The Universal Basic Income Discussion

Yves here. Notice how these Universal Basic Income programs don’t even necessarily alleviate poverty. And none of these critiques pointed out the big shortcoming that was exposed with the Speenhamland system (see here for a longer explanation): that it suppressed wages and wound up being in large measure a subsidy to employers.

By Silvia Merler, an Affiliate Fellow at Bruegel. Previously, she worked as Economic Analyst in DG Economic and Financial Affairs of the European Commission. Originally published at Bruegel

What’s at stake: the concept of a Universal Basic Income (UBI), an unconditional transfer paid to each individual, was prominent earlier this year when Finland announced a pilot project. It’s now back in the discussion as the OECD published a report illustrating costs and distributional implications for selected countries. We review the most recent contributions on this topic.

The OECD recently published a policy brief and a methodological note looking into the cost and benefits of adopting Basic Income (BI) as a policy option. The simplest way of introducing a BI would be to take existing cash benefits paid to those of working age and to spread total expenditure on these benefits equally across all those aged below normal retirement age. The resulting BI amount would be very much lower than the poverty line for a single individual. Therefore, without any additional taxes, a budget-neutral BI will be very far from eradicating poverty.

Source: OECD

A perhaps less ambitious alternative may be to use the levels of guaranteed minimum-income benefits (GMI) in existing social protection system as an initial target value for a BI. However, many individuals receive benefits other than a GMI to pay for additional costs for specific needs that they have and they would lose out even more from a flat-rate BI. So it would be likely desirable to retain some targeted cash transfers, but this would require even greater reductions of BI amounts if expenditures are to be kept at current levels. Thus a BI at socially and politically meaningful levels would likely require additional benefit expenditures, and thus higher tax revenues to finance them.

The OECD  simulations for four countries (Finland, France, Italy and the UK) show that although a universal basic income is simple, existing benefits are not, and replacing them with a single flat rate benefit produces complex patterns of gains and losses. Those receiving social insurance benefits would normally lose out from the replacement of those with a universal basic income at GMI levels. Those not qualifying from any social benefit under existing policies would benefit as long as the increase in benefits exceeds the corresponding increase in their taxes. Lower-income households are more likely to receive means-tested income support so they are actually less likely to gain from a BI set at a similar level to GMl.

Source: OECD

Robert Greenstein at the Centre on Budget and Policy Priorities looked specifically at the case of the US, for which Charles Murray proposed that every citizen age 21 and older could get a $13,000 annual grant deposited electronically into a bank account in monthly installments, $3000 of which should be used for health insurance, leaving every adult with $10,000 in disposable annual income for the rest of their lives. Greenstein points out that with over 300 million Americans today, an UBI of $10,000 a year would cost more than $3 trillion a year. This single-year figure equals more than three-fourths of the entire yearly federal budget and it’s also equal to close to 100 percent of all tax revenue the federal government collects. UBI’s financing challenges raise fundamental questions about its political feasibility, both now and in coming decades. UBI’s supporters generally propose UBI as a replacement for the current “welfare state”, which may  increase poverty and inequality rather than reduce them. Some UBI proponents may argue that by ending current programs, we would reap large administrative savings that we could convert into UBI payments. But Greenstein thinks that’s mistaken because the major means-tested programs – SNAP, Medicaid, the EITC, housing vouchers, Supplemental Security Income (SSI), and school meals – administrative costs consume only 1 to 9 percent of program resources, and their funding goes overwhelmingly to boost the incomes and purchasing power of low-income families.

Berk Ozler at the World Bank refers to a paper by van de Walle, Ravallion and Brown, who examine the best methods available for targeting poor people to see how they would fare in reducing poverty. The policies evaluated include a universal basic income, targeting on the basis of basic proxy-means tests (PMT), improvements to PMT they propose, and some simple categorical targeting options (such as targeting the elderly, children, widows, etc.). They find that these would reduce poverty by less than 25% depending on the choice of poverty measure. Universal Basic Income (UBI) would reduce the Headcount Index by 14.5 percent. Categorical targeting performs very similarly to UBI. They do significantly better when caring about distribution-sensitive measures of poverty (43 percent reduction in the Poverty Gap) – but only assuming an improvement upon the common PMT methods by using poverty quantile regressions or means from panel data when available. The difference between the performance of UBI and the best targeting method looks small. But that is a little deceiving: in a country of 25 million people, such as Cameroon, reducing the Headcount Index from 17.1% to 15.4% allows close to half a million people escape poverty.

Shanta Devarajan offers three reasons in favour of a Universal Basic Incomes. First, efficient use of natural-resource rents. Most of the oil-rich countries in sub-Saharan Africa suffer from poor public-spending outcomes. One reason is that oil revenues go directly to the government without passing through the hands of the citizens. If the oil revenues were transferred directly to citizens, with government having to tax them to finance public spending, citizens would know the magnitude of oil revenues and they would have a greater incentive to monitor how their tax money is being spent. Even without these changes, a simple transfer of 10 percent of oil revenues could effectively eliminate poverty in several oil-exporting countries.

Second, improving the welfare of the poor. Replacing inefficient subsidies with cash transfers would ensure at the very least that the poor are getting the intended monetary benefit. But it could also be empowering. Targeting would be preferable in principle, but in practice there are so many problems in identifying the poor that a universal scheme may do just as well. Third, adjusting to labour-saving technologies. The dilemma is that with these technologies productivity will increase but many people will lose their jobs. Managing this transition is difficult from an economic, political, and moral viewpoint. A system where part of the increase in productivity is taxed, and then distributed as cash transfers to all citizens, whether they are working or not, could help resolve some of the tension.

Rick McGahey at INET says the UBI debate should focus on the long-term weakening of labour’s bargaining power. Much of the current interest in UBI stems from a belief that technology is eliminating jobs more rapidly than new ones can be created, and that future job growth will be much lower. McGahery argues that the assumption that technology will be so disruptive as to justify discarding existing welfare state and other labour market institutions for a UBI should be treated with caution. Politically, that could result in an alliance with libertarian advocates of a UBI who want to eliminate the welfare state and use the funds to provide cash grants to individuals, with the ultimate goal of reducing public spending. Instead, the UBI debate should focus on the strengthening of business’ economic power over labour over a more than three-decade period.  Rather than a historically unique event, advanced technology may just be the latest factor impeding labour’s ability to bargain by contributing to weaker demand and growing inequality.

Nathan Keeble at Mises Wire argues that UBI would not create incentive to work, help solve unemployment, or alleviate poverty, and it could turn out to be worse in the long run than traditional, means-tested welfare systems. First, UBI does not eliminate the disincentives to work that are inherent in welfare programs; it simply moves them around as this program must be financed, and any welfare system, including the UBI, is necessarily a wealth redistribution scheme.The progressive taxation that is necessary to finance a UBI means that the more a person earns, the higher percentage of their wealth will be taken from them. The work disincentives are therefore still very much present in the tax system. They’ve simply been transferred onto different, higher income groups of people. Moreover – Keeble argues – UBI diminishes the power of consumers in directing the marketplace, as it would subsidize non-productive activities.

