Is UBI good? The minimum to live above the poverty line.
in Economy

Pogue · December 2017

I think it is good (depending on implementation). If it is not taxed, poor people have money to spend so the GDP will rise.

DrCereal · December 2017

How would the money to pay for such a program be acquired?

Pogue · December 2017

@DrCereal A shift in wealth. No inflation and helps with income inequality.

DrCereal · December 2017

Pogue said:

@DrCereal A shift in wealth. No inflation and helps with income inequality.

Raised taxes? How do you shift the wealth?

Edril · December 2017

I say yes.
Though I admit my ignorance when it comes to economics, I feel like resources should be distributed equally between all who participate in society.

CYDdharta · December 2017

It would be completely unworkable in the US. In order to even attempt it, the government would need to have tight controls on immigration, which we obviously do not have.

DrCereal · December 2017

CYDdharta said:

It would be completely unworkable in the US. In order to even attempt it, the government would need to have tight controls on immigration, which we obviously do not have.

That's a pretty lackluster reason for it being "completely unworkable".

CYDdharta · December 2017

DrCereal said:

That's a pretty lackluster reason for it being "completely unworkable".

Is it? Think about it. We can't (or won't) control immigration now, and theoretically illegals are not allowed to receive Social Security, welfare, etc. What do you think would happen if we offered a free monthly paycheck to everyone who resided in the US?

DrCereal · December 2017

CYDdharta said:

DrCereal said:

That's a pretty lackluster reason for it being "completely unworkable".

Is it? Think about it. We can't (or won't) control immigration now, and theoretically illegals are not allowed to receive Social Security, welfare, etc. What do you think would happen if we offered a free monthly paycheck to everyone who resided in the US?

Wouldn't that be easily amended by offering UBI to citizens only?

CYDdharta · December 2017

DrCereal said:

Wouldn't that be easily amended by offering UBI to citizens only?

No, the government would need tight controls of the population to make such a system work. Even if basic income was not provided to illegals, any children they had inside our borders would be US citizens and would receive a monthly paycheck as soon as they were born.

DrCereal · December 2017

CYDdharta said:

No, the government would need tight controls of the population to make such a system work.

For what reason?

What do you think would happen if we offered a free monthly paycheck to everyone who resided in the US?

The more important question is: what do you think will happen? You clearly have something in mind.

... would receive a monthly paycheck as soon as they were born.

No one said that we should give UBI to someone immediately after they are born.

CYDdharta · December 2017

DrCereal said:

CYDdharta said:

No, the government would need tight controls of the population to make such a system work.

For what reason?

...because the economy would depend on it. The system could never work if we have to provide a basic income not just to current citizens, but also to anyone who can make it inside our borders (at least without massive border controls) if not directly, then through their offspring.

No one said that we should give UBI to someone immediately after they are born.

You are obviously unfamiliar with the concept of basic income. Watch the video in the OP and get back to me.

DrCereal · December 2017

CYDdharta said:

...because the economy would depend on it. The system could never work if we have to provide a basic income not just to current citizens, but also to anyone who can make it inside our borders (at least without massive border controls) if not directly, then through their offspring.

Perhaps, but I fail to see how this makes the system "completely unworkable".

You are obviously unfamiliar with the concept of basic income. Watch the video in the OP.

I watched the video again, and I didn't hear him say you get an income immediately after birth. Even if the video did say that, I fail to understand why the specific system in the video should be the only one considered.

Besides this failure to recognize a specific statement in a video, what have I said that demonstrates that I'm "oviously unfamiliar"?

CYDdharta · December 2017

DrCereal said:

CYDdharta said:

...because the economy would depend on it. The system could never work if we have to provide a basic income not just to current citizens, but also to anyone who can make it inside our borders (at least without massive border controls) if not directly, then through their offspring.

Perhaps, but I fail to see how this makes the system "completely unworkable".
You are obviously unfamiliar with the concept of basic income. Watch the video in the OP.
I watched the video again, and I didn't hear him say you get an income immediately after birth. Even if the video did say that, I fail to understand why the specific system in the video should be the only one considered.

Besides this failure to recognize a specific statement in a video, what have I said that demonstrates that I'm "oviously unfamiliar"?

Kindly explain who such a system could possibly work without shutting down the borders?

MayCaesar · July 2018

Economical growth is defined by the volume and effectiveness of investments. The more money is invested for the bigger return, the faster the economy grows, the faster the quality of life grows, and the faster the poor become richer. Hence, the quality of life of the poor gradually increases in the absence of UBI, given the country experiences a high level of investment returns.

The problem with UBI is that it is a very poor investment of the capital. It is literally throwing money away, hoping that the receivers, in turn, will invest the money wisely. Will they? The vast majority of people are very poor financial managers and are more likely to spend the money on static or temporary goods, than invest it in their future - hence, the opportunities for the economical growth are wasted.

