Universal Basic Income - pro.s and con.s

[Werthead]

One thing worth noting is that if you live in London or New York or another expensive city right now, you can already afford to live there (if only just), so you'd be adding the UBI amount, whatever that is, to your existing salary. Even a few thousand would make a big difference there. People barely able to pay their rent or mortgage despite having two people working 60-hour weeks would find themselves in a better position. Companies would also be in a more competitive market. If any of your staff can just quit at any time because they know they're not going to be homeless and starving immediately, companies would be forced to make working for them a more attractive proposition than the competition.

It does illustrate that UBI by itself isn't going to solve problems over night, and may introduce new ones (companies may argue that the existence of a UBI negates the need for a legally-enforced minimum wage, for example). A combination of UBI and a major house/flat-building programme in or near major cities, with improved, cheaper transport links, to lower rents and property prices could be a potent combination, along with bringing down utility prices as cheap energy becomes more plentiful.

[Which Tyler]

Good point, well made

[Larry of the Lawn]

The other issue with a geographic adjusted UBI is that even within zip codes there is a huge variation in rent.  I feel like if you were really set a system like this any given area should only be like +/- 10% at most of the average benefit.  It just doesn't really seem necessary.  

I think means testing should be limited to avoid the divide-and-conquer micro-class warfare we see in the US.  A more egalitarian society might be able to do more means testing but I feel like here we'd be stoking resentment (see welfare queens) and or gumming up the process of cash to people with added layers of scrutiny.  

[Liffguard]

9 minutes ago, larrytheimp said:

I think means testing should be limited to avoid the divide-and-conquer micro-class warfare we see in the US.  A more egalitarian society might be able to do more means testing but I feel like here we'd be stoking resentment (see welfare queens) and or gumming up the process of cash to people with added layers of scrutiny.  

This would be my concern too. One of the chief benefits, perhaps the chief benefit, of UBI over other forms of social welfare is its simplicity and near-total absence of intrusive bureaucracy. As soon as you start adjusting for circumstances - financial, geographic, whatever - then you have to create a bureaucracy to administer it. Someone has to decide who gets more and who gets less, and the terms of that decision become a political football. Some people end up falling through the cracks, and you create gaps into which political enemies can insert wedges. If it's not a universal right, I'm not sure I see it surviving.

I'm not necessarily fully sold on UBI yet (I'd say I support it provisionally). But I think that as soon as you start messing with the universality of it, you fatally weaken the entire premise.

[Mlle. Zabzie]

54 minutes ago, Liffguard said:

This would be my concern too. One of the chief benefits, perhaps the chief benefit, of UBI over other forms of social welfare is its simplicity and near-total absence of intrusive bureaucracy. As soon as you start adjusting for circumstances - financial, geographic, whatever - then you have to create a bureaucracy to administer it. Someone has to decide who gets more and who gets less, and the terms of that decision become a political football. Some people end up falling through the cracks, and you create gaps into which political enemies can insert wedges. If it's not a universal right, I'm not sure I see it surviving.

I'm not necessarily fully sold on UBI yet (I'd say I support it provisionally). But I think that as soon as you start messing with the universality of it, you fatally weaken the entire premise.

Lol - there would ABSOLUTELY and without doubt be a huge increase in intrusive bureaucracy as a result of a UBI program.  (To be clear, I’m thinking about how it would actually work in practice and not under utopian conditions, and this is a value-neutral comment as to the benefits of UBI as a concept).

1.  In order to have a UBI program, you will need an agency (in the states it would probably end up being the IRS, because, well, why not) to administer it.  The agency would need the ability to deposit funds/mail checks.  Here are the things this would require:

a.  An infrastructure to collect, maintain, and defend the personal data necessary to validate the accounts/address and make deposits.

b.  An infrastructure to provide accounts to every citizen.  In order to combat money laundering, in most countries that I deal with, opening a bank account requires an identifying number (like a SSN), and other “know your customer” type information.  

