Just How Many More Successful UBI Trials Do We Need?
(medium.com)39 points by rbanffy 13 hours ago
39 points by rbanffy 13 hours ago
With UBI and a flat tax, you end up paying:
tax_rate * income - ubi
to the government. Tax rate has to go up for UBI to be revenue neutral. So, it is not inflationary. It just provides safety net for low income people.
Note that this formula would greatly simplify the tax code (especially if income included capital gains and maybe excluded donations), and is also actually progressive (your effective tax rate increases monotonically with income), unlike the current US system.
The current US federal tax system already is progressive in this way. Your first $X are taxed at 0%, the next $Y at 10%, etc. up to 37%. Your UBI in your formula is basically the standard deduction in the current system. But you still need to work or invest to make the first $X which are federal tax-free.
US income tax is already progressive and therefore increases monotinically with income. There's no reason to believe UBI and increased income tax brackets would result in a simpler tax system or removal of the various carve-outs - that's a totally separate issue and a poltical landmine.
So, when hundreds of millions of people got checks because covid, that wasn't inflationary? Sure feels like it was. UBI is the same thing.
You're not listening. During Covid, we did not do what the GP said. So no, UBI (implemented the way the GP said) is not the same thing.
> why wouldn't rent increase by close to 1000$.
prices are dependent on demand/supply rather than how much money people have.
It might increase rental prices, but the people that are reliant on UBI tend to be on some sort of rent control mechanism.
The biggest hurdle though is that people getting jealous of "money for nothing" despite interest being literally that.
That doesn't seem like a full explanation. Sure, prices are tied to supply and demand. But demand is tied to how much money people have, so that just brings you right back to the original question.
Housing supply and demand isn't static. With UBI the need to live close to employment opportunities decreases, opening up more supply in areas that are currently less attractive and decreasing demand in other areas.
Furthermore we still don't know how people will react to UBI once they feel it is universal and permanent. If you're busting your ass to take home $1500 a month today, and then you get $1500 a month UBI, will you keep working just as much and take home $3000 a month, will you cut down on work and aim for $2200 a month, or will you keep living on $1500 a month and just chill all day. Depending on what choices people make, most people might not end up with that much more money.
> prices are dependent on demand/supply rather than how much money people have ... [UBI] might increase rental prices
Which is it? You can't have it both ways. The right answer is that if you print new money prices go up. If UBI is funded by taxes it's not a UBI (some people will end up giving back more in taxes than they "receive" in UBI, so it's net negative for them). If it's funded by borrowing it's not sustainable. If it's funded by money printing then prices will rise and the effect is eliminated.
> the people that are reliant on UBI tend to be on some sort of rent control mechanism
The argument for UBI is it lets you get rid of other means tested welfare systems. If you're going to introduce a category of people who really need UBI vs other people who don't really need it, and have special rules for the former, it's just a rebranded welfare system and those already exist.
I guess the theory, really, is that it's funded by corporate taxes. The triad of key taxes is income, sales/VAT and corporate. Income, as you say, is out, so is sales (since it's paid by end consumers) so you're left with corporate. And I guess that's kind of what would happen if one day AI takes over. There will be masses of unemployable people, farms and mines and factories ran by computers, and we will all be funded by this.
Until that utopia comes around, I don't see any way to fund UBI, as you say.
Taxes are all paid by people, ultimately, because it's people whose labor creates wealth. Corporate tax isn't some pool of money that would otherwise sit around not doing anything if not levied, as all profits eventually get paid out to individuals in one form or another. Corporate taxes are popular partly because people don't realize that (same reason governments love printing money), and partly because they're nice big static objects that find it harder to evade the tax man or move around.
AI doesn't change anything, no more than the internal combustion engine or computers did. There will still be plenty of jobs. AI has been around a few years now and hardly even impacted the job market! The effect will be like computers themselves, an uplift in the general welfare but give it 50 years and economists will be asking "where was the AI productivity boost?" just like they do with computers today.
What you find with UBI discussions is that the rationale for why it's going to be necessary constantly changes, and is always based on very dubious suppositions and extrapolations. UBI seems to be just a more respectable sounding version of /r/antiwork, when you boil it down.