Another problem with UBI is that it removes one of the most important incentives on the free market: the need to survive. If, no matter whether you do any amount of work or not, you will get by off solely the donations from the government, then you are much less likely to work, and if you do work, you do not put in as much effort in the work, because you know that being fired will not economically endanger you. You always have a safety cushion, no matter what you do on the market, and having such a cushion lower people's drive to work on their career.

Rather than introducing country-wide UBI, the government should urge people to invest in their personal BI. People who, instead of wasting their money on the immediate pleasures, invest them in stocks or currencies, naturally generate a passive income that serves the same purpose as UBI - with the difference being that their personal investments are the income generators, not other people's taxes. If everybody in the US had investments passively generating $2,000 a month (not an unreasonable number by any metric), then the problem of poverty would be eradicated - without any additional governmental expenses.

WordsMatter · July 2018

@MayCaesar I always take issue with the idea that this would somehow remove the incentive to work. Why do people pursue high stress, difficult jobs now when they know plenty well they could survive (food, shelter, healthcare) with a job as a secretary or working fast food? People are greedy, they want nice things to show off. I believe a majority of people would still aspire to work hard so that they can afford luxuries.

My idea of a UBI would be enough money to cover food and shelter (and healthcare if it isn't single payer). If their was a way to make sure the money was only spent on those things then I would support it (I know this is probably not likely).

Here is the free market argument I've heard elsewhere on UBI. If you have your basic necessities paid for, and you know that they are secure, then you are free to pursue any type of work that interests you. That person who is too scared to risk their savings to open a resteruant, or work on a new invention, suddenly has the confidence to pursue that, introducing more competition into the market. It allows riskier businesses to start up possibly illuminating sectors of the market that haven't had their demands met. As a ridiculous example, let's say a store entirely dedicated to origami, and it turns out people didn't realise it but they love origami. The market can still crush ridiculous businesses like that because the capital to open and run them should absolutely 100% not be allowed to come from the UBI.

Maybe all I'm describing is a welfare state, except the individual gets to decide what food or shelter they put the money towards? I would love feedback on my post as this is an idea that I'm extremely flexible on and get very little chances to discuss it.

Edit: to add, I have no idea what would constitute appropriate housing or food.

WordsMatter · July 2018

@MayCaesar I'm curious about your thoughts on forced investments of income through tax. Basically privatized social security, if I'm correct. So same social security tax, but instead of the government investing it into low risk, low return investments, the individual gets to decide how that taxed income is invested. I think this would be good for individuals as they will save for their own retirement and not have their taxes income going towards paying others retirement, it also allows the money that would have gone into social security be placed into more aggressive investments spurring market growth. Of course some can claim that you shouldn't be taxed to force you to save for retirement, but I think the good outweighs the bad here. If you are smart with money you are going to invest it privately anyway, this allows you to have full control over those investments so I think it's still more of a free market system than the current social security system. If you're bad with money you can go with the default low risk low reward bonds that social security is invested in now, or a more aggressive investment that places their taxed income more directly into the market. Thoughts?

MayCaesar · July 2018

@WordsMatter

I have heard this argument, and it certainly has a merit - however, I do not think it is practically very relevant. I will explain my opinion by grouping people into those who would benefit from UBI, and those who would not - and exploring how people in those groups affect the economy in the absence of UBI.

Group A: people who earn enough money to not need UBI.
Group B: people who do not earn enough money to not need UBI.

You mentioned that UBI promotes risky investments. In my experience, people willing to perform risky investments tend to have a very innovating and outside-the-box thinking mind; such people are going to be very well adapted to the realities of the free market and will be able to join group A on their own. I have met quite a few businessmen that started with saving money for opening a company, and when they did open the company, their profit returned the investment many times. People committed to something are going to be able to do this something regardless of any difficulties they can encounter.
My point is that people who are able to commit to risky investments and succeed in the presence of UBI, are able to do the same in the absence of UBI. The presence of UBI hence, in general, will only drain their investment capital due to increasing taxes necessary to provide every citizen with UBI.

What about people who do need UBI to get by in life? There are reasons as to why they are struggling in the absence of UBI. Such people, in my experience, tend to have a much poor financial culture, they are more prone to wasting their money on the immediate pleasures as opposed to investing it in profitable endeavors. They also do not really have outstanding skills useful in high-productiveness fields (otherwise they would have utilized those skills in order to gain a high income), hence providing them with UBI will not make them invest their new capital smartly. It is very rare for a talented and hard-working individual to be on the poor side of the spectrum; when this is the case, there definitely have to be some personal factors preventing the individual from realizing their potential.

