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The Unconditional Basic Income and the Hayekian Price System

Sam Bowman of the UK’s Adam Smith Institute writes what he calls “a neoliberal case for a basic income.”

I loathe the term neoliberal, but his case is persuasive. It’s summarized as follows:

1. It addresses in-work poverty well.
2. It reduces complexity in the welfare system.
3. It facilitates other reforms that would raise overall living standards.

Let’s add to it Jacob Levy’s argument against putting conditions on welfare:

A lot of people a lot of the time underestimate how burdensome, onerous, and intrusive complicated bureaucratic rules and regulations are. They casually treat the only cost of a rule as the cost to bad people of not doing whatever the rule prohibits, which isn’t a cost at all. But in order to have effect, rules have to be enforced; efforts have to be made to detect violations and monitor performance on an ongoing basis. This is a burden on the whole class subject to the rule, not only those who were going to break it….

And so poor people will be subjected to another set of forms, another set of inspections, another set of surveillance and monitoring, another set of insults, another risk of false findings of guilt, for trivial financial savings. Someone gets to posture as having zero tolerance for some unacceptable outcome; that’s what the zero tolerance policies are for. And life for a sixth of the country’s population gets worse, more unfree, more subject to the burdens and intrusions of micromanaging regulation.

I find that argument pretty strong as well. And I’d like to add another argument for a basic income, also in the classical liberal tradition, one that I don’t believe I’ve heard before.

Let’s start with F. A. Hayek’s examination of prices as economic signals. If you’re not familiar with it, you will do well to start with “The Use of Knowledge in Society.” For the moment some quotes will do:

[A] little reflection will show that there is beyond question a body of very important but unorganized knowledge which cannot possibly be called scientific in the sense of knowledge of general rules: the knowledge of the particular circumstances of time and place. It is with respect to this that practically every individual has some advantage over all others because he possesses unique information of which beneficial use might be made, but of which use can be made only if the decisions depending on it are left to him or are made with his active coöperation…

Fundamentally, in a system in which the knowledge of the relevant facts is dispersed among many people, prices can act to coördinate the separate actions of different people in the same way as subjective values help the individual to coördinate the parts of his plan. It is worth contemplating for a moment a very simple and commonplace instance of the action of the price system to see what precisely it accomplishes. Assume that somewhere in the world a new opportunity for the use of some raw material, say, tin, has arisen, or that one of the sources of supply of tin has been eliminated. It does not matter for our purpose—and it is very significant that it does not matter—which of these two causes has made tin more scarce. All that the users of tin need to know is that some of the tin they used to consume is now more profitably employed elsewhere and that, in consequence, they must economize tin. There is no need for the great majority of them even to know where the more urgent need has arisen, or in favor of what other needs they ought to husband the supply. If only some of them know directly of the new demand, and switch resources over to it, and if the people who are aware of the new gap thus created in turn fill it from still other sources, the effect will rapidly spread throughout the whole economic system and influence not only all the uses of tin but also those of its substitutes and the substitutes of these substitutes, the supply of all the things made of tin, and their substitutes, and so on; and all this without the great majority of those instrumental in bringing about these substitutions knowing anything at all about the original cause of these changes. The whole acts as one market, not because any of its members survey the whole field, but because their limited individual fields of vision sufficiently overlap so that through many intermediaries the relevant information is communicated to all. The mere fact that there is one price for any commodity—or rather that local prices are connected in a manner determined by the cost of transport, etc.—brings about the solution which (it is just conceptually possible) might have been arrived at by one single mind possessing all the information which is in fact dispersed among all the people involved in the process.

We must look at the price system as such a mechanism for communicating information if we want to understand its real function—a function which, of course, it fulfils less perfectly as prices grow more rigid. (Even when quoted prices have become quite rigid, however, the forces which would operate through changes in price still operate to a considerable extent through changes in the other terms of the contract.) The most significant fact about this system is the economy of knowledge with which it operates, or how little the individual participants need to know in order to be able to take the right action. In abbreviated form, by a kind of symbol, only the most essential information is passed on and passed on only to those concerned. It is more than a metaphor to describe the price system as a kind of machinery for registering change, or a system of telecommunications which enables individual producers to watch merely the movement of a few pointers, as an engineer might watch the hands of a few dials, in order to adjust their activities to changes of which they may never know more than is reflected in the price movement.

In short, prices are an impersonal index of the needs of economic actors all across the world. They’re weighted against one another, taking into account the opportunity costs and tradeoffs that the production process will always entail: If you’re going to use tin to make lithium-ion batteries, then you can’t use that same tin for electroplating.

F. A. Hayek

F. A. Hayek

Which do you choose? If you’re looking to sell tin futures, the answer is simple: You sell your futures to the highest bidder. In a price system, the highest bidder tends to be the one with the highest profit margin. And it turns out that the highest profit margin comes from consumers bidding up the prices of lithium-ion batteries.

A holder of tin futures don’t actually need to know anything about the use of the tin, or the profit margins of various firms, or even why consumers like lithium-ion batteries so much. All she needs to know is to buy low and sell high, combined with her local knowledge about how to mine tin. Just like that, all across the chain of production, consumers send signals that reach primary producers, who are in effect put to work for the consumer.

Posturing, meanwhile, gets discounted to zero. There’s a reason why sending price signals costs money: It forces consumers to prioritize, and to tell producers, through revealed preferences, only that which they truly want. Posturing is for politicians, not for traders. Hayek never put it quite this way, but we can almost think of the price system as a place where only real needs are communicated, while the political system is reserved for unmonetizable needs. The set of unmonetizable needs may include some real needs, but it also includes a lot of magical thinking.

As real incomes rise, we can expect that more urgent price signals will be sent about progressively less important consumer needs. Now, there’s nothing necessarily wrong with this. When living standards rise, consumers tend to spend less of their incomes on food. They spend more on education, recreation, and end of life care, and we should be glad that they do. But again, the signals for these goods still need to cost money if the price system is to function.

But also as real incomes rise, the price system may run into trouble on the low end of the economic spectrum: How can someone send a price signal when they don’t have any money at all? How can the comparatively feeble price signals of the very poor compete with the price signals of the middle class, which are strong and (happily) getting stronger?

It’s possible, and tempting, to make gross simplifications of this situation. But the impaired ability of the poor to signal via the price mechanism has some predictable effects, and they aren’t especially good. We might say, for example, that inexpensive, high-quality basic consumption goods will be underprovided, in favor of conspicuously non-basic goods. The latter signal at great cost that the consumer belongs to a higher social class. That’s a big problem if you’re poor. (Revealing, too, is that the word “basic” itself has acquired such a negative connotation in recent years.)

We might further hypothesize that when charity is left to the upper classes, a good deal of supposed charitable expenditure will be devoted instead to virtue signaling. Charity will tend to be demonstrative rather than helpful, a subject I’ve discussed before. Charity in the form of simple cash transfers to the indigent will almost certainly be more efficient, and Hayek’s theory of price signals explains why this is so, and this would apply as well to state-provided charity as private.

