I'm UBI-curious, but surely inflation would be inevitable if everyone suddenly had $x more disposable income per year? Landlords and grocery stores and everyone else would raise prices because they know people can afford it. Obviously if you're living in poverty, anything is better than nothing, but would the average middle class person be better off? As far as I can tell no country has ever tested true UBI (unconditional and for all residents) so its all theoretical.
Musk's idea of a Universal High Income (where money is no longer necessary because robots and AI give us anything we want) sounds great too until you consider scarce resources like land. Who decides who gets to buy the best properties on Earth if money is no longer a factor? What if you want, say, a human hair stylist or therapist: who would do such a job if they don't have to? We would lose the human touch in our lives, and that sounds awful.
Is that what UBI has become these days? That everyone is supposed to get some extra money on top of whatever they already have?
~20 years ago, when UBI was a popular idea in my country, it was understood as a technical fix to the welfare and tax systems. It was supposed to simplify the systems and make them easier to understand. It was supposed to fix the perverse incentives people with low wages face, such as the extremely high (often >80%) effective marginal tax rates. It was supposed to automatically give people the benefits they are entitled to, without having to deal with the punitive bureaucracy. It was supposed to help people who fall between the categories in the existing welfare system. And so on.
And it was supposed to be funded by making it an accounting technicality, at least for the most part. Most basic welfare benefits, tax credits, and tax deductions would go away. Progressive taxation would go away. Standard deduction would either go away or become substantially smaller. And the highest income tax bracket would start at 0.
Everything you say is still the idea and I agree but where does the idea that progressive taxation would go away coming from? What does it have to do with UBI?
A UBI is a method of achieving the same effect as progressive taxation without the complexity and perverse incentives of tracking everyone's income and applying different marginal rates.
Suppose you have a tax system with progressive tax brackets and then a needs-based welfare system with benefits phase outs. It turns out, those two things (progressive rate structure and benefits phase outs) basically cancel each other out -- lower income people are supposed to pay lower marginal tax rates but if you're paying a 10% marginal tax rate and then have a 25% benefits phase out rate, that's the same as paying a 35% marginal tax rate. Worse, the benefits phase outs for different benefits often overlap, with the result that lower income people are often paying higher marginal tax rates than wealthy people, and there are some cases when their marginal rates even exceed 100% of marginal income.
So you have two unnecessarily complicated systems that mostly exist to cancel each other out, and to the extent that they don't they're doing something you don't actually want (excessively high marginal rates on poor people). It's better to just get rid of both -- no phase outs is the "universal" part of the UBI, and then you combine that with a uniform marginal tax rate for everyone.
You're basically getting rid of the progressive rate structure so you can lower the marginal tax rates on poor people to the ones being paid by rich people, and if that seems counterintuitive it's because the status quo is very stupid.
It turns out that a theoretically optimal non-linear taxation schedule features a UBI plus varying marginal tax rates (i.e. continuous tax brackets) that start out quite high (but sub-100%) in the UBI-clawback range (to manage the UBI break-even point while still offering a high subsidy to the very lowest earners) become very low for low-to-middle income earners and rise gradually for middle- and high-income earners. That's quite redistributive in intent, but the tax brackets themselves are neither "progressive" nor "regressive". Nevertheless, middle- and high-income earners do face moderately progressive rates.
You should repeat that claim with concrete numbers.
What is the effective marginal tax rate in the UBI-clawback range, including any housing / healthcare / childcare / whatever benefits lost due to income? And what is the minimum hourly net income that would encourage someone with guaranteed basic income to take a job instead of staying at home? With those two numbers, you can calculate an effective minimum wage, below which it would be practically impossible to hire anyone.
Mathematically equivalent does not mean human psychologically equivalent. e.g., people prefer a discount, even if the actual final numbers are the same. The framing matters
UBI basically is an equalizer, instead of a standard deduction and graduated taxation, you get $N off the top and pay X% of whatever you earn. The progression comes in the money you get since it comes out of taxes from everyone, theoretically it is wealth redistribution especially if it becomes a significant part of most people’s income.
That's exactly what it's supposed to be, but then opponents (or just people who are confused) will often characterize it as something else which is easier to find fault with.
It could start out like that while we gradually dial down the other systems it is suppose to replace.
> Progressive taxation would go away.
There should be very aggressive progressive taxation. When you've absorbed a lot we should encourage you to stop hoarding and get a life.
