What drives me nuts in this debate is that the US already has a universal basic income. It’s called Social Security.
Granted, it doesn’t take effect until you’re ~65, and there are some (fairly minor) restrictions. But it’s the closest thing we’ve got.
It’s also the largest item on the federal budget, soon to be bankrupt, and (from my personal observations) disincentivizes work and encourages early retirement, as well as a general attitude of entitlement from the government.
You could say that it’s not a very well designed program, but that’s the point. You don’t get to decide how a UBI is implemented, the existing federal government does.
Chris is effectively promoting that we get rid of the one saving grace of social security (the age limit), and promises that all of the clearly bad and negative consequences that we see with the existing system will just go away.
Social Security is nothing like a UBI. The level of benefits varies greatly, and you must have a work history (though not much to get minimum benefits). Plus the money comes from paying OASDI taxes.
There are plenty of UBI proposals that have variable benefits (e.g. negative income tax).
There are also many proposals for funding a UBI through a new tax. Though, I personally don’t think it matters. The government is going to do what it needs to do to fund the program, where that money is documented as coming from is irrelevant.
And yes, one other saving grace to Social Security is that it requires 10 years of work. I alluded to, but did not expound on this fact, because it is very difficult to go 65 years of life without any sort of work for 10 of those years. Making it irrelevant to the conversation.
I fail to see how any of this is makes social security “nothing like a UBI”. If anything, you’ve confirmed my prior even more.
I don't think you understand what UBI actually is. A UBI means everyone gets exactly the same benefit regardless of age, income, tax status, etc. All other social programs have special eligibility requirements. That is the entire point with UBI.
The negative income tax is not a UBI. Under a negative income tax everyone gets a different level of benefits, and most get nothing. That is not universal.
The reason why Social Security is not a UBI is not because it is funded by a tax (all social programs are funded by a tax). Social Security is funded by a tax by the exact same people who will receive a benefit. If you do not pay the tax, you do not get the benefit. Many people over 65 do not get Social Security benefits. Therefore, it is not universal.
Like, I don’t think you’re right at all. A negative income tax is a UBI with less steps. And I don’t see how funding something with a tax makes it not a UBI.
But let’s put all that to the side. Because, I think your definitions prove my underlying point even more.
It’s one thing to say Social Security is a UBI, and it’s a total mess of a system that’s totally bankrupt, and creates perverse incentives to not work. But it’s another to say that it’s not even a UBI, is actually a program structured to benefit people who work more, and doesn’t go to people who don’t work, and is specifically funded by special taxes, yet is still plagued by all these issues.
I think that diminishes my hope of a UBI working, even more so. Since a program ostensibly structured to not fall into such pitfalls still very carelessly falls into them. I very much doubt a program with no protections at all would do any better.
I guess that you will just have to trust me on this one. I have a PhD in Political Science and Public Policy from Brown University and have taught university-level courses on this subject.
The reason why “the debate is driving you nuts” (as you state) is that you do not understand what UBI is. I am not trying to embarrass you, I am just stating a fact.
And, yes, I agree with you that UBI will have negative consequences on society.
I did! I also am a huge fan of your book reviews on your blog site. I have read many of the same books, and by following you, I get a great feel for the ones I haven’t.
Thanks so much, and I am glad that you enjoy my book reviews. I had planned on doing many more, but I got sidetracked on other projects. I have got a lot of balls in the air!
The most interesting new addition to the progress field is Michael Muthukrishna's Theory of Everyone. Kling is doing a running chapter by chapter series review on it now on his substack, which I assume you are familiar with.
It's true that a negative income tax would not necessarily a UBI, but it could be implemented in a way which would be _very_ close a UBI. Let's say that the first $5,000 dollars you make is taxed at a rate of -100% (i.e. the government matches every dollar that you earn). Let's also say that this tax scheme applies an alternative credit of $5,000 for each person who is unable to work in a job (i.e. dependents, full-time caretakers, and people with severe disabilities/illnesses). This would basically be a UBI of $5,000 which would apply to almost everyone except those who are able to work but who (for whatever reason) choose not to - exactly the sort of people to whom we would not want to provide welfare in the first place.
It wouldn't be perfect, of course. There would be incentives for fraud (e.g. "employers" who lie about paying $5,000 to people who don't actually work in return for a cut of the credit). And keeping track of who is "unable to work in a job" would be just as difficult as it is today, but a system like that could be strictly better than our current system of welfare (which incentivizes people NOT to get married and NOT to work).
I'm not in the US but I assume that because you don't get it until you're 65 means that people see it as specifically money to help you retire? Whereas that wouldn't be the case if you've been getting it your whole life.
Generally I think that older people are less likely to be in need of money than younger people because they've (hopefully) been saving/investing for years in order to be able to retire. Young people would be more likely to put UBI to good use to enable them to e.g. get a mortgage, support a family, improve their skills etc. and generally invest in their future whereas older people wouldn't.
“Put to good use” is the exact argument against a UBI, as Chris elaborated on above.
If “putting money to good use” is your metric for whether or not a person should be given free money. Then you should be in favor of existing welfare systems, which ensure, to at least some degree, that the welfare money is “put to good use”.
Or even further, since existing welfare system do a very bad job of this, you should actually just favor private charity and responsible investment made by individuals, since these entities have the most incentive to ensure that given money is “put to good use”.
I don't think it's quite that simple, since Chris argued that one of the problems with the current system is that the people who do need the money (which to me means they would put it to good use) often don't get it, which is what I was saying in favour of UBI over social security.
On charity, I don't think we can or should expect to rely on private organisations to provide the a security net. Charities are not uniformly distributed - there wouldn't be charities available to help some people who need them (same problem as with welfare state that they target specific issues, but also that they only tend to be active in particular areas). Also a lot of people won't give to charities, whereas we should be able to agree a fair system of ensuring everyone in the country contributes what they are able to support a welfare system.
Your argument was that social security is not equivalent to a UBI, because older people would not be using the money in the way you think they ought to.
But this is the same argument for welfare over a UBI, because many people would not be using the money in the way you think they ought to (deciding instead to spend this money on alcohol, gambling, drugs, or as Chris said “surfing”).
So either social security is equivalent to a UBI (and thus indicative of it’s problems), or welfare is better than a UBI. I don’t see how you can hold the position that they are different and a UBI is better.
"But this is the same argument for welfare over a UBI, because many people would not be using the money in the way you think they ought to"
No I think this is the part where we differ. I think people who need the money would (mostly) use it in a way that is beneficial.
I think that limiting the money just to people who pass certain criteria or limiting it just to certain uses will mean that people who really need support won't get it/won't be able to use it for what they really need. Likewise I think that social security is limiting in that it only provides support to a specific group of people and isn't available for most of the people who need support.
Mostly using it in the way you want still admits that some people will not. Seems as though the above logic still holds.
Spinning this around: sure some old people won’t use social security to “get a mortgage, support a family, improve their skills etc”, but many will. Ergo, the fact that some old people won’t do this doesn’t seem like a good objection to the claim that social security is equivalent to a UBI.
I would leave the current welfare program in place and increase taxes on the 1% to augment the Earned Income Tax Credit. This additional money would go to the working poor. The group (in my mind) most in need of and (sorry) most entitled to additional assistance. It would help relieve their burden without providing a disincentive to work.
Are people poor because they don't have money or are they poor because they weren't raised properly to want and know how to provide for themselves? If you believe it's mostly the latter, UBI would help entrench and perpetuate the problem for generations to come. And UBI would foster an entitlement mentality: society owes me a living.
Once that mentality is in place, the amount is never enough. There will be constant conflict to ratchet it up. And almost nothing destroys people and societies as quickly as entitlement and dependency.
The current system has at least some features to treat assistance as a temporary safety net. That's a good thing.
Instead of UBI, why not increase the earned income tax credit and cut further on programs for the able-bodied but not working?
"Are people poor because they don't have money or are they poor because they weren't raised properly to want and know how to provide for themselves?"
