That depends on where you live. Prior to a recent move to a high COL area, it would've lasted me a month, with $50-100 to spare (rent, utilities, and food if I went for rice and beans and the cheapest meat I could find).
Cut out the optional services (streaming services) and fuel (not driving as much, $100/month fuel cost gets reduced to maybe $20 for the isolation month), and it can work in many parts of the country.
It probably wouldn't last long in San Francisco, New York, Seattle, and other high COL areas. And to make it last, you'd need roommates, which creates a hazard with regard to trying to create/enforce social distancing. But not every city or region has crazy high rent. Some places are still sane.
Am I way out of band or does that seem like a comically small amount of money for the average American?
I live in an extremely low COL area and live well within my current means. Assuming my work dries up and I don't have any savings, 3k$ would buy me two months tops.
Just to give you an idea of how cheaply I live: Mortgage is ~800$/mo, Car is a paid off 2006 Toyota Highlander, Student loan minimums of ~400$/mo, My wife and I have a newborn, which currently isn't very expensive but we all still need to eat.
The average one bedroom rental in any given metro area, even in mid sized cities, probably lands somewhere around my basic monthy costs. So, if you're a single person in the city you might get one month out of 1k$.
And I am VERY lucky to have a bunch of cashed packed away. I assume at least a large portion of this country is living paycheck to paycheck.
That also seemed like a comically paltry move. I still have to make my payments, after all!
In addition my wife and I have spent the last couple of years with two incomes wiping away our student debt on high incomes in Seattle - so the only loans I have left are pretty low interest.
The only way I can see this working for everyone is to simply halt the economy altogether. No mortgages, no bills, free food, free medical care. Once we get a hold on the disease itself we can deal with the economic impacts.
What exactly are you trying to do here? Criticize my life choices? You don't know me or my decisions. What if I did exactly what you said but happened to fall in love with a wonderful woman who happened to have a bunch of student debt?
Why should _anyone_ to be expected to pay their student loans if all of the other sectors of the economy are going to shut down?
The biggest mistake I making here is even attempting to have a discussion with you. Bugger off.
I think this is a profoundly bad idea. It's just as dumb as the fed trying to prop things up. You're not going to solve this problem with money, but with a strong response to the root cause, the pandemic. That said ...
> My wife and I have a newborn, which currently isn't very expensive but we all still need to eat
I imagine you would get $3k since there are 3 of you.
A strong response to the pandemic will leave millions of people with no income. Many have zero in savings. These issues are tightly coupled: we can't expect people to make the right choices for everyone if doing so threatens their survival.
People working many hourly jobs net less than $1,000 per month and cannot afford to take unpaid time off. So they go to work and spread the virus. Providing them and others with enough money to at least cover their most dire bills reduces that need to go to work sick. If money is not provided to these people, the odds that they are soon homeless if their work closes down is very real.
~40% of America cannot afford a $400 emergency, all of those people are at real risk of hunger and homelessness.
Giving everyone cash allows the country the freedom to implement programs that run a real chance of preventing the spread. It also goes a long way towards preventing societal chaos as people without savings and suddenly no income are now provided a way to continue living and feeding their families.
> People working many hourly jobs net less than $1,000 per month and cannot afford to take unpaid time off.
Absolutely and those people should receive assistance through the regular channels we have available. Unemployment, charities, welfare, churches, synagogues, etc. and frankly, good old fashioned neighborly assistance.
Not by throwing money at everybody, most of whom do not need it. That's just redistribution of wealth by another means. Don't shove your political agenda down people's throats in the middle of a pandemic.
> charities ... churches, synagogues, etc., and frankly good old fashioned neighborly assistance
All of those things have displayed discrimination against groups they don't like in the past, or have an overt or covert missionary agenda. Charities have also come under fire for spending much of their funds raised on high executive salaries and not so much on actual aid to the needy. It is no surprise that much of the developed world no longer considers them a reasonable social safety net. (Indeed, in the Nordic countries the churches have largely given up their historical niche as a distributor of charity, since they feel the state can do a better job of taking care of the needy than they can.)
You could cut out the vast majority of giving people $1000 they don't need by only giving it to people that ask for it. If you wanted to go further you could check the persons last tax return. If they exceed some threshold then you could deny them.
"Absolutely and those people should receive assistance through the regular channels we have available. Unemployment, charities, welfare, churches, synagogues, etc. and frankly, good old fashioned neighborly assistance."
This probably works well in upper class neighborhoods, but a good portion of the US don't live in communities with much to spare. People unable to afford a $400 emergency or who rely on schools to ensure their children have at least one good meal a day generally dont have much to share with their neighbor. Most of the community organizations that serve those communities are in the same boat. Your suggestion also removes a good portion of people who don't attend religious services. Charities are limited in what they can provide.
Unemployment is difficult. For example to be eligible, Florida requires "You must be able to work, available to work, and actively seeking work. This includes being able to get to a job and have child care if necessary." Not many people hiring in the middle of a pandemic and further complicated by the closing of schools.
"Not by throwing money at everybody, most of whom do not need it."
~75% of Americans live paycheck to paycheck and 40% of US citizens cant afford a $400 emergency meaning that most of them do indeed need it.
"Don't shove your political agenda down people's throats in the middle of a pandemic." - You seem upset which I can completely understand in this stressful time but please note; looking to ensure that people, especially children have food to eat and can afford their most basic of bill should not be seen as a political agenda, its simply trying to be a good human.
Your point is absolutely valid, but there is no reason why the same doesn't apply to this new scheme as well. You would need to distribute the money and the same distribution problems apply. People are people.
Give everybody $1k? Who's everybody? If you're in this country illegally, do you get $1k? What about people who got stranded here due to border closures? How are you going to identify people? How will you stop fraud, double dipping, etc?
Maybe instead of creating a new bureaucracy in the middle of a crisis, use the existing systems that are already in place and just pump more cash into them?
I think focusing on 1, 10 or 100 people double dipping or potentially getting funds they should not have is besides the point. We implement this to keep people from starving and going hungry. Plenty of time to track down people who abuse the system after the crisis. As far as distribution that's not an impediment. The IRS already has a list of people and addresses and we can mail them a check. Is it complete? who knows but its a start and probably covers 95% of people. Not doing anything because of bleeding edge cases is not a solution.
The existing systems you mentioned before are not setup for mass distribution. There is no way the local unemployment office can scale up to 100x. In addition we are not going to just give money to the other private entities to distribute as they are not equipped to do so.
This. The purpose of the money is to address the immediate demand shortfall. We have until December to figure out who might have gotten more than their fair share and claw it back. Hell, even if a fair chunk is wired to Central America it will mean those people won’t starve.
We need to be A-10 Warthogging cash now and not let the perfect be the enemy of the good.
You're right, I don't get it. Its much better to have these people who are suffering under an economic collapse outside of their control go to work sick, and spread the virus before finally losing their jobs and homes and go without food instead of getting money and then using that money to buy necessities and in turn stimulate the economy. In addition the people who's children relied on school lunches should be glad they are not getting money to feed them so as to keep it out of the hands of big industry. Thank you for illuminating my ignorance I was blind to it before.
You can't live off of $1000/mo in most cities without making some real sacrifices, but a $1000 supplement would still be a huge help to people who live paycheck-to-paycheck and may not get paid for a few weeks. It'll buffer out what might otherwise turn into an inability to pay basic bills like food and medicine.
After all, only 40% of Americans are able to cover an unexpected $1000 expense. That's the really sobering number, in my view:
Well, policymakers could re-asses at that point in time if they decided to take an action like this.
If you really believe that things will remain disrupted for a long time, it seems like you could see this as a great opportunity for a basic income experiment, huh?