In short, it seems that an unconditional basic income might do three important things in light of the Hayekian price system:

1. A UBI would allow the indigent to communicate their needs by means of efficient price signals, rather than relying on inefficient charities to do the exact same thing. The needs of the indigent would therefore be met more effectively, as the economy re-ordered itself to match them.

2. A UBI would allow the price signals of the indigent to compete somewhat better with the signals being sent by the still-rising middle class. May our middle class rise forever, but long as they do, the gap between them and the utterly indigent is going to grow. That’s a real problem as regards the communication of local knowledge in the economy, but it’s also a problem that a UBI could address.

3. The unconditional nature of a UBI would prevent the market distortions inherent in conditional grants, which always incentivize or disincentivize particular behaviors. The incentives that are set up by means of conditional grants are the product of politics, and to the extent that politics intrudes on the economic process, it crowds out the price signals that communicate consumers’ actual needs. Hayek argues that such intrusions should be resisted with great force, and a UBI might be one means of doing so.


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Jason Kuznicki is a research fellow at the Cato Institute and editor of Cato Unbound. He's on twitter as JasonKuznicki. His interests include political theory and history.

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144 thoughts on “The Unconditional Basic Income and the Hayekian Price System

  1. This is probably the best set of arguments I can think of for a UBI.

    I’m not 100% on board, though, and I’m not sure if it’s because of practical reasons or because of any faults with UBI itself. So here are my concerns, which touch only tangentially on the arguments you cite and make and are very US-centric:

    1. How do we get from here to there? Would other welfare supports be dismantled and if so, would they be dismantled right away or phased out as the UBI is phased in?

    2. What would UBI in the US actually look like? A very robust EITC? A means-tested thing where the recipient has to prove they’re not at a certain income threshold? A universal grant to every adult citizen?

    3. What are the unexpected and unforeseen consequences? That’s a hard question to answer because by definition the answer is “unexpected” and “unforeseen.” It’s also an unfair question in some ways, because it doesn’t refute or even address the arguments for UBI. But the arguments just seem to work too nicely. Maybe there’s a catch? The arguments are vaguely reminiscent to me of the promises held out for what the world would look like after a socialist revolution. You may find the analogy offensive, and I don’t mean any offense. And there are a lot of ways that the arguments for UBI are better and more realistic than the arguments for extreme socialism I have in mind. I just have an ill-defined skepticism that I’m not ready to let go of.

    4. How do we keep it once we have it? Would it survive a court challenge? (I’m not being a constitution troll here…but if I’m going to devote energy to supporting a UBI, I’d want something that won’t be dismantled.)

    5. (A variant of no. 4). If UBI becomes the sole or principal welfare support in the US, it will be a very visible expenditure in any government budget. Even though it will likely be much more efficient and cost-effective than other welfare supports, it might be an easy target as well for balanced-budget crusaders.

    What I fear is twofold:

    One, the current messy system/non-system of federal/state/local welfare supports creates so many interlocking interests and constituencies and provisos that as you and Bowman point out are oppressive to recipients. But at the same time, they make it very hard to dismantle. A UBI would be one program. It would presumably have a large constituency, especially if it works like social security and everyone gets a check, and if that social security analogy holds, a UBI would be hard to dismantle or change. But I can envision UBI being an easier target than the instances from our messier (and I agree, unfair) system.

    Two, if UBI is not an easy target for dismantling, it might be an easy target for reduction and austerity, where Congresspersons would debate endlessly about how to reduce the basic income so as to provide only the bare minimum for survival, perhaps reviving the discussions Orwell refers to (in Road to Wigan Pier) about minimum survivable calorie counts when determining the extent of public assistance. Even so, it’s possible that a UBI would be better than our current system. But it’s a concern.

    As I said, my concerns are tangential to your argument(s). This comment will be kind of a drive-by as I have to go to work now, but I’ll follow up later and read any response you might have.

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    • The nice thing about the UBI is that it’s downsides are clear and visible. Unlike policies that tamper with relative prices it is much less likely to have strange side effects. A really generous UBI could lower employment, but we’d probably having to be living in a post-scarcity society to pay for one that generous anyway.

      The big downside is the obvious one – it’s expensive. And it would require people to think differently about how the welfare system works, which honestly might be the biggest practical barrier.

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      • One of my concerns, , is Burkean. If we replace the complex web of social supports with a simple and “more efficient” UBI, maybe we’re destroying something worthwhile or even necessary and that we don’t know about yet. I’m not saying this definitively means we shouldn’t do it, mind.

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          • Here I’m speculating a bit. But I’d suggest even something of fairly recent vintage, like the New Deal and Great Society in the US, could create a “complex web of etc., etc.” in a relatively short time.

            I’m not so sure all of it is as new as you’re suggesting. Those 20th century innovations were mapped onto more timeworn practices. There’s a tradition of county-level aid that stretches back to the Elizabethan poor laws and earlier. There’s also a tradition of public-private partnerships that in the U.S. stretches back to the late 1800s. I’m thinking of things like private foster care and adoption agencies, like the Children’s Home and Aid Society of Illinois as just one example. It had its origins in the 1880s.

            Now, I’m not sure how much I’d want to rely on these claims. A lot happened between the Elizabethan laws and the creation of the American republic (and of course, I’m being US-centric. I can’t comment on New Zealand or anywhere else). But I still think Burkeanism ought to be a consideration.

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            • Assistance to the poor has been around for a long time, but those forms were fundamentally different to the welfare state that replaced them.

              I’m desperately trying to work out scenarios where the whole thing goes horribly wrong. The best I can come up with is that the UBI removes the stigma of unemployment, leading to a huge reduction in the labour force at the low end of the labour market. If this led to people feeling like their lives were meaningless that would be bad, but if work provides meaningfulness won’t people seek it out anyway?

              The other outside scenario I’d be worried about is demographic – if a significant fraction of women are no longer in the workforce at all, do we start to see natural increase in developed countries start to rise to unsustainable levels? I’m not worried about overpopulation right now, but I’m not worried because developed countries have zero or negative natural increase.

              Naturally there may be other possibilities I haven’t even considered – I’d be most worried about outcomes that are heavily tied up with culture because my training as an economist leaves me with a blind spot in that area.

              But there is a way to implement new policies that respects Burke.
              1) You start by seriously thinking about the possible downsides of the policy, as I just did here, but using a larger pool of multidisciplinary people putting more work in that I’m willing to for a blog comment.
              2) You implement pilot programmes and carefully monitor the results. You then take the results of these pilots seriously – do we see any major negatives, if so can we adjust the policy to manage them?
              3) If step 2 checks out OK, try implementing the policy and monitor the hell out of it. Get good baseline data and watch for any systematic changes. Ideally have some contingency plans ready to go if things start to slide off the rails.

              For a big programme like UBI step three might take decades to produce results either way, but then governments should really be monitoring everything they do this closely anyway.

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              • My only disagreement is that the 20th century reforms, as I see them, supplemented and commingled with existing relief approaches and didn’t replace them, or at least not entirely.