Partly that. But mostly the factor that's so thoroughly taboo you didn't even think to mention it: genetics. For g, for conscientiousness, for pro-social traits relevant to maintaining employment, for low risk of substance addiction, and for a whole slew of other low-key but highly heritable traits that add up. Adoption studies tell us a lot about how fast different genetics can toggle poverty in both directions, in the developed world.
Random comments from a real surfer who is skeptical of almost every argument in this admittedly well argued post:
1. I think it is better to give targeted assistance for baby food and heat in the winter than cash which can be used for surf boards, gambling, booze and hookers. I am not trying to optimize people-who-don’t-work’s utility, I am trying to provide a safety net for those truly in need.
2. Agree the current system doesn’t target real well, but the obvious solution is to work to improve targeting and building incentives to reduce overhead, not give something to everyone. Similar argument for eliminating "cliffs" and getting aid to those in need missing out.
3. I believe the average poor American family not only can make over $42k per year in government assistance, but that they on average do, and that this is then specifically excluded from measures of poverty and inequality.
4. My skepticism aside, I believe we would be better served by experimenting somewhere with UBI rather than just arguing it. I believe longer term it will be a complete and total disaster, especially for less capable people in general. I strongly suspect it will lead to lower total productivity, more free riding, lower average living standards, increases in gambling, substance abuse and mental illness, increased dependency, higher rates of illegitimacy and single parenting, higher rates of gang violence, and bad breath. I would prefer to be nowhere near the experiment.
- [ ] A program is good only if it is better than something else. UBI would be better if it replaced all existing low income benefit programs. The most important program to be replaced is what I call mishmash. Almost every government program is modified to adjust for its impact on the poor. For example, local regulation of housing almost always includes mandatory low income housing. I would gladly trade a UBI program in return for the elimination of all mishmash.
I think a UBI paired with Georgist tax reforms (in which Georgist taxes replace all other forms of taxes - bit of a caveat that I'd add copyright and patents to the Georgist tax framework), comprised entirely of the "profit" of government (revenue less expenses), is both morally workable (as you are more or less explicitly taxing people for a "right" which entirely comprised of limiting other people's choices, so the UBI is compensating them for the loss of choice), and likely aligns most of the incentives in the correct direction.
Has anyone taken the idea seriously enough to try to map out the multiple levels of municipal, county, state, and federal programs that would be impacted (positively, IMO, by elimination, but they won't see it that way)? I presume the high-level proposal is that it becomes 100% federal, even for the large amount of current funding that's administered at lower levels today.
Would a good first step be to turn MOST programs into unrestricted cash grants? Not universal, but a basic income to those folks getting significant assistance in ways that don't work for them now. My base intuition is that we'd find that MOST of that $42k doesn't actually reach them - it's taken in parts by administrators, contractors, and agencies and not available to the nominal recipients.
I'm in favor, in the same sense that I'm in favor of consumption taxes to replace income taxes, but I don't see how it's anywhere near feasible in the US in the next few decades.
Why is the fact that some people might choose not to work a problem? The goal is to maximize utility not economic output and if some people decide that they'd prefer not to work then maybe that increases overall utility.
I actually think the fact that people may choose not to work is the strongest argument *for* UBI. In a world without UBI I fear that technical Innovation will make functional goods very cheap but that they'll always be plenty of demand for status goods -- things that are desierable simply because they are expensive because they are hand made. As we get richer the returns to utility of extra consumption decrease and more of what we consume becomes about demonstrating relative status (so providing more doesn't necessarily increase the overall consumer utility substantially).
Because the reason we work is to produce the goods and services that we use to live on. If ten percent of people choose not to contribute in a society that rewards free riding (a form of exploitation or cooperative defection), then average living standards will drop for the 90 as utility increases for the 10. As the UBI increases, the incentives to free ride increase, the numbers free riding increase, the UBI tax on producers increases and average living standards drop.
That's largely a selection effect because it's not seen as acceptable to live that way and doing it usually requires some level of scamming etc. If you instead look at the people who work in i-banking or whatever for a decade and then retire at 35 they are fine.
There is a big difference between working for a decade or more and making lots of money and never working. And besides very few people can retire at age 35 so you have any even larger selection effect.
Would a UBI raise the cost of some goods and services (e.g., rent on small apartments)? I don't have a sense of the answer. Also how would a UBI interact with Brian's desire for unrestricted immigration?
Interesting to frame the UBI debate as to whether or not it improves upon the status quo welfare system (which most of us probably regard as a complete debacle). Didn’t Friedman make an efficiency argument for replacing welfare with a negative income tax? Yet even with this extremely low bar, political reality means that no existing welfare program can ever be dismantled (meaning UBI will be another cherry on top). We have seen the results of a recent natural experiment along these lines with widely distributed Covid relief payment fiasco.
I wanted to mention: Milton Friedman's "negative income tax" is a version of UBI, isn't it? So, what is wrong with that - or how is it worse than the status quo. Friedman had no "means-testing" either. (The version Chris advocates is not the only one around. ). My five cent: UBI is fine as long as it is low enough. Talking UBI without giving a number makes no sense. 300$ a month borders on excessive, imho. ;)
The negative income tax has some similarities to UBI, but the main difference is under Friedman's plan most workers get nothing. Under UBI everyone gets the same amount of money. Because of that Friedman's plan is much cheaper.
Not true. They are mathematically very different. Let me give an example.
An earner with 100k income gets nothing under Friedman’s proposal. Under UBI that person get the full UBI ($7000 or whatever the proposal). This would be true for the vast majority of earners.
In Friedman’s proposal, the only ones who get anything like the full benefit are those with little to no income.
Not even close to being the same.
It is literally a reverse income tax. Everyone gets different amounts based on the income. Just like in a regular income tax.
Any negative income tax can be converted into an equivalent ubi. The amount of the equivalent ubi depends on the deduction and tax rate involved, but they are mathematically the exact same thing.
Give me Friedmans exact proposal and I can give you the equivalent ubi amount.
"Negative Income Tax" became prominent in the United States as a result of advocacy by Milton and Rose Friedman, who first put forward a concrete proposal in 1962 in a brief section of their book Capitalism and Freedom.[9] Their system is equivalent in its operation to most forms of Universal basic income (UBI)
I have a question I asked in one of the threads but would like to ask you all:
If you think people would stop working or being employed with a poverty line, subsistence level allocation, then why do you think people are working as much as they are now?
I am really confused by the math (and lack thereof) of UBI claims in this post. Surely some formulations are terrible, so the onus is on those who want it to provide a reasonable way. If not it's too easy for Caplain to (intentionally or accidentally) debate a strawman.
I'm especially concerned by Caplan's claims here:
> Even with a one-third flat tax, that implies that a family of four would have to make $120,000 a year before it paid $1 of taxes. This is pie in the sky.
Surely we can design a system where on net only the bottom ~25% see any benefit of UBI, even if it involves a slightly odd tax bracket system with an increased clawback for the UBI amount.
This is not really answering your question, but phase-outs and cut-offs of benefits are really hard to design. This is one of the great conundrums of social programs. You want to help those in need, but also give them an incentive to earn more money. You also want to keep costs manageable. There is no easy solution.
If you have a 100% cut-off after someone reaches 26th percentile (to use your example), you create a "benefits cliff." This gives a very strong incentive for people around that income level to stop working more hours or at least not look for higher-paying jobs. This can create dangerous long-term incentives if poor people refuse to take better jobs.
To avoid this most proposals have some sort of a phase-out of benefits as income increases. The problem is that this functions exactly like taxes. You work more, but get less of a percentage of your earned income back.
If you create a phase-out then it has to be really gradual or it will create a similar but lesser disincentive (just like income taxes do now). I would say 33% is probably the absolute highest, but then this greatly increases the cost of the program because so many more people are receiving benefits. You can easily triple the cost with a lost phase-out rate.
Plus you have to take into consideration that the phase-out is in addition to increased income tax rate and Social Security taxes. It is very easy to get well over a 50% loss in post-tax benefits.