One of the interesting questions would be how much a basic income would affect people's willingness to work, and we would not be getting that out of this experiment. In fact, I can't imagine anything useful we'd be getting out of that experiment, except for its effects in similar very dramatic circumstances.
> I can't imagine anything useful we'd be getting out of that experiment
I uhhhh. People's ability to work and live is important. That's what we get out of it. People not starving or living in poverty is, surprisingly enough, pretty important to the economy and the ability to sell luxury goods. Regarding 'useful data':
How would the data from any experiment reach you? (there have been lots of experiments) And not to offend you but what point is there in informing people?
I would like to see an 1 euro/month basic income. Then we get a good idea what it costs to distribute. Then we should gradually increase it by an equally insignificant amount so that we can gradually observe who should but doesn't get it and how much fraud we have to deal with.
With 100 euro extra we can at least silence the folk who for the last 100 years barricaded the discussion by saying they would continue to work themselves but others... others will do this and that. Popular variations: Wimmen will stop obeying their husband. Men will use the extra money to buy alcohol. Kids wont seek jobs. etc
I think Keynes 15 hour work week provides a good hint. Wealthy people actually work more.
I think the silver bullet basic income is silly for other reasons. Our economic model is to optimize for wealth extraction. Give people 50, 500 or 1000 extra and rent will go up by exactly the same amount.
I'd still be willing to pay for the distribution experiment.
Pretty much everybody has either rent or a mortgage. Therefore giving someone $1000 towards their rent/mortgage is basically equivalent to just giving them $1000, except that it's a ton of extra administrative complexity and it also screws over a few people who somehow don't qualify but still need help.
Whereas if you make the assistance "we pay the amount of your mortgage" instead of "we pay $1000" then you're giving much more of the money to affluent people, who presumably need it less.
That's not what he said. He didn't say, "give everyone $1000 towards their rent or mortgage". He said, temporarily suspend all rent and mortgage payments. As in, nobody pays any of it. Recurring expenses are what's going to destroy the economy so thoroughly that the great depression will look like a minor downtown. If nobody gets kicked out because they can't pay rent, or their mortgage, or the lease on their business, things might actually be able to resume once there's a handle on this.
I understand how that would work for Mortgage payments as they are controlled/facilitated by banks, and the government has the ability to coordinate with banks (in an ideal case). But how might the federal government enforce suspension of rent payments? Rent just goes to landlords (regular people) and is part of their gross income filed on their taxes. If you don't have to pay your rent, wouldn't we just be moving the buck from renters to landlords in terms of finnancial needs?
The landlords are using the rent to pay the mortgage on the property. If the banks suspend mortgage payments, then the landlords don't need to collect rent any more.
If the landlords desperately need that rent just to do basic maintenance and repairs, and don't have enough saved to deal with a possible problem that might happen in the next month, then they don't deserve to own the property.
> If the landlords desperately need that rent just to do basic maintenance and repairs, and don't have enough saved to deal with a possible problem that might happen in the next month, then they don't deserve to own the property.
I'm not saying you're wrong, but what's the argument for that? On its surface, the proclamation that they 'don't deserve to own their property' seems a little draconian to me. What if a repair is required that was unforeseen and not basic?
If the repair is not basic, then it sounds like it's going to be very costly. If it's very costly, then the tenants missing a month or two of rent is not going to be enough to make a difference on the landlord being able to afford it. After all, the amount of money they should be raking in above the mortgage on the property is not generally going to be a large fraction of the total rent. So if the landlord can't swing a few hundred dollars for an unforeseen repair, then they aren't in sufficient financial shape to be owning and renting out that property, since the landlord (in normal circumstances) is fully responsible for keeping the property in good repair at all times. "I can't afford it" is not a valid excuse for not doing repairs, and the court system agrees with me.
> The landlords are using the rent to pay the mortgage on the property. If the banks suspend mortgage payments, then the landlords don't need to collect rent any more.
How do you know it goes to a mortgage? The property could be owned by a retired couple and the rent is the income they live on, or a charity and the rent is how they fund their operations.
Or it could be owned by a regular old smelly landlord who just takes the rent money and invests it in the S&P 500 -- which, if you take it away multiplied by millions of landlords, does a Bad Thing to the stock market right when you want the opposite of that.
Sometimes rent includes utilities. What does the landlord pay that with?
I imagine you also expect to waive property tax or the landlords would have nothing to pay that with either, but then what are you using to fund local governments?
You can't just delete an industry and expect it to have no untoward effect.
Landlords do not need to invest in the S&P 500 right now; keeping the stock market going is not more important than people who can't pay rent.
If the landlords are retired, they have Social Security and probably other sources of income. If they can't live on that, then they're living beyond their means and don't need to be landlords.
If landlords can't float a little money to pay utilities, then they're in desperately bad financial shape, and shouldn't be landlords. What are they going to do when one of their tenants doesn't pay rent? Just let the utilities for other tenants get turned off? I'd be OK with simply seizing the properties from landlords that can't manage their properties properly.
Then what about all the other ones? Are we also suspending utility bills? Car loans? Property tax? Grocery bills?
Why should someone paying the same total amount in recurring expenses have more of them waived just because they happen to pay more in rent and less in transportation and utilities than somebody else?
Whenever the current situation has subsided to the point where we are no longer asked to engage in social distancing, perhaps local governments should make it a priority to allow a bunch of festivals and other large public events to take place. This will create work for the service industry which will help bootstrap their sector back into motion and also give the public a sense of normalcy so they'll start going out again.
Terrible idea. Unless there's herd immunity, this will just restart the epidemic anew, this time in the people who managed to dodge the virus the first time. Social distancing can be lifted in those who recovered from the virus though, maybe they'll be able to attend.
> only 40% of Americans are able to cover an unexpected $1000 expense. That's the really sobering number, in my view
This is pretty common everywhere across the developed world. The majority of OECD nations have a lower median wealth figure than the US, including Sweden and Germany (their median wealth figures are particularly shockingly low, given the affluence those nations should have vs their national output and given the high German savings rate).
The OECD labor force participation rate is such that about 28% of persons 15-64 do not work. Of the 72% group, a solid 1/3 are typically working jobs where they struggle to make ends meet month to month. The only way a lot of people will have a spare $1,000 in cash for random emergency expense, is if you directly transfer cash to them, and even in that case they will inevitably need to spend it sooner than later.
Yeah, income inequality is not a uniquely American problem. But it's still worth pointing out that even though $1k probably seems like a piddling amount to most readers of this site, it could still help a lot of people who are significantly less well-off.
- don't need to keep beating the dead horse about American healthcare
- cars. In most European countries a car is not absolutely vital. A lot of America is "drive til you qualify", and car issues can easily be above a grand. You need a car to go even to the closest store many times, so quarantine would not really get rid of your need for a car.
The thing about rural areas, is that not many people live there.
We live just ouside a mid-sized UK town (and cities down to small/mid sized towns covers a really high % of the population). Between public transport and good cycle/pedestrian routes, a car is not a major living requirement for many.
Sure, these nations might have lower median "wealth" figures, but they also typically have lower costs of living (maybe not Sweden, but Germany does). These countries also have much better safety nets than the US. And if the German savings rate is high, that means they can weather a crisis better than the average American. Americans may make more money, but when they blow it all on an enormous car payment for a giant SUV and a mortgage for the biggest house they could possibly get given their salary, and don't save anything, that leaves them in a precarious position when they have a temporary loss of income.
My interpretation was that flat $ amounts are leaving a lot on the table, with the extreme divergence of COL in cities vs. suburban vs. rural areas.
And I agree. I don't think the federal government should frame these things in terms of absolute $ amounts (I see the same thing in e.g. tax brackets and tax credits). The amounts should ideally be adjusted based on the COL and the dollar's purchasing power in the citizen's local area.
