I can't see how. The government has no money if its own. It depends on taxes. Currently about 47% of working citizens pay no federal income tax at all. I like the idea of basic income, but I cannot fathom where the money comes from.
We could separate the concept of business and personal income where the basic income is taxes on business. Also, crank up efforts to eliminate tax dodges by big companies.
Anyway, I did a quick multiplication of average cost of living times our population. I get $10 trillion a year. Yeah, have no idea where they'll get that from. A stipend good enough for a chunk of food or rent with a limit of one per head of household would be a fraction of that. Probably doable with U.S.'s tax revenues.
> Currently about 47% of working citizens pay no federal income tax at all.
That sounds a lot like the usually cited figure for the share of US households that don't pay federal income tax (which tend to have less adults per household, and a lower employment rate among those adults, than households that do pay federal taxes, so its unlikely to be much like the percentage of "working citizens" that don't pay federal income taxes.)
I think it will work fine for about two generations. People who've developed a career will probably still work, since much of the hard work is done. And there's a cultural push toward work.
But culture follows the facts on the ground. Over time the concept of a work ethic will erode away. I suspect once it becomes acceptable to not work a whole lot of people will be perfectly happy smoking pot and playing video games. It won't take that many to break the system.
At the end of 2 generations, people may not need to work or 50+% of them will be forced into permanent unemployment. What do you do in that case? Does the state toss democracy out the window by culling the unemployable? Does the state implement basic income to prevent such a tragedy from occurring?
>At the end of 2 generations, people may not need to work or 50+% of them will be forced into permanent unemployment.
Or maybe not. People have been predicting that for hundreds of years, and it still hasn't happened.
>What do you do in that case? Does the state toss democracy out the window by culling the unemployable? Does the state implement basic income to prevent such a tragedy from occurring?
The problem is UBI might cause big problems in the absence of any other problems. Certainly if labor becomes mostly worthless I'd consider it, but that's certainly not the case just yet.
> I suspect once it becomes acceptable to not work a whole lot of people will be perfectly happy smoking pot and playing video games. It won't take that many to break the system.
If the system is constructed so that increasing defections from taxable-income-generating activity (which isn't just work -- capital income, after all, is taxed as well) decrease the real value of UBI (and, thus, the attractiveness of forgoing such activity in favor of other pursuits), then this tendency will be controlled and constrained within the ability of the productivity of the active economy to support.
As discussed in other subthreads of this thread, this kind of negative feedback is actually quite easy to build into a UBI system.
>As discussed in other subthreads of this thread, this kind of negative feedback is actually quite easy to build into a UBI system.
So you might end up with a situation where people who've never held a job and have no marketable skills find, in their late twenties or thirties, that UBI is no longer enough to make ends meet.
>>The best past experiment, in the Canadian town of Dauphin in the 1970s, was considered promising because it suggested the policy didn't discourage people from working much; only teenagers and new moms (two groups who might be better off not working anyway) reported working less.
Typically, both of those groups are low-income, and therefore wouldn't be contributing that much to tax anyway. Its precisely the idea that taxpayers will decide not to work which is driving these studies.
Money comes from the government that issues it, actually. Government operating funds come from a variety of sources, but largely, it is true, tax payments.
> What if a majority of taxpayers decide they'd rather not work?
If you mean "decide not to take actions that create taxable income" (UBI -- and government in general as increasing automation eats traditional employment -- only works with ending preferential tax treatment of capital income, so that "work" and "create taxable income" become even less the same than they are currently), then either:
(1) If UBI is variable in quantity based on distributing proceeds of a dedicated tax stream among the qualified recipients (i.e., the citizenry at large), then the UBI amount drops, and that decision because less attractive, leading to more of those able to earn taxable income in addition to the UBI choosing to do so; this is a self-limiting negative feedback loop.
(2) If UBI is not variable, and is fixed in nominal value, the reduction in production relative to the supply of money in consumer hands caused by that decision leads to increased inflation, reducing the real value of UBI, leading to the same results as in #1. Again, a self-limiting negative feedback loop.
(3) If UBI is inflation-indexed, then you have a positive feedback loop that blows up the system. So, don't do that.
This is a tragedy of the commons problem. If there are 100 individuals, then if one individual stops working, average UBI payout would only decrease 1%. So, a rational actor would stop working.
