The 70% marginal tax does not apply to a person's entire income. It starts taking effect after an amount, $10 million for example. So your $10,000,001st dollar is taxed at 70%. This is a very important detail.
@@callous21 Oh no. You can only afford a villa and two Masaratis while dining out the entire month. Truly horrid. How will you live without a yacht on top of all of that.
What's missing from the conversation is one good idea from UBI, just reducing bureaucracy. Welfare doesn't have to be universal, but it also doesn't have to be split among a hundred different programs that make it difficult to use and costly to operate. Giving people a single check that gradually phases out to a certain income threshold wouldn't require trillions in spending while making it cheaper to operate (so more money for the program itself) and much easier to use for those who need it.
Tried that in the UK with Universal Credit taking over from about 7 different benefits like unemployment etc, its been a lot of problems to implement but might be working.
Over time it will split into the same number of programs as any other institution. Lower class will blow up over the millionaire who does take it. Politicians will run based on this vote. Now it’s no longer a UBI. Never forget. Once something becomes standardized, it becomes the baseline as well. It’s a bonus year one…it’s an expectation year 2.
The people who would get screwed (although its the way to "sell" this to Conservatives) are those that paid into Social Security -- if $1000 flat payments replaced the current SS payment. (which is much higher than $1000) You get rid of SS, UI, ect... but you actually make it worse for the lower class. (the UBI becomes the minimum income level and its very minimum) People who planned for a $2200 SS payment in retirement suddenly lose over half their "equity" in the old system. And lets face it.. if the "Liberals" managed to get a UBI then the "Conservatives" would use the excuse to kill every other program they could next time they were in power. And then once they were done it would be just like Minimum Wage.. they would fight increasing it with inflation tooth and nail so it would go down and down versus inflation. You might catch up 3-4 times in your lifetime before you lose ground again. Just for reference a full time person on MW makes about $1250/mo. And its not go up since 2009... and not likely to go up anytime soon.
I read about the finish experiment where some people (I think it was 10000 people) got an UBI for a few years. The experiment was intresting. The wellfare system in place basically makes it so that if you get a job or start a bussines you will start paying taxes at about the same rate you lose your unemployment benefits making it hard for some to see any reason to put an effort in it. With the money being unconditional the people in the experiment were able to start bussineses and get jobs and get the full benefit imediatly and the most drivven entrepreneurs were able to re use all the money they had earned to keep the bussines growing since they didn't lose their benefits and had to give them self a salary imediatly. Some of them stated that it would be imposible for them to get to that point in the traditional wellfare system in place, even though it is more generous than most.
There were also some more experiments like that, in different countries and places. I was surprised to learn that apparently, someplace in my native Poland also did such an experiment for IIRC 2 years, with similar results (more likely to find work than in traditional welfare systems)
Yes, this video is missing a lot of stuff about how UBI is suppose to work. There is the fact that traditional welfare always has this income zone where working more hours doesn't result in more pay. Welfare, to put it bluntly, incentivises staying poor unless you can make a big leap in income. And although EE mentioned how UBI reduces bureaucracy, it fails to mention that this effects the people on welfare even more. Most welfare systems have recuirements, like a minimal number of job applications to send out, and many forms and mandated appointments. Being poor is a part time job. And there is the psychological effect of living in constant fear of being unable to feed yourself and your family which has a scientifically proven effect that it makes people make worse financial decisisions. So the big economic question about UBI is: how much more productive will this make the poor compared to traditional welfare? And what are the secondary effects, like reduction in crime etc. Every discussion about UBI should also mention that many countries already HAVE UBI, just for senior citizens. Every fundamental argument against UBI fails when you realize people already pay taxes for UBI, there hasn't been a massive exodus of people to countries that don't have UBI for senior citizens, it hasn't made people stop saving for their additional pensions either. Ultimately it's a cost-benefit question, but a lot of people already have a politically motivated preference and don't want to know the science.
@@CardboardArmUBI for seniors only works when you have a larger pool of younger people working and paying taxes. As the birth rates shrink and more older people exist in these nations, we are starting to see the issues.
@@richarddecker9515trying, being the pertinent word, they often fail, but that is fine, just increase the premium, therefore excluding those most likely to have a claim.
@@Robert-xs2mv Out of all the trained economists, very few are pulling big levers in the economy. Academic economists largely don't pull levers, nor do gov economists that provide advice and run cost benefit analyses. Advice is built on predictions about what will happen under different courses of action.
If we implemented a UBI, I'd suggest we set it as a percentage of the GDP per capita, not a fixed dollar amount. That way, it would function as a share every citizen holds in the success of their country, and as a bonus the GDP per capita would actually mean something. It would also save politicians from wasting their time on debates about raising the amount as the economy grows, like we see for the minimum wage. For that matter, we should probably tie the value of minimum wage to inflation, rather than having a set amount. But alas, these ideas are common sense solutions to make life better for the people, and that does no good for politicians and business owners' careers, so I don't see much hope for them.
@@ShiftE21 The only reason that would happen would be if we didn't have enough of whatever product. Which i don't think we have too much scarcity for anything essential that would make the prices rise like water or food. The only thing that could go up would be non essential items like iPhones, Androids, etc.
@@MrMarker8050 tell this to the people who say that a UBI/minimum wage will cause runaway inflation. To them, putting money in the hands of the poor is a surefire way to raise prices across the board. Effectively admitting that the economic systems they support require a struggling underclass.
Two thoughts about the inflationary effects of UBI: 1) If the system is designed in a way that middle-income earners roughly break even, then the inflationary impact should be minimal. I think there have been surveys that showed that, if given more money, most people on the lower end of the income scale would use it to pay off debt. If that is wrong, and there are indications that inflationary pressures would be high, you could design it such that the payments phase in over a period of a few years. Also, once you reach a steady state (supply catches up with demand), inflation will return to normal. 2) Let's think about what it means morally if inflation is expected to increase a lot in an economy upon the implementation of UBI. From what I remember of my college econ classes, there's a term for the kinds of goods and services that low-income people buy - necessities. Wikipedia defines it as "product(s) and services that consumers will buy regardless of the changes in their income levels, therefore making these products less sensitive to income change." If merely bringing lower incomes to a lower-middle income results in a significant changes to the consumption of necessities, doesn't that mean that previously, your economy wasn't allowing people to get what they need, either to survive or to keep pace with change? Now linguistically, we can quibble over different definitions of "need" and "necessity", but IMO there's a good reason we use these words, and they really illustrate the problem here.
"Once you reach a steady state" is a hidden assumption. Why do you think we would ever reach one? In particular, perhaps you are assuming the UBI would be a fixed amount over time. But given its purpose, it would obviously have to be indexed to cost of living. Which means the UBI and inflation could well just chase each other upward indefinitely.
@@cablefeed3738 Inflation's not a binary. It's not like the only two states are "we have inflation" vs. "we do not have inflation." The _degree_ of inflation matters. Think of it like pollution. It'd be nice if there were none, but that's not practical; we accept that there will be some. But that doesn't mean that every polluter should get a free pass because some amount of pollution was already inevitable. Likewise inflation. A policy shouldn't get a free pass on inflationary effects just because there was always gonna be some amount of inflation from other causes.
@@ps.2 Actually economics believes slightinflation is good it's good and it's the same with pollution if there were no greenhouse gasses on Earth would be negative 38ﾟ Celsius That or negative 18ﾟC I can't remember. But my main argument was these same arguments get brought up about minimum wage increases and yet overtime minimum wage still increases which means there are benefits to giving more money to poor people and requiring rich people to give up more money AKA to pay poor people More.
@@cablefeed3738 You're getting it. A little inflation is fine, maybe even good (I'm not convinced it's better than zero: my understanding is that the Fed tries to target 2% not because it's thought to actually be optimal, but because it's safely above 0%, and they are perhaps a little more afraid than they have to be about what might happen if it ever dips below 0%). Doesn't mean that we should ignore any inflationary effects, no matter how great or small, of any policy proposal. Inflation is a tax on people who get a salary and have savings and carry cash. It doesn't have much effect on people whose wealth and income is mostly in stonks and real estate, as those tend to self-index to inflation. That's not to say all taxes are bad. But they aren't all good or neutral, either.
I think one of the biggest benefits of UBI is a better upbringing for children of poor households who are heavily affected by a stressful family life, and who may perform better in school, be less incentivized to do criminal activity, get better a education, and contribute more to the economy than they would otherwise. Early UBI-studies have shown signs of this effect.
Stats in Denmark show that's its life-damaging for a child's future to grow up in family where no-one is working. One reason the Government is doing everything it can to push poor families into the work force. I guess you may find the same in many other countries.
In the case of UBI I think that the problem really comes down to how it is conceptualized since the whole thing is predicated on our current economic model. Current, of course, means an economic model that hasn't changed substantially for hundreds of years. My observation is that, especially in the common parlance, economics is nearly entirely focused on the concept of currency - fiat currency to be exact. The problem is that economics is actually about the distribution of resources and currency, fiat or otherwise, isn't a resource in and of itself, but rather a measure of the ability to acquire arbitrary resources. Put another way, much like saying that "I want 10 feet" doesn't make any sense unless it is followed by "of X", saying "I want 10 dollars" only makes sense if one has an idea of the resources they intend to acquire. Acquiring money for the sake of acquiring money is a pointless endeavor. The real question shouldn't be whether there is enough currency to meet people's needs, but rather whether or not there are enough resources. More specifically we have to ask what are the basic physical and psychological needs of an individual and do we have the resources to meet those needs. Insofar as the absolute basics are concerned (food, water, shelter, etc.) I believe the answer is, unequivocally, yes. Medicine is a bit stickier of an issue, although I refuse to believe that it, or any other issue, is inherently unsolvable if you put some effort into re-conceptualizing the problem. If we were to establish a minimum quality of life and build our economic system on that moral imperative we could remove a large chunk of the abject suffering that exists in the world. With every passing day we move closer to a post-scarcity world and, while this generally though of as a positive, it will be disruptive and dangerous. Our current economic system is ill-prepared to handle that reality without the world turning dystopian. We talk a lot about the individual's responsibility towards society, but rarely in my experience do we talk about society's responsibility to the individual. "Ask not what your country can do for you - ask what you can do for your country," is a fine sentiment in certain contexts. One can ask what the individual can do for their community, but framing it to exclude community's responsibility to the individual is absolutely reprehensible.
The community is not responsible for you or anyone else. The moment there is no threat of financial ruin, there is no incentive to do the right thing for far too many people. We cannot afford that kind of hubris.
I think the proposals for UBI are the middle ground in the "what if automation" thought experiment. They are the middle ground between just letting the extra people starve and completely socializing all the benefits of automation.
Automation is already part of why wage stagnation is happening at least at the lower end of earnings, as companies can get higher productivity out of less employees and so demand for employees is lower, or More people want less jobs, and so they can pay people less as if you don't accept a low pay, someone else will.
The only way this sort of thing would actually work is if it was done in combination with incentivizing low-income housing builds HEAVILY because if not good old supply and demand would kick in and low-income apartments would go up 700$ and we're almost as bad off as we were before. I think a video talking about options when AI takes over x% of jobs would be an interesting topic, definitely something I've thought about a few times. edit: this comment really blew up, so I'd like to clarify a few things. First of all I do agree with the point many people made that affordable housing is a more important priority than UBI, making housing affordable could allow for a far far lower payout as it's a significant portion of many peoples expenses. Also I'm not by any means anti-working, I think this amount should be the minimum to have food and a leaky roof over your head while also working a reasonable part time job. Also "low-income housing" doesn't have to be an undesirable place to live, skip the hardwood floors, marble countertops and have one bedroom, it doesn't have to be expensive but still can look nice. Also empty homes are a huge issue that needs to be solved in someway too, and so is people's tendency to want to live in a city those issues aren't removed by offering affordable housing. I'm not an economist I'm just a normal guy weighing in my OPINION on this topic.
exactly, housing is the big one. If UBI passed and tens of millions of low income people suddenly had way more spending money, first thing that would happen would be landlords & investment groups that own apartments jacking up the prices by hundreds of dollars. They did it during the pandemic and they're still doing it. In the mid aughts I thought 700 a month was too much. Now it would be half what I'm paying for an apartment. 100% increase in 20 years is a bit much, especially when income for the poor and middle class has not increased even a fraction of that much. We're all expected to do more with less somehow as we hurtle towards a breaking point. I've often suggested that there needs to be a 50 state affordable housing program. Since the private sector doesn't want to be bothered building it, have the government step in and fund adequate housing so prices go down across the board and those who need low income housing aren't reliant on the market which is predatory & price gouging them.
Yep!! I have said this about any free money initiative. Money is how we divide the available resources between members of our society. If you increase the amount of money available to the average member of the system, it just causes inflation. We need to increase PRODUCTION OF RESOURCES if we have any hope of giving impoverished people more resources to help them.
@@mjkittredge I agree 100%, the government needs to force affordable housing to be built in areas where the rent is unacceptably high. Unfortunately, every area is different, so this will be perfect for some areas and cause major problems in other areas, for many reasons. But hey - thats what we are paying politicians for, to figure this stuff out for us!!!!!!
My interest in UBI is in balancing the labor economy. There is no "free" labor market in the U.S. Too people often have to take the job that they can get at whatever the pay may be, and it's not often tied to true demand. I would like to see flexibility in being able to leave a job (even temporarily) without it being financially disastrous. It's not like you can fall back on self sufficiency farming in a modern economy, if the labor market doesn't suit you. One truly does not have a choice! And because there is no choice, capitalist squeeze the working class by paying as little as possible while charging as much as possible for living essentials (also in part to poor infrastructure--like, you often can't opt out of owning a car in this country). UBI--in theory--does offer some relief there atleast.
One of the challenges with a ubi is that you either do it or you don't. "Toned down alternatives" definitely won't work. For a ubi to work it has to hold people at or just over thr poverty line and it has to be UNIVERSAL. Anything less won't work. So the the alternative can't be a toned version it has to be something completely different. More likely a raft of alternatives from improved welfare systems to addressing the power imbalance between employees and employers and way more besides.
What are you talking about? You can easily do a "toned down" universal basic/supplemental income of like $100/month instead of $1000/month, for example. Neither really removes the need for some means tested welfare for people with higher needs and you're not going to achieve with any universal income that is basic for the average person anyways. Heck, you could even start at $0.10/year if you wanted to ramp up really slowly and measure the effect on inflation. Doesn't get much more toned down than that.
I'm in support for some form of basic income, but know that its success would be greatly affected by its implementation and how other economic policies are formed. Thank you for highlighting some of the difficulties in such a program! It's important discussions to be had
me too, we need more smart people to focus on this idea to address and solve the major problems. our world needs solutions asap before we are all fucked.
I would love UBI as well But we live in the real world We will need to raise taxes If you raise taxes, companies will leave and the economy will get smaller Tax revenue will be lowered (This is a statistical fact, not an opinion) We will then run out of money and any entitlements you have will be gone. Let them eat cake, doesnt work
@@adrienwatson2179 Companies need to realise it's in their own interest too if all people have enough money, so they can buy their products. They can pay more taxes because they will save a huge amount of money after they get rid of employees, thanks to automation.
@@86Corvus, You say smart people say don't do it. But other smart people ( starting with Thomas Paine onwards to Yanis Varoufakis say that it is a necessity in a fully developed economic democracy. Start with economic realities and do some independent thinking: Economic activity by people all the wealth that people in society need. this continuously generated wealth in the best way is the next phase. Careful or shoddy thinking here determines whether our understanding is sound or faulty. Running to "experts" instead thinking things out for ourselves is one reason why there is such confusion when basic income is being discussed. Economics is the simplest of the social sciences and it's sound principles can be understood by any interested person of average education. And a good society needs an economically literate population.
For the record the $5 trillion excess COVID spending was just the directly COVID-related spending. The budget introduced authorized up to $14 trillion in excess spending, over 90% of which has been used if I’m not mistaken. Let’s never do this again please.
It's easy to forget that people with least money may and do actually generate costs for the society thats non neglible. The cost is probably bigger for countries with proper welfare, lesser for ones without it - but it's a cost nevertheless. I'm highly impressed how in modern times with modern tools we still tend to use simplified models that fail to catch overall pictures and are easy to manipulate. But an actual deep dive analysis is not something easy, nor probably cheap to do, that could be neatly and easilly shown with trivial iconographics. It's not a direct accusation here, as it's seen everywhere and the channel is pretty nice in bringing the topics in generall and doesnt seem too biased. I just would love to see a deeper dive than just that.
One key aspect overlooked in this conversation is the potential of Universal Basic Income (UBI) to streamline welfare. Rather than numerous fragmented programs, consolidating support into a single, simplified payment system would enhance efficiency. By providing a unified benefit that gradually decreases as income reaches a specific threshold, we can reduce administrative costs and make assistance more accessible to those in need, all without requiring trillions in additional funding.
Safest approach i feel to tackle it is to diversify investments. By spreading investments across different asset classes, like bonds, real estate, and international stocks, they can reduce the impact of a market meltdown
The issue is most people have the “I will do it myself mentality” but not skilled enough. Ideally, advisors are perfect reps for investing jobs and at first-hand experience, my portfolio has yielded over 350%, since covid-outbreak to date, summing up nearly $1m.
This is definitely considerable! think you could suggest any professional/advisors i can get on the phone with? i'm in dire need of proper portfolio allocation
Rebecca Noblett Roberts is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..
The problem with a high tax rate vs a low tax rate when starting a business isn't that the entrepreneur might have to pay more taxes. The issue is that the higher tax rate reduces the margin of error for that business to succeed at all, which makes it less likely that the business will be started.
Don't forget that a business tax must be passed to the end consumer. Business tax interferes with a proper supply and demand curve and ultimately suppresses market competition because of decreased demand at the inflated price. This also goes to the issue of funding. Taxes just like pay raises are always inflationary.
Theoretically, a UBI is meant to be a stepping stone to a post-scarcity system. A post-scarcity economy is a theoretical economic system in which basic necessities (like food) can be produced in such abundance that they become almost free. Though this post scarcity would require replicators, infinite resources, etc.
I see what u mean but I’m highly skeptical of the claim that a post-scarcity system will require infinite resources. It’s often estimated that there’s enough food produced to feed 10 billion people, even though close to a billion of them are hungry each year
I think a UBI can be great, but like a lot of proposals, the detail is what matters. A fairly cheap UBI could be coupled with Negative Income Taxation. What's interesting about a UBI is that Richard Nixon almost implemented one.
The video talks about a marginal tax rate of 100%, but fails to mention there actually are people in the US with a 100% marginal rate, when you calculate base tax along with welfare phase out. This is the double edged sword of charity, which your suggestion avoids.
For single mothers of 3 children receiving receiving WIC, medicaid, rent assistance, and food stamps, the total phase out of benefits as income increases is more than the income increase from about $24,000 until about $80,000 per year. That is the extreme, but that extreme includes an amazingly large number of people. There are other cases with similar negative income results, but they aren't as common or as wide of an income gulf.
UBI itself is an amazingly good idea for resolving the biggest problems in modern society right now. Simplifying taxation to a flat % allows for simple and elegant solutions. Giving a flat amount of money to each person would effectively make the % taxation higher for high incomes, lower for people of moderate incomes and negative for low incomes. Also you should absolutely include under 18 in UBI, those are literally the primary people that need financial assistance. As for the 70% taxation and such, I don't see it being much more than just spiteful stupidity. If you earn more you pay more without increasing the percentage taken. By making complicated tax laws you encourage bad actors to utilize loopholes to optimize their personal benefits, such as distributing that income within their family or other underhanded ways to make it appear as if their income is lower. This only serves to hurt the competitive advantage of people who play by the rules as intended.
Fun fact: My home state passed a "Millionaire's tax" during the Financial Crisis years. After its passage, the state collected less tax from those intended targets than it had in prior years. Some of that was due to the crisis making some people no longer in the income bracket the tax was aimed at, but a lot was due to those people just moving or changing their state of residence. Additionally, there were some taxes proposed/passed on certain services designed to get money mostly from the upper middle income class and above but my home county, an extremely blue county normally happy to support tax increases to fund government programs and services, is the wealthiest in the state and suddenly started protesting new taxes vehemently as its population and representatives realized the "wealthy" in the state was no longer some nebulous other but themselves
Millionaires tax should only apply if you're earning that kind of money yearly not based on assets you own like homes, stocks and shares etc (selling them is not the same as being taxed on owning them). To many millionaire taxes are based on assets owned rather than straight income. Making capital gains equal to income taxes would be a simple way of doing it.
I highly recommend reaching out to Scott Santens (One of the foremost experts on UBI), talking with him, and making a follow-up video after. It would make for much richer content with more nuance. The largest thing missing is the "social vaccine" sort of effect that UBI could have. For example, what costs would be reduced in health care if everyone had a UBI. What burdens of society are being unloaded in other places that would not even exist if there was a UBI, etc. Love your stuff. Please consider!
My problem with this idea is the concept of lifestyle creep. All of this is assuming that the people who get UBI now have some leeway for healthcare or emergencies cause they save up that money. But aren't they likely to just get accustomed to the new 12K/year soon enough, and just end up buying (mostly useless) stuff? And then we are back to square one again. Just my thoughts on this.
