Study: a universal basic income would grow the economy

[workinclasszero]

Study: a universal basic income would grow the economy
Updated by Dylan Matthews Aug 30, 2017, 7:10am EDT

A universal basic income could make the US economy trillions of dollars larger, permanently, according to a new study by the left-leaning Roosevelt Institute.

Basic income, a proposal in which every American would be given a basic stipend from the government no strings attached, is often brought up as a potential solution to widespread automation reducing demand for labor in the future. But in the meantime, its critics typically allege that it is far too expensive to be practical, or else that it would spur millions of Americans to drop out of the labor force, wrecking the economy and depriving the government of a tax base for funding the plan.

Their paper analyzes three different models for a universal basic income:

1. A full universal basic income, in which every adult gets $1,000 a month ($12,000 a year)

2. A partial basic income, in which every adult gets $500 a month ($6,000 a year)

3. A child allowance, in which every child gets $250 a month ($3,000 a year)

They find that enacting any of these policies by growing the federal debt — that is, without raising taxes to pay for it — would substantially grow the economy. The effect fades away within eight years, but GDP is left permanently higher.

https://www.vox.com/policy-and-politics/2017/8/30/16220134/universal-basic-income-roosevelt-institute-economic-growth

[haveahart]

1. It would be cheaper than what we have now and our deficit would shrink.

But then we would just have to spend all that benefit on more weapons.

[Eliot Rosewater]

2. We dont want a strong economy, we want concentration camps for brown and gay people.

That is what I am told anyway.

[Initech]

3. But that would hinder corporations' mega profits and billionaire salaries!

[HeartachesNhangovers]

4. It sounds like a free lunch, so I'm skeptical.

The article also says:

These are extremely contentious estimates, borne of controversial assumptions about the way the economy works and the effects that a basic income would have on it. Many, if not most, economic modelers would come to very different conclusions: that a basic income discourages work, that raising taxes to pay for it could have profound negative economic impacts, and that not paying for it and exploding the deficit is a recipe for fiscal and economic ruin.

However, I am eagerly awaiting a developed nation to successfully implement a UBI.

[JCanete]

9. It is. it's a free lunch. It takes whether or not you can feed yourself and house yourself with the

most basic necessities, out of the equation of whether or not you are a worth-while human being who has a right to live. It assumes you do and that you as a human being deserve these basic things. Not only does this go some way to counter the mental and physical consequences of the high stress caused by shelter instability, as well as the cognitive deficits caused by nutritional deprivation, it affords a certain dignity that our society strips people of when they are forced to rely upon charity to survive. Nobody is on unemployment. Nobody is on welfare. There is no shame that accompanies being out of the workforce. There are no structural barriers to entry into education or the workforce(things which exist now to prevent exploitation of our welfare systems but have the stupid consequence of keeping people locked into their poverty).

To say nothing of the ways this gives women with children the freedom to get out from under whatever thumb might be on them, specifically as it relates to either domineering/abusive parents or husbands.

It takes the most exploitive jobs and makes them untenable models, but it does not discourage work, and I would argue the opposite, since all work is additional...above and beyond, NOT instead of.

But that said, we stand to lose like 50 percent of the jobs that exist today anyway. No, they will not be replaced by new opportunities. But there are ways people can contribute to society that aren't correlated to a paycheck. This frees up people to be more civic minded and more active/helpful in their communities. This has the potential to enrich communities and to elevate the people in them to be both more capable to contribute to a better world, and invited to do so.

And I'm really just scratching the surface.

[HeartachesNhangovers]

11. OK, so why hasn't any developed country done it?

Why hasn't every country done it, if it's a win-win-win?

[JCanete]

12. Its not a win for the rich, who would rather consolidate the world's wealth into their pockets.

That should be pretty obvious, I think. And they do kind of control the messaging, and the politicians to a great extent.

[HeartachesNhangovers]

14. I think that's an overly simplistic answer.

I think that there are real obstacles to eliminating poverty and financial insecurity by simply giving people money.

One real obstacle is inflation. For example - I used to live in San Francisco, where rents and home prices are very high. Many people live outside of SF who would prefer to live right in town - maybe on Haight St. or in the Mission or the Marina - but they can't afford it. What do you think would happen to rents in SF if every single person had an extra $12,000 to spend? I think rents in SF would go up a few thousand dollars. Restaurant prices would also go up. So would prices at the grocery store and the gas station.

How do you think we'll prevent the benefit of a UBI from simply being negated by increasing prices? Price controls on all essentials? Like they have in Cuba or Venezuela?

[JCanete]

16. Well, be fair, it was an overly simplistic question, since you know that just because something is

good for us doesn't mean you will necessarily hear corporate news media or any politicians saying so. There are plenty of examples of that I could point to over the course of recent history.

I think inflation is a genuine concern, and while I've heard that studies of minimum wage hikes, etc. don't have a dramatic effect on inflation particularly as it pertains to non-luxury items, I'm somewhat skeptical of that. However when more people at the bottom are spending, that money is circulating in far more hands...especially if you have a refresher that continues to take from the top(where it will inevitably end up) and puts it back into the economy at the base level, so arguably it should stimulate the economy by that alone.

Of course scarcity is a reality now just as it would be in this model. Pricing will still have the effect of determining who gets those scarce items, housing, etc. I have no doubt there are tricky areas to consider, but if we see a shrinking job market the way it has been speculated over the next 25-30 years, there's no real choice but to start considering these sorts of solutions.