Maybe do a license for a fund for a specific purpose. Then you can continue playing the game but the fund may only be spend on [say] high speed rail.
It seems fun to leave all the money in the companies and require them to explain to a committee what they are going to do with it. If apple says they are going to make phones the size of the fund begs to question why they are not already spending it on making phones?
The current UBI frame is nothing like what you said. And I think this is the issue with UBI - the incentives are not aligned for it to be stable and reasonable over time, but rather to get much worse and misused over time.
I tend to think a job guarantee would work better than UBI: have the government provide a job to anyone who can't find one somewhere else, something like what was done in the 1930's in the US. Come up with a list of things needed (can you think of anything that needs fixing?), and pay people a living wage and benefits to take care of those things. Call it 'Universal Basic Work.'
Beyond spending government money to take care of the country and beyond providing those hired with enough to take take of themselves, it'd force private employers to pay and provide benefits at least as well as the government UBW jobs if they want to hire employees.
I further imagine that a person making enough to get by would be less prone to being hopeless and frustrated, supporting social cohesion. And that there's a dignity in that both for the individual and the community they are a part of.
Inflation is a common red herring that people arguing in bad faith throw at policies they don't like, because most people don't know enough to reject it.
The monetary side of the economy deals with money volumes orders of magnitude larger than the real side, and reacts to change also orders of magnitude faster. Because of that, inflation is almost always completely determined by monetary policy. A real shock that can out-impact monetary policy looks like the end of the world.
In places that consist of many people with subsidized incomes, like elderly housing complexes, why aren't local grocery stores and gas stations higher than elsewhere?
Also, aside from that question, prices will only rise if there's no competition. In a working market, if more people can afford a higher rent more apartments will be built.
> What if you want, say, a human hair stylist or therapist: who would do such a job if they don't have to?
I have no faith in Musk's vision of an abundance utopia for many reasons, but I suspect a lot of people would still want to do the job of being a human therapist or hair stylist even if they technically didn't need to for money.
They may want to work less than 40 hours a week, but most people do have an inate need to feel like their life has some sort of productive value beyond just base level existing.
Inflation isn't inevitable, especially in the long term. But of course it depends on implementation.
The goal of a UBI is to make sure people get their essentials to live. Right now, people get those essentials, one way or another (otherwise, they'd be dead; and to the extent people starve to death in the developed world, it's issues of distribution, not production or money). This makes the UBI an accounting trick: there's no actual goods not being produced that need to be produced, and it is just shifting costs from welfare, charity, family and friends, etc to the UBI program. This is not inflationary and frees up human effort to focus on higher needs than scraping together a basket of things merely to live.
A lot of the time, though, people also want some non-essential but still pretty important things covered, which is a bit trickier. In this case, there is the potential for more money to be chasing a fixed supply of goods. This will drive inflation in the short term. However, in the longer term, capital will be redeployed to capture that increased demand (while being deployed away from the desires of those taxed to fund the UBI).
This all assumes that the UBI is revenue neutral; if not, yeah, we will get a lot of inflation.
UBI is the actual solution, and is well understood enough now to know that most of the arguments against it are moot points or simply falsehoods.
Unfortunately, with regulatory capture at near 100 percent and electoral capture almost as bad, there is no incentive structure with sufficient influence to make it happen. Wealth will continue to be funneled to the top, and taxation schemes that act as a de-facto sales tax create incentives that favor even more centralized systems.
But wouldn’t it be great?
An interesting aspect is that I am constantly observing innovators with significant technical and technological skills that are employed in fields outside of their expertise as a “temporary “ measure that often becomes permanent if they get further encumbered, simply because they can keel out an existence while trying to build the next cool thing. So we are wasting probably trillions of GDP in talent because people need to go work in a labor job to support their wife and child instead of continuing his very promising project in training data for humanoid robots, which could easily net 100m+ in the next decade. (Actual example. I offered him $1000 a month to keep on it, but he unfortunately needs more to survive and he has eaten through his savings over the past two years of working on it.)
The only way? What about built out infrastructure? What about universal health care? What about enforcing laws? What about enforcing truth in advertising? What about punishing various types of crooks in the various markets and transactions, financial and otherwise, that ordinary people take part in?
The only way? Like a silver bullet? Like that thing that the common idiom says doesn't exist?