Bryan Capland and Ed Dolan had a long exchange earlier this year, on how libertarians should see UBI. Capland first argued that while dropping multi-faceted means-testing that characterises other types of social spending would reduce moral hazard, it would also greatly increase the number of eligible recipients. He declared himself “baffled that anyone with libertarian sympathies takes the UBI seriously”, because the welfare state is already unsustainable, largely because our means-testing by age and health isn’t stringent enough. Doland took on the challenge and offered a taxonomy of three kinds of libertarians who might take a UBI very seriously, arguing that UBI could very well be a policy for pragmatic critics of well-intentioned but ineffective government, for classical liberals, and for advocates of personal freedom.

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  1. From Cold Mountain

    The only way to end poverty is to end the ownership of private property.

    UBI, or any other techno-capitalist scheme, serves only to placate the rioting masses while keeping a segment of society in a place a dominance and control.

    I have a feeling that NC is flirting with Libertarian Socialism but y’all are afraid to come out of the closet. :)

    1. diptherio

      Labels, labels, labels…not too useful, I think. And “libertarian socialism” is the type of label that is practically guaranteed to turn off just about everybody (although I’ve labeled myself that, in the past).

      I used to be of the “we need things to get worse to wake people up so we can have some REAL change” camp. Then I spent a decade working in low-paid jobs with the people who already have it plenty bad…and now I think that just about anything that seems likely to make my co-workers somewhat better off, or at least not worse-off, is to be supported, whatever effect it has on the overall social system. And if the particular policy doesn’t require you to prove that you’re destitute to receive the benefit, then all the better, as that’s a particular form of social shaming that I absolutely despise.

      1. From Cold Mountain

        Labels are always useful. Your reply is a string of labels. But why do you think it will turn people off? Like the label “Universal Healthcare” turns people off? Like people who thought that sanders calling himself a socialist would turn people off?

        I do not want to make things worse and I have no idea why you made that assumption. I am saying that UBI does not make things better.

        If you make things better off in a bad system, the system can take those things away as quickly as it gave it to you. Where do you think the unions went?

        Again, it was the same with ACA vs. Universal Healthcare. People said “Well, it is the best we can do now and it makes people better off.”

        1. jrs

          maybe because those who don’t hate socialism hate libertarianism and vice versa and many people probably hate both. Yea I know what the term means more or less, maybe it’s a nod to Chomsky, usually incorporating various anarchists ideas as well etc.. (I think anarchist have a lot of good ideas, but the average person won’t understand the term “anarchism” either which is likely a more accurate label).

          1. From Cold Mountain

            I just do not live my life in fear of what other people think anymore. I took me time to understand what anarchism was so i afford that same luxury to others.

            Sanders does not run from the socialist label even though the majority of people do not knwo what that means, but the understand what he is for. And that is what gets rid of stigma.

        2. No One

          Labels are useful but only when they are specific and it is clear what they are referring to. Once you get to things like ‘Libertarian Socialism’ it is not entirely clear what views that encompasses and people will make assumptions that are often not accurate.

          ‘Universal Healthcare is a good label because it is well defined and when people hear Universal Healthcare they know what it means. That’s not always true with political labels like Libertarian Socialism where the terms are weakly defined and the people who identify with the label often disagree on significant points.

    2. Yves Smith Post author

      Sorry, we aren’t libertarians or even close. Did you miss that we think regulations are necessary in a whole bunch of arenas?

      And we don’t like UBI. We prefer a Job Guarantee. The UBI is being pushed hard by Silicon Valley so they can get cheaper wage slaves.

      1. From Cold Mountain

        I did not say Libertarian, I said Libertarian Socialist, also known as Anarchist. I decided to choose a label that does not leave the bitter aftertaste of propaganda in your mouth.

        Libertarian Socialists are all for regulations, and against UBI and wage slaves as well. So you see, we are in agreement on several topics already.

        1. Yves Smith Post author

          Oh OK, I confess to not checking the link. But I find that label to be unfortunate, since libertarians are vehemently anti-regulatory.

          I consider myself to be pragmatic. It’s hard making a complex society work (as we are seeing now with so many falling apart under stress). More equal societies work better (more cohesive, better social indicators, meaning better for everyone, even the rich despite their preference for having more distance from the lower orders) which is why I favor them, for instance.

          1. From Cold Mountain

            I agree with everything you said. I have no illusions that anarchism will happen voluntarily nor over night, but for me it is the far goal that I strive for, while taking small pragmatic steps along the way and explaining to others the roots of my opinions. Those roots are Daoist and Anarchist.

            And one of the reasons this is the only blog on the internet I comment on is because of your introspection and humility, so thanks for that.

            1. jerry

              “That government is best which governs not at all”; and when men are prepared for it, that will be the kind of government which they will have.”

              and when men are prepared for it

              And that’s the big question – will we be ready for it before we destroy each other and/or the planet? Seems about as likely as Frodo carrying the ring all the way to Mount Doom.

          2. Will Shetterly

            “Libertarian socialism” has been used by people like Chomsky, but it’s been poisoned by right-libertarians. Better to use “democratic socialism”, imho.

            I’m thinking UBI and Job Guarantee don’t have to be at odds. I’m not convinced that a large UBI wouldn’t be a good short-term solution, but I agree with people who say a small UBI would make many poorer folks worse off. A UBI of less than, say, $$2400 a month would have to include universal health care and free higher education.

          3. JTMcPhee

            Showing my ignorance, but I think of libertarians as very much in favor of “regulation,” but just a very precise form of regulation, instituted by a Wise Government that only adopts and enforces those laws and rules necessary to correct and protect the “honesty of the market.” Mostly just to deal with enforcement of “contracts,” which for libertarians, and coincidentally Scientologists, are the nuts and bolts of human interactions.

            FAQs on libertarianism:

            “A6. Do libertarians want to abolish the government?

            Libertarians want to abolish as much government as they practically can. About 3/4 are “minarchists” who favor stripping government of most of its accumulated power to meddle, leaving only the police and courts for law enforcement and a sharply reduced military for national defense (nowadays some might also leave special powers for environmental enforcement). The other 1/4 (including the author of this FAQ) are out-and-out anarchists who believe that “limited government” is a delusion and the free market can provide better law, order, and security than any goverment monopoly.

            Also, current libertarian political candidates recognize that you can’t demolish a government as large as ours overnight, and that great care must be taken in dismantling it carefully. For example, libertarians believe in open borders, but unrestricted immigration now would attract in a huge mass of welfare clients, so most libertarians would start by abolishing welfare programs before opening the borders. Libertarians don’t believe in tax-funded education, but most favor the current “parental choice” laws and voucher systems as a step in the right direction.

            Progress in freedom and prosperity is made in steps. The Magna Carta, which for the first time put limits on a monarchy, was a great step forward in human rights. The parliamentary system was another great step. The U.S. Constitution and Bill of Rights, which affirmed that even a democratically-elected government couldn’t take away certain inalienable rights of individuals, was probably the single most important advance so far. But the journey isn’t over. Compare Augustine of Hippo: ” Grant me chastity and continence, Lord, but not yet.”

