do: https://en.wikipedia.org/wiki/Negative_income_tax

Absentinsomniac3• 10 years ago

But this can have the effect of reducing incentive to work, according to the criticisms section of that page and some other stuff I've read.

patio113• 10 years ago

UBI advocates believe that distinguishing between people who need/deserve assistance and people who don't need/deserve assistance is one reason why the US is not in favor of larger social outlays, and putting a check in everyone's hand every month will buy ironclad support from across the political spectrum. They additionally say that welfare programs can realize tremendous reductions in cost of administration by not having to distinguish between e.g. working and non-working recipients.

peteretep• 10 years ago

You are conflating two points here. UBI needs to be available to everyone, but that doesn't mean everyone should receive it. Unless you abolish all tax, then for people paying more than it in tax, it's simply a tax break.

pkaye2• 10 years ago

How is it different from an earned income credit?

prostoalex4• 10 years ago

Wouldn't you then need some kind of bureaucracy to process applications, make decisions on eligibility and combat fraud? One of the arguments for UBI is allegedly lower overhead.

WalterBright3• 10 years ago

If one has to qualify for it, how is it different from welfare, etc.?

ubernostrum• 10 years ago

One of the advantages of truly universal -- everyone gets it, regardless of need -- payments is that you can do away with a gigantic bureaucratic apparatus whose only reason for existence is to try to determine who "really" needs help and who doesn't. It's also generally seen as a more palatable option for people who are offended that someone else might get something they don't, even if the other people truly do need it.

adrianN3• 10 years ago

If it's not "universal", then it's just welfare.

jdub• 10 years ago

The theory is that if you phase out a given transfer payment at, say, $1000 per month, that reduces the incentive to earn more than $1000 per month. There's some evidence to suggest that's already the case with existing means tested transfer payments (such as unemployment coverage).

So instead of phasing out transfer payments at the low end, you reduce bureaucracy by introducing a universal payment, and balance it out at the high end with progressive taxes.

Someone who chooses to work and earns an additional $20,000 per year would still see a real benefit from their universal payment.

Someone who chooses to work and earns an additional $200,000 per year would be taxed such that their universal payment is essentially zero.

Meekro• 10 years ago

A basic income can be funded by taxing bad things...

The author is assuming that you can increase revenue by imposing new taxes, but that is rarely true. Tax revenue as a percentage of GDP has been nearly constant for the last 70 years, even as tax policy has fluctuated all over the place[1].

[1] http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Doc...

jessriedel2• 10 years ago

But don't several other countries collect a much higher percentage of GDP? I like your data, but it seems more likely to me that fractional GDP collected is limited by voters than economic limitations of taxation.

nickff3• 10 years ago

Most of the countries which collect a higher percentage of GDP do so only at the federal level. If you look at US tax income and include the states, you will see that the collection percentage is more closely comparable to other western countries, and that the total receipts still stay relatively flat despite tax policy changes.

sparky_z• 10 years ago

I have difficulty believing that this is some ironclad law of economics without a lot of further study. Does it hold true for other countries? It would certainly be possible to pass laws that decrease tax revenue (just reduce all taxes by 90% across the board). I would guess that this "trend" (untrend?) is at least partly due to the fact that those changes to tax law weren't random, but were passed by politicians who were reacting to contemporary conditions (both economic and political).

It's like observing that a driver keeps adjusting the gas pedal but their speed never changes and concluding that it's not possible to change a car's speed using the gas pedal. In reality, the driver is actively adjusting to local conditions (like hills) to maintain a constant speed.

spangry5• 10 years ago

I'm not sure how you can draw any conclusions from that data. The fact that tax to GDP ratios in OECD countries vary anywhere from around 17% to 48% suggests that different tax policies can alter a country's tax take: http://www.oecd.org/newsroom/taxrevenuesstabiliseinoecdcount...

Taxing 'bad things' is fine, assuming the author means taxing activities that generate negative externalities (https://en.wikipedia.org/wiki/Pigovian_tax). However I doubt that would raise sufficient revenue for a UBI. Most likely you'd have to levy taxes on large, immobile tax bases like consumption and land.