I mean, yes and no. It isn't enough to live for any significant length of time, but it would make a material difference for those living paycheck to paycheck.
It is comically small, both in terms of impact and necessity.
It costs about $75 billion a week to pay the hourly workers of America. We can do that, even if it's only a fraction for the companies that don't have the cash on hand to do it for 4-5 weeks.
I'm in a similar situation as the OP, and have heard that argument used for me. I don't like it. In order to live frugally and responsibly, I was lucky to have the upbringing that taught me to do it, and to not have anyone depend on me so that I could focus on getting to this point. I was lucky to live in a relatively wealthy country during a relatively stable time.
I made a couple of good decisions, and put in some effort, sure. But a lot of people work harder than me and make harder decisions every day, and they are doing a lot worse than me. What separates me from those people? Luck, mostly.
What you call luck is actually a set of economic signals that has incentivized good behavior and teaching good behavior.
If your Ferrari-renting, living above their means counterparts are bailed out while your frugal living means are not rewarded, then you are incentivized to live above your means when things return to normal.
There’s also just straight up luck. I was fortunate enough to get a decent job that paid well largely because I knew the right people; I have friends with similar levels of education who aren’t so well off.
They’re not any less thoughtful with their money than I am (in fact probably more so), it’s just a matter of circumstance.
"Knowing the right people" isn't exactly pure luck either. People do have a certain amount of influence over the social connections they (or their family) choose to cultivate.
It might not be "luck" but it certainly is privilege, I would call it "Economic/Wealth privilege". Which isn't to say it means purely rich vs poor, but it's much easier to be in an environment that fosters "knowing the right people" if you have economic privilege. Although not impossible, certainly unequal.
Let's add some more context: high school, the guy in question was a former student of one of my teachers from a few years before who visited from time to time. I chatted with him occasionally in class. Later in college I found out he worked for a local tech company, which was pretty rare in that area. Got a recommendation, got the job.
You apparently found him interesting enough to keep up on his activities after graduating, put enough effort into making a good impression that he was willing to recommend you, and took advantage of the opportunity when it presented itself. Not everyone would. Was there some luck involved? Sure. There always is. But it wasn't all luck.
I don't think the intent is to make everything go smoothly for the average American. Instead, it's to keep the gears of the economy turning.
People who have money saved will just dip into their savings and keep spending. At a reduced rate, but not at a rate that falls off a cliff.
But people who live paycheck to paycheck will just stop spending. Because they can't spend. And the money they didn't spend means reduced cash flow for someone else. Which means that other person (or business) won't spend.
In many cases, it will be a huge domino effect. Enough people take the paycheck-to-paycheck approach that there are essentially large numbers of people who have been moving synchronously, in lock step with each other. If one stops moving (spending), they all stop.
If spending stops, that means economic activity stops. Which is close to saying the same thing as saying recession.
Putting cash into people's hands counteracts this. The people who operate paycheck-to-paycheck are the main problem area that needs to be addressed to achieve the goal of keeping the gears turning. And when they receive $1K, they will spend every cent immediately, which is exactly what you need them to do. (People with savings aren't the main problem area, but they will also spend some of it.)
Economically, this is going to be very ugly for a lot of people, but putting $1K into people's hands could make it a lot less ugly compared to the alternative of not doing it, and I think that's all this is aiming for.
I believe that that is the point of UBI. It’s a huge benefit for almost every American, but it’s not enough to live on as that’s the point. It allows you to pay for the things you need and maybe go out a bit to help stimulate the economy, but you couldn’t just be a “free loader.” You’d still need to work. In the current pandemic that obviously presents some challenges, but it’s better than nothing.
That's the compromise: An idealized UBI would allow folks to live without working if they so choose. You might need to be slightly frugal, but you'd have normal things (phone, internet, car, etc). Most folks simply would keep working, though. It would allow folks to retire on their own terms and stop working for sickness if they choose.
To add to this, I am extremely stressed right now. I have an immune-compromised 67 year old parent, I work in international freight, I have a GED so am not too marketable if I lose my job, I've got a few hundred dollars in savings, I've got enough food for a couple of months for my mother and I, that $1000 even just once would help markedly in reducing my stress.
Add to that I'm supposed to be getting married in 68 days and who knows what's going to happen now. I don't even know if the courthouse will be open to get the marriage license (it's only good for 60 days).
None of this is good for my sobriety. 7 months 25 days, 15 hours. I got this. I can keep that number growing.
> I have a GED so am not too marketable if I lose my job
I'm the GP who started this huge thread but I just want you to know I got my GED in 2007 right before the last recession. Don't be so hard on yourself - you could have a remote job working for a company in SF like me :). It took a lot to get here but almost anyone can do it.
> Add to that I'm supposed to be getting married in 68 days and who knows what's going to happen now. I don't even know if the courthouse will be open to get the marriage license (it's only good for 60 days).
Why not just go down to the courthouse tomorrow and get married? Can you think of a better time? You're not going to disappoint anyone by cancelling the event.
> None of this is good for my sobriety. 7 months 25 days, 15 hours. I got this. I can keep that number growing.
Every day I wish I could get sober so in a way you have a wealth that I deeply desire :) Keep it up, it has got to be worth it.
Good luck and don't wait for the dust to settle to find yourself in a better position. I'll try to do the same thing.
>Don't be so hard on yourself - you could have a remote job working for a company in SF like me :). It took a lot to get here but almost anyone can do it.
Unlikely. I'm not a programmer and have no desire for it. Everything else remote wants people with years of experience and a degree in something like marketing or only hires via short term contracts for stuff like customer service/support and doesn't actually want to make you a proper employee. At least in my experience over the past few years.
A lot of places just flat out require a bachelors degree (especially startups once they get some investor money).
I might shoot you an email based on your contact info because this conversation doesn’t really suit itself to this type of forum.
I am not a programmer(but do computer things) but I didn’t do this stuff when I got my ged. Anyways I want to emphasize that your sobriety is really amazing and I genuinely look up to people such as yourself who can make it happen.
>Anyways I want to emphasize that your sobriety is really amazing and I genuinely look up to people such as yourself who can make it happen.
To get to this length I had lots of shorter ones building up to it. The previous 5 being 69 days, 27 days, 38 days, 127 days, 33 days, now into this stretch.
I've actually found this most recent stretch fairly easy, I avoid the liquor aisle like the plague at the grocery, I stopped using one drugstore because the liquor is kept at the counter and I stopped eating out (although that was rare anyway).
It's definitely a struggle most days still, sometimes even catching a whiff of hand sanitizer will put me in that mental space but since I've been basically bathing in hand sanitizer as we hot bunk desks at work with another shift, I've not had it trigger me since COVID-19 started popping up in the United States.
I think most of my success is just pure laziness. If I'm at home and get the urge for a drink, I'd have to get dressed and go out and then it becomes a 30 minute chore and I find I can talk myself out of going.
Using an app has helped a lot too, it gives me notification every morning and I can open it when I want a drink and watch the seconds tick by.
It won't go very far in replacing income, but it could push a lot of people from a high risk category into a low risk category.
"Annual income twenty pounds, annual expenditure nineteen [pounds] nineteen [shillings] and six [pence], result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery."
For context, the US has 330M people. So $1k per person is a $330B expense.
The Fed, which has no legislative oversight on this kind of thing, lowered interest rates to 0% and is buying $700B of treasuries to stabilize the banks. So you know, only twice that much authorized to make things marginally better for banks and the stock market.
So I think maybe pretend that it was actually $2k per person. Other than losing your job this seems like a reasonable amount to hunker down and not eat out or go to events for 6 weeks. But if you lose your job long term... I think the effect is going to be much longer than a few weeks of people working from home.