Similarly, if 95 out of 100 stop working, then the other 5 have little incentive to work, because their income is basically funding everyone else.
I'm not sure which of the two cases you're addressing; I'll respond with one comment assuming each.
If we are talking about case 1 (a fixed BI tax rate with all proceeds distributed), then when one individual stops working the basic income goes down by 1% as you say.
> So, a rational actor would stop working.
I don't see how this follows. A rational actor weighs the 1% decrease in BI plus the 100% decrease in earned income, and whatever that means for quality of life, against their preference not to work.
> Similarly, if 95 out of 100 stop working, then the other 5 have little incentive to work, because their income is basically funding everyone else.
This is not case 1 anymore. In this scenario, one of the other 5 quitting reduces the BI by 20%... of the remaining 5% of the original level. It has no effect on how much any individual is paying in. Meanwhile, with the BI amount being 1/20th its original level, some of the other potential workers are probably getting interested in working again.
I'm not sure which of the two cases you're addressing; I'll respond with one comment assuming each.
If you are talking about case 2 (fixed UBI, fixed tax rate, making up the difference - when there is one - by printing money or borrowing), then when one individual stops working the UBI payment does not decrease. If productivity falls when that worker stops working (presumably the case for most workers), then we would expect to eventually see some
inflation. It may work out to 1%, with the proper assumptions; I'm not certain.
Still I don't see why it follows that "a rational actor would stop working" - some may, but only if they decide the small decrease in UBI and large decrease in earned income is worth it.
At sufficiently high UBI level relative to earned income, that's pretty likely to be the case. At sufficiently low UBI level ($1?) that's pretty unlikely to be the case.
> Similarly, if 95 out of 100 stop working, then the other 5 have little incentive to work, because their income is basically funding everyone else.
The same chunk of their income as ever is going directly to fund everyone else. A bigger portion of their income is being diluted by the money printed to make up the rest of the UBI. But as the currency devalues, presuming they are doing things people want, they are able to demand more money for their production. The UBI is diluted toward meaningless. At some point, other workers decide to get back in the game, because the (nominally constant but really much lower) UBI will not fund the lifestyle they want, slowing the inflating.
It's none of the cases dragonwriter described, but what seems to be closest to what you're analyzing:
If you have a fixed UBI, paid for with a variable tax that splits the total burden of the UBI across all workers in proportion to their productivity, then you would see dynamics like you describe. This is, indeed, the opposite of a negative feedback loop. Don't do this, either.
If UBI is set high enough that more people drop out of the labor force than we can manage, the (real) UBI must fall by some mechanism.
It depends on how generous BI is. And if we tied it to the revenues it is funded by this percentage would balance out.
Additionally, remember this amount is enough to live on with 6 roommates and eating beans and rice. It's by no means extravagant. Most people like having stuff. Especially more and better stuff than their neighbors.
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[ 2.6 ms ] story [ 66.8 ms ] threadAnyway, I did a quick multiplication of average cost of living times our population. I get $10 trillion a year. Yeah, have no idea where they'll get that from. A stipend good enough for a chunk of food or rent with a limit of one per head of household would be a fraction of that. Probably doable with U.S.'s tax revenues.
That sounds a lot like the usually cited figure for the share of US households that don't pay federal income tax (which tend to have less adults per household, and a lower employment rate among those adults, than households that do pay federal taxes, so its unlikely to be much like the percentage of "working citizens" that don't pay federal income taxes.)
But culture follows the facts on the ground. Over time the concept of a work ethic will erode away. I suspect once it becomes acceptable to not work a whole lot of people will be perfectly happy smoking pot and playing video games. It won't take that many to break the system.
Or maybe not. People have been predicting that for hundreds of years, and it still hasn't happened.
>What do you do in that case? Does the state toss democracy out the window by culling the unemployable? Does the state implement basic income to prevent such a tragedy from occurring?
The problem is UBI might cause big problems in the absence of any other problems. Certainly if labor becomes mostly worthless I'd consider it, but that's certainly not the case just yet.
If the system is constructed so that increasing defections from taxable-income-generating activity (which isn't just work -- capital income, after all, is taxed as well) decrease the real value of UBI (and, thus, the attractiveness of forgoing such activity in favor of other pursuits), then this tendency will be controlled and constrained within the ability of the productivity of the active economy to support.
As discussed in other subthreads of this thread, this kind of negative feedback is actually quite easy to build into a UBI system.