Plus you have to take into consideration that wages are not the same as income. A $15,000 wage by a mother working part-time may be very low. But she could be married to a husband who is making 100k plus.
The question of fraud also needs to be addressed. There is fraud under the current system, of course, but would it be better or worse under a UBI? Note that even if the total levels of fraud would be roughly the same, UBI fraud could have worse effects because the victims would probably be the specific vulnerable people whose UBI checks are stolen, whereas the effects of fraud under the current system are more diffuse and affect the taxpayer public as a whole.
I am currently writing a book on subject called "Upward Mobility."
A far better solution than any kind of UBI would be a replacement of all means-tested programs with a radical expansion of the current Child Tax Credit and rebranding it as the Working Family Tax Credit.
The purpose of the Working Family Tax Credit is to create a short-term positive incentive for lower-income parents with children to:
o Get married and stay married
o Get a full-time job and stay employed
To be eligible to receive the Working Family Tax Credit, the parents must:
• Be legally married
• Work at least 35 hours/week combined (not including vacations or sick days).
The new credit would pay:
• $12,000/year for the first child
• $7000 for the second child (for a total of $19,000)
• $2500 for the third child (for a total of $21,500)
• Nothing for any additional children.
To be eligible for the Working Family Tax Credit, a household must be a married family with children with at least one full-time worker. To ensure that the benefits primarily go to working-class families rather than professional-class families, the full benefit will go to families that earn $15,000/year, and the amount will gradually phase out so that families that earn $110,000/year or more will not be eligible. The entire amount should be fully refundable.
While one of the flaws of the current system is that it discourages marriage, a system which does not provide _any_ benefit to single parents would be flawed in the opposite direction. I would propose amending the eligibility requirements to add a provision for single parents who work at least 25 hours/week or something like that. That way there would still be an incentive to marry (i.e. it's much easier to get 35 hours per week between two people), but single parents (who generally struggle in poverty the most) would not be entirely cut out of the benefits.
The system should also provide _something_ for 4+ kids. It's true that the per-child cost does go down with additional children, but it doesn't go down to $0. Maybe $1000 for each child at 4+? The incentives would need to be much higher, of course, if you were wanting to encourage people to have larger families, but I assume that you're mostly trying to offset the costs that parents incur from having kids in order to provide a safety net and prevent them from falling into poverty.
Thanks for the feedback. I am sure that many people will want to include single-parents, but I strongly disagree. One of the main points of my proposal is to encourage two-parent families because it creates far better results for children. Your amendment would undo that.
As for increased benefits for 4+ kids, I can see your point. You are correct: the cap is mainly to ensure that have children just to get money and keep the costs down a little. A small amount like you suggest is an acceptable amendment.
The primary purpose of this kind of subsidy is to benefit poor kids (i.e. to offset the negative effects of poverty). Poor kids who live with a single parent are even more disadvantaged compared to similarly poor kids who have both parents. The current system recognizes this and tries to provide extra financial help for such kids to offset that disadvantage, but that policy has had the unintended consequence of encouraging their parents not to get married in the first place, which almost certainly makes things worse. Your system would completely reverse that incentive, and that would certainly lead to some marriages which would provide more stable households for many of the kids affected. However, for a single parent who is unable to marry the other parent of their children (due to abuse or death), this would be much worse relative to the current system. And their kids are the ones who would suffer.
Ideally, the replacement of the current system should be a pareto improvement (at least from the perspective of the kids who are affected).
Exactly. The kind of person who is in desperate poverty is the kind of person who will spend cash benefits on drugs and booze and still live on the street. UBI is tempting because it seems like so much bureaucracy could be eliminated (and the cliff problem removed), but I think in practice it would be a disaster just like drug legalization. People at the bottom rungs don't make good decisions. (Yes, "good" is subjective at some level, but there are objective metrics that policy makers have in mind when they make these programs, like getting homeless drug addicts off the street).
Also: Politicians would have a new knob to turn for the level of UBI and democrats would keep wanting to turn it up. As with all benefits like this, it would be a one way increasing ratchet. If it got good enough I'd retire early.
I chose to retire early (at 49) to surf, but this was dependent upon my productivity and savings for 30 years. With a UBI, there would be a lot more people on the margin choosing waves over work.
Surfers are not a problem; if a few people can survive on the minimum necessities and want to spend the majority of their time surfing (and don't harm others), then good for them! Such people are never going to make up more than a tiny minority; most people would not be satisfied with that life and would therefore be incentivized to work. The problems occur when the system discourages people from working or else it encourages behaviors which are harmful to others. I'm reasonably convinced that the current system is worse than a UBI on those metrics, but I'm not convinced that there is a path forward to replace the current system with UBI.
I totally disagree that just a tiny minority would be interested in leisure activities (of whatever type) over work. Maybe we know totally different people.
Getting out of the box, maybe we could incentivize people meeting certain requirements to stay home and raise large families thus solving the coming fertility crisis. Instead of a decreasing stipend per child (like Michael Magoon suggested above) have an increasing one.
I think you are seriously underestimating how many people prioritize free time over money.
Imagine a UBI of $7000 per year. Imagine four 20-year-old male friends with few employment skills. If given the opportunity for the four of them to pool their income and rent a cheap house in a rural area so they can play video games all day rather than work full-time in a minimum-wage job.
What percentage will take that opportunity? I think many will. Now imagine ten years later when they realize they made a big mistake. How will they make up for their lost decade?
Now move forward three generations where you have entire towns full of people making the same choice. Children know few people who actually work. How many young people in those communities will get a job?
So you are saying, in essence, that these imaginary people don't want any of the modern leisure, comfort goods that come with the salary associated to employment. As an aside, how would they pay for their videogames?
On a more general level, why are real, young or old, people working as much as they do? As per your thinking, wouldn't they stop working as soon as they can eat, clothe themselves & find shelter and buy videogames or netflix?
I guess, on the most general level, the question is: why do people work? Or, in an even more general way: why do people exchange their ressources on the labor market?
The question that keeps going through my mind is actually how it is that you don’t know people like this? These aren’t imaginary people to me, they are common. The goofy kid who lives in the parents basement until he or she is 35. The group of guys getting together and splitting rent on various assistance programs. People abusing disability to play disc golf. Granted it isn’t a majority of people I know. But it isn’t uncommon, and the concern is incentives that make it worse.
As I wrote earlier, I retired at 49 after decades of productive work and savings. I loved my job, and added value to millions of people (I designed new financial products which proved very popular). But I vastly prefer the new routine of surfing a couple of hours a day, reading, writing, painting and spending time with family while living off my savings and investments.
Really, I don't know anyone with this behavior. And again, in your case, you seem to have money to enjoy some of the finer things in life. You worked because you wanted these things.
We are talking poverty line, subsistence level allocation here. Not "buy widescreen tvs and lots of videogames" money. Do you think lots of people don't care about these finer things that money can buy? If so, why do you think people work?
I am also mystified as to why you do not know anyone like this. Some people prefer free time over money. I have known many people, and I probably would of in my 20s as well.
Just look at YouTube channels devoted to Van Life, Simple Living, Stealth Camping, Homesteading, and Retire at Age 35. And retiring early is one of the most common life goals in American society. This is hardly unusual behavior.
Poor people in the US have cell phones, HDTVs, and video games (if they want it). Compared to the rest of the world and previous generations, they already have the "finer things." With UBI you would be able to get that without any work.
"Our analysis shows that in spite of the safety net programs that support families residing in poverty, those living at or below twice the federal poverty line, devote a substantial share of their monthly expenditures to goods and services necessary for basic shelter, health, and nutrition. The data do not support claims of ‘irresponsible’ spending on alcohol or tobacco among these families."
Again, with retiring early, you need to have money, and quite a lot of it. And how much do you think poor people make to enjoy all these things? Do you think with $12 000 a year, you can buy all of this? I find it hard to believe.
