UBI comes from tax money though. If the idea behind UBI is that people don't need to go work, and won't go buy McDonalds anymore, then tax income is going to plummet. If tax income plummets, what pays for UBI ?
UBI can only succeed if people continue to consume, preferably at higher levels than currently, which would allow others who want to live a life at a higher standard to sell things to UBI recipients, who can then be taxed and support everyone else on UBI.
If UBI encouraged too large a portion of the population to pursue non-taxable income (say, making art and games and giving them away for free because they don't need money), then UBI would collapse from lack of income. Especially so if that art is given away freely to other countries over the internet. So it's a fine line that is probably a lot more complex than people give it credit. There's certainly no guarantee as to what the results of UBI would be, and no guarantee that the medicine won't be far worse than the symptoms.
EDIT: Even if you assume that a UBI could survive if it decreased with a fall in taxable income from a policy and livability perspective, if a person on UBI received $100 one week, and then had it drop to $75 the next, he would get a major shock and public opinion of a UBI would fall apart. You could print money to make sure UBI never falls, but if UBI is going out to the entire population, the amount of money needed would be enormous. That much money added to a system without an increase in real demand (people on UBI would still buy the same stuff), could easily cause hyperinflation. So another constraint that UBI has and I've never heard anybody mention - UBI can never decrease, even if tax income decreases. Plus there's no way anybody could trust politicians to manage something that complex. UBI practically demands a complete restructure of government, society and the economy. Instead of being a 'patch' as many have described, UBI is closer to 'The World 2.0'. It would be the most incredible Second System Syndrome ever seen.
While this is true mathematically, I prefer to think about the opportunity cost of not having a UBI. I (like perhaps many people on HN) basically wasted my 20s trying to make rent while I worked on my shareware game company. I basically failed at that and all of that code went obsolete before it earned me income.
Had I had a relatively small UBI of perhaps $12,000 per year, I could have met expenses long enough to get ahead of the curve. I wouldn't have spent that time burned out and getting sucked into dead end $20,000 per year jobs that took all of my time and energy.
So for me, not having a UBI and throwing away a rather prolific 20 something probably cost the US GDP growth whatever my business might have contributed for a decade, say whatever a typical game developer salary might be (perhaps $60k/yr), call it $600,000. That could easily be 2, 4, 10 times that much if we grew enough to hire other employees.
By not investing in the workforce like the country did with public works before the information age started in 1980, my generation (gen x) lost out on at least a 5x rate of return. My struggles happened just before Prosper and Kickstarter got big, so I ran up staggering credit card debt. Had we chosen a more progressive route, even at a 20% tax rate I would have paid the government back what it paid me, with the bonus of life sucking a whole lot less.
I think a UBI might be one of the few things that can raise the 10% startup success rate because it attacks burn rate directly. It would also allow startups to focus on things more meaningful than video games and social media apps because it wouldn’t just be about trying to get enough F.U. money to get left alone anymore. I had always planned to save enough to be able to work on AI and alternative energy, and now with consistent hard work I have a chance of doing it, but with a middle aged realism that is just not helping my motivation. To be 20 again and told “go do all the things” is one of my deepest wishes and I hope it happens for future generations.
That $600k of production is based on the idea that you would have worked at some point, and people would have consumed your work. That is very different from "let's all stop producing and consuming."
There are many ways to gain funding now if you are expecting returns of the investment. The only thing different about UBI is that it is unconditional.
> If the idea behind UBI is that people don't need to go work, and won't go buy McDonalds anymore, then tax income is going to plummet.
The idea is that people don't need to go work, because robots do all the work, and thus any economic value attached to labor, either real or nominal, converges to zero. It doesn't matter whether people have financial incentives to do work, because people /do no work/. You don't tax labor income to finance UBI, because nobody will have labor income; all taxes will be on capital of some sort, such as land or securities, and such taxes would be sustainable because all income will accrue to capital and none to labor.
Except the value of labor - especially labor such as marketing, or government gruntwork such as FDA approvals - cannot be done by robots. At least today, and probably not in the next 50 years. So there is still a lot of labor that will have to go on.
As for shifting all taxes from income to capital - this can't work without enormous changes to free trade. This means that we'd have to stop free trade entirely (catastrophic for developing countries) or implement UBI across all countries at the same time (definitely impossible in the near future).
The problem is that all the capital holders would have immense pressure to move their businesses overseas if they're going to lose substantial parts of their capital every year from tax. Income and profit taxes don't do this because the business still has to be growing to pay the tax, so you can just increase prices to offset the tax, etc. But a capital tax big enough to cover income for the entire country would be significant percentage of capital every year. Any hole left open in free trade would have that capital rush to other countries where such a tax does not exist.