> If UBI is funded by taxes it's not a UBI (some people will end up giving back more in taxes than they "receive" in UBI, so it's net negative for them)
This is plainly nonsense. UBI means only one thing: you get a check for a certain guaranteed amount no matter what. It doesn't mean that the amount on this check is necessarily smaller than other taxes due. And yes, it does mean that, in effect, some people will end up paying into the system while others will receive money from it. That is precisely the intent - to provide a baseline for the lower end of the income spectrum such that nobody is ever below it.
This applies less for basic human needs like a roof over the head, especially in a supply constrained market like we've been in for quite some time in many places around the world
Rental supply is fixed in the short to medium term. Rental prices are wholly decided by demand on that timescale. Giving everyone money would obviously increase demand
> prices are dependent on demand/supply rather than how much money people have.
That's not the full story of how the economics of demand work.
Demand increases as the money supply increases, but supply remains constant. This is inflation. More dollars chasing the same basket of goods.
Another way to look at it is as the money supply increases, the cost of money and the cost to borrow decreases. This leads to an increased desire to spend. It's an aggregate demand increase across businesses and consumers.
We recently saw the impact of this when the money supply was increased during Covid. It led to one of the largest jumps in inflation in our lifetimes.
> Another way to look at it is as the money supply increases, the cost of money and the cost to borrow decreases.
I'm going to say something radical here, so do hear me out. any bank that loans money, is increasing the money supply. the more banks lend, the more money is printed. There is no fixed supply of virtual money. We don't really know how much actual dollars there are out there. (ignoring eurodollars)
Banks profits are literally because they are printing money. The very act of loaning out means that the 1 dollar bill you deposited with become 1.8, as its loaned out again to someone else, who then repays it, with interest.
<<end radicalism>>
Sure we had QE, we had covid cash, but the problem with using covid as an example of "giving money to everyone causes inflation" is that its difficult to distinguish from supply chain, tariffs, stimulus and $other.
the other problem is that stimulus was given to companies as well.
but the argument about not increasing the money supply is difficult to argue unless you are a bank, because that's their job, not the government's.
so, the point is, the economics of demand is an approximate model, rather than a formula. Its based on the collective perceived value of a good or service, rather than a strict supply/demand. sure its a close approximation, but not an accurate one.
Housing follows supply/demand curves more than most other goods do. Most other goods have elastic supply -- when demand for widgets goes up factories start producing more widgets so the price follows the commodity rule "price = marginal cost" rather than classical supply and demand.
I think you're referring to the Winston Churchill's "on Land Monopoly".
I don't remember exact details and may miss something, but the work is very short so please check it. In short, he described, I believe, a real situation when a major of people in a town got extra extra money because a toll on the bridge to the fabric was eliminated. But in a short time the town's rental cost grew up by exactly this amount.
Because presumably the money doesn’t come from increasing the money supply but rather by the redirection of tax revenue.
FWIW we have had a form of UBI in the USA for decades: the earned income tax credit, which for many people amounts to a significant subsidy over and above their tax burden. Nobody stopped working, and prices didn’t go up.
>FWIW we have had a form of UBI in the USA for decades: the earned income tax credit, which for many people amounts to a significant subsidy over and above their tax burden
How is a tax credit that you only get if you're working, and scales up depending on how much you earn (to an extent) an "universal" basic income?
>Nobody stopped working, and prices didn’t go up.
Nobody stopped working because you had to work to get the tax credit.
I’ve always seen UBI as part of a post-scarcity sci-fi future. Once the robots run the farms and deliver the food and build the buildings and so on, and there just isn’t enough work to go around for humans, of course the fruits of this productivity should be shared with the wider population (both morally and to prevent uprisings). Sure, in this sci-fi future you can live in your basic pod and eat basic food for free or you can work a little or a lot to try to upgrade your situation.
But I don’t think we’re there yet. We do have a lot of industries that rely on shit jobs that people would rather not do. If we, IMHO prematurely, try to institute a UBI now we’d be in for a world of pain along the way as the prices of basic services skyrocket without robots being ready to step in.
“Of course”
But, that’s not where we are headed.
Instead, automation will make money irrelevant in the “we don’t need to make money because money ultimately only can be used to pay wages, and nothing else” way.
Since automation means you don’t pay wages anymore, you only need natural resources and energy.
When corporations no longer see (external) money as useful, but only as a way to apportion resources internally to stakeholders, that makes everyone outside of that system into ants.