            Just try to get any two self-described libertarians to agree on anything, of course, including what constitutes just the right amount of regulation.

    3. Optimader

      “Property is theft”.

      Site a working example of a society with no private property that you would be keen to live in.
      Startrek doesn’t count

      1. jrs

        why assume anyone is talking about star trek? Wouldn’t the more obvious example be the vast majority of human history?

        1. From Cold Mountain

          Yes, jrs! Anarchism was the natural state of humanity before words, before farming.

          1. Optimader

            …And before air conditioned rooms with keyboards and monitors! Yeeeah

            Now, share that rotting carrion with me or I will stab you in the eye with this sharp stick of mine… oh , you say you want my sharp stick?
            Gosh, this business of no private property has it’s complications!!

            1. Alejandro

              There’s the POV that the burden of legitimacy should always be on power and the powerful…”consent of the governed” as opposed to the “divine right of kings”.

              1. optimader

                And that’s great.
                now connect the dots to back to elimination of the governed’s private property

                1. Alejandro

                  There’s nothing “great” about the abuse of power by the illegitimately powerful… ‘Privately’ filling a class war chest by mulcting the ‘public’ coffer…’publicly’ posing as the worthy merited meritocrats, while ‘privately’ camouflaging their proximity and addiction to the nanny states bosom…all with the histrionics, and the haze and daze language of “shared sacrifice”, “self-reliance” and “fiscal responsibility”, with an occasional croc tear for the “least of these my brethren”…

            2. From Cold Mountain

              These immature objections have been rehashed for decades. If you read about anarchism at all, instead of having a knee jerk reaction to it, you would know that anarchism does not insist on primitivism.

              And you seem to be confusing personal property with private property.

              I am wondering if you would scoff at quantum physics as well, knowing nothing about it. I would welcome knowledgeable critiques, but at this level I cannot continue.

              1. optimader

                Your debate style and reasoning in this thread are defended with fallaci and Ad hominem attack

                And if you read your own link, the basic tenant of Anarchism = “Property is theft”.
                No distinction between personal property/private property is even necessary, so your concern about differentiating terms are a Red Herring and a strawman argument , take your pick. The subject is the contention “property is theft” Isthat claim defensible?

                based on the fact that you tried to ridicule a thought expressed by prominent economists and anarchist authors
                Appeal to authority

                I cannot tell you what it would look like, that would be authoritarian
                Contradiction, or are not prominent economists/anarchists authorities?

                I really am unsure you know what is meant by “private property”
                A non sequitur This is not relevant to the claim Anarchist fundamental claim “Property is Theft”.

                you would know that anarchism does not insist on primitivism.
                Anarchism was the natural state of humanity before words, before farming.

                Contradiction, or was not humanity before words and farming Primitive?

                These immature objections have been rehashed for decades.

                Appeal to ridicule
                Argument from Authorities

                “I am wondering if you would scoff at quantum physics as well, knowing nothing about it. I would welcome knowledgeable critiques”


          2. River

            The “natural state” was an alpha ruling the roost. Like every other mammal.

            Might not be property, but there are those who eat the choice cuts and those who eat the remains.

            Let me guess in your utopia you’ll be eating filet mignon and others will be eating offal. At least no one will own the plate.

            1. Optimader

              I would eat the brain, my cat taught me that.
              Protip: in a more feral, world pass on the lean muscle and go for the fat

        2. Optimader

          I was just ruling out the fantasy idealism of the Startrek model out.

          Now, firmly planted in reality, tell me what society in the “vast majority of human history” you would prefer to live in? I am always curious to hear the perspective

            1. optimader

              “Wouldn’t the more obvious example be the vast majority of human history?”
              Just interested in narrowing down to even just one historical example.

              I read: I want everyone to derive uniform happiness and satisfaction from their contribution to the collective, even if they choose to not or cannot contribute.

              T. Lawrence Shannon: The Fantastic Level and the Realistic Level are the two levels upon which we live.
              –The Night of the Iguana

              Aspiring to the fantastic level is fine, but operationally we live at the reality level. Offering some nuts and bolts suggestions to a new enlightenment in our Societies approach would be helpful.
              Just proclaiming “Eliminate Capitalism!” is intellectual ephemera Complaining about the present arrangement is the easy part.


              1. From Cold Mountain

                Because there is no historical example does not mean it is not possible. There was no historical example of a computer yet here we are.

                There is TONS of material which explains the nuts and bolts. You could take the time to learn about it at length buy using DuckDuckGo.

              2. jrs

                actually getting people to understand what is wrong with capitalism doesn’t seem easy at all, but it’s the only thing that ever seems to have made things better even temporarily.

      2. From Cold Mountain

        I really am unsure you know what is meant by “private property” based on the fact that you tried to ridicule a thought expressed by prominent economists and anarchist authors.

        “cite (SIC) a working example” is some kind of logical fallacy I am sure…but I will say that I do not think our current capitalist society is not that keen.

        1. Optimader

          Private property is all that is not owned by state/public entities. Need I be more complex than that?

          Is there a problem with “ridiculing the thoughts of prominent economists and anarchist authors? If one cannot do at least the former, this would be a pretty lean website

          1. jrs

            Private property usually stands for land and capital (in the hands of the rich? Of course it is!!! overwhelmingly). Pretty much noone who is using private property in that sense means your smart phone or the shirts in your closet or something, they just don’t. It’s about who actually owns and controls society. This is usually well obfuscated mostly by those who wish to defend the status quo.

            1. Optimader

              Well its good to clarify your own definition of words.
              Now define “rich people”.

  2. reason

    “that it suppressed wages and wound up being in large measure a subsidy to employers”

    Yves – this is irrelevant – seriously. IT DOESN’T MATTER who people are getting money from, it matters how much they get and how reliably they get it. The issue is quite complicated (see the discussion on interfluidity about regional aspects for instance ). But this is an example of the series of poor arguments used against UBI. UBI is quite different from other welfare, cheaper to implement and the micro-economics are better. But it does mean major social change, which is why I think it can and should be phased in as a “national dividend” – perhaps initially as an offset to environmental taxes or phasing out of tax deductions.

    1. Yves Smith Post author

      It’s not irrelevant. I suggest you read up on Speenhamland. That is precisely what happened and Waldman tries saying that what actually happened under the Speenhamland system (the pauperization of the people getting the subsidies) would not happen. He appears ignorant of it, which is a serious lapse for anyone opining on this topic.

      Moreover. had you read the post, it indicates that 1. a UBI would not provide an adequate income and 2. quite a few people now getting welfare would be made worse off.

      1. reason

        And even more people would be made better off – (and a local test is NOT the same as a universal test because people can move and still retain the UBI). This is a more complicated issue that you are outlining it here. But the argument seems to be x is not perfect, therefore it is no good. No – that is not the right test – the right test is, is it better than alternatives all things considered.