But you still did not answer the question I asked: if you think lots of people would stop working and live on a poverty line, subsistence level allocation as you seem to do, then why are they working now? Why don't they stop working as soon as they made $12 000?
If you're making assumptions about people's will to work, it seems important to know then *why* they work.
1) Abolished all means-tested programs including Medicaid, CHIP (but not Social Security and Medicare).
2) Required one full-time worker in the household to be eligible.
Would you agree to that? I would not consider it to be UBI, but I would support it.
I would be even more enthusiastic if it were also restricted to married parents with children with an income under say $75,000. This is getting much closer to my proposal, which I outlined in another thread.
Imaginary people? You must live in some very elevated social circles to know no one who prioritizes free time over money.
Why do people work? Throughout human history, people have labored to survive. They have no choice. Material circumstances dictate work.
Because most people are not currently eligible to get an income without working today, they work. The realities of modern society are that you need a full-time job within the household. No work is not an option for them. It is a stark binary choice. Some can work part-time, but that includes a large drop in wages per hour.
If the current system effectively forces at least one worker in the family to work full-time anyway, it makes perfect sense to increase the amount of money that one can earn per work hour. But that does not mean that they would keep working if they did not need to do so.
Your real question should be: why do people retire? If everyone were income maximizers, no one would retire. But almost everyone eventually does.
People typically retire when they have enough guaranteed income to survive at a specific standard of living (which varies by person). For most people, that means waiting until they are eligible for Social Security and Medicare. For a lucky few, it means earning lots of money and saving like crazy or inheriting money.
UBI effectively lowers the retirement age to 20.
The minimum Social Security benefit for workers with 30 years of work history is about $12,000 per year. Many people gladly take it in favor of working full-time. Some supplement their benefits with part-time work, but many do not. Why do you think that it is so crazy that many people will want to retire at age 20?
I think you need money to retire. How many of these retirees live *only* on the 12 000$ without any savings or capital? That's why I think people retire: they've accumulated enough capital & savings.
And thank you for the answer. Now, I think you touch something important here: people are *forced* to work. So they work because they are effectively coerced into it lest they die of hunger or cold... Which brings me to another question:
What does it say about the current labor market if people are forced to work? Is it really voluntary exchange?
PS: I said "imaginary" because you said "Imagine four 20 year olds..."
PPS: sorry but I lagged a little in the comments since you went so fast.
Fair enough. The thread is getting a little confusing. And your questions are helping me think through my point, so thank you for that : )
People are forced to work by material reality, and they always have been. We used to work to grow food to eat, now we work in jobs. Only a small elite could get around that reality by expropriating labor from the masses.
Work is a good thing (up to a point) because it forces us to grow as human beings, overcome our limitations, learn new skills, make positive contributions to society, and learn to cooperate with others who are different from us. Plus it pays taxes to support government programs.
What our current labor market does is very strongly encourage people to choose full-time work over part-time work. In addition to the lower work hours, you also have lower wages per hour and lower benefits. This is somewhat made up for with lower taxes. So regardless of whether you maximize time or money, a full-time job makes sense for at least one person in the household.
This is probably also good because the gap in long-term skills acquisition between a full-time worker for 20 years and a part-time worker for 20 years is huge. Those skills benefit society.
And yes it is voluntary exchange because there are millions of jobs to choose between. If there was only one job assigned to each person by someone else, then it would be coercion.
UBI fundamentally breaks the link between work and survival like nothing in human history. It also means that you can retire at age 20 without savings or capital.
I have known many people who inherit a decent amount of money in their 20s and never work a day in their lives. I call them "Independently Poor" because they have just enough money to survive, but not enough to be anything like rich. By their 40s they have far less income than their peers who were forced to work. Many of them are very immature and entitled, but they will refuse to work to better themselves. And after awhile, no employer will hire them.
I think UBI will radically increase the number of those types of people.
I agree with you that this is becoming a little confusing... hehe. But still, I must make two further points:
1. Theoretically, maybe there are "millions" of jobs... But effectively, for many, these jobs incur costs they can't pay in distance, ressources, talent, etc. So, for a lot of people you think could stop working altogether, while only given the means to subsist, there are more like a couple of alternatives. And I would finally ask, the fact that people, in general, are forced to enter the market, doesn't it exercise, again generally, downward pressure on the price they can get for their exchanged goods (labor) ?
2. I still think that reeeaaally little people won't ever want to work for a decent salary if only given the bare subsistence minimum. You think otherwise. Either way, it's more of a gut feeling I guess. Maybe ideology too. No real way to know I guess. But to the best of my knowledge, studies tend to show that people want to contribute and feel useful. Even without a salary! Hehe. Maybe you saw studies to the contrary, studies which I would gladly read and consider!
Note that I would expect full-time employment to drop slightly if a UBI were implemented as the primary instrument of welfare. But I would also expect part-time employment to rise. Let's take your example of the four friends who mostly sit on the couch and play videogames, but add to that that they occasionally go out and drive people around in an Uber or deliver groceries in order to pay for the games and other small luxuries. They might not be living the best life that they could be living (and they might regret their choices 10 years from now), but they would still be providing a net benefit to society!
I doubt such small work efforts that you mention would earn more than the UBI benefits that they earn. Plus we still have to pay for all the infrastructure that they use. And someone would have to pay taxes for military, police, and other non-social programs. That would not be them. Even small reductions would lead to large losses in government revenue. I think that it would be a clear negative for society.
And I think the drop in full-time employment would be far larger than slight.
If they're happy playing video games and working part-time, then at least they wouldn't be going out and causing crime and mischief which are the worst kinds of costs to society. And they would be better for society than welfare recipients under the current system who don't work at all (there are currently many young people who subsist entirely on "disability" payments). Obviously it would not be sustainable for _everyone_ to live like this, so I guess that the main question is how many additional people would rely on a UBI and coast through life who would have been working full-time under the current system. My guess is that this would be a small minority of people (many of them, only for a small part of their lives), but you think that this would be widespread, so I guess that's where we differ.
I believe that it would be a small percentage of the overall population at first, but a sizable minority of young people from lower-income families. Then this would gradually increase over time until it becomes the dominant lifestyle in lower-income neighborhoods. Then it would gradually expand outward until it becomes the norm in a few generations.
In other words, it would accelerate all the problems of our current welfare system by making everyone eligible.
What drives me nuts in this debate is that the US already has a universal basic income. It’s called Social Security.
Granted, it doesn’t take effect until you’re ~65, and there are some (fairly minor) restrictions. But it’s the closest thing we’ve got.
It’s also the largest item on the federal budget, soon to be bankrupt, and (from my personal observations) disincentivizes work and encourages early retirement, as well as a general attitude of entitlement from the government.
You could say that it’s not a very well designed program, but that’s the point. You don’t get to decide how a UBI is implemented, the existing federal government does.
Chris is effectively promoting that we get rid of the one saving grace of social security (the age limit), and promises that all of the clearly bad and negative consequences that we see with the existing system will just go away.
I find this highly implausible.
Social Security is nothing like a UBI. The level of benefits varies greatly, and you must have a work history (though not much to get minimum benefits). Plus the money comes from paying OASDI taxes.
There are plenty of UBI proposals that have variable benefits (e.g. negative income tax).
There are also many proposals for funding a UBI through a new tax. Though, I personally don’t think it matters. The government is going to do what it needs to do to fund the program, where that money is documented as coming from is irrelevant.
And yes, one other saving grace to Social Security is that it requires 10 years of work. I alluded to, but did not expound on this fact, because it is very difficult to go 65 years of life without any sort of work for 10 of those years. Making it irrelevant to the conversation.
I fail to see how any of this is makes social security “nothing like a UBI”. If anything, you’ve confirmed my prior even more.
"What drives me nuts in this debate ...... already has a universal basic income. It's called Social Security."
Man, this is embarrassing AF. Think HARDER king
I don't think you understand what UBI actually is. A UBI means everyone gets exactly the same benefit regardless of age, income, tax status, etc. All other social programs have special eligibility requirements. That is the entire point with UBI.