@@ashwinbhat95 with healthcare, I was referring more to what universal basic income studies have shown about how having a UBI prevents people from needing the medical services in the first place. If you look up an article called universal basic income as a vaccine for the 21st century, it lists the examples as well as gives an overview of the concept.
@@ashwinbhat95 I find it highly unlikely that people below the poverty line and low-income households would rather buy useless figurines instead of, well, food, education for their kids and a place to sleep in.
It wouldn't do anything. When everyone is $12,000 richer, costs just go up to match. (Or of course, you could just have free healthcare like the civilised world)
@@broti705 as someone thats worked in retail banking for 15 years, I'd say you're partially incorrect. A lot of clients who had incomes at or below the poverty line were not good with their money, and they prioritized material possessions instead of smart spending. It's very common.
I think if we implemented a system akin to UBI, it'd be better off to go for a negative income tax bracket ala Milton Friedman's proposal. Starting from $0 taxable income up to a set amount, the negative rate dictates how much money a person gets as a % of the difference between their taxable income and the bracket's cap. For example, say we had a negative tax bracket from $0 - $40k at 30%, for simplicity. In affect, this would mean that for every dollar you earned through taxable income (up to $40k), you'd receive 30c less from government: Someone earning no taxable income would receive (40k-0)*.3 = $12,000 p/a Someone earning $20k would receive (40k-20k)*.3 = $6,000 p/a which in addition to what they earned would total $26k income that year. Depending on size of the bracket and the rate this could be manipulated to improve incentive to work at low income or lower costs to government. For comparison, imagine this bracket is instead up to $24k at 50% to minimise government costs. So up to $24k, every taxable dollar earned would only net you 50c: Someone earning $0 would receive (24k-0)*.5 = $12,000 p/a Someone earning $20k would receive (24k-20k)*.5= $2,000 p/a, which in addition to what they earned would total $22k income that year. --- One advantage of this system over UBI is that it avoids giving money to people earning large amounts of taxable income who do not need it. Another use is that this can be used to replace welfare for unemployment, as it avoids creating a system where a person can be better off financially by not working at all versus working part-time or full-time (though it lacks the advantage UBI has in not affecting incentives at all). If desirable, one may also consider it worthwhile to have things like disability and single-parenthood increase the size of the bracket, in effect targeting vulnerable welfare groups to get more money due to higher costs of living/less opportunity to earn income. One potential issue though, is the need to review people's income more frequently in order to provide the negative tax benefits more frequently rather than an annual lump sum. How much this might impact the economy (for good or bad) is uncertain, but given how automated the tax process is in advanced economies, this could prove fairly simple.
In practice, the net income effect of a UBI and negative income tax are identical. The only different is that negative income taxes have better PR and they take longer to actually hit your bank account (at the end of a taxation period, rather than monthly)
That model incentivises non-productivity. When the government makes it easier for people to consume without producing, there is simply less of everything for everyone. We already have a low workforce participation rate. Taking from those who work to pay those who don't would just further exacerbate that issue. You also have the 'off the books' labor market. Cash jobs, drug dealers. They currently qualify for welfare, and would receive payout under your system as well.
There is another economic effect I've wondered about with UBI that I've not seen discussed much. The pandemic highlighted that there are minimum wage jobs that are crucial to society. They are minimum wage because of the lack of “qualifications” needed. If people no longer had to work to avoid going hungry/becoming homeless, we could see jobs that society can’t go without that aren’t the most fun/pleasant (e.g. rubbish collection) start to become better paid. As a software engineer I’ve never had to put up with bad work environments or bosses if I don’t want to. I don’t know about the economic effects, but the social effects of everyone having more of an option to leave a bad job could see major improvements to pay and conditions for a lot of people.
That's a really good one. Taking the desperation out of the equation, "unpleasant jobs" might need to offer more than "pleasant jobs". There can be a lot of debate on whether that's a good or bad thing (why be a doctor if I can just collect rubbish?), but it does seem fair to properly reward jobs that can be physically and psychologically demanding.
Most of the low income jobs that are "critical" don't generate enough economic output to be anything more than minimum wage jobs. For example delivery drivers. How much premium are people prepared to pay for delivery? Take away the cost of vans, warehouses, fuel, taxes and other expenditure. The result is how much a delivery driver is worth. It may be deemed essential for people who have no choice but to get delivery, the old and inform, the people who work long hours and have no time to go shopping. But if they have a value of 50c per delivery, and they can only manage one delivery every 5 minutes that's $6 an hour in value. So either things must get more expensive generally to pay for them to have more money, which makes their additional money go less far. Or delivery must get more expensive which will disproportionately hit those who have no option to pay. You could try a UBI which gives everyone more money to pay for the more expensive things and thus allow everyone to get delivery and the delivery drivers get a "fair" salary. Or you could specifically target those who have no choice through illness, or childcare or work commitments and give them extra funds to cover the premium of delivery. Alternatively, you could do nothing and force delivery companies to innovate with their logistics to get more deliveries in a certain timeframe, reduce fixed overheads like fuel and truck maintenance etc, giving more money to the drivers.
That might be a problem if the UBI was large enough to live on, but it seems to be proposed more as a supplement. An unqualified person is still an unqualified person. If the only job he can get is garbage collector, the UBI might make his life more comfortable, but he still wouldn't be able to get a better job.
"Bullshit Jobs" by David Graeber, for example, does bring up the paradoxical status of low skill professions and jobs that are crucial to society yet paid close to nothing, doesn't it. I am also of the opinion that, aside from the group of people who really don't feel like working because of the UBI, the majority would do so in some way nonetheless, and the decreased personal impact of those low incomes wages could very well improve the status of said jobs on top of making them much less of a pit to work in. Some folks could also get creative by choosing to live in poverty, so to speak, to save a larger portion of the UBI and bet on making it big some time in the future with those savings. In general, though, having none or close to no troubles due to a lack of income and getting to work one's body and brain in an environment that is not shitty while making even more varying amounts of money... that is the dream. Btw, I am a junior web developer.
I think it should have been mentioned that a lot of jurisdictions have tested the UBI concept on a small scale over the last fifty-some years, and in general they've been fairly successful on their short-term timescales. In Manitoba, Canada in the 1970s, a program was tested by the tory government with a control group with standard tax practice and a test group that received a basic income and a flat tax rate of 60% on every dollar over the stipend. The result was a 5% reduction in working hours, but also an increase in school test scores in children of participating families, reduced dropout rates, and increased rates of adults in post-secondary education. The expectation, had the experiment not ended, was that the long-term effect would be significantly improved education rates and earning potential.
Yes but these small scale UBI projects don’t have to worry about the larger effects UBI would have on an economy like tax hikes and inflation. Keeping it at a small scale keeps the figures rosier than they would be if it was nationwide
The biggest problem with most of those experiments is that they are often time limited like "we give you UBI for the next 5 or 10 years and see what changes". For an actual proper case study on what the people will do, they would have to say "you get it until the end of your life". Otherwise, they'll just take the money and prepare for when it stops. Also, those experiments don't really solve the question of how the economy itself would change with a UBI.
@@maxbraddy8003 you're assuming it requires tax hikes or that inflation would be inevitable. Most governments, especially the US, could simply cut wasteful spending to pay for it. Inflation, if it happens, is usually limited to certain types of products where the supply chain is weak, as we saw during the pandemic. That increased demand and extra money eventually leads to improvements in the supply chain because businesses hate leaving money on the table.
Wait we have a long term. One of the Indian tribes I forget which one has had a ubi since legalization of gambling and it's had the same effects. Alsaka had one for decades at this point. Not a very large one but still
Of course beyond the economic aspects of UBI, one of the other elements is to look through the society at all the people making not so intelligent decisions and asking "How much of that is the result of mental impairment due to excessive stress? And would removing some of the stress of trying to survive while being underpaid improve things?"
Not just mental impairment, but stunted education. They don't have the time or energy to learn about economics or efficient living. You can probably walk into the home of the average impoverished person and find their living space is a disorganized mess, because they have no idea how to clean. Their parents didn't have time to teach them and they didn't have the time or energy to teach, let alone discipline, themselves. When they try, they blow their money on "life hacks" they find in their hunt for advice, which will just lead to more clutter, less money, and self loathing. They're also less likely to understand nutrition, leadibg to then thinking it's easier and cheaper to get prepared meals and packaged foods, rather than understanding many healthy meals are quick to prepare and they can freeze ingredients without losing nutritional value- or even what nutritional value is as a concept. Those are just a couple tiny examples, but the list of handicaps stress of poverty puts on people, and how it sets children up to fail at becoming functional adults, is endless
A few important points about UBI that I think this video missed: Removing overhead costs for welfare is still a good thing even if it can't offset a sudden expansion of welfare expenditures. UBI is usually floated as an idea for a country to do more for its people, not the same amount but through different means; it's intended to be a way to redistribute wealth from the incredibly wealthy to the other 99%. UBI is more resistant against means testing and legislative negligence. When the benefits are universal, it's harder for a political party to argue against stripping it away from needy people because of quibbling over "where the line is" for the welfare. If you index it to inflation/GDP, it also doesn't need to be consistently reviewed and updated to stay relevant over decades of support. As far as price of living goes, extending UBI to the state/provincial level could help make sure that people receive equitable payouts through the program. As far as capital flight goes, a vast amount of wealth is already squirreled away into shell accounts in tax havens. There's only so much we can do to reign in tax avoidance without international action. The bottom line is that the more developed nations that adopt a UBI, the fewer options for "citizenship shopping" wealthy expats have to look for. This is an issue for all tax reform, not just UBI.
TLDR; UBI should not be rejected as a thought experiment. Farming subsidies have demonstrated the effects on a large economy, and cash in hand aid has demonstrated the genuine benefits to individuals. Basic Payment Scheme, The EU's Basic Payment Scheme (aka SFP, then SPS, now BPS) is essentially a UBI for the agricultural economy. BPS has significantly reduced food prices by boosting the agricultural outputs of Europe. BPS has been particularly effective towards reducing the cost of ruminant meats. Research has also suggested the capital provided by BPS has reduced costs of several agricultural inputs by stabling markets. An example of the stabilisation was storage of fertilisers, and purchase histories of machinery. Direct Aid, There is many examples of Direct Aid (giving individuals money, instead of top-down aid) being much more successful for helping communities break out of poverty. Inflation, There evidence shown from both these examples shows, yes there is inflation, but it is a spike that stabilised after a short period. SFP tended to be implemented over 5 years, in the UK this was for ~10% subsidy of the economy. Capital Flight, Capital flight is way over blow, and you agree. A UBI would bring quality of life up for all, reducing social friction (increasing the feeling of safety and pleasance of public spaces). A UBI would also diversify markets (through the same stabilisation seen in the last 15 years of EU agriculture). I'm sure we can see how this increases the desire to stay in a state with higher taxes. Cost of UBI, It's expensive, and most states could only pay for pandemic bailouts because everyone was doing it. But freeing up labour markets would be huge in our overemployment age. A decade of research has debunked much of these arguments against UBI. And we can always say "more research is required".
It is worth exploring the Douglas Social Credit Theory. In this theory, the amount of National Dividend ( UBI) must not be in fixed amount to be given to the people so it is not always $1000/month but will be based on the the gap between the rate of cost/price generated and the rate of income distributed. The bigger gap, more national dividends(ubi), smaller gap, smaller national dividends(ubi) , so no gap, no dividends. This makes sense when the automation takes almost all of the jobs, the rate of income distribution will decrease therefore increasing the gap which means that more money to be given to the people to balance the purchasing power and the goods produced.
Could you look at Milton Freidman's proposed negative income tax? People often mistake it as synonymous with UBI - they are different. Would be interesting to hear your views/research in a modern context. Cheers, Patrick (I'm from NZ and we can't afford economists so I'm hoping as an educated Australian you may be able to shed some light).
@@JewTube001 the universality of it. In the case of negative tax ... people with high taxes still pay tax. It is just an easier way of making sure the money goes to those who need it.
@@JewTube001 Like Luis said, there is a poverty threshold. People above the threshold are taxed, people below the threshold receive the negative income tax payments. There is also earning incentive built into the NIT. If the threshold is $30k and the NIT rate is 50%, you would get $15k per year if your income was $0. If you make $15k, you would receive $7.5k. If you make $29,999, you would receive $0.50. This contrasts with how conventional welfare systems often unintentionally incentivize people not to take low paying jobs. They could end up with less money than if they had stayed at home. With the NIT, taking work always means that you take home more money at the end of the day. You could also write a work requirement into the NIT. So the advantages of NIT: - Inherent work incentive. - Not wasting payments on people who don't need it - Higher payments are possible for the people who DO need it. - More suitable as a replacement for existing entitlement programs than UBI.
@@heartflame503 NIT would have a lower headline cost. If the government gives everyone $12,000 it’s going to cost more than if the give everyone enough to get up to $12,000.
Great video as always. Surprised though that there was zero mention of having a potential UBI program coincide with the implementation of a financial literacy/ education program. That would make the biggest impact of anything else by far. I received expensive private education throughout my childhood and adolescence, and never learned more than how to balance a checkbook. Even if I had just learned what compound interest was in high school my life would be completely different. Teach a man to fish….
No need lol. Poor people have necessities they can't afford and debts they can't pay. The money would instantly go there. Nothing to save if you're trying to survive.
The thing about compound interest/financial literacy education is that it doesn't actually scale to the entire economy. The only way to increase average prosperity is to increase actual production. Compound interest is just a redistribution of existing resources from one place in an economy to another. That means the prudent investor lives a better life while many workers live a slightly worse one. In fact, one of the main purposes of taxation and proposals like UBI is to do exactly redistribute the gains from compounding inequality in exactly the opposite direction. This is easy to understand when you think about bonds. Every bond is someone else's debt. The interest is a long term transfer of wealth from the borrower to the lender. If your wealth is increasing without you doing work directly to create that wealth, it's coming from someone else in the economy.
Alaska has a UBI that is working out pretty well. It is not like the ones usually proposed, but I like the idea of instituting a carbon tax and dividing the proceeds up equally amongst the people that have to live with the externalities … UBI.
Alaska works because it is a tiny percentage of the people. Scale it up, tax carbon, and you're just moving money in a circle. Everything will cost more, then you get some of those higher costs back as a rebate, you end up in the same place.
Big bosses of corporations calling their prices on the products they didn't even produce is what destroying social security, inflating prices as they think that they could pocket a lot more cash is going to make poverty in societies even worse.
Great video! I have a few follow-up questions: 1. In the Great Depression, the high water mark for economic armageddon, unemployment nearly reached 25%. Once general AI reaches and surpasses the level of humans, something that could quite conceivably happen this century, even conservative estimates of the unemployment (and unemployability) that would follow far outstrip that 25% figure. What would a non-UBI economic structure look like in that scenario? You mentioned a sliding scale from "let them starve" to "free money" UBI, but it's pretty clear that "let them starve" isn't a realistic solution. 2. You mentioned that even if a UBI proposal is 100% offset by tax increases, increasing the velocity of money would lead to more inflation, but isn't that a cost we as societies have to face sooner or later? After all, there are obscene amounts of wealth sitting inactive in Scrooge McDuck-like vaults (possibly an exaggeration); any effort to re-introduce those reserves to the economy would necessarily constitute either an increase in the money supply or an increase in velocity. 3. On a similar note to 2, we have many people living under the poverty line. As noted, if they received UBI, they have needs they would then spend that money on, applying upward inflationary pressure through an increase in aggregate demand. But doesn't the very fact that they have needs they're not currently able to afford to meet mean that aggregate demand is, in a way, artificially depressed? Am I missing something? 4. If (and this is a real "I don't know" if, not a rhetorical one) lifting people currently living under the poverty line out of poverty DOES necessarily exert upwards inflationary pressure, what can governments do in tandem with welfare programs and/or UBI to mitigate the damage from that inflation? 5. You used yourself as an example when discussing capital flight. I really appreciate the frank honesty in admitting you'd likely shop for alternatives; I think most people would in your situation. However, most people *aren't* making TH-cam videos for a living. In the corporate world, yes, work from home has gained decent traction, but it's also receiving heavy resistance from leadership structures. Further, many high income earners are entrepreneurs whose businesses are not easily relocated, let alone across international borders. This is to say nothing of the realities that international relocation brings. Sure, being a multimillionaire is great no matter where you are. But, is having $100million in Somalia better than just paying the tax and having $30million in California? I'd wager it's not for most people. So my questions are: How significant/likely is capital flight as a problem in currently wealthy nations? and What can governments or coalitions of governments do to combat/mitigate it? I appreciate any and all insight on these topics; I'll even look forward to hearing you talk more about any of them in future videos! Cheers, mate! :)
@@sten260 But once AI is better at any given job, why would any company pay more to keep flesh and blood employees that are less effective than their AI counterparts? And once every human is unemployable, through no fault of their own, how do we structure the economy? Does it even make sense to call that kind of system an economy?
@@ranthria general intelligence is a lot farther than you may think and most of the best models in development only do a specific task like text completion (GPT-3) or image generation (DALLE 2).
@@jaborl Oh I know we're really not close. But we've got 78 years left in this century, and 78 years is a really long time technologically, even before considering that the rate of advancement is generally accelerating.
Have you ever considered the negative income tax model proposed by Milton Friedman? Seems like the only thing that is being talked about nowadays is flat rate payments.
A couple of advantages of a falt rate payment is the low overhead and broad social support is can enjoy. Both models are better most current systems imo, and maybe using both could work in tandem.
@@dudono1744 No. Negative income tax is the same thing as a Guranteed Minimum Income. If the GMI is $12k and has a clawback of 10% than someone earning $0 would get the full $12k, someone earning $60k/year would recieve $6k/year. It's not literally a negative income tax.
frankly I think negative income tax deserves more attention than flat rate UBI since it's a lot more affortable and the overhead for running the system is small. How that would influence inflation and CPI is something that would require detailed analysis though.
@@michaelspence2508 also a negative income tax would still benifit the middle class if the clawback is low enough which it should be to avoid 70% tax rates on the poorest citizens.
I always thought UBI should be a percentage of GDP. Higher GDP, UBI goes up. Lower GDP... You need negative feedback loops and self-correcting mechanisms to mitigate the problems with UBI (and there are problems). The question is if the benefits exceed the costs, which makes implementation key.
@@quintessenceSL I agree I think it could be easily one 5th of the gdp per capita. In USA it would be around 1100$ per month. But of course he is right doing this immediately causes inflation
@@randomthoughts6625 I don't know if I agree with the inflation argument per se. One of the arguments given in defense of UBI is since it isn't earmarked, inflation is spread out against all markets, since everyone has a chance at receiving those money dollars. Also, if there is inflation, how much? The doomsday scenario is that any welfare will immediately lead to Zimbabwe, but that's hard to quantify against existing welfare spending (and if inflation is less than overhead, you've saved money), nevermind any UBI would have to be phased in anyway to give governments time to adjust, let alone markets. There was an economist comparing UBI against traditional means tested welfare, asking what are the affects. He points out, they are essentially the same, the only real difference is where the accounting occurs (before getting benefits or after), but you've streamlined the process with UBI, saving hundreds of millions.
@@quintessenceSL no I am pretty sure it would lead to inflation. After all from one day to another the lowest income bracket will have substantially more money. But of course this should not be the final word on this topic. After all you can start with ubi of 100$ till you reach 1000$ after 5 to 10 years with almost zero inflation impact
@@narsaku1408 Wow, that has literally nothing to do with the topic. Also, "i was an atheist" tells me nothing about why you were an atheist in the first place. There are really bad reasons to be an atheist especially if you never thought it out, now you are shoving your religion into places no one cares about but from this you will get the satisfaction of being persecuted. It sounds like you are one of those people who leave tracts in place of tips. you aren't going to change one mind doing this. Just a bunch of people wishing you'd go away.
Although I'm ideologically opposed to UBI today, I understand that it makes sense the closer we get to a post-scarcity world. The entire point of an economy is to fairly distribute resources in a scarce world. If machines are mining and manufacturing and distributing far more than people actually need with far fewer people than the number of work capable adults, it would be unethical to not have UBI.
Fantastic job on this video. Very well thought out and very well balanced. Kudos for tackling a difficult job and covering most (if not all) the angles.
How is it balanced to discuss all the negatives of a program without discussing any of the positive or any of the empirical evidence from the numerous experiments that have been done on the subject. Aside from "Government spending is inflationary" and "Taxes call the boogeyman of capital flight" there was nothing of substance presented in this video.
One of the benefits of UBI that doesn't get enough attention in these discussions is what it would do to the balance of power between employees and employers. On the radical end it's much easier to go in strike if you still get a trickle of income, but on the less radical end it allows people to negotiate for better wages, or when looking for a job to be more choosy about which one they take, leading to better matches and better productivity. Also from the employers side, the laziest prospective employees will choose to live of the UBI perhaps supplemented with family support or something, which means the pool of employees becomes a lot better, making hiring less difficult and stressful on both sides. And I have done both and it sucks to have to hire someone. It also sucks to go through the interview process.
Your first point mentioned why nixon family assistance plan failed. I have a law of economics of my own: poor people won't work for slave wages if they have government benefits.
Excellent video. Huge fan of EE! Sometimes I ply episodes that relate to topics I am teaching in my High School Business classes. Thank you for the Content!
@@_Wombat Very true, however perhaps the better way for EE to approach this would be to mention the studies as well as their shortcomings in order to be thorough?
