Facts about UBI

A UBI would direct much larger shares of transfers to childless, non-elderly, non-disabled households than existing programs, and much more to middle-income rather than poor households. A UBI large enough to increase transfers to low-income families would be enormously expensive. We review the labor supply literature for evidence on the likely impacts of a UBI. We argue that the ongoing UBI pilot studies will do little to resolve the major outstanding questions.

That is from a new NBER working paper by Hilary W. Hoynes and Jesse Rothstein.

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It occurs to me that the future of democracy may depend on a significant overlap between the "unwilling to work" crowd and the "unwilling to vote" crowd.

Most people don't care about democracy if they have a roof over their head. How often have you criticized something you don't like in public? You can get arrested and ruin your career if you protest in a group that doesn't have the proper permits, by way of example. And there's defamation laws for non-anonymous people who have a sizeable net worth (the proles don't matter, and they're the ones that rationally can protest in public).

UBI is just another way to soak the rich IMO, unless you believe we're heading towards a post-scarcity economy where robots will do all the work and there's no need to work.

UBI is a fairy tale. It isn't even possible. Perhaps for a year or two and then it all collapses into what Venezuela is facing today. Our present welfare system is not much better. It has put us $21 trillion in debt and sooner or later that piper must be paid. When it all comes crashing down our cherished democratic republic will be lost.

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To most Americans, soaking the rich is more preferable to the current soak the middle class system we have now.

Bingo.

And a system that people like Prof. Cowen work tirelessly to preserve.

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lol what?? Middle class get huge subsidies and pay no taxes. Any new programs have to be borne by the middle class as there is no more money to get out of the rich.

"Middle class...pay no taxes"
"there is no more money to get out of the rich"

Parody or just stupid?

This is not controversial stuff, please don't pretend that it is

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lol what?? Middle class pay no taxes? Are you considering sales taxes? How about thew fact wages as income is taxed much higher levels than other forms of "income".

Also I believe it to be self evident that if "there was no more money to get out of the rich" than they would by definition no longer be rich, yet here we are.

Sales taxes are not federal taxes, smart guy.

Your comment on the rich just is pretty ignorant. The rich just don't have that much income to start with and are highly mobile and great at taking advantage of loopholes.

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They need to confiscate wealth to pay for dependents and dependents' votes, fraudulent and otherwise.

Soon they'll run out of billionaire's people's money, like the second month.

How much will it cost?

Where will they get all that money?

2020 Democrat Campaign Slogan: "Free Money For Lazy People!"

Das Dicke Ende Kommt Noch.

Lol. Meanwhile on planet earth Republicans have to reach all the way back to the Eisenhower administration to find a balanced budget.

LOL. Non Sequitur much?

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Nope. Newt Gingrich

President Newt? What kind of drugs did you take in the 90s?

The kind that remind me that Congress passes budgets. Clinton's proposed budget had a deficit in it. Newt cut until there was a surplus.

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+1. He did it with his now famous 90% tax on the rich. He was a good man. They don't make Republicans as smart as Ike anymore.

Pray tell, how many people do you think actually paid that level?

I'm not sure why greed is such a popular sentiment nowadays, but it is disturbing.

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"The top 1 percent of income earners paid an average effective income tax rate of 16.9 percent in the 1950s"

http://checkyourfact.com/2019/01/09/fact-check-90-percent-taxes-eisenhower-1950s/

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I think the biggest issue is reversing the free lunch logic that paying workers to work costs too much, and high costs of paying workers kilks jobs.

That, plus,thee view that paying workers either gives them too much money to buy stuff creating supply shortages like in Venezuela, or the alternative, workers simply burn the money, going to ATM to get $20s they set on fire.

How else can increasing the pay of low wage workers from $8 to $15 cause lower GDP?

As in, higher wages will require employers to produce less, requiring getting rid of workers, because demand falls when workers has more money in their pocket on payday.