                That said, I agree with the rest of your comment and think the 3 steps you posit are probably good ones. And while I can theoretically imagine that there exist “complex webs” and some such, I too struggle to see the downside of UBI replacing most/all other forms of welfare supports. So we probably agree more than not.

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              • James,
                We’re above earth’s carrying capacity right now (so says my friend in logistics). Overpopulation is definitely an issue.

                Men will continue to work, not because of fulfillment, but because women don’t particularly go for layabouts (sex drive solves something!)

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  2. UBI seems to be having a little moment but I still think there are many hurdles.

    1. The biggest hurdle is the very old human notion of “those who don’t work, don’t eat.” Lots of UBI fans believe that many will still work and they are probably right but we still deeply abhor those who don’t (rightly or wrongly). If Lenin could believe in “those who don’t work, don’t eat”, I am not sure if UBI has a chance yet.

    2. Many liberals (including myself) don’t believe that UBI means the complete gutting of the welfare state. The debate seems to be between those who would keep things like single-payer health care and the ACA and those who would just gut the welfare state completely. I think Kevin Drum makes good points for the keeping of the welfare state:

    http://www.motherjones.com/kevin-drum/2016/04/it-finally-time-ubi

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    • Your item #2 would cut strongly towards #1. If a UBI was proposed to be added on top of the existing edifice of safety nets and entitlements it’d be extremely hard to achieve and even harder to finance. The elimination of distortions and inefficiency is a significant selling point for anyone to the right of, say, Bernie (which is the overwhelming majority of the population).

      I dunno, if you’re getting a UBI why would you need a minimum wage? Why would you need unemployment? Healthcare is a special category but why would you need food stamps?

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      • To clarify, you could obviously get rid of some parts of the welfare state like unemployment. I would be cautious about getting rid of the minimum wage but it would not need to be super-high either. I would not want to get rid of the ACA or stop striving for single-payer healthcare. You could also get rid of social security assuming that UBI lasts until the grave.

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      • With UBI you can get rid of the minimal wage and social security because UBI will take over those functions. You can most likely get rid of housing vouchers and food stamps to. What I’m not sure of is getting rid of universal healthcare or insurance. I think that should be kept even with UBI because of it’s great expense.

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        • Unemployment insurance, too. And AFDC becomes an age-scaled UBI for the children themselves.

          I think I’ve seen numbers such that, if you actually do abolish all the programs it directly replaces, a UBI is a fairly small tax-increase-above-$100000-beyond-UBI from being revenue-neutral, or close enough to it for government work.

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            • Thanks, I’ll try to update my acronym mapping. The point is still the same – you don’t need any targeted distributions if you’re already making a blanket distribution, so you can subtract all of those current running costs from the cost of the UBI itself.

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          • Devil’s in the details (especially health care, SS and Medicare/Medicaid). It’d be easier to roll UBI and SS together (although possibly keep a fraction of the SS tax to allow people to ‘earn more’ for retirement over their UBI — or make it optional, akin to a 401k through the government), and maybe roll UBI into the Medicare/Exchange (UBI is UBI+refundable health care credits — it either goes to ensure you’re covered healthcare wise or is refunded to you if your employer covers you).

            How much that needs to be…..it really depends on how you implement it, I guess. I’d definitely recommend a cost of living adjustment based on area and costs, and possibly segmenting health care out given our patchwork system (your UBI might be 20k a year, but 4k is earmarked towards cheapest silver coverage or Medicare, so you’ll only get 16k — basically ensure health care is paid up front, and refunded later).

            Doing cost estimates on UBI are going to be a nightmare unless you have a full UBI plan that covers every variable.

            Scoring it will be a nightmare because even tiny changes can radically alter the cost structure — especially if you’re rolling healthcare coverage in.

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    • I think, or assume or imagine, that built into the idea is that UBI provides for a reasonable quality of life — but not enough for a luxurious one. If you want to enjoy the nicer things in life, well, for that sort of thing you’ll need to earn money in some other way. UBI is to keep you clothed, fed, housed, etc. It’s not there to pay for luxuries. My assumption is that aspiration to get those kinds of goods and services will be what drives people to enter the labor market.

      To find the theory interesting and attractive, we have to assumes we can determine where that sweet spot is that necessities are provided for but not luxuries. That “etc.” leaves room for a debate that turns out to be hugely contentious as demonstrated by the periodically repeating story of someone using public nutrition benefits to buy a lobster as if that were either personally sinful or collectively economically intolerable.

      Also COLA for various regions is pretty significantly variable, which makes a national dialogue about where the “sweet spot” lies quite difficult to have. What it costs to rent a barely-liveable apartment in San Francisco is probably enough to live with a substantial degree of luxury in rural Tennessee. OTOH, what survival numbers look like in rural Tennessee would likely cause a lot of urban dwellers to consider the UBI a step backwards in the effort to eradicate poverty.

      There’s also the assumption of UBI advocates that providing UBI will be roughly as affordable to the polity as are the existing social welfare programs that it will displace (by which I assume we’re referring to Social Security, Medicaid, General Assistance, Section 8, WIC, AFDC, Unemployment Insurance or cognates thereto). Turns out that these social welfare programs are quite popular. And they’re also generous enough and address complex enough benefits that it’s easy to imagine unsophisticated recipients misallocating the resource provided to them (particularly if they feel an immediate desire for the luxury goods and the necessity is remote in time or of uncertain actual need, as in health insurance).

      We then must decide whether and to what extent we will tolerate someone who buys a “luxury” instead of health insurance and then needs catastrophic health care: do just we let them rot, on the theory that hey, society did provide for you and your bad decision is why you can’t get your broken bones mended, or do we spend/loan additional dollars to get them patched up anyway? In which case why isn’t more of the UBI in the form of in-kind benefits like Medicare, rather than just plain money, in which case we’re back to something that looks like the status quo so what’s all this UBI business about anyway?

      These are the two big speed bumps I see between theory and practice.

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      • I think, or assume or imagine, that built into the idea is that UBI provides for a reasonable quality of life — but not enough for a luxurious one.

        The amounts that are often tossed around for a UBI all seem to me to include the qualifier on reasonable quality of life of “so long as nothing goes seriously wrong.” And possibly an additional “and you don’t purchase insurance to protect against something going seriously wrong.” Contemporary health care insurance and long-term care insurance run to several thousand dollars per year. UBI may be able to consolidate and replace those parts of the welfare state that fall under the blanket classification “income support.” We still need to solve the problem of how someone whose only income is UBI affords a million-dollar cancer treatment, or lifetime kidney dialysis, or long term care for physical or mental disorders severe enough that a person can’t care for themselves.

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          • While I was a legislative staffer, a small group of very conservative members of the General Assembly were outraged because there was an instance of a young woman who had drawn ~$30K in “welfare” in a one year period.

            Here was her situation: a mother of two pre-schoolers; the father had disappeared; she was finishing a two-year radiology tech program at the local community college; she already had a job offer in the $18-21/hr range.