The goal we all seek - liberation - is a distant one. That said I’m skeptical that UBI is the right way. UBI assumes and requires an elite ownership class and a powerful state to force them to share their profits. But as we’ve seen, such class members will organize to penetrate the state and contort it for their own ends. Thus any successful UBI will be a compromise or it will be dismantled by the powerful class that owns the economy.
In my mind, only community ownership of the means of production can truly achieve what we desire. Of course with all distant goals, it is hard to see how we get there. And to be clear I do not mean state ownership.
But I am curious, on my basic point of elite capture of the state, does that make sense?
I am struck that TFA’s title says UBI is “the only way to share”, amusing to me since literally directly sharing is another way. I understand we all have spooky ideas of what that means, but think for example of the concept of library economies. You borrow what you need, but you don’t own it nor have the right to destroy it. We share.
I recently came across the idea of Universal Basic Capital (UBC): "granting every person a meaningful ownership stake in productive assets from birth." UBC would be enormously difficult to implement, as well as have its own weaknesses. It doesn't seem realistic, but introduces a new idea into the conversation.
A think a more workable and politically palatable version of UBI would be some form of universal utility allowance.
E.g. the first x kWh electric you use, or the first X litres of water, or the first x GB of data you use is entirely free, for everyone (where X is some reasonable number that someone could just conceivably survive on). Then as you use more and more the prices start to gradually increase across a series of bands so that the heaviest users are subsidising those using the least.
It would promote efficiency, would be progressive, and would allow people to live without quite so much "bill fear" for essential utilities.
Plus it is not literally putting money in people's hands which is often unpopular with some demographic groups. People would still need to work but there would be some element of safety net.
UBI is good on paper but far from enough. Without Universal Ownership of the State, UBI is easily removed by inflation.
A better yet more difficult model is universal basic resources (food stamp to exchange for packages, social housing, etc.). People can work X hours on these social projects after reviewing some training (e.g. training of plumbing to maintain the social housing apartments). This also gives them some meaning in life. Of course this will degrade in the future if there is no ownership of the state by the people, but I think it’s going to last longer.
I still haven’t seen a convincing exoneration for how to avoid UBI warping politics. It seems politically impossible to lower (see Alaska’s challenges [1]) and too attractive for politicians to promise to increase in order to easily win votes.
UBI will likely be necessary but that won’t appease society. Everyone wants to have a chance to climb the ladder. If it becomes self evident that humans can no longer have a meaningful impact on their outcome, there’ll be riots whether they have a roof and food or not.
Well, there's definitely other ways. I would prefer a system where company ownership public and private has a mandatory public stake in both ownership and voting on company policy and major business decisions.
I would prefer it illegal for the wealthy to possess an excessive amount of assets. If your assets became more valuable than the limit, the asset share would automatically rebalance toward other employees and owners in the organization who are below the asset ownership limit.
You don't even really need UBI if healthcare, housing, food, and education are considered basic human rights that are included and free of cost at point of usage.
My take is that UBI is the most obvious solution but not one we should count on happening. There is just too much political resistance and a population-level mental block against it, at least in the US. Not to mention, Capitalism doesn't like if it can't push labor around. (Which is largely why the mindset exists, but I digress.)
I say that we need to realize that by the same token(s) that AI reduces the need for labor, it also reduces the need for capital. A single motivated, disciplined individual can now do, using AI and public elastic clouds, what used to require an entire team. So companies can decimate teams, but companies are largely a source of capital. If you don't need so many people, you don't that much capital either! You could potentially parlay an insight or domain expertise into a viable business. Your moat could be the obscurity of your niche, or relationships, or IP (yes, patents. Suck it up and use every leverage you can.)
Easier said than done, of course. This essentially means everyone becomes an entrepreneur. Most people are not cut out for that because (besides hard-to-acquire domain expertise) that requires being immersed in an ocean of uncertainty at all times. None of our education systems prepare people for that, or for what is coming.
I expect a time of disruption, but we need to realize that AI not only a tool for the Capital class. It's a tool for us too, if only we can adapt.
UBI doesn't make any sense when you imagine how it will play out. Let's consider what it actually implies on the face: labor has been obviated through automation and therefore humans no longer have a purpose on earth. UBI then amounts to a bribe paid to the remaining surviving masses of humanity so they don't go on to destroy all the automated economy and those who remain in control of the automated economy, if those are actually people in this future and not some statistical models running on their own. This is unsustainable. The masses of humanity will inevitably want a larger and larger bribe to sustain a standard of living in probably an inflationary environment. Eventually a tipping point will be reached where the models in charge of the planet determine it is more efficient to eliminate humanity than to continue paying increasing bribes.
