Why a Universal Basic Income Will Not Solve Poverty

[Independent voter]

I guess people have always been uncertain about the future. What happens when most jobs are automated, what will people do who don't have jobs and will never get a job?

This guy points out some problems with basic income in the US.

more at link



http://www.nytimes.com/2016/06/01/bu...-poverty.html?
Its first hurdle is arithmetic. As Robert Greenstein of the left-leaning Center on Budget and Policy Priorities put it , a check of $10,000 to each of 300 million Americans would cost more than $3 trillion a year.

Where would that money come from? It amounts to nearly all the tax revenue collected by the federal government. Nothing in the history of this country suggests Americans are ready to add that kind of burden to their current taxes. Cut it by half to $5,000? That wouldn’t even clear the poverty line. And it would still cost as much as the entire federal budget except for Social Security, Medicare, defense and interest payments.

Thinkers on the right solve the how-to-pay-for-it problem simply by defunding everything else the government provides from food stamps to Social Security. That, Mr. Greenstein observes, would actually increase poverty. It would redistribute wealth upward, taking money targeted to the poor and sharing it with everybody, including you and me.


The popularity of the universal basic income stems from a fanciful diagnosis born in Silicon Valley of the challenges faced by the working class across industrialized nations: one that sees declining employment rates and stagnant wages and concludes that robots are about to take over all the jobs in the world.

That scenario might lie in our future — I will devote my next column to discussion of such a universe. But it’s certainly not our present. Men at their prime working ages — 25 to 54 — have been falling out of the labor force since the 1960s. Still, today more than eight out of every 10 Americans in their prime are working.

Work, as Lawrence Katz of Harvard once pointed out, is not just what people do for a living. It is a source of status. It organizes people’s lives. It offers an opportunity for progress. None of this can be replaced by a check.





A universal basic income has many undesirable features, starting with its nonnegligible disincentive to work. Almost a quarter of American households make less than $25,000. It would be hardly surprising if a $10,000 check each for Mom and Dad sapped their desire to work.

A universal income divorces assistance from need. Aid is fixed, regardless of whatever else is going on. If our experience with block grants serves as precedent, it is most likely to become less generous over time.

To libertarians this will sound more like a feature than a flaw, but replacing everything in the safety net with a check would limit the scope of government assistance in damaging ways. Say we know the choice of neighborhood makes a difference to the development of poor children. Housing vouchers might lead them to move into a better one. A monthly check would probably not.

And those who think a universal benefit would be more politically resilient than a means-tested one might stop to ponder the unceasing chatter about trimming Social Security.

It is undoubtedly true that the American safety net needs fixing. Fifty million Americans live in poverty. Sixteen million live on the equivalent of $8.60 a day. Providing more income security for the struggling working class would not only produce a more equitable society, it would increase spending and improve economic growth.

How about subsidized employment? The government could subsidize jobs as varied as school repairs and fixing potholes. “This would provide employment while doing things that improve productivity and improve people’s lives,” Mr. Greenstein said.

Perhaps we could expand the earned-income tax credit, the country’s most successful antipoverty tool, which increases the earnings of low-income workers. Or take the idea pushed for years by Edmund Phelps from Columbia University: Instead of providing a subsidy to workers that phases out as their income rises, why not subsidize workers’ wages instead?

As Mr. Summers told a gathering last week at the Brookings Institution, “a universal basic income is one of those ideas that the longer you look at it, the less enthusiastic you become.”

[unbound]

Hard to take the author seriously when he is trying to talk about the costs of basic income vs taxes. He should be talking about in terms of GDP per capita (which is around $53k in the US). So the nation could absolutely afford it, but it would take a massive shift of taxing appropriately (if the rich want to continue to keep all the money for themselves, they just need to be taxed more appropriately).

That said, I disagree with the universal basic income at this time. It isn't really addressing the core problems which are:
- The rich continue to keep more and more for themselves, increasing the wealth inequality every year (thus providing less and less compensation to workers)
- When jobs shift from one industry to the next, neither corporations nor government help train existing workers to get to the new jobs
- Not enough support is provided to help new industries move forward (existing corporations fight it via their politicians and PR to keep things the same to maximize their profits; investment firms / individuals demand massive profits before they invest in even good ideas)

Address those core issues, and we don't need to talk about basic income.