            The benefits were a modest monthly cash payment; a monthly SNAP (food stamp) benefit; she was insured through Medicaid and the kids through CHP+; free daycare while she was in class, plus some library time; and a tuition subsidy. She was, in my opinion, doing all of the right things to turn her life around and, as they say, “become a productive member of society.” And busting her butt doing it.

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        • That’s why I think that the system needs to be UBI and universal healthcare and not just UBI. Healthcare can really wreck your financial status if you need it. To get the real security UBI is supposed to provide than you need a healthcare provision to.

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      • The notion of Welfare Queens is not new. I’ve pointed out that in the transition from Georgian and Regency England to Victorian England, there were a lot of similar stories about people who begged during the day and lived it up at night. The notion of the deserving poor v. undeserving poor goes back hundreds of years. One of the things that really marked the start of modern Liberalism was a strike against old notions about the deserving poor v. undeserving poor.

        I think you are right about the problem of Cost of Living. If we were to have a universal flat rate, it would probably need to be closer to 35,000 to 40,000 than 10,000 a year. Basically a decent salary. You might need a roommate or two in SF and NYC but it will still be a step up.

        Though as Kevin Drum pointed out, 10,000 a year would still cost 3.2 Trillion a year. So that is going to be hard. There is also the question of how many people would move to a rural area to live well on UBI.

        One interesting option, what if kids under 16 got less but it was kept in trust for them until they turned 16. That could help a lot. It could be something like 5000 dollars a year prudently invested.

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        • There is also the question of how many people would move to a rural area to live well on UBI.

          For single people without jobs or with low-skilled low-pay jobs (e.g., supermarket cashier), I can see that becoming pretty popular in the case of a UBI. You still couldn’t live well off $10k, but you could live on it, while you couldn’t live on it at all in a city.

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      • That “etc.” leaves room for a debate that turns out to be hugely contentious as demonstrated by the periodically repeating story of someone using public nutrition benefits to buy a lobster as if that were either personally sinful or collectively economically intolerable.

        I stood in line at a grocery checkout for about 10 extra minutes over a bottle of apple cider purchased by the woman ahead of me.

        Because it didn’t qualify for the Texas food stamp program. I think because “Apple Juice” is covered but “Apple Cider” is not, although it could ALSO be because of the size because as the cashier and manager worked out, some sizes of Apple Juice weren’t covered and others were.

        WTF. I didn’t even know there was much of a difference between apple “juice” and “cider” much less one so freakin’ significant that the state of Texas decides poor people can drink one but not the other.

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        • Open apple cider. Close apple cider. Wait 3 weeks. Open apple cider. Drink apple cider. Get drunk off of apple cider.

          The apple juice version of that contains everything except the “get drunk” part.

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          • Isn’t apple cider required to be pasteurized in Texas???
            Apple cider around here is merely using the UV pasteurization, which makes it tons tastier than if you leave it at too hot for ages.

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          • This is a dangerous way to get your drink on. It might work, but you might get a malicious bacteria enjoying that sugary cider instead of happy friendly yeasts that might not survive immediate human ingestion in the quantities then present but which would do very bad things to your G-I system were they allowed to be fruitful and multiply.

            Better to open apple cider, boil it for a little while, let it cool down again, add a small quantity of yeast, seal apple cider with a one-way airlock to let carbon dioxide vent, wait three (to four) weeks, drink some apple cider, offer the remainder of apple cider to a friend who will drink it with you, get pleasantly buzzed but not rip-roarin’ drunk off of apple cider because you’re not 22 years old anymore and by now should have learned through headache-and-nausea-filled-mornings-after why it is that sweet alcohols should not be consumed in excessive quantities over short periods of time.

            If you want it to look pretty when it’s all done, you’re gonna have to filter it at some point, at which point it becomes apple juice. Don’t worry, once the alcohol comes in you can call it “cider” again.

            Add flavors like cinnamon and nutmeg after fermentation, not before.

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      • Turns out that these social welfare programs are quite popular. And they’re also generous enough and address complex enough benefits that it’s easy to imagine unsophisticated recipients misallocating the resource provided to them (particularly if they feel an immediate desire for the luxury goods and the necessity is remote in time or of uncertain actual need, as in health insurance).

        That’s one of my concerns, too,

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    • I have very little time today to answer comments, unfortunately, but I will just say this: The very old notion that “those who don’t work, don’t eat” is seldom if ever literally true in the developed world. It would require a Lenin to make it so.

      Once we’ve determined that there is some sort of obligation to provide charity to the indigent, all that remains is to decide on a delivery system.

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      • I agree with both and here. We do have some very old and robust notions about the need for people to work. And at the same time, it’s simply not true anymore in the developed world. So, what we see now is that we find ways of pretending that we still value work, while at the same time developing ways of excusing large groups of people out of the labor market.

        Probably the two biggest ways that we do this right now is the expansion in incarceration rates (which is great because prisoners don’t really work and they create more work for prison guards) and the expansion of SSI disability payments.

        I come at this from an explicitly capitalist framework (ie I pay attention to price signals), but you can see the same from a Marxist perspective or mercantilist or whatever else. Look back at history. Anytime a society has an opportunity to employ labor in a productive capacity (ie anytime that there is a profit to be made), the system finds a way to compel people into the labor market. The antebellum American south, the Belgian Congo, post-war America, examples abound. The fact that we are now paying people to keep them out of the labor market is telling us something. The only questions are, “how long we can pretend that the idea of full employment is still either attainable or desirable?” and “what will the next stage in the economy look like?”

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        • I’ll need some more thinking to be sure, but I think I agree with this. I’d add that the examples you bring up (prison and SSDI) don’t bode particularly well for human happiness or well-being in a post-work world.

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        • I agree heartily. For quite possibly the first time in human history, we can produce everything we need (and pretty well everything we want, as well) without employing the entire supply of available labour. And thanks to the rising population and the level of mechanization, this is going to continue to be the case.

          So punishing people for not working when 1) they can’t find work and 2) society doesn’t need them to work is both unethical and unreasonable.

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          • Out of 7.5B people, how many are not getting as much living space, personal transportation, climate control, sophisticated modern medical care, state-of-the-art sewage treatment, 24-hour-per-day lighting and retail sales, etc, etc, as they would like? 3B? 4B? Globally, we aren’t particularly close to “needs”, and much farther from “wants”. The “wants” part requires quadrupling global electrical power generation, and we have no serious clue about how to pay for that.

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  3. Great article and I like Bowman’s piece as well. A question and a thought:

    -Why do you loathe the term neoliberal? My first impulse was to think it’s too far to the left for a libertarian like you but my second though was that the term itself is so plastic that it basically stretches to cover the entire political continuum between corporate conservative and socialist. That makes it a not very useful term for conveying information. Are one of those the reason you loathe it or is it something else?

    -I am a big proponent of GBI but, having noodled the concept a bit I do think there’s one area where a condition is needed and that is the question of securitization. I don’t think the government should honor any liens against the GBI in any way.
    People shouldn’t be able to sell their future GBI payments for a lump sum payment. Or rather people should be able to but the government shouldn’t honor any claims against it (which would rapidly make it impossible to sell them).