        1. JTFaraday

          Well, if we look at what happened in the US in the 20th century, we see that domestic and agricultural labor were excluded from New Deal regulation, including social security because the south moaned and whined about the high costs. If US fedgov agreed with this assessment–as it effectively did– it could have given those workers a UBI, based on human values rather than market values.

          But it didn’t, so f*ck them then. And f*ck us too.

      2. nihil obstet

        Large retailers and fast food chains use food stamps, housing subsidies, and Medicaid to lower wages. I support food stamps, housing subsidies, and Medicaid. Do you oppose good things coming from the government because our current system allows corporations to convert them into a rental stream for themselves? Should we abolish food stamps because they subsidize Walmart?

        There are many forms that a UBI might take. A top-up scheme like Speenhamland is a very bad one. A corresponding version of a Job Guarantee would be the work house. The same people who insist that a UBI would take a bad form generally object vociferously to the idea that a JG would take the form of workfare.

        Either a JG or a UBI would bring bad things trailing along with the potential benefits unless we make some other adjustments to our society. A major factor, of course, is the problem of pricing power for necessities. Raise wages or share capital without addressing housing, education, or healthcare costs and the corporations will simply price it away. There are a number of issues that similarly need to be addressed.

        I favor a UBI. The experiments with giving people money have generally had very good outcomes. In addition, I think the non-economic benefits of valuing people beyond their economic productive value are important for the world we want to build. Meanwhile, we need to keep working towards the philosophical framework that would make either one or a combination of the two succeed — higher minimum wage, required paid sick and annual leave, civil-service-like job protections, required severance pay for layoffs, universal health care, free education, expanded housing options.

        1. jrs

          “Raise wages or share capital without addressing housing, education, or healthcare costs and the corporations will simply price it away. There are a number of issues that similarly need to be addressed.”

          yes and it seems a problem with the UBI but to some extent it ALSO seems a problem with a living wage …

      3. Amateur Econ

        Yves, have you seen Rutger Bregman’s chapter on Speenhamland in “Utopia for Realists”? He’s critical of Polanyi’s and others’ work on that, and defends Speenhamland. I tend to agree with you on this but reading Bregman (recently) gives me some pause.

        1. Yves Smith Post author

          I need to read it. I admit to the danger of being wedded to my priors, but as has been demonstrated regularly with scientific research, the incentives in academia are strong to overturn prior understandings, not to confirm or modify them somewhat. The former has high odds of being published, the latter not.

      4. reason

        I have gone to the Speenhamland post and I think we are talking past one another. It seems to me that the Speenhamland system was a guaranteed minimum income which is something quite different from a universal basic income. Basically you are comparing apples and oranges. I also do not like guaranteed minimum income systems.

  3. WobblyTelomeres

    Re: “wound up being in large measure a subsidy to employers.”

    As is socialized health care (in this mindless system where employers are expected to provide health insurance).

    1. Yves Smith Post author

      Sorry, employers are not “expected to provide health care”. Only 45% do in the US. It was a way to compete for workers when labor markets were tight.,%22sort%22:%22asc%22%7D

      It came about as the result of bad policy in the US:

      During World War II, the federal government was wary of post-war inflation. The administration saw the terrible devastation hyperinflation wreaked on post-World War I Germany and they were determined to hold it at bay through wage and price controls which they instituted during the war. In reaction to the wage controls, many labor groups planned to go on strike en masse. In order to avert the strike, in a concession to the labor groups, the War Labor Board exempted employer-paid health benefits from wage controls and income tax.

      This historical accident created a tax advantage that drove enormous demand for employer-provided health insurance plans over the previously more common individual health insurance. Employers received a 100% tax deduction while the benefits employees received were exempt from federal, state, and city taxation.

      It was and remains a tax arbitrage for those who get the benefit now. Before that, individuals paid for their own insurance. Had that system persisted, we would have almost certainly gone to some form of government supported health care.

      1. WobblyTelomeres

        “Sorry, employers are not “expected to provide health care”.”

        I thought employers with over 50 employees had to provide health insurance under the ACA. My bad.

        1. Grumpy Engineer

          Employers only need to provide insurance for full-time equivalent (FTE) employees, and only if they have more than 50 of them: And even then, employers can opt out of the requirement by paying a tax penalty instead.

          This is why most new job postings are for 29 hours or less. And with rising insurance premiums, an increasing number of FTE employees are seeing their employer pay the penalty instead.

          Yves is right. Our current system has its roots in wage and prices controls that were in effect during (and briefly after) World War II. And it’s badly distorted the labor market and caused all sorts of problems. Expecting employers to provide for healthcare was a bad idea. [And as a side note, expecting employers to provide for retirement has also worked rather poorly.]

          1. WobblyTelomeres

            Thanks for the link! The $2000/head (-30) penalty seems really light. I can see why a lot of employers would rather pay that than $10,000/head insurance premiums.

            When I think about (to me) the obvious solution to unemployment/underemployment, namely that the standard work week be reduced to 32 hours, the only standard benefit that doesn’t really scale down well (as a cost to employers) is health insurance. Medicare for All would eliminate that. Is this simplistic?

  4. reason

    By the way the arguments from Nathan Keeble (Mises) are surprise, surprise pathetic.

    For instance “UBI diminishes the power of consumers in directing the marketplace, as it would subsidize non-productive activities” – i.e. giving money to poor people is a waste – their wants are unimportant.

    And he makes no mention of course of the difference between income and substitution effects (for instance rich people with higher take home pay retiring early) or of the change in power relationships – i.e. people being able to tell abusive employers to take their job and stuff it.

  5. diptherio

    I have to agree that I don’t think Speenhamland is all that relevant to the current debate. I also wonder if the conventional narrative that Yves points to is to be entirely trusted.

    This article revisits the Speenhamland episode to unravel its tangled history. Drawing on four decades of recent scholarship, the authors show that Speenhamland policies could not have had the consequences that have been attributed to them. The article ends with an alternative narrative that seeks to explain how the Speenhamland story became so deeply entrenched.

    Employers (especially the large corporate ones) already use the welfare system as a way to reduce labor costs. That’s no argument for getting rid of welfare. The UBI might result in the negative consequences that Yves mentions, but there would be benefits as well. All political policies are fraught with danger and liable to be twisted and misused, of course, which is why any of us advocating for a UBI should be clear that we don’t want it to replace the existing welfare system, but rather we want it to replace the Fed’s QE programs. Instead of the Fed giving money to the banks, and then us having to borrow if from them if we want to use it, make it the other way around — the Fed gives money to the citizenry and if the banks want to make use of it, they have to borrow it from us.

    Personally, I think a UBI would help get people hip to the realities of gov’t spending (it’s essentially unconstrained), and might relieve some of the constant anxiety that those of us who live paycheck-to-3-days-before-paycheck experience on a regular basis. I’m pretty zen about stuff, but even I notice how much more anxiety-inducing literally everything is when I my account starts running near-or-below zero. Given the financial state of pretty much everyone in my immediate circle, I’m willing to give UBI a try, even if we risk some unintended consequences. I’d prefer a Job Guarantee as well, but I’m willing to take what I can get.