[PC2]

The UBI numbers are pretty mediocre. Maybe at $100k+ GDP per capita.

[Deleted]

Hard to take the author seriously when he is trying to talk about the costs of basic income vs taxes. He should be talking about in terms of GDP per capita (which is around $53k in the US). So the nation could absolutely afford it, but it would take a massive shift of taxing appropriately (if the rich want to continue to keep all the money for themselves, they just need to be taxed more appropriately).

That said, I disagree with the universal basic income at this time. It isn't really addressing the core problems which are:
- The rich continue to keep more and more for themselves, increasing the wealth inequality every year (thus providing less and less compensation to workers)
- When jobs shift from one industry to the next, neither corporations nor government help train existing workers to get to the new jobs
- Not enough support is provided to help new industries move forward (existing corporations fight it via their politicians and PR to keep things the same to maximize their profits; investment firms / individuals demand massive profits before they invest in even good ideas)

Address those core issues, and we don't need to talk about basic income.

comparing as a % of gdp never works as it still has to be paid for. if you cant afford said % even it it looks reasonable as a % on paper. then its doomed from the start.
the issue as i see it, is its oh so easy for people to "blame the rich" and have ideas of "just tax the rich more" but its not that simple.

training for new jobs is an expensive process, especially when some people resist the change. frankly, i think job retraining should fall with unions. they are their ultimately to look after the workforce, currently they tend to exploit it for their own means.

the problems are system wide really. US seems especially bad given the crazy extent of the lobbying

[Theodarzna]

Hard to take the author seriously when he is trying to talk about the costs of basic income vs taxes. He should be talking about in terms of GDP per capita (which is around $53k in the US). So the nation could absolutely afford it, but it would take a massive shift of taxing appropriately (if the rich want to continue to keep all the money for themselves, they just need to be taxed more appropriately).

That said, I disagree with the universal basic income at this time. It isn't really addressing the core problems which are:
- The rich continue to keep more and more for themselves, increasing the wealth inequality every year (thus providing less and less compensation to workers)
- When jobs shift from one industry to the next, neither corporations nor government help train existing workers to get to the new jobs
- Not enough support is provided to help new industries move forward (existing corporations fight it via their politicians and PR to keep things the same to maximize their profits; investment firms / individuals demand massive profits before they invest in even good ideas)

Address those core issues, and we don't need to talk about basic income.

In the case of this, this is challenging when the rate of change can happen many times over in a single human lifespan. Consider how many new industries have arisen, and how many have died out in just 60 years. Plus there is timing to consider, some people cannot simply take a break and be trained for 4 or so years in some new field. Realistically change happens too quickly for humans to realistically plan around.

[Nihilist74]

It doesn't work unless costs are controlled. A lot of costs do need to be controlled like housing, medical treatment, food and transportation.

[Deleted]

It's not meant to "solve poverty". What kind of a ridiculous, asinine notion is that anyway.

[Annoying]

a check of $10,000 to each of 300 million Americans would cost more than $3 trillion a year.

Well, first off, there are ~242m adults in the US. I wouldn't say that children would be part of a UBI for most systems. Beyond that, this entire article is based on a single type of UBI, and there are multiple that fix the issue without just handing out a check to every person. Look up a negative income tax. That doesn't give checks out to those who make enough each year, but still achieves the goal of ensuring every citizen has some support if they make too little. ~90m Americans are of a working age but aren't working for various reasons (disability, retired, in college, etc). Of those 90m, ~20m of them aren't working for none of those reasons (NEET, homeless, lazy bastards, etc).

[PC2]

Well, first off, there are ~242m adults in the US. I wouldn't say that children would be part of a UBI for most systems. Beyond that, this entire article is based on a single type of UBI, and there are multiple that fix the issue without just handing out a check to every person. Look up a negative income tax. That doesn't give checks out to those who make enough each year, but still achieves the goal of ensuring every citizen has some support if they make too little. ~90m Americans are of a working age but aren't working for various reasons (disability, retired, in college, etc). Of those 90m, ~20m of them aren't working for none of those reasons (NEET, homeless, lazy bastards, etc).

That doesn't sound very universal and unconditional.