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    • I seldom encounter the term “neoliberal” except when it is offered as a term of abuse. I’m a liberal, but not neo-. Rather, I’m a classical liberal.

      I haven’t considered liens on GBI at all. I’ll give it some thought. You may be right.

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    • Related to the topic of liens. If you’re active duty military, you’ll find yourself able to get all kinds of credit you would not otherwise be able to get. The big reason why is because you have something of a GBI, and your chain of command will forcibly garnish your pay if you default on a debt (and, if necessary, confine you to berthing and mess). As you can imagine, this can easily become an issue when you have young people with few material needs and cash to burn (even if it isn’t much, and it isn’t – a recruit get $1500/month before taxes).

      To address this, military commands make a considerable effort to educate new recruits about credit & debt. It helps, somewhat, but it remains an issue, and always will. The benefit the military has is that, if you do get your pay garnished, the military can, and will, take non-judicial action against you, unless you have a very compelling case. Making a persons life miserable until they learn to manage their finances usually gets the job done.

      Also, the military does not recognize any kind of lump sum for an annuity contract. It’s been tried, and the military voids them as soon as they are identified (and makes life unpleasant for anyone involved as, I believe, it is illegal to try and enter into such a contract with a service member).

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      • Yes, I wouldn’t approve of even going to the degree that the military does and approving garnishing. If the lender wants to go after the UBI revenue they’ll have to try and get it from the borrower before they spend it. I wouldn’t want to Government involved at all in garnishment and I would agree that they should refuse to honor any claim of ownership of the GBI stream from any other person. Borrower beware is a thing but lender beware is ALSO an important thing and I’ve read far too many stories of finance snuffling around after poor people with annuities to be sanguine on the subject.

        The purpose of GBI is to provide for a person’s basic needs, not to be a financial asset they can barter away. Simply refusing to cooperate or support the demands on the income stream would both A) be very administratively simple, B) would prevent a lending mill industry around GBI and reduce the opportunities for fraud and C) would preserve the core purpose of a GBI.

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        • I don’t know if we’d want to completely ban the ability to garnish, since we it could be very bad to lock out people on UBI/GBI from sources of credit (which that would do). But I do agree that some degree of limitation would need to exist to discourage predatory lending (perhaps a max allowable interest rate? something else?).

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          • Well it’d mean that they’d have a hard time getting credit unless they were earning some money above/beyond the UBI and creditors could always go after the UBI money by indirect means. But you let them start making the government directly garnish the UBI and that’s a kettle of fish that I think would very rapidly start to stink and an extra dimension of complexity that’d be highly undesirable.

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            • Perhaps, but I still think that would lock a lot of people out of credit when being able to build good credit could be vitally important.

              What we could do is make it so garnishing UBI is pretty close to sending a debt to collection. You get $0.25 on the dollar (or less) and the loss is written off on your taxes, then the government pays itself out of the UBI.

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          • Also, we want to ensure the soundness of our lending institutions. Lending to a poor person is currently a huge default risk. This drives up interest rates. If, maybe up to 50% of the UBI could be garnished to pay debts, this would work greatly to lower interest rates and at the same time put poor people in a much more financially flexible position.

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      • So conceivably a side-benefit of a UNI could be a newly animated societal push for financial literacy for everyone, the poor included. Once you have some money is when the incentive actually arrives to learn how money works (and how it makes you the target of scams).

        That would be awesome.

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    • I think I’ve said this before, but I dislike the way “neo-liberal” is often used as a term of abuse whereas I prefer to see it as a middle way between (late 20th-century American) liberalism (or European-style social democracy) and libertarianism.

      I worry about liens, too.

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  4. I’ve spent almost a year fretting about the whole high trust/high collaboration society thing and worrying at the edges of how high trust/high collaboration societies turn into lower trust/lower collaboration ones.

    I worry about moral hazard over the long term. Not for people who sign up for the UBI. They probably know what they’re getting into.

    It’s the whole “people on the UBI raising kids with no expectation other than that the kids will exist on the UBI”.

    Above, Burt mentions “the idea is that UBI provides for a reasonable quality of life — but not enough for a luxurious one” and the whole intergenerational UBI thing strikes me as doing a blow against trust and collaboration… and that strikes me as a recipe for people sitting down to hammer out what, exactly, would constitute a “luxury”. Because, it is agreed, that we wish to provide a reasonable quality of life, but not a luxurious one, and so we wonder if the UBI that allows for the following items is not too high: (list follows).

    And, next thing you know, we’re auditing again.

    Because of the blow to trust that is followed by a blow to collaboration.

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    • Precisely, . The high-trust society doesn’t have the “welfare lobster” discussion; if “welfare lobster” is found (and determined to be as somehow contrary to norms), it’s treated as an aberration and not a reason to burn the whole system down.

      Another notion. If families exist on UBI and raise children with no expectations other than that the kids will also be on UBI forever, this opens up some interesting concepts from a population distribution and urban planning perspective. Maybe it provides a vehicle by which we can move people into areas where jobs are not hugely plentiful, or to areas where there is better ecological capacity for housing, or so on. Utopian mental experiments with command economies are fun! Now, that’s several mileposts down the slippery slope, I realize. But if we have this discussion, we should realize that’s a place it could spiral to, and a thought to whether we want to stop it from reaching such a point and if so how we do that is of interest to me.

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      • Maribou grew up on PEI and she told me that her experience was not that lobster was a luxury item. Most people knew a lobster fisherman. It was precisely the opposite of a luxury item there. (It may not be true now, but it was true in the 80’s.)

        So, in that particular case, we’d have people saying “Those people on the UBI ought to be eating lobster!”

        When it comes to “population distribution and urban planning perspective”, it seems to me that that is exactly what will eventually happen. The people who put themselves in the category of “hey, at least I’m not on the UBI” will find a handful of intangible benefits of not being on the UBI.

        I foresee a movement talking about how it’s not fair that these intangible benefits not being extended to people on the UBI are an example of society acting badly and there will be a movement to stop it. If redistribution of these intangible benefits is not possible then a movement to stop the provision of these intangibles to people not on the UBI.

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        • Lobster was, note, originally a peasant food. Lobsters were and are distinctly perishable. It was only with refrigeration and other modern conveniences that lobster evolved into the luxury it is considered now.

          I, also, was raised on a diet of plentiful lobster. Lobster for dinner then a week of lobster salad sandwiches. I know I groaned over the burden of that in the ignorance of my youth. I am deeply aware of the irony.

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          • Lobsters were a luxury item since the late 19th century. Railroads and refrigeration allowed you to transport them to the interior cities and going out for a lobster dinner in Chicago made you a big shot. Even in coastal areas lobster was a luxury meal by than. One of the fanciest dining experiences you could have in early 20th century New Yirk City was at one of Times Squares lobster palace restaurants.

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            • Not in eastern Canada. I’m 42 and like North and Maribou, I grew up eating lobster all the time and we were very poor. We just ate the smaller ones we called “canners”. They were around a dollar each and we ate every single bit of it. The shells went into the vegetable garden as fertilizer.