I think low wage workers spend their wages faster, but as a minority of workers, this will boost demand for consumption goods in poor areas, and barely lower demand in wealth areas for the goods that represent less than 5% of consumer spending, even though the price had to increase 20% to pay twice the wage to the 20% of workers who produce that 5%. Sure, the majority of the 20% spend 20-30% of wages on the goods that have 20% price hikes, but their wages are 80% to 40% higher, more toward 40% higher, but more than enough to offset the 20% price hike on 30% of spending.

As FDR argued, wealth redistribution is best done by paying wages, not by by doling out food or cash. He further argued, the work ideally builds somethinng of lasting value, whether a road or park or a forest or windbreak. So, FDR advocated paying workers to built capital assets.

Socialism is not paying those who can work to provide for the wants and needs of others who don't pay for them. The political elites want views without trash, so they demand government force people, who political elites refuse to pay to work, work for free picking up trash.

At least that was the economics of my youth, the 50s and 60s.

Today, paying people to build capital assets like wind, solar, batteries, EVs, heat pumps, etc is called socialism.

And conservatives are demanding people who can work work for free in exchange for things their families need like medical care, child education, food for kids, housing for kids, because paying these people to build capital assets costs too much, and kills jobs. That is today called capitalism.

I want to make America Great by taking us back to 1968, when Americans actually paid for what they wanted by paying more, like paying 10% more in Federal income taxes with a surcharge, paying higher wages. And soon decided to block paying for thing they didn't want to pay for, but mandating payment for things they wanted paid for.

Today the GOP is the party of not paying for things they want, but in favor of spending lots of money for things most people don't want, while calling for not paying for things most people want, but never arguing people should not want what they want, like clean air, clean water, health care, not being homeless and hungry when employers won't pay you because you're old or disabled.

Wow. Just wow.

Tyr to abbreviate your nonsense so as to fit on a cocktail napkin that you stole from your former employer, like AOC.

Try "to abbreviate your nonsense "

Then it wouldn't be mulpian.

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Simple. Like the Alaska Permanent Fund you don't give an income to a household you give a fixed amount to each resident young, old, rich, poor. It is not a panacea but it is simple, transparent, and people view it as fair. Rich people will have a big part of it clawed back in taxes.

Solve for the equilibrium when a couple of billion third worlders learn that residents of the US gets a check just for existing.

And if you limit it to just citizens, then you'll have the world's biggest crush of pregnant woman slipping over the border.

What's the present day value of a U$12,000 inflation-adjusted lifetime annuity? And how does that compare with the median wage in Djibouti or the DRC?

A $12,000 UBI is never going to happen as it is far too expensive to implement, even without your anti-immigration doomsday scenarios.

Even if it's a $3,000 UBI, then his point still stands.

Even if it's a $3,000 UBI, it's still not going to happen. Which was my point. UBI is too expensive to warrant anti-immigration doomsday scenarios.

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Or you could work like the Alaska Permanent Fund does, which you cite, and require legal residency for a certain number of years, or if a minor have said residency requirement and a legal adult guardian to manage said UBI. This isn't difficult stuff, naysayers be damned.

Birth tourism is definitely a problem but it is both independent of a UBI and overblown in magnitude relative to its importance. I'd argue for a crackdown on it on its merits as public policy, but outside of border cities like Juarez/El Paso or Nogales it's simply not practical for anyone but rich people to do anyway. Unless you believe that birth tourism is something that penniless Guatemalans can afford to do at a higher rate than Chinese millionaires.

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Not for just existing! Didn't you read "Average Is Over"?

For playing video games.

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We could complicate that a bit more by then considering the calculations the immigrants make regarding acceptable living conditions (significantly below the standards applied by HUD or DSS) leading to greater measured levels of poverty and so the push for even higher UBI levels.

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Wasn't that the underlying thought behind social security and various social welfare programs. None are expected to provide a sufficient income, only provide a limited support (during a limited time period in most cases)

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If it was to replace existing welfare programs, the UBI would have to be enough to live on (and include health coverage!). If it was that high (and provided to everyone not just the poor), it would be *unbelievably* expensive.