It should be a monthly payment. This single 1k cash handout is a joke. The gov announced over $2T worth of measures to help the "economy", average Joe is about to get less than 1/6th the amount.
Demand-side stimulus, especially to middle- and lower-class citizens tends to have very high multipliers. The intent isn't simply to say "here's $1000 so you can live the high life" it's $300B worth of fresh aggregate demand to keep businesses in business that will turn into more $500B once it's finished circulating.
You are correct. Especially given that expenses are hightened right now. People are stocking up all at once, which requires upfront money - something most of the country does not have.
1k is considerably less than even unemployment, which is also not enough for a huge portion of society. I would say 3k is probably the bare minimum for 1 month of self-isolation. Essentially expanding unemployment (just over 2k) to everyone.
> Am I way out of band or does that seem like a comically small amount of money for the average American?
You are way out of band. The average American can't afford an unexpected $500 bill, lives pay-check-to-pay-check and doesn't have education beyond high school. $1k month would be HUGE for the average American.
Most common jobs are truck driving, retail workers, food prep and service.
You probably just live in an echo chamber where most people you live around and associate with are college educated people in professions like IT, Marketing, Accounting, etc.
Sure, it is huge if you have your regular paycheck. But as a paycheck replacement because the preschool you work at has closed for 6 weeks? It isn't so large. It might be what you bring home every couple of weeks. (Preschool teachers often need a 2-year degree and get paid minimum wage or just a bit more).
That $1k only works if it is on top of normal wages.
Last I checked for someone getting $0, vs they now get $1k every month, that is a pretty big deal. Even if it by no means covers all expenses. It is the difference of being absolutely fucked, vs being kinda fucked, but you now have a much better chance of transitioning or making things work. Also if it is 1k for every adult, then a household with 2 adults (a spouse or significant other), now is getting (as a unit) $2k a month, that is not insignificant and can easily cover mortgage/rent and then some for most Americans.
Sure, it is better than nothing, and might cover expenses for the month. Or might not. But people are acting like folks are going to go on a spending spree - this only works if you are getting a regular paycheck anyway. This isn't gonna happen. It is survival money if it replaces regular wages, and maybe less than that if they are taking taes out.
Even in China, lockdowns are starting to be lifted now after like 2 months. So buying people two months is a HUGE deal.
There are other measures in talks too, like eviction protection during the duration of the outbreak as a state-wide in California. Utility companies have agreed not to shut off power and water for those late on their bills. So $1000 would go a long way keeping people from not starving, and maybe even go further to cover all costs like you mention in your case.
Well, it's a stupid fucking idea, to begin with. If donald wants to throw money at something, he should throw it at the actual problem (implementing a vaccine for the virus, improving the shit health care system in the US, etc). Giving people money that they are too scared to go spend will do nothing, except get support for an election. But hey, donald has no interest in actually governing.
I spend more than $1000/mo in Austin, but my essential costs (rent, food, utilities) have always been <$1000/mo.
$1000 won't cut it for everyone, but it will be enough for a lot of people, and disproportionately enough for people living from paycheck-to-paycheck. They've already had financial pressures to keep their standing expenses low. And keep in mind that this is per adult, not per household.
It wouldn’t be much per person for living alone but it would save families if it were really per person. A family of four would get 4000 per month, which for me would cover all family expenses.
The people who need the most help are the people who are going to be homeless in a month. 1k will buy them a second month. This thing will not blow over in two months.
What would help, is for mortgage and rent payments to be suspended as long as the state of emergency lasts. Not deferred[1], suspended.
When economic activity stops, we have to stop rent-seeking from bleeding everything out of the system.
[1] Deferral doesn't work. A bartender living paycheque to paycheque, who lost his job because all bars were shut down is not going to be able to magic up six months of back-rent in September. His landlord won't see a penny of that owed money... But the landlord's bank will be demanding six months of mortgage payments.
Then what happens to the people who's income depends on those rent payments. I think an approach like this makes sense. The problem is immediate cash flow for people. This is cash flowing to people. It may not be enough, but it's moving in the right direction. We're not going to re-engineer the economy in the next few weeks.
> Then what happens to the people who's income depends on those rent payments.
Since they also won't need to pay rent or mortgage, they won't get kicked out of their homes, too. Which is about the most that people should expect when the economy grinds to a halt.
Otherwise, tough. We're in a state of emergency, that is preventing their tenants from getting paid. Just like their tenants, they'll have to deal with it.
> We're not going to re-engineer the economy in the next few weeks.
1. This is not going to blow over in a few weeks.
2. We sure as hell shouldn't empty the treasury into the pockets of landlords over a few weeks. They should not be the only people to walk out of this unscathed.
Suspending rents and mortgages is the only fair thing to do. It costs the state, and the taxpayers nothing, it puts everyone on an even footing, in terms of continuing to have a roof to sleep under, and it doesn't screw us six months down the road.
IIRC "getting kicked out of their homes" is not a thing during an official state of emergency, it shouldn't be possible to evict renters for nonpayment right now. The same should apply for mortgage foreclosures, penalty interest/late fees on loans, etc - so if you can't pay these things because of the emergency consequences, you simply don't pay.
We need to tackle the financial consequences of the related economic crisis, but that can be done afterwards when all of this is over; right now what matters is tackling health issues and also the immediate financial issues of people being able to obtain core goods and services - and $1000 per person can buy a decent amount of food and necessities; let's sort out the rent debts when there's a vaccine available.
I'm sympathetic to the idea that a jubilee can work, but there's no realistic chance that bars are going to be shut down for the next six months. Whether or not it'd be good public policy, people won't stand for it.
Which are either comparably small, or can be deferred, by virtue of just... Not paying them on time. You're better off not paying your HOA on time, than not paying your bank.
People have expenses, too. Food, transportation, healthcare. Hard to deal with when you don't have a job. The landlords will have to deal with their other expenses, too. At least they aren't going to get their properties repo-d, after their tenants stop paying.
Both HOA and property taxes are a lien on the property and will eventually lead to losing the property if you don’t pay them.
You seem to be assuming landlords are “rich” and tenants are “poor”, which may be true in many cases but it’s not a given. If you want means-tested benefits, just hand out cash based on means.
This is how we should manage the money supply, and it should be monthly. Direct, debt free issuance of a citizens dividend to every US citizen. Coupled with a wind-down of the debt bubble. Maybe take Steve Keen's idea and require that a certain portion of the payment be used to extinguish any debts.
Unfortunately whenever a president starts talking about this, he has a tendency to be shot.
Obviously there is a level that makes sense and a level that does not. Using the big-bank/government debt-system to manage our money supply is no more or less free market than a citizens dividend, it just ensures that the wealthy get first dibs on the new money and then the rest of us pay interest on it.
Steve Keen's idea for a modern debt jubilee is more important for the long term growth of the economy:
this angle of where to inject money into the system is the only potentially reasonable argument i've heard for UBI so far (but doesn't address its many other adverse consequences).
without much consideration by us commoners, we've come to accept that money must be injected into the economy through large financial institutions that gatekeep and rentseek.
money is literally the intermediary for trading the fruits of labor (not capital) with each other, and the closer money is injected into the system at the point value is created (when labor turns raw materials into desirable goods), the better.
I agree. The best thing would be a modern debt jubilee, coupled with direct payment for public labor with debt-free money from the government. This was implemented by a certain unmentionable and won him the widespread adulation of his country despite his other rather significant faults.
Of course I am being flippant, so thanks for your thoughtful response despite that.
I don't know what you mean about wealthy getting first dibs on money (if I am lending to someone why would I care if they are wealthy or not [aside from risk considerations]?).
My argument is simply that we cannot afford it. Any Ubi is either too low to live on or unaffordable. Want to give everyone 20k per year? In America that would cost about 5 trillion per year.
