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I can’t find the podcast. Maybe someone else can post an article about this:
Several years ago, I listened to a podcast that interviewed a man in Chicago who was conducting a study. His team found people with a criminal history(I think maybe drug dealers?) and tell them they’ll get $1000 a month. No strings attached.
There were a few who didn’t use the money well, but most quit crime/dealing drugs entirely. They found steady work and some went back to school.
All they needed was an opportunity to feel financially safe, feed their kids, and pay rent.
Edit: I think I found it? Here’s an article on it. Some of my facts were wrong, but the idea was right overall.
The article also mentions another called the Stock Economic Empowerment Demonstration.
I’m not sure which I heard about but I suspect the interview was with Richard Wallace who is mentioned in the article. Some of his talking points sounded familiar.
They've been trying it across the world, it's called Universal Basic Income. It's been proven mostly successful every time.
Here's an old article about the US: https://mashable.com/article/cities-with-universal-basic-income-guaranteed-income-programs
Yeah! I wanted to specifically call out the study on UBI with formerly incarcerated people.
I know a lot of pushback on UBI is that it will make people lazy, or emboldened criminals. It has the exact opposite effect.
I believe that's manufactured pushback tbh. People who are overworked might think it would make themselves lazy. At first, maybe? To get your thoughts in order, it might look lazy. But most people who feel safe with a steady income want to be productive.
I was talking about it with my GF over breakfast. She's being worked to the bone, waking up in pain etc. and thought about alternatives.
She had the idea of a cat-bookstore-library-café. Imagine being able to sit down with a nice [beverage of your choice], read a good book, have a curious kitten climb onto your lap... Sure, it wouldn't be for everyone and probably too expensive to run at a profit, but it might be possible with UBI.
And she'd still want to work her other job part-time too, just not full time anymore. She'd still be contributing, just in a different way.
It's not "universal" unless/until it's given to everyone. Until then, it's just another targeted welfare program, "offered to a select portion of a city's population instead of all residents", as your link says.
You can't say UBI has been "proven mostly successful" without actually doing UBI, considering its main hurdles are related directly to giving out that much money to everyone. A UBI of $12000/year ($1000/month) for just all working-age people in the US (a bit over 200 million) would cost the government $2.4 TRILLION, yearly.
Even seizing the entirety of every US billionaire's net worth (est. $4.5 trillion), assuming you could convert it straight across into cash 1:1 (which you can't), and cutting defense spending (~$850 billion), the two most common ways I've seen people claim we can pay for UBI in the US, even if defense was cut to literal zero (also absurdly unrealistic), that still wouldn't even cover the cost of this UBI for three years.
There are alternatives that would have a similar effect, without the scary price tag. A negative income tax is an example: https://en.m.wikipedia.org/wiki/Negative_income_tax
The politics are easy, except that it needs a political champion who promises and delivers the redistribution of power that is UBI.
A UBI of $12000/year ($1000/month) for just all working-age people in the US (a bit over 200 million) would cost the government $2.4 TRILLION, yearly.
Technically UBI saves government money. That $2.4T is just transfers from net tax payers to net receivers. But because programs can be cut at that UBI level, It costs somewhere around $1200B (all government levels) less to provide $2.4T. Once you look at military budget as something that could increase your own cash, even more.
A fair tax system that eliminates payroll taxes and pays for universal healthcare can be 33%. Or 25% for first $100k income, and surtaxes at higher income levels.
https://www.naturalfinance.net/2019/06/andrew-yang-and-democrat-tax-proposals.html
I've had this discussion before. You might want to do some more research and have sources. I would advise you to look at really good sources about the following points:
- "It’s not “universal” unless/until it’s given to everyone."
- "...would cost the government $2.4 TRILLION, yearly."
- "Even seizing the entirety of every US billionaire’s net worth and cutting defense spending wouldn’t even cover the cost of this UBI for three years"
Your numbers and projected income is way wonky. I'll discuss it when you come back with sources from the studies of UBI and why most experts think they worked being referenced.
I’m not the other person but I’ve had this discussion in work before and people have hit back with the following:
This wouldn’t work because with all these people getting UBI would just mean companies would put prices up to levels making the UBI worthless. For example if the cost of living is $1000 and you give people who need it $1000 then before long the cost of living would rise to $2000.
Now I’m in support of doing more for the average person and taking from corporations but I just don’t know how to argue against their, albeit lacking in actual data, arguments.
If sellers can fix prices so easily they're a cartel. Your whole economy is way fucked in that case so you definately need radical reform of one type or another, UBI is the least of your worries. Paying monopoly prices for everything is your big problem, you do need to get on with effective anti-trust action - or other radical market reform.
Even if no prosecution due to regulatory capture and so on though, a cartel of enough oligopolists in inherently unstable and they have to work hard to keep up the cooperation, it becomes a complex situation but underying it, the first one to cut prices will sell way more units and eat the others market share . This doesn't work all the time in all industries, but general competetive pressure does sometimes work to mediate excess profits in some circumstances.
Now, if you'd picked a broken market like rents and said landlords fix rental prices higher, yes - dysfunctional market, high barriers to entry, no real liquidity, rare transactions, powerful intermediators, weak ill informed buyers; yes such a market probably would benefit from price regulation or increasing social housing provision.
I'd love to see the evidence for the 1:1 happening in practice. I suspect it's someone's perverse-dream, very strong assumptions about universal sellers power and consumers total inability to substitute.