[Endus]

Well, first off, there are ~242m adults in the US. I wouldn't say that children would be part of a UBI for most systems. Beyond that, this entire article is based on a single type of UBI, and there are multiple that fix the issue without just handing out a check to every person. Look up a negative income tax. That doesn't give checks out to those who make enough each year, but still achieves the goal of ensuring every citizen has some support if they make too little. ~90m Americans are of a working age but aren't working for various reasons (disability, retired, in college, etc). Of those 90m, ~20m of them aren't working for none of those reasons (NEET, homeless, lazy bastards, etc).

And even in the cases where it IS giving out checks to everyone, the idea is that by the time you hit people making say $80k+/year, the additional taxes they're paying and the UBI check balance out. And as incomes increase from there, you'll see an increasing hit, in terms of tax burden. So saying "we can't afford it if we keep taxes at the current levels" is pretty silly, since the entire point is to reform tax levels to bring about a more equitable wealth distribution.

And before anyone goes on about "wealth redistribution" as some sort of "evil", the current system is "wealth redistribution". The only question is about who the redistribution benefits. Currently, it largely benefits the wealthy. We're arguing that the wealthy are well-enough-off on their own merits, and we should worry about those in hardship.

[Deleted]

And even in the cases where it IS giving out checks to everyone, the idea is that by the time you hit people making say $80k+/year, the additional taxes they're paying and the UBI check balance out. And as incomes increase from there, you'll see an increasing hit, in terms of tax burden. So saying "we can't afford it if we keep taxes at the current levels" is pretty silly, since the entire point is to reform tax levels to bring about a more equitable wealth distribution.

And before anyone goes on about "wealth redistribution" as some sort of "evil", the current system is "wealth redistribution". The only question is about who the redistribution benefits. Currently, it largely benefits the wealthy. We're arguing that the wealthy are well-enough-off on their own merits, and we should worry about those in hardship.

the issue with this, is that its always the middle man.. average working bob who gets ass pounded by the changes, not the rich. the rich, would simply up and leave to a country where they were not getting the bollox taxed of them.

"wealth redistribution" as a concept i totally disagree with. I dont believe that one person should be able to benefit from another direct financial earnings. I dont like the current status quo with a vast swath being controlled by the super rich, but i dont think people should just be given free handouts "because" without (potentially) ever working a single day in their life. at that point, we are encouraging people to be sponges

[Krastyn]

Just some quick counterpoints:

Its first hurdle is arithmetic. As Robert Greenstein of the left-leaning Center on Budget and Policy Priorities put it , a check of $10,000 to each of 300 million Americans would cost more than $3 trillion a year.

First off, it wouldn't be that high. Most basic income proponents only have the full amount going to those over the age of 18. Only 209 million adults in the US.

Secondly, it ignores any reference to an increase in income tax to offset this, that every proposal of basic income includes.

Thinkers on the right solve the how-to-pay-for-it problem simply by defunding everything else the government provides from food stamps to Social Security. That, Mr. Greenstein observes, would actually increase poverty. It would redistribute wealth upward, taking money targeted to the poor and sharing it with everybody, including you and me.

This again goes back to taxation. Adjust taxes and it removes the redistribution. Furthermore, having multiple layers of service is inefficient, and less dollar for dollar value to the person in need. Look at charities. People love to complain about how only $0.XX of every dollar goes to actual people in need. Social assistance programs are the same.

It also ignores any spin-off savings that studies have shown to happen when basic income is introduced, such as a drop in hospital visits.

A universal basic income has many undesirable features, starting with its nonnegligible disincentive to work. Almost a quarter of American households make less than $25,000. It would be hardly surprising if a $10,000 check each for Mom and Dad sapped their desire to work.

It seems unlikey that a family making less than $25,000 a year and struggling to get by (which you are if you're only making that) would just decide "hey, I'll not work and continue to struggle". What seems more likely is that either both would keep working, and now be making less than $45,000 a year and be able to afford things that they weren't able to before (buy a house, more amenities, etc), or maybe one of them stops working to raise the kids and the other keeps working to be in the under $37,500 club.

Sure, there will be those who try do do nothing, and be lazy, but those people exist now, and do the minimum they can.