This is in general why I do not like heavy welfare spending, including UBI: people who are able to generate resources are already able to secure a decent income, while those who are not will not suddenly learn how to do it by getting UBI. What establishing UBI does is it transfers a certain amount of wealth from those who generate wealth towards those who do not, or who do it with a lower effectiveness. UBI can be illustrated as Bill Gates giving a million dollars to my neighbor: my neighbor will not create a new technological startup on that money, she will instead buy an expensive house and a car - and move back to poverty. Give her a million every month - and she will buy more and more luxury items. I see this a lot in my city, where a lot of people receive welfare and spend it all to pay off a modern car loan, leaving them wearing old torn clothes and mainly buying chips at a grocery store.

Unfortunately, there are very few Bill Gates in the world and very many people with a very narrow set of life skills. To avoid the situation where the minority maintains the majority, the majority has to have incentives to seek employment - and I see no better incentive than the natural "Find a way to contribute to the society, or relinquish the benefits the society provides".

---

However, it does not mean that the government cannot invest the taxpayers' money in a way that contributes to the economical growth. I support the old Chinese approach: "Give the man a fish - you will feed him for a day. Give the man a fishing rod - you will feed him for a lifetime". Instead of giving people money directly, the government should invest the money in a way that improves those people's ability to produce resources. The government should not be charitable with people, it should invest in people instead.

The education investment is probably the most effective way to do so. If the government provides additional incentives for people to receive higher education by, for example, partially subsidizing student loans (this may have been one of the very few of Sanders' policies I found practical), and simultaneously investing more in the universities themselves, then this already will make an average citizen much more likely to eventually possess the set of skills that allows them to reach a high quality of life by their own effort.
I also like to advocate for the government creating a public-funded platform that acts as a mediator between the workers and the employers. If the potential worker has certain skills they want to put to use, but they have trouble finding an interested employer - then the government could do the search for them, connect the worker to the employer and maybe, again, subsidize part of the employee's wage, to make the arrangement more profitable for both the employer (who now can get away with spending less money maintaining the worker) and the worker (who gains more income than otherwise).
Finally, as much controversial as this idea is, I think the government should act as a corporation on the private market. The government could create jobs for people with little-to-no skills, maybe providing short cheap training programs along with them. If someone wants to become a farmer, but does not know where to start, then the government could build a farm village, train public farmers, grant them jobs at the farm - and then sell the farm to the interested private company at a low price. This does have certain socialist aspects to it, but it does not force anyone to do anything, it simply provides people with new voluntary opportunities, so I do not see anything wrong with it.

In the end, in my opinion, we should focus on making people more employable and more willing to be employed, as opposed to satisfying their short-term needs. Investment, as opposed to consumption, is the main driver of the economy, as I see it.

MayCaesar · July 2018

WordsMatter said:

@MayCaesar I'm curious about your thoughts on forced investments of income through tax. Basically privatized social security, if I'm correct. So same social security tax, but instead of the government investing it into low risk, low return investments, the individual gets to decide how that taxed income is invested. I think this would be good for individuals as they will save for their own retirement and not have their taxes income going towards paying others retirement, it also allows the money that would have gone into social security be placed into more aggressive investments spurring market growth. Of course some can claim that you shouldn't be taxed to force you to save for retirement, but I think the good outweighs the bad here. If you are smart with money you are going to invest it privately anyway, this allows you to have full control over those investments so I think it's still more of a free market system than the current social security system. If you're bad with money you can go with the default low risk low reward bonds that social security is invested in now, or a more aggressive investment that places their taxed income more directly into the market. Thoughts?

I think this is an interesting idea - however, given the variety of free-of-worry investments the private market already provides, creating such a system would not change the investment market significantly. Even if you are extremely bad with money, but you really want to invest it in the future, you can always go to the closest office of a private investment company and invest however much you have. Savings accounts in banks is another easy to make and very secure investment (if I am not mistaken, savings accounts are effectively insured by the government, so should the bank declare bankruptcy, the client will still be able to claim their funds). I suppose the government could also act as a bank or a stock investor (and, to an extent, it already does, albeit slightly indirectly) - it would be interesting to try it in practice. I do not think it would change much, but if such a system is properly advertised, then it could, I suppose, improve awareness of investment opportunities in the society.

WordsMatter · July 2018

@MayCaesar I think the biggest benefit I see to privatizing social security is this. Every year I will make out my IRA contribution whether I'm paying social security or not. Now if the taxes that are taken out for social security I can now reroute to my IRA. As long as the max yearly contribution doesn't change, I'm basically not paying social security tax anymore. That would be tax now pays for my investment, and the money that I would have invested under our current system is now free to be either spent in the market, or to build and diversify my investments further.

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Is UBI good? The minimum to live above the poverty line.
in Economy