The reason why many people would like and support the idea of a universal basic income is that most people agree that a basic human dignity should be granted to everyone and that everyone should have the opportunity to live their life freely with lots of options instead of being forced to work in low-wage jobs just to survive. Thus, my very simple and direct idea as a counter argument to the inflation problem you raised regarding the UBI, is to just make the basic needs of everyone as close to free as possible, while also giving incentives to be productive. If everyone had a simple home (maybe 30-60 m² for single households?) available if they needed or wanted it (without huge amounts of bureaucracy and income or property proof) as well as free healthy food and water (luxurious food would not be included, like alcohol, caviar and a lot that isn't basic), I believe it would be just as good as a UBI. It would be good enough to live in such a small apartment for quite a few years, but not good enough that you would want to stay there if you had the opportunity to move into a bigger/better apartment or house in a better location. If those free apartments then also had different classes (worst to best) which you would get based on (your) need and service (you bring to the country), I believe it might be possible to create a system where not everyone takes advantage of free housing (you would have to actually live there to have one) and people do their best to move into their own housing once they can afford one, despite the free housing not being terrible. This idea is a bit idealistic and still has many problems that need to be solved when implemented in real life, but I believe this has a greater potential than UBI.
This leaves out a large number of important considerations: 1. Tax flight - there is plenty of research on this and we have a pretty good idea of how it scales. While it lowers the expected income of larger tax raises on top earners somewhat, it still leaves plenty of net gain up to around 70% top tax rate. 2. Further cost savings resulting from UBI. Especially factors like public health, crime, and education greatly benefit from financial safety. The whole country becomes more efficient, beyond the immediate benefit of saving on the (often excessively large and expensive) means-testing bureaucracy. 3. The far more complicated nature of inflation, which more often does not behave according to the simplified ideal of "supply and demand of money". In reality it is more often driven by other external influences, such as the Ukraine war, or driven by financial decisions of the wealthy far moreso than by the finances of low income earners. Industries that cater to low incomes are also extremely price competitive and tend to have far lower inflation, so general inflation figures represent its dynamics very poorly - unless it is influenced by external factors like the labour and shipping situation during Covid or the supply issues caused by the Russian invasion.
@@SerErryk I think you might need to re-read "capitalist and freedom" ;) Personally I think the only thing Friedman has ever said that stands today is that the military should not be privatised. Literally everything else is questionable, to the point that even the IMF has abandoned their policies like MF's.
UBI and NIT are essentially the same policy. EE's criticism of NIT should be exactly the same, but EE's criticisms are weak because he presents no evidence whatsoever that inflation or capital flight will be enough to counteract the numerous observed (in actual studies/experiments) and expected positive effects of UBI on either the overall economy of the jurisdiction or people with low incomes. You could literally replace UBI with the public school system, which allowed the US to become a dominant global superpower with a relatively educated workforce, in this video and you would be forced to conclude public education would somehow hurt the economy based on EE's arguments.
@@rileynicholson2322 I’m actually a big fan of the idea of UBI. While I’ve seen some studies performed that resulted in net benefits, sometimes those studies leave out whether the overall number of work hours dropped or not. But let’s assume that people worked the same number or hours or just didn’t have to carry 2 jobs, the question is how do we pay for it all? If you tax the rich, they’ll just leave. If we raise taxes on everyone, then theoretically it’d be the same amount of money going in as going out. I haven’t seen a version of UBI that can realistically pay for itself. If you have any studies though, please send them my way. Again, I’m a big fan of the idea, I just haven’t seen an action plan for implementation that gets down to the nitty gritty of who pays for what with the exception of Milton Friedman’s negative income tax idea.
One thing most people don't talk about when it comes to the ubi is that more people can take out larger debts at lower costs. If a government garuntees ur income any Banker will be crazy not to give u that loan and they will just take part or all of the ubi to pay it off over years. It will single handedly destroy the predatory debt industry.
kind of moot if it causes inflation, because lenders are looking at your ability repay debt, if cost of subsistence goes up then that's just subsistence money and you need more than that to pay back debts. be nice UBI did lead to higher production and entrepreneurialism but we're not sure if it would do that.
@@JewTube001 inflation is not only determined by the supply of money but also the velocity. Let's say a bank gives you a 5 year loan backed by ubi payments. Since it's backed the interest is likely low and u get almost 5 years of subsidence upfront and since the ubi u are getting from the government is being used to pay off the debt velocity and supply will decrease.
If we ever get to the point of needing a UBI it will be past the point of job lotteries when a significant amount of industry is fully automated and people can't easily find work. It will be much easier to implement a UBI in a command economy where the government has a significant control over what is being produced and can set prices of goods. Otherwise, companies will take advantage of a UBI by raising prices to meet demand. A UBI has a disadvantage of making money less scarce and therefore less valuable.
8:00 in the USA, if someone sells their company for a lot of money let’s say millions or more, depending on a variety of factors they’d probably pay 23.8% or 20% on all or most of that capital gain as opposed to 15%.
@@sprinkle61 I mean general (life, health, disaster, agriculture, etc) insurance. An insurance which will have a safety net for those who face adverse situations in their life. Corporations can still provide their own insurance schemes as this UBI would cover only the basic level and people will be more than willing to pay more for added security (provided if they have money).
I only believe in ubi IF you remove the perverse incentives. Means-testing creates the perverse incentive for people to stay below a certain income level/ remain under-employed/ work "under the table", etc. "universal" should imply everyone gets it no matter how much money they earn but that seems to get lost in the pilot programs, (and most welfare programs in general tbh) I also like the Negative Income Tax idea, as this also seems to eliminate the perverse incentive to remain unemployed/ under-employed.
Technically, anything with means-testing is not a UBI. It doesn't qualify on universality. Negative Income Tax is nothing like UBI because it's not universal, it requires a lot of bureaucracy, and it requires filing/applying for it. There is no perverse incentive to remain unemployed/under-employed with a UBI.
UBI payment amounts should be linked to GPD so there is a feedback loop linking the payment, productivity and the number of people choosing to work. It should also ramp up slowly over 10 to 20 years to allow the economy to adjust organically
@@calebromo1 Incorrect Its only been tried once and only once. Finland What happened? You obviously are unaware of the singular only relevant piece of data. Which makes me wonder why you comment with no data or math to backup your opinion?
@@calebromo1 Well, i wasnt 100% correct TECHNICALLY it was tried on Canada for 2 years but called CERB as opposed to UBI The result was even more extreme than the Finland experiment The resultsnt loss in government revenue was exorbitant to the point where Canada is now the worst performing Civilized Economy on the planet due to inflation, skyrocketed interwst payments and the resulting government cuts to remain solvent. Although not called UBI, the description and reasoning behind the payments checka all the UBI boxes. So i digress, 2 exampmes
@@adrienwatson2179 Do more research into the math behind the economic. Quoting single points of situational attempts, is not the same as doing the math on. Your argument is using typical political logic to back your bias. I don't care about red or blues pathetic claims to economics using none repeatable data. Again, do more homework. I'm not your teacher, do your own work and check your bias at the door if you want the truth.
The solution that has come in on the research that I haven't seen many people talk about is wage adjustments. Because everyone on the lower-earning side would have a survival budget supplied by the UBI the businesses could pay less in wages. Survival would be covered by the UBI while employment becomes a source of quality of life and luxury access. In this case, the wage expenditures go down for employers of unskilled labor for example. If an employer is supplying a full budget of $3000 per month for the employee they would then be able to pay $2000 per month under the UBI amount from the video knowing that the employee has the same buying power. The difference can now go toward other budgets within the company with the possibility of growing the value and return of the company as a whole. This would lead to more small business entities which have historically proven to improve economies and function as the "backbone" of growth and stability.
When I think of the UBI, I think of that study on how much money a person has affects their happiness. If we took the figures from that and used it as a border. So, for instance, once someone earns more than that figure, half the additions go back to the government? I feel like something like that might help, at least a little bit.
6:24 Basic universal income wouldn't remove the need for other welfare systems and their bureaucracy, but it would allow said bureaucracyto operate with lower funding and fewer rules and still provide something for those that would otherwise fall between the cracks of the system, and it would make getting a application handled less urgent.
"As economists, we should always be stress testing ideas to make the lives of economic participants more comfortable" This is such a mild-seeming statement, but it's actually a massive condemnation of objectivists and libertarians. The ones who would shout from the rooftops if literally anything was tried in order to balance the books and/or living conditions of normal people. That sort of thing might cost them a piece of the money/power they receive just for owning capital! There are so many anti-progressives and reactionaries who choose to shrug their shoulders and say things like "It's too complicated to fix" or "It works fine for me, you must be the problem". When sentiments like that are so common, it's understandable why radical anti-capitalism is increasingly popular among young people. Here, though, it's so refreshing to hear even the most basic of progressive ideals stated as a given by someone who analyzes the world as it is. It makes me feel like the drive to build the best systems possible should be taken seriously and not dismissed out of hand. If economics is a science, it should have the goal of all science to push the boundaries of human understanding! Thank you for taking the time to reason through this thought experiment and sharing your "results". You are doing good work, and I hope you never have to leave your home country just for a better tax rate. 😆 Cheers
I would find it interesting for this channel to cover UBI's little sibling, negative income tax. Creating an income floor for a society. The main problem I see with this is the political will required for getting everyone on UBI is much less than a negative income tax. But it seems like a topic that would be interesting to explore
The only practical difference between UBI and NIT is that UBI is a stable source of income, but NIT requires you to do your taxes to get the money. If your comparing NIT pasted onto the current tax system vs a monthly UBI for the same amount, imagine what happens if you lose your job. If you lose your job with UBI, you still get UBI. It's a stable and predictable source of income. You don't have to do any math to figure out how much you'll get for a given month. If you lose your job with NIT, you get nothing until you file your tax return at the end of the year. You'll have to take out a loan to access that money and pay it back after your tax return, which is a hassle and allows a rich person to extract some of your NIT payments in the form of interest. The problem isn't as severe if you evaluate taxes monthly, but that would be a nightmare for anyone with multiple sources of income or otherwise complicated taxes. So, to sum up. The net cost of NIT is the same, but it's less administratively efficient for both user's and the government. It's literally just a worse policy. Assuming you have the typical proposal for negative income tax. If it's progressive in some way, you have the same "welfare trap" problem as other means tested programs.
The problem is the more recent experiments and trials were not of UBIs. They were toned down versions which the early experiments showed didn't work. Therefore all the recent experiments haven't delivered the results promised by a ubi.
@@StuartChignell well that was very general. Can you give specifics because the research papers I have read does not show that. Which research are you comparing. And if UBI beginning experiments did not work then why in scientific method would they keep retesting it? Even Einstein would call that insanity. How about the practice of refinement and narrowing down which variable was the factor that provided success because as a society I imagine we want a successful society where needs are met and not economical tyranny like we had with royalty and slavery.
The UBI should be planned in multiple countries at once. And together with implementation of 8 principles of Creative Society. Only in such case it will work well for sure.
My understanding is that the only thing Universal about Universal Basic Incomes is that it increases the frequency and duration of unemployment, presumably because there is less drive to get a job immediately when you've been laid off, and the barrier to exit an employment agreement (for both employer and employee, but primarily for the employee) is much lower. Basically, people are more likely to quit when they feel their job is too whatever... too stressful, too boring, too demanding, too dangerous, too not-at-home-playing-video-games, whatever. This was shown in the Indiana experiment by the department of labor, San Francisco's now several attempts at a UBI, Denmark and Sweden's attempts at something approaching a UBI, etc. The only ones that haven't had this problem, theoretically, are the Communist countries where you didn't get to "quit" your job, and even then, they had different problems... much lower worker efficiency, for example.
@@cassiecaradoc2070 I have not seen it increase unemployment. I have seen it increase entrepreneurship. And considering there are less than 10 nations that are communist and those nations have not done any UBI experiments, makes me go hmmmm. Since I have lived in San Francisco, I have never once seen any attempt at UBI where it is a universal Basic Income meaning there is no means test. I have seen reduce drug and alcoholism, increase health and mental health, decrease unemployment, increase entrepreneurship, decrease.suicide.
part of UBI is you're going to get rid of most of your individual social programs, which would at least make it more efficient to get money to the people who are already on or should be on these programs, but since you're expanding the pools to everybody the overall cost goes up
This is NOT true.. The libs want UBI to be inlcuded with all of the others free welfare handouts.. People will literally have enough handouts to never have to work.. They can just lay around and smoke pot and opine on their love of Che Guevara and other murderous socialists.
UBI will likely become possible through the increasing automation of labour over the next few decades. By taxing the labour of machines and AI, a lot of money would likely become available UBI should be structured based on your qualifications though. That way we can continue to incentivise education
Please keep in mind that no welfare system is perfect, and speaking as an American who was below the poverty line my whole life and did not qualify for all the support we needed, there are people who fall in the cracks. My family ended up with nearly $50k in credit card debt, to us clothed and fed. We did not dare get sick enough to need a doctor... at least my parents didn't. They were able to get me on Kid's Care, but that still meant the sliding scale (which was still generally more than we could afford). Because my mother was a substitute teacher working in multiple districts, they required her to provide stubs monthly to determine our eligibility for the next month... so we qualified sometimes, but the months we needed it the most, we did not qualify. I like the idea of a UBI, but we need other things with it... namely, tax incentives to businesses that provide a living wage, a ceiling on inflation levels, rent caps or relief, Universal Healthcare, Proper funding for public works.
You covered the argument that ubi would disincentivise entrepreneurs, but one of the arguments for ubi is just the opposite. If people didn't need to work gruelling hours just to survive we would be in a much better position to start our own businesses.
I disagree. If you have a basic income that covers your expenses, you have no need to start your own business. I'm a Dane and although we do get money from the government for studying, we barely get enough to survive, so if we want to earn more, we have to take a job or get creative. With the inflation it's practically get a job or get creative, as massive debt isn't exactly alluring. Furthermore, the money that students and less fortunate citizens (such as the unemployed, elderly and handicapped) actually get from the government, isn't something everyone gets and its set at pretty much the bare minimum deliberately, in order to scare people away from choosing that option. Taking any kind of education, even the lowest paid one, will still yield twice the income of what's obtainable through welfare and most of the time, it's 3-5 times as much. And the ability to go from zero to everything, without everyone getting that tad bit extra (only those who need it the most), has enabled far more to get creative in their attempts to earn more and get a livable life, rather than scraping by. Starting and maintaining a business requires a mindset of its own, as there will be no one handing you money when running that. Wanting a UBI with the excuse of making it easier to start a business, is the wrong mindset. No one will come to you and give you anything. You have to do everything yourself, especially in the beginning, as in the first few years you will have to work all the time, in all your waking hours and never take a day off. A UBI won't make that easier either. The competition doesn't get easier with a UBI. It'll most likely get harder for those who expect someone to come and help them by injecting money into the business. That won't happen. Everything is of ones own accord and it is way, way harder, than scraping by with a 9 to 5 job.
@@Arterexius a UBI would not stop all the real entrepreneurs. This would not stop small businesses nor medium sized businesses from being started. I mean YOU may think this way, but others do not. No one survives on 1k a month, and the fact you don't get that is what keys me in to you being out of touch on the subject.
@@CaseyTheBrash I'm not out of touch on the subject, but it's pretty clear from your comment alone, that you actually don't have a clue about how economics, capitalism and businesses work. A UBI won't benefit entrepreneurs. Especially not if you insist on making classification between "real" and "fake" entrepreneurs, as there is no such thing. You can't be a fake entrepreneur. You're either an entrepreneur or you're not. There is no middle ground in a world where you either make money or you lose money. The entire purpose of starting a business, is to make money. The entire reason a business have for existing, is to make money, regardless of how big or small it is. Throw in a UBI and you remove the reason to start anything. You have no reason to start a business to make money, when you can just take a 9 to 5 job and make whatever extra you need on top of the UBI. Entrepreneurship isn't about making new things or any of that fancy other stuff that's always mentioned. That's all just marketing. The real purpose is to make money. And to say I don't get it, is to miss the point entirely. I'm a Dane. I'm literally from a country that have a welfare system which pays a "UBI" to all the elderly and the sick who can't work, the workers who've lost their jobs, the students who's currently under education and the few who've fallen out of the education system and needs financial support until they can get either an education or a job. If that day never comes, then they'll just remain on the "UBI" But our businesses doesn't get a universal, basic income and the entire country's business owners, large and small, doesn't want it and neither does any of the entrepreneurs. They even use the same reasoning as I wrote. So now you have a problem. You gotta prove that an entire nations business owners, large and small, doesn't understand what it means to run a business. I'll be looking forward to that. As a final note, our businesses can seek loans, grands and tax cuts from the government, if they're in a rough time and needs some leverage. During the Pandemic, our government lent hundreds of businesses money throughout the pandemic, to help them stay afloat and make it through to the other side. There's no need or reason for a UBI in business. If you think so, you simply aren't thinking creatively enough.
@@Arterexius you literally refuted your own talking points. A UBI would not stop entrepreneurs. It was a false statement the first time you made it, it still remains such. The assumption you make is based on internal feelings you hold, biases you promote and subjective reasoning. Sure if all humans reacted the same way to UBI you would, maybe? You comparing any EU country to America makes me give you the side eye on your dismissive statement I know nothing about [INSERT WHATEVER YOU SAID HERE], Because quite frankly, that's laughable. Any and every single business in America takes whatever tax cut they can get. The larger you are in America the more subsidized you are by tax dollars. A UBI would just be one more tax break for them and they would take it. So yeah, forgive me if I ignore 90% of your apples to oranges comparison. I still stand by what I say, the money involved is not enough to dissuade people who would have the drive to enough to found their own businIss. It's absurd to even suggest it. In fact, it would present greater opportunities to people less fortunate. If basic needs are accounted for risk aversion becomes less of an issue and people would be willing to try more ventures. You think you may understand America, but you don't. Our "capitalist" system does more to hold us back than promote us. Side note, right wing people in countries that promote leftist ideals preaching American propaganda to Americans is weird. Let's not.
The world always needs more discussion on topics imo. Just "discussion" and not random off the cuff thoughts. My one issue with the flat payment is location living costs. It really needs to be tailored in some way.
They're functionally the same. Having a 50% tax rate and paying a $20k rebate has the same effect as paying $20k and taxing everything else at 50%, or paying $40k and taxing all income at 50%. Either way you're left with $20k plus 50% of everything else at the end of the year, it's just a matter of what order it happens in.
Once AI and robotics truly become good enough to begin replacing humans in the economy en masse, two things will occur: 1) The governments of the world's advanced nations will have no choice but to begin creating payment schemes based on IQ. Fundamentally, for example, if any person with IQ below 100 can be replaced with a robot in any job which they can conceivably be trained to do, then this person is de facto disabled from birth. But this person is still a voter. So... These schemes will, perforce, rapidly take on the character of a UBI, especially if the prowess of AI keeps increasing until the majority of people around the world are unemployable. 2) The cost of goods and services will simultaneously drop through the floor. Robots don't get sick, don't have bad/sad/lazy days, don't take vacations, don't have children, can work 24/7/365, etc, etc, etc. So, suddenly, the cost of manufacturing a good begins to asymptotically approach the cost of raw materials plus energy. This means that a UBI will actually become affordable. Basic food, housing and clothing will suddenly be so cheap, that it will not be a problem to provide a comfortable baseline living standard to literally every citizen, regardless of their social position.
I'm convinced that UBI requires some more radical changes to be really viable, like substituting ALL taxes with an unique tax appplicated to all circulating money similar to what Gesell proposed as "expiring money", focus the government on laws and less on regulating market and others. Interesting ideas have been proposed by Giuseppe Bellia in his Anthropocracy concept, but unfortunately it is almost unknown.
If a UBI would transfer capital from wealthier people to poorer people and increase spending (since wealthier people spend smaller proportions of their incomes) thus also increasing the velocity of money, wouldn't that be a good thing? Yes in the short term there would be demand pull inflation as the economy doesn't produce enough consumer goods but as production tilts from higher value goods like sports cars & jewelry and financial instruments (wealthier people spend a higher proportion of income in investments) to consumer items like groceries & kitchen utensils, inflation would slowly decline In this case, it'd probably be best to introduce UBI slowly to give enough time for the economy to adjust to demand changes
There's a number which bugs me in this. It's that the US would only spend .5tr $ in "welfare". A UBI wouldn't only replace welfare expenditure. It would replace any form of direct gov payouts and subsidies up to the value of the UBI as well. Meaning most social security and many forms of tax breaks as well. UBI doesn't mean slap a handout ontop of the current system - it means a fairly comprehensive overhaul of social security, welfare and tax system, reducing bureaucracy across the board and reducing the need to use taxation as a bludgeoning tool on the economy.
One thing that you missed is the changes to economic efficiency caused by economic redistribution. A lot of people are effectively priced out of the job market, because they’re in a desperate position that forces them to make very short term decisions. As seen in Northern Europe, raising the baseline causes more people to have the capacity to persue advanced educations and start businesses. It also changes who is employed: students and single parents will work less, and their jobs will largely go to existing unemployed people. Also, removing gatekeeping systems removes work from both ends of those transactions: people spend a Lot of time engaging with systems trying to prevent benefit abuse, and not doing so frees up that energy and time to let those people better care for themselves and improve both their lives and their ability to contribute
I really loved the idea of an UBI but I was concerned for some of the same reasons you brought up in the video (mainly inflation). It's sad that you reached a similar conclusion to what I did but it's nice that now I'm more well informed.