For example if the cost of living is $1000 and you give people who need it $1000 then before long the cost of living would rise to $2000.
You may choose to have a $2000 cost of living, but you would choose that too through a pay raise. You could be empowered to keep $1000 cost of living, and there would be more apartments like "yours" if everyone else is moving up in lifestyle.
UBI gives you more choices. If you think everyone else is passive, just paying what they are told, you can use the opportunity to build more affordable life options for people, including easy access to loans from all of the extra money getting spent.
So when I said cost of living I meant in general and not on an individual basis.
For example $1000 would cover all rent and bills, but then companies or landlords get greedy and raise prices so the cost of living is now $2000 making UBI futile. Rather than an individual increasing their own cost of living. If that makes sense.
Your example cost of living can apply to many people close to poverty line. Whether that is "general" or you is the same.
UBI will cause some inflation. More demand for stuff, quickly, with supply needing to catch up, and better labour bargaining power meaning higher labour costs.
But it is completely unreasonable to say that UBI makes people no better off. None of the money that gets spent or paid in taxes is destroyed. Very significant economic growth occurs. China can keep up with supply if US can't, and we are collectively better off, but the richest are especially better off, with cheaper options for stuff. If housing costs skyrocket, big incentive for builders. You can choose room mates that with UBI can afford to pay. If you don't want/need to work you can move to boonies where costs are lower, also with room mates. UBI lets people afford buying homes, with necessarily good credit from UBI safety net. Group buying easier.
Your fearmongering is not just false, it is an argument for continued power imbalance slavery. Even if your fear was true, we would still be better off through more choices and more power.
This is usual information and highlights I don’t have a great grasp on economics. Thanks for providing some more info.
I am not intentionally fear mongering and am just trying to recite objections that I have come up against when discussing this with colleagues etc.
I am for UBI.
This wouldn’t work because with all these people getting UBI would just mean companies would put prices up to levels making the UBI worthless. For example if the cost of living is $1000 and you give people who need it $1000 then before long the cost of living would rise to $2000.
It's the guaranteed part that makes a difference. If they know they can at least buy toiletries or whatever with the money.
I don't understand the cost of living part? Are they raising the prices randomly? Is it because more people are buying stuff, so there's more demand? Then more jobs are created. It's a very vague question.
Apologies for being vague, it’s been a while since I’ve had this discussion.
Perhaps I am misunderstanding UBI as being linked to the cost of living, in that the UBI would provide for people’s basic needs and if they wanted more than that then they could find a job to supplement their income or maybe it’s one or the other.
I think what they were getting at ok the raising prices is that because there is more spending power then that means corps would like to get their hands on this extra money by raising prices.
I’ll try and broach this topic again and get their objections and bring it up next time I see this discussion.
No worries, I'm guessing they won't be able to respond either. It sounds like talking points they were given by a podcast or something, and they didn't really look into it. Whenever people start spouting those kind of things, digging deeper into their thoughts will usually tell you pretty quickly how much they believe or are repeating.
You might want to do some more research and have sources.
I brought up a handful of VERY easily-verifiable, non-controversial data points, and just did some simple math. But, I guess, for the extremely lazy:
- $1000/mo x 12 months in a year = $12000/yr
- Number of working-age (16-64) Americans = ~210 million (I rounded down to 200 and counted working-age only (i.e. no elderly/retired), two things that make my argument WEAKER)
- $12 thousand x 200 million = $2.4 trillion
- Combined net worth of US billionaires is ~4.5 trillion. But hey, I found a much higher estimate that puts it a bit above 6 trillion. That gets you almost a whole extra year!
- Latest US defense spending budget is $850 billion
Assuming stripping defense down to zero (which again, is an absolutely absurd hypothetical made for the sake of argument, and making my argument AS WEAK AS POSSIBLE) and applying the entire $850 billion to the UBI price tag, you're left with a yearly cost of $1.55 trillion. And even using the higher estimate of $6 trillion from the billionaires, 1.55 goes into 6 less than 4 times.
The only thing 'wonky' is your refusal to accept mathematical reality.
P.S. Telling me to "look at really good sources" for 'it's not universal if it's not given to everyone' made me laugh pretty hard.
Where do you think the money goes when people get them? They don't "dissappear", so the "three years" you get from your billionairs in your example is you not understanding economy, even if you math is correct as you describe it.
The money people get would circulate and be taxable, so the government will get most of that money back to repeat giving out more the next month.
Also, your example I only using billionaires wealth instead if increasing taxes that more people are able to afford now that they have this UBI. The ones who have more than they need in income would be taxed harder, as they earn enough that they don't need the UBI, but since it's universal, they still receive.
I’ll discuss it when you come back with sources from the studies of UBI and why most experts think they worked being referenced
Why the hell would we give the rich $12k/year.? It makes no sense for it to be "universal," we should change the branding. Doesn't make it the bad idea you are so eager to paint it.
Taxes on the rich go way up, and so UBI is just a refundable tax credit, but some people pay more than they receive = taxation, where others receive more than they pay = negative taxation.
Why the hell would we give the rich $12k/year.?
Because the administrative costs associated with making sure they don't, will cost even more. That's one of the main upsides of UBI--no means testing makes it have practically no 'overhead'. If means testing were added, its price tag would be even higher.
Negative income tax solves the "rich people getting 12k/yr they don't 'need'" issue. Beaurocracy/overhead has already been mentioned as another reason.
That’s precisely it, there’s lots of evidence which shows that welfare programs are better for creating stable societies.