Is it a good idea to give people money monthly for "doing nothing"? Let's rephrase the question.
Resistance to universal basic income generally comes from two arguments:
- Where will the money come from?
- Should we pay people for nothing?
These are extremely valid questions with complex economic and philosophical answers.
On an economic level, each extra dollar we pay people will add value and movement into the economy. The extra money will stimulate purchases and stability. In an emergency, the Freedom Dividend provides a safety net that can help. According to a a study from 2018, only 39% of Americans could cover a $1,000 emergency. That is shockingly low, and can lead to significant loss for vulnerable groups.
Where are we going to get this money? Will inflation tick up? The money can come from a reduction in overlap between government programs, a reduction in government waste and through the development and support of profitable business ventures. A combination of investment into renewable energy, infrastructure projects and housing projects can help produce income that can be given to Americans. As the stimulus takes hold, millions can be supported by increased economic activity, which can be taxed or invested to further support the initiative.
When we ask the question regarding payment for idleness (this is what is implied), we need to look at human nature. Should we subsidize idleness? The simple truth is that the subsidy will allow citizens to pursue passions, create small business and be more stable in their lives. It will be a good thing.
So with the economic boon and stabilization this money can provide, why do we still oppose it? The proposed stimulus will produce up to 4.5 million jobs in America.
Sources:
Picture from Pixabay.
Cover picture from Shutterstock:
https://www.shutterstock.com/editorial/search/andrew%20yang
https://www.cnbc.com/2018/01/18/few-americans-have-enough-savings-to-cover-a-1000-emergency.html
I did the math a few years ago on how much is already being spent on all the different kinds of welfare at all levels of government. When you divide it out by the population, it comes to about 3,000 USD per person.
If you reallocate all that evenly to make it universal, a family of 4 would get 12,000 USD per year. Of course, the people already receiving welfare benefits and seeing them cut might be upset about that.
But that's money that is already being spent.
Going from 3,000 per person (all ages) to 12,000 USD per year per adult means about 3x the money.
So problem #1: where does the money come from? Yang says it will be paid for primarily with a VAT and economic growth. Of course, a VAT will increase consumer prices in the end, so prices will rise in order to give people these handouts. Depending on how you tweak the model, you might get a small arbitrage out of it. But the net benefit is certainly going to be far less than 1,000 USD/month.
Problem #2: does giving people money make life better? There have been a few experiments run around the world and results have been mixed.
The thing is, in the US, life is actually pretty good. There are already programs to help the needy. In terms of absolute numbers, people who lack the very basics of shelter, food, and so on are very low and largely a function of mental illness.
There are around 300,000 homeless people in the US. That sounds like a lot, but compared to the population it's about 0.1%.
The statistics you see thrown around about "food insecurity" are largely bogus. Anybody responding to a survey saying they weren't sure where one meal was going to come from in the past 12 months is counted as "food insecure."
According to https://www.worldlifeexpectancy.com/cause-of-death/malnutrition/by-country/, 64 people out of 10,000,000 die from malnutrition-related causes in the US each year. That translates to about 2,000 people a year. Individual tragedies, yes, but not a systemic problem.
So, will people feel better or richer or anything? None of the experiments conducted so far have really been universal, so it's hard to say. My guess is no because it's not absolute wealth that fires off those neurotransmitters, but relative wealth. If you are doing better than your neighbor, you feel more secure in the world and generally happier. If you and your neighbor both get the same payments, that doesn't improve the relative position.
And then there is problem #3: is UBI a moral idea? Obviously, the proponents of UBI see no moral quandary with taxation or the whole give a man a fish idea. For me, it's the antithesis of everything we know about elevating people by helping them discover their own strengths. Yes, there are people out there who cannot cope with the world, and they should receive our charity. But we're talking about 10% of the population then, not 100%.
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You mention welfare being cut, but my understanding is that the planned UBI is opt-in, so existing benefits if they happen to be better for you would be preserved.
#1 is debatable, since we know the VAT will be shifted towards taxing luxury goods. Though I didn't look into the specifics of it.
#2 from a practical standpoint, money clearly can improve the quality of life, especially at the lower income levels. Just being able to compare with neighbors is a luxury. There's a lot of people living paycheck to paycheck where they wouldn't even think of it.
I don't have a problem with #3. The amount we are talking about isn't even enough to be fully dependent on. It's not meant to be that either, it's about moving towards economic freedom, allowing choices that would not otherwise be possible.
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The welfare cut is part of my calculations about already-existing payments being spent. Nothing to do with Yang's proposal.
Why would a VAT be shifted towards luxury goods? It applies to just about everything.
And more money isn't better if things just end up costing more. There is no optimal quantity of money.
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Because they want to help out those that would be spending it on essential goods. There's a common critique of Yang's proposal that VAT is regressive and will hurt lower income more, but the counter to that is exactly changing the structure of the VAT to balance that out. That and the fact that UBI + VAT yields a strictly improved situation for lower income families (price assumption here).
The "things costing more" part is a potential problem though. But it won't be because everyone is making more money so sellers can automatically jack prices up. It will be based on supply and demand (as always). Demand for essential goods isn't going to suddenly spike because people have more money.
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Yes, if they pick and choose what gets a VAT and what doesn't, that will alter the cost structure. So there is that.
There's nothing automatic about it. It's more money chasing relatively the same goods.
Of course it will. It's the reverse of the substitution effect that is used in inflation discounting calculations. Times get tough? You switch from steak to hamburger. Got an extra 1000 USD inyour pocket? Back to steak.
Same goes for housing, energy, and all the rest.
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Something where substitution applies I would argue is non-essential. But yes, I do see your point here.
When it comes to housing for example, I would expect "nicer" properties to be impacted more, for the same reason.
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I would rather have my medical debt erased and be guaranteed a well paying job than spend an extra $1000 a month on rent.
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Yang's UBI is wealth redistribution by coercion. Coercive wealth redistribution is socialistic. No other ideology has produced so much injustice, suffering and cruelty as socialism has. UBI is a fine idea if it comes from voluntary action or from something like the inflation from STEEM blockchain, then it is eloquent, charitable, voluntary and virtuous. However if it comes from government it is coercive, potentially violent, and immoral.
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