The inflation argument shouldn’t be taken too seriously. All welfare programs that target poorer people are inflationary for the same exact reason. The inflation is purely demand-driven, meaning the fed could control it with monetary policy.
This video isn't really informative. It's a bunch of misleading political arguments couched in the language of first year economics classes and presented as indisputable despite a complete lack of any actual evidence being presented. I suggest you watch the video again and replace UBI with some other government program, like public schools or roads, and see if the arguments are still convincing.
That seems like a surefire way of encouraging some people to do nothing. Specifically, those whose skills would only land them a job slightly above the guaranteed minimum income, while costing them time.
GMI just seems like a mix of UBI with what we have now. It wears away at some of the advantages of UBI and negative taxation so I'm not sure what it brings to table that we don't already have.
What you're highlighting is the real reason ubi won't be implemented: poor people won't work for slave wages if they have government benefits @@guncolony
Very few people talk about a negative income tax. For every dollar you make below a certain "basic" amount, you get paid a fraction of that amount. For example, a 50% negative income tax set at $2000/month would mean that for every dollar less than $2000, you get 50 cents. If you have no income, you would get $1000/month. It incentivizes work as much as you can because even if you earn $1, you are 50 cents richer. Something that people forget is that it also helps with entrepreneurship. Well, any social safety net does. People are more willing to take that risk of starting a new business if they know that there is a safety net if they fail. And, to a point, the better the social safety net, the more willing people are to take the risk.
We have to make the change from a consumer society to a needs society. We have to do this together. And we will all feel better after. The Universal Basic Income is one step in the right direction to end poverty. An other thing is a Health Insurance for everybody and Studying has to be free for everybody.
Many folks have no healthcare. If Yu can't be healthy and need doctors then we can't get decent jobs.any need mental health care and basic ins. We also need to plan getting off benefits down the road. When we reach a basic subsistence level we can pay more taxes and pay for our own ins. The ins needs to be expanded under. A. C. A. Get a clue America we are becoming a s hole country whicheads to revolution and we don'tean trump ste take over who h benefit him and family of crooks.
you could means test anybody or just make laws to hobble people you don't like. doesn't really have anything to do with UBI as a policy. especially since U part. GMI is the one where you're suppose to exclude some people.
The heart of the UBI proposition is that people naturally want to be productive, but the profit motive makes all endeavors that don't serve the interests of the rich unviable.
One similar proposal I have heard that is much cheaper is the minimum guranteed income. How it works is each person is entitled to a minimum income and this amount slowly phases out as your income grows. I think this could work as long as the clawback rate is less than 30%.
That would partially solve one big problem with the UK's welfare system, wherein if you're claiming unemployment benefits and manage to secure part-time or one-off work, they simply subtract your meagre income from your benefits, usually negating them (since the benefits are roughly equivalent to what you could scrape together doing odd jobs). This massively disincentivizes people on benefits to actually take small steps to finding work, since the choices are: stay on benefits and receive £x, or do work and receive £x.
@@ThomasVWorm a UGI is a lot more transparent and involves less overhead than sending everyone money you'll just take back later even if the net effect is the same (and the net effect is not necessarily the same due to how marginal tax rates work)
@@ThomasVWorm perhaps. I was thinking more about overhead in terms of collecting, managing, and sending out a bunch of extra unnecessary money to people who would just end up paying it back (which they also have to predict and manage and save until tax day etc). But it's true that there are things to consider either way, like for example deciding what interval matters for determining each person's payment, and how they'd file for it...
With this low earning workers would just quit. The unemployed would be discouraged from getting jobs. Why bother when you get the same $ anyway? The difference between working and not isn't the money you'd make. It becomes the money you'd make minus the guaranteed income. So unless the job really paid a lot, why bother?
I'd suggest we reduce taxes first before even considering UBI. The less money taken out of your paychecks, the more money you already have (and your average low-income earner is already out almost $10k to $30k by the end of a year due to taxes).
The upwards pressure higher consumption has on inflation would be a valid point if the country has no idle productive capacity, which most countries do. The thing that really drives that consumption inflation is the wildly large profit margins modern companies employ.
I think UBI could be implemented by giving stocks or ETF units to every citizen. That way, whenever the corporate sector increases profits due to automation, then public gets dividends. And companies included in the ETF, could get some incentives, that helps them grow.
Doing this would create a lot of inequity in the business market (between big companies who the government was buying up shares of to spread around and everyone else), and catastrophic systemic risk during a downturn (by making the welfare system dependant on the performance of the stock market).
Thanks for covering this very interesting topic. In Susskind's book A world Without Work, he talks about the Value system and satisfaction 'work' provides us, which a UBI could not provide, notwithstanding the other problems you mentioned like inflation etc. He instead proposes a 'CBI' (Conditional basic Income) which made alot more sense to me, if a BI is needed at all ! Additionally, Like you put so well, it's a fascinating topic to think about. In some ways, the UBI via the the Covid stimulus was a big joke, as to what it did to the economy and the world. Instead, I liked my country India's approach, where money was instead injected in strategic areas to stimulate demand, and it shows why India is performing relatively well (but it may all get undone if the current FDI outflows continue due to strengthening dollar). Thanks for what you do !
Ahh yes "a world without Wok" a true classic, I remember reading it while studying gastronomy, it really depicts how dystopian the world would be without Chinese food
Even after over 30 years of research into UBI, it still requires consideration from a broader vantage than existing economic theories and monetary policies. Never seen a study that shows negative results for UBI (though some studies have been wrongly interpreted that way), but the fact is that until it's done at scale, we just don't know for sure. As for inflation, oh my, so many factors. However, the percentage impact which US government checks have played on US inflation certainly seems minimal compared to supply chain issues and profit gauging. As such, I remain in convinced that inflation on a properly taxed and managed economy would immediately result in inflation. Then again, when basic nessecities like housing and food are viewed solely as markets where profit I king, then any opportunity for raising prices will be taken. It might require more 'controls' to stop runaway inflation. P.S. As someone who followed Andrew Yang's campaign with a lot of 'skeptical/hopeful interest', I think he certainly got to the point that he truly believed it was not only minimally possible but practically possible, though he always knew it was a long shot, to get UBI to happen.
I am a supporter of UBI in some form, so it was nice to get a sober critique on it. Now, you base your analysis on the US economy and the cultural specificities there, but what about other countries such as the Scandinavians? There has been done experiments with it in Finland that seem to prove very succesful, with the most significant change for the test subjects was reduction in stress levels leading to better health and therefore less strain on the universal health care system (savings). I would very much like to see another video on the subject that doesn't focus on the US :)
It only works in homogeneous societies where people have the same values. If your population is diverse then it does not work because the lazy take advantage
Also, I'd like to offer some counter-criticism: I don't think in this case that a UBI would increase demand in the way you might think. As you assert, the main beneficiaries would be low income groups who already struggle with paying for utilities, insurance, etc., and as opposed to stimulus checks, this might rather put out a safety net under those groups. Also, like I mentioned above, additional benefits to the economic system would lie outside of direct spending on the UBI, since it would affect other parts of the economy as well. So the potential government savings would be present across the board. Less sick days would also lead to higher productivity and thus revenue for private and public enterprise alike.
Those experiments were designed to succeed, they can't be considered "realistic" as there was no way for them to fail (they were politically driven to reach a predetermined result, not a real one). They only permitted a select number of people (< 1% of society) to take part. This avoided hyperinflation and it meant that everyone else would pay for it (via taxes). The moment you try to bring this into use as a real UBI (i.e. for everyone), the whole thing fails. That's just basic economics. Also note that Finland and the other Nordic Countries are very highly taxed (one of the main reasons most people move away and why most businesses never go there).
Agreed. A lot of this video was very US-centric, while I am most familiar with UBI discussions in the context of UK and EU. Eg: I remember reading years ago that, in the UK, a poverty-line UBI could be completely paid for by completely replacing several existing benefits (eg. unemployment, pension), including firing the relevant admin staff. I had also heard that the experiment in Finland was widely viewed as a success, but it's not even mentioned. Even looking at the US-centricism in the video, I think there's a lot missing. Eg1: Most discussions of UBI that I've seen suggest that the aim is to raise all recipients above the poverty line; $12k is not enough for that in most/all of the US; so the monthly amount would need to be much higher and also explicitly inflation-linked. Eg2: The implication that higher income or capital gains tax is the only possible way to fund UBI is a bit of a strawman - there are also corporation taxes, and it would make a lot more sense to raise those if you're worried about the impact of automation. (It would also be a good idea to remove the US-specific loopholes that encourage international corporate tax avoidance, eg. the fact that companies expect that there will be amnesties about once per decade that allow them to repatriate overseas profits virtually tax-free.)
A really important argument for UBI that you didn't really address is that UBI recipients would be more likely to start business and produce goods and services (as shown in many trials). Whether or not this balances out the inflationary effect isn't knowable without implementation.
@@XMcBainXUSA people aren't lazy parasites. So no it wouldn't have the opposite effect(as proven by so many experiments and studies) because people want more than just the minimum amount and want to live life and not just skid by.
@@MrTophatcat that's obviously not accurate. There will always be plenty of people who want to do the absolute minimum possible and our brains are (rightfully) geared towards that as well. A good example is during lockdowns, people wanted to improve themselves with their spare time, but many people ended up becoming less productive even though they didn't want to.
@@jayasuryangoral-maanyan3901 Thanks for necoing an old comment chain but evidence supports that generally work either remains the same, is reduced slightly, or improves . For example, the Netherlands they did a UBI-esq test to see if fewer rules on getting government assistance had any effects and work suppression was not one of them. Or in Madhya Pradesh india where they found that "According to the first communication of the pilot projects, positive results were found.[31] Villages spent more on food and healthcare, children's school performance improved in 68% of families, time spent in school as well as personal savings nearly tripled and new business start-ups doubled.[32] The study has also found an increase both in economic activity and in savings, an improvement in housing and sanitation, improved nutrition, less food poverty, improved health and schooling, greater inclusion of the disabled in society and a lack of frivolous spending." (socialprotection-humanrights.org/wp-content/uploads/2016/04/Indias-Basic-Income-Experiment-PP21.pdf a more academic source if you don't like Wikipedia ) Obviously those are just two I found on Wikipedia(not the best source) but if there was solid evidence that UBI reduced the amount of people working then God knows people would complain about it loudly.
An honest discussion about a universal basic income should probably be a multidisciplinary discussion. Only looking at it from a financial perspective is a bit hollow in my opinion. For example I've read some examples where giving poor people UBI for only a couple of years makes them use a lot less alcohol and drugs, take better care of their children, start new studies etc which while being positive for the economy in many ways also makes a country more humane and lowers stress levels (and all consequences of high stress because of not knowing if you can pay next months rent for example). One of the problems in my country with the welfare system is that there are a lot of strings attached that add a lot of stress to one of the most stressfull situations a person can find themself in, not having the money to pay for their basic needs (food, house etc). I think UBI or some form of UBI could be part of becoming a more humane society.
The real reason is poverty is a feature of USA. Conservatives oppose welfare and ubi for they destroy work incentive, by what is actually meant is the incentive of the poor to do the needed dirty work when the wage from work is smaller than the government grant
Id be really interested in seeing a similar video on the economics of "basic" as done in the books of "The Expanse". Honestly, just a discussion on the economics of that world would be fascinating.
You do realize that the "basic assistance" is literally dystopian and wasteful in the extreme? People who are intelligent and eager to learn and become productive instead spend decades eking out a shitty living waiting for the chance to get the training/education they need to actually work a job. It's insane.
@@Raptor747 It's likely the root the world will go down, also it seems a bit dramatized in the show with that homeless doctor guy on a waiting list for 14 years. In the Expanse universe half of the population is working and the other half is doing nothing, that leaves enough spots for anyone who has motivation to be able to work and advance their standard of living, you only need to be 51st percentile. Half of the population isn't productive or cares about work in this world anyways, this will become even truer in the next 20 years as automation winds up further and will hit like a truck when big employers like transportation are automated in the next 5-10 years.
Another great video. It seems to me that workplaces are becoming more automated but the workers are not sharing in the benefits of the automation. I am currently in the process of automating my own job (We are under staffed so I will just do other work). I’m not complaining about my situation but hypothetically, in a completely fair world, I should make more money or be able to work less for the same amount after automating my position. In the real world I will continue doing just as much work at the same rate while my employer takes the benefit. I make a comfortable income and have little room to complain but I think it is interesting that I am a micro example of the macro problem.
This has been a long term and broad trend (at least in the US). For decades the overall productivity of the American worker has risen while their wages stagnate.
As a business owner who has automated several positions in a very literal way, the money saved by automation is usually dumped right back into the company. Who took the risk and invested the capital of pursuing automations? The employee or the employer?
@@kylendmiller Nice point. And who gives the employer a chance to make their risk pay off? Surely the individual investor/employer is not operating everything by themselves. They are entitled to the biggest gains for sure. Doesn't mean everyone else is not due at least a minor fraction of that.
@@victormendes956 I understand what you’re saying… But I think you are wrong. there is a simple contract between an employer and employee with the only benefit being a paycheck. If the company goes under, should the employee have to help pay for all of the equipment?
@@kylendmiller a musical conductor is nothing without his musicians. Remove your workers and your company ceases to function. Workers grow less tolerant of this uneven balance of value as it becomes a question of endless toil to make money for someone else while not even being able to make ends meet.
5:50 UBI payments being below poverty line is not an issue. UBI is not a get-rich or remove-personal-accoutability scheme. As you said on 14:54, the solution is somewhere between those 2 extremes. UBI being a helping hand is all it needs to be. It doesn't need to be a free pass for a comfortable lifestyle. It's fine for someone relying solely on UBI to be below poverty line.
Your point cannot be stressed enough. UBI should not be meant to single handedly uplift someone from poverty, hence it should be below the poverty line. Thereby individual are incentivize to work to really improve their standard of living. Yet there are sufficient benefits to UBI on the micro level -- 1 parent may choose to not work (full time) and take better care of children/family (a point being parenthood is not rewarded by the current economy, yet so important), taking more risk in entrepreneurship or creative endeavours, etc.
@@TechnoMinarchist universal basics are just that. Poverty line is not necessarily "not being able to afford water+food+electricity bills" (as in, ALL of them), it's often much higher or lower, depending on how someone defines this. For my country, the poverty line could be as low as 1200 PLN for 3 people family (minimum subsistence level) or as high as 2500 PLN (social minimum, no clue what is the English name, this covers all the basics plus social contacts, a job - eg. commuting - etc.)
This idea that we can’t have comfortable lifestyles unless we grind to death is a brain wash tactic. Should everything be given? Maybe, maybe not. But I encourage you to think about where the idea that we can’t be comfortable without “work” comes from. We should guarantee a certain decent, and comfortable, living situation for everyone, because it is in fact within our means to do so. I think the real thing UBI gives people, is their time back. And time, gives us the capability to look for happiness, fulfillment, personal growth, and spark human creativity; which is the backbone to innovation.
@@JohnnyPeraltaa I don't think the "can't be comfortable without work" is an ideological position. That is deeply rooted in the reality that we're not a civilization with infinite resources and a "free" way to exploit them. I challenge the assertion that it is within our means to provide a comfortable life to everyone, but that also depends on your definition of "comfortable". I agree fully with your last sentence though, which is the primary reason why I support UBI. If people aren't spending most of their time trying to just survive, they will be able to spend that time on something more worthwhile.
Thinking of UBI as a Rich to Poor wealth transfer can help recontextualize it. It's essentially a more free market solution to per capita taxation and subsidation.
“Wahhhh you’re disincentivizing my entrepreneurship by taxing me the same as everyone else!!” 😩 - Guy with more money than he can spend in 10 lifetimes
UBI is a must in future economy. Otherwise, in the future, you'll only find a handful of rich people and their AI robots. We will realize this when AI is smart enough to replace customer service.
Exactly unless billionare bailout maniacs we see in the comments suddenly decide that mass culling or purging the millions that will be layout by the ai and automatization is beneficial for their overlords
Markets, left to their own devices, follow a power law. Lots of money accumulate with a few. That's not ideal for loads of reasons. It puts a lot of power in the hands of a few, it puts a few people in gatekeeper positions for larger commercial/communal ideas, etc. A UBI counteracts the power law. It moves money from the few to those with less. It moves power through society. It allows more ideas to get funded and grow. It accelerates progress.
That wasn’t UBI. That was money handouts for a select few. Universal is in the name, everyone gets it or it isn’t UBI. Also, it’s a one way road to creating a welfare “universe”.
The 70% marginal tax does not apply to a person's entire income. It starts taking effect after an amount, $10 million for example. So your $10,000,001st dollar is taxed at 70%. This is a very important detail.
So someone that makes $20M would only get to keep $13M. That guy's not gonna be too happy with that deal
Yes , but it would suck for people earning above that limit . I would hate to pay 70% over 10 million, even if i was earning 30 million.
70% above any limit is too much
LoL John and callous here talking like they’ll ever make over 10 million, these blokes will be lucky to make half of ONE million
@@callous21 Oh no. You can only afford a villa and two Masaratis while dining out the entire month. Truly horrid. How will you live without a yacht on top of all of that.
What's missing from the conversation is one good idea from UBI, just reducing bureaucracy. Welfare doesn't have to be universal, but it also doesn't have to be split among a hundred different programs that make it difficult to use and costly to operate. Giving people a single check that gradually phases out to a certain income threshold wouldn't require trillions in spending while making it cheaper to operate (so more money for the program itself) and much easier to use for those who need it.
Tried that in the UK with Universal Credit taking over from about 7 different benefits like unemployment etc, its been a lot of problems to implement but might be working.
If i got the thing right the amount of money given only depends of the money you earn. Not so hard to implement on paper.
Over time it will split into the same number of programs as any other institution. Lower class will blow up over the millionaire who does take it. Politicians will run based on this vote. Now it’s no longer a UBI.
Never forget. Once something becomes standardized, it becomes the baseline as well. It’s a bonus year one…it’s an expectation year 2.
What your describing sounds like the Guranteed Minimum Income. I think this could work as long as the clawback is low.
The people who would get screwed (although its the way to "sell" this to Conservatives) are those that paid into Social Security -- if $1000 flat payments replaced the current SS payment. (which is much higher than $1000) You get rid of SS, UI, ect... but you actually make it worse for the lower class. (the UBI becomes the minimum income level and its very minimum)
People who planned for a $2200 SS payment in retirement suddenly lose over half their "equity" in the old system.
And lets face it.. if the "Liberals" managed to get a UBI then the "Conservatives" would use the excuse to kill every other program they could next time they were in power. And then once they were done it would be just like Minimum Wage.. they would fight increasing it with inflation tooth and nail so it would go down and down versus inflation. You might catch up 3-4 times in your lifetime before you lose ground again.
Just for reference a full time person on MW makes about $1250/mo. And its not go up since 2009... and not likely to go up anytime soon.
I read about the finish experiment where some people (I think it was 10000 people) got an UBI for a few years. The experiment was intresting. The wellfare system in place basically makes it so that if you get a job or start a bussines you will start paying taxes at about the same rate you lose your unemployment benefits making it hard for some to see any reason to put an effort in it. With the money being unconditional the people in the experiment were able to start bussineses and get jobs and get the full benefit imediatly and the most drivven entrepreneurs were able to re use all the money they had earned to keep the bussines growing since they didn't lose their benefits and had to give them self a salary imediatly. Some of them stated that it would be imposible for them to get to that point in the traditional wellfare system in place, even though it is more generous than most.
There were also some more experiments like that, in different countries and places. I was surprised to learn that apparently, someplace in my native Poland also did such an experiment for IIRC 2 years, with similar results (more likely to find work than in traditional welfare systems)
Exactly
Yes, this video is missing a lot of stuff about how UBI is suppose to work.
There is the fact that traditional welfare always has this income zone where working more hours doesn't result in more pay. Welfare, to put it bluntly, incentivises staying poor unless you can make a big leap in income.
And although EE mentioned how UBI reduces bureaucracy, it fails to mention that this effects the people on welfare even more. Most welfare systems have recuirements, like a minimal number of job applications to send out, and many forms and mandated appointments. Being poor is a part time job.
And there is the psychological effect of living in constant fear of being unable to feed yourself and your family which has a scientifically proven effect that it makes people make worse financial decisisions.
So the big economic question about UBI is: how much more productive will this make the poor compared to traditional welfare? And what are the secondary effects, like reduction in crime etc.
Every discussion about UBI should also mention that many countries already HAVE UBI, just for senior citizens. Every fundamental argument against UBI fails when you realize people already pay taxes for UBI, there hasn't been a massive exodus of people to countries that don't have UBI for senior citizens, it hasn't made people stop saving for their additional pensions either. Ultimately it's a cost-benefit question, but a lot of people already have a politically motivated preference and don't want to know the science.
@@CardboardArmUBI for seniors only works when you have a larger pool of younger people working and paying taxes. As the birth rates shrink and more older people exist in these nations, we are starting to see the issues.
Hence why we have immigration, because the wealthier the nation the lower the birth rate it seems @graye2799
"no one can predict the future, least of all economists" is a perfect catchphrase!