Worth noting the cost of a UBI isn't completely additive. In the most extreme form, the cost is partially offset by the abolition of unemployment welfare payments and administration, tax free thresholds, earned income tax credits etc.

dilemma4• 10 years ago

I'm partial to it as an idea and a sentiment, but what it would take to institute it is the impossible: deciding on the level of it.

Should it be $5,000 per month so that the full costs of an apartment in NYC/SF so that a family could on with their lives undisturbed by unemployment? Or, should it be $500 to cover just the most fundamental needs of shelter and nourishment in the Midwest?

There are many levels in-between -- it's just as impossible to decide between $1,000 and $1,500 -- and if you went ahead to implement UBI, the conflict this would cause would halt implementation.

isomorphic• 10 years ago

Most states have some form of income tax. The federal government could work with an average UBI amount, which each state could increase (or not) from its own budget.

(Not that the above isn't contentious and probably stands no chance of being put into place; I'm just suggesting a model to address your point.)

dilemma4• 10 years ago

No. The problem of deciding on the level of UBI remains, and remains impossible regardless of who is making the decision.

mirimir• 10 years ago

Where to take the money from is not so doable either.

But hey, let's wait until most of the truck drivers have lost their jobs, and are camped out in DC. That will help greatly to focus the debate.

adrianN3• 10 years ago

You start with very little, say $100 a month, that can be paid from current tax revenue, and increase it as the productivity per worker increases.

dilemma4• 10 years ago

Completely unfeasible.

1. $100 is roughly the same as $0 in the US; you cannot live on it at all. It does simply not pass as UBI. 2. The impossible decision to be made on the final level remains. You just put it off until tomorrow and obfuscate that this is what you're doing.

mc325• 10 years ago

UBI is attractive in its simplicity but there are many open questions.

-How much is dispensed/person/family?

-Who qualifies [every child, man and woman; when do new citizens qualify?]

-What happens when people make bad decisions about their UBI? Do we still offer assistance to people who misspend/misallocate it?

-In order to get more purchasing power out of UBI, do we move people en-masse to less costly and more dispersed places?

-Is it progressive depending on income, or is it unconditional?

-People who were once employed by the apparatus, and who may not have alternative jobs in social services, are they relegated to just getting by with UBI?

-How do we pay for all this [depending on allotment]?

matt_wulfeck• 10 years ago

I'm sorry but I can never support something that gives this much power to the federal government. I'm thinking of the massive tax collection and enforcement machinery needed to gather this much money. im thinking of all of the new laws and exceptions that will be created.

WalterBright3• 10 years ago

taxing bad things, things we need less of, such as [...], and extreme wealth

Yes, the money should be taken away before those people fritter it away on eradicating polio, making electric cars, and building a space program.

darpa_escapee• 10 years ago

Because this is an accurate description of how the wealthy have used their wealth.

The public good shouldn't be left in the hands of those who are only willing to contribute if doing so can increase their wealth.

landryraccoon• 10 years ago

The public good shouldn't be left in the hands of those who are only willing to contribute if doing so can increase their wealth.

Would you be willing to consistently apply this across everyone in the population, not only the wealthy?

yanilkr3• 10 years ago

It would truly cost liberty.

Do you think an entity that gives you free money is going to let you be free? It is going to tell you what you can/cannot spend on, where you can and cannot go. The system would enslave you to the state.

It would be so bad it would even be impossible to opt-out.

EthanHeilman2• 10 years ago

Why not have it not be state controlled at all? For instance setup it up as a series of trusts paid out to each person.

Or limit state control by creating it under a constitutional amendment which establishes a fourth branch of government outside of congressional and executive control.

These are not unsolvable problems. The US has a large standing professional military which is civilian controlled. Many thinkers in the past would have asked, "Do you think the people that control the military will just allow the president to fire them?" Yet that has happened. Legitimacy and tradition goes pretty far.

yanilkr3• 10 years ago

I am a math minded person I don't see how this adds up. Let me explain myself in a different way.

Money, wealth, currency and value are all related but they are not the same. They are tied to each other via currency.

