I don't think anyone is doubting that giving people money improves their lives. That seems to be the conclusion of these studies. However what is seemingly _never_ studied is how to finance such an operation. The money has to come out of the system somewhere. Is it with new taxation on XYZ, or slashing services somewhere else etc.
I’ve seen proponents suggest we take the money from other welfare programs, as paradoxically the means-testing overhead costs so much that we can afford to pay everyone $X instead of thousands of workers to process thousands of welfare applications. I haven’t seen specific numbers about this though.
Edit: I'm failing to find numbers to support this now.
The 2022 budget was $1.2T across all welfare programs[0]. This includes programs people don't normally consider welfare such as the Child Tax Credit and parts of the Pell Grant.
There are currently 350M people in the USA [1]. $1.2T / 350M People is $3,428/person/year. Please note that while significantly less, there will still be some overhead in the UBI program so the actual number is lower.
This also doesn't include state budgets for welfare.
Meanwhile, the median social security recipient gets about $1,700 per month. I don't think most people are going to get behind a "Rob grandma's pension so a bunch of college socialists can write poetry instead of working (and even then actually can't because they're bad at math)" program.
Social security is another $1.4T/year budget that is not considered welfare [0]. Medicare is another $0.9B [1] that isn't considered welfalre [1].
If we raided these programs, along with the previously mentioned programs, we reach an annual budget of $3.5T. The per person math is $10,000/person/year. A two person household would very near the federal poverty line.[2]
It's starting to look like it could be viable if we add state budgets into the mix, and find another solution for elderly healthcare.
I hate welfare programs as much as the next libertarian leaning conservative, but overhead from means testing (and admin overhead generally) really isn't a major expense. Medicaid overhead is a grand total of 5% of the program.
It's really just UBI advocates handwaving away the question of funding.
The cost of means testing isn't just what you see on a budget. It's also all of the people who are eligible, but incapable of demonstrating that fact because of some byzantine requirements imposed on them to show eligibility[0].
There will, of course, be people who consider this to be a feature, not a bug. That's an ideological difference outside the scope of this comment.
[0] Source: I know someone applying for long-term disability. Getting an answer to a question as straightforward as how to sign the paperwork (wet signature, digital, print/sign/scan, fax?!) has been a challenge for them. It's also unclear if the three different signatures needed of them are even to be done the same way. This is a generally competent, functional person I'm talking about, by the way.
That's not a "cost" of means testing though, at least not in the accounting sense. If anything, that causes the program to spend less money. Like you said, whether or not otherwise qualifying people get excluded from a welfare program is a good or bad thing is up for debate, but if it has any effect on the cost of a welfare program it only reduces it.
It's a cost borne by society at large and specifically by the people who can't get enrolled in the programs they're eligible for. Not every cost is easily measured by accountants.
> I don't think anyone is doubting that giving people money improves their lives.
I think this is actually more controversial than you're giving it credit for. Giving money as opposed to other non-monetary forms of aid is quite a radical concept. Many people believe that giving money to the poor results in bad financial decisions, short term spending, and few long-term effects. This is the main belief that the trials of UBI so far have disproven.
Another example of this is charitable giving. Most charities tackling poverty focus on giving food, water, medicine, etc, whereas studies have shown that giving money is a remarkably efficient way of donating. Give Directly has done very well with this.
> However what is seemingly _never_ studied is how to finance such an operation
You haven't understood the concept of UBI. It doesn't have to be "financed". It's a different way of assigning tax and benefits.
E.g. imagine a population of only two people, Alice and Bob. Currently Alice pays £100 in tax, and Bob receives £50 in welfare payments because he's unemployed.
You could set up a UBI scheme to be net zero. Under this UBI system, Alice would pay £150 in tax, and receive £50 in UBI. Bob would receive £50 in UBI instead of benefits.
It doesn't have to cost anything (in theory). You could make it redistributive, but it doesn't have to be.
The proponents of UBI would say it's worth it because you wouldn't have the expense and unfairness of means testing for benefits, and Bob would have the incentive to look for work (any work) without any reduction in benefits. In addition people could do things like start companies on a small guaranteed wage with less risk.