Insurance companies use statistics to determine the odds on risk. They are trying to predict the likelihood of the future
@@richarddecker9515trying, being the pertinent word, they often fail, but that is fine, just increase the premium, therefore excluding those most likely to have a claim.
But it's also obviously untrue. Even though they are often very wrong, economists are better at prediction than most academic specialties.
@@matthewgentzel2004 economics are not “predicting” they are pulling the levers in order to direct where the future goes!
@@Robert-xs2mv Out of all the trained economists, very few are pulling big levers in the economy. Academic economists largely don't pull levers, nor do gov economists that provide advice and run cost benefit analyses. Advice is built on predictions about what will happen under different courses of action.
If we implemented a UBI, I'd suggest we set it as a percentage of the GDP per capita, not a fixed dollar amount. That way, it would function as a share every citizen holds in the success of their country, and as a bonus the GDP per capita would actually mean something. It would also save politicians from wasting their time on debates about raising the amount as the economy grows, like we see for the minimum wage.
For that matter, we should probably tie the value of minimum wage to inflation, rather than having a set amount.
But alas, these ideas are common sense solutions to make life better for the people, and that does no good for politicians and business owners' careers, so I don't see much hope for them.
Just remember that in our consumer economy, helping lots of people buy things by giving them money will make everything cost more.
@@ShiftE21 The only reason that would happen would be if we didn't have enough of whatever product. Which i don't think we have too much scarcity for anything essential that would make the prices rise like water or food. The only thing that could go up would be non essential items like iPhones, Androids, etc.
@@MrMarker8050 tell this to the people who say that a UBI/minimum wage will cause runaway inflation. To them, putting money in the hands of the poor is a surefire way to raise prices across the board. Effectively admitting that the economic systems they support require a struggling underclass.
@@ShiftE21 if everyone was rich who would serve you burgerking
@@Xxcyclonexx44 Admitting that the economic systems you support require a struggling underclass.
Two thoughts about the inflationary effects of UBI:
1) If the system is designed in a way that middle-income earners roughly break even, then the inflationary impact should be minimal. I think there have been surveys that showed that, if given more money, most people on the lower end of the income scale would use it to pay off debt. If that is wrong, and there are indications that inflationary pressures would be high, you could design it such that the payments phase in over a period of a few years. Also, once you reach a steady state (supply catches up with demand), inflation will return to normal.
2) Let's think about what it means morally if inflation is expected to increase a lot in an economy upon the implementation of UBI. From what I remember of my college econ classes, there's a term for the kinds of goods and services that low-income people buy - necessities. Wikipedia defines it as "product(s) and services that consumers will buy regardless of the changes in their income levels, therefore making these products less sensitive to income change." If merely bringing lower incomes to a lower-middle income results in a significant changes to the consumption of necessities, doesn't that mean that previously, your economy wasn't allowing people to get what they need, either to survive or to keep pace with change? Now linguistically, we can quibble over different definitions of "need" and "necessity", but IMO there's a good reason we use these words, and they really illustrate the problem here.
"Once you reach a steady state" is a hidden assumption. Why do you think we would ever reach one?
In particular, perhaps you are assuming the UBI would be a fixed amount over time. But given its purpose, it would obviously have to be indexed to cost of living. Which means the UBI and inflation could well just chase each other upward indefinitely.
@@ps.2 Inflation already does that on its own. At this point the argument just sounds like the same ones for being against increasing minimum wage.
@@cablefeed3738 Inflation's not a binary. It's not like the only two states are "we have inflation" vs. "we do not have inflation." The _degree_ of inflation matters.
Think of it like pollution. It'd be nice if there were none, but that's not practical; we accept that there will be some. But that doesn't mean that every polluter should get a free pass because some amount of pollution was already inevitable.
Likewise inflation. A policy shouldn't get a free pass on inflationary effects just because there was always gonna be some amount of inflation from other causes.
@@ps.2 Actually economics believes slightinflation is good it's good and it's the same with pollution if there were no greenhouse gasses on Earth would be negative 38ﾟ Celsius That or negative 18ﾟC I can't remember. But my main argument was these same arguments get brought up about minimum wage increases and yet overtime minimum wage still increases which means there are benefits to giving more money to poor people and requiring rich people to give up more money AKA to pay poor people More.
@@cablefeed3738 You're getting it. A little inflation is fine, maybe even good (I'm not convinced it's better than zero: my understanding is that the Fed tries to target 2% not because it's thought to actually be optimal, but because it's safely above 0%, and they are perhaps a little more afraid than they have to be about what might happen if it ever dips below 0%). Doesn't mean that we should ignore any inflationary effects, no matter how great or small, of any policy proposal.
Inflation is a tax on people who get a salary and have savings and carry cash. It doesn't have much effect on people whose wealth and income is mostly in stonks and real estate, as those tend to self-index to inflation. That's not to say all taxes are bad. But they aren't all good or neutral, either.
I think one of the biggest benefits of UBI is a better upbringing for children of poor households who are heavily affected by a stressful family life, and who may perform better in school, be less incentivized to do criminal activity, get better a education, and contribute more to the economy than they would otherwise. Early UBI-studies have shown signs of this effect.
Stats in Denmark show that's its life-damaging for a child's future to grow up in family where no-one is working. One reason the Government is doing everything it can to push poor families into the work force. I guess you may find the same in many other countries.
@@meibing4912That's interesting. Where can I find those stats? Doesn't have to be in English.
We should just make it illegal to abandon your kids.
well said, please keep talking about it
@@meibing4912
UBI results in people working more, not less.
In the case of UBI I think that the problem really comes down to how it is conceptualized since the whole thing is predicated on our current economic model. Current, of course, means an economic model that hasn't changed substantially for hundreds of years. My observation is that, especially in the common parlance, economics is nearly entirely focused on the concept of currency - fiat currency to be exact. The problem is that economics is actually about the distribution of resources and currency, fiat or otherwise, isn't a resource in and of itself, but rather a measure of the ability to acquire arbitrary resources. Put another way, much like saying that "I want 10 feet" doesn't make any sense unless it is followed by "of X", saying "I want 10 dollars" only makes sense if one has an idea of the resources they intend to acquire. Acquiring money for the sake of acquiring money is a pointless endeavor.
The real question shouldn't be whether there is enough currency to meet people's needs, but rather whether or not there are enough resources. More specifically we have to ask what are the basic physical and psychological needs of an individual and do we have the resources to meet those needs. Insofar as the absolute basics are concerned (food, water, shelter, etc.) I believe the answer is, unequivocally, yes. Medicine is a bit stickier of an issue, although I refuse to believe that it, or any other issue, is inherently unsolvable if you put some effort into re-conceptualizing the problem. If we were to establish a minimum quality of life and build our economic system on that moral imperative we could remove a large chunk of the abject suffering that exists in the world.
With every passing day we move closer to a post-scarcity world and, while this generally though of as a positive, it will be disruptive and dangerous. Our current economic system is ill-prepared to handle that reality without the world turning dystopian. We talk a lot about the individual's responsibility towards society, but rarely in my experience do we talk about society's responsibility to the individual.
"Ask not what your country can do for you - ask what you can do for your country," is a fine sentiment in certain contexts. One can ask what the individual can do for their community, but framing it to exclude community's responsibility to the individual is absolutely reprehensible.
The community is not responsible for you or anyone else. The moment there is no threat of financial ruin, there is no incentive to do the right thing for far too many people. We cannot afford that kind of hubris.
> "Acquiring money for the sake of acquiring money is a pointless endeavor."
It is not. Because money is fungible -- easily converted to resources.
The realistic problem when talking about having a different economic system is that those who try it end up having a visit from freedomTM
I think the proposals for UBI are the middle ground in the "what if automation" thought experiment. They are the middle ground between just letting the extra people starve and completely socializing all the benefits of automation.
Automation is already part of why wage stagnation is happening at least at the lower end of earnings, as companies can get higher productivity out of less employees and so demand for employees is lower, or More people want less jobs, and so they can pay people less as if you don't accept a low pay, someone else will.
@@A.Martin We're not seeing anything like that though, at least right now. Demand for labor is still very high.
Yeah the world will go communist the moment automation replaces everyone.
So we should we talking about socializing the benefits of automation
@@colinhobbs7265 not really. If demand was high, then wages would have kept pace with inflation.
The only way this sort of thing would actually work is if it was done in combination with incentivizing low-income housing builds HEAVILY because if not good old supply and demand would kick in and low-income apartments would go up 700$ and we're almost as bad off as we were before. I think a video talking about options when AI takes over x% of jobs would be an interesting topic, definitely something I've thought about a few times.
edit: this comment really blew up, so I'd like to clarify a few things. First of all I do agree with the point many people made that affordable housing is a more important priority than UBI, making housing affordable could allow for a far far lower payout as it's a significant portion of many peoples expenses. Also I'm not by any means anti-working, I think this amount should be the minimum to have food and a leaky roof over your head while also working a reasonable part time job. Also "low-income housing" doesn't have to be an undesirable place to live, skip the hardwood floors, marble countertops and have one bedroom, it doesn't have to be expensive but still can look nice. Also empty homes are a huge issue that needs to be solved in someway too, and so is people's tendency to want to live in a city those issues aren't removed by offering affordable housing. I'm not an economist I'm just a normal guy weighing in my OPINION on this topic.
It takes about 20 years for a luxury apartment to become a low income apartment, so the pain would be temporary.
the AI topic is interesting but will go along with a world population decrease so i suspect everything will balance somewhat in long term.
exactly, housing is the big one. If UBI passed and tens of millions of low income people suddenly had way more spending money, first thing that would happen would be landlords & investment groups that own apartments jacking up the prices by hundreds of dollars. They did it during the pandemic and they're still doing it.
In the mid aughts I thought 700 a month was too much. Now it would be half what I'm paying for an apartment. 100% increase in 20 years is a bit much, especially when income for the poor and middle class has not increased even a fraction of that much. We're all expected to do more with less somehow as we hurtle towards a breaking point.
I've often suggested that there needs to be a 50 state affordable housing program. Since the private sector doesn't want to be bothered building it, have the government step in and fund adequate housing so prices go down across the board and those who need low income housing aren't reliant on the market which is predatory & price gouging them.
Yep!! I have said this about any free money initiative.
Money is how we divide the available resources between members of our society. If you increase the amount of money available to the average member of the system, it just causes inflation.
We need to increase PRODUCTION OF RESOURCES if we have any hope of giving impoverished people more resources to help them.
@@mjkittredge I agree 100%, the government needs to force affordable housing to be built in areas where the rent is unacceptably high.
Unfortunately, every area is different, so this will be perfect for some areas and cause major problems in other areas, for many reasons.
But hey - thats what we are paying politicians for, to figure this stuff out for us!!!!!!
My interest in UBI is in balancing the labor economy. There is no "free" labor market in the U.S. Too people often have to take the job that they can get at whatever the pay may be, and it's not often tied to true demand. I would like to see flexibility in being able to leave a job (even temporarily) without it being financially disastrous. It's not like you can fall back on self sufficiency farming in a modern economy, if the labor market doesn't suit you. One truly does not have a choice! And because there is no choice, capitalist squeeze the working class by paying as little as possible while charging as much as possible for living essentials (also in part to poor infrastructure--like, you often can't opt out of owning a car in this country). UBI--in theory--does offer some relief there atleast.
this
Interesting points man, i never looked at it that way, do you have some more?
That's all well and good, but having good reasons to want something doesn't make it viable.
Very well said
@@rightwingsafetysquad9872 why are you suggesting it's not viable?
One of the challenges with a ubi is that you either do it or you don't. "Toned down alternatives" definitely won't work. For a ubi to work it has to hold people at or just over thr poverty line and it has to be UNIVERSAL. Anything less won't work.
So the the alternative can't be a toned version it has to be something completely different. More likely a raft of alternatives from improved welfare systems to addressing the power imbalance between employees and employers and way more besides.
"Do or do not, there is no try" - Master Yoda.
So you're saying nobody can opt out?
@@mikeroagreschen5350 Why would anyone opt out?
@@mikeroagreschen5350 It will probably take a civil war to fix that one if it ever comes to pass.
What are you talking about? You can easily do a "toned down" universal basic/supplemental income of like $100/month instead of $1000/month, for example. Neither really removes the need for some means tested welfare for people with higher needs and you're not going to achieve with any universal income that is basic for the average person anyways.
Heck, you could even start at $0.10/year if you wanted to ramp up really slowly and measure the effect on inflation. Doesn't get much more toned down than that.
I'm in support for some form of basic income, but know that its success would be greatly affected by its implementation and how other economic policies are formed. Thank you for highlighting some of the difficulties in such a program! It's important discussions to be had
me too, we need more smart people to focus on this idea to address and solve the major problems. our world needs solutions asap before we are all fucked.
Smart people already solved it decades ago, dont do it.
I would love UBI as well
But we live in the real world
We will need to raise taxes
If you raise taxes, companies will leave and the economy will get smaller
Tax revenue will be lowered (This is a statistical fact, not an opinion)
We will then run out of money and any entitlements you have will be gone.
Let them eat cake, doesnt work
@@adrienwatson2179 Companies need to realise it's in their own interest too if all people have enough money, so they can buy their products. They can pay more taxes because they will save a huge amount of money after they get rid of employees, thanks to automation.
@@86Corvus, You say smart people say don't do it. But other smart people ( starting with Thomas Paine onwards to Yanis Varoufakis say that it is a necessity in a fully developed economic democracy.
Start with economic realities and do some independent thinking:
Economic activity by people all the wealth that people in society need. this continuously generated wealth in the best way is the next phase.
Careful or shoddy thinking here determines whether our understanding is sound or faulty.
Running to "experts" instead thinking things out for ourselves is one reason why there is such confusion when basic income is being discussed.
Economics is the simplest of the social sciences and it's sound principles can be understood by any interested person of average education. And a good society needs an economically literate population.
For the record the $5 trillion excess COVID spending was just the directly COVID-related spending. The budget introduced authorized up to $14 trillion in excess spending, over 90% of which has been used if I’m not mistaken. Let’s never do this again please.
It's easy to forget that people with least money may and do actually generate costs for the society thats non neglible. The cost is probably bigger for countries with proper welfare, lesser for ones without it - but it's a cost nevertheless.
I'm highly impressed how in modern times with modern tools we still tend to use simplified models that fail to catch overall pictures and are easy to manipulate. But an actual deep dive analysis is not something easy, nor probably cheap to do, that could be neatly and easilly shown with trivial iconographics.
It's not a direct accusation here, as it's seen everywhere and the channel is pretty nice in bringing the topics in generall and doesnt seem too biased. I just would love to see a deeper dive than just that.
One key aspect overlooked in this conversation is the potential of Universal Basic Income (UBI) to streamline welfare. Rather than numerous fragmented programs, consolidating support into a single, simplified payment system would enhance efficiency. By providing a unified benefit that gradually decreases as income reaches a specific threshold, we can reduce administrative costs and make assistance more accessible to those in need, all without requiring trillions in additional funding.
Safest approach i feel to tackle it is to diversify investments. By spreading investments across different asset classes, like bonds, real estate, and international stocks, they can reduce the impact of a market meltdown
The issue is most people have the “I will do it myself mentality” but not skilled enough. Ideally, advisors are perfect reps for investing jobs and at first-hand experience, my portfolio has yielded over 350%, since covid-outbreak to date, summing up nearly $1m.
This is definitely considerable! think you could suggest any professional/advisors i can get on the phone with? i'm in dire need of proper portfolio allocation
Rebecca Noblett Roberts is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..
She appears to be well-educated and well-read. I ran an online search on her name and came across her website; thank you for sharing.
The problem with a high tax rate vs a low tax rate when starting a business isn't that the entrepreneur might have to pay more taxes. The issue is that the higher tax rate reduces the margin of error for that business to succeed at all, which makes it less likely that the business will be started.
yes
Don't forget that a business tax must be passed to the end consumer. Business tax interferes with a proper supply and demand curve and ultimately suppresses market competition because of decreased demand at the inflated price. This also goes to the issue of funding. Taxes just like pay raises are always inflationary.
Yup, it makes the business harder to grow. The big company can hide behind tax heaven places, the middle one is the one that suffers.
Besides sales taxes that are not mentioned to change it's profit what would be taxed, not income, it only affects after it's successful
Theoretically, a UBI is meant to be a stepping stone to a post-scarcity system. A post-scarcity economy is a theoretical economic system in which basic necessities (like food) can be produced in such abundance that they become almost free. Though this post scarcity would require replicators, infinite resources, etc.
Yep.
I see what u mean but I’m highly skeptical of the claim that a post-scarcity system will require infinite resources. It’s often estimated that there’s enough food produced to feed 10 billion people, even though close to a billion of them are hungry each year
@@cackjasey1492 wow
You need matter replicators
Precision fermentation is coming...
I think a UBI can be great, but like a lot of proposals, the detail is what matters. A fairly cheap UBI could be coupled with Negative Income Taxation. What's interesting about a UBI is that Richard Nixon almost implemented one.
The video talks about a marginal tax rate of 100%, but fails to mention there actually are people in the US with a 100% marginal rate, when you calculate base tax along with welfare phase out. This is the double edged sword of charity, which your suggestion avoids.
@@theBear89451 lol, please do elaborate
For single mothers of 3 children receiving receiving WIC, medicaid, rent assistance, and food stamps, the total phase out of benefits as income increases is more than the income increase from about $24,000 until about $80,000 per year.
That is the extreme, but that extreme includes an amazingly large number of people. There are other cases with similar negative income results, but they aren't as common or as wide of an income gulf.
@@rightwingsafetysquad9872 the only single mothers who deserve welfare are widows.
no it will never work just lead to more inflation...stop looking for handouts and work harder
UBI itself is an amazingly good idea for resolving the biggest problems in modern society right now.
Simplifying taxation to a flat % allows for simple and elegant solutions. Giving a flat amount of money to each person would effectively make the % taxation higher for high incomes, lower for people of moderate incomes and negative for low incomes.
Also you should absolutely include under 18 in UBI, those are literally the primary people that need financial assistance.
As for the 70% taxation and such, I don't see it being much more than just spiteful stupidity. If you earn more you pay more without increasing the percentage taken. By making complicated tax laws you encourage bad actors to utilize loopholes to optimize their personal benefits, such as distributing that income within their family or other underhanded ways to make it appear as if their income is lower. This only serves to hurt the competitive advantage of people who play by the rules as intended.
Fun fact: My home state passed a "Millionaire's tax" during the Financial Crisis years. After its passage, the state collected less tax from those intended targets than it had in prior years. Some of that was due to the crisis making some people no longer in the income bracket the tax was aimed at, but a lot was due to those people just moving or changing their state of residence. Additionally, there were some taxes proposed/passed on certain services designed to get money mostly from the upper middle income class and above but my home county, an extremely blue county normally happy to support tax increases to fund government programs and services, is the wealthiest in the state and suddenly started protesting new taxes vehemently as its population and representatives realized the "wealthy" in the state was no longer some nebulous other but themselves
So basically rules for thee and not for me. And people wonder why government support is at all time lows.
Great example! Could be said about virtually every political issue, it's easy to support something until it affects you directly.
When the rich dunno they are rich. Lol
Millionaires tax should only apply if you're earning that kind of money yearly not based on assets you own like homes, stocks and shares etc (selling them is not the same as being taxed on owning them).
To many millionaire taxes are based on assets owned rather than straight income.
Making capital gains equal to income taxes would be a simple way of doing it.
Good for those who left to preserve THEIR hard earned income. Greed, jealousy of corrupt politics drives it.
I've been waiting so long for Economics Explained to finally make a video on UBI!
When an Aussie educational king comments on another Aussie educational king!
still waiting for him to do lvt
I love your Aussie series
and the video was bad
@@yeetyeet7070 no it was a good video.
I highly recommend reaching out to Scott Santens (One of the foremost experts on UBI), talking with him, and making a follow-up video after. It would make for much richer content with more nuance. The largest thing missing is the "social vaccine" sort of effect that UBI could have. For example, what costs would be reduced in health care if everyone had a UBI. What burdens of society are being unloaded in other places that would not even exist if there was a UBI, etc. Love your stuff. Please consider!
My problem with this idea is the concept of lifestyle creep. All of this is assuming that the people who get UBI now have some leeway for healthcare or emergencies cause they save up that money. But aren't they likely to just get accustomed to the new 12K/year soon enough, and just end up buying (mostly useless) stuff? And then we are back to square one again. Just my thoughts on this.
@@ashwinbhat95 with healthcare, I was referring more to what universal basic income studies have shown about how having a UBI prevents people from needing the medical services in the first place. If you look up an article called universal basic income as a vaccine for the 21st century, it lists the examples as well as gives an overview of the concept.
@@ashwinbhat95 I find it highly unlikely that people below the poverty line and low-income households would rather buy useless figurines instead of, well, food, education for their kids and a place to sleep in.
It wouldn't do anything. When everyone is $12,000 richer, costs just go up to match. (Or of course, you could just have free healthcare like the civilised world)
@@broti705 as someone thats worked in retail banking for 15 years, I'd say you're partially incorrect. A lot of clients who had incomes at or below the poverty line were not good with their money, and they prioritized material possessions instead of smart spending. It's very common.
I think if we implemented a system akin to UBI, it'd be better off to go for a negative income tax bracket ala Milton Friedman's proposal.