    1. Yves Smith Post author

      I’ve skimmed the study. It attempts to discredit the views of people who were closer to the phenomenon with data that the authors have to admit is shaky. For instance: “Since the available data on productivity in the wheat-growing regions are sketchy at best…” Yet it makes strong claims about the impact of Speenhamland despite that. For instance, it argues that Speenhamland couldn’t have had that big an impact because it was a spotty system (administered locally), a point Polyani acknowledged. But that does not disprove the notion that it had an impact where it was in effect and provided a meaningful payment. The disconnect between the caliber of the evidence and conclusions it reaches are disconcerting despite the appearances of rigor.

    2. akaPaul LaFargue

      Thank you! Fred Block has been a principled and astute advocate of UBI for decades. It would be good to see some inclusion/links to the sound arguments of those not in Silly Con Valley who support UBI in the US.

      That said, we need to be aware that the supporters in Europe already assume the social safety net we poor souls in the US can only dream of (did I mention Bernie?). And while I think JG would be too easily corrupted as a stand alone program (see Livingston’s article in the current Baffler), I do believe that we are dealing with such a retarded system of solidarity (what?) in this country, that some sort of funding for socially necessary jobs and cultural enhancements should be on the “table” along with UBI. BUT, mainly the desire for UBI is not about welfare, but about cultural transformation. Paul La Fargue knew this in 1883.

    3. Jay

      I dont think UBI at the moment is a good idea because –

      1. It promotes the neoliberal idea of a strong state making every sphere of society more market-like. If I understand correctly, UBI basically relies on people BUYING the welfare goods and services they need from the private markets rather than the state providing them. There are many cases where specialised delivery of welfare benefits is needed and the state’s bargaining power against private markets helps the recepients a lot. Leaving such people to the whims of the markets would be a bad idea. For example, UBI wouldn’t solve the terrible private healthcare system in the USA. One would still need to pay for even basic services. I also find it suspicious that the scrapping of welfare benefits/services is promoted alongwith UBI.

      2.Labour’s power at the moment is VERY weak. They aren’t united and markets are skewed against them, especially in the west. Like Yves pointed out in the speemhamland study, its likely the UBI will be used to reduce wages.

      3. If the UBI is not enough to satiate people’s desires and needs, they would try to find employment that pays them more. How would that reduce labour supply for the pvt sector and increase labour’s bargaining power?

      1. Jay

        Also for those interested in UBI’s rival, the job guarantee, they should have a look at India’s rural work guarantee scheme called MNREGA.

    1. Yves Smith Post author

      His tax proposal would never work. First, every business would fight it. Second, it would drive people into cash transactions and businesses into netting and would increase the use of cash. It’s a Tobin tax, and Tobin taxes are meant to discourage the activity, not raise revenues.

  6. Jef

    As Elisabeth Warren pointed out a lifetime ago it seems, the greater issue here is the increased expense in cost of living such as housing, healthcare, education, insurance, interest, etc.

    Handing people more money to pay for these things does end up being a subsidy for the leaches. Make all these expenses cheap almost free then make sure everyone has enough money to live a simple dignified life.

    By the way this is a major important step in addressing climate change too.

    1. jrs

      In other words socialism, I suspect it might be the only answer as well, have the state provide all basic necessities (healthcare, housing etc.).

      It is kind of odd given that we could choose socialism and only the minimal labor needed to produce these necessities and whatever other labor people wanted to do, that we would choose to use government money to make everyone work 40 hour weeks instead.

  7. JTMcPhee

    without any additional taxes, a budget-neutral BI will be very far from eradicating poverty,” and “even greater reductions of BI amounts if expenditures are to be kept at current levels. Thus a BI at socially and politically meaningful levels would likely require additional benefit expenditures, and thus higher tax revenues to finance them.

    Is that how any of this is proposed to work? Straight out of the neoliberal playbook, with economics per Heritage and Cato?

    “The economy” is this big thing of many moving and static and broken (let’s face it) parts. A thing that generates all the constituents that make up what’s considered as wealth, including all the externalities now getting some belated attention. We humans don’t seem capable of running our affairs on any other basis than double-entry book-keeping, with little to nothing of comity and cooperative interchanges — everything is an “exchange,” these days, it would seem, with interest and rent extraction and “profit” added to every “transaction.” Plus all the losses occasioned by frictions and entropy produced by that “war” thing and all the other elements of the Great Game writ large, as one significant but not master bit to the badness…

    What’s the form of subsistence that all these economist-“studied” policy options are assuming? What’s the “utility” of “distributing tax revenue to the poor,” whoever they are, in all their varied conditions of health, competence, etc.? What’s the “floor,” the one that would “support” the mopery, to any of these proposed approaches actually look like? What “value” does the collective place on all the individual humans, from the best of us (measured how?) to the “guests” on the Jerry Springer Show to those heedless, mindless Gun-men in the war-bands in those “far-flung outposts and borders of Empire?”

    As to subsidies, Walmart and McDonalds, etc. “associates” are encouraged by their employers to dip into “tax-funded” “welfare” pools to augment their incomes to a semi-living level. What is the frame that all this policy-spinning is supposed to fit into, in terms of what “we” humans might come to agree on as what constitutes a life worth living, and “deserving” of shared support of all of us so the “least” of us (to include my friend’s child with profound cerebral palsy physical deficits but an active aware mind, or the raggedy veterans and alcohol- and drug-dependent scarecrows who hang out at busy road intersections, with their folded bits of cardboard bearing various pleas to try to touch the consciences of, and extract a few bucks for booze or street drugs from the better class of people in nice cars who whiz by?) Which of the monsters of greed and self-pleasing that rule us and own us is going to step forward and argue for any kind of recognition of the inherent worth of individuals, qua individuals, in all their variety? Especially if such a stance would in any way limit the increase in their “take?”

    Nice stuff to talk about. Too bad the lingo and tools of analysis being employed seem predestined to give only worse outcomes (from the standpoint of “quality of life” for the mopes) if actually reduced to “policy.” Good to undertake the exercise, there’s some evidence that in among the sub rosa recognition that something needs to be done to keep the proles from taking up arms, there might be some folks with a shred of what used to be called ‘a conscience.” And the discussion might lead, after all the ins and outs have been chewed over and debated endlessly, and some “approach” reduced to the level of conventional wisdom and agreement, maybe even leading to “something better,” but… History, my dears…

    1. jrs

      What is to stop a living wage (with or without job guarantee) facing the same consequences?

      Actually probably the only reason a minimum wage increase doesn’t (and maybe it will as wages are scheduled to go up many places, so we’ll see), is because it only applies to a small minority of people and the rest are already earning more than that so the effect is small?

  8. rc

    UBI needs to be paired with universal healthcare and education/training four years past high school.