We can afford it if we print the money, that is, it is debt-free money. The fear if we print the money is inflation, but, as Steve Keen has shown, in the current situation inflation isn't going to happen, especially if we put the focus of this money on paying down debt.
> Direct, debt free issuance of a citizens dividend to every US citizen. Coupled with a wind-down of the debt bubble.
There are three ways to make it possible: 1) issue government debt to pay for it 2) increase taxes to cover it 3) print money to cover it.
Number 3) will cause significant inflation, so it will effectively be paid for by tax on cash savings. High inflation is really bad, it’s a terrible idea.
1) has the problem of only working temporarily: you cannot indebt yourself indefinitely, at some point the service payments will become simply untenable.
2) is the only one practical, but the only way to make it work in practice is to increase taxes all across the population. In result, this will be $1000 monthly only for the very poor. For people around the median, this will balance out to zero or negative.
So, the only way this destroys debt bubble is by 1), inflation destroying cash debt. This is terrible: businesses will not have access to debt to finance operations, mortgages will not be accessible for people without significant savings to buy houses, etc. All around, a terrible idea.
The fed's job is literally to control the money supply, which includes expanding it at certain times. Currently they are doing it through various transactions and loans conducted with other banks. The proposal is to simply give cash to citizens instead.
Saying that this will lead to inflation is moot - this proposal will only take effect when inflation is explicitly desired.
> There are three ways to make it possible: 1) issue government debt to pay for it 2) increase taxes to cover it 3) print money to cover it.
There is another way to do it without issuing debt, but while still controlling monetary policy.
1. Provision "dividend.federalreserve.gov" CRUD app (or just dividend.gov for convenience). Create "Fed" accounts, very similar to what you get with a Social Security Administration account at https://ssa.gov. Accept routing and account numbers from citizens. Issue debit cards with no fees to the unbanked. Provide local service at Social Security offices.
2. The Fed slowly buys up income producing assets (equities, fixed income, etc), and distributes the gains monthly to everyone. Many central banks go on buying binges to support asset prices already (the Bank of Japan already owns a significant amount of the Nikkei [1]).
You will eventually arrive at a UBI supported by the economic productivity of your country. Alaska does something smaller with oil revenue already [2]. This also keeps with Fed mandates to maximize employment and keep inflation around their 2% target (inflation will never increase because of structural demographics, the shift to a service economy, the transition to EVs and renewables, etc).
QE already is #3. The Fed is printing money to purchase bonds/treasures/bad mortgages. The printing of money definitely needs to be balanced in order to stabilize inflation, but the fed is doing that.
The only difference would be that instead of the Fed injecting the printed money through financial instrument purchases which benefit the top 5%, they would provide it to all citizens as a UBI.
Another difference would be that QE, as practiced by Fed in 2008-2014, would pay a basic income of around $150/month. Now, consider what inflationary impact would QE have if it was 6 times larger, and perpetuated indefinitely. Then remember that because of the way QE was structured, it had much smaller inflationary impact than directly printing that money and handing it over to government or people.
While I'd like for it to be possible to pull $12k/year for every American out of thin air, there's simply no way.
QE likely had a smaller inflationary impact simply because the printed money went only towards treasuries and financial instruments disproportionately benefiting the rich (top 5%). There's a strong argument that this is why it didn't show up in the consumer price index and we've also significantly increased wealth inequality.
12k / year for every american is likely too high. I think the Fed should still determine the amount of QE based on inflation and economic metrics, however that QE should be distributed via a UBI rather than used to purchase financial instruments.
> I think the Fed should still determine the amount of QE based on inflation and economic metrics, however that QE should be distributed via a UBI rather than used to purchase financial instruments.
But why go the roundabout way of going through QE to pay for UBI? Why not just increase taxes directly?
The answer is, clearly, because once you talk about increasing taxes to pay for something, you start thinking hard about numbers, and having them add up. When you talk about some vague ideas like the above, calculating the impact exactly becomes difficult, so instead one can just throw up their hands in the air and ignore the problem altogether. The impact however stays very real, as real as when you pay for it through taxation.
Yes, for government services I agree, they should be paid for with taxes and we should have some semblance of a balanced budget.
QE is different though, the Fed already has mechanisms in place to decide "how much" and is already printing money not paid for by taxes. Part of the goal of QE is actually to devalue the nation's currency in order to increase exports. The question is just how to best inject this printed money into the nation's economy.
In one way, QE is an extremely efficient (and very difficult to evade) wealth tax applied proportionally and instantly to any entity that holds USD. It would be very hard to pull that off with traditional taxes.
> In one way, QE is an extremely efficient (and very difficult to evade) wealth tax applied proportionally and instantly to any entity that holds USD. It would be very hard to pull that off with traditional taxes.
The government could also just print itself lots of new dollars, it's even more efficient. We don't do that, because the central banks are independent from government, so QE is a roundabout way of allowing government to print more money in a way that doesn't create high inflation expectations in future.
The biggest reason we don't do such taxes though is because they would be extremely distortionary. It's super easy to evade USD cash tax: just don't hold cash, buy stocks or real estate or some other real property. The USD tax will artificially inflate those assets, while at the same time, will require new cash-denominated bonds to be have payouts indexed by inflation.
I generally agree, there is significant benefit to having the central bank operate independent from government. I'm not advocating any change there.
The central bank could keep that independence but simply distribute the QE money to individuals as a one-time or traunched payment (I realize calling it a UBI is misleading as it implies it is ongoing). There should be no expectation that it is permanent or continues.
> The central bank could keep that independence but simply distribute the QE money to individuals as a one-time or traunched payment (I realize calling it a UBI is misleading as it implies it is ongoing). There should be no expectation that it is permanent or continues.
Right. This is a sensible (though unclear if the best) policy in context of exogenous shock. However, using this as a backdoor to introduce perpetual basic income of significant value, with some very vague hand-wavy plan how to pay for it on an ongoing basis, is rather silly, and that's what I was pointing out in parent posters.
I agree that high inflation is really bad, but during the last decade there has been several rounds of QE without causing particularly high inflation. The recent QE package from the FED is about 2000USD per person in the US, perhaps some of it could be dished out as a helicopter drop instead.
You act like these are wild approaches. But during this this current term we've already done #1 via the 1Trillion tax cuts to mostly the wealthy. Those (many of us on here) who won't use it for goods and services, but instead to further prop up your asset bubble of choice. Ie not improve the economy much, but make the appearance of improvement via higher asset pricess.
Then we've done #3 via re-introducing QE via the fed. Both back in September, and again last week, and why yet again just 30 mins ago. While we call them short term loans, they still haven't been paid back since the start of the GFC. And not only have we continued printing more via the Fed, when the fed finally tried to get some companies to pay them back a year ago the repo market siezed up last fall. The fact that there was a flood of Treasury Securities on the market to pay for item #1 (it increased supply by 50%) likely had a lot to do with it.
If you want the economy to function, then get money in the people who will spend it. What's the factor? For lower incomes every extra dollar they have, introduces 1.5x or 2x or something into the economy. And for every dollar given to middle-high and high incomes only 0.4x or less actually goes into the economy.
> You act like these are wild approaches. But during this this current term we've already done #1 via the 1Trillion tax cuts to mostly the wealthy.
$4T a year, required to pay for monthly basic income of $1k to all Americans is much wilder than $1T of tax not collected over 10 years, yes. The former number is 40 times larger than the latter.
> Then we've done #3 via re-introducing QE via the fed.
No, we've done only small part of 3) via QE. QE over its history had bought around $4T of assets, which is a far cry from what's required to pay every American $12k/year. QE also doesn't directly "print money", and so Fed buying $4T of assets has much smaller inflationary impact than actually printing $4T and giving it to the government or people.