The negative income tax is not a UBI. Under a negative income tax everyone gets a different level of benefits, and most get nothing. That is not universal.
The reason why Social Security is not a UBI is not because it is funded by a tax (all social programs are funded by a tax). Social Security is funded by a tax by the exact same people who will receive a benefit. If you do not pay the tax, you do not get the benefit. Many people over 65 do not get Social Security benefits. Therefore, it is not universal.
Like, I don’t think you’re right at all. A negative income tax is a UBI with less steps. And I don’t see how funding something with a tax makes it not a UBI.
But let’s put all that to the side. Because, I think your definitions prove my underlying point even more.
It’s one thing to say Social Security is a UBI, and it’s a total mess of a system that’s totally bankrupt, and creates perverse incentives to not work. But it’s another to say that it’s not even a UBI, is actually a program structured to benefit people who work more, and doesn’t go to people who don’t work, and is specifically funded by special taxes, yet is still plagued by all these issues.
I think that diminishes my hope of a UBI working, even more so. Since a program ostensibly structured to not fall into such pitfalls still very carelessly falls into them. I very much doubt a program with no protections at all would do any better.
I guess that you will just have to trust me on this one. I have a PhD in Political Science and Public Policy from Brown University and have taught university-level courses on this subject.
The reason why “the debate is driving you nuts” (as you state) is that you do not understand what UBI is. I am not trying to embarrass you, I am just stating a fact.
And, yes, I agree with you that UBI will have negative consequences on society.
Love your newest book, Michael!
Thanks so much for the positive feedback. I would appreciate it if you could leave a review on Amazon. It really helps.
I did! I also am a huge fan of your book reviews on your blog site. I have read many of the same books, and by following you, I get a great feel for the ones I haven’t.
Thanks so much, and I am glad that you enjoy my book reviews. I had planned on doing many more, but I got sidetracked on other projects. I have got a lot of balls in the air!
The most interesting new addition to the progress field is Michael Muthukrishna's Theory of Everyone. Kling is doing a running chapter by chapter series review on it now on his substack, which I assume you are familiar with.
My guy get off substack and go read a book or two ... thanks
> The negative income tax is not a UBI.
It's true that a negative income tax would not necessarily a UBI, but it could be implemented in a way which would be _very_ close a UBI. Let's say that the first $5,000 dollars you make is taxed at a rate of -100% (i.e. the government matches every dollar that you earn). Let's also say that this tax scheme applies an alternative credit of $5,000 for each person who is unable to work in a job (i.e. dependents, full-time caretakers, and people with severe disabilities/illnesses). This would basically be a UBI of $5,000 which would apply to almost everyone except those who are able to work but who (for whatever reason) choose not to - exactly the sort of people to whom we would not want to provide welfare in the first place.
It wouldn't be perfect, of course. There would be incentives for fraud (e.g. "employers" who lie about paying $5,000 to people who don't actually work in return for a cut of the credit). And keeping track of who is "unable to work in a job" would be just as difficult as it is today, but a system like that could be strictly better than our current system of welfare (which incentivizes people NOT to get married and NOT to work).
I'm not in the US but I assume that because you don't get it until you're 65 means that people see it as specifically money to help you retire? Whereas that wouldn't be the case if you've been getting it your whole life.
Generally I think that older people are less likely to be in need of money than younger people because they've (hopefully) been saving/investing for years in order to be able to retire. Young people would be more likely to put UBI to good use to enable them to e.g. get a mortgage, support a family, improve their skills etc. and generally invest in their future whereas older people wouldn't.
“Put to good use” is the exact argument against a UBI, as Chris elaborated on above.
If “putting money to good use” is your metric for whether or not a person should be given free money. Then you should be in favor of existing welfare systems, which ensure, to at least some degree, that the welfare money is “put to good use”.
Or even further, since existing welfare system do a very bad job of this, you should actually just favor private charity and responsible investment made by individuals, since these entities have the most incentive to ensure that given money is “put to good use”.
I don't think it's quite that simple, since Chris argued that one of the problems with the current system is that the people who do need the money (which to me means they would put it to good use) often don't get it, which is what I was saying in favour of UBI over social security.
On charity, I don't think we can or should expect to rely on private organisations to provide the a security net. Charities are not uniformly distributed - there wouldn't be charities available to help some people who need them (same problem as with welfare state that they target specific issues, but also that they only tend to be active in particular areas). Also a lot of people won't give to charities, whereas we should be able to agree a fair system of ensuring everyone in the country contributes what they are able to support a welfare system.
Your argument was that social security is not equivalent to a UBI, because older people would not be using the money in the way you think they ought to.
But this is the same argument for welfare over a UBI, because many people would not be using the money in the way you think they ought to (deciding instead to spend this money on alcohol, gambling, drugs, or as Chris said “surfing”).
So either social security is equivalent to a UBI (and thus indicative of it’s problems), or welfare is better than a UBI. I don’t see how you can hold the position that they are different and a UBI is better.
"But this is the same argument for welfare over a UBI, because many people would not be using the money in the way you think they ought to"
No I think this is the part where we differ. I think people who need the money would (mostly) use it in a way that is beneficial.
I think that limiting the money just to people who pass certain criteria or limiting it just to certain uses will mean that people who really need support won't get it/won't be able to use it for what they really need. Likewise I think that social security is limiting in that it only provides support to a specific group of people and isn't available for most of the people who need support.
Mostly using it in the way you want still admits that some people will not. Seems as though the above logic still holds.
Spinning this around: sure some old people won’t use social security to “get a mortgage, support a family, improve their skills etc”, but many will. Ergo, the fact that some old people won’t do this doesn’t seem like a good objection to the claim that social security is equivalent to a UBI.
I would leave the current welfare program in place and increase taxes on the 1% to augment the Earned Income Tax Credit. This additional money would go to the working poor. The group (in my mind) most in need of and (sorry) most entitled to additional assistance. It would help relieve their burden without providing a disincentive to work.
Troll ... dont feed the Denver
Who's the troll? I thought this was a decent discussion.
Are people poor because they don't have money or are they poor because they weren't raised properly to want and know how to provide for themselves? If you believe it's mostly the latter, UBI would help entrench and perpetuate the problem for generations to come. And UBI would foster an entitlement mentality: society owes me a living.
Once that mentality is in place, the amount is never enough. There will be constant conflict to ratchet it up. And almost nothing destroys people and societies as quickly as entitlement and dependency.
The current system has at least some features to treat assistance as a temporary safety net. That's a good thing.
Instead of UBI, why not increase the earned income tax credit and cut further on programs for the able-bodied but not working?
"Are people poor because they don't have money or are they poor because they weren't raised properly to want and know how to provide for themselves?"
Partly that. But mostly the factor that's so thoroughly taboo you didn't even think to mention it: genetics. For g, for conscientiousness, for pro-social traits relevant to maintaining employment, for low risk of substance addiction, and for a whole slew of other low-key but highly heritable traits that add up. Adoption studies tell us a lot about how fast different genetics can toggle poverty in both directions, in the developed world.
Random comments from a real surfer who is skeptical of almost every argument in this admittedly well argued post:
1. I think it is better to give targeted assistance for baby food and heat in the winter than cash which can be used for surf boards, gambling, booze and hookers. I am not trying to optimize people-who-don’t-work’s utility, I am trying to provide a safety net for those truly in need.
2. Agree the current system doesn’t target real well, but the obvious solution is to work to improve targeting and building incentives to reduce overhead, not give something to everyone. Similar argument for eliminating "cliffs" and getting aid to those in need missing out.
3. I believe the average poor American family not only can make over $42k per year in government assistance, but that they on average do, and that this is then specifically excluded from measures of poverty and inequality.