    The $30,000 per adult and $7,500 per minor seems about right. The U.S. wastefully spends 20% of GDP on healthcare when it should be 8%. We spend nearly $1 trillion (4% to 5% of GDP) on the security state, when it should be less than half of that number. We spend $250 bn on unnecessary interest payments. We already spend over 50% of GDP via direct gov’t (39%) and regulatory inflated money (10+%) needed to hit these targets for a reasonable UBI. The rackets are the problem. Is UBI a way to solve the public pension issue?

  9. Susan the other

    The pattern that emerges finally for me is that a BI would create a kind of modern serfdom. It would stagnate the economy in a time that begs for things to get done, for good projects and labor. It would not bother me to see the government enhance welfare programs to provide more people in need with more money but it should not end there. Everyone with a little enlightenment is now seeing the same thing, but like the blind men and the elephant – they see it with a different vocabulary. Mark Blythe says he sees no alternative to deficit spending. Recently we read up on the theory of the discount rate – to maintain the value of the dollar over time because inflation is a given. This is all part of the dialectic that Polanyi saw as an interaction between labor and markets. It’s all really the same thing. And as markets would have it, “the things to be done” now are remediation for all the previous externalized cost of the market because competition is so brutal. A basic income does nothing to tame that brutality. A job does.

    1. cocomaan

      That’s what bothers me about UBI as well: there’s an ENORMOUS amount of work to be done. People need care, infrastructure needs care, we have tons of kids who need teaching, there’s intense resource scarcity that could be alleviated, there’s plenty of plants to harvest without mechanical means, and so on.

      That’s what was upsetting about the financial crisis. Tons of people out of jobs, but tons of jobs needing doing.

      1. Ann

        Thank you. That is what I really wanted to say on yesterday’s thread about the job guarantee. So much of what is volunteer work really ought to be paid work. Our values are way out of whack, and at bottom, this is what needs to be addressed.

  10. Skip Intro

    Aren’t they just adorable!
    Watching ‘experts’ discuss UBI without MMT is like watching puppies using an iPad… or perhaps it is chimps with a hand grenade…

    “oh where will the gov’t get all the money!”

    1. cr

      Very important point. The gov’t can created demand with zero interest money–no need for gov’t debt. There are different constraints around productive capacity and inflation.

  11. Jesper

    The UBI/JG discussion is possibly interesting in a philosophical sense:
    -JG advocates believes that the public sector can’t hire without JG and that a life without being directed by others as much as possible in exchange for money lacks meaning.
    -UBI advocates simply hope for too much. We don’t work before becoming adults, during vacation or when retired. Lets just increase the amount of that time instead.

    Shorter working time reduces the amount of hours available to sell to the market -> stronger bargaining power for the sellers of work (workers) -> higer wages for people doing work that is actually needed if it is not done (usually low-wage work).
    The ones who feel the legal maximum is too low and don’t ever want to retire or go on vacation can always start their own business and then the amount of work they can put in is practically unlimited. The rest of us would find meaning in our additional free time.

  12. bdy

    …make sure everyone has enough money to live a simple dignified life. Hear hear.

    Without controls on rent, every subsidy benefits the rentier class and stuff doesn’t get any more affordable. Make all these expenses cheap happens when subsidiary markets that don’t add value are withered, when monopolies are broken and collusion prosecuted, and when extravagant income is taxed away.

    Enough is enough. Putting power behind that idea seems the hard part to me. When too-much-is-never-enough rules the day, arguing over how to fix not-enough is like engineering a collision with a concrete wall. It won’t happen unless it helps the rich get richer. That’s one reason the Speenhamland objections look more and more predictive as elite support for BI comes into vogue. “Hey, we might to have to feed all these people we’re about to fire” is neither reasonable or compassionate. It’s just effed up.

    1. JTMcPhee

      Lucky are the states with extractable depletable resources that can, for a time, be subject to severance taxes, thus “socializing” the cost of basic living or at least a pro rata distribution of $$$, to citizens of said state, by extracting $$$ from citizens of other states through the wonderfully efficient medium of corporate pricing practices…

      1. Alex

        Well, back to the original point JT, which was that Yves stated:

        Notice how these Universal Basic Income programs don’t even necessarily alleviate poverty.

        First, regardless of what the academic proposes, there are real-life examples that UBI does work and it does address poverty and inequality. That’s a fact.

        Second, the Canadian example was implemented under Trudeau the elder (not to be confused with the current White Obama of the Great North, Trudeau the junior). If you read the article, it doesn’t mention anything about extractive resources as a source of funding; remember, in the 1970s it wasn’t the Big Oil of today. And this was also soon after Premier Tommy Douglas (Kiefer Sutherland’s grandfather) implemented Medicare for All in Canada all within the parameters of the tax system at the time because they recognized the benefits of public vs private healthcare.

        Btw, you might enjoy The Story of Mouseland

        But, I digress.

        Last, Alaska’s pretty smart for acting on behalf of its’ citizens. That’s nothing to complain about. Especially since the US allows mining companies to mine on federal lands for next to nothing; federal lands taxpayer dollars support.

        1. JTMcPhee

          Alaska is “smart?” Well, see below. Last paragraph.

          The examples you say establish UBI working to “address” (not “alleviate” or “end”) poverty and inequality seem a little thin on the ground. And without recourse to the sovereign power to create money out of the general motor of “the economy,” the Dauphin and Alaska examples show the difficulties and limits that result from the power of entrenched interests to stifle any tiny bit of fairness (from the mopes’ perspective) in the political economy.

          The “Mincome” experiment in Dauphin, Man., beneficial but short-lived, and killed swiftly and completely by a “change in government,” involved what, 9,000 people, 1000 households of which were deemed “in poverty,” and a bunch of social workers and other government types to go about collecting detailed information on each poor family’s income streams and expenses. And then an algorithm, I guess, to calculate the cheque to be cut for each individual family.

          “It worked,” improving lives and health outcomes and lots more, but in a small experiment under a socially decent government regime and with a lot of moving parts and the absolute need for $money$, $17 million for those 1000 families, from the provincial and federal government. In Alaska, a state with a pretty small population and no significant income disparities I could document, and the other states with revenues from selling off public assets like oil&gas and collecting severance taxes and royalties and such, there is darn little of the generosity of spirit that’s needed to make even the Manitoba approach “work” or even have a chance of being adopted. Here’s a much more detailed discussion of the Mincome experiment, and context for discussion of UBI, jobs guarantees, and “fairness” in distribution of wealth and income:

          And the rulers of the states that do have such nice severance and royalty income, from people all over the world paying $money$ to the rentiers of the extractive industries to be passed on, with friction losses, to the government and then out to budget line items, don not seem to be distributing that gleaning to the needy and poor and distressed in the polity, nor even putting some aside against the ‘rainy days” of price fluctuations and exhaustion of the resources and the costs of making good the dirty effing externalities that ‘government policies” encourage or at least wink at. Like fracking, and pipelines, and rail carriage, etc. Here’s a summary of sorts, of what the state governments where there are ‘severable” resources to sell or tax, are doling out and directing all those billions of $dollars$: And yes, there are a few “prudent” examples in the mix. But the vasty large majority of all that extractable $money$ is going to purposes that have little or no benefit for little poor and disabled and deplorable people.