I. This would need to be expanded and further systematized in order to prevent duplication and fraud.  The stimulus checks worked ok-ish, but I’m not sure the infrastructure really works on an on-going basis, AND so we are clear, it did involve the IRS, which, honestly, should be doing its job collecting and enforcing tax laws, not mailing out checks.  You should really have another unconflicted department doing this.

ii.  Private banks may not wish to provide this service- already lack of banking services affects those who are not wealthy.  You would need to create an infrastructure in order to provide accounts for the recipients (who are the least likely to have accounts).  Maybe postal banking is the solution, but that has its own issues and should almost be its own thread.

iii.  In the absence of accounts (I.e., checks) you will need a an ability to convert the UBI into spending money.

c.  I will note for the record that our current UBI concept (the EITC) is a complex horrifying disaster.  I would prefer we just sent checks. See above re IRS.

2.  In addition, people being people and all, it is likely that UBI is unlikely to be actually universal.  The easiest places to chip away are:

a.  Non-citizens.  This is actually an interesting policy question.  How should non-citizens be thought of for UBI purposes?  If the individual is a permanent resident and a taxpayer, should they get UBI?  What about undocumented residents?  And this comes in two flavors - utopian and realistic.

b.  Use of proceeds.  Taxpayers get weird about controlling other people’s money.  While I personally think it is the wrong policy answer, at least in the states, there would likely at some point be a push to ensure that the UBI is spent on “acceptable” goods and services.  This is of course hogwash (money being fungible and all), but you know that’s where it would end up and it would be invasive and awful much like SNAP is today.  

All this is not to say (as I lead with) that we shouldn’t have a “poverty floor” safety net.  We should continue to increase the minimum standard of living that we as a collective society are willing to sanction.  But I don’t think it is right to gloss over reality in our utopian eagerness to get to a better world.  Far better to be clear eyed about what the world actually is and design change in ways that confronts actual problems head on.

[Altherion]

13 hours ago, Centrist Simon Steele said:

Fundamentally untrue. I live in a high priced city and teaching salaries, for example, are higher across the interstate.

It's true, but only on average. Yes, there will be examples like yours and the flip side of that coin is something like "Warren Buffet lives in Omaha", but on average, the people who live in expensive localities must make more money than those in cheaper ones (or else they would not be able to afford living where they do).

1 hour ago, Mlle. Zabzie said:

Lol - there would ABSOLUTELY and without doubt be a huge increase in intrusive bureaucracy as a result of a UBI program.  (To be clear, I’m thinking about how it would actually work in practice and not under utopian conditions, and this is a value-neutral comment as to the benefits of UBI as a concept).

I believe the argument is not that there would be no bureaucracy at all, but there would be less of it because there would be just this one universal program rather than the current list of limited ones.

1 hour ago, Mlle. Zabzie said:

1.  In order to have a UBI program, you will need an agency (in the states it would probably end up being the IRS, because, well, why not) to administer it.  The agency would need the ability to deposit funds/mail checks.  Here are the things this would require:

a.  An infrastructure to collect, maintain, and defend the personal data necessary to validate the accounts/address and make deposits.

b.  An infrastructure to provide accounts to every citizen.  In order to combat money laundering, in most countries that I deal with, opening a bank account requires an identifying number (like a SSN), and other “know your customer” type information.  

I. This would need to be expanded and further systematized in order to prevent duplication and fraud.  The stimulus checks worked ok-ish, but I’m not sure the infrastructure really works on an on-going basis, AND so we are clear, it did involve the IRS, which, honestly, should be doing its job collecting and enforcing tax laws, not mailing out checks.  You should really have another unconflicted department doing this.

I think this part of it is actually not that problematic because the IRS already does most of this. And yes, you would have to use the Social Security number in the US and similar national ID numbers elsewhere, but all of this already exists and is already in use. In some sense it would actually be easier to prevent fraud and duplication here because you're giving money to literally everyone with a number so all you need is to have one master database where all of the numbers are kept and it's easy to check that there are no duplicates. Fraud also becomes harder to pull off for more than a month or so because everyone is expecting their payment so if it does not arrive on time because the number has been stolen, they will detect it immediately.