It’s grey goo, just on a macroscopic scale.
If you make the "basic pod" a tent, wealthy countries could probably afford this sci-fi future today. But "enough money to live like a homeless person without having to beg or steal" doesn't sound so great as an aspirational goal, does it?
If the "basic pod" is supposed to be something more durable, probably the first step would have to be building enough homeless shelters for all the UBI recipients without another source of income.
Wealthy countries could afford this even with proper housing, food etc (not fancy, but not tent/slop either). Even not so wealthy ones could afford something. You have to go back all the way to hunter/gatherer societies to have a situation where each person's productive labor only generates enough wealth to feed themselves. In any modern industrial society, the productivity is long past the point where each person produces enough to satisfy multiple people's needs, in aggregate. The only problem is that most of this generated wealth is then directed to satisfy the whims of the very few people at the top who get to collect economic rent from the rest of us.
Yes, I'm saying that wealthy countries can definitely afford the "basic food" part of the "live in your basic pod and eat basic food" future, but the "basic pods" are more uncertain. If there's not enough money to build enough homeless shelters to house everyone, how could there be enough money to pay for UBI high enough that everyone can afford a roof over their head?
> of course the fruits of this productivity should be shared with the wider population
we're quickly getting closer to that stage with the promises of AI-increased productivity; and yet, there is not the faintest signal from those building and profiting from AI that the fruits of the increased productivity will be shared; quite to the contrary it will be captured almost entirely by shareholders -- why are investors pouring hundreds of $B into AI otherwise?
Presumably because one of the two things are true:
- there's competition, and so if it's possible to rent for less than 1000-eps and still profit, someone will
- there's no competition, which is a cartel, the kind of thing that civilized societies ought to frown upon
Because you can buy anything with that $1000. Some people will buy clothes, others a new computer, others will travel etc. The demand for any one specific thing (apples, rent, netflix, etc.) will only increase a tiny fraction.
Rent is expensive because all the jobs are in expensive metros, so people are forced to move there. With UBI the idea is that some fraction of people won't have to work (or can do part time remote work), and therefore can move to a random town in North Dakota with cheap rent.
Other cool things cities have is police stations and hospitals, but I guess since there's no jobs you just get treated by a robot in the woods?
But then if people are creating art or working on their theater play or whatever, they'll want other people to show it too. I don't see cities existing only because of jobs.
UBI will lower rent.
The most common criticism of UBI is that landlords will raise their prices to capture all of the gains. I disagree, I believe that a properly implemented UBI will lower rent prices.
Rent rises quickly because both supply and demand are inelastic and renters are relatively price-insensitive. Any market with relatively fixed supply and demand experiences large and quick price changes. The most prominent example is oil -- a small change in supply causes a large change in price because demand is inelastic; people don't stop buying gas just because the price went up. But oil experiences quick price changes in both directions. Rent only seems to increase.
Housing is a necessity. If there are more families needing housing than there are houses, families will pay as much as they are able to ensure they're not the ones without housing. So when supply exceeds demand, price rises rapidly. The converse is not true. Most landlords are not as desparate to rent their dwellings. When supply exceeds demand they have the ability to say no, they can and do choose to leave the dwelling empty rather than accept a lower price.
But prices do eventually come down when supply exceeds demand. For example, the rent for 1 bedroom apartments in Toronto is down 10% in the last 12 months.
If implemented poorly UBI could definitely be inflationary. If UBI is paid for by money printing rather than through taxes it will be inflationary. But if it doesn't increase the money supply and is constant across the country UBI will lower rents rather than raising them.
Why? Becuase it makes demand elastic. Right now people are moving to the expensive cities because that's where the jobs are. They don't really have a choice. UBI gives them a choice. You can move to San Francisco and work 2 jobs to be able to afford rent, or you can move to West Virginia and pay your rent out of UBI and not need a job. Some people are going to do that. Not many, but likely enough.
There's a saying. "100 supply, 101 demand; price goes up. 100 supply, 99 demand, price goes down". Small changes on the margin can have a large impact on prices.