          Your Dauphin link makes it clear that after 6 years of the experiment, 1974-79, the new neoliberal government killed the arrangement, and boxed up and stored the records of the project in some obscure warehouse, where only fortuity saved the 1,800 boxes of records from being destroyed, and there are very few living participants and beneficiaries from that project to report its effectiveness. I believe the provincial and federal finances do depend in measurable degree (did even back then) on revenues from private extraction of public resources.

          Love the tale of Mouseland — ,I recall seeing that speech in a history seminar back in 1970 or’71, taught by a revisionist professor who loved multimedia presentations. And the moral of the tale is what, again? The mice need an “idea,” to elect mice instead of cats to rule them? And the little mouse who espoused that idea out loud and in public, ended up “locked up.” How many people, mice, can hang on to and work from a beneficial-to-the-general-welfare idea, consistently and over time, and as effectively as, say, the Koch Brothers or the “Blob” and its parts?

          A guaranteed livable living is, we agree apparently, a most worthy aim. I’m just skeptical enough to want to point out the weakness of those proposing it, in the world as it is, and their apparent inability to mobilize to do what seems necessary to not avoid huge die-offs, from starvation or opioids or toxins or wars or ambient temperatures outside the adaptability of our bodies. Going to a “fairer” distributive model basically requires re-working all of the elements of the political economy, re-educating all those Deporables who have drunk deep from the toxic well of neoliberal and Calvinist ichors, and defeating all the entrenched rentier and corporate interests whose officers and facilitators are just fine with things the way they are.

          And Alaska: how much is the yearly “income guarantee” that the 593,000 residents each get? Well, it topped out at $2,100, and in 2014 was a YUUUUGE $900.

          1. Alex

            Everyone is entitled to his own opinion, but not his own facts. Daniel Patrick Moynihan

            Year Amount
            1982 $1,000.00
            1983 $386.15
            1984 $331.29
            1985 $404.00
            1986 $556.26
            1987 $708.19
            1988 $826.93
            1989 $873.16
            1990 $952.63
            1991 $931.34
            1992 $915.84
            1993 $949.46
            1994 $983.90
            1995 $990.30
            1996 $1,130.68
            1997 $1,296.54
            1998 $1,540.88
            1999 $1,769.84
            2000 $1,963.86
            2001 $1,850.28
            2002 $1,540.76
            2003 $1,107.56
            2004 $919.84
            2005 $845.76
            2006 $1,106.96
            2007 $1,654.00
            2008 $2,069.00 + $1,200 Alaska Resource Rebate
            2009 $1,305.00
            2010 $1,281.00
            2011 $1,174.00
            2012 $878.00
            2013 $900.00
            2014 $1,884.00
            2015 $2,072.00
            2016 $1,022.00 (dividend was estimated to be $2,052 however Governor Walker’s veto reduced it)

            I’m drawing the line at fact-checking your homework for you.

            As far as the rest of your reply, you write a lot but don’t say much other than what your opinion is.

            1. JTMcPhee

              Oopsie, major impeachable factual issue: Top payout to Alaskans was (for a whole year, per your helpful chart), “2008 $2,069.00 + $1,200 Alaska Resource Rebate.” Not $2100. And the $900 was for 2013. And all of $1,022 in 2016. And how much saved by the state for a rainy day, per the report I linked?

              And that proves that Alaska has a UBI from severance that provides an actual living to its poorer residents?

              Some kind of UBI is a very decent idea. I don’t think getting there in any acceptable form (for us mopes) is any kind of easy path.

              Cool thing about the net, everyone gets to judge and comment on everyone else, and make up their own minds about who;s right and wrong…

              1. Alex

                Two things on UBI:

                1. Difficult things take a long time, impossible things a little longer.

                2. It always seems impossible until it’s done. – Nelson Mandela

                Granted, +/-$2000 per year is not a lot, but it helps some people.

                Last thing: shake hands, call it a draw, and continue to fight the good fight.

                1. tegnost

                  “1. Difficult things take a long time, impossible things a little longer”
                  I recall hearing this line about the ACA many times, right now medicare for all is in the discussion because the clinton lost. It’s about maintaining a sick status quo that suits a wealthy minority., and it was also justified by claiming
                  it helps some people…
                  Why not just bring back the welfare the the previous clinton did away with if all you want to do is help some people. People want to take care of themselves, and there are plenty of projects out there that are currently being privatized, a basic income guarantee for the wealthy.
                  Jobs guarantee if you actually want to help people, UBI if you want to stay the course

                  1. Alex

                    That’s a great idea.

                    I decided to support these platforms:
                    1. Jobs

                    2. Personal Income

                    3. Workplace Rights

                    4. Veterans

                    It lays out a clear path to fixing things. Sanders’ problem is he never claimed to be a Democrat, but he supported them 100%. As far as I’m concerned he can’t be trusted. And candidates themselves never commit to anything.

                    The Greens will never be anything people can get behind; they are just a mess of a party (by design it seems).

                    The Socialists keep talking but they really don’t have any main candidate or even a main party or a platform, despite Kshama Sawant getting press.

                    The U.S. did have a Labor Party but it couldn’t decide if it wanted to run candidates or not, and ended up disbanding.

                    And the U.S. doesn’t even have anyone like Jeremy Corbyn.

                    So it’s very slim pickings out there now.

  13. Sue

    I read the first half of the article. It is not about UBI. It is about a particular type of UBI. One which deficiently replaces existing benefits, and when it fully substitutes them or complements them resorts to general personal income taxation. There are many other ways to UBI and better interpretations to UBI than the ones outlined by this article. Do not take it as an apology for UBI.

    1. Yves Smith Post author

      No, it is a survey of various analyses of different UBI proposals, with the OECD one getting more attention than the rest. That’s how Bruegel posts like this work. They are a summary of what the author could find.

  14. skippy

    My biggest gripe wrt a UBI is its proponents from Friedman’s side of the mental pond musing about voting rights et al, democracy would have to be tamed or they would just vote for more money. Yet the SJW on the other hand fall over themselves after the bait.

    disheveled… the endless Bernays of meanings and terms to make them palatable, but no mention of the devil in the details.

  15. Carey

    WRT Libertarianism, the question I’ve always had is: how do they handle competing claims?

    Serious question, btw.

  16. Temporarily Sane

    A UBI is a concept definitely worth exploring and on the surface it makes immediate sense. However, the “careful what you wish for” principle also applies here. I haven’t yet explored the issue in great depth myself and am still on the fence. The arguments for a UBI are straightforward and I won’t repeat them here.

    A compelling argument against a UBI is that it would result in lower wages and in effect become a state subsidy to employers. This could be mitigated of course by legislation that prevents employers from taking the UBI into account when negotiating wages/salaries but how realistic that is I don’t know. At any rate there would have to be measures put in place to prevent businesses and organizations from using a BI as an excuse to pay their employees less.

    Another argument against a basic income is that it puts an end to the concept of social responsibility and further erodes society. Kind of like parents that regularly give their kids money but balk when a kid comes to them with a problem or issue that requires more than just a cash handout A healthy society needs at least some shared norms and values to function.