4. My skepticism aside, I believe we would be better served by experimenting somewhere with UBI rather than just arguing it. I believe longer term it will be a complete and total disaster, especially for less capable people in general. I strongly suspect it will lead to lower total productivity, more free riding, lower average living standards, increases in gambling, substance abuse and mental illness, increased dependency, higher rates of illegitimacy and single parenting, higher rates of gang violence, and bad breath. I would prefer to be nowhere near the experiment.
- [ ] A program is good only if it is better than something else. UBI would be better if it replaced all existing low income benefit programs. The most important program to be replaced is what I call mishmash. Almost every government program is modified to adjust for its impact on the poor. For example, local regulation of housing almost always includes mandatory low income housing. I would gladly trade a UBI program in return for the elimination of all mishmash.
I think a UBI paired with Georgist tax reforms (in which Georgist taxes replace all other forms of taxes - bit of a caveat that I'd add copyright and patents to the Georgist tax framework), comprised entirely of the "profit" of government (revenue less expenses), is both morally workable (as you are more or less explicitly taxing people for a "right" which entirely comprised of limiting other people's choices, so the UBI is compensating them for the loss of choice), and likely aligns most of the incentives in the correct direction.
Has anyone taken the idea seriously enough to try to map out the multiple levels of municipal, county, state, and federal programs that would be impacted (positively, IMO, by elimination, but they won't see it that way)? I presume the high-level proposal is that it becomes 100% federal, even for the large amount of current funding that's administered at lower levels today.
Would a good first step be to turn MOST programs into unrestricted cash grants? Not universal, but a basic income to those folks getting significant assistance in ways that don't work for them now. My base intuition is that we'd find that MOST of that $42k doesn't actually reach them - it's taken in parts by administrators, contractors, and agencies and not available to the nominal recipients.
I'm in favor, in the same sense that I'm in favor of consumption taxes to replace income taxes, but I don't see how it's anywhere near feasible in the US in the next few decades.
Why is the fact that some people might choose not to work a problem? The goal is to maximize utility not economic output and if some people decide that they'd prefer not to work then maybe that increases overall utility.
I actually think the fact that people may choose not to work is the strongest argument *for* UBI. In a world without UBI I fear that technical Innovation will make functional goods very cheap but that they'll always be plenty of demand for status goods -- things that are desierable simply because they are expensive because they are hand made. As we get richer the returns to utility of extra consumption decrease and more of what we consume becomes about demonstrating relative status (so providing more doesn't necessarily increase the overall consumer utility substantially).
Because the reason we work is to produce the goods and services that we use to live on. If ten percent of people choose not to contribute in a society that rewards free riding (a form of exploitation or cooperative defection), then average living standards will drop for the 90 as utility increases for the 10. As the UBI increases, the incentives to free ride increase, the numbers free riding increase, the UBI tax on producers increases and average living standards drop.
" free riding (a form of exploitation or cooperative defection)" .... im stealing this. thanks
Pete ... go take a nap, lol
Work/economic output creates utility for others.
No, you cannot become a fully-functional adult unless you work for a significant period of time.
> The goal is to maximize utility not economic output
Does this include the utility of taxpayers?
Have you not noticed what happens to people who don't work?
That's largely a selection effect because it's not seen as acceptable to live that way and doing it usually requires some level of scamming etc. If you instead look at the people who work in i-banking or whatever for a decade and then retire at 35 they are fine.
There is a big difference between working for a decade or more and making lots of money and never working. And besides very few people can retire at age 35 so you have any even larger selection effect.
Would a UBI raise the cost of some goods and services (e.g., rent on small apartments)? I don't have a sense of the answer. Also how would a UBI interact with Brian's desire for unrestricted immigration?
Interesting to frame the UBI debate as to whether or not it improves upon the status quo welfare system (which most of us probably regard as a complete debacle). Didn’t Friedman make an efficiency argument for replacing welfare with a negative income tax? Yet even with this extremely low bar, political reality means that no existing welfare program can ever be dismantled (meaning UBI will be another cherry on top). We have seen the results of a recent natural experiment along these lines with widely distributed Covid relief payment fiasco.
Yes, I think any attempt to create a UBI will be in addition to our current system, not instead of.
I wanted to mention: Milton Friedman's "negative income tax" is a version of UBI, isn't it? So, what is wrong with that - or how is it worse than the status quo. Friedman had no "means-testing" either. (The version Chris advocates is not the only one around. ). My five cent: UBI is fine as long as it is low enough. Talking UBI without giving a number makes no sense. 300$ a month borders on excessive, imho. ;)
The negative income tax has some similarities to UBI, but the main difference is under Friedman's plan most workers get nothing. Under UBI everyone gets the same amount of money. Because of that Friedman's plan is much cheaper.
Mathematically, they are the same.
A UBI and a large tax deduction are the same thing, just one is spread out in 12 payments and the other happens all at once.
If the UBI was paid once a year on April 15th, it would be exactly equivalent to a negative income tax.
Example to prove my point:
Scenario 1: 30% flat tax on all income, $2k per month UBI.
Person A makes 100k, pays $30k in taxes, receives $24k in UBI, for a net tax paid of $6k.
Person B makes 50k, pays $15k in taxes, receives $24k in UBI, for a net receipt of $9k.
Scenario 2: 30% flat negative income tax, $80k standard deduction (24k/.3=80k).
Person A pays $6k in taxes ((100-80)*.3).
Person B receives $9k in tax refund ((50-80)*.3).
Not true. They are mathematically very different. Let me give an example.
An earner with 100k income gets nothing under Friedman’s proposal. Under UBI that person get the full UBI ($7000 or whatever the proposal). This would be true for the vast majority of earners.
In Friedman’s proposal, the only ones who get anything like the full benefit are those with little to no income.
Not even close to being the same.
It is literally a reverse income tax. Everyone gets different amounts based on the income. Just like in a regular income tax.
See my post and do the math.
I am not questioning your math. I am saying that your example is not Milton Friedman's negative income tax proposal.
Any negative income tax can be converted into an equivalent ubi. The amount of the equivalent ubi depends on the deduction and tax rate involved, but they are mathematically the exact same thing.
Give me Friedmans exact proposal and I can give you the equivalent ubi amount.
Wikipedia agrees with me:
"Negative Income Tax" became prominent in the United States as a result of advocacy by Milton and Rose Friedman, who first put forward a concrete proposal in 1962 in a brief section of their book Capitalism and Freedom.[9] Their system is equivalent in its operation to most forms of Universal basic income (UBI)
I suspect that many people support or dislike UBI based on various personality traits.
I wonder of being low on agreebleness is correlated with being against UBI? (And welfare in general)
Im high in agreebleness and am for UBI but suspicious of welfare
I feel like the benefits of UBI had to be very very large for bryan caplan to be fine with it, its an aesthic thing.
I have a question I asked in one of the threads but would like to ask you all:
If you think people would stop working or being employed with a poverty line, subsistence level allocation, then why do you think people are working as much as they are now?
I am really confused by the math (and lack thereof) of UBI claims in this post. Surely some formulations are terrible, so the onus is on those who want it to provide a reasonable way. If not it's too easy for Caplain to (intentionally or accidentally) debate a strawman.
I'm especially concerned by Caplan's claims here:
> Even with a one-third flat tax, that implies that a family of four would have to make $120,000 a year before it paid $1 of taxes. This is pie in the sky.
Surely we can design a system where on net only the bottom ~25% see any benefit of UBI, even if it involves a slightly odd tax bracket system with an increased clawback for the UBI amount.
This is not really answering your question, but phase-outs and cut-offs of benefits are really hard to design. This is one of the great conundrums of social programs. You want to help those in need, but also give them an incentive to earn more money. You also want to keep costs manageable. There is no easy solution.
If you have a 100% cut-off after someone reaches 26th percentile (to use your example), you create a "benefits cliff." This gives a very strong incentive for people around that income level to stop working more hours or at least not look for higher-paying jobs. This can create dangerous long-term incentives if poor people refuse to take better jobs.
To avoid this most proposals have some sort of a phase-out of benefits as income increases. The problem is that this functions exactly like taxes. You work more, but get less of a percentage of your earned income back.