Plus even if capital stayed, that would further reinforce 'growth at all costs' mindset. You'd have to grow your capital at a rate greater than the tax every year to be successful. You'd have massive corporate thuggery - such as pricing things just above UBI to force people to come in to work as marketers and other roles to push each business above the competition and beat the capital taxes.
What if your whole economy had a bad decade and assets failed to outgrow your capital tax? As with income tax, your tax base has just shrunk. But you can't decrease UBI because your whole population and economy is based around a set price level. You're back to having to take extreme measures to keep everything running, and a mistake will blow your now-fragile economy out the water.
The takeaway for me is that UBI isn't something we could just graft onto our existing system and pretend it's a miracle cure. We are going to need to change our entire system.
> This means that we'd have to stop free trade entirely (catastrophic for developing countries) or implement UBI across all countries at the same time (definitely impossible in the near future).
That's a valid and important concern, and one that I don't have any answers to right now. One possibility is keep capital fixed while making people mobile, i.e. very tight capital controls combined with very loose immigration controls. Capital thus cannot escape to low-tax regimes, and people in developing countries can take still advantage of capital by moving to where the capital is. If that's too difficult to handle, there is also the possibility of "virtual" immigration through political union.
> You'd have to grow your capital at a rate greater than the tax every year to be successful
Since the tax would be about the same as the current (or 1960s, if you're generous) share of the national income from capital captured by wages, capital already grows at at least this rate--otherwise wages alone would be dragging down all economies today, and that's just not happening.
> What if your whole economy had a bad decade and assets failed to outgrow your capital tax?
We'd do what we do today, and draw down the sovereign wealth fund and/or borrow from the bond markets.
> That's a valid and important concern, and one that I don't have any answers to right now. One possibility is keep capital fixed while making people mobile, i.e. very tight capital controls combined with very loose immigration controls. Capital thus cannot escape to low-tax regimes, and people in developing countries can take still advantage of capital by moving to where the capital is. If that's too difficult to handle, there is also the possibility of "virtual" immigration through political union.
For real immigration: that is already happening massively in the form of economic migrants into Europe. If you restrict capital from traveling out of the developed world, you'll turn the developing world into a hellscape that everyone will try to escape. Real immigration of that size would make housing unaffordable, overwhelm all infrastructure, overwhelm local water resources, etc. It's the exact opposite of what we want: we don't want all of humanity in a 100km big city. We really really don't.
For "virtual" immigration - you basically mean annexing the sovereignty of citizens of developing countries. Extremely unlikely, no government would allow that without a fight. But assuming they do, you now have a billion new voters living outside of your country. What do they do the next election? They'll vote in their own leader who will promptly redirect all the social grant money overseas. Hell, I know African leaders, they'll redirect all tax money to themselves in massive quantities. We don't want all of the developing world electing leaders for us, we really really really don't. You'll likely end up with a devout religious leader of some kind because of uneducated voters.
On the tax stuff - we'd need hard numbers to draw a conclusion. I was just giving some examples of how a capital tax would not necessarily solve the problems faced by an income tax and may have far more unknown problems that would only come up after we face the unintended side effects. There's always unintended side effects.
So why would anybody bother to put themselves through school to become something like a doctor or an engineer to build the robots that do all of the work?
People are geared to competing with one another in the social domain.
In order to maintain status, people will continue to get well educated and 'contribute to society' in some way rather than simply sit and be mediocre.
Granted, if you have a UBI, lots more people can maintain their status by say.... becoming top ranked at a video game, but even then so long as it doesn't lead to societal collapse... does it really matter how fast we are improving our civilisation?
I'm willing to allow us to improve slower if it means we grant everyone freedom from worrying where their next meal is coming from.
>does it really matter how fast we are improving our civilisation
Yes, when you consider the global problems we have with energy, climate, food supplies, water supplies, and general poverty it's pretty selfish to just stop pushing forward.
This really, really, is not true at all. Only people who aren't doctors tell themselves it's all about passion. If you remove the financial motivation you will have far less people going through the rigorous schooling and sacrifice of youth required to become a physician.
I would also argue that the vast majority of engineers became so because it was a "good job" not because they're fueled by some extraordinary passion.
The point you're missing is that a lot of people cannot even attend medical school because their parents are too poor to support a child which could be working an underpaid job at mcd instead. And I'm only taking about cost of living, not tuition.