Since we don't have any significant number of people dying in the gutters we are somehow already making sure people have enough to live on. Are you sure that a UBI replacing the current system would be that much more expensive?

Absolutely. That's because the U in UBI stands for 'universal'. A UBI doesn't just replace existing welfare programs for the poor, it is distributed to *everybody*.

But you can tax it back on everyone but the poorest of the poor

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The amount paid out from the Alaska Permanent Fund varies with the earnings generated by the fund. No payout amount is guaranteed. Our previous governor arbitrarily halved the payout to help cover budget deficits.

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The Alaska Permanent Fund Dividend can't teach us much about UBI. It was set up to keep the fate of the state's oil revenue savings account on the political radar.The amount paid out from the Fund varies with the earnings generated by the fund. No payout amount is guaranteed. Our previous governor arbitrarily halved the payout to help cover budget deficits.

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"and much more to middle-income rather than poor households"

Almost by definition, for the average taxpayer the increased taxes that pay for UBI should exactly balance the amount received.

And while "middle-income" and "average taxpayer" aren't quite equivalent (mean vs median, etc), it's not that different, is it?

So the paper doesn't pass the sniff test at first glance.

"than existing programs, and much more to middle-income rather than poor households" "middle-income" would receive more that the existing system not more in the absolute sense if there were no transfer payments.

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Almost by definition, for the average taxpayer the increased taxes that pay for UBI should exactly balance the amount received.

You mean sort of like digging a ditch and then filling it back up again. Certainly no efficiency lost there...

More like getting overtaxed and then a tax rebate all in less than a femtosecond?

Right, or you could just like... not do any of that stuff... and cut out the middle man.

It's always amazing to me that people see this UBI ouroboros as being more efficient than not doing it. Does the IRS suddenly not have to be staffed, administered, and paid for? Do you think there are zero administrative costs here?

"You mean sort of like digging a ditch and then filling it back up again. Certainly no efficiency lost there..."

It wouldn't surprise me if the people for the UBI are proponents of the broken window fallacy. They don't care about inefficiency as long as the "rich" are paying for them.

"Do you think there are zero administrative costs here?"

Nope, the supporters see a jobs program for Federal employees.

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Well the situation at present involves a nonzero level of IRS, so we're arguing that this imposes more admin burden, than the current taxation system, loopholes and all. Could be true, may not be. It ain't digging a ditch vs nothing happening, that's for sure.

Oh, so you're not suggesting a UBI, you're suggesting a complete reformation of the US welfare system. That's much more realistic....

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The linked study is from Cal-Berkeley. That's Cal-Berkeley, as in the same place that is providing much of the weight behind the "soak the rich" (that's the NYT characterization: https://www.nytimes.com/2019/02/08/business/democratic-wealth-tax-warren-sanders-ocasio-cortez.html) plans proffered by the young Democrats who think they should be president. The study is from September 2018. An aside, my view is that the two public universities that will thrive in the coming decades are Cal-Berkeley and UVA. I'm not alone in that assessment. Doesn't all of this suggest we are not as divided as social media portrays?

So nothing to say about the actual content of the paper, huh?

Only at times the pupil’s curtain slides
up soundlessly — . An image enters then,
goes through the tensioned stillness of the limbs —
and in the heart ceases to be.

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Everything I've seen in recent memory about proposed or failed (most of them have been regarded as failures) UBI is that this is basically the death of productivity.

Tyler is well known for being obsessed with productivity and examining ways for avoiding productivity traps. UBI is a MASSIVE productivity trap, of a magnitude awfulness far beyond other social programs which themselves have done their own share of damage. It's bad enough we have almost 50 million people receiving some kind of government food assistance with an inability for that and other programs to be re-assessed or ended, UBI is where I'd absolutely draw a hard line in the sand.

Every penny of current govt. assistance has loud activist constituencies, which is why a UBI in the US would be in addition to current programs.