Just imagine a class room full of students and we have a way of grading student's work. A better grade means the student is smart. Currency is just that a system of accounting to make students work for better grades. Try distributing grades from performing students to non-performing students and see if it makes the entire class any more smarter than before? Similarly try to just boost grades ie guarantee someone a minimum grade. Now the overall grades look better but students are working the same and they are not any smarter than before.

agorabinary2• 10 years ago

And self-respect. What Golden-age do UBI proponents imagine in which everyone is massively dependent on a state entity, in which young men and women grow up without an impetus to become self-sustaining adults, in which everyone is an "artist" working on their book, one Facebook alt-tab at a time.

It would begin with a basic income. And once it is in place, would voters every pick the candidate that promises to reduce or persist the current rate of free money? It's impossible for UBI to not explode in scope over the course of a few election cycles.

Frondo2• 10 years ago

Everyone works on a book or project of their choosing? Sounds like a golden age for creativity and culture. Sounds like everyone gets to enjoy the self-actualization currently reserved for a few.

Sounds really nice overall.

ohthehugemanate• 10 years ago

The title is wrong. It should be "we talked to 4 pro-UBI Facebook group admins, and 1 expert"

TL;DR Associate professors of philosophy who manage Facebook groups promoting UBI like the concept and think it's feasible in a number of ways. The only economist (and only full professor) interviewed says:

"UBI gets all this attention and popularity, but I haven’t seen one model that’s even on the planet of financial feasibility."

tristanburnside• 10 years ago

Except that his reasoning seems flawed. He says that expanding the Finland trial would require "taxing citizens double what you’re taxing them now".

Finland has about 5.5 million in population (this counts children)

So 800 * 12 * 5.5mil = 52.8 Billion euro

Finland GDP is about 290 Billion euro and their tax take as a % GDP is 20-25%. That's at least 58 Billion euro.

So while it would take a lot of work to find the money, it seems that this statement is not really true either.

mc325• 10 years ago

So what's the budget left for infrastructure, defense, R&D, education, disasters, emergencies?

ntumlin• 10 years ago

20% * 300 billion = 60 billion is where they're at now, add on 58 billion to pay for basic income and you've doubled taxes.

qrendel2• 10 years ago

People seem to forget just how much is currently spent on a lot of extremely... debatable programs. These are approximate numbers off the top of my head, but:

US military spending = $1.5 trillion per year (~$700 billion for the DoD, the rest from other military and NatSec programs)

US per capita healthcare spending = $8,600/person/year (edit: corrected by caseysoftware below, that includes private and public spending)

Social Security = another ~24% of the federal budget

Interest on the national debt = 7% of the US budget

Again, rough numbers off the top of my head, but you could get a decent basic income going across the entire US just by switching to an affordable healthcare system and cutting the military budget to something on par with what the rest of the world spends. UBI would also replace and simplify a lot of the existing welfare and social security system, so that portion wouldn't even be additional spending compared to what's already happening.

The obstacles seem more political and cultural than fiscal and economic. To a large extent it's basically wanting to replace the current corporate welfare for the military-industrial complex, healthcare, college bubble, etc. systems with something that would (arguably) benefit society far more.

caseysoftware• 10 years ago

Don't guess when the actual 2015 budget is a single search away:

https://www.nationalpriorities.org/budget-basics/federal-bud...

Your $1.5T number for military isn't backed up by facts as the entire discretionary spending for all agencies is only $1.1T

US per capita healthcare spending - do you mean Medicare and Medicaid? I'm not sure how you came up with this number because $8.6k * 320M people = $2.75T which would be about 66% of the federal budget.

Social Security itself is closer to 33% of the federal budget, not the 24% you cite.

raddad2• 10 years ago

Exactly. A disabled guy collects $908 a month which is 10896 annually, with housing and food stamps it comes to $18744 annually. The difference of $7848 annually is social services to allow survival and to keep all those social service employees employed. Figure 56.7 million disabled people in the USA(0), that's a lot of cake. $445 billion on top of the disability checks. I think this would cover the cost of the program plus save a bundle on social service employment. Average social worker earns $45,000 annually(1). 649,300 social workers (1) (2014) totals $29.2 billion.