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Musk's idea of a Universal High Income (where money is no longer necessary because robots and AI give us anything we want) sounds great too until you consider scarce resources like land. Who decides who gets to buy the best properties on Earth if money is no longer a factor? What if you want, say, a human hair stylist or therapist: who would do such a job if they don't have to? We would lose the human touch in our lives, and that sounds awful.
~20 years ago, when UBI was a popular idea in my country, it was understood as a technical fix to the welfare and tax systems. It was supposed to simplify the systems and make them easier to understand. It was supposed to fix the perverse incentives people with low wages face, such as the extremely high (often >80%) effective marginal tax rates. It was supposed to automatically give people the benefits they are entitled to, without having to deal with the punitive bureaucracy. It was supposed to help people who fall between the categories in the existing welfare system. And so on.
And it was supposed to be funded by making it an accounting technicality, at least for the most part. Most basic welfare benefits, tax credits, and tax deductions would go away. Progressive taxation would go away. Standard deduction would either go away or become substantially smaller. And the highest income tax bracket would start at 0.
Suppose you have a tax system with progressive tax brackets and then a needs-based welfare system with benefits phase outs. It turns out, those two things (progressive rate structure and benefits phase outs) basically cancel each other out -- lower income people are supposed to pay lower marginal tax rates but if you're paying a 10% marginal tax rate and then have a 25% benefits phase out rate, that's the same as paying a 35% marginal tax rate. Worse, the benefits phase outs for different benefits often overlap, with the result that lower income people are often paying higher marginal tax rates than wealthy people, and there are some cases when their marginal rates even exceed 100% of marginal income.
So you have two unnecessarily complicated systems that mostly exist to cancel each other out, and to the extent that they don't they're doing something you don't actually want (excessively high marginal rates on poor people). It's better to just get rid of both -- no phase outs is the "universal" part of the UBI, and then you combine that with a uniform marginal tax rate for everyone.
You're basically getting rid of the progressive rate structure so you can lower the marginal tax rates on poor people to the ones being paid by rich people, and if that seems counterintuitive it's because the status quo is very stupid.
What is the effective marginal tax rate in the UBI-clawback range, including any housing / healthcare / childcare / whatever benefits lost due to income? And what is the minimum hourly net income that would encourage someone with guaranteed basic income to take a job instead of staying at home? With those two numbers, you can calculate an effective minimum wage, below which it would be practically impossible to hire anyone.
> Progressive taxation would go away.
There should be very aggressive progressive taxation. When you've absorbed a lot we should encourage you to stop hoarding and get a life.
Maybe do a license for a fund for a specific purpose. Then you can continue playing the game but the fund may only be spend on [say] high speed rail.
It seems fun to leave all the money in the companies and require them to explain to a committee what they are going to do with it. If apple says they are going to make phones the size of the fund begs to question why they are not already spending it on making phones?
You do know that the I in UBI stands for Universal, don't you?
What the people in your country were talking about is a Guaranteed Minimum Income. Related but different
I tend to think a job guarantee would work better than UBI: have the government provide a job to anyone who can't find one somewhere else, something like what was done in the 1930's in the US. Come up with a list of things needed (can you think of anything that needs fixing?), and pay people a living wage and benefits to take care of those things. Call it 'Universal Basic Work.'
Beyond spending government money to take care of the country and beyond providing those hired with enough to take take of themselves, it'd force private employers to pay and provide benefits at least as well as the government UBW jobs if they want to hire employees.
I further imagine that a person making enough to get by would be less prone to being hopeless and frustrated, supporting social cohesion. And that there's a dignity in that both for the individual and the community they are a part of.
The monetary side of the economy deals with money volumes orders of magnitude larger than the real side, and reacts to change also orders of magnitude faster. Because of that, inflation is almost always completely determined by monetary policy. A real shock that can out-impact monetary policy looks like the end of the world.
Also, aside from that question, prices will only rise if there's no competition. In a working market, if more people can afford a higher rent more apartments will be built.
> What if you want, say, a human hair stylist or therapist: who would do such a job if they don't have to?
I have no faith in Musk's vision of an abundance utopia for many reasons, but I suspect a lot of people would still want to do the job of being a human therapist or hair stylist even if they technically didn't need to for money.
They may want to work less than 40 hours a week, but most people do have an inate need to feel like their life has some sort of productive value beyond just base level existing.