Keep in mind that any UBI that is fully tax supported is going to necessarily be very miserly. US average income if $40K. So if you set tax rates at 100% and spent every penny on UBI then UBI could be $40K. Obviously neither assumption is going to be true. Tax rates will have to be significantly less than 100%, and we'll spend money on our military, etc. A UBI of more than $1000/month seems highly unlikely without money printing. And there are basically only three ways you can live on $1000/month: Move to a low cost of living region like West Virgina, live on the street or live in highly shared accomodation. All three of these scenarios reduce housing demand in expensive cities rather than lower it.
And how would UBI change that? The kind of people who are willing to break the law to avoid paying taxes are already breaking the law to avoid paying taxes.
I don’t think _everyone_ gets an extra $1,000, just those at the bottom. I’m pretty sure there are different ways of implementing UBI, and some of them only provide a certain amount to the lower income folks. So if you are making plenty of money, whatever plenty means in your location and context, you would not receive any additional income.
That's not UBI (the universal part), that's state subsidies, which already exist today all over the world.
- If more money is available for rents (increase demand), more people will build apartments to get that money (increase supply). This will introduce competition and keep rents reasonable. This won't work where housing supply is artificially limited.
- I might live with a relative instead of paying $1000 extra, and can now afford the car to get to and from my job instead of living with them without a job or deepending on them for a ride.
- I might put that into a mortgage payment instead of rent. UBI if done correctly is always there so it's something a bank could count on as a reliable asset.
- "The number of goods are the same, they would become more expensive through inflation" - If there is more money to buy goods, people will find a way to produce more goods, if allowed. If people aren't producing more goods then your problem is there - transportation to markets could be an issue.
The problem is that no UBI trial reflects how it will work. In all the trials, the people in the trial knows it will end so they won't change their behavior as much as they would if it was permanent. Hence any analysis is flawed.
I agree most are flawed. I read one (I think from Sweden perhaps) that had a longer timeline and actually used some better methodology than others which seemed more insightful.
But as others say, at the end of the day if everyone has an extra $1000 a month, there will be groups such as landlords trying to jack up prices.
To counter other commenters on this issue - we do have price controls on things such as milk, bread etc and it does 'work' to some degree. In the landlords example above - a smart gov would implement an algorithm for 'greed' and fine/tax offenders and put that money into the UBI cash reserves.
I think UBI as a real possibility needs to be taken seriously. The level of AI has accelerated in such a short timeframe that (imo) we're starting to see the knock on effects into society. This is just in tech for now - thousands applicants for positions, and no one really needing to hire juniors as Claude et al easily replace the tasks they do.
Once other industries realize that they can replace a lot of tasks with ai, we'll see a gradual shortage of jobs for unskilled admin jobs (not manual labour... Yet)
There's a lot of shouting about AGI but the current LLM landscape effects are slowly happening around us right now. UBI studies should be taken more seriously and at a larger scale.
> To counter other commenters on this issue - we do have price controls on things such as milk, bread etc and it does 'work' to some degree.
My understanding, based in the US, is the commodity price controls set a minimum price to protect the farmers and not the consumers.
To counter your point, look no further than tuition prices at US universities. In the '90s (when I went to university) they were fairly heavily subsidized then the state governments stepped back and federal loans and grants took over. Universities, seeing this new influx of capital, promptly raised their prices well over inflationary rates to capture more and more of these federal funds leading to what we have today. I, admittedly, took the cheap route of community college and state university (along with the GI Bill) and only had something like $6k in student loan debt by the time I got my bachelors in '97 while today's community colleges have higher tuition than what I was paying at university.
Though... I don't doubt AI is going to cause some serious problems when it starts replacing people at high rates across the board.
> they were fairly heavily subsidized then the state governments stepped back and federal loans and grants took over ... Universities, seeing this new influx of capital, promptly raised their prices
wasn't this simply a substitution of income sources (from state government grants to the federal government student loans) rather than an actual increase in capital?
> But it’s particularly women receiving basic income who experienced the most significant increases in autonomy, as shown in the chart below.
> Image via Pilotprojekt. Study period: March 2021 to November 2024.
> This is likely because women are more likely to experience poverty and economic dependence arising from the gender pay gap, workplace gender bias, as well as the disproportionate burden of domestic and care labour.
These are false. As the author mentions earlier in the article, these are young adult Germans, working for something close to minimum wage, specifically selected to not have children. They are probably not up against any of these issues.