I don't believe we could eliminate all the social workers, but a substantial number of them.

(0) http://1.usa.gov/1nQXOL7 (1) http://1.usa.gov/1nQY38Y

5424585• 10 years ago

I get what you're saying, but this is exactly the sort of stuff that makes me think "wow, this is never going to happen". You're talking about in a very small span of time dismantling entire industries and a huge portion of both federal and state governments (shattering the value of billion-dollar companies, and temporarily putting millions of people out of their jobs) in order to implement an economic policy that has never been tested on a large scale in one of the world's most complicated economies.

I really don't see how a plan like that could ever work in a democracy. You'd make too many people mad. Even if it were to everybody's long-term benefit the moment the layoffs started people would petition their state governments, who would drop out or refuse to comply with the plan, grinding the whole thing to a halt. The political will to do such a thing just isn't possible IMHO.

pbreit3• 10 years ago

The point of the article was not "pros & cons of UBI" or "is it feasible?". It was "what would it take?"

bernardlunn• 10 years ago

I found it a good intro to the subject. I am surprised by how negative the comments here on HN are.

forrestthewoods• 10 years ago

wtf. The article doesn't actually answer the question!

The last answer comes closest. But the others aren't even close.

Lame.

visarga• 10 years ago

It would be necessary to augment UBI with free healthcare and education, and, maybe, a part of the UBI should be in food or tickets that can be exchanged for food in stores so as to make sure it is being used for survival.

strathmeyer• 10 years ago

No it is supposed to replace those things.

SCAQTony2• 10 years ago

The United states pulls in $3-trillion in taxes. We have 225-million adults over 18-years old and if they (we) were handed out $2,000 a month each that would equal

EDIT: [225 million * 2000 * 12 = 5.4 trillion per year.]

If we're talking about the solutions mentioned in the article I suspect administrating the various types of handouts may add an additional 50% cost to that [$5.4 trillion per year.]

A basic income may work for Switzerland due to it's amazingly tiny population. (Less than half the size of L.A. County) In the United States, I would think inflation, laziness and complaints that $2,000 was not enough basic income would rule the day.

agorabinary2• 10 years ago

225 million * 2000 * 12 = 5.4 trillion per year.

Basic income arguments usually revolve around numbers. But what of self-respect? There is something very concerning about faith in a benevolent State-parent that will feed and clothe us instead of enabling us to do so ourselves, by removing policies that keep Americans poor.

Frondo2• 10 years ago

The state already provides roads, ensures the safety of our food, and gives us all access to a justice system. What of self-respect? If we want it, we should be able to derive it from being political beings, from being active and engaged members of civic society. While you need a purpose for being to have self-respect, that doesn't have to come from punching a clock.

ChuckMcM• 10 years ago

One of the most interesting questions that people consider, when thinking about basic income, is whether or not people would still "want" to work if they were being given enough money to get by. That is a question which has a lot of opinions but not a lot of data behind.

One way to study this might be to take a population which is on welfare, and for some of them replace their welfare with 'one string attached' basic income. The string is that if they take the BI they cannot also take welfare. However any money they earn by working doesn't affect how much BI they receive, it's a constant. Then compare them against other people in the study who were left on welfare.

The goal would be to see how many BI recipents returned to work versus welfare recipients over 1, 2, and 5 year time spans. Trying to get a sample set in the 100 - 200 people range could be very expensive but it would help establish some data with which to analyze the question of whether or not people will work or not while getting basic income.

pkaye2• 10 years ago

One thing I imagined with basic income is if my wife and I paid off our mortgage and saved enough money, we could retire early, tighten our belts and live off our savings and whatever the basic income provides (multiplied my number of people in my household.) A big part of our living expenses are taxes and a mortage!

duncan_bayne2• 10 years ago

This entirely dodges the moral issue of whether it is acceptable to force people to subsidise others. UBI is particularly problematic in this area, as given its scale, it is impossible to implement without coercion.

intopieces• 10 years ago

Focusing on UBI as a national program is a mistake. Something like this would only gain traction if it were proven at the state level. Remember, ObamaCare was RomneyCare first.