Too poor to attend medical school is not an excuse. If you have the aptitude for medical school there are plenty of scholarships available for people that poor. There are also student loans, which a doctor will be able to pay back without much difficulty.
> rigorous schooling and sacrifice of youth required to become a physician
Which wouldn't be such a barrier to entry if medicine were an undergraduate degree (i.e. an MBBS) as in the rest of the world, instead of a graduate one, and residents and fellows were paid market wages instead of government-depressed ones. Creating skilled and knowledgeable doctors does not require stacking a 4 year degree on top of another 4 year degree--a single 5 or 6 year program should be enough.
I think the comment your replying to is saying that, if you have the passion/desire/drive to become a doctor, having a basic income can help that person get there. Especially so that they don't have to work as much while also going through rigorous schooling.
In addition, those jobs would still be good jobs on top of the UBI. Depending on how the implementation of robots plays out, they may be the only jobs if you wanted to make more than the living wage.
There's a lot of countries where financial motivation to become a doctor is far lower, yet people keep doing it. Don't assume your own drives are shared by others to the same extent.
I have a friend who lived in the USSR and I asked him the same question. In a world where everyone is paid the same, why become a physicist when you could just be a cab driver? His answer was pretty much what you'd expect: different people aspire to do different things. It's not about the money (physicists were working multiple jobs to make ends meet), it was about what they wanted to do with their lives.
And how did that work out for the USSR? An unfortunately small minority of people are driven by enough passion to ignore how they are being screwed by society (sacrifice all of your 20s to go through med school to get the same compensation as a high school dropout that sweeps floors).
But not everyone had the same amount of privileges. People in politics often had bigger apartments, for example. So if you wanted "more" in a communist state, you went into politics.
Because of the psychological joy of self expression doing work like that entails (see Maslows hierarchy of needs).
Some people like helping people, some people like the prestige of being a doctor.
Besides, it's ones family background which predicts ones future career path far more than economic insentives. I would imagine the social strata that is now educated will prefer to have their offspring educated in the future.
Human culture is often a far greater determinant of behaviour than any economic cost-benefit analysis done at an individual level.
I would also point out that in the 17th century there was very little financial insentive to pick up natural sciences and people did just because they could and because they were interested.
I for example would gladly work in my current field (software engineering) even if it did not grant financial benefits because I like it so much.
I think americans are so preoccupied with money because everything is so expensive there. There are far more interesting ways to spend ones life than by surviving (if one goes to a job just to survive - i.e. to get shelter and food, one really is just satisgying ones lower needs on the maslows hierarchy of needs).
Maslows hierarchy of needs is mostly garbage. There is not really any evidence to support those rankings being innate to humans (other than basic survival being top priority).
There is little psychological joy in collecting garbage, cleaning gutters, and shoveling manure. It seems to me that all of the arguments for UBI are predicated on ubiquitous automation of every mundane job, which is a long ways out of reach from where the most advanced countries are (let alone the whole world).
> There is not really any evidence to support those rankings being innate to humans (other than basic survival being top priority).
There's actually considerable evidence that even "basic survival being top priority" doesn't reflect actual human behavior in some important ways.
> There is little psychological joy in collecting garbage, cleaning gutters, and shoveling manure. It seems to me that all of the arguments for UBI are predicated on ubiquitous automation of every mundane job
Well, that depends what you mean by UBI: a mature UBI that can afford to pay a high standard of living will require phenomenal productivity which requires a level of automation which would go far beyond ubiquitous automation of every mundane job.
OTOH, the basic idea of a universal unconditional grant as a replacement for some subset of the existing social benefit system reducing the administrative costs to benefits ratio of the replaced programs and eliminate the adverse incentives of the means-tested programs replaced obviously doesn't require any additional automation than we have now.
"The idea is that people don't need to go work, because robots do all the work, and thus any economic value attached to labor, either real or nominal, converges to zero. "
This is entirely theoretical and will never happen.
My friend, the industrial revolution represented a vastly bigger shift to automation than anything we are witnessing today.
Imagine a 'magic machine' that could do the work of 10 000 horses (i.e. 10 000 horse-power) - and move people from Penzance to London - on coal - no horses or drivers needed!
To be more precise: at the dawn of the industrial revolution, almost 95% of people were doing 'laborious' jobs. 95% of jobs at that time were 'at risk' of being replaced. Most of them were.
Not only did we move forward, but there were so many surpluses, and so much more to do that even common household jobs (maids, butlers, footmen, valets) - could find higher paying work doing other things.