If you create a phase-out then it has to be really gradual or it will create a similar but lesser disincentive (just like income taxes do now). I would say 33% is probably the absolute highest, but then this greatly increases the cost of the program because so many more people are receiving benefits. You can easily triple the cost with a lost phase-out rate.
Plus you have to take into consideration that the phase-out is in addition to increased income tax rate and Social Security taxes. It is very easy to get well over a 50% loss in post-tax benefits.
Plus you have to take into consideration that wages are not the same as income. A $15,000 wage by a mother working part-time may be very low. But she could be married to a husband who is making 100k plus.
The question of fraud also needs to be addressed. There is fraud under the current system, of course, but would it be better or worse under a UBI? Note that even if the total levels of fraud would be roughly the same, UBI fraud could have worse effects because the victims would probably be the specific vulnerable people whose UBI checks are stolen, whereas the effects of fraud under the current system are more diffuse and affect the taxpayer public as a whole.
I Feel like you need to make 2 fraud categorizes here:
1 for fraud to GET the welfare. Fake people, people that doesnt qualify, rerouting the welfare from intended recipient to the criminal
Another for fraud against people when they have already gotten the UBI.
Apriori, total fraud should clearly go down for the first category because there is far less complexity and opportunities to fraud people.
I am currently writing a book on subject called "Upward Mobility."
A far better solution than any kind of UBI would be a replacement of all means-tested programs with a radical expansion of the current Child Tax Credit and rebranding it as the Working Family Tax Credit.
The purpose of the Working Family Tax Credit is to create a short-term positive incentive for lower-income parents with children to:
o Get married and stay married
o Get a full-time job and stay employed
To be eligible to receive the Working Family Tax Credit, the parents must:
• Be legally married
• Work at least 35 hours/week combined (not including vacations or sick days).
The new credit would pay:
• $12,000/year for the first child
• $7000 for the second child (for a total of $19,000)
• $2500 for the third child (for a total of $21,500)
• Nothing for any additional children.
To be eligible for the Working Family Tax Credit, a household must be a married family with children with at least one full-time worker. To ensure that the benefits primarily go to working-class families rather than professional-class families, the full benefit will go to families that earn $15,000/year, and the amount will gradually phase out so that families that earn $110,000/year or more will not be eligible. The entire amount should be fully refundable.
While one of the flaws of the current system is that it discourages marriage, a system which does not provide _any_ benefit to single parents would be flawed in the opposite direction. I would propose amending the eligibility requirements to add a provision for single parents who work at least 25 hours/week or something like that. That way there would still be an incentive to marry (i.e. it's much easier to get 35 hours per week between two people), but single parents (who generally struggle in poverty the most) would not be entirely cut out of the benefits.
The system should also provide _something_ for 4+ kids. It's true that the per-child cost does go down with additional children, but it doesn't go down to $0. Maybe $1000 for each child at 4+? The incentives would need to be much higher, of course, if you were wanting to encourage people to have larger families, but I assume that you're mostly trying to offset the costs that parents incur from having kids in order to provide a safety net and prevent them from falling into poverty.
Thanks for the feedback. I am sure that many people will want to include single-parents, but I strongly disagree. One of the main points of my proposal is to encourage two-parent families because it creates far better results for children. Your amendment would undo that.
As for increased benefits for 4+ kids, I can see your point. You are correct: the cap is mainly to ensure that have children just to get money and keep the costs down a little. A small amount like you suggest is an acceptable amendment.
Thanks again.
The primary purpose of this kind of subsidy is to benefit poor kids (i.e. to offset the negative effects of poverty). Poor kids who live with a single parent are even more disadvantaged compared to similarly poor kids who have both parents. The current system recognizes this and tries to provide extra financial help for such kids to offset that disadvantage, but that policy has had the unintended consequence of encouraging their parents not to get married in the first place, which almost certainly makes things worse. Your system would completely reverse that incentive, and that would certainly lead to some marriages which would provide more stable households for many of the kids affected. However, for a single parent who is unable to marry the other parent of their children (due to abuse or death), this would be much worse relative to the current system. And their kids are the ones who would suffer.
Ideally, the replacement of the current system should be a pareto improvement (at least from the perspective of the kids who are affected).
It is unclear to me what your proposal is. You say that it is to replace the current system, but this is vague.
Do you plan to abolish Social Security, Medicare, Medicaid, and all means-tested benefits with a UBI?
If not, which programs do you wish to abolish to pay for UBI?
The answer to this radically impacts the amount of money that will go to UBI and there for the level of income each person will receive.
One slight mistake. You reason that the UBI recipient is someone like you. Smart, educated.
Exactly. The kind of person who is in desperate poverty is the kind of person who will spend cash benefits on drugs and booze and still live on the street. UBI is tempting because it seems like so much bureaucracy could be eliminated (and the cliff problem removed), but I think in practice it would be a disaster just like drug legalization. People at the bottom rungs don't make good decisions. (Yes, "good" is subjective at some level, but there are objective metrics that policy makers have in mind when they make these programs, like getting homeless drug addicts off the street).
Also: Politicians would have a new knob to turn for the level of UBI and democrats would keep wanting to turn it up. As with all benefits like this, it would be a one way increasing ratchet. If it got good enough I'd retire early.
I chose to retire early (at 49) to surf, but this was dependent upon my productivity and savings for 30 years. With a UBI, there would be a lot more people on the margin choosing waves over work.
Surfers are not a problem; if a few people can survive on the minimum necessities and want to spend the majority of their time surfing (and don't harm others), then good for them! Such people are never going to make up more than a tiny minority; most people would not be satisfied with that life and would therefore be incentivized to work. The problems occur when the system discourages people from working or else it encourages behaviors which are harmful to others. I'm reasonably convinced that the current system is worse than a UBI on those metrics, but I'm not convinced that there is a path forward to replace the current system with UBI.
I totally disagree that just a tiny minority would be interested in leisure activities (of whatever type) over work. Maybe we know totally different people.
Getting out of the box, maybe we could incentivize people meeting certain requirements to stay home and raise large families thus solving the coming fertility crisis. Instead of a decreasing stipend per child (like Michael Magoon suggested above) have an increasing one.
I think you are seriously underestimating how many people prioritize free time over money.
Imagine a UBI of $7000 per year. Imagine four 20-year-old male friends with few employment skills. If given the opportunity for the four of them to pool their income and rent a cheap house in a rural area so they can play video games all day rather than work full-time in a minimum-wage job.
What percentage will take that opportunity? I think many will. Now imagine ten years later when they realize they made a big mistake. How will they make up for their lost decade?
Now move forward three generations where you have entire towns full of people making the same choice. Children know few people who actually work. How many young people in those communities will get a job?
So you are saying, in essence, that these imaginary people don't want any of the modern leisure, comfort goods that come with the salary associated to employment. As an aside, how would they pay for their videogames?
On a more general level, why are real, young or old, people working as much as they do? As per your thinking, wouldn't they stop working as soon as they can eat, clothe themselves & find shelter and buy videogames or netflix?
I guess, on the most general level, the question is: why do people work? Or, in an even more general way: why do people exchange their ressources on the labor market?
Any thoughts?
The question that keeps going through my mind is actually how it is that you don’t know people like this? These aren’t imaginary people to me, they are common. The goofy kid who lives in the parents basement until he or she is 35. The group of guys getting together and splitting rent on various assistance programs. People abusing disability to play disc golf. Granted it isn’t a majority of people I know. But it isn’t uncommon, and the concern is incentives that make it worse.
As I wrote earlier, I retired at 49 after decades of productive work and savings. I loved my job, and added value to millions of people (I designed new financial products which proved very popular). But I vastly prefer the new routine of surfing a couple of hours a day, reading, writing, painting and spending time with family while living off my savings and investments.
Really, I don't know anyone with this behavior. And again, in your case, you seem to have money to enjoy some of the finer things in life. You worked because you wanted these things.