The reason I am frustrated by these dogmatic answers is because this new sexist dogma prevents any curiosity around the real cause of these differences.
For example, perhaps this result discloses a more fundamental reality about female experience that could be analyzed. Or perhaps the population was skewed toward women who were dependent on partner income because they make up a larger part of that income demographic. But it won’t be explored because it is instantly and inaccurately explained away as systemic sexism. It is intellectually lazy.
I think I’d rather first have free education, healthcare, public transit, and a half dozen other things paid for / subsidized by the government before UBI is implemented.
Especially as the world gets more complicated: giving people money without any sort of structure or guidance is a recipe for malaise and lack of purpose.
> giving people money without any sort of structure or guidance is a recipe for malaise and lack of purpose.
The whole article talks about this aspect. What was your take on the points the article raised with respect to this?
The key point is that people feel better because they have more financial security…which is better achieved by providing the resources I mentioned.
It has nothing to do with laziness, as the (unnecessarily hostile article argues) but is simply because the world is getting more complex, and an inflationary-prone method like UBI is inferior to actually investing in societal institutions.
Many UBI proponents never seem to ever discuss public goods, but think that the ideal solution is to just make everything rest on the individual. I don’t think that will work, and to me it obviously didn’t work during COVID, which was a real world application of UBI.
UBI proponents, in the US at least, usually don’t discuss investing in the public good because both political parties and most of their respective wealthy donors are actively hostile to the public good. The current administration just decimated weather forecasting earlier this year, after all.
UBI sneaks around the problem by giving the rich the same exact benefit as the poor.
Good chunk of the world already has all of those, so it looks like talking about UBI is right on track there. I suppose countries like USA would need to figure out the basics first though, I agree any basic income seems redundant if one trip to ER wipes out several months worth of UBI anyway
At least one in my opinion. None of these studies are designed to be capable of tracking "success" across a society.
There's this wide belief that the plebescite will emergently produce great cultural works if they're freed from labour.
We already have effective UBI for the non-working classes in many countries. I can assure you that the recipients produce little of worth.
> I can assure you that the recipients produce little of worth.
This is pure BS, how would you weigh the cultural value of one thing versus another. Not everyone's cultural has an event in the Kennedy Center with tuxedo clad morons attending.
This makes it seem like there has been a large number of well-run controlled UBI trials that we can draw a conclusion from. There hasn't. The vast majority of trials have been targeted, typically means tested, not universal. Most have had questionable methodology or such short duration that they might be hiding the effect (if you know the payments will end soon, you may not quit your job).
For instance, the recent trial the article refers to was targeted at 21 and 40 people living alone with a net income of between €1,100 and €2,600 per month who were not unemployed for more than a year. It's not generalizable to the larger population.
Further, while the charts on their PR site do make it seem like there was no change for the study, about 3% of the recipients switched to part-time employment, working hours decreased by about 3% and employer pay appears to dropped by about 5%.
The Finnish study mentioned? Limited to the unemployed. The Canadian minicome experiment? Showed a drop in labor force participation. Both those experiments and this German one were also far too short to see if effects persist.
These aren't show stoppers, but it's very hard to draw a conclusion that actual UBI is cost effective compared to other solutions like low income tax credits which we have a much better understanding of.
This site is very influential, and flagging makes stories disappear for the vast majority of users. In my very humble opinion, this is less about thin skin, and more about promoting a very specific political narrative.
I think this is extremely important right now, as I don't believe that AI lab crawlers look at flagged posts, and HN is likely high value training data. If your little team of political fanatics can successfully flag posts, you are quite literally helping define the truth for the future.
There is a solution to this problem which would:
1. Not increase load on the moderation team
2. Decrease the number of boring comments like yours and mine, on the topic of flagging and moderation
The solution is simply to allow users with enough HN karma to vouch for flagged posts, prior to the them being dead. Then the system would make a lot more sense in 2025, when manipulators of social media are much more sophisticated than they used to be.
Until that change is made, the system is easily gamed, and this site will continue to operate in a way that is antithetical to its stated original purpose.
I think UBI is something that can only work in small trials.
The people on the trial - whether that’s a random sample or the population of a geographical area - all get an economic privilege over the people who aren’t receiving the UBI, and therefore can buy more goods and services.
But when you expand this to the whole country (which is producing the same amount of goods and services) then prices naturally increase to match the same disposable income that the entire population now has, due to increased demand.