Opposers of UBI would say some proportion of people wouldn't work at all if they were guaranteed an income.
There are likely many more advantages and disadvantages that would only become apparent if a country actually tried it.
Please try to do some actual math here. What annual UBI are you targeting, and how much could be funded from pillaging existing spending vs. new taxes?
We did this during the pandemic and it resulted in inflation that we're still trying to deal with. Exactly the kind of inflation that detractors claim would happen.
Safety net, yes. UBI and other redistributionist fantasies, no.
The thing that I question is why is this requirement for this fiscal balancing only required for giving money to poor people? In 2018, the US Government added $2 trillion to the US national debt to give a 5k/capita/year subsidy to the top 5% of earners.
If we're already in the business of chucking money at people in fiscally irresponsible ways, I don't see why changing the target from "rich people" or "oil companies" to "everyone" is suddenly a problem.
Right. And if they can print it from thin air and just give it to everyone, then it has no actual value. Price discovery will force significant inflation on every class of product and service because that is what people will be buying with it. Its effectiveness drops with scale, which is what they are not testing. It's great that UBI works in a lab, but this experiment has been run at multiple points in history and absolutely thrashed societies every time without significant external input (conquest, exploitation, etc.).
Money by definition derives its value from its scarcity relative to the economy it is representing. There is no free lunch here.
Yeah, as much as I hate the inefficiency of some wellfare programs in the USA - their inefficiency is a feature in that it provides a kind of scarcity.
Depends on how much you print, and what happens with supply as you do so. Some countries (eg. Japan) are struggling to increase inflation, so this seems like a straightforward policy. At the same time it can solve the problem of weak consumer demand: productive factories making desirable goods that citizens nonetheless feel too poor to buy, causing those factories to shut down, resulting in the country getting poorer in real terms. After all, "demand" is desirability times spending power: if spending power is low in your target market, then demand is low, even when your products are desirable.
Putting money in the hands of the largest number of people works well with production economies of scale. For the same total quantity of money, having it concentrated in a few hands means your society is incentivized to produce a few yachts and private jets, and too low on the quantity curve for economies of scale to make that production efficient. When that same money is distributed, the incentives are to produce large quantities of vacuum cleaners and washing machines, where mass production is very efficient, so total utility can be higher.
We are actually, right now, "printing money" out of thin air. The process is called "fractional reserve banking" and is a cornerstone of modern economics systems. You can of course read up on it, but, suffice to say, if we did not do it, financial systems would be extremely unergonomic.
Hyperinflation is one of the things that could happen, when you do it badly, I suppose, but there is a lot of ways to get hyperinflation, if you do things badly.
Thank you for insulting my intelligence by assuming I don't understand fractional reserve banking. My point remains. A government does not have carte blanche to inject money into an economy without hyperinflation beyond a certain point.
If you were a little more honest and a little less into making a point of being offended, you would probably find it fairly easy to concede that the statements you made in both comments are substantially different.
What is useful is thinking about money sources and money sinks. As long as the (source rate - sink rate) ≅ Δvalue of goods an services, inflation is checked.
"Printing money", paired with a comparable sink, is completely fine and a more useful tool than "never print money". The biggest roadblock we have when it comes to employing this tool is that our system of governance has different systems when it comes to monetary and fiscal policy that over-complicate its use.
Printing money out of thin air makes existing money worth less. So it is effectively a tax by another name, you are taking the value from the people who have money now, without actually changing the balances in their bank accounts. And it's regressive, since there's no way to limit inflation to any selected demographic.
The folks down-voting you down appear to have no problems with hundreds of billions of dollars spent on War every year - the money for that was printed out of thin air. The current U.S. Biden administration even removed the debt ceiling to do this!
The US has raised the debt ceiling multiple times across multiple administrations. And the debt ceiling isn't raised so that we can pass a specific bill or take a specific action, it's so we can pay for the bills and actions we agreed to months beforehand.
If we make corporate tax to e what it was historically normal, and tax the wealthy-wealthies to a reasonable level and close all ridiculous loop-holes, then it can be zero-sum. Or even profit.