So you might end up with a situation where people who've never held a job and have no marketable skills find, in their late twenties or thirties, that UBI is no longer enough to make ends meet.
That sounds like a recipe for revolution.
Typically, both of those groups are low-income, and therefore wouldn't be contributing that much to tax anyway. Its precisely the idea that taxpayers will decide not to work which is driving these studies.
Money comes from the government that issues it, actually. Government operating funds come from a variety of sources, but largely, it is true, tax payments.
> What if a majority of taxpayers decide they'd rather not work?
If you mean "decide not to take actions that create taxable income" (UBI -- and government in general as increasing automation eats traditional employment -- only works with ending preferential tax treatment of capital income, so that "work" and "create taxable income" become even less the same than they are currently), then either:
(1) If UBI is variable in quantity based on distributing proceeds of a dedicated tax stream among the qualified recipients (i.e., the citizenry at large), then the UBI amount drops, and that decision because less attractive, leading to more of those able to earn taxable income in addition to the UBI choosing to do so; this is a self-limiting negative feedback loop.
(2) If UBI is not variable, and is fixed in nominal value, the reduction in production relative to the supply of money in consumer hands caused by that decision leads to increased inflation, reducing the real value of UBI, leading to the same results as in #1. Again, a self-limiting negative feedback loop.
(3) If UBI is inflation-indexed, then you have a positive feedback loop that blows up the system. So, don't do that.
Similarly, if 95 out of 100 stop working, then the other 5 have little incentive to work, because their income is basically funding everyone else.
This is the opposite of a negative feedback loop.
If we are talking about case 1 (a fixed BI tax rate with all proceeds distributed), then when one individual stops working the basic income goes down by 1% as you say.
> So, a rational actor would stop working.
I don't see how this follows. A rational actor weighs the 1% decrease in BI plus the 100% decrease in earned income, and whatever that means for quality of life, against their preference not to work.
> Similarly, if 95 out of 100 stop working, then the other 5 have little incentive to work, because their income is basically funding everyone else.
This is not case 1 anymore. In this scenario, one of the other 5 quitting reduces the BI by 20%... of the remaining 5% of the original level. It has no effect on how much any individual is paying in. Meanwhile, with the BI amount being 1/20th its original level, some of the other potential workers are probably getting interested in working again.
This is exactly a negative feedback loop.
If you are talking about case 2 (fixed UBI, fixed tax rate, making up the difference - when there is one - by printing money or borrowing), then when one individual stops working the UBI payment does not decrease. If productivity falls when that worker stops working (presumably the case for most workers), then we would expect to eventually see some inflation. It may work out to 1%, with the proper assumptions; I'm not certain.
Still I don't see why it follows that "a rational actor would stop working" - some may, but only if they decide the small decrease in UBI and large decrease in earned income is worth it.
At sufficiently high UBI level relative to earned income, that's pretty likely to be the case. At sufficiently low UBI level ($1?) that's pretty unlikely to be the case.
> Similarly, if 95 out of 100 stop working, then the other 5 have little incentive to work, because their income is basically funding everyone else.
The same chunk of their income as ever is going directly to fund everyone else. A bigger portion of their income is being diluted by the money printed to make up the rest of the UBI. But as the currency devalues, presuming they are doing things people want, they are able to demand more money for their production. The UBI is diluted toward meaningless. At some point, other workers decide to get back in the game, because the (nominally constant but really much lower) UBI will not fund the lifestyle they want, slowing the inflating.
This is a negative feedback loop.
If you have a fixed UBI, paid for with a variable tax that splits the total burden of the UBI across all workers in proportion to their productivity, then you would see dynamics like you describe. This is, indeed, the opposite of a negative feedback loop. Don't do this, either.
If UBI is set high enough that more people drop out of the labor force than we can manage, the (real) UBI must fall by some mechanism.
Additionally, remember this amount is enough to live on with 6 roommates and eating beans and rice. It's by no means extravagant. Most people like having stuff. Especially more and better stuff than their neighbors.
For that matter, despite paying taxes and operating legally, some dubious companies are obviously a drain on the system overall.
> If UBI is set high enough that more people drop out of the labor force than we can manage, the (real) UBI must fall by some mechanism.
There are a few choices of mechanism, with various trade-offs, but we should be sure we're picking one.