Starting from $0 taxable income up to a set amount, the negative rate dictates how much money a person gets as a % of the difference between their taxable income and the bracket's cap.
For example, say we had a negative tax bracket from $0 - $40k at 30%, for simplicity. In affect, this would mean that for every dollar you earned through taxable income (up to $40k), you'd receive 30c less from government:
Someone earning no taxable income would receive (40k-0)*.3 = $12,000 p/a
Someone earning $20k would receive (40k-20k)*.3 = $6,000 p/a which in addition to what they earned would total $26k income that year.
Depending on size of the bracket and the rate this could be manipulated to improve incentive to work at low income or lower costs to government. For comparison, imagine this bracket is instead up to $24k at 50% to minimise government costs. So up to $24k, every taxable dollar earned would only net you 50c:
Someone earning $0 would receive (24k-0)*.5 = $12,000 p/a
Someone earning $20k would receive (24k-20k)*.5= $2,000 p/a, which in addition to what they earned would total $22k income that year.
---
One advantage of this system over UBI is that it avoids giving money to people earning large amounts of taxable income who do not need it.
Another use is that this can be used to replace welfare for unemployment, as it avoids creating a system where a person can be better off financially by not working at all versus working part-time or full-time (though it lacks the advantage UBI has in not affecting incentives at all). If desirable, one may also consider it worthwhile to have things like disability and single-parenthood increase the size of the bracket, in effect targeting vulnerable welfare groups to get more money due to higher costs of living/less opportunity to earn income.
One potential issue though, is the need to review people's income more frequently in order to provide the negative tax benefits more frequently rather than an annual lump sum. How much this might impact the economy (for good or bad) is uncertain, but given how automated the tax process is in advanced economies, this could prove fairly simple.
Thats a nice model
The issue is the tax revenue requirements, not the math behind who gets what unfortunately
In practice, the net income effect of a UBI and negative income tax are identical.
The only different is that negative income taxes have better PR and they take longer to actually hit your bank account (at the end of a taxation period, rather than monthly)
@@rhubarb2301wow
That model incentivises non-productivity. When the government makes it easier for people to consume without producing, there is simply less of everything for everyone. We already have a low workforce participation rate. Taking from those who work to pay those who don't would just further exacerbate that issue. You also have the 'off the books' labor market. Cash jobs, drug dealers. They currently qualify for welfare, and would receive payout under your system as well.
There is another economic effect I've wondered about with UBI that I've not seen discussed much. The pandemic highlighted that there are minimum wage jobs that are crucial to society. They are minimum wage because of the lack of “qualifications” needed. If people no longer had to work to avoid going hungry/becoming homeless, we could see jobs that society can’t go without that aren’t the most fun/pleasant (e.g. rubbish collection) start to become better paid.
As a software engineer I’ve never had to put up with bad work environments or bosses if I don’t want to. I don’t know about the economic effects, but the social effects of everyone having more of an option to leave a bad job could see major improvements to pay and conditions for a lot of people.
That's a really good one. Taking the desperation out of the equation, "unpleasant jobs" might need to offer more than "pleasant jobs". There can be a lot of debate on whether that's a good or bad thing (why be a doctor if I can just collect rubbish?), but it does seem fair to properly reward jobs that can be physically and psychologically demanding.
Exactly what I was thinking about!
Most of the low income jobs that are "critical" don't generate enough economic output to be anything more than minimum wage jobs. For example delivery drivers. How much premium are people prepared to pay for delivery? Take away the cost of vans, warehouses, fuel, taxes and other expenditure. The result is how much a delivery driver is worth. It may be deemed essential for people who have no choice but to get delivery, the old and inform, the people who work long hours and have no time to go shopping. But if they have a value of 50c per delivery, and they can only manage one delivery every 5 minutes that's $6 an hour in value. So either things must get more expensive generally to pay for them to have more money, which makes their additional money go less far. Or delivery must get more expensive which will disproportionately hit those who have no option to pay.
You could try a UBI which gives everyone more money to pay for the more expensive things and thus allow everyone to get delivery and the delivery drivers get a "fair" salary. Or you could specifically target those who have no choice through illness, or childcare or work commitments and give them extra funds to cover the premium of delivery.
Alternatively, you could do nothing and force delivery companies to innovate with their logistics to get more deliveries in a certain timeframe, reduce fixed overheads like fuel and truck maintenance etc, giving more money to the drivers.
That might be a problem if the UBI was large enough to live on, but it seems to be proposed more as a supplement. An unqualified person is still an unqualified person. If the only job he can get is garbage collector, the UBI might make his life more comfortable, but he still wouldn't be able to get a better job.
"Bullshit Jobs" by David Graeber, for example, does bring up the paradoxical status of low skill professions and jobs that are crucial to society yet paid close to nothing, doesn't it.
I am also of the opinion that, aside from the group of people who really don't feel like working because of the UBI, the majority would do so in some way nonetheless, and the decreased personal impact of those low incomes wages could very well improve the status of said jobs on top of making them much less of a pit to work in.
Some folks could also get creative by choosing to live in poverty, so to speak, to save a larger portion of the UBI and bet on making it big some time in the future with those savings.
In general, though, having none or close to no troubles due to a lack of income and getting to work one's body and brain in an environment that is not shitty while making even more varying amounts of money... that is the dream.
Btw, I am a junior web developer.
I think it should have been mentioned that a lot of jurisdictions have tested the UBI concept on a small scale over the last fifty-some years, and in general they've been fairly successful on their short-term timescales. In Manitoba, Canada in the 1970s, a program was tested by the tory government with a control group with standard tax practice and a test group that received a basic income and a flat tax rate of 60% on every dollar over the stipend. The result was a 5% reduction in working hours, but also an increase in school test scores in children of participating families, reduced dropout rates, and increased rates of adults in post-secondary education. The expectation, had the experiment not ended, was that the long-term effect would be significantly improved education rates and earning potential.
Yes but these small scale UBI projects don’t have to worry about the larger effects UBI would have on an economy like tax hikes and inflation. Keeping it at a small scale keeps the figures rosier than they would be if it was nationwide
The biggest problem with most of those experiments is that they are often time limited like "we give you UBI for the next 5 or 10 years and see what changes". For an actual proper case study on what the people will do, they would have to say "you get it until the end of your life". Otherwise, they'll just take the money and prepare for when it stops.
Also, those experiments don't really solve the question of how the economy itself would change with a UBI.
@@maxbraddy8003 you're assuming it requires tax hikes or that inflation would be inevitable. Most governments, especially the US, could simply cut wasteful spending to pay for it. Inflation, if it happens, is usually limited to certain types of products where the supply chain is weak, as we saw during the pandemic. That increased demand and extra money eventually leads to improvements in the supply chain because businesses hate leaving money on the table.
@@mjkittredge What 2 trillion wasteful spending are you talking about?
Wait we have a long term. One of the Indian tribes I forget which one has had a ubi since legalization of gambling and it's had the same effects. Alsaka had one for decades at this point. Not a very large one but still
Of course beyond the economic aspects of UBI, one of the other elements is to look through the society at all the people making not so intelligent decisions and asking "How much of that is the result of mental impairment due to excessive stress? And would removing some of the stress of trying to survive while being underpaid improve things?"
Not just mental impairment, but stunted education. They don't have the time or energy to learn about economics or efficient living. You can probably walk into the home of the average impoverished person and find their living space is a disorganized mess, because they have no idea how to clean. Their parents didn't have time to teach them and they didn't have the time or energy to teach, let alone discipline, themselves. When they try, they blow their money on "life hacks" they find in their hunt for advice, which will just lead to more clutter, less money, and self loathing. They're also less likely to understand nutrition, leadibg to then thinking it's easier and cheaper to get prepared meals and packaged foods, rather than understanding many healthy meals are quick to prepare and they can freeze ingredients without losing nutritional value- or even what nutritional value is as a concept. Those are just a couple tiny examples, but the list of handicaps stress of poverty puts on people, and how it sets children up to fail at becoming functional adults, is endless
A few important points about UBI that I think this video missed:
Removing overhead costs for welfare is still a good thing even if it can't offset a sudden expansion of welfare expenditures. UBI is usually floated as an idea for a country to do more for its people, not the same amount but through different means; it's intended to be a way to redistribute wealth from the incredibly wealthy to the other 99%.
UBI is more resistant against means testing and legislative negligence. When the benefits are universal, it's harder for a political party to argue against stripping it away from needy people because of quibbling over "where the line is" for the welfare. If you index it to inflation/GDP, it also doesn't need to be consistently reviewed and updated to stay relevant over decades of support. As far as price of living goes, extending UBI to the state/provincial level could help make sure that people receive equitable payouts through the program.
As far as capital flight goes, a vast amount of wealth is already squirreled away into shell accounts in tax havens. There's only so much we can do to reign in tax avoidance without international action. The bottom line is that the more developed nations that adopt a UBI, the fewer options for "citizenship shopping" wealthy expats have to look for. This is an issue for all tax reform, not just UBI.
TLDR;
UBI should not be rejected as a thought experiment. Farming subsidies have demonstrated the effects on a large economy, and cash in hand aid has demonstrated the genuine benefits to individuals.
Basic Payment Scheme,
The EU's Basic Payment Scheme (aka SFP, then SPS, now BPS) is essentially a UBI for the agricultural economy. BPS has significantly reduced food prices by boosting the agricultural outputs of Europe. BPS has been particularly effective towards reducing the cost of ruminant meats. Research has also suggested the capital provided by BPS has reduced costs of several agricultural inputs by stabling markets. An example of the stabilisation was storage of fertilisers, and purchase histories of machinery.
Direct Aid,
There is many examples of Direct Aid (giving individuals money, instead of top-down aid) being much more successful for helping communities break out of poverty.
Inflation,
There evidence shown from both these examples shows, yes there is inflation, but it is a spike that stabilised after a short period. SFP tended to be implemented over 5 years, in the UK this was for ~10% subsidy of the economy.
Capital Flight,
Capital flight is way over blow, and you agree. A UBI would bring quality of life up for all, reducing social friction (increasing the feeling of safety and pleasance of public spaces). A UBI would also diversify markets (through the same stabilisation seen in the last 15 years of EU agriculture). I'm sure we can see how this increases the desire to stay in a state with higher taxes.
Cost of UBI,
It's expensive, and most states could only pay for pandemic bailouts because everyone was doing it. But freeing up labour markets would be huge in our overemployment age.
A decade of research has debunked much of these arguments against UBI. And we can always say "more research is required".
It is worth exploring the Douglas Social Credit Theory. In this theory, the amount of National Dividend ( UBI) must not be in fixed amount to be given to the people so it is not always $1000/month but will be based on the the gap between the rate of cost/price generated and the rate of income distributed. The bigger gap, more national dividends(ubi), smaller gap, smaller national dividends(ubi) , so no gap, no dividends.
This makes sense when the automation takes almost all of the jobs, the rate of income distribution will decrease therefore increasing the gap which means that more money to be given to the people to balance the purchasing power and the goods produced.
Could you look at Milton Freidman's proposed negative income tax? People often mistake it as synonymous with UBI - they are different. Would be interesting to hear your views/research in a modern context. Cheers, Patrick (I'm from NZ and we can't afford economists so I'm hoping as an educated Australian you may be able to shed some light).
I don't think it is very different from UBI. What would be the main advantages it has over UBI?
@@JewTube001 the universality of it. In the case of negative tax ... people with high taxes still pay tax. It is just an easier way of making sure the money goes to those who need it.
@@JewTube001 Like Luis said, there is a poverty threshold. People above the threshold are taxed, people below the threshold receive the negative income tax payments. There is also earning incentive built into the NIT. If the threshold is $30k and the NIT rate is 50%, you would get $15k per year if your income was $0. If you make $15k, you would receive $7.5k. If you make $29,999, you would receive $0.50. This contrasts with how conventional welfare systems often unintentionally incentivize people not to take low paying jobs. They could end up with less money than if they had stayed at home. With the NIT, taking work always means that you take home more money at the end of the day. You could also write a work requirement into the NIT.
So the advantages of NIT:
- Inherent work incentive.
- Not wasting payments on people who don't need it
- Higher payments are possible for the people who DO need it.
- More suitable as a replacement for existing entitlement programs than UBI.
@@AChungusAmongUs LOL technically its the same thing.. UBI is cheaper to implement but NIT is easier to wrap your head around :-)
@@heartflame503 NIT would have a lower headline cost. If the government gives everyone $12,000 it’s going to cost more than if the give everyone enough to get up to $12,000.
Great video as always. Surprised though that there was zero mention of having a potential UBI program coincide with the implementation of a financial literacy/ education program. That would make the biggest impact of anything else by far. I received expensive private education throughout my childhood and adolescence, and never learned more than how to balance a checkbook. Even if I had just learned what compound interest was in high school my life would be completely different. Teach a man to fish….
No need lol. Poor people have necessities they can't afford and debts they can't pay. The money would instantly go there. Nothing to save if you're trying to survive.
They were teaching it in my high-school but lots didn't care
DUDE! You learned how to balance a checkbook in school?!
The thing about compound interest/financial literacy education is that it doesn't actually scale to the entire economy. The only way to increase average prosperity is to increase actual production. Compound interest is just a redistribution of existing resources from one place in an economy to another. That means the prudent investor lives a better life while many workers live a slightly worse one. In fact, one of the main purposes of taxation and proposals like UBI is to do exactly redistribute the gains from compounding inequality in exactly the opposite direction.
This is easy to understand when you think about bonds. Every bond is someone else's debt. The interest is a long term transfer of wealth from the borrower to the lender.
If your wealth is increasing without you doing work directly to create that wealth, it's coming from someone else in the economy.
@@rileynicholson2322 Greatly appreciate you taking the time for a thoughtful and mature response Riley. Well done and thank you.
Alaska has a UBI that is working out pretty well. It is not like the ones usually proposed, but I like the idea of instituting a carbon tax and dividing the proceeds up equally amongst the people that have to live with the externalities … UBI.
Alaska works because it is a tiny percentage of the people.
Scale it up, tax carbon, and you're just moving money in a circle. Everything will cost more, then you get some of those higher costs back as a rebate, you end up in the same place.
Big bosses of corporations calling their prices on the products they didn't even produce is what destroying social security, inflating prices as they think that they could pocket a lot more cash is going to make poverty in societies even worse.
Great video! I have a few follow-up questions:
1. In the Great Depression, the high water mark for economic armageddon, unemployment nearly reached 25%. Once general AI reaches and surpasses the level of humans, something that could quite conceivably happen this century, even conservative estimates of the unemployment (and unemployability) that would follow far outstrip that 25% figure. What would a non-UBI economic structure look like in that scenario? You mentioned a sliding scale from "let them starve" to "free money" UBI, but it's pretty clear that "let them starve" isn't a realistic solution.
2. You mentioned that even if a UBI proposal is 100% offset by tax increases, increasing the velocity of money would lead to more inflation, but isn't that a cost we as societies have to face sooner or later? After all, there are obscene amounts of wealth sitting inactive in Scrooge McDuck-like vaults (possibly an exaggeration); any effort to re-introduce those reserves to the economy would necessarily constitute either an increase in the money supply or an increase in velocity.
3. On a similar note to 2, we have many people living under the poverty line. As noted, if they received UBI, they have needs they would then spend that money on, applying upward inflationary pressure through an increase in aggregate demand. But doesn't the very fact that they have needs they're not currently able to afford to meet mean that aggregate demand is, in a way, artificially depressed? Am I missing something?
4. If (and this is a real "I don't know" if, not a rhetorical one) lifting people currently living under the poverty line out of poverty DOES necessarily exert upwards inflationary pressure, what can governments do in tandem with welfare programs and/or UBI to mitigate the damage from that inflation?
5. You used yourself as an example when discussing capital flight. I really appreciate the frank honesty in admitting you'd likely shop for alternatives; I think most people would in your situation. However, most people *aren't* making TH-cam videos for a living. In the corporate world, yes, work from home has gained decent traction, but it's also receiving heavy resistance from leadership structures. Further, many high income earners are entrepreneurs whose businesses are not easily relocated, let alone across international borders. This is to say nothing of the realities that international relocation brings. Sure, being a multimillionaire is great no matter where you are. But, is having $100million in Somalia better than just paying the tax and having $30million in California? I'd wager it's not for most people. So my questions are: How significant/likely is capital flight as a problem in currently wealthy nations? and What can governments or coalitions of governments do to combat/mitigate it?
I appreciate any and all insight on these topics; I'll even look forward to hearing you talk more about any of them in future videos! Cheers, mate! :)
the AI only exists if it's profitable, nobody would develop AI if we didn't need to work. If we had UBI we would probably go back 100 years
@@sten260 But once AI is better at any given job, why would any company pay more to keep flesh and blood employees that are less effective than their AI counterparts? And once every human is unemployable, through no fault of their own, how do we structure the economy? Does it even make sense to call that kind of system an economy?
@@ranthria general intelligence is a lot farther than you may think and most of the best models in development only do a specific task like text completion (GPT-3) or image generation (DALLE 2).
@@jaborl Oh I know we're really not close. But we've got 78 years left in this century, and 78 years is a really long time technologically, even before considering that the rate of advancement is generally accelerating.
@@ranthria if we ever get there, we can think about it. But currently AI can do only the most simple jobs
Have you ever considered the negative income tax model proposed by Milton Friedman? Seems like the only thing that is being talked about nowadays is flat rate payments.
A couple of advantages of a falt rate payment is the low overhead and broad social support is can enjoy. Both models are better most current systems imo, and maybe using both could work in tandem.
so you would give money for earning money ? Also a reduction of low income taxes can basically be a flat payment depending on how taxes work.
@@dudono1744 No. Negative income tax is the same thing as a Guranteed Minimum Income. If the GMI is $12k and has a clawback of 10% than someone earning $0 would get the full $12k, someone earning $60k/year would recieve $6k/year. It's not literally a negative income tax.
frankly I think negative income tax deserves more attention than flat rate UBI since it's a lot more affortable and the overhead for running the system is small. How that would influence inflation and CPI is something that would require detailed analysis though.
@@michaelspence2508 also a negative income tax would still benifit the middle class if the clawback is low enough which it should be to avoid 70% tax rates on the poorest citizens.
You need a transition time between ubi and how things are normally done. Per year you increase monthly ubi 100$ so in 10 to 13 year you get full ubi
I always thought UBI should be a percentage of GDP. Higher GDP, UBI goes up. Lower GDP...
You need negative feedback loops and self-correcting mechanisms to mitigate the problems with UBI (and there are problems).
The question is if the benefits exceed the costs, which makes implementation key.
@@quintessenceSL I agree I think it could be easily one 5th of the gdp per capita. In USA it would be around 1100$ per month. But of course he is right doing this immediately causes inflation
@@randomthoughts6625 I don't know if I agree with the inflation argument per se.
One of the arguments given in defense of UBI is since it isn't earmarked, inflation is spread out against all markets, since everyone has a chance at receiving those money dollars. Also, if there is inflation, how much? The doomsday scenario is that any welfare will immediately lead to Zimbabwe, but that's hard to quantify against existing welfare spending (and if inflation is less than overhead, you've saved money), nevermind any UBI would have to be phased in anyway to give governments time to adjust, let alone markets.
There was an economist comparing UBI against traditional means tested welfare, asking what are the affects. He points out, they are essentially the same, the only real difference is where the accounting occurs (before getting benefits or after), but you've streamlined the process with UBI, saving hundreds of millions.
@@quintessenceSL no I am pretty sure it would lead to inflation. After all from one day to another the lowest income bracket will have substantially more money. But of course this should not be the final word on this topic. After all you can start with ubi of 100$ till you reach 1000$ after 5 to 10 years with almost zero inflation impact
"Transition times" is to water down good legislation, and keep those at the bottom oppressed.
“Business opportunities are like buses, there’s always another one coming.” - Richard Branson. Thanks for the video :)
That is such a painfully European quote.
Until they cut the budget for public transportation.
When there are no opportunities, you take it by force - mustache man
I wonder if Richard Branson has ever seen the inside of a bus.
@@narsaku1408 Wow, that has literally nothing to do with the topic. Also, "i was an atheist" tells me nothing about why you were an atheist in the first place. There are really bad reasons to be an atheist especially if you never thought it out, now you are shoving your religion into places no one cares about but from this you will get the satisfaction of being persecuted. It sounds like you are one of those people who leave tracts in place of tips. you aren't going to change one mind doing this. Just a bunch of people wishing you'd go away.
Although I'm ideologically opposed to UBI today, I understand that it makes sense the closer we get to a post-scarcity world. The entire point of an economy is to fairly distribute resources in a scarce world. If machines are mining and manufacturing and distributing far more than people actually need with far fewer people than the number of work capable adults, it would be unethical to not have UBI.
Fantastic job on this video. Very well thought out and very well balanced. Kudos for tackling a difficult job and covering most (if not all) the angles.
How is it balanced to discuss all the negatives of a program without discussing any of the positive or any of the empirical evidence from the numerous experiments that have been done on the subject.
Aside from "Government spending is inflationary" and "Taxes call the boogeyman of capital flight" there was nothing of substance presented in this video.