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            • It happened sometime between the Civil War and the late 19th century, then. During the Civil War there were rules against serving lobster to prisoner of war more than twice a week on the basis that it constituted inhumane treatment.

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          • I’m well aware! In pre-revoutionary New England, there were laws regulating that gaolers could feed prisoners with lobster no more than three days a week. This was thought to be an enlightened, progressive, anti-cruelty measure to ensure humane treatment of those prisoners.

            Tastes, technology, and times have changed. For most people in most parts of the United States, lobster has become a luxury food.

            Thus, there is periodic anguish about welfare lobsters.

            As points out, the welfare lobster boogeyman is a permutation on the welfare queen boogeyman which is probably not a very new argument either. But what’s the right line to draw between the shared moral responsibility that no one starve in a land of abundance, and on the other hand, the apparently necessary amount of humiliation and degradation to deter people from actually availing themselves of this public benefit? The “Community Gruel Pot”?

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            • Wait i thought Lobster was something people got fried and smothered in gallon of butter are Red Lobster with a side of fries. When did lobster go back to being something for rich people?

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                • oh yeah, the “wild caught” thing. Fish taste better when a brave fisherman engages in a life or death struggle with a noble animal like our forefathers did in the olden times. I do believe , i really do, that people can tell the difference between Wild Caught and farmed fish.

                  That is a thing up here, lots of people are very down on fish farms. Seems sort of like hating on GMO’s to me but i’m not much of a fish person.

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                  • To me, Wild Caught == Free Range. The fish got to live a free fishy life before being caught and eaten.

                    I have no issue with farmed salmon, but it does depend on how it’s farmed, because some places are pretty bad and result in unhealthy fish (which do taste bad).

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                  • Fish farms have some genuine, and serious, environmental issues. A major one is that farmed fish get a lot of parasites (e.g., sea lice) because there are so many of them in a small space, and because the fish are farmed directly in the ocean, these parasites spread to wild salmon and do quite a bit of damage.

                    I don’t think aquaculture is inherently bad – I think it has a lot of potential benefits – but there are definitely some wrinkles in the process that will need to be worked out. In some countries they farm the fish in large tanks on land, rather than in the ocean, and that prevents the environmental issues. It’s more expensive, though, so the aquaculture companies don’t want to do it.

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            • My main point was just that North got his timeframe as lobsters as luxury good wrong. Lobsters were fine eating and luxury good since the 19th century even in the New England coast or areas near it.

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              • “Lobsters were fine eating and luxury good since the 19th century even in the New England coast or areas near it.”
                For rich / upper-middle class people, yes. Meanwhile the exact same food was being sold to poor people to cook themselves, for cheap.

                Where I come from we called those kinds of restaurants “tourist places”. “Have you been to Chez Homard?” “Yeah, my cousins made me go but it’s a tourist place. Nothin’ but the same lobster you could get at the wharf, except 30 bucks a plate.” “Jeez.” “Yup, those tourists will pay for anything.”

                Much like how liver and onions is poor people food, and foie gras is rich people food, except that no one was force feeding the lobsters.

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          • I’m picturing an Andy Griffith story about a place where poor people got fed. You could tell they was proud people, so they dressed real nice, but all they got to eat was bait. Not even cooked, just wrapped in seaweed from the pond it got took from, with a tiny bit of rice to make it seem wholesome-like. If that don’t beat all!

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        • kiiiiiiinda thinkin’ that a discussion of that hoary old chestnut “lobster used to be trash food” was not what Jaybird really intended, here.

          “I foresee a movement talking about how it’s not fair that these intangible benefits not being extended to people on the UBI are an example of society acting badly and there will be a movement to stop it.”

          For example, “asking about income” (that is, doing a credit check) could be seen as a backdoor way of identifying whether someone’s on UBI (their monthly income is a very specific number that matches the UBI). So no more credit ratings.

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  5. I’m open to a UBI. It’s never going to happen here, but i’m fine with the idea. But i’ve never really seen good estimates of what kind of number we are talking about. How big a UBI? What taxes to support( can’t just say, all the current welfare will pay for it, that’s a weak cop out)? Exactly what does it replace?

    The size of the UBI is a big concern. As we’ve talked about in the min wage threads, what is barely surviving is doing okay in another place. So how do we look at that.

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    • The basic idea is UBI provides a floor. Since it makes no demands on your time you’d be free to use it however you wanted. If that Spartan minimum is sufficient for you then spend the day napping but if you want more than barely surviving it would not take very much employment to (added to your UBI) amount to a significantly higher standard of living and in a UBI world with no minimum wage those kinds of jobs would most likely be rather plentiful.

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      • I understand the concept. It seems fine as an idea. But i want numbers. How much UBI does each person get and what taxes do we need? Do kids get an UBI? How do we deal with or figure out the different standard of living issues for various places? If an UBI was 15K a year that would be really minimal in many cities but a lot of the way to a decent living in many rural areas. In low cost rural areas a higher UBI might lead to people needing almost no work but in cities they would need close to a full time job for the same standard of living.

        I want graphs and pie charts and digits.

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        • Sure, and once UBI moves closer to reality some concrete numbers would be useful. What I’ve generally read suggests that taxes would go up and most of the safety net would be folded into the UBI (healthcare being the interesting exception). Most proposals I’ve read suggest that a parent with their first kid would get a modest UBI increase and an even smaller one for a second kid with none for any kids after that. Kids usually get their own GBI at 16 though some proposals suggest trickling it on gradually over teenage years.

          What’s badly needed, however, is for some smaller polities to give it a shot.

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    • Kevin Drum estimated that giving 10,000 a year to every American would cost 3.2 trillion a year at current population levels. Note that this includes people under 18 and he raised the issue of whether children get UBI or not.

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  6. I would think that the whole point of a UBI would be to encourage people to move to ultra-low cost neighborhoods. Who would have the political appetite to pay a higher UBI for San Francisco, when all it really means is that the landlord is receiving a direct subsidy payment from Uncle Sam? I’m pretty liberal and I don’t think I could accept that.

    So, California’s ultra-poor communities — San Bernardino, Visalia, Calexico — get an influx of people who don’t work and don’t need to work. What could possibly go wrong? And in 10 years, kids who have grown up in a community of the permanently unemployed will turn out how?

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    • It seems highly dubious to me to presume that a person with a UBI would not work and would think or behave similarly to poor people today living on uncertain/no incomes.

      But yes, people who didn’t want to work probably would move to lower income areas but hell, a UBI would reshape our landscapes profoundly.

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    • With a UBI, what would keep a low cost neighborhood low cost? It might remain “less desireable” than some other place, but one of my questions is how the new money doesn’t get absorbed like water on a sponge by my cohort of HENRY’s and our evil overlords.

      I suppose the whole Macro Inflation question has been asked and answered(?), but what about the micro inflation? Why wouldn’t rent – and a lot of other costs that are indeed suppressed by the wage signals of the poor – rise to new floors; perhaps not everywhere, but in lots of somewheres. Presupposing the poor will move is something we already know doesn’t happen for lots of non-monetary reasons. Unless the no-strings UBI is really all about strings.