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The disconnect between the idea of working and the improvement of one's circumstances is already lost and could be one of the most important aspects of the decline of the republic.

"the decline of the republic"

Citation needed

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The farms and factories are automated. Most current jobs are make work and very few people do something that is vital. The economy has countless layers of churn.

The country is rich enough so that everyone can be fed and housed and provided with stuff while only 10% of people work.

Do I get to pick the color of the 10% that do the work? We could even stretch that up to 13% if needed.

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Opposite day?

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Your logic fails. Under UBI, work is still incentivized. If you don't work, you get a "basic" quality of life of food, water, shelter, necessities. If you want more than the minimum, say the latest doodads or status markers, then work is still an option.

"If you don't work, you get a "basic" quality of life of food, water, shelter, necessities."

Quite a lot of young males will be perfectly happy with that "basic" quality of life as long as necessities include the internet and computer games. Without the pressure of paying for rent and food, how many 20 year old males will drop out of the work force?

And if they find out in 10 years they regret dropping out, they've passed the time in their life to build skills. Who is going to hire a 30 year old with no experience?

We already set up kids to fail by giving them undischargeable student loan debt and lots of them seem to have done the wrong thing. Maybe we should not do it a second time.

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Most people, even young men, want more than just a subsistence life. I sure did at that age (and still do)

Many 20 year old males consider being a top ranked Fortnite player with their own Twitch channel to be a worthwhile achievement for somebody their age. Working 40 hours a week at a minimum wage job significantly cuts into their enjoyment of life. Given a choice to ditch that job and double their available game playing time and many will choose to do so.

Daniel Weber is correct. By the time that they realize there is more to life, they'll be 30 years old with no job experience and little marketable skills.

Yes, people have hobbies and recreation activities. I did too, and still do. Your point is?

You were mature. A lot of 18 year olds aren't. And the ones with hobbies didn't have the choice of just skipping work because they needed the work in order to support themselves.

We have already seen that lots of kids made really and irrevocable stupid choices in terms of their educational goals. But they at least went through the motions of staying engaged to the educational system and the economy.

This is a serious issue that you can't just shrug away with "whatever."

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Go the whole hog. Entertain the public with fights between Christians and lions.

If it's at the Superbowl, the Christians have nothing to fear.

Are you STILL complaining about that bogus call against the Saints?

(grin)

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No. A UBI should be a handy step stool in order to be able to reach up to the real economy, but never so large that it allows you to stay in bed.
Reduced benefits like for children, old age and disabled come on top of the Societal Dividend.
http://myubi.blogspot.com/2017/01/my-universal-basic-income.html

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Why should the elderly get more and why not tax the payment away at a 50% rate?

Each adult US citizen would get $200/week, but to lower the cost you would:

Raise the tax rate on lower income people to consume the UBI more rapidly, low earners currently pay no income taxes. Income up to $26,000/year tax rate would be taxed at a 40% rate. So at $26,000/year of earnings the net effect of the BIG on their income would be zero. The tax rates on income above $26,000/year would then drop to the current rate and rise as the current rate does from there.

With the BIG you eliminate SS.There is Absolutely no need for SS with a BIG! Also eliminate the minimum wage.

https://un-thought.blogspot.com/2014/08/basic-income-guarantee-again.html

“Eliminate SS... Also eliminate the minimum wage.” Just imagine what will happen to the first member of Congress to propose this. I’m in that age bracket where people are beginning to receive their checks. They are universally opposed to eliminating SS, on the grounds that they have worked for it and are entitled to it. (I’m not saying this is true, but that this is what they have been led to believe by the SS admimistration.) They will crush any politician who tries to implement it. It’s all very well to imagine a different universe. The universe we inhabit will vomit out such proposals.

"They will crush any politician who tries to implement it."

Very true but if you believe what Bernie sanders says he believes that is the direction that he should push toward.

The AARP may me hunting me down right now.

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Without reading, I suspect they found a significant bimodality in wealth distribution, a humongous chunk of poor; the Unreachables.