[HeartachesNhangovers]

17. I don't think a UBI is out of the question, since

lots of people and entities already get "free money" from the government. Before I left SF, Twitter got millions of dollars of tax breaks from the city for headquartering in the city. Lots of large companies have gotten similar deals all over the country. The home mortgage deduction is "free money". Almost every tax provision is "free money" for some interest group.

That's why I am genuinely perplexed that it's never been done on a national level. Alaska gives residents money, but that's based on an actual resource and the resulting income: oil. Saudi Arabia apparently runs a welfare state for their relatively-rich population, again because of oil revenue (and in order to placate the public from questioning the the legitimacy of the "monarchy&quot . [Note: I don't know why this stupid smiley is here - can't make it go away!]

Maybe the way to get public support for an UBI is to expose the current beneficiaries of "free money" and start by re-distributing that amount (not necessarily a more arbitrary amount of $12,000).

[djsunyc]

5. what's interesting...

we always here stories of rich athletes or lotto winners losing most of their money.

what needs to be taken into account is that alot of folks like to spend money regardless of how little of it they have.

you give some people 1000/mo, instead of saving it or using it to take care of their family...they will spend it on new objects + toys. (ie. better phone..better car, etc.)

alot of people will put that money back into both big and small business' hands.

so while some may think people will stop working...i also think those that "stop" working will end up spending the money given to them.

[xor]

19. I think it would work best if instead of it being viewed as a replacement income

It is viewed as more of a supplemental income that would give breathing room for those who are 'stuck' in their current situation. It would also give room for those who are in better situations to invest money in whatever makes sense for them. I use the term invest loosely as that could be like stock/bonds or it could be in education or a business or whatever. Even just putting money away in savings for unfortunate events. But the idea is that the income is supplemental for those who need it the most. A single parent who is working two jobs just to get by would benefit greatly by having additional funds to either safe guard themselves (job loss, broken down car) or to improve their position (paying for education and/or childcare so they can go to classes) How many times have you heard conservatives say "If there aren't any jobs where you live then move somewhere else and/or get a education" Which completely ignores the realities of life and how one needs money to do either of those. This would make that a far more feasible option for many. I also think if presented in such a way it would easier to sell it to certain people who may kneejerk against any such ideas.

[sarcasmo]

6. Europe will have UBI long before the United States.

[Hortensis]

7. Not only that, it will be required in future. No consumers, no profits.

[Warpy]

8. America needs a raise and it doesn't matter how we get it

Wages were allowed to fall below subsistence and if they stay there much longer, the economy will consist of rich men in their mansions, their servants, and the lackeys who play with numbers and give them the illusion of ever increasing wealth while they scheme to take it away from competing rich men in mansions. Anyone else will be invisible, scrambling for basic needs with no resources. We know this. We saw that sort of economy develop across Europe.

A universal basic income paid for with a large surtax on the top 5% in general and top 0.1% in particular will get it started. Increased income at the bottom will also increase tax revenues, something the stingy rich and corporate classes don't get, taking the pressure off for increases every year.

The economy of this country has been starved by low wages as government policy for over 40 years. Even the rich have got to notice all the vacant storefronts and defunct mid level restaurants on their limo rides to the local private airport.

[leftstreet]

10. DURec

[Warren DeMontague]

13. With automation, either we go in that direction or we rapidly devolve into a class-based dystopia

I wish I could say I was optimistic, but I suspect we're headed for the latter.

[taught_me_patience]

15. I'd love some money for nothing

and, perhaps, chicks for free too. Oh yeah and some of what the authors of the study are smoking.

[xor]

18. I've been discussing/thinking about this a lot lately...

Last edited Wed Aug 30, 2017, 08:46 PM - Edit history (1)

Obviously it has many benefits and there would be gains, but it really does seem extremely expensive when you work out the numbers. I always stick with $1k/mo and even if it's just for the adult population it comes out to be more than the entire revenue of the US government. Even if you cut out the majority of other social programs and have this replace it, reduce crime, cut down the military, and take into account increased revenue that it should produce, there still doesn't seem to be enough money to do it. At least based on my fairly simplistic views on how things work. Perhaps I am missing something (I haven't read the article yet)

But that got me thinking that a semi-universal supplemental income would bring all the same benefits at more feasible cost. So maybe every adult gets $1,000 and it gradually begins to reduce at higher incomes. Exactly what those numbers should be are things that would have to be determined and likely tweaked over time.

I'm going to go read that article now, though. Maybe they figured it all out.

[Lee-Lee]

20. 12,000 a year and I almost don't hVe to work now

I would move back to the house I used to live in before I had to leave the area that I now have rented. It's mine free and clear. With it is a small second home and a large steel building that used to be the property my dad ran his business from. I can rent those at $1900 a month total and end up clearing $1400 a month based on past history.

That puts me at $31,200 a month. I've been putting all the proceeds from the rent of them and the home I would live in into investments or savings for years now, and have enough that I could right now renovate the old home, put in a complete solar system and "retire" to it and just rent the other two. I have enough in savings to supplement that amount if needed and cover expensive emergencies. Without having to work 40 hours a week I would do a whole lot more gardening and grown my own food, have chickens, etc. Between the food I can grow and can and chickens and power from solar my actual month to month living expenses would be low.

I'm about 10 years from being able to do that funded by my savings until my Army Reserve retirement and LE pension kick in at 62 and carry me the rest of the way. If that was passed now I would be retired at 45 and not looking back...