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"wealth redistribution" as a concept i totally disagree with. I dont believe that one person should be able to benefit from another direct financial earnings. I dont like the current status quo with a vast swath being controlled by the super rich, but i dont think people should just be given free handouts "because" without (potentially) ever working a single day in their life. at that point, we are encouraging people to be sponges

Depending on your country, "free" handouts already exist, and you could (potentially) go without ever working a single day in your life. Do you think there is a large percentage of people who are going to go "Sweet! I'm never going to get a job and just live off of $10,000 a year!". There will be some, but likely not anymore than currently use welfare / food banks / food stamps / other aid.

[Endus]

the issue with this, is that its always the middle man.. average working bob who gets ass pounded by the changes, not the rich. the rich, would simply up and leave to a country where they were not getting the bollox taxed of them.

This is true of the old system. Which is why we're proposing a new system.

And no, the wealthy wouldn't just "up and leave". They could already do so, if tax burden was an issue; the USA is not the country with the lowest tax burden around.

"wealth redistribution" as a concept i totally disagree with. I dont believe that one person should be able to benefit from another direct financial earnings. I dont like the current status quo with a vast swath being controlled by the super rich, but i dont think people should just be given free handouts "because" without (potentially) ever working a single day in their life. at that point, we are encouraging people to be sponges

You're operating under the false premise that those people making that income deserve that income. That's a premise that has never been established, and given that it largely came at the expense of both their customers and their employees, in most cases, it's pretty solidly arguable that it isn't remotely true, in the first place. They've just managed to game the system to benefit themselves. They don't really have room to complain if the people game the system for everyone's benefit, not just the few at the top.

Particularly since you're not considering that the consumer class having more wealth with which to consume will boost the economy, which increases productivity, so those at the top still aren't being left behind. They're just more equitably sharing the benefits of that productivity with everyone who's contributed to it.

[Daelak]

the issue with this, is that its always the middle man.. average working bob who gets ass pounded by the changes, not the rich. the rich, would simply up and leave to a country where they were not getting the bollox taxed of them.

"wealth redistribution" as a concept i totally disagree with. I dont believe that one person should be able to benefit from another direct financial earnings. I dont like the current status quo with a vast swath being controlled by the super rich, but i dont think people should just be given free handouts "because" without (potentially) ever working a single day in their life. at that point, we are encouraging people to be sponges

What country would that be? The low tax havens of Sub-Saharan Africa, Indonesia, Syria, Iraq, Pakistan, Brazil, Bolivia?

[PC2]

Europe can be the guinea pig for UBI.

[Independent voter]

When you're talking about how much the rich pay in taxes, you should talk about the net payment after deductions. The tax rate for rich people in the US seems high but then there are many deductions in the US and a rich man can take advantage of many of them. You mortgage payment is deductible so many rich in the US own more than one house for example.

[Deleted]

What country would that be? The low tax havens of Sub-Saharan Africa, Indonesia, Syria, Iraq, Pakistan, Brazil, Bolivia?

yet you are looking at it from the current values. to pay for this grand extravagance, taxes will have to be significantly increased. And there will be plenty of other countries willing to take their money.

[Daelak]

When you're talking about how much the rich pay in taxes, you should talk about the net payment after deductions. The tax rate for rich people in the US seems high but then there are many deductions in the US and a rich man can take advantage of many of them. You mortgage payment is deductible so many rich in the US own more than one house for example.

Correct, the larger their portion of the wealth that they have (which distorts the global economy) the more the state should tax them.

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yet you are looking at it from the current values. to pay for this grand extravagance, taxes will have to be significantly increased. And there will be plenty of other countries willing to take their money.

Which countries would a wealthy westerner entrust to protect their assets? China, Russia, Afghanistan, Mongolia, India?

[Tinykong]

The government isn't taking in enough taxes from businesses and the wealthy. We've been cutting taxes when we should be raising them, and closing loop holes and havens.

UBI will only work with a corresponding adjustment of taxes.

[Captain N]

yet you are looking at it from the current values. to pay for this grand extravagance, taxes will have to be significantly increased. And there will be plenty of other countries willing to take their money.

And this has been explained before. Taxes would be increased under a Basic Income System. However this taxation would be overhauled to be unlike our current system that can easily be loopholed. I think it was Endus who posted something a while back about the math involved under UBI system.