2 hours ago, Mlle. Zabzie said:

ii.  Private banks may not wish to provide this service- already lack of banking services affects those who are not wealthy.  You would need to create an infrastructure in order to provide accounts for the recipients (who are the least likely to have accounts).  Maybe postal banking is the solution, but that has its own issues and should almost be its own thread.

Much of the reason the banks don't want deal with the poor is that there is simply no money in it... but with UBI there will be. Many banks are perfectly happy to provide a "free" account with the only condition being that you set up a direct deposit for at least some amount and UBI would satisfy this condition. And yes, if they really don't want to play along with this, the government can always set up a competitor (this would be extra complexity, but it would probably pay for itself).

2 hours ago, Mlle. Zabzie said:

a.  Non-citizens.  This is actually an interesting policy question.  How should non-citizens be thought of for UBI purposes?  If the individual is a permanent resident and a taxpayer, should they get UBI?  What about undocumented residents?  And this comes in two flavors - utopian and realistic.

This is relatively simple: if you have a national ID (e.g. Social Security) number, you get paid. If not, you don't.

2 hours ago, Mlle. Zabzie said:

b.  Use of proceeds.  Taxpayers get weird about controlling other people’s money.  While I personally think it is the wrong policy answer, at least in the states, there would likely at some point be a push to ensure that the UBI is spent on “acceptable” goods and services.  This is of course hogwash (money being fungible and all), but you know that’s where it would end up and it would be invasive and awful much like SNAP is today.

One of the main tenets of UBI is that this sort of control is a waste of time and money for everyone so in theory, it would not exist. However, you are right that there would be groups out there that would fight for it -- that's why the push is to make it as universal as possible (e.g. US states can't tell people what to do with dollars provided by the US federal government).

[felice]

10 hours ago, Inkdaub said:

I had always assumed it would be tied into income level instead of geography.  After your income passes certain benchmarks your portion goes down until you stop receiving it at all.

No, income level is completely irrelevant to the UBI; the whole point is that everyone gets it no matter what. But the more you earn, the more tax you pay, at higher rates than now. A return to the good old days of a top marginal rate of 94% sounds sensible to me.

 

57 minutes ago, Mlle. Zabzie said:

Lol - there would ABSOLUTELY and without doubt be a huge increase in intrusive bureaucracy as a result of a UBI program.

An increase in the number of people it deals with, compared to current welfare systems, yes, but it should be far less intrusive. All it needs to know is 1) do you exist? and 2) where do you want your payment sent? There's no need to determine whether people are meeting criteria, which is where most of the current intrusiveness comes in.

57 minutes ago, Mlle. Zabzie said:

In order to have a UBI program, you will need an agency (in the states it would probably end up being the IRS, because, well, why not) to administer it.

Why not the Social Security Admin? It's already set up to make regular payments to large numbers of people, and keep track of even more people.

57 minutes ago, Mlle. Zabzie said:

Private banks may not wish to provide this service

So make it a mandatory requirement for holding a banking license.

57 minutes ago, Mlle. Zabzie said:

a.  Non-citizens.  This is actually an interesting policy question.  How should non-citizens be thought of for UBI purposes?  If the individual is a permanent resident and a taxpayer, should they get UBI?  What about undocumented residents?

Yes, permanent residents should get it. And there desperately needs to be a means for undocumented residents to get documented irrespective of the UBI question.

57 minutes ago, Mlle. Zabzie said:

b.  Use of proceeds.  Taxpayers get weird about controlling other people’s money.  While I personally think it is the wrong policy answer, at least in the states, there would likely at some point be a push to ensure that the UBI is spent on “acceptable” goods and services.  This is of course hogwash (money being fungible and all), but you know that’s where it would end up and it would be invasive and awful much like SNAP is today.