I'd have to see their argument. A basic "better things aren't possible because where will the money come from?" Isn't possible to engage with seriously. We don't fund our state with gold mines.
Yes we have? There's an ongoing funding crisis for Ukraine's defense, and there are legions of conservatives who are mad about the trillion + spent blowing up Afghanistan + Iraq.
Taxation in the US came about to fund a war.
Money is in the top-three concerns people have about war; it's right after lives lost and infrastructure destroyed.
Bring back the 70% corporate tax rate that was considered normal when Reagan was elected. That should give us a solid start. After that take all the money from every billionaire. You can have up to $999,999,999.99 in your bank + assets, and everything after that goes to healthcare and UBI. If you get to a billion, we'll name a dog park after you and you get a little trophy that says you won capitalism.
More importantly though, why is it that the funding of vast government expenditure is only a problem when it stands to benefit the working class? We always have heaps of money for tax cuts for the wealthy, blowing shit up overseas, and buying this year's crop of tanks to replace the ones we're about to shove into a field to rust. How many millions in PPI loans were forgiven, when most people got maybe $2,400 total over COVID when the economy damn near imploded?
70% corporate tax rate will get you another Reagan.
It's a fast track to destroying entrepreneurship, reducing competition to introduce new, better products or lower prices of existing products.
This is bad for the middle-class consumer because they'll have less to buy, and fewer places to work at.
Furthermore, even if you went full Stalin and confiscated the entire wealth of all the billionaires, that's only $12T [1]. Sounds like a lot? It's a whopping $1500 per person in the world. You'll completely obliterate the economy for the ability to give everyone a check for $1500. One month later, 95% of that money will be spent and back in the hands of innovators and value providers.
> 70% corporate tax rate will get you another Reagan.
What do you mean? We still have Reagans, they never went away.
> It's a fast track to destroying entrepreneurship, reducing competition to introduce new, better products or lower prices of existing products.
Right America wasn’t even remotely an economic power until the 80’s. How could I forget?
> Furthermore, even if you went full Stalin and confiscated the entire wealth of all the billionaires, that's only $12T [1]. Sounds like a lot? It's a whopping $1500 per person in the world. You'll completely obliterate the economy for the ability to give everyone a check for $1500. One month later, 95% of that money will be spent and back in the hands of innovators and value providers.
It’s not confiscating, it’s tax. Tax everything above one billion at 100%. It’s not one time, it’s every year. And it’s not like we wouldn’t still have incredibly rich people, we just wouldn’t be permitting them to lock up entire GDPs worth of money in nothing.
Like if you think there are tons of people out there who will refuse to create businesses because we cap wealth at a mere, paltry one billion dollars, I think that’s a those people problem not an argument against that idea.
They'll get elected in 49-state blowouts like he did, and for the same reason.
America's economy went from nowhere to #1 under a regime of almost no tax and regulation at all during the 1800's until 1914.
Even then, corpo's aren't actually paying 70%; there's a ton of loopholes and deductions. A high tax rate like that just favors the large incumbents and makes it hard for small businesses with no tax lawyers to get off the ground.
Also, oh my god, if you tax the wealth of all the billionaires at 100%:
a) it's confiscation
b) they won't magically keep churning out 12T in assets every time you confiscate it. Its wealth, not income.
c) the money isn't locked up in anything; how can you possibly believe this. It's invested in the economy. It's lent out to businesses and governments in the form of bonds. It's deployed capital in the form of stock.
Economic literacy is in an absolute shambles. We need to urgently improve the teaching of economics to kids. Between this, the common misconceptions about inflation, supply and demand, and people not knowing the difference between net worth and income, I'm getting more and more worried.
> They'll get elected in 49-state blowouts like he did, and for the same reason.
Again you are speaking as though this isn't status quo. A huge slice of our political landscape is people who still think trickle down economics works, tons of politicians are elected running on platforms for tax cuts. Reagan's politics live on and are largely responsible for how shit the world has become over the last 4 decades or so.
> Even then, corpo's aren't actually paying 70%; there's a ton of loopholes and deductions.
Then close them.
> a) it's confiscation
I don't care.
> b) they won't magically keep churning out 12T in assets every time you confiscate it. Its wealth, not income.