The problem compounded by geography where tent living in California is often considered a choice, camper living actually chosen by many retirees. That kind of thing really fouls the calculation and generates many solutions, none of them good.

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In other words, the same points made by Bryan Caplan in his debate with Will Wilkinson on UBI.

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Though the goals of UBI, as usually proposed, are not really to increase transfer to low-income families though, but rather to combat a decreasingly egalitarian income distribution (even if not through transfer to low income) and preserve "the middle class", combat concerns of tech fueled unemployment and (incidentally) killing means testing costs.

"It transfers from the Upper Class to the Middle Class!" is, if a counterargument, not actually a counterargument that undermines the people why the people arguing for it are interested in it. UBI is usually argued for on the "Automation and 'superstar compensation' are hollowing out the Middle Class, so what are we going to do?" basis.

That premise is incorrect though, unless by hollowing out you mean lifting the middle class into the upper middle class

Assuming class is in a rank distribution and not all members of the present day middle are being lifted, or even the majority, then what's the distinction you're making?

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The other basis of UBI, which I forgot to mention, is lower disincentives to increasing employment. So there would be something dishonest in rejecting UBI in favour of, in theory, transfers to the poor, then not following through on that because of disincentives to the poor to work.

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Not a huge fan of UBI. Would rather have wage subsidies such that if someone's full-time employed they're not "poor", then subsidize (most of) the cost of children, then adequately care for those with extenuating circumstances that prevent work: health/disability, old age, single parent caring for small child.

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"Would rather have wage subsidies such that if someone's full-time employed they're not "poor","

A wage subsidy on the equivalent of $2 per hour is far preferable to the various UBI proposals.

Make it universal to deal with the marginal tax issue and fund it with a 1% flat wage tax on all Earned income and capital gains.

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That's the point of the "Unconditional Basic Income" or "Universal Basic Income". It's supposed to be distributed equally to all citizens, not according to politics and "means testing" by government bureaucrats. It's a citizen's dividend for having a share in the body politic.

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Transfers are not costs. Although they have associated costs and benefits.

Right, just like buying milk from the grocery store. It's not a cost to me, because that money just gets transferred to the grocer. Magic!

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"A UBI would direct much larger shares of transfers to childless, non-elderly, non-disabled households than existing programs."

Most people have children or adopt? 80-90%? So, in most cases being childless is a temporal condition. What's the problem of improving your situation while being childless today if you become a parent by 2020?

Non-elderly? All of us will be old.....well, except the ones who die young. Is there such a difference if the elderly get a transfer at 40 or 80 years old?

Transfers to the elderly and disabled are a safety net for the poor. This is a concern in countries with high poverty rate.

The UBI idea comes from country with already low poverty rate. Where the concern is to have a safety net for the middle class. To prevent people falling into poverty.

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childless, non-elderly, non-disabled households than existing programs

Not a huge fan of the UBI either, but should society necessarily discriminate in favor of the elderly, disabled, and people with kids? Isn't part of the whole point of the UBI to avoid creating (for instance) incentives to have kids or go on disability? The goal of UBI is not to give poor people more money - it is to get rid of perverse incentives and social engineering.

If you are targeting the results and calling it a "Universal Basic Income" you are just misleading the gullible. It's not a UBI at that point. Not even close.

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I am puzzled that no one seems to consider the extent to which the money supply has to be inflated to deliver a basic income to every person / adult / household. M1 is roughly 3.5T. A typical estimate of aggregate annual payouts for this kind of program is 2.5T to 3.9T. Even assuming every single other income maintenance program or living expense subsidy gets folded in (unlikely)(order of magnitude 750-800B), and output remains the same (also unlikely), M1 would have to jump by 1/2 at a minimum and plausibly twice that. The tax take can’t reabsorb very much without defeating the purpose of the program or the “per adult / household” principle (in which latter case it just becomes a bloated welfare program). This seems like a fundamental flaw but ir’s rarely even touched on.

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