That's one of the advantages of a UBI - people are indeed prone to moralising about what other people should be allowed to spend welfare on, but they're a lot less likely to be keen on restrictions on what they can buy themselves!

[Guy Kilmore]

28 minutes ago, felice said:

No, income level is completely irrelevant to the UBI; the whole point is that everyone gets it no matter what. But the more you earn, the more tax you pay, at higher rates than now. A return to the good old days of a top marginal rate of 94% sounds sensible to me.

 

An increase in the number of people it deals with, compared to current welfare systems, yes, but it should be far less intrusive. All it needs to know is 1) do you exist? and 2) where do you want your payment sent? There's no need to determine whether people are meeting criteria, which is where most of the current intrusiveness comes in.

Why not the Social Security Admin? It's already set up to make regular payments to large numbers of people, and keep track of even more people.

So make it a mandatory requirement for holding a banking license.

Yes, permanent residents should get it. And there desperately needs to be a means for undocumented residents to get documented irrespective of the UBI question.

That's one of the advantages of a UBI - people are indeed prone to moralising about what other people should be allowed to spend welfare on, but they're a lot less likely to be keen on restrictions on what they can buy themselves!

I was also going to say either the Social Security Administration, which does this on a smaller scale already, or I know some states use EBT cards to fill, I wonder if something like that would work on distribution.

I also feel that UBI should be a flat rate geographically.  If we are worried about the expensiveness of living in certain areas, I think expanding the voucher options, such as section 8, would be a method of offsetting the cost of living.

[Pebble thats Stubby]

I would think payments could be made the same way as state pensions at least here in the UK.

You are encouraged to have it paid directly into your bank account, but you can use a pension book and visit your post office once a week or month and be paid in cash.  No bank account needed.

We even have national savings in the UK,  which if serviced by th vpost office, it shoukd be fairly simple to set up some kind of basic account that has a debit card attached even if the only thing paid into it is UBI and any other benefits if you don't nominate a bank account. If we want to go cashless .   

[BigFatCoward]

Ball park, assuming something like 12 - 16 grand is the payment. When does it stop benefiting people? I.e. if you earn 40, 50, 60 grand are you better or worse off? 

Where does the benefit stop?

[Pebble thats Stubby]

12 minutes ago, BigFatCoward said:

Ball park, assuming something like 12 - 16 grand is the payment. When does it stop benefiting people? I.e. if you earn 40, 50, 60 grand are you better or worse off? 

Where does the benefit stop?

Pulling figures out of the air, I'd say the UBI is tax free, but any income after that is taxed.

Let's say the first 10k at 10%,  at 20k it's 20%, at 30k it's 30% all the way up to say 90k and abovecat 90%.  Would that work?    I'm not clever enough right now to work out when you would have paid that 16k in income tax.  Also the exact tax rates may need to be tweeted to give a slower initial ramp in tax rates.     

[Which Tyler]

40 minutes ago, BigFatCoward said:

Ball park, assuming something like 12 - 16 grand is the payment. When does it stop benefiting people? I.e. if you earn 40, 50, 60 grand are you better or worse off? 

Where does the benefit stop?

It doesn't, or it wouldn't be universal, and would require extra bureaucracy to administer.

Taking the UK example, we currently get £12k as a personal allowance at 0% income tax. My thought is that UBI is that, and anything you earn on top of UBI is taxed - so it includes a simplification of the tax structure - though I'd stick with 4 tax brackets, just with a new highest bracket at higher rate.

[mcbigski]

18 hours ago, DireWolfSpirit said:

Actually that begs the question, under ubi, does social security get eliminated?

I feel like it shouldn't, at least for people over 50 or so.  Unfair to pull the rug on the working lower class and Social Security is structurally in favor of lower incomes.  And another thing about UBI, there should be some age adjustment.  Assuming the base line is barely below an entire living standard, younger healtier fitter people can don more marginal physical work even if they have the same immediate need as a sixty year old.

Eventually maybe pull social security but have to grandfather the near retirees expecting it.