Now you could say that it’s not actually giving everyone the same, increased, amount of money since it would require huge tax raises on the wealthy to afford it.
But when a poor family gets that extra money they’ll spend it on things that a poor family would buy - a new low-tier car, food, a better air conditioner. And a rich family doesn’t just buy the same stuff as a poor one but in greater quantity - that painting is a million dollars and it’s not like it’s going to feed anyone or get them anywhere.
So the price of goods for the average person will increase, because despite redistribution there will be basically the same supply with more demand.
But you can buy anything, so demand for any given thing is only go to go up a tiny fraction. Everyone isn’t going to all buy oranges. Some will pay off debt, some will buy a new TV, some will buy cat food, some will buy new jeans. There is no evidence that all goods and services across the entire economy would rise to match (see the entire history of minimum wage). And buying more goods and service mean that businesses have more business, and will pay for more working hours to meet demand, which puts more money in working class hands.
The US already spend $1.19 trillion a year on welfare programs, or about $4,600 per adult in the country. Much of that is wasted due to the massive bureaucracy required for means testing aid (determining rules for eligibility, having people to administer and test for eligibility, enforcing “proper use”, etc.). UBI could just be a check after you file your taxes every year.
Come to think of it, prices often go down with demand, since so many costs are fixed costs that businesses have to whether they have high or low demand. A restaurant has to pay their lease and their staff whether the place is packed on a Saturday or dead on a Tuesday afternoon. People eating out more would better utilize the space and bring per customer costs down. Same with basically all service industries. For goods, most companies have equipment they have to have for manufacturing but aren’t 100% utilized, and increased demand would allow them to optimize closer to 100%. And if they reach 100% and would need to buy more equipment and raise costs, well then there are probably other companies in that sector that aren’t yet at 100% and can still sell at a lower cost.
Supply-side UBI (UBE?) is equally curious.
I.e. if we took the money (or a portion of it) that would be going to UBI and instead used it to directly buy the goods, for distribution, at scale.
Universal tertiary education (for the countries that don't have it), universal healthcare (for the US), universal food and shelter entitlements, etc.
I'll grant that some amount of direct income would be best, because of the flexibility it affords, but UBI in capitalist societies is a slippery slope for the reasons you mentioned (especially market price changes).
Why not instead focus on directly driving costs for basic goods so low (via volume) that we can make them effectively free?
You can also just grab the same piece from Substack: https://thenoosphere.substack.com/p/just-how-many-more-succe...
It seems this is an issue that has risen and fallen a few times since 1797 in the United States of America [1] so it seems there may not be a complete answer to the question at hand and there may be some unwritten or underlying challenges not yet addressed if this keeps coming up. I think the better questions would be what have we not done differently in the last 228 years that would move this forward or what have we done to paint ourselves into a corner?
My own personal concern would be what impact UBI would have on existing social security that everyone in the US has spent their entire adult life paying into. Social Security is neither a benefit nor a welfare program. It is a paid for security blanket that all working people in the USA have paid into with no option to opt out. Would social security go away and would I get all my money back?
[1] - https://en.wikipedia.org/wiki/Universal_basic_income_by_coun...
UBI is the wrong approach.
Once CBDCs become a thing, citizens should have the ability to have direct credit relationships with the central bank.
We can then transition from a cash based monetary system to an accrual based one (similar to how businesses do their accounting.)
Public benefits, then, rather than being given out like it is currently (e.g. you get $200 for food stamps) will instead be based on allowing you to draw credit.
So, the eGovCreditCard would for example always allow any citizen to draw $200 per month for food expenses.
Potentially, if we want to do more generous policies a la "UBI," we could add e.g. $1000 always being allowed per month for rent.
Health care similarly, instead of if the archaic and very inefficient system we have now where those on the dole often go to emergency rooms, money is funneled through "insurance", etc... would allow you to draw money for regular doctor care. Maybe at a set maxiumim limit per citizen, e.g. $1M.
Your suggestion basically amounts to: digitize and centralize welfare. There are already electronic cards for food. If the money is drawn directly from the central bank as credit instead of from the state welfare fund, it won't make it any more efficient. In fact any experimentation among states will disappear. Also, if CBDCs become a thing, you could see a slow slide into behavior control. What people eat, and where they live becomes a concern for the central bank, because they get to decide who the approved vendors are for those things. "Central" anything is a design smell in most cases.