Today, only about 30% of jobs are 'at risk' - and I'd argue they are not at as much risk as we think.
Call centers are not going away. For every task that is automated, 2 more will appear that need human intervention, and 5 more customers will be added (thereby creating more work) - new consumers from the current 4 billion human being who have yet to come into the world economy.
UBI comes from tax money though. If the idea behind UBI is that people don't need to go work, and won't go buy McDonalds anymore, then tax income is going to plummet. If tax income plummets, what pays for UBI ?
People will still have the same incentive to work they always had (to make money) -- but some people will quit jobs they don't like, which will drive wages up (due to falling supply in the labor market). But the reason why UBI is so interesting now is that, with increasing automation, increased wages will have less of an impact on general prices. So prices will hold steady, as people continue to go to McDonalds.
Note that there are other ways to collect tax revenue: sales tax, VAT tax, property tax, wealth tax, etc.
UBI can only succeed if people continue to consume, preferably at higher levels than currently
What basis do you have for saying this? Deflation may actually be beneficial in a basic income scenario (falling prices makes a fixed basic income worth more).
If UBI encouraged too large a portion of the population to pursue non-taxable income (say, making art and games and giving them away for free because they don't need money), then UBI would collapse from lack of income.
Why would they give it away for free when they could sell it for money instead?
> People will still have the same incentive to work they always had (to make money) -- but some people will quit jobs they don't like, which will drive wages up (due to falling supply in the labor market).
The market is already "suffering" from labor shortage, but it's just a cover for companies to demand more H1-B visas. Seeing jobs Americans are perfectly good at doing go overseas says American labor isn't being cut for quality or demand, it's being cut out for cost.
You're right. What H1-Bs do though is allow companies to replace a worker with full mobility and bargaining power (a US citizen) with one who has limited mobility and bargaining power, which drives down industry wages. Now, if the visa were attached to the person but not the company and were valid as long as the holder has a job, this would be much less of an issue.
Give immigrants the same bargaining power a citizen has and both would benefit.
> Why would they give it away for free when they could sell it for money instead?
I think the entire line of thinking is a bit flawed...
UBI isn't about making sure any thing we do for money today remains a skill that anyone else will pay for.
Like with open source some software will be given away, most software will not exclusively solve a problem or even do it well and complex problems will still require paid collaboration to produce complex software.
I think there is a third path that could work even better. If you think about how money really works it first goes to those the bankers deem most worthy. Tech founders, producers of fine products, schools. It flows down a cascade of people's perceptions. If you really think about it money does not necessarily go to that which benefits society as a whole, it does somewhat, but it really the majority goes to those that have the perception of being the best from the perspective of a small subset of society. Possibly a more impartial and scientific method of deciding who gets money would be more beneficial instead of the whim of cabals of bankers.
Not necessarily. It's quite possible to have UBI be part of the money creation process. In order to understand this approach, it's useful to understand how money is currently created. I'd recommend the 4 minute video found here as a starting point:
New money is necessary for our current economy to function. Making UBI part of the distribution of this new money makes it possible to get spending power directly in the hands of all citizens, as well as doing so without raising money through taxation.
UBI can only succeed if people continue to consume, preferably at higher levels than currently, which would allow others who want to live a life at a higher standard to sell things to UBI recipients, who can then be taxed and support everyone else on UBI.
If UBI encouraged too large a portion of the population to pursue non-taxable income (say, making art and games and giving them away for free because they don't need money), then UBI would collapse from lack of income. Especially so if that art is given away freely to other countries over the internet. So it's a fine line that is probably a lot more complex than people give it credit. There's certainly no guarantee as to what the results of UBI would be, and no guarantee that the medicine won't be far worse than the symptoms.
EDIT: Even if you assume that a UBI could survive if it decreased with a fall in taxable income from a policy and livability perspective, if a person on UBI received $100 one week, and then had it drop to $75 the next, he would get a major shock and public opinion of a UBI would fall apart. You could print money to make sure UBI never falls, but if UBI is going out to the entire population, the amount of money needed would be enormous. That much money added to a system without an increase in real demand (people on UBI would still buy the same stuff), could easily cause hyperinflation. So another constraint that UBI has and I've never heard anybody mention - UBI can never decrease, even if tax income decreases. Plus there's no way anybody could trust politicians to manage something that complex. UBI practically demands a complete restructure of government, society and the economy. Instead of being a 'patch' as many have described, UBI is closer to 'The World 2.0'. It would be the most incredible Second System Syndrome ever seen.