[felice]

3 hours ago, Pebble thats Stubby said:

Pulling figures out of the air, I'd say the UBI is tax free, but any income after that is taxed.

Let's say the first 10k at 10%,  at 20k it's 20%, at 30k it's 30% all the way up to say 90k and abovecat 90%.  Would that work?

I think 10% might be too low for the starting rate (especially if you've got a lot more people working part time), but otherwise that doesn't look too bad to me. In any case, the UBI should mean a large majority of people are better off, while a high-earning minority are contribute significantly more than they do now.

2 hours ago, mcbigski said:

I feel like it shouldn't, at least for people over 50 or so.  Unfair to pull the rug on the working lower class and Social Security is structurally in favor of lower incomes.  And another thing about UBI, there should be some age adjustment.  Assuming the base line is barely below an entire living standard, younger healtier fitter people can don more marginal physical work even if they have the same immediate need as a sixty year old.

I'd suggest immediately stopping payment in to Social Security, but keep paying out (adjusted for UBI) until the fund is used up. I don't think age adjustment is a good idea; older people have had decades to save and to make major purchases, while younger people typically still have to buy everything they need. And physical ability may be correlated with age, but they're not the same thing.

[mcbigski]

14 minutes ago, felice said:

I'd suggest immediately stopping payment in to Social Security, but keep paying out (adjusted for UBI) until the fund is used up. I don't think age adjustment is a good idea; older people have had decades to save and to make major purchases, while younger people typically still have to buy everything they need. And physical ability may be correlated with age, but they're not the same thing.

"Until the fund is used up" for a program that has over promised isn't probably the fairest.  If earlier retirees got their actuarially fair payout based on total available funding then the paying out side would be in balance.

[dbergkvist]

5 hours ago, BigFatCoward said:

Ball park, assuming something like 12 - 16 grand is the payment. When does it stop benefiting people? I.e. if you earn 40, 50, 60 grand are you better or worse off? 

Where does the benefit stop?

If UBI replaces other welfare systems, I don't see why poeple with an income would be affected? Yes, you'd get UBI, but your taxes would go up the same amount (for example via a tax bracket change) so it would cancel out.

If, on the other hand, the purpose of the UBI is to increase the total amount of welfare the government pays out, then everyone who has a middle class income or more would obviously get higher tax increases than than they get in UBI, as that would be the whole point.

[mcbigski]

5 hours ago, BigFatCoward said:

Ball park, assuming something like 12 - 16 grand is the payment. When does it stop benefiting people? I.e. if you earn 40, 50, 60 grand are you better or worse off? 

Where does the benefit stop?

I don't think it ever stops.  The universal part is that everyone gets it.

Presumably there's still an income tax, probably not a flat tax.

So the benefit becomes less and less meaningful as income increases, But from the income side only, getting 2k a month is still positive whether your make $500 a month or $500 million.  

I still think having a negative income tax for below wherever the poverty line is, let's say $30k annual in the US, is better than paying people to not work at all, but I probably need re-education.  (By which I mean that up to a certain point, let's call it $50k annually, earning more money means your net of earnings plus social benefits minus taxes still increases.)

[The Marquis de Leech]

I'm a UBI sceptic. I don't think people realise the sheer expense of the damn thing, in terms of providing every adult with however thousand per year - it would dwarf current social welfare expenditure, while going largely to people who don't actually need it.

[ants]

I think I'm a supporter of UBI, but it clearly needs to be funded; its very nature means it can't pay for itself as its an expansion of the welfare state to people who currently don't receive welfare. It would generally be expected to be funded via:

• A saving on administration of the various current limited, often complicated entry, schemes.  This would remove mean testing, appeal courts (e.g. on applications for disability or support schemes), possibly legal fees, costs of chasing over-payments, etc.  All this is simplified and gone. 
• Pushing up workers' salaries (as they get salary + UBI) will push them up the tax brackets.
• There will likely still need to be higher taxes.  Given the UBI exists, consumption taxes won't be as regressive as before, but a combination of taxes (consumption, asset, high income, company) would be best.  

