First of all, even if the people in positions like this were only working for sustenance and UBI provides it for them, it doesn't mean some wouldn't want to continue working to make even MORE money. UBI is a baseline, not welfare. If previously a lawn mowing job was only enough for rent and food, maybe now with UBI it'd be enough for rent, food, and the occasional dinner and a movie. Ain't nothing wrong with that.
But you're right, at least some people would definitely completely exit the work force. Well, that just means the salaries of the rest would go up. Simple economics. Does that mean that some working families can no longer afford to pay a new immigrant bottom dollar to mow their lawn and instead have to pitch in themselves? Maybe so. Is that so bad.
Okay, you say, but what about those working mothers that are barely making enough money to be able to afford the most basic child care while they make their income? Good news - UBI also helps THEM too so either they no longer need to work if all they're doing is getting by to keep a roof over the child's head, or they have enough extra to pay for the increase in child care.
I'm not saying "don't worry about, it'll all sort itself out". This is a very complex policy with millions of consequences to our societies - intended and unintended. A lot of research must be done, and also experimentation. But to say that with UBI everyone would be worse off is ridiculous bordering on propagandistic.
As costs for services go up, costs of products go up as well. For example, if I'm in the beer business, and the cost for me to bottle a single beer is $.10 per bottle on my assembly line. If labor costs increase under UBI to double that ($.20/per bottle) (because cheap labor is now harder to find), I must increase my sale price by at least the same or go out of business.
Now somebody buying my beer has to pay $.60 more per six-pack, potentially wiping out that fraction of new income UBI was providing them.
The government could come in and say "the price of beer may not increase at all" and set some kind of price control. So now I need to cut $.60 of cost somewhere else in my product.
But wait, it gets worse!
Bottling isn't the only cost for me to make and sell my beer.
- Grain harvest is more expensive - increasing my cost
- Transport costs are more expensive - increasing my cost
- Blank bottles are more expensive - increasing my cost
- Brewing is more expensive - increasing my cost
and so on...
So to prevent inflation I have to cut costs everywhere else. Cheaper glass, worse grain quality, worse brewing methods, worse water supply, and so on. If I can't balance the cost equation I simply go out of business, decreasing the supply of products in the economy and increasing unemployment.
In effect, nobody gets paid more because everybody gets paid more, which drives up prices, which is the definition of inflation. If inflation is artificially capped by price controls, then product quality either goes down, or I go out of business.
It's basic economics.
Sounds more like fantasy than economics.
https://news.ycombinator.com/item?id=11619803 https://news.ycombinator.com/item?id=11619677 https://news.ycombinator.com/item?id=11619716 https://news.ycombinator.com/item?id=11619722 https://news.ycombinator.com/item?id=11619700 https://news.ycombinator.com/item?id=11619538 https://news.ycombinator.com/item?id=11619598 https://news.ycombinator.com/item?id=11619476 https://news.ycombinator.com/item?id=11619477 https://news.ycombinator.com/item?id=11619730
> AND it will decrease so substantially that all markets will have to increase prices to a 1:1 ratio with the new UBI.
No, all money will devalue with the increase in supply and increase in labor costs. That's pretty basic economics.
They will, and I never said they wouldn't. The problem with your "theory" is that they are going to decrease at a 1:1 ratio with increase in labor costs from the UBI resulting in an overall "0 gain" from the UBI.
> No, all money will devalue with the increase in supply and increase in labor costs. That's pretty basic economics.
True, but that's not the argument you are making. You are arguing that nobody will be better off because the decrease in available labor will be entirely offset by the increased costs in goods/services based exclusively off of labor losses from the UBI.
That is a nonsensical argument. There is ZERO evidence to support it. The overwhelming likelihood is that the price goods will increase, but no where near enough to offset the UBI. The remaining difference in the economy will come from wealth redistribution.
Fact is, labor is not 100% of the cost.
If UBI makes HALF of the worforce quit -which is not very likely- salaries wouldn't go up 100%. So it's not a 1:1 ratio.
The potential for number 3 is the reason I think UBI is a macroeconomic necessity. Currently, our monetary system is based almost entirely on debt; only if that debt (private+public) grows is there an incentive to invest and further grow the economy. When the country and its citizens reduce their debt load, the currency deflates, which distinctivises investment and growth---a depression. With UBI, we could potentially replace this system with a much more stable and robust one, while simultaneously eliminating poverty and poor working conditions.
Capital gains taxes only occur if money is made from investments, and there's lots of wonderful ways to show losses or get around that kind of tax system by reinvesting or working the books over to show losses.
You don't want to tax asset ownership too much, because then you'll be taxing people's stock and bond ownership and their retirement accounts and it produces a disincentive to invest in businesses that would need that money to produce the kind of automation revolution that would make UBI work (your #2). A great many assets also only have value and not intrinsic worth. For example, Donald Trump is on record saying that he believes his personal fortune can vary by billions of dollars on any given day given how he "feels" about his brand image. We all know about VC valuations. Do we tax paper billionaires who are pulling down $100k in real income? How can they possibly pay that?
Consumption taxes have been demonstrated to have an outsized impact on the poor.
and so on.
A notion that "well we'll just close all the tax loopholes to make UBI work" is quite frankly a fantasy.
I agree that UBI would stabilize boom bust cycles, but it's not clear that that's a desired end-state. Boom cycles are often when major innovation happens.
e.g. When the Fed raises and lowers rates, it's using inflationary models to inform that decision. With a desired goal of sustainable and controlled minor inflation.
An amazing amount of work is not mindless factory work.
Yes, it's bad because now we are all poorer. We have fewer goods and services to go around. The fact that salaries (paper) go up doesn't change this fact.
Okay, you say, but what about those working mothers that are barely making enough money to be able to afford the most basic child care...
I'm referring to highly productive women who should be designing self driving cars, automating business processes, and other such valuable things. Instead they are stuck at home changing diapers.
We, as a society, lose the value of their output.
This is absolutely true in a free market with no labor distortions (BI, tax, etc). However, we already live in a world with distortions (taxes, welfare, regulations) that drive a wedge between economically optimal and actual choices. How would adding an even bigger wedge help?
Also, due to women's sexual choices, most likely the father is also highly productive. So your "fathers change the diapers" is not really a viable solution - it just means you lose his output rather than hers.
The current market is not free because people are forced to offer their services if they don't want to starve. That's a huge distortion that you would remove with basic income.
At the margin this will certainly cause people to drop out of the workforce. Heck, as I get closer to having enough assets saved to be able to require, I'd probably choose the pull the trigger on that decision sooner.
Later: Which is not intended as more than hand-wavy thinking out loud. Regardless of the impact, a basic income is a political pipe dream in the US. More immediate improvements in quality of life might come from better aligning incentives in the healthcare system and fixing cliffs in existing programs.