The goal of a UBI is to make sure people get their essentials to live. Right now, people get those essentials, one way or another (otherwise, they'd be dead; and to the extent people starve to death in the developed world, it's issues of distribution, not production or money). This makes the UBI an accounting trick: there's no actual goods not being produced that need to be produced, and it is just shifting costs from welfare, charity, family and friends, etc to the UBI program. This is not inflationary and frees up human effort to focus on higher needs than scraping together a basket of things merely to live.
A lot of the time, though, people also want some non-essential but still pretty important things covered, which is a bit trickier. In this case, there is the potential for more money to be chasing a fixed supply of goods. This will drive inflation in the short term. However, in the longer term, capital will be redeployed to capture that increased demand (while being deployed away from the desires of those taxed to fund the UBI).
This all assumes that the UBI is revenue neutral; if not, yeah, we will get a lot of inflation.
Unfortunately, with regulatory capture at near 100 percent and electoral capture almost as bad, there is no incentive structure with sufficient influence to make it happen. Wealth will continue to be funneled to the top, and taxation schemes that act as a de-facto sales tax create incentives that favor even more centralized systems.
But wouldn’t it be great?
An interesting aspect is that I am constantly observing innovators with significant technical and technological skills that are employed in fields outside of their expertise as a “temporary “ measure that often becomes permanent if they get further encumbered, simply because they can keel out an existence while trying to build the next cool thing. So we are wasting probably trillions of GDP in talent because people need to go work in a labor job to support their wife and child instead of continuing his very promising project in training data for humanoid robots, which could easily net 100m+ in the next decade. (Actual example. I offered him $1000 a month to keep on it, but he unfortunately needs more to survive and he has eaten through his savings over the past two years of working on it.)
The only way? Like a silver bullet? Like that thing that the common idiom says doesn't exist?
In my mind, only community ownership of the means of production can truly achieve what we desire. Of course with all distant goals, it is hard to see how we get there. And to be clear I do not mean state ownership.
But I am curious, on my basic point of elite capture of the state, does that make sense?
I am struck that TFA’s title says UBI is “the only way to share”, amusing to me since literally directly sharing is another way. I understand we all have spooky ideas of what that means, but think for example of the concept of library economies. You borrow what you need, but you don’t own it nor have the right to destroy it. We share.
https://www.digitalistpapers.com/vol2/autorthompson#:~:text=...
E.g. the first x kWh electric you use, or the first X litres of water, or the first x GB of data you use is entirely free, for everyone (where X is some reasonable number that someone could just conceivably survive on). Then as you use more and more the prices start to gradually increase across a series of bands so that the heaviest users are subsidising those using the least.
It would promote efficiency, would be progressive, and would allow people to live without quite so much "bill fear" for essential utilities.
Plus it is not literally putting money in people's hands which is often unpopular with some demographic groups. People would still need to work but there would be some element of safety net.
A better yet more difficult model is universal basic resources (food stamp to exchange for packages, social housing, etc.). People can work X hours on these social projects after reviewing some training (e.g. training of plumbing to maintain the social housing apartments). This also gives them some meaning in life. Of course this will degrade in the future if there is no ownership of the state by the people, but I think it’s going to last longer.
[1] https://www.npr.org/2019/07/03/738569508/university-of-alask...
I would prefer it illegal for the wealthy to possess an excessive amount of assets. If your assets became more valuable than the limit, the asset share would automatically rebalance toward other employees and owners in the organization who are below the asset ownership limit.
You don't even really need UBI if healthcare, housing, food, and education are considered basic human rights that are included and free of cost at point of usage.
I say that we need to realize that by the same token(s) that AI reduces the need for labor, it also reduces the need for capital. A single motivated, disciplined individual can now do, using AI and public elastic clouds, what used to require an entire team. So companies can decimate teams, but companies are largely a source of capital. If you don't need so many people, you don't that much capital either! You could potentially parlay an insight or domain expertise into a viable business. Your moat could be the obscurity of your niche, or relationships, or IP (yes, patents. Suck it up and use every leverage you can.)
Easier said than done, of course. This essentially means everyone becomes an entrepreneur. Most people are not cut out for that because (besides hard-to-acquire domain expertise) that requires being immersed in an ocean of uncertainty at all times. None of our education systems prepare people for that, or for what is coming.
I expect a time of disruption, but we need to realize that AI not only a tool for the Capital class. It's a tool for us too, if only we can adapt.