    The UBI concept sounds very simple and straightforward…but is it? The left likes it because they see it as a solution to grinding poverty, but poverty is not only about money. Social programs are called ‘social’ for a reason. The libertarian right likes it because it costs less than current social welfare programs and it opens the door to privatizing social services that were once provided by government. This further erodes society and appeals to the globalist ideologues (whether libertarian or neoliberal) whose goal is the destruction of the nation state.

    If a UBI becomes reality it won’t just be what we’ve got now plus every citizen gets $1750 (or whatever) a month and hey no more poverty. It would change some fundamental aspect of our society with many details to be hammered out by competing interests (with the devil smugly looking over their shoulders).

    The debate is a step in the right direction…the current system is a shambles that desperately needs updating.

  17. nah

    to create a parent person to have value such that they should not have to cheat
    “the system”

  18. Dom O'Doom

    Rather than raising taxes to fund UBI How about raising the minimum wage? If all states did it simultaneously the increased spending power would offset the increased costs as firms would be able to pass on the costs to customers and inflation would rise, what central banks have been trying to achieve for years. External competitiveness would take a hit but the US is largely domestic driven so it wouldn’t be as much of a big deal as eg in the Euro area. And the dollar would depreciate, and you could implement a border adjustment tax to further increase attractiveness of producing in the IS. Higher wages would also increase the incentive to invest which would raise labor productivity. This could be accompanied by higher taxes on non reinvested profits, especially the removal of the tax exemption on stock payments to CEOs. That the corporate sector has become net saver is a sign of very deep dysfunction of the market economy and needs to be adressed. This could be done through measures such as the above that would lower the share of profits in GDP and increase reinvestments of profits

  19. jabawocky

    I would like to see the speenhamland system tried again, coupled this time to a minimum wage, just to see. This might prevent the ultimate race to the bottom in wages that occured before, or it might not. However, in my view most of the above conversation misses the salient point in the income debate.

    1. Income distribution matters, but not as much as supply.This is because redistribution towards poorer people is only successful if supply of the goods they desire the purchase keeps pace with the increase in demand. UBI I believe would see incentives to cut wages, would bring another round of house price inflation similar to that caused by women entering the workplace, and see our new higher incomes depleted by increasing rent and mortgage payments. This is because housing supply is inelastic. The gains would be quickly wiped out by inflation and falling wages.

    2. Gobal population is increasing at a faster rate than productivity increases. Even in the UK when we need skilled labour there is no incentive to provide a rate of pay that attracts local workers into the sector. We just import labour from China or India or somewhere and pay low wages. In theory we can only get a work permit if there is no suitable local applicant for a role. If there are no local applicants we treat this as a failure of the education system, not a failure in renumeration. However, in general pay is not high enough to attract large numbers of local applicants to enter whole sectors in the first place.

    3. A better solution is stronger wage bargaining power, mandatory recognition of unions in the workplace, a strong minimum wage and progressive taxation of wealth. And the state as employer of last resort.

  20. Felix FitzRoy

    Following Jabawocky’s point 3, the best solution is a combination of a modest BI with a job guarantee or ‘the state as employer of last resort’ at min wage, flexible hours and good conditions, which would put a floor under private sector wages and conditions. The BI would add to irregular earnings for many self employed, gaps in atypical jobs, and support those, mainly women, working at home for no formal pay, caring for children and elderly. By taxing all income including BI, high earner’s BI would be recouped, so total cost much less. More effective than targeted welfare with negative incentives from tapered withdrawals.

    1. tegnost

      Identity politics much? women, self employed, childcare

      what about the negative incentive to pay your employees more because they get a basic income?
      Welfare for the rich. Class prejudice. Bifurcated economy.

  21. Steven

    I confess to not having read the complete article and all the comments. But from what I can see this one suffers from the same flaw as all the others – a patently flawed definition of ‘universal’ which seems to stop at national boundaries. The OECD simulations show results on a country by country basis, not for the European Community as a whole.

    But most important on a truly ‘universal’ scale, why should not people in the countries that currently produce much of the world’s wealth, e.g. China, be included? They are currently being paid for that wealth with, as Michael Hudson phrases it, “debt that can’t be repaid (and) won’t be”. Sooner or later they are going to wake up to the scam and reject ‘leaders’ who allow it to continue.

  22. Francois

    argues that the assumption that technology will be so disruptive as to justify discarding existing welfare state and other labour market institutions for a UBI should be treated with caution

    That so? Why is that, pray tell? Every foremost expert in AI and Deep Learning has warned that most people severely underestimate the growth rate of the machines abilities to perform ever more complex tasks. The ability went from linear with Watson winning Jeopardy, to geometric with AlphaGo, (Go) Girafe, (from total newb to International Chess Master in 72 HOURS) Amelia (replacing 70% of call centers workers in 10 WEEKS) and finally Libratus who went out to accomplish the Holy Grail of AI: beat humans at a incomplete information game like Texas Hold’Em, a feat thought possible in…2040, at best!

    One only needs to recall how dumb smartphones were only 4 years ago compared to now. The amount of AI injected into every sensor of these devices is enough to make a service totally nauseous.

    Hence, any prediction lowballing how fast machines could replace human work should be viewed with a high index of suspicion.

    1. tegnost

      Hopefully they’ll take your job sooner than you expect.
      Additionally, what do you think all those people with nothing to do will occupy themselves with, after the more precarious off themselves? I guess they’ll just disappear…

  23. Jake

    To reduce the severe insecurity of society created because of the inherent dynamics of capitalism, I think we definitely need some form of permanent guaranteed income. I see the following few issues that pose a problem. Would like NC staff and the commentariat’s views on it –

    1. Income for work like the Job Guarantee or regardless like UBI or a mix – The problem one faces here is that because of the massive productivity gains in the past decades, there simply isn’t much need of people for the amount of work required. So is it worth employing more people but less machines or vice-versa?

    2. Amount – I noticed in the above article that the amounts were measly! USD$10K annually is not enough! Should be more but tuned according to each country’s specific situation. The income should guarantee a decent standard of living that is in accordance with modern standards.

    3. Funding or where does the money come from – Here I propose direct crediting of citizens’ bank accounts by central banks creating the money. Funding it out of taxes or any other limited pot will either never pass politically or will severely hamper the amount that will be paid. What’s the point of even talking about such schemes if they dont pay enough or are dependent on the for-profit system generating enough taxes! This would obviously be have to preceded by laws that make sure the central bank cant get too powerful to refuse citizens their income.

    4. Inflation – I reckon this is the great bugaboo of economists when talking about such schemes. Instead of reducing the guaranteed income to keep inflation low, economists and policy makers would need to be pressured to make sure producers keep their prices in control. Besides, considering the current massive private debt levels, i’m sure some amount of inflation would be welcome to erode them away. Moreover, before starting the scheme, i’m sure govt.officials would need to make sure there’s enough production of basic necessities to avoid sudden jumps in inflation because of supply constraints.

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