What I want is for people to be honest about how much basic income actually costs, and where will that money actually come from. Quite simply, you cannot double federal government spending overnight by some clever accounting trick or increasing taxes on "the wealthy": there aren't nearly enough wealthy people to cover that.
> The deficit is a spending problem not a revenue problem.
I'm not certain what you're getting at. The deficit is defined as the delta between spending and revenue. It's as much one problem as it is the other. Could you clarify what you mean?
It does not matter how much money the US government takes in taxes. They will continue to spend more than that causing a deficit. For example if tax revenues increased by 500 bln, that could be used to decrease the deficit by 500 bln if spending was not increased. However, what would happen is that the government would increase spending by say 1 trillion so the deficit would continue to grow despite higher tax revenue.
Number 3 will not create inflation. Not in all cases and not in our current environment. That is a myth pushed by the banks in order to keep the current system in place.
Debt spends the same as money. We have already had the inflation, paid for with debt. Now the debt system is becoming unstable and will lead to deflation unless we put non-debt spending power in the average persons hands.
Most economists view debt as a wash. "We owe it to ourselves." But, at Keen demonstrates, that isn't the case. We need a debt jubilee if we want the economy to function properly again, and he, alone and mocked by any mainstream economist who actually paid attention to him, came up with a modern, fair way to do it.
>Unfortunately whenever a president starts talking about this, he has a tendency to be shot.
What are you talking about? Unless I'm forgetting someone, there have only been 2 assassinations, and one attempted one that famously failed. Lincoln was assassinated by someone who was mad about the Civil War. Reagan was shot by Sirhan Sirhan, but I doubt that's what you're talking about. Kennedy might be what you're talking about, but there's a lot of theories about what might have motivated that if you believe that it was orchestrated by someone and not the sole work of Oswald, with the biggest one I think being that Kennedy was planning to pull out of Vietnam. Anyway, even if your claim has merit, that's only a single data point.
I too think this is silly. Everyone wants to use this disaster to achieve the policy goals they wanted anyway. Republicans want to use it as an excuse for tax cuts. Democrats want to expand public healthcare and benefits. Everyone is trying to attach riders for domestic violence victims or pork spending or whatever pet issue they have.
Neither? Markets have been overheated, so a correction makes a ton of sense.
What we need is to get over this pandemic as quickly as possible so we can stop disrupting trade and get people back to work. The news coming out of China is encouraging, and production seems to be slowly returning to normal.
Any discussion about UBI should be based on the long term merits, not a reaction to any current crisis. QE is a bit different, but honestly I think it does more harm than good much of the time, especially once it makes it through the political system.
The Fed steps in, makes some loans or buys some securities -- when the disaster abates, they get some money back from their loans and sell the securities for a profit.
UBI, Tax Cuts, Social Safety Net – these are all different approaches to solving actual problems. Are politics full of pork and cynicism? Sure. But at the end of the day _something_ needs to be done, and it would be more constructive to have a rational discussion of which of the tools at our disposal stand a chance against this menace.
I suppose I just get skeptical whenever a solution has been proposed that is apparently a panacea to all of societies problems. When 'x' has been purported to solve everything for 30 years, I start to get skeptical about x has any bearing on whatever disaster occured today.
This is hardly a UBI. It's also been done before, for example in Australia during the GFC.
The idea is to get money into the hands of people who will actually spend it - the poor will tend to go buy their kid a desperately needed new pair of school shoes, for example, whereas the rich will just throw it in with their other savings. Only one of those stimulates the economy in the short term.
I don't get it, particularly in the context of emergency relief for individuals, which is where this conversation started.
1. The pandemic reveals major holes in the social safety net that people are pretty upset about.
2. One party wants the patch the holes, and they continue to feel that way. The other party regards the holes as grimly necessary to keep people properly motivated, or part of God's divine plan, or impossibly expensive to fix in spite of the fact that less wealthy countries manage it, or something, and they continue to feel that way.
One party wants to fix the economy and promote jobs and enterprise. The other wants to destroy the economy so we are all dependent on government handouts and keep voting for more handouts.
See how I can easily spin it the other way?
I hate to say it--and I hope this doesn't sound too flippant--but I think you're doing exactly what I described.
If you started out thinking that your ideology is clearly correct and the opposition has nefarious motives, then rather than this disaster leading anyone to question their beliefs, it will stand to reinforce them.
It does sound flippant, but that's not the point. A situation like "everyone wants to use this disaster to achieve the policy goals they wanted anyway," while a slight exaggeration, might productively lead a person interested in the function of their government to evaluate the quality of those policy goals, rather than withdraw into cynicism. In an election year, it'd actually be somewhat appropriate.
> If you started out thinking that your ideology is clearly correct and the opposition has nefarious motives, then rather than this disaster leading anyone to question their beliefs, it will stand to reinforce them.
If you're the kind of person who gives a damn about "motives" instead of ideas and policies, well... it is understandable at times, but that's not something to aspire to.
I think the issue here is that companies could fail without doing anything wrong. It's not just bad companies that will fail, but also responsible companies that simply cannot weather a months-long economic standstill.
Other than the logistical difficulties specifically imposed by Covid 19, I believe good companies should be able to weather a couple of months of double-digit reductions in sales. Like if airlines or large events are forced to close down, I could see helping them.
Everyone else who simply has to deal with a reduction in consumer spending should take some responsibility for overbuilding for an overheated economy. For whatever cause, the Fed has predicted a recession months ago.
People living paycheck-to-paycheck with no savings will go to work while sick, hurt themselves and infect all their customers. Solving the simple issue of their income is a prerequisite for tackling the public health issues; and if you can't implement lockdowns and other restrictions because you haven't solved the financial logistics of how people will pay for their food, then the result will be dead people.
I've been railing against this idea as uniquely stupid for the past few days.
1. For people who are living "paycheck-to-paycheck", this won't even matter. How far does $1000 get you in the US? A better policy would be a general amnesty on rent and interest payments for a few months, and temporary free healthcare.
2. For industries where it's a demand shock (e.g. travel), no amount of helicopter money will restart the demand. A better solution would be helping the companies directly, to the extent the government wants to help them survive, by e.g. tax write-offs or delays, emergency credit loans, or my favorite, emergency equity (the free-market solution, if your company cannot survive because of your poor panic, you don't deserve to own (all of) it).
3. For industries where it's a supply shock (face masks, hand sanitizers, possibly soon but hopefully not food), some kind of coupon-based rationing (with the government paying the producers directly) would be a better solution, providing just the necessities for survival and ensuring there's minimal waste.
On point one, that's just the thing. If I got 1000$ right now from the government, I'd pay things that I'd already have been paying anyway, or I'd save it because the economy is bad. I'd imagine most people would do something similar.
> pay things that I'd already have been paying anyway
That's kind of the point. With a nearly imminent lockdown, many people would not be able to pay for things that they have been paying all the time, and that will bankrupt companies and break the economy. A cash injection that allows you to pay for things that you're already paying for - and get the basic things you were already getting before - would be quite helpful.
The goal is create as many delays as possible, to maximize the duration and number of people who can stay home instead of spreading the virus. It doesn't address the root problem because we can't solve the problem - people will have to go back to work eventually. We're not a post-scarcity society yet.
My understanding was that it's a proposal to help people who'll be devastated by not being allowed to work. If we're trying to get people to stay home on a voluntary basis, yeah, I agree it won't help much there.
It gives a month to implement more complex measures. This is something that can be done pretty much instantly, a better solution needs time, this gives time.
These sorts of micro-management solutions seem like the wrong approach to me. It is very hard to target them to people who really need it. Some people will still have jobs and don't need the assistance, some people can weather a couple of months without income, some people are retired and are living off their savings already, etc.