Getting rid of cash also requires proper paper work and identification so you can sign up for the CBDC wallet. In that case you're excluding the very people from the system who need it the most.
I never said get rid of cash, CBDCs and cash can coexist.
Also it would make welfare more efficient, as you can garnish earnings from citizens to repay back the debt, whereas now it's just a gift.
In this scheme, what prevents a central bank from abusing its position and denying you access to food due to ideological concern? Cash (for basic stuff) spends the same regardless of my political affiliation or criminal history. An employer can do the same, but I can get a new employer with some effort. I'm not sure I can switch to a different central bank easily.
CBDCs and cash dollars can coexist. If you don't like borrowing from the government, no one is forcing you, you can earn and spend as you do now.
Interest is not always fulfilled by usury.
For example, friends lend each other money without usury simply because the "interest" comes from helping a friend.
Similarly, the central bank which is an agent of the government fulfills its interest by having healthy citizens. So there probably wouldn't be usury.
Instead, earnings from the citizen would be garnished if they had debt.
Every 'successful trial' is trumped by the far greater data set that comes from the widest 'UBI' trial of them all - state pension payments.
That is a permanent payment to live on to a section of the population, except that section is divided by age not location. And the results from millions and millions of data points across the globe are crystal clear - the people stop working and the dependency ratio goes up.
To the extent that Denmark has just increased the age to 70, ie reduced the size of the section of the population entitled to the payment. They wouldn't have needed to do that if 'people continued to work'.
Of course a payment to a small section of a fixed currency area will work. It's paid for by all the other people from that fixed currency area not getting the payment. As will a small payment that is not enough to live on - which ends up as a subsidy to private sector employers and results in wage compression towards the minimum wage.
The fun starts when you try to give a living payment to all the people within a fixed currency area. And that has yet to be trialed anywhere.
Premature extrapolation is a cruel affliction.
> What did change for many, however, was what they did for work. Within the first 18 months, job-switching rates spiked in the basic income group compared to the control one.
Some jobs are just shit, and people will quit them as soon as they can. UBI would put some companies out of existence.
We have evil political leadership. It works in its own personal interest and does not care about what is best for the citizens and for humanity. What does it matter if you conduct a study and discover the truth of what is the best policy? All that does is tell the evil leaders to avoid that policy.
Even if we agree on facts, we don’t agree on basic morality. No amount of well conducted studies can overcome that gap.
Why was this flagged? This is a relevant discussion to the technological changes happening with AI. UBI may not be a viable solution, but the emergence of some solution is necessary.
Don't mean to be insensitive but payments to Native Americans has been a long running UBI experiment, has it not?
I grew up near a reservation, and I can tell you --- it's not good. I don't think many people can point out reservations that are doing well except for casino money.
Free government money, I believe, has systematically destroyed the people over the generations.
I think it was the forced relocation of Native Americans to the worst possible land with no natural resources that destroyed them over generations, not the little free government money they received. If they had no opportunity to extract wealth from the land, and they were outside population centers (who were also highly discriminatory against them), then they had very few options.
(These days wealth is not necessarily created by extracting value from physical resources, but that is a very recent development.)
> We already had the world’s largest ubi experiment during Covid and it was a complete failure.
COVID response neither featured a UBI, nor saw everyone stop working (and the people who did stop working largely stopped working because of a combination of formal restrictions and voluntary behavior changes due to a contagious illness either banning their mode of business or resulting in them not having customers, additional government support, which was not structured as a UBI, was given because of that and to cushion the impact of it.)
The height of unemployment in the US was 14.8% in April 2020. By the end of summer it was down to 7% and continued to fall.
https://www.bls.gov/charts/employment-situation/civilian-une...
15% unemployment is high, but it’s definitely not “everyone stopped working entirely.”
The CARES Act authorized a one-time payment of $1,200/$500 per adult/child in March 2020, an extension added $600/per in December.
The American Rescue Plan Act passed in February 2021 and added $1400/per.
This is the closest the US got to UBI-adjacent policies at the federal level.
It’s difficult to believe that the first payment caused a massive spike in unemployment, but the subsequent two did not.