      This might sound more hostile than intended… in my heart I’m 100% in favor, its my head that’s doesn’t get it (yet)… so the questions are genuine, if maybe stupid for being obiously answered in UBI 101 – if I’d bothered to read the original memo.

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        • This is one big advantage that usually doesn’t get mentioned enough. Our current safety net provisions are directly aimed at survival, and thus – by design! – not fungible. So it traps people where they are because they’re too poor to move. Give them the wherewithal to save up for a few months and buy train tickets or a beater ’82 Dodge Omni (god, I hated that car), and it potentially opens up a whole new life.

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          • Well, I appreciate the replies, but I’m not sure they answer my questions… at least not without the tautology of giving everyone more money gives everyone more money.

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            • I’m not sure there is a complete answer to your question because it was a very good one. A big problem is that the situation is so far removed from real-world studies to make them almost inapplicable, so we’re in the realm of theory. And at the end of the day, there’s only so far that ruminating on spherical cows will get you.

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            • Okay, I’d need you to answer in turn then: by what mechanism would all the rentiers and other providers of services to the poor collude to raise prices to absorb the UBI without any of their members defecting to fill their spaces more quickly or sell more of their goods by undercutting their compatriots prices?

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    • I think the disemployment effect of a UBI is seriously overstated. Do we observe people in the real world cutting back their hours as soon as they earn $10k or $20k per year? Or do people find out that once they have the basics, there are other things they want to buy?

      Further more, there is currently a benefit system that pays people only if they don’t work, and a series of other benefits that are clawed back as your income rises, leading to extremely high effective marginal tax rates (rates that likely exceed 100% in some cases), add that to minimum wages and there are plenty of systems in the status quo that discourage the poor from working.

      Any UBI the US government could actually afford to implement would most likely be better at encouraging the poor to work than the current system.

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      • “do people find out that once they have the basics, there are other things they want to buy?”

        Netflix is $120 a year, Bud Light is cheap, my room at my folks’ place is free. Who needs money?

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    • It wouldn’t be the point, but it would definitely be a benefit. Especially if it’s ever enough that people can get by without working. If you’re not going to or able to work, then do that some place cheap. If you are going to work, then they need to make it worth your while not to go.

      I do agree with James K about disemployment being overestimated. There will be pressures if only to avoid living around people who all don’t work. Relative income differential would still matter quite a bit.

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  7. Another overlooked benefit of UBI is in workplace and consumer safety. I think a guaranteed ‘floor’ wage would make it harder for unscrupulous companies to push workers into operating in unsafe conditions, or to produce an unsafe product by cutting corners. Particularly if (and dream with me now) UBI could be extended world-wide into the poorest regions.

    A question for the group: Do you think a global UBI would increase or decrease off-shoring of labour?

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        • UBI in the USA is unlikely, and any transnational one is pretty much a political fantasy, but if given that a UBI exists in the USA, there would be tremendous political pressure to tie it into the cost of living for a locality. (it wouldn’t necessarily be administratively difficult, relatively speaking – you could use the GS pay scale locality tables as the adjustment for instance. Though, of course, recording and verifying where people live substantially increases the complexity of a ‘simple universal’ program).

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          • You know where they live. It’s the zone where you mail the checks to. Everyone has a mailing address in your database from the get-go. It’s also where they’re registered to vote.

            (I can dream, can’t I? This is an airy-fairy discussion, after all)

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            • Do kids get a stipend? Particularly for the kids that need the money the most, it becomes complicated by the residence status of the custodial parent or other legal guardian (which, for the kids that need it the most, may switch as often as yearly). School districts deal with this issue frequently enough, but it’s an 80/20 to 90/10 problem (i.e. the bureaucracy is doing 90% of the work for 10% of the population) though distributed across a gazillion school districts.

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                • Exactly my thinking. The full “adult” amount has some things like being a primary provider of food/clothing/shelter baked in, whereas for kids you’re only looking at the incremental cost of adding them to an existing family structure.

                  So I’m thinking a relatively high initial amount for newborns, ramping down somewhat at out-of-diapers stage, then scaled up yearly to full benefit at 18.

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                    • I’m assuming the universe is giving me some kind of karmic punishment for being too cryptic in the past or not unpacking my in-jokes and/or obscure pop-culture references – but I have literally no idea what you’re getting at. I’m not even sure how to begin to reply.

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                        • A couple of things:
                          – I never used that term as such. I only quoted “adult”, and it wasn’t meant as a value judgement – “standard” might have been a better term, however. If you read the first sentence as saying: The (full) standard benefit has…, it might better communicate what I intended to say.
                          – Almost everyone benefits from a UBI at some point:
                          — I’m currently unemployed. Because I have some money saved up and years of experience dealing with large bureaucracies, the Department has little fear for me – which is not true for many, many people it “serves”. Under a UBI, the transition to/from employment would be seamless relative to now.
                          — New parents get hit with a lot of brand new incidental expenses along with the sleeplessness. The baby’s pro-rated UBI isn’t means-tested.

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                          • I know it’s lame to follow up your own post, but I just realized something, potentially a big something…

                            If the UBI for a newborn is set to a level where it compensates the expenses of having a newborn, well, then, that significantly reduces the financial hardship of having a child. So, in family planning terms, finances become much less of a disincentive, so we can expect more planned births, and fewer abortions once unplanned pregnancies are discovered.

                            There it is – the UBI is a pro-life position.

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                            • I’m certain that there will be unintended upsides that no one could have foreseen. The pro-life one could well be one of them.

                              I’m trying to figure out what the unintended downsides will be. The weird ones.

                              I’m thinking that we’ll inadvertently create a society of sneeches with stars and sneeches without. One of the benefits of not being on the UBI will be the ability to brag about not being on it.

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                              • I don’t think the last part, at least, will be any different – since everyone is on the UBI, it doesn’t necessarily have a particular stigma. There will be e.g. status signaling based on working vs. non-working, but there is that now. It might even be less – “depending on his UBI” will certainly be no worse than “he’s on the dole”, and there’s certainly hope that it might not become a synonym.

                                I fear unintended consequences also, more along the lines that identified, that it would just create micro-inflation in e.g. rental markets that would suck out all the goodness and leave us back where we started.

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                                • since everyone is on the UBI, it doesn’t necessarily have a particular stigma

                                  As fictions go, that’s a particularly polite one.

                                  Let’s assume that the UBI would be, oh, $25,000.

                                  Sure, everybody gets the $25,000 but not everybody also pays $25,000 in taxes.

                                  I’m guessing that there will be a handful of distinctions made. One of them will be based on whether one pays enough taxes to cover the UBI.

                                  I mean, right now, is it possible to make distinctions between people who pay more taxes than they use in services? Not really, no as far as I can tell…

                                  But a UBI will create a bright line (where we don’t really have one now).

                                  That just screams “unintended consequences”.

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                              • RE: Unintended downsides
                                1) $10k is FAR too much. The gov has things to do other than BI, and having children shouldn’t be a lifestyle. “Basic” should mean “poverty” (a min wage job easily takes you above that).