Yes, and I am suggesting the tax be based on net worth, not income.
> c) the money isn't locked up in anything; how can you possibly believe this. It's invested in the economy. It's lent out to businesses and governments in the form of bonds. It's deployed capital in the form of stock.
It's not going to the workers, which is why we need UBI. People asked "How do we pay for it" and I have answered that. I don't care about lending to businesses, I definitely don't care about the debt traps set for the global south's nations, and frankly, I don't really give a shit about the economy either. We hear all about how great the economy is doing year over year, and me and my friends get more and more broke as it does. If the economy's doing great, it's not doing great for me or anyone I care about, and insofar as that's the case, why the fuck should I care if it continues to do great?
What goods an economy that doesn't serve the workers? If the economy is doing so great, why am I paying through the nose for every fucking service and resource I need? If the economy is so great, why are so many people living check to check and barely making ends meet? If the economy is so great, why is every fucking thing getting more expensive? If the economy is so great, why does a house cost 8 years of salary?
Great for WHO? It ain't doin' shit for me personally.
> Economic literacy is in an absolute shambles. We need to urgently improve the teaching of economics to kids. Between this, the common misconceptions about inflation, supply and demand, and people not knowing the difference between net worth and income, I'm getting more and more worried.
I didn't say income, you did. I said "bank + assets" but if you want the fancy words, yes, net worth, held stock, bank accounts. Etc.
> A huge slice of our political landscape is people who still think trickle down economics works, tons of politicians are elected running on platforms for tax cuts. Reagan's politics live on and are largely responsible for how shit the world has become over the last 4 decades or so.
The problem here is the need to distinguish between two things that are complicated to distinguish.
There are a lot of regulations on the books with a decent cost/benefit ratio, and a lot with a poor cost/benefit ratio. Everyone benefits from removing the latter, but there are thousands of individual rules and you need someone who understands them to distinguish one type from the other. But these are often the exact people (lawyers, compliance bureaucrats) who benefit from the status quo and don't want wasteful inefficiencies to be removed because it pays their salary.
Meanwhile voters don't have the bandwidth to dive into the details, so in politics the candidates who want to do the right thing just say "we need fewer regulations" -- okay great, let's vote for that guy? But there is another class of candidate who is captured by corporations and says the same words but the regulations they want to get rid of are the ones with a high cost/benefit ratio, only the cost is on the corporation and the benefit is to the public.
You have to find a way to distinguish between them or you're screwed. Just saying "leave the inefficient rules in place and keep accumulating more of them forever" is still you're screwed, you have to actually solve that problem.
> Then close them.
That's what they did at the same time as they lowered the rate. Government revenues aren't any lower now than they were then -- they're higher.
> I don't care.
You don't care that it won't actually generate any long-term revenue? Then what is its purpose, just pure animosity?
> Yes, and I am suggesting the tax be based on net worth, not income.
Which is completely asinine because it creates all kinds of perverse incentives.
Major corporations would end up being controlled by foreign nationals instead of domestic ones because domestic owners would have to sell their shares to pay the tax. Anyone subject to the tax would have the incentive to take insanely wasteful high risk bets because high rates of return would be the only way to cover the tax without losing money year over year and losing everything to the tax over ten years isn't much worse than losing everything in a casino right away. Some assets would be harder to value than others and then trillions of dollars would shift into those assets away from others, which would be several different kinds of disastrous.
There are reasons we don't do it that way.
> frankly, I don't really give a shit about the economy either. We hear all about how great the economy is doing year over year, and me and my friends get more and more broke as it does. If the economy's doing great, it's not doing great for me or anyone I care about, and insofar as that's the case, why the fuck should I care if it continues to do great?
People say it's doing great because they have the incentive to find numbers that allow them to make themselves look good. They'll always say that when they're in charge. In fact there are some problems right now, but don't think for a second that adopting poorly considered policies couldn't make it a lot worse.
Considering the price of eggs skyrocketed due to an outbreak of avian flu forcing farmers into mass culling tens of millions of egg laying hens across the US, it's probably not the money supply that caused that.
They increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices...