It seems to me that some sort of unemployment benefit program on steroids would be better. But that doesn't help with people who are self-employed. Perhaps there could be a special program to allow self-employed to take advantage of unemployment programs?
> companies affected
I'm wary of assistance in this area because it is next to impossible to understand all the ramifications of the bailout and businesses are generally better positioned to figure out how to "survive" in the new environment. I'd go back to my first comment above and focus on assisting people not companies.
> supply shock
This one I really wouldn't worry about as the market is going to address these shortages quickly. In fact I'm more worried about the government imposed shutdowns creating problems for companies who are trying to address these shortages (parents not working because they have to stay at home with kids, e.g.).
A loan may not encourage spending in the same way free, no-strings-attached money does. For example, if you're poor and struggling pay-to-pay, would you like the idea of borrowing knowing that it'll bite you later on when you have to survive on even less money due to paying back the loan?
On the other hand, absolutely no-strings-attached money might see you spend it on something that you've needed for a while but haven't been able to afford.
That seems pretty silly. Me and probably a lot of other people would just put it aside and save because we don’t need the money. And for the people in some industries who are at risk of losing their jobs this is laughably little money. In Germany there is a concept called “Kurzarbeit”. Companies reduce work hours and salaries across the board and unemployment insurance makes up for some of it. This way mass layoffs are avoided. That’s the way to go in my view.
But I guess the US will
either do nothing or hand a lot of money over to the top income earners in the hope that they will “create ” jobs.
You, me, others may not need it, but then again we'd be paying for it with assets getting hit because if I understand correctly, this would be in place of bigger bail-outs so our stock/401k/real estate etc would take a hefty hit knowing we won't starve even with big losses.
What I am saying is that more money should be given to people who really need it and no money to people like me (and a lot of HN readers) who don’t need it.
> He adds that the law "should also specify that the payments would continue in 2021 and beyond if the unemployment rate rises to 5.5% and remains there or higher. Hopefully this will not happen, but if it does, the money will be needed."
If it has this caveat, it's essentially just UBI, not a response to coronavirus. I'm more sympathetic to UBI than I'd have once expected, but my observation is that any response that creates a potential post-virus entitlement is substantially less likely to pass, and at the moment, the priority should be getting some relief out there. This is suboptimal, but reality.
This makes no sense. Why would we give money to every American instead of just those that really need help? If you aren’t living paycheck to paycheck just to cover necessities you should have savings to fallback on. We should be giving money and help only to people who need it. Not people who have over extended themselves with credit card or student loan debt and no savings. People with means could use a lesson in personal responsibility.
Because means testing requires a massive, and in this case ad hoc, bureaucracy established to evaluate who should get money. Good luck establishing that. Mailing out checks is actually cheaper and technically feasible, in comparison.
Additionally, not everyone in debt got there by way of lack of personal responsibility. One ambulance ride and ER would send many minimum wage earners into debt, even if they were responsible with their earnings.
I think the IRS is much better set up for this than state run welfare programs. Send a check out to everyone now but collect $950 more in taxes next year from only folks that made more than $XX,XXX amount of money in 2020. Also you could make it so that uncashed checks would be cancelled by next year and you get a $50 extra refund.
I agree, the people I had in mind are those who make high 5 to low 6 figures but have extensive credit card debt for things like vacations, unnecessary purchases, or expensive cars. (I personally have been guilty of this in the past)
Means-testing it isn't necessarily that difficult. When Australia implemented the same idea during the GFC, it was paid out on a scale up to ~$130k based on the previous year's income tax report. Whilst not perfect, I'd be willing to bet good money that it correlates pretty decently well across financial years.
It was also distributed via direct electronic funds transfer in the most case (as that's how the vast majority opt to receive a tax return), so it was pretty frictionless here because all of that infromation was readily on hand. That may not apply in the US, I don't know.
Tax rebate doesn’t help if you don’t pay any tax, and if you’re out of work, you’re also not paying tax.
For example, if you normally make the median income of $30k, but quarantine put you out of work for 3 months, you’re down to $22,500, your federal tax bill is ~$2700, and so this is most you can get from tax rebate. If you have children, this is even lower.
While I agree that tax rebates are typically correct approach, here it’s not the case: they won’t help much those who most need it, and they’ll help most those who don’t need them at all.
i just don't see how UBI survives a highly polarized, segregated society pumped out by the US media. imagine the headlines by Fox News as soon as they find 4 people living together playing video games all day. or smoking pot. or etc.
in a weird way it dangerously exposes people as, according to "the economy", particularly not valuable. the framing will go: these people are literally doing nothing and we're supporting them financially, no questions asked. that will draw a fair amount of outrage, i assume, given that the US can't even get that done for older and poorer people.
that's why i think if you buy in to UBI, you sort of need whatever else Yang brought with it - measuring societal value differently, etc. otherwise you are looking at a situation where certain persons are going to be portrayed as truly valueless, bc in the US the economy dominates so much. and i don't think that bodes well for those people.
This is not my opinion, but I think there are many people out there who would be happy for those four people to live together off UBI and play video games and smoke pot all day and literally do nothing to contribute to society.
Why? Because it contains them. Otherwise, where would they be? If they have little interest in holding down a job, they're probably out committing crimes, or sitting in jail for those crimes. So the thinking goes that UBI is a way to contain them without having to jail them.
I don't think this is the right way to think about this problem, but I think it's tempting to think this way.
I agree, although I think once it happens it stands a chance of being politically bulletproof--argue about it beforehand all you want, but once people have the 1k check in their hands, regardless of their means, it might be hard to take out. I believe the Alaska Permanent Fund is similar.
My objection to it is that it'll be too easy to go after social programs, which for some I assume is the point--"you have the money, you don't need SNAP/Medicare/Social Security/etc". This proposal seems too much like an opportunistic attempt to trial the UBI. It'll be moderately successful on some metric, I'm sure, and that'll be used to push a permanent UBI.
imagine the headlines by Fox News as soon as they find 4 people living together playing video games all day. or smoking pot. or etc.
You're right that it'll require a pretty fundamental shift in attitude. Some folks will still think people like that are losers. That's fine. But maybe we'll get to a point where they won't think such people, losers that they may be, are doing anything they're not entitled to be doing. That's the kind of shift in perception that's required to make it work.
We're never going to agree with everyone else's choices. We need to agree that they're entitled to those choices.
The hypothetical group of stoned gamers being discussed are certainly entitled to choose to spend their time smoking weed and playing games. I don't see how it follows that they're entitled to me subsidizing their choices with my tax dollars. I think people who are capable of holding a job / productively contributing to society but choose not to are indeed losers, and I will continue to think that way because it seems to me to be an obvious truth. I truly hope that does not change.
Can you explain why I should think otherwise? I'm genuinely curious. I realize this is just a hypothetical but I can't imagine anyone having any sympathy for those people. There's also an argument to be made that enabling them is hurting more than helping, but I'm leaving that aside entirely for the moment.
People have choices, and choices have consequences.
Can you explain why I should think otherwise? I'm genuinely curious.
Others have made the case far better than I could here. I wasn't actually trying to argue for or against it, just noting that 1) social perception of "freeloaders" is indeed a barrier to acceptance of UBI (as you succinctly demonstrate); but 2) relatively small shifts in perception could open a path for it, anyway.
They are 100% entitled to those choices. I can't disagree there.
The only thing I disagree with is that I should have the choice to not pay for other people's choices of not doing nothing. If they want to be like that, they can as long as they don't interfere with everyone else's choice.
> We're never going to agree with everyone else's choices. We need to agree that they're entitled to those choices.
I agree with the sentiment that everyone is entitled to do as they wish, even if I don't like it. This includes the choice to do nothing.
What I do not agree with is their choice to do nothing being subsidized by myself and everyone else who works and contributes to the economy and tax revenue. You are entitled to do whatever you want, but not on someone else's dime.