ScottBurson• 10 years ago

I've found a short piece [0] on the Negative Income Tax, an idea closely related to the UBI, that I think does a better job than this article of discussing the problems with any such scheme. Some quotes:

The first and most basic problem is that it is currently fiscally—and perhaps administratively—impossible to construct an NIT that simultaneously

1. provides an income guarantee as generous as the cash and in-kind benefits already available to many welfare recipients in the United States,

2. provides an ostensible incentive to work (a far greater concern when benefits are to be extended beyond the traditional welfare population dominated by female-headed families), and

3. restricts coverage to any manageable proportion of the population—the so-called "break-even" problem.

These constraints are, in fact, irreconcilable as long as the median income remains within striking distance of the poverty line—a situation that has barely improved over the last two decades of slow average economic growth.

The second problem with an NIT is that the welfare system already provides a package of cash and in-kind benefits that, in many states, is worth considerably more than any likely NIT (though at the cost of excluding large groups of the poor—such as two-parent families—from eligibility). Political and humanitarian considerations prevent reducing these benefits, thus vitiating one of the NIT's attractions—the possibility of abolishing the welfare system.

[0] http://www.econlib.org/library/Enc1/NegativeIncomeTax.html

spangry5• 10 years ago

Good find. It's worth noting though that the author is discussing the 'Jersey Experiment', which implemented an 'impure' form of the NIT:

Thus, a treatment might offer a guarantee equal to half the poverty line, which was then about $8,000 for a family of four, with benefits being reduced by 50 percent of the family's income. When income was zero, the family would receive the full $4,000 (50 percent of $8,000). When income reached $8,000, the benefit would be reduced to zero and the family would "break even" (i.e., neither receive negative taxes nor pay positive taxes).

This is basically the opposite of a 'pure' NIT: where earnings do not affect the annual cash amount handed out by the government. In other words, under an NIT, the government would be sending the same amount of money to Bill Gates as they would send to its poorest citizen.

The NIT discussed above meant that recipients faced at least a 50% effective marginal tax rate on their first $8000 of earnings, which is a pretty significant disincentive to work. The whole point of an NIT is to avoid this 'welfare trap' effect.

cprayingmantis• 10 years ago

Look I really like this idea of a UBI but I don't think it would work. We tend to think everyone is like us and we're hackers and creators to us its a compulsion to add or create value. The trouble of this idea to me is for a lot of low income families we pretty much subsidize their lives and it honestly isn't working. I grew up in an area of the country where we had tons of people living on welfare. Did they create? Did they add value to the community? Nope not at all. They were a drain the community. Take for instance a friend of mine we'll call her Mary. She has three kids and she gets free child care and after school care. She also gets food stamps, low income housing, and is eligible for 2 free college classes a semester from the local university because she's a single mom with low income. She's also got her CNA licence. She holds no job despite offers from places in the community. Now according to this UBI theory she would be a prime candidate. We give her money and magically she begins to add value to the community because she doesn't have to worry about money anymore. However we already do this and she's a drain on the community. She takes and never gives back. Now let's take another friend of mine we'll call him James. He doesn't have a job and didn't qualify for college but he can code. His github account is filled with commits to all kinds of crazy projects. He just loves to build things. He adds to the community.

My question to you is do we give every one UBI because I'm not really ok with that. If James said man I'm short on rent this month I'd give him $100 but if Mary said she need $100 for diapers and cloths I'd refuse because she has places to get that and if she's short on money its most likely her own mismanagement of cheques. I'm open to new ideas though. So help me understand why UBI is a great idea.

ap3• 10 years ago

Still don't understand why do we need this, and what would it solve in the US

MrsPeaches• 10 years ago

Has anyone made an explorable explanation for UBI?

It seems like the perfect candidate.

duncan_bayne2• 10 years ago

Worth reading on this topic: https://thesnarkwhohuntsback.wordpress.com/favorite-passages...

What it would take to actually institute Universal Basic Income

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