$1,000 per month cash handout would grow US economy by $2.5 trillion, study says

https://www.cnbc.com/2017/08/31/1000-per-month-cash-handout-would-grow-the-economy-by-2-point-5-trillion.html

by arangelov • 9 years ago

39 46 9 years ago

jchmbrln• 9 years ago

Halfway through:

These estimates are based on a universal basic income paid for by increasing the federal deficit. As part of the study, the researchers also calculated the effect to the economy of paying for the cash handouts by increasing taxes. In that case, there would be no net benefit to the economy, the report finds.
"When paying for the policy by increasing taxes on households rather than paying for the policy with debt, the policy is not expansionary," the report says. "In effect, it is giving to households with one hand what it is taking away with the other. There is no net effect."

TL;DR: If we create money, there's more money in the economy. If we don't create money, there's not.

mrep2• 9 years ago

HA! I had just copied those exact 2 paragraphs and was going to paste them here but you summed it up well enough

k_sh• 9 years ago

Earth-shattering discovery!

pitaj2• 9 years ago

I'm a libertarian. I think that the UBI could allow for economic growth based solely on the power it as to eliminate the welfare trap. However, this would only work as a replacement for all welfare, though. It would have to replace welfare, food stamps, social security, etc, with the exception of medicaid and medicare.

I support UBI only as a replacement for existing (bad) welfare systems. I think UBI in conjunction with simplified tax code could inject life into the inner cities. Add onto that decriminalization of all controlled substances, and you've got a huge boon.

paulddraper3• 9 years ago

Hello fellow libertarian.

The problem is that very many welfare recipients get more than $1,000/month per adult. Disabled? Single mother with children? You'll easily get 2x that (including check, food stamps, subsidized housing).

And no one is going to want to take away from the poor.

$1,000/adult/month replacing welfare is an impossibility. We'd have to use much larger numbers.

dilemma• 9 years ago

UBI is the welfare trap par excellence.

Redoubts• 9 years ago

Well, I suppose that's better than making things a lot worse.

yuhong• 9 years ago

Printing money would encourage the ad bubble, because the economy would grow based on how much of the basic income consumers spend.

paulddraper3• 9 years ago

Tomorrow's headline:

Startups could grow more if they borrowed more money!

AnimalMuppet• 9 years ago

Wait a minute, though: Every adult gets $1,000/month. That's $12,000/year. How many adults do we have? Well, the US population is 326,000,000. Median age is 37, so I'll guess that 3/4 of the population is "adult" (age >= 18). That means that paying this handout will cost $12,000/person * 244,500,000 people = $2.934 trillion. That's... not a net win.

gremlinsinc• 9 years ago

How many make > 200k and will be paying 100% of that 1k back as a tax? maybe 30%? So you can cut that by 30%.

edison85• 9 years ago

ZoeZoeBee• 9 years ago

Do you honestly believe 30% of the US earn 200k a year? Where do you figure?

sintaxi4• 9 years ago

Do people actually believe this universal basic income nonsense? If money isn't scarce but goods are the goods become proportionally more expensive. Inflation is a thing.

bittercynic2• 9 years ago

Even if goods become more expensive, if you currently have $0/month, and transition to $1K/month, that is an improvement.

sintaxi4• 9 years ago

You unwittingly discovered how much value $1k/mo will have if it's freely given to everyone.

CuriouslyC• 9 years ago

That only happens when the demand for goods increases. The price of core necessities would likely be unaffected, as people already prioritize these items and purchase enough to meet their needs. The cost of entertainment, prepared food and other discretionary spending would likely increase though.

mrep2• 9 years ago

Sane UBI plans do not change the scarcity of money but use it as a way to re-distribute money from the rich (those with capital making all the money with robots and technology) to those that only have their labor to support themselves (which is getting inferior to technology by the day).

delbel• 9 years ago

Yup, inflation is a thing. Alaskans get Dividend checks every year -- almost $2k. Right after they get their checks, the price of everything skyrockets, on top of already extremely high prices for everything up there. The best time to spend the check is to wait until next year right before the checks are sent out to increase your buying power. If UBI made sense, Alaska would be a utopia. Not seeing it..

BoiledCabbage• 9 years ago

Compare Alaska with dividend checks to the Alaska without. Do they make Alaska better or worse

Thetawaves• 9 years ago

Horseshit. Prices of commodities are not affected by PFDs in any way.

uoaei4• 9 years ago

This is predicated on the assumption that goods are scarce. Are they scarce due to natural constraints or are they scarce artificially to drive up profits?

tonyedgecombe• 9 years ago

For anything with a constrained supply, most likely it would end up in the pockets of landlords.

basicplus22• 9 years ago

It would work if you take it from the 1%

sintaxi4• 9 years ago

No it wouldn't. It would ruin the buying power of the dollar which is effectively the same as giving every working person a pay cut. Those who own companies and assets would be who benefits.

grwthckrmstr• 9 years ago

You mean the rich will benefit? :O

basicplus22• 9 years ago

Your logic is flawed.. if it is taken from the richest 1% it is not creating money from nothing it is simply moving money from A to B, therefore still the same amount of money in the system therefore it does not devalue buying power.