One of the benefits of UBI that doesn't get enough attention in these discussions is what it would do to the balance of power between employees and employers. On the radical end it's much easier to go in strike if you still get a trickle of income, but on the less radical end it allows people to negotiate for better wages, or when looking for a job to be more choosy about which one they take, leading to better matches and better productivity. Also from the employers side, the laziest prospective employees will choose to live of the UBI perhaps supplemented with family support or something, which means the pool of employees becomes a lot better, making hiring less difficult and stressful on both sides.
And I have done both and it sucks to have to hire someone. It also sucks to go through the interview process.
Your first point mentioned why nixon family assistance plan failed.
I have a law of economics of my own: poor people won't work for slave wages if they have government benefits.
Excellent video. Huge fan of EE! Sometimes I ply episodes that relate to topics I am teaching in my High School Business classes. Thank you for the Content!
I hope you give your students the opportunity to hear views from less free-market economists as well.
Please consider the fact he is very narrowly focused in his videos ignoring things like existing successful UBI tests in favor of his viewpoint.
He doesn't write these himself...other people write them and he's paid to narrate them.😂😂
@@ZentaBon I feel like UBI tests will never be successful because you have to apply the idea at massive scale before you can measure the effects - no?
@@_Wombat Very true, however perhaps the better way for EE to approach this would be to mention the studies as well as their shortcomings in order to be thorough?
The reason why many people would like and support the idea of a universal basic income is that most people agree that a basic human dignity should be granted to everyone and that everyone should have the opportunity to live their life freely with lots of options instead of being forced to work in low-wage jobs just to survive.
Thus, my very simple and direct idea as a counter argument to the inflation problem you raised regarding the UBI, is to just make the basic needs of everyone as close to free as possible, while also giving incentives to be productive.
If everyone had a simple home (maybe 30-60 m² for single households?) available if they needed or wanted it (without huge amounts of bureaucracy and income or property proof) as well as free healthy food and water (luxurious food would not be included, like alcohol, caviar and a lot that isn't basic), I believe it would be just as good as a UBI. It would be good enough to live in such a small apartment for quite a few years, but not good enough that you would want to stay there if you had the opportunity to move into a bigger/better apartment or house in a better location.
If those free apartments then also had different classes (worst to best) which you would get based on (your) need and service (you bring to the country), I believe it might be possible to create a system where not everyone takes advantage of free housing (you would have to actually live there to have one) and people do their best to move into their own housing once they can afford one, despite the free housing not being terrible.
This idea is a bit idealistic and still has many problems that need to be solved when implemented in real life, but I believe this has a greater potential than UBI.
This leaves out a large number of important considerations:
1. Tax flight - there is plenty of research on this and we have a pretty good idea of how it scales. While it lowers the expected income of larger tax raises on top earners somewhat, it still leaves plenty of net gain up to around 70% top tax rate.
2. Further cost savings resulting from UBI. Especially factors like public health, crime, and education greatly benefit from financial safety. The whole country becomes more efficient, beyond the immediate benefit of saving on the (often excessively large and expensive) means-testing bureaucracy.
3. The far more complicated nature of inflation, which more often does not behave according to the simplified ideal of "supply and demand of money". In reality it is more often driven by other external influences, such as the Ukraine war, or driven by financial decisions of the wealthy far moreso than by the finances of low income earners.
Industries that cater to low incomes are also extremely price competitive and tend to have far lower inflation, so general inflation figures represent its dynamics very poorly - unless it is influenced by external factors like the labour and shipping situation during Covid or the supply issues caused by the Russian invasion.
We need to guarantee food, housing, and healthcare for everyone. No need for ubi if you have those three needs taken care of.
Universal basic services…..UCL in London has done great work
UBI is a dream, the amount would be just the new zero or starting point
Yep. The fact that people don’t understand a basic rule of economics like supply and demand is disturbing.
Yep. Negative income tax makes much more sense than UBI.
No.
The real political problem is it gives too much power to poor people
It would be really interesting if you could cover the pros and cons of Milton Friedman's proposal of a Negative Income Tax.
Hasn't the last 40 years of experience debunked Friedman's policies?
@@auto_revolt No, they've supported them.
@@SerErryk I think you might need to re-read "capitalist and freedom" ;) Personally I think the only thing Friedman has ever said that stands today is that the military should not be privatised. Literally everything else is questionable, to the point that even the IMF has abandoned their policies like MF's.
UBI and NIT are essentially the same policy. EE's criticism of NIT should be exactly the same, but EE's criticisms are weak because he presents no evidence whatsoever that inflation or capital flight will be enough to counteract the numerous observed (in actual studies/experiments) and expected positive effects of UBI on either the overall economy of the jurisdiction or people with low incomes.
You could literally replace UBI with the public school system, which allowed the US to become a dominant global superpower with a relatively educated workforce, in this video and you would be forced to conclude public education would somehow hurt the economy based on EE's arguments.
@@rileynicholson2322 I’m actually a big fan of the idea of UBI. While I’ve seen some studies performed that resulted in net benefits, sometimes those studies leave out whether the overall number of work hours dropped or not. But let’s assume that people worked the same number or hours or just didn’t have to carry 2 jobs, the question is how do we pay for it all? If you tax the rich, they’ll just leave. If we raise taxes on everyone, then theoretically it’d be the same amount of money going in as going out. I haven’t seen a version of UBI that can realistically pay for itself. If you have any studies though, please send them my way. Again, I’m a big fan of the idea, I just haven’t seen an action plan for implementation that gets down to the nitty gritty of who pays for what with the exception of Milton Friedman’s negative income tax idea.
One thing most people don't talk about when it comes to the ubi is that more people can take out larger debts at lower costs. If a government garuntees ur income any Banker will be crazy not to give u that loan and they will just take part or all of the ubi to pay it off over years. It will single handedly destroy the predatory debt industry.
kind of moot if it causes inflation, because lenders are looking at your ability repay debt, if cost of subsistence goes up then that's just subsistence money and you need more than that to pay back debts. be nice UBI did lead to higher production and entrepreneurialism but we're not sure if it would do that.
@@JewTube001 inflation is not only determined by the supply of money but also the velocity. Let's say a bank gives you a 5 year loan backed by ubi payments. Since it's backed the interest is likely low and u get almost 5 years of subsidence upfront and since the ubi u are getting from the government is being used to pay off the debt velocity and supply will decrease.
If we ever get to the point of needing a UBI it will be past the point of job lotteries when a significant amount of industry is fully automated and people can't easily find work. It will be much easier to implement a UBI in a command economy where the government has a significant control over what is being produced and can set prices of goods. Otherwise, companies will take advantage of a UBI by raising prices to meet demand. A UBI has a disadvantage of making money less scarce and therefore less valuable.
8:00 in the USA, if someone sells their company for a lot of money let’s say millions or more, depending on a variety of factors they’d probably pay 23.8% or 20% on all or most of that capital gain as opposed to 15%.
We need this just like Covid. People need a basic income. Everyone willing. 🤞🏽 this is what we need. It’s Revolutionary.
Can you also make a video about the other type of UBI? Universal Basic Insurance, especially from the perspective of a developing country.
So, just like Medicare For All ?
@@sprinkle61 fire/homeowners/renters insurance, etc. as well
I'm interested, but it sounds like a massive moral hazard.
@@rightwingsafetysquad9872 still less of a moral hazard than bailing out corporations.
@@sprinkle61 I mean general (life, health, disaster, agriculture, etc) insurance. An insurance which will have a safety net for those who face adverse situations in their life. Corporations can still provide their own insurance schemes as this UBI would cover only the basic level and people will be more than willing to pay more for added security (provided if they have money).
I only believe in ubi IF you remove the perverse incentives. Means-testing creates the perverse incentive for people to stay below a certain income level/ remain under-employed/ work "under the table", etc. "universal" should imply everyone gets it no matter how much money they earn but that seems to get lost in the pilot programs, (and most welfare programs in general tbh) I also like the Negative Income Tax idea, as this also seems to eliminate the perverse incentive to remain unemployed/ under-employed.
Technically, anything with means-testing is not a UBI. It doesn't qualify on universality.
Negative Income Tax is nothing like UBI because it's not universal, it requires a lot of bureaucracy, and it requires filing/applying for it.
There is no perverse incentive to remain unemployed/under-employed with a UBI.
UBI payment amounts should be linked to GPD so there is a feedback loop linking the payment, productivity and the number of people choosing to work. It should also ramp up slowly over 10 to 20 years to allow the economy to adjust organically
The end game is the same
The government goes broke and takes back even what entitlement you currently have even before UBI
@Lance your right and the math backs you up.
@Adrien your wrong and the math does not back up your idea.
@@calebromo1 Incorrect
Its only been tried once and only once.
Finland
What happened?
You obviously are unaware of the singular only relevant piece of data.
Which makes me wonder why you comment with no data or math to backup your opinion?
@@calebromo1 Well, i wasnt 100% correct
TECHNICALLY it was tried on Canada for 2 years but called CERB as opposed to UBI
The result was even more extreme than the Finland experiment
The resultsnt loss in government revenue was exorbitant to the point where Canada is now the worst performing Civilized Economy on the planet due to inflation, skyrocketed interwst payments and the resulting government cuts to remain solvent.
Although not called UBI, the description and reasoning behind the payments checka all the UBI boxes.
So i digress,
2 exampmes
@@adrienwatson2179
Do more research into the math behind the economic. Quoting single points of situational attempts, is not the same as doing the math on. Your argument is using typical political logic to back your bias. I don't care about red or blues pathetic claims to economics using none repeatable data. Again, do more homework. I'm not your teacher, do your own work and check your bias at the door if you want the truth.
The solution that has come in on the research that I haven't seen many people talk about is wage adjustments. Because everyone on the lower-earning side would have a survival budget supplied by the UBI the businesses could pay less in wages. Survival would be covered by the UBI while employment becomes a source of quality of life and luxury access. In this case, the wage expenditures go down for employers of unskilled labor for example. If an employer is supplying a full budget of $3000 per month for the employee they would then be able to pay $2000 per month under the UBI amount from the video knowing that the employee has the same buying power. The difference can now go toward other budgets within the company with the possibility of growing the value and return of the company as a whole. This would lead to more small business entities which have historically proven to improve economies and function as the "backbone" of growth and stability.
When I think of the UBI, I think of that study on how much money a person has affects their happiness. If we took the figures from that and used it as a border. So, for instance, once someone earns more than that figure, half the additions go back to the government? I feel like something like that might help, at least a little bit.
Uploaded 2 minutes ago? As if a Friday could get any better!
6:24
Basic universal income wouldn't remove the need for other welfare systems and their bureaucracy, but it would allow said bureaucracyto operate with lower funding and fewer rules and still provide something for those that would otherwise fall between the cracks of the system, and it would make getting a application handled less urgent.
"As economists, we should always be stress testing ideas to make the lives of economic participants more comfortable"
This is such a mild-seeming statement, but it's actually a massive condemnation of objectivists and libertarians. The ones who would shout from the rooftops if literally anything was tried in order to balance the books and/or living conditions of normal people. That sort of thing might cost them a piece of the money/power they receive just for owning capital! There are so many anti-progressives and reactionaries who choose to shrug their shoulders and say things like "It's too complicated to fix" or "It works fine for me, you must be the problem". When sentiments like that are so common, it's understandable why radical anti-capitalism is increasingly popular among young people. Here, though, it's so refreshing to hear even the most basic of progressive ideals stated as a given by someone who analyzes the world as it is. It makes me feel like the drive to build the best systems possible should be taken seriously and not dismissed out of hand. If economics is a science, it should have the goal of all science to push the boundaries of human understanding!
Thank you for taking the time to reason through this thought experiment and sharing your "results". You are doing good work, and I hope you never have to leave your home country just for a better tax rate. 😆 Cheers
I would find it interesting for this channel to cover UBI's little sibling, negative income tax. Creating an income floor for a society.
The main problem I see with this is the political will required for getting everyone on UBI is much less than a negative income tax. But it seems like a topic that would be interesting to explore
The only practical difference between UBI and NIT is that UBI is a stable source of income, but NIT requires you to do your taxes to get the money. If your comparing NIT pasted onto the current tax system vs a monthly UBI for the same amount, imagine what happens if you lose your job. If you lose your job with UBI, you still get UBI. It's a stable and predictable source of income. You don't have to do any math to figure out how much you'll get for a given month. If you lose your job with NIT, you get nothing until you file your tax return at the end of the year. You'll have to take out a loan to access that money and pay it back after your tax return, which is a hassle and allows a rich person to extract some of your NIT payments in the form of interest.
The problem isn't as severe if you evaluate taxes monthly, but that would be a nightmare for anyone with multiple sources of income or otherwise complicated taxes.
So, to sum up. The net cost of NIT is the same, but it's less administratively efficient for both user's and the government. It's literally just a worse policy. Assuming you have the typical proposal for negative income tax. If it's progressive in some way, you have the same "welfare trap" problem as other means tested programs.
I'll make a video on it.
Can we have a video on the results of UBI research experiments rather than speculation of what we think can be or could be?
The problem is the more recent experiments and trials were not of UBIs. They were toned down versions which the early experiments showed didn't work. Therefore all the recent experiments haven't delivered the results promised by a ubi.
@@StuartChignell well that was very general. Can you give specifics because the research papers I have read does not show that. Which research are you comparing. And if UBI beginning experiments did not work then why in scientific method would they keep retesting it? Even Einstein would call that insanity. How about the practice of refinement and narrowing down which variable was the factor that provided success because as a society I imagine we want a successful society where needs are met and not economical tyranny like we had with royalty and slavery.
The UBI should be planned in multiple countries at once. And together with implementation of 8 principles of Creative Society. Only in such case it will work well for sure.
My understanding is that the only thing Universal about Universal Basic Incomes is that it increases the frequency and duration of unemployment, presumably because there is less drive to get a job immediately when you've been laid off, and the barrier to exit an employment agreement (for both employer and employee, but primarily for the employee) is much lower. Basically, people are more likely to quit when they feel their job is too whatever... too stressful, too boring, too demanding, too dangerous, too not-at-home-playing-video-games, whatever.
This was shown in the Indiana experiment by the department of labor, San Francisco's now several attempts at a UBI, Denmark and Sweden's attempts at something approaching a UBI, etc. The only ones that haven't had this problem, theoretically, are the Communist countries where you didn't get to "quit" your job, and even then, they had different problems... much lower worker efficiency, for example.
@@cassiecaradoc2070 I have not seen it increase unemployment. I have seen it increase entrepreneurship. And considering there are less than 10 nations that are communist and those nations have not done any UBI experiments, makes me go hmmmm. Since I have lived in San Francisco, I have never once seen any attempt at UBI where it is a universal Basic Income meaning there is no means test. I have seen reduce drug and alcoholism, increase health and mental health, decrease unemployment, increase entrepreneurship, decrease.suicide.
part of UBI is you're going to get rid of most of your individual social programs, which would at least make it more efficient to get money to the people who are already on or should be on these programs, but since you're expanding the pools to everybody the overall cost goes up
This is NOT true.. The libs want UBI to be inlcuded with all of the others free welfare handouts.. People will literally have enough handouts to never have to work.. They can just lay around and smoke pot and opine on their love of Che Guevara and other murderous socialists.
UBI will likely become possible through the increasing automation of labour over the next few decades.
By taxing the labour of machines and AI, a lot of money would likely become available
UBI should be structured based on your qualifications though. That way we can continue to incentivise education
Please keep in mind that no welfare system is perfect, and speaking as an American who was below the poverty line my whole life and did not qualify for all the support we needed, there are people who fall in the cracks. My family ended up with nearly $50k in credit card debt, to us clothed and fed. We did not dare get sick enough to need a doctor... at least my parents didn't. They were able to get me on Kid's Care, but that still meant the sliding scale (which was still generally more than we could afford). Because my mother was a substitute teacher working in multiple districts, they required her to provide stubs monthly to determine our eligibility for the next month... so we qualified sometimes, but the months we needed it the most, we did not qualify.
I like the idea of a UBI, but we need other things with it... namely, tax incentives to businesses that provide a living wage, a ceiling on inflation levels, rent caps or relief, Universal Healthcare, Proper funding for public works.
You covered the argument that ubi would disincentivise entrepreneurs, but one of the arguments for ubi is just the opposite. If people didn't need to work gruelling hours just to survive we would be in a much better position to start our own businesses.
I disagree. If you have a basic income that covers your expenses, you have no need to start your own business. I'm a Dane and although we do get money from the government for studying, we barely get enough to survive, so if we want to earn more, we have to take a job or get creative. With the inflation it's practically get a job or get creative, as massive debt isn't exactly alluring. Furthermore, the money that students and less fortunate citizens (such as the unemployed, elderly and handicapped) actually get from the government, isn't something everyone gets and its set at pretty much the bare minimum deliberately, in order to scare people away from choosing that option. Taking any kind of education, even the lowest paid one, will still yield twice the income of what's obtainable through welfare and most of the time, it's 3-5 times as much. And the ability to go from zero to everything, without everyone getting that tad bit extra (only those who need it the most), has enabled far more to get creative in their attempts to earn more and get a livable life, rather than scraping by.
Starting and maintaining a business requires a mindset of its own, as there will be no one handing you money when running that. Wanting a UBI with the excuse of making it easier to start a business, is the wrong mindset. No one will come to you and give you anything. You have to do everything yourself, especially in the beginning, as in the first few years you will have to work all the time, in all your waking hours and never take a day off. A UBI won't make that easier either. The competition doesn't get easier with a UBI. It'll most likely get harder for those who expect someone to come and help them by injecting money into the business. That won't happen. Everything is of ones own accord and it is way, way harder, than scraping by with a 9 to 5 job.
To start a business you must work grueling hours just to survive, for a decent period of time anyways.
@@Arterexius a UBI would not stop all the real entrepreneurs. This would not stop small businesses nor medium sized businesses from being started. I mean YOU may think this way, but others do not. No one survives on 1k a month, and the fact you don't get that is what keys me in to you being out of touch on the subject.
@@CaseyTheBrash I'm not out of touch on the subject, but it's pretty clear from your comment alone, that you actually don't have a clue about how economics, capitalism and businesses work. A UBI won't benefit entrepreneurs. Especially not if you insist on making classification between "real" and "fake" entrepreneurs, as there is no such thing. You can't be a fake entrepreneur. You're either an entrepreneur or you're not. There is no middle ground in a world where you either make money or you lose money.
The entire purpose of starting a business, is to make money. The entire reason a business have for existing, is to make money, regardless of how big or small it is. Throw in a UBI and you remove the reason to start anything. You have no reason to start a business to make money, when you can just take a 9 to 5 job and make whatever extra you need on top of the UBI.
Entrepreneurship isn't about making new things or any of that fancy other stuff that's always mentioned. That's all just marketing. The real purpose is to make money.
And to say I don't get it, is to miss the point entirely. I'm a Dane. I'm literally from a country that have a welfare system which pays a "UBI" to all the elderly and the sick who can't work, the workers who've lost their jobs, the students who's currently under education and the few who've fallen out of the education system and needs financial support until they can get either an education or a job. If that day never comes, then they'll just remain on the "UBI"
But our businesses doesn't get a universal, basic income and the entire country's business owners, large and small, doesn't want it and neither does any of the entrepreneurs. They even use the same reasoning as I wrote. So now you have a problem. You gotta prove that an entire nations business owners, large and small, doesn't understand what it means to run a business. I'll be looking forward to that.
As a final note, our businesses can seek loans, grands and tax cuts from the government, if they're in a rough time and needs some leverage. During the Pandemic, our government lent hundreds of businesses money throughout the pandemic, to help them stay afloat and make it through to the other side. There's no need or reason for a UBI in business. If you think so, you simply aren't thinking creatively enough.
@@Arterexius you literally refuted your own talking points.
A UBI would not stop entrepreneurs. It was a false statement the first time you made it, it still remains such.
The assumption you make is based on internal feelings you hold, biases you promote and subjective reasoning. Sure if all humans reacted the same way to UBI you would, maybe?
You comparing any EU country to America makes me give you the side eye on your dismissive statement I know nothing about [INSERT WHATEVER YOU SAID HERE], Because quite frankly, that's laughable.
Any and every single business in America takes whatever tax cut they can get. The larger you are in America the more subsidized you are by tax dollars. A UBI would just be one more tax break for them and they would take it. So yeah, forgive me if I ignore 90% of your apples to oranges comparison.
I still stand by what I say, the money involved is not enough to dissuade people who would have the drive to enough to found their own businIss. It's absurd to even suggest it. In fact, it would present greater opportunities to people less fortunate. If basic needs are accounted for risk aversion becomes less of an issue and people would be willing to try more ventures.
You think you may understand America, but you don't. Our "capitalist" system does more to hold us back than promote us.
Side note, right wing people in countries that promote leftist ideals preaching American propaganda to Americans is weird. Let's not.
The world always needs more discussion on topics imo. Just "discussion" and not random off the cuff thoughts. My one issue with the flat payment is location living costs. It really needs to be tailored in some way.
Great episode! I wish you mentioned Andrew Yang's VAT (value added tax) idea and your analysis of it as a way to pay for UBI.
Most countries in the world have VAT already, I was surprised to learn, from a different channel, that USA does not.
You should do a video on Negative Income Tax as an alternative proposal to UBI
They're functionally the same. Having a 50% tax rate and paying a $20k rebate has the same effect as paying $20k and taxing everything else at 50%, or paying $40k and taxing all income at 50%. Either way you're left with $20k plus 50% of everything else at the end of the year, it's just a matter of what order it happens in.