We are talking poverty line, subsistence level allocation here. Not "buy widescreen tvs and lots of videogames" money. Do you think lots of people don't care about these finer things that money can buy? If so, why do you think people work?
I am also mystified as to why you do not know anyone like this. Some people prefer free time over money. I have known many people, and I probably would of in my 20s as well.
Just look at YouTube channels devoted to Van Life, Simple Living, Stealth Camping, Homesteading, and Retire at Age 35. And retiring early is one of the most common life goals in American society. This is hardly unusual behavior.
Poor people in the US have cell phones, HDTVs, and video games (if they want it). Compared to the rest of the world and previous generations, they already have the "finer things." With UBI you would be able to get that without any work.
With a little googling I stumbled onto this:
"Our analysis shows that in spite of the safety net programs that support families residing in poverty, those living at or below twice the federal poverty line, devote a substantial share of their monthly expenditures to goods and services necessary for basic shelter, health, and nutrition. The data do not support claims of ‘irresponsible’ spending on alcohol or tobacco among these families."
And that's at *twice* the poverty line.
Ref: https://econofact.org/how-do-low-income-families-spend-their-money
This does not address my argument at all. I never claimed that people would spend money irresponsibly. Are you even reading my comments?
Again, with retiring early, you need to have money, and quite a lot of it. And how much do you think poor people make to enjoy all these things? Do you think with $12 000 a year, you can buy all of this? I find it hard to believe.
But you still did not answer the question I asked: if you think lots of people would stop working and live on a poverty line, subsistence level allocation as you seem to do, then why are they working now? Why don't they stop working as soon as they made $12 000?
If you're making assumptions about people's will to work, it seems important to know then *why* they work.
To clarify I could get behind a UBI if it:
1) Abolished all means-tested programs including Medicaid, CHIP (but not Social Security and Medicare).
2) Required one full-time worker in the household to be eligible.
Would you agree to that? I would not consider it to be UBI, but I would support it.
I would be even more enthusiastic if it were also restricted to married parents with children with an income under say $75,000. This is getting much closer to my proposal, which I outlined in another thread.
Please reread my previous comments. I already answered your questions.
UBI will make it possible for people to retire early at age 20 without saving any money. Not sure why you think very few people will take that option.
Imaginary people? You must live in some very elevated social circles to know no one who prioritizes free time over money.
Why do people work? Throughout human history, people have labored to survive. They have no choice. Material circumstances dictate work.
Because most people are not currently eligible to get an income without working today, they work. The realities of modern society are that you need a full-time job within the household. No work is not an option for them. It is a stark binary choice. Some can work part-time, but that includes a large drop in wages per hour.
If the current system effectively forces at least one worker in the family to work full-time anyway, it makes perfect sense to increase the amount of money that one can earn per work hour. But that does not mean that they would keep working if they did not need to do so.
Your real question should be: why do people retire? If everyone were income maximizers, no one would retire. But almost everyone eventually does.
People typically retire when they have enough guaranteed income to survive at a specific standard of living (which varies by person). For most people, that means waiting until they are eligible for Social Security and Medicare. For a lucky few, it means earning lots of money and saving like crazy or inheriting money.
UBI effectively lowers the retirement age to 20.
The minimum Social Security benefit for workers with 30 years of work history is about $12,000 per year. Many people gladly take it in favor of working full-time. Some supplement their benefits with part-time work, but many do not. Why do you think that it is so crazy that many people will want to retire at age 20?
So I ask you, why do people retire?
I think you need money to retire. How many of these retirees live *only* on the 12 000$ without any savings or capital? That's why I think people retire: they've accumulated enough capital & savings.
And thank you for the answer. Now, I think you touch something important here: people are *forced* to work. So they work because they are effectively coerced into it lest they die of hunger or cold... Which brings me to another question:
What does it say about the current labor market if people are forced to work? Is it really voluntary exchange?
PS: I said "imaginary" because you said "Imagine four 20 year olds..."
PPS: sorry but I lagged a little in the comments since you went so fast.
Fair enough. The thread is getting a little confusing. And your questions are helping me think through my point, so thank you for that : )
People are forced to work by material reality, and they always have been. We used to work to grow food to eat, now we work in jobs. Only a small elite could get around that reality by expropriating labor from the masses.
Work is a good thing (up to a point) because it forces us to grow as human beings, overcome our limitations, learn new skills, make positive contributions to society, and learn to cooperate with others who are different from us. Plus it pays taxes to support government programs.
What our current labor market does is very strongly encourage people to choose full-time work over part-time work. In addition to the lower work hours, you also have lower wages per hour and lower benefits. This is somewhat made up for with lower taxes. So regardless of whether you maximize time or money, a full-time job makes sense for at least one person in the household.
This is probably also good because the gap in long-term skills acquisition between a full-time worker for 20 years and a part-time worker for 20 years is huge. Those skills benefit society.
And yes it is voluntary exchange because there are millions of jobs to choose between. If there was only one job assigned to each person by someone else, then it would be coercion.
UBI fundamentally breaks the link between work and survival like nothing in human history. It also means that you can retire at age 20 without savings or capital.
I have known many people who inherit a decent amount of money in their 20s and never work a day in their lives. I call them "Independently Poor" because they have just enough money to survive, but not enough to be anything like rich. By their 40s they have far less income than their peers who were forced to work. Many of them are very immature and entitled, but they will refuse to work to better themselves. And after awhile, no employer will hire them.
I think UBI will radically increase the number of those types of people.
I agree with you that this is becoming a little confusing... hehe. But still, I must make two further points:
1. Theoretically, maybe there are "millions" of jobs... But effectively, for many, these jobs incur costs they can't pay in distance, ressources, talent, etc. So, for a lot of people you think could stop working altogether, while only given the means to subsist, there are more like a couple of alternatives. And I would finally ask, the fact that people, in general, are forced to enter the market, doesn't it exercise, again generally, downward pressure on the price they can get for their exchanged goods (labor) ?
2. I still think that reeeaaally little people won't ever want to work for a decent salary if only given the bare subsistence minimum. You think otherwise. Either way, it's more of a gut feeling I guess. Maybe ideology too. No real way to know I guess. But to the best of my knowledge, studies tend to show that people want to contribute and feel useful. Even without a salary! Hehe. Maybe you saw studies to the contrary, studies which I would gladly read and consider!
Note that I would expect full-time employment to drop slightly if a UBI were implemented as the primary instrument of welfare. But I would also expect part-time employment to rise. Let's take your example of the four friends who mostly sit on the couch and play videogames, but add to that that they occasionally go out and drive people around in an Uber or deliver groceries in order to pay for the games and other small luxuries. They might not be living the best life that they could be living (and they might regret their choices 10 years from now), but they would still be providing a net benefit to society!
Would it be a net benefit to society?
I doubt such small work efforts that you mention would earn more than the UBI benefits that they earn. Plus we still have to pay for all the infrastructure that they use. And someone would have to pay taxes for military, police, and other non-social programs. That would not be them. Even small reductions would lead to large losses in government revenue. I think that it would be a clear negative for society.
And I think the drop in full-time employment would be far larger than slight.
If they're happy playing video games and working part-time, then at least they wouldn't be going out and causing crime and mischief which are the worst kinds of costs to society. And they would be better for society than welfare recipients under the current system who don't work at all (there are currently many young people who subsist entirely on "disability" payments). Obviously it would not be sustainable for _everyone_ to live like this, so I guess that the main question is how many additional people would rely on a UBI and coast through life who would have been working full-time under the current system. My guess is that this would be a small minority of people (many of them, only for a small part of their lives), but you think that this would be widespread, so I guess that's where we differ.
I believe that it would be a small percentage of the overall population at first, but a sizable minority of young people from lower-income families. Then this would gradually increase over time until it becomes the dominant lifestyle in lower-income neighborhoods. Then it would gradually expand outward until it becomes the norm in a few generations.
In other words, it would accelerate all the problems of our current welfare system by making everyone eligible.