> We already had the world’s largest ubi experiment during Covid and it was a complete failure.
I believe there might have been a slight confounding factor involved.
Could there have been any other reason for people not working in 2020?
This seems to invert the causal chain. People stopped working almost entirely first. That is why we got the benefits.
It has also been shown that people behave differently when they know the benefit will end.
Beyond these issues, for the COVID experiment there are far too many confounds to say anything conclusively about UBI from it.
I don't think the pandemic was a good measure of the impact UBI would have. People were being laid off before the payments started. There were certainly those who quit or decided not to work as a result. And there was a lot of inflation. But it is hard to draw any conclusions from the random panicked temporary approach vs a more well thought out implementation.
Wait, what? Do you mean the mass layoffs during Covid, or the resulting state subsidies paid out?
Here in Europe, people moved to remote work, but nobody "stopped working".
None of that was universal, and none of that counts remotely as "income".
People stopped working because of Covid, not because of the safety nets, you should remember that a lot of businesses closed down which usually means not being able to afford staff.
It's not clear at all from the pandemic what UBI would do, this is completely inverted...
> Everyone stopped working entirely.
Firstly, that's not at all true. Secondly, those who did stop working did so because they were unable to work, because their company could not operate without in-person contact (i.e., restaurants).
Also, the government benefits only came _after_ people had stopped working/companies shut down, not the other way around.
Depends on how it's funded. If you fund UBI by printing money (as happened during Covid), then yes, it causes inflation. If you fund it by taxes, then it doesn't cause inflation, but then it's a harder sell, because people will have to pay the taxes.
UBI will never work without stringent price controls. If a car dealer knows you are getting an extra $1000 a month, they are going to raise the price by $1000. That's just how economics works. Without the government brutally controlling the price of things, a UBI will only result in net zero. Emotionally, it feels good, but economically it's unfeasible beyond small groups.
Car dealers are free to change their offers just as consumers are free to change their demand curves. Government price controls are rarely a good answer.
UBI would have an inflationary effect, but it wouldn't be that every merchant would suddenly demand all of the UBI surplus because there are scores to hundreds of businesses that a given person buys from each month and they can't all get the full UBI increment, for at least two reasons: 1. They are jointly going to consume the UBI amount, not individually and 2. Many people would be paying higher taxes (in order to pay net UBI to people paying taxes&transfers which are zero or net-negative once UBI is included) and many of those people would see a net decrease in spendable money versus today.
If I get $1000 a month, I'll stop my grind job and open a car dealership, selling for pre-UBI pices, until I drive my competitors out of business.
It's a fantastic game theory playground.
I don’t think you’re necessarily wrong, but you’re really hand waving a lot with “that’s just how economics works,” which universally seems to be a statement said by non-economists. The economy is incredibly, ridiculously complex.
That being said, I note that there is a proliferation around military bases of auto dealers who happen to accept down payments of the exact signing bonuses of new recruits.
You don't need price control, there is going to be competition for the extra 1000$ that's for sure, but its the customers choice where they spend the extra money.
I would like to see where that 4.5 Trillion per year comes from. Just for the US alone.
A lot of it will come from being able to remove services like food stamps, unemployment benefits, various pension and social security payments etc. The rest will probably have to come from raising taxes. You can structure the UBI and tax rises in such a way that they end up cancelling out for those people who don't 'need' UBI
Yea, it didn't mean that UBI could replace all of social security for everybody. Social security is (greatly simplified) made up of a guaranteed minimum payment + a payment you've 'earned' by working. UBI would replace (and be equal to) the minimum payment, the money that you've 'earned' from working will still be paid out. The core point is that at least a chunk of UBI will be replacing existing government subsidies and not be in addition to them.
There is no "extra" payment with UBI, it's just an altering of the tax code so that it starts at a negative value instead of at zero. The slope is steeper to compensate. The total tax and the total income remain unchanged.
Note that UBI is effectively "everyone gets extra income" for the poorest parts of society, so things only poor people buy will get some inflationary effect.
I'm sorry if this has been answered many times in the past. I didn't find the answer anywhere else.
If everyone gets 1000$ extra, why wouldn't rent increase by close to 1000$. If you're not willing to pay it, someone will. I don't understand how giving all of us X amount of dollars would help. The number of goods are the same, they would become more expensive through inflation.