The rich might put the prices up to steal it back but that is another argument

gozur88• 9 years ago

You couldn't take that much money from wealthy people, and if you tried you'd wreck the economy so badly we'd end up like, well, Venezuela.

nimos• 9 years ago

I think it is really dangerous to hand over an amount of money that lets people completely check out of contributing to society. Alone maybe that is a sketchy amount to live off of but with roommates in an inexpensive area without a car it seems very doable.

If you look at the amount of entertainment you can get from a used cheap desktop computer and internet connection along with the low cost of at home production of marijuana/alcohol I think it would be disastrous socially and economically.

Maybe that is overly pessimistic but I'm far more in favor of minimum wage elimination with government wage substitution up to some higher livable minimum and in the case that someone can't find a job the government acts as an employer of last resort creating some sort of busywork that has some social benefit.

uoaei4• 9 years ago

Maybe it's just me, but

some sort of busywork that has some social benefit

sounds like so much more of a trap and a hellhole than hanging out at home with the potential to produce the things you love. There will be some who simply don't contribute at all, but think of all the artists who could contribute to social good through culture enrichment who are stuck in the stereotypical barista/retail/waiter job who have no time to contribute to their community outside of their two jobs. You think they are already contributing maximally? They will be climbing out of a local optimum (making money to scrape by( to pursue their global optimum (producing art that enriches others' lives and gives them a sense of meaning, and possible a path out of crippling depression).

Edit: I should also include that "some social benefit" can be twisted to mean anything. One person handing out tickets, another stamping a wrist, and a third saying "enjoy the show" arguably provides social benefit but there is a significant opportunity cost involved with railroading people into these sorts of jobs.

ThrowawayR2• 9 years ago

...think of all the artists who could contribute to social good through culture enrichment who are stuck in the stereotypical barista/retail/waiter job who have no time to contribute to their community outside of their two jobs.

Is there any evidence that there's an explosion of artistic and other innovation happening in any of the economically depressed areas of the US where a significant percentage of the public were/are already on public assistance? Has Appalachia or Detroit or similar places experienced an artistic renaissance? I certainly see no indications of any such thing happening.

bebop22• 9 years ago

But, inflation.

uoaei4• 9 years ago

Oh yeah, shit, how could we forget about that?

freefm• 9 years ago

It's not inflationary because you're not creating new money you're just redistributing it.

dfps• 9 years ago

... While costing roughly exactly the same amount? :)

Gys2• 9 years ago

Nothing about inflation ? That is likely to increase ? So what are the long term effects when corrected for inflation ?

everheardofc• 9 years ago

It will cause inflation at the bottom of the economc and reduce it at the top. We call the difference between the top and the bottom inequality. Imagine you earn 24k in a very cheap part of the US. You now have 36k. Most of the cost gets absorbed and you need 36k for the same quality of life. However that CEO with 1000k per year also only gets 12k which means he gets 1012k. Before UBI the CEO had 42 times the income. After UBI the CEO has only 28 times the income.

Gys2• 9 years ago

Most of the cost gets absorbed and you need 36k for the same quality of life.

In that case the handout does not make any sense ?

Mz• 9 years ago

It would not grow the economy. You grow the economy by creating more goods and services. When you inject money without adding goods and services, the result is inflation.

_5ysi• 9 years ago

I agree it would cause inflation. What is not clear (and I probably won't believe any study claiming clarity) is what % of said inflation would be caused by economic growth vs monetary manipulation. There are lots of studies that show disbursing money to relatively poorer people results in more immediate demand for goods than the investments & spending of those it was taken from. Whether this is a net positive for the economy is unclear, but the GDP metric would likely record growth.

If the money for UBI is obtained through debt, then I 100% agree with you because then gov. is basically taking money from the working class through inflation and also giving it back to them with an awkward couple year delay + corruption leakage in the giving and taking cycle. Ironically this would probably increase wealth and power inequality in the long term.

Edit/PS:

What is worrisome about proposals like this is the delay in the giving-taking cycle. If party A enacted such a policy they would probably enjoy a big economic boom for the duration of their term and then 8 years later party B would suffer from a massive increase in inequality and possibly financial crises.

$1,000 per month cash handout would grow US economy by $2.5 trillion, study says

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