@@Roxor128I see.
Once AI and robotics truly become good enough to begin replacing humans in the economy en masse, two things will occur:
1) The governments of the world's advanced nations will have no choice but to begin creating payment schemes based on IQ. Fundamentally, for example, if any person with IQ below 100 can be replaced with a robot in any job which they can conceivably be trained to do, then this person is de facto disabled from birth. But this person is still a voter. So...
These schemes will, perforce, rapidly take on the character of a UBI, especially if the prowess of AI keeps increasing until the majority of people around the world are unemployable.
2) The cost of goods and services will simultaneously drop through the floor.
Robots don't get sick, don't have bad/sad/lazy days, don't take vacations, don't have children, can work 24/7/365, etc, etc, etc. So, suddenly, the cost of manufacturing a good begins to asymptotically approach the cost of raw materials plus energy. This means that a UBI will actually become affordable. Basic food, housing and clothing will suddenly be so cheap, that it will not be a problem to provide a comfortable baseline living standard to literally every citizen, regardless of their social position.
I'm convinced that UBI requires some more radical changes to be really viable, like substituting ALL taxes with an unique tax appplicated to all circulating money similar to what Gesell proposed as "expiring money", focus the government on laws and less on regulating market and others. Interesting ideas have been proposed by Giuseppe Bellia in his Anthropocracy concept, but unfortunately it is almost unknown.
Land Value Tax/Georgism video!
I feel like you are trying to look at these things as neutral as possible, great work!
I didn't feel that with this one
If a UBI would transfer capital from wealthier people to poorer people and increase spending (since wealthier people spend smaller proportions of their incomes) thus also increasing the velocity of money, wouldn't that be a good thing?
Yes in the short term there would be demand pull inflation as the economy doesn't produce enough consumer goods but as production tilts from higher value goods like sports cars & jewelry and financial instruments (wealthier people spend a higher proportion of income in investments) to consumer items like groceries & kitchen utensils, inflation would slowly decline
In this case, it'd probably be best to introduce UBI slowly to give enough time for the economy to adjust to demand changes
There's a number which bugs me in this. It's that the US would only spend .5tr $ in "welfare". A UBI wouldn't only replace welfare expenditure. It would replace any form of direct gov payouts and subsidies up to the value of the UBI as well. Meaning most social security and many forms of tax breaks as well. UBI doesn't mean slap a handout ontop of the current system - it means a fairly comprehensive overhaul of social security, welfare and tax system, reducing bureaucracy across the board and reducing the need to use taxation as a bludgeoning tool on the economy.
One thing that you missed is the changes to economic efficiency caused by economic redistribution. A lot of people are effectively priced out of the job market, because they’re in a desperate position that forces them to make very short term decisions. As seen in Northern Europe, raising the baseline causes more people to have the capacity to persue advanced educations and start businesses. It also changes who is employed: students and single parents will work less, and their jobs will largely go to existing unemployed people. Also, removing gatekeeping systems removes work from both ends of those transactions: people spend a Lot of time engaging with systems trying to prevent benefit abuse, and not doing so frees up that energy and time to let those people better care for themselves and improve both their lives and their ability to contribute
I really loved the idea of an UBI but I was concerned for some of the same reasons you brought up in the video (mainly inflation). It's sad that you reached a similar conclusion to what I did but it's nice that now I'm more well informed.
The inflation argument shouldn’t be taken too seriously. All welfare programs that target poorer people are inflationary for the same exact reason. The inflation is purely demand-driven, meaning the fed could control it with monetary policy.
@@youtubeviewer8968 sure welfare programs exist but they don’t span the entire population without exception
This video isn't really informative. It's a bunch of misleading political arguments couched in the language of first year economics classes and presented as indisputable despite a complete lack of any actual evidence being presented.
I suggest you watch the video again and replace UBI with some other government program, like public schools or roads, and see if the arguments are still convincing.
I'd really like to see more discussions around the idea of a Guaranteed Minimum Income.
You should ask Scandinavians about that
That seems like a surefire way of encouraging some people to do nothing. Specifically, those whose skills would only land them a job slightly above the guaranteed minimum income, while costing them time.
GMI just seems like a mix of UBI with what we have now. It wears away at some of the advantages of UBI and negative taxation so I'm not sure what it brings to table that we don't already have.
What you're highlighting is the real reason ubi won't be implemented: poor people won't work for slave wages if they have government benefits
@@guncolony
Very few people talk about a negative income tax. For every dollar you make below a certain "basic" amount, you get paid a fraction of that amount. For example, a 50% negative income tax set at $2000/month would mean that for every dollar less than $2000, you get 50 cents. If you have no income, you would get $1000/month. It incentivizes work as much as you can because even if you earn $1, you are 50 cents richer.
Something that people forget is that it also helps with entrepreneurship. Well, any social safety net does. People are more willing to take that risk of starting a new business if they know that there is a safety net if they fail. And, to a point, the better the social safety net, the more willing people are to take the risk.
We have to make the change from a consumer society to a needs society. We have to do this together. And we will all feel better after. The Universal Basic Income is one step in the right direction to end poverty. An other thing is a Health Insurance for everybody and Studying has to be free for everybody.
The problem with UBI is it can be taken away by those who disagree with you.
its universal it wouldnt b taken away
@@eg1525 you could say that in 2019.
@@jurajo.2129 ok said it in 2019
Many folks have no healthcare. If Yu can't be healthy and need doctors then we can't get decent jobs.any need mental health care and basic ins. We also need to plan getting off benefits down the road. When we reach a basic subsistence level we can pay more taxes and pay for our own ins. The ins needs to be expanded under. A. C. A. Get a clue America we are becoming a s hole country whicheads to revolution and we don'tean trump ste take over who h benefit him and family of crooks.
you could means test anybody or just make laws to hobble people you don't like. doesn't really have anything to do with UBI as a policy. especially since U part. GMI is the one where you're suppose to exclude some people.
The heart of the UBI proposition is that people naturally want to be productive, but the profit motive makes all endeavors that don't serve the interests of the rich unviable.
One similar proposal I have heard that is much cheaper is the minimum guranteed income. How it works is each person is entitled to a minimum income and this amount slowly phases out as your income grows. I think this could work as long as the clawback rate is less than 30%.
That would partially solve one big problem with the UK's welfare system, wherein if you're claiming unemployment benefits and manage to secure part-time or one-off work, they simply subtract your meagre income from your benefits, usually negating them (since the benefits are roughly equivalent to what you could scrape together doing odd jobs). This massively disincentivizes people on benefits to actually take small steps to finding work, since the choices are: stay on benefits and receive £x, or do work and receive £x.
@@ThomasVWorm a UGI is a lot more transparent and involves less overhead than sending everyone money you'll just take back later even if the net effect is the same (and the net effect is not necessarily the same due to how marginal tax rates work)
@@boiledelephant the UK already uses some bracketing/marginal withdrawal for the WTC, currently at 41% above the calculated entitlement.
@@ThomasVWorm perhaps. I was thinking more about overhead in terms of collecting, managing, and sending out a bunch of extra unnecessary money to people who would just end up paying it back (which they also have to predict and manage and save until tax day etc). But it's true that there are things to consider either way, like for example deciding what interval matters for determining each person's payment, and how they'd file for it...
With this low earning workers would just quit. The unemployed would be discouraged from getting jobs. Why bother when you get the same $ anyway? The difference between working and not isn't the money you'd make. It becomes the money you'd make minus the guaranteed income. So unless the job really paid a lot, why bother?
I'd suggest we reduce taxes first before even considering UBI.
The less money taken out of your paychecks, the more money you already have (and your average low-income earner is already out almost $10k to $30k by the end of a year due to taxes).
The upwards pressure higher consumption has on inflation would be a valid point if the country has no idle productive capacity, which most countries do.
The thing that really drives that consumption inflation is the wildly large profit margins modern companies employ.
You basic understanding of economics is incorrect.
I think UBI could be implemented by giving stocks or ETF units to every citizen. That way, whenever the corporate sector increases profits due to automation, then public gets dividends. And companies included in the ETF, could get some incentives, that helps them grow.
Doing this would create a lot of inequity in the business market (between big companies who the government was buying up shares of to spread around and everyone else), and catastrophic systemic risk during a downturn (by making the welfare system dependant on the performance of the stock market).
That's just quantitative easing with extra steps
that's kind of how compulsory retirement funds work. more money for the blue chips I guess.
Thanks for covering this very interesting topic. In Susskind's book A world Without Work, he talks about the Value system and satisfaction 'work' provides us, which a UBI could not provide, notwithstanding the other problems you mentioned like inflation etc. He instead proposes a 'CBI' (Conditional basic Income) which made alot more sense to me, if a BI is needed at all !
Additionally, Like you put so well, it's a fascinating topic to think about. In some ways, the UBI via the the Covid stimulus was a big joke, as to what it did to the economy and the world.
Instead, I liked my country India's approach, where money was instead injected in strategic areas to stimulate demand, and it shows why India is performing relatively well (but it may all get undone if the current FDI outflows continue due to strengthening dollar).
Thanks for what you do !
No Chinese food, though?
@@adamcetinkent what are you blabbering about?
@@adamcetinkent A World Without Wok scarcely bares thinking about
Ahh yes "a world without Wok" a true classic, I remember reading it while studying gastronomy, it really depicts how dystopian the world would be without Chinese food
Hilarious stuff on my 'Wok' typo !! Haha
Even after over 30 years of research into UBI, it still requires consideration from a broader vantage than existing economic theories and monetary policies. Never seen a study that shows negative results for UBI (though some studies have been wrongly interpreted that way), but the fact is that until it's done at scale, we just don't know for sure. As for inflation, oh my, so many factors. However, the percentage impact which US government checks have played on US inflation certainly seems minimal compared to supply chain issues and profit gauging. As such, I remain in convinced that inflation on a properly taxed and managed economy would immediately result in inflation. Then again, when basic nessecities like housing and food are viewed solely as markets where profit I king, then any opportunity for raising prices will be taken. It might require more 'controls' to stop runaway inflation.
P.S. As someone who followed Andrew Yang's campaign with a lot of 'skeptical/hopeful interest', I think he certainly got to the point that he truly believed it was not only minimally possible but practically possible, though he always knew it was a long shot, to get UBI to happen.
I am a supporter of UBI in some form, so it was nice to get a sober critique on it. Now, you base your analysis on the US economy and the cultural specificities there, but what about other countries such as the Scandinavians? There has been done experiments with it in Finland that seem to prove very succesful, with the most significant change for the test subjects was reduction in stress levels leading to better health and therefore less strain on the universal health care system (savings). I would very much like to see another video on the subject that doesn't focus on the US :)
It only works in homogeneous societies where people have the same values. If your population is diverse then it does not work because the lazy take advantage
In what way was the expirement in Finland succesful and in what way was the setup a good representation of a full economy?
Also, I'd like to offer some counter-criticism:
I don't think in this case that a UBI would increase demand in the way you might think. As you assert, the main beneficiaries would be low income groups who already struggle with paying for utilities, insurance, etc., and as opposed to stimulus checks, this might rather put out a safety net under those groups.
Also, like I mentioned above, additional benefits to the economic system would lie outside of direct spending on the UBI, since it would affect other parts of the economy as well. So the potential government savings would be present across the board. Less sick days would also lead to higher productivity and thus revenue for private and public enterprise alike.
Those experiments were designed to succeed, they can't be considered "realistic" as there was no way for them to fail (they were politically driven to reach a predetermined result, not a real one). They only permitted a select number of people (< 1% of society) to take part. This avoided hyperinflation and it meant that everyone else would pay for it (via taxes). The moment you try to bring this into use as a real UBI (i.e. for everyone), the whole thing fails. That's just basic economics. Also note that Finland and the other Nordic Countries are very highly taxed (one of the main reasons most people move away and why most businesses never go there).
Agreed. A lot of this video was very US-centric, while I am most familiar with UBI discussions in the context of UK and EU. Eg: I remember reading years ago that, in the UK, a poverty-line UBI could be completely paid for by completely replacing several existing benefits (eg. unemployment, pension), including firing the relevant admin staff.
I had also heard that the experiment in Finland was widely viewed as a success, but it's not even mentioned.
Even looking at the US-centricism in the video, I think there's a lot missing. Eg1: Most discussions of UBI that I've seen suggest that the aim is to raise all recipients above the poverty line; $12k is not enough for that in most/all of the US; so the monthly amount would need to be much higher and also explicitly inflation-linked. Eg2: The implication that higher income or capital gains tax is the only possible way to fund UBI is a bit of a strawman - there are also corporation taxes, and it would make a lot more sense to raise those if you're worried about the impact of automation. (It would also be a good idea to remove the US-specific loopholes that encourage international corporate tax avoidance, eg. the fact that companies expect that there will be amnesties about once per decade that allow them to repatriate overseas profits virtually tax-free.)
you are my favorite Australian
A really important argument for UBI that you didn't really address is that UBI recipients would be more likely to start business and produce goods and services (as shown in many trials). Whether or not this balances out the inflationary effect isn't knowable without implementation.
then the businesses where they used to work can't find workers.
if people received money for nothing, they would have no incentive to start a businesses. It would have the opposite effect.
@@XMcBainXUSA people aren't lazy parasites. So no it wouldn't have the opposite effect(as proven by so many experiments and studies) because people want more than just the minimum amount and want to live life and not just skid by.
@@MrTophatcat that's obviously not accurate. There will always be plenty of people who want to do the absolute minimum possible and our brains are (rightfully) geared towards that as well. A good example is during lockdowns, people wanted to improve themselves with their spare time, but many people ended up becoming less productive even though they didn't want to.
@@jayasuryangoral-maanyan3901 Thanks for necoing an old comment chain but evidence supports that generally work either remains the same, is reduced slightly, or improves . For example, the Netherlands they did a UBI-esq test to see if fewer rules on getting government assistance had any effects and work suppression was not one of them. Or in Madhya Pradesh india where they found that
"According to the first communication of the pilot projects, positive results were found.[31] Villages spent more on food and healthcare, children's school performance improved in 68% of families, time spent in school as well as personal savings nearly tripled and new business start-ups doubled.[32] The study has also found an increase both in economic activity and in savings, an improvement in housing and sanitation, improved nutrition, less food poverty, improved health and schooling, greater inclusion of the disabled in society and a lack of frivolous spending."
(socialprotection-humanrights.org/wp-content/uploads/2016/04/Indias-Basic-Income-Experiment-PP21.pdf a more academic source if you don't like Wikipedia )
Obviously those are just two I found on Wikipedia(not the best source) but if there was solid evidence that UBI reduced the amount of people working then God knows people would complain about it loudly.
An honest discussion about a universal basic income should probably be a multidisciplinary discussion. Only looking at it from a financial perspective is a bit hollow in my opinion. For example I've read some examples where giving poor people UBI for only a couple of years makes them use a lot less alcohol and drugs, take better care of their children, start new studies etc which while being positive for the economy in many ways also makes a country more humane and lowers stress levels (and all consequences of high stress because of not knowing if you can pay next months rent for example).
One of the problems in my country with the welfare system is that there are a lot of strings attached that add a lot of stress to one of the most stressfull situations a person can find themself in, not having the money to pay for their basic needs (food, house etc). I think UBI or some form of UBI could be part of becoming a more humane society.
The real reason is poverty is a feature of USA.
Conservatives oppose welfare and ubi for they destroy work incentive, by what is actually meant is the incentive of the poor to do the needed dirty work when the wage from work is smaller than the government grant
Id be really interested in seeing a similar video on the economics of "basic" as done in the books of "The Expanse". Honestly, just a discussion on the economics of that world would be fascinating.
You do realize that the "basic assistance" is literally dystopian and wasteful in the extreme? People who are intelligent and eager to learn and become productive instead spend decades eking out a shitty living waiting for the chance to get the training/education they need to actually work a job. It's insane.
@@Raptor747
It's likely the root the world will go down, also it seems a bit dramatized in the show with that homeless doctor guy on a waiting list for 14 years. In the Expanse universe half of the population is working and the other half is doing nothing, that leaves enough spots for anyone who has motivation to be able to work and advance their standard of living, you only need to be 51st percentile. Half of the population isn't productive or cares about work in this world anyways, this will become even truer in the next 20 years as automation winds up further and will hit like a truck when big employers like transportation are automated in the next 5-10 years.
Another great video. It seems to me that workplaces are becoming more automated but the workers are not sharing in the benefits of the automation. I am currently in the process of automating my own job (We are under staffed so I will just do other work). I’m not complaining about my situation but hypothetically, in a completely fair world, I should make more money or be able to work less for the same amount after automating my position. In the real world I will continue doing just as much work at the same rate while my employer takes the benefit. I make a comfortable income and have little room to complain but I think it is interesting that I am a micro example of the macro problem.
This has been a long term and broad trend (at least in the US). For decades the overall productivity of the American worker has risen while their wages stagnate.
As a business owner who has automated several positions in a very literal way, the money saved by automation is usually dumped right back into the company.
Who took the risk and invested the capital of pursuing automations? The employee or the employer?
@@kylendmiller Nice point. And who gives the employer a chance to make their risk pay off? Surely the individual investor/employer is not operating everything by themselves. They are entitled to the biggest gains for sure. Doesn't mean everyone else is not due at least a minor fraction of that.
@@victormendes956 I understand what you’re saying… But I think you are wrong. there is a simple contract between an employer and employee with the only benefit being a paycheck. If the company goes under, should the employee have to help pay for all of the equipment?
@@kylendmiller a musical conductor is nothing without his musicians. Remove your workers and your company ceases to function. Workers grow less tolerant of this uneven balance of value as it becomes a question of endless toil to make money for someone else while not even being able to make ends meet.
5:50 UBI payments being below poverty line is not an issue. UBI is not a get-rich or remove-personal-accoutability scheme. As you said on 14:54, the solution is somewhere between those 2 extremes. UBI being a helping hand is all it needs to be. It doesn't need to be a free pass for a comfortable lifestyle. It's fine for someone relying solely on UBI to be below poverty line.
Your point cannot be stressed enough. UBI should not be meant to single handedly uplift someone from poverty, hence it should be below the poverty line. Thereby individual are incentivize to work to really improve their standard of living. Yet there are sufficient benefits to UBI on the micro level -- 1 parent may choose to not work (full time) and take better care of children/family (a point being parenthood is not rewarded by the current economy, yet so important), taking more risk in entrepreneurship or creative endeavours, etc.
@@cp995 By definition it cannot be a UBI if it does not provide enough for the universal basics.
@@TechnoMinarchist universal basics are just that. Poverty line is not necessarily "not being able to afford water+food+electricity bills" (as in, ALL of them), it's often much higher or lower, depending on how someone defines this. For my country, the poverty line could be as low as 1200 PLN for 3 people family (minimum subsistence level) or as high as 2500 PLN (social minimum, no clue what is the English name, this covers all the basics plus social contacts, a job - eg. commuting - etc.)
This idea that we can’t have comfortable lifestyles unless we grind to death is a brain wash tactic. Should everything be given? Maybe, maybe not. But I encourage you to think about where the idea that we can’t be comfortable without “work” comes from. We should guarantee a certain decent, and comfortable, living situation for everyone, because it is in fact within our means to do so.
I think the real thing UBI gives people, is their time back. And time, gives us the capability to look for happiness, fulfillment, personal growth, and spark human creativity; which is the backbone to innovation.
@@JohnnyPeraltaa I don't think the "can't be comfortable without work" is an ideological position. That is deeply rooted in the reality that we're not a civilization with infinite resources and a "free" way to exploit them. I challenge the assertion that it is within our means to provide a comfortable life to everyone, but that also depends on your definition of "comfortable".
I agree fully with your last sentence though, which is the primary reason why I support UBI. If people aren't spending most of their time trying to just survive, they will be able to spend that time on something more worthwhile.
Thinking of UBI as a Rich to Poor wealth transfer can help recontextualize it. It's essentially a more free market solution to per capita taxation and subsidation.
Can you please make a video, explaining the economics of universities and colleges etc...
Funded by the people's taxes in each State
“Wahhhh you’re disincentivizing my entrepreneurship by taxing me the same as everyone else!!” 😩
- Guy with more money than he can spend in 10 lifetimes
UBI is a must in future economy. Otherwise, in the future, you'll only find a handful of rich people and their AI robots. We will realize this when AI is smart enough to replace customer service.
Exactly unless billionare bailout maniacs we see in the comments suddenly decide that mass culling or purging the millions that will be layout by the ai and automatization is beneficial for their overlords
Markets, left to their own devices, follow a power law. Lots of money accumulate with a few. That's not ideal for loads of reasons. It puts a lot of power in the hands of a few, it puts a few people in gatekeeper positions for larger commercial/communal ideas, etc.
A UBI counteracts the power law. It moves money from the few to those with less. It moves power through society. It allows more ideas to get funded and grow. It accelerates progress.
Really surprised there was no mention at all about real cases of UBI experiments in other countries: Finland in 2017, Germany in 2020 and so on
That wasn’t UBI. That was money handouts for a select few. Universal is in the name, everyone gets it or it isn’t UBI. Also, it’s a one way road to creating a welfare “universe”.
Germany never had a UBI.
@@yeetyeet7070 Basic Income Pilot Project seems pretty much UBI for me. Even if it wasn't doesn't matter, is just an example