Structure

The exact nature will vary by country; for example Australia has universal health cover, a state pension for those who are poor, unemployment benefits, a national disability scheme, superannuation, franking credits, rental support, etc.  New Zealand has a national accident scheme giving no-fault coverage for any accidents, anywhere.  Elements such as these immediately creates some differences to a country like the USA.  Personally, I think it should be set equal or above to what is currently paid out.  So consider pensions, unemployment, rental support, and set it to be at that level (or higher if that is completely unacceptable).

For example, I hear horror stories of some people in the US on SS, who receive a pittance.  That implies to me the UBI should be above the SS rate.

The UBI should then remove, to the degree possible, those schemes.  It will never be perfect; the disability scheme is a good example where someone who needs specialised care, or housing changes (e.g. to be wheelchair accessible) will need additional payments.  But it should be trying to replace 90% of the existing schemes.  This increases efficiency, reduces arguments over levels, and reduces red-tape such as appeals processes.  

I think @mcbigski's idea of it possibly ratcheting up at retirement age makes some sense as well. 

I think it has to be universal.  That might suck for people who lose jobs living in higher cost areas who don't want to move, but the nature of those higher costs is they're higher demand versus supply.  Subsidising someone to live there is immediately making a judgement call that they're in some way more worthy (even if that's just because they were historically there) than others.  I think the UBI must be flat to be acceptable.  

Overseas Participants

As a country with a LOT of overseas students who help fund our economy (pre-COVID!), I think its safe to say they would be excluded!  Similarly, people coming in on temporary visas to pick crops should also be exempt.  Permanent residents would probably be included. 

Application

In Australia, given everyone had a medicare number, most have superannuation, everyone has a tax file number, I'm not convinced that there would be huge issues with the practical implementation.  We also have national consumption, company and income taxes.  Some of these could also be simplified; for example the consumption tax excludes certain items to be less regressive (e.g. food, shavers, some medicine).  Part of introducing a UBI is that the consumption tax could be simplified to cover everything (except housing).  

I don't foresee issues such as @Mlle. Zabzie had about use of funds; as everyone is getting them, I don't think people will want restrictions.  

Flow-on Effects

This is obviously the big one, and nobody knows how it would play out.  The first article indicated a bit more happiness and self-determination.  Would it increase employment, reduce it, change the nature?  

My suspicion is that you would have more people shift out of employment, pushing up wages for those who stay.  This would narrow the tax base, but I think we would have a nicer society.  

I know one issue that I've debated with my brother is employment protections.  In Australia, we have quite strong protections.  He argues for a UBI to be introduced and removal of these protections, allowing employers to fire at will.  I'm leery on that as I think it gives too much power to the employer, given the UBI will often be nowhere near the salary that is being made for the middle class.  So this is an example of where there would definitely be headaches in the details, and different philosophical views even amongst proponents of UBI.  As @Werthead mentioned, what happens to the minimum wage becomes important.  

[Free Northman Reborn]

One

This weakens the incentive to get off your ass and better yourself. Even if fear of homelessness is what motivates someone to go and become a waiter or construction worker, that is better for society than having millions sitting at home watching TV while earning a government freebie.

Two

It will put upward pressure on the wages for menial jobs, reducing the deserved premium that more highly educated people should earn compared to those who are less educated - and like in Australia will make the cost of a beer or a meal in a restaurant ridiculously expensive for a normal middle class person.

Three

The idea that there are millions of talented authors, artists and musicians that would greatly improve society if only they could be freed from the constraint of earning a living is highly unrealistic. Most would just end up sitting at home, producing nothing of worth.

And idle hands are the devil’s workshop. 
 

EDIT

And four, even if all of the above were untrue, whats the point of paying everyone $2000 a month if the average cost of living then just increases by an average of $2000 due to the inflationary pressure of all this free cash being available?