No one is entitled to things merely by virtue of existing, doubly so if they are able to work or provide for themselves and choose not to.
It's looking to me like the only way to fight the coronavirus recession is to have a strong enough testing capacity that we can be relatively sure that the people we are interacting with in the world do not have the virus.
The whole idea of UBI is honestly pretty idiotic. Any form of UBI should 1000% be in the form of benefits, goods, housing, or other physical goods.
I'd much rather have tax cuts to reduce money lost through the middle man, as the middle man always wants a cut. Meaning you'd lose far more money to the process than if you were to just reduce taxes.
> Any form of UBI should 1000% be in the form of benefits, goods, housing, or other physical goods.
We've tried this and it's a dumpster fire. The government builds low income housing which is 100% people in poverty and it turns into a slum. The government subsidizes home loans and student loans and it raises the cost of housing and education. The government subsidizes food and then restaurant workers who already have access to food can't use the money to fix their car or whatever it is they really need right now.
People know what they need better than bureaucrats do. If you give them money and they need food, they buy food. If you give them money and they need transportation, they buy transportation. If you give them food and they need transportation, you messed up, which is what consistently happens in practice when you don't give them money.
In general that's just the same thing. If the per capita average cost of providing roads and schools etc. is $15,000/year then anybody you're taxing less than $15,000/year is really getting a subsidy in the amount of the difference. They get roads and schools and pay less in tax than they cost and the other taxpayers have to pick up the tab.
Nothing about that changes at the point where the amount of "tax" someone pays goes negative. They started getting a subsidy from other taxpayers when they paid less than $15,000, not when they paid less than $0.
So if you want to call a UBI a "tax credit" then go ahead, but changing the name to "tax credit" makes no mathematical or economic difference at all.
I honestly don't believe people that aren't disabled that don't work or do anything should receive free money in the form of a handout. I.e. you don't get a refund if you aren't paying taxes.
I'm all for reduced taxes though in some regards. So we agree in some areas and not others.
Yup. This is an _extensively_ studied problem. Money works. It works in an African village and in an Alabama trailer park the same. The main argument against giving people money is only an ideological one, that we "shouldn't" give people money rather than that it doesn't work better.
Simple, direct, democratic. $1000 is a good amount - for those in need it can be stretched to go a long way (just imagine the status quo alternative). For those who are more comfortable, it's an easy amount that can be saved, donated, or spent on discretionary items, all wins for us.
Hong Kong will distribute HKD 10,000 to every citizen (about USD 1300).
USD 1000 for every American (while low) strikes me as a sensible, effective, efficient, fast measure that helps the poor more than the rich. As such, unlikely it will come to pass in today’s USA.
There was a $300/person tax rebate during the 2008 recession in the USA. So it's not that far fetched an idea.
I wonder how these kind of direct-to-consumer payments compare with traditional monetary policy (cutting interest rates, securities purchases) in terms of impacts.
"Only about one-fifth of respondents in the Reuters/University of Michigan survey report that the 2008 tax rebates led them to mostly increase spending, while over half said it would lead them to mostly pay off debt... [T]he results imply that the rebates provided only a modest stimulus to spending per dollar of rebate."
Nope, as pointed out by others. This doesn't do anything to solve the systemic problems that allowed this to happen and us to be woefully unprepared for this.
I don't have any specific opinion on if the proposed action would be a good or a bad thing (I'm not an economist or policy-wonk type), but it seems silly to me to dismiss actions taken in a crisis just because they don't solve the systemic problems that caused the situation.
Sometimes you need to stem the bleeding to buy yourself enough time to fix the underlying problem.
I think this is silly. The idea behind this is to induce demand, but there isn't a lack of demand due to lack of purchasing power. People aren't spending because they aren't leaving the house. (which, in the case of a pandemic, is a thing to be encouraged)
I sincerely doubt that giving everyone a thousand bucks will save the restaurants and bars and movie theaters and retailers and cruise ships and hotels and airlines etc...
You're right, a thousand bucks a person won't save those things. But the people who /were/ working at those restaurants/bars/etc now have a way to buy food for the month. People aren't leaving the house but they sure still need to spend on food, rent, basics.
This method is good when you want people to go out and shop and spend the money.
What happens when millions of American's now have money to go out and eat and go on vacation? That's the opposite of what we want.
You can't just sat that universal health care isn't helping in Italy because things are bad there. Things might be even worse if Italy didn't have universal health care.
As we are all being reminded now, healthcare is a good with a fixed capacity. We still need some way to decide who gets access to the capacity.
But even if we did provide universal healthcare, people who aren't working run the risk of losing their homes, access to food, and other necessities, so providing universal healthcare would only solve part of the problem that's being proposed.
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[ 3.5 ms ] story [ 314 ms ] threadCut out the optional services (streaming services) and fuel (not driving as much, $100/month fuel cost gets reduced to maybe $20 for the isolation month), and it can work in many parts of the country.
It probably wouldn't last long in San Francisco, New York, Seattle, and other high COL areas. And to make it last, you'd need roommates, which creates a hazard with regard to trying to create/enforce social distancing. But not every city or region has crazy high rent. Some places are still sane.
I live in an extremely low COL area and live well within my current means. Assuming my work dries up and I don't have any savings, 3k$ would buy me two months tops.
Just to give you an idea of how cheaply I live: Mortgage is ~800$/mo, Car is a paid off 2006 Toyota Highlander, Student loan minimums of ~400$/mo, My wife and I have a newborn, which currently isn't very expensive but we all still need to eat.
The average one bedroom rental in any given metro area, even in mid sized cities, probably lands somewhere around my basic monthy costs. So, if you're a single person in the city you might get one month out of 1k$.
And I am VERY lucky to have a bunch of cashed packed away. I assume at least a large portion of this country is living paycheck to paycheck.
In addition my wife and I have spent the last couple of years with two incomes wiping away our student debt on high incomes in Seattle - so the only loans I have left are pretty low interest.
The only way I can see this working for everyone is to simply halt the economy altogether. No mortgages, no bills, free food, free medical care. Once we get a hold on the disease itself we can deal with the economic impacts.
I do think that the money would be better if targeted toward certain people versus peanut-buttered over everyone.
It will benefit people more in the long run, but it's not short term relief.
Why should _anyone_ to be expected to pay their student loans if all of the other sectors of the economy are going to shut down?
The biggest mistake I making here is even attempting to have a discussion with you. Bugger off.
EDIT: Found some info, although it's unclear what exactly qualifies the loan: https://www.nytimes.com/2020/03/14/business/student-loans-co...
> My wife and I have a newborn, which currently isn't very expensive but we all still need to eat
I imagine you would get $3k since there are 3 of you.
* facepalm * I'll edit to clarify.
~40% of America cannot afford a $400 emergency, all of those people are at real risk of hunger and homelessness.
Giving everyone cash allows the country the freedom to implement programs that run a real chance of preventing the spread. It also goes a long way towards preventing societal chaos as people without savings and suddenly no income are now provided a way to continue living and feeding their families.
Absolutely and those people should receive assistance through the regular channels we have available. Unemployment, charities, welfare, churches, synagogues, etc. and frankly, good old fashioned neighborly assistance.
Not by throwing money at everybody, most of whom do not need it. That's just redistribution of wealth by another means. Don't shove your political agenda down people's throats in the middle of a pandemic.
All of those things have displayed discrimination against groups they don't like in the past, or have an overt or covert missionary agenda. Charities have also come under fire for spending much of their funds raised on high executive salaries and not so much on actual aid to the needy. It is no surprise that much of the developed world no longer considers them a reasonable social safety net. (Indeed, in the Nordic countries the churches have largely given up their historical niche as