                                For example, median household wage is currently $52k(ish), I have 4 kids.

                                2) Giving out free money is popular, if we go down this road the gov will be under huge pressure to increase the BI (just like Social Security was originally intended to be a very basic low key top off, not your entire retirement).

                                3) The Purity of this system is great, but I’m not sure what happens after we get lots of political meddling.

                                I like the idea… a lot… but only if it’s replacing existing systems (i.e. not a massive tax increase) and not in addition to them.

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                  • Serious answer:
                    There probably won’t be education vouchers.

                    The argument will be something like this:
                    We provide a public education to everybody.
                    This public education should be equal in quality whether it is in the worst part of Baltimore or the best part of Westchester.

                    Therefore… no vouchers.

                    (The difference in quality between education on that side of the tracks and this side of them is one of the “intangibles” that people not on the UBI will have access to.)

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          • It wouldn’t be difficult to add regional cost-of-living to social security, but I don’t think we do. Nor should we. Doing it for G5 makes sense for the same reasons that corporations do it. You want to encourage people to come work for you, and that’s hard to do if wages/COL is out-of-wack. We’d only do it with UBI if we wanted to encourage people to live in more expensive places.

            As far as the politics go, let’s talk about the US Senate and how many senators would represent states whose residents would get less money with regional cost adjustments…

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            • Though there is a time-lagged deep seeded cost of living adjustment into social security as you get more money out of social security if you spent your working life making a larger income in a high cost of living area. (and then move to a low cost of living locale for retirement).

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          • The problem with indexing for local cost of living is that it does nothing to discourage people from living in the most expensive areas, and unless building regulations are relaxed, it will just end up pushing up the price of expensive real estate further, benefitting landlords at the expense of taxpayers.

            I don’t see any reason to index. If people aren’t working, they don’t need to live where the best-paying jobs are, driving up rent for everyone else. With all the problems in the world, helping poor people in a zero-sum bidding war for expensive real estate seems like just about the worst possible use of taxpayer money.

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            • This is all in the context of a UBI. A UBI won’t let anyone live in any expensive area, much less the most expensive areas, so that whole line of thought is a non-starter.

              You index so that the people in the third-worst area aren’t worse off relative to those in the second-worst.

              There’s no possible proposal for a UBI that would make it possible to live where I’m living now, which is basically a cave in a decent part of town.

              So I call shenanigans.

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              • Remember that thing you mentioned about micro inflation? Even if they’re not living on the UBI, it’s favoring precisely those places where this is likely to be an issue.

                If people in an expensiveplaceneed more money to get by, that’s on the employer requiring that they live there. If they’re living there voluntarily without attachment to a particular job or industry, that’s a consumption choice and giving them more money to do so is like giving me more money because I want a Silverado and that costs more than a Focus.

                Any which way it’s putting the incentives in the wrong place.

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                • I see where you’re coming from, but this is just our worldviews crashing together in a twisted heap of metal. Your conclusions don’t necessarily follow from my premises, and vice versa. I do sincerely respect your worldview, but there’s enough of a disconnect that we’re dangerously close to a Gossage-Vardebedian situation, and I don’t want that to happen.

                  My god, Woody Allen wrote that before I was born, and I’m getting old…

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              • “A UBI won’t let anyone live in any expensive area…”

                It’s not my fault that I lost my job. Why do you want to force me and my family to move out of the house that I grew up in, the schools they’ve been growing up in, move away from all our friends and the rest of our family, just so some rich bastard landlord can continue to line his pockets by charging insane rents?

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        • You’d have to have one at some level, otherwise the $15k when it first goes into practice will be below the poverty line 30 years later. Better to have it part of the system from the beginning as an extra lever to pull to turn the ship one degree now so you don’t have to turn it 20 degrees in the future.

          I’m also open to an argument for adjusting the base income by zone, the way they do with e.g. Meals and Incidental Expenses on government billing. But that’s even less likely, and it’s not a hill I’d die on.

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            • Yah, I realized that later. I’d like to have a regional purchasing power adjustment, but as you note the government even now is inconsistent on that note – some programs don’t index where it would seem very valuable, and others do when all it does is add overhead for minimal benefit.

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    • It’s brutally difficult to even hypothesize to be honest. You’d need a global entity with the authority and pull to extract taxes globally and the honesty and infrastructure to distribute the GBI globally. That doesn’t exist right now so it’s enormously hard to imagine how the existing national actors would interact with such a transnational government.

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  8. Strong piece, Jason. I’m a fan of UBI/GAI/GBI/whateveryacallit, if not a 100% convert. I know there are issues with funding (and obvious political roadblocks), but I would be really interested to see one instituted.

    And I agree with you, I don’t think this particular argument has been advanced, exactly (or, at least, I haven’t seen it). It’s a very good argument in favour.

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  9. Francis: So, California’s ultra-poor communities — San Bernardino, Visalia, Calexico — get an influx of people who don’t work and don’t need to work.

    Unless the basic income is so insanely low that they can’t afford to buy anything, someone is going to have to staff the stores they shop at, the restaurants they get fast food from, the clinics they visit, the plumbers|contractors|etc they hire to maintain their houses, and so on. I’m sure there will be some people who, after having worked at crap jobs all their lives just to keep from sinking beneath the waves, will just stop working altogether, but there will be more that will work just so they can have more breathing room or to better themselves.

    It would be worse for expensive cities — businesses there would have to either accept paying a real living wage, underwriting serious affordable housing, or massively beefing up mass transit to keep service jobs around.

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    • Fair enough. I will admit that my post above was not necessarily well thought out. And I do think that the culture of work is pretty deeply rooted in lots of different slices of America.

      And maybe both Compton and Appalachia would be much better places to live if the grinding poverty was alleviated by a regular inflow of tax dollars. New stores open; new employment opportunities arise.

      One thing that I think that Kevin D’s post misses is our ability to recoup UBI to anyone much above the 4x poverty line through adjustments to standard deductions.

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      • When I picture the income profile for this to work, it has to be neutral at a minimum at 3x or 4x the poverty line.

        I’d like to tie implementation to more aggressive taxation of what would then be marginal income, so that someone making $75k today is unaffected, at $100k you’re paying a couple thousand more, at $200k a few thousand more, and so on. That would go a long way to offsetting the cost.

        I could live with “no net change above $60k”, though, if that was what greased the wheels.

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  10. I think the UBI is a great idea and this post does a good job of explaining why, but I get the feeling that people don’t really understand how welfare works in America. 80-90% of welfare spending is on (a) the elderly; (b) the disabled; (c) children. These are categories for which a UBI makes much less sense because their needs are very specific and they would typically not be in a good position to negotiate aggressively in the market with cash. Moreover, most of the individual programs are already in the form of tax-credits or insurance … or they’re counseling and educational programs that would need to exist anyway. How much difference will it make to replace someone’s $500 children’s insurance subsidy with $500 cash that they are legally required to spend on their child’s insurance (and that’s ignoring the cost-savings you get from the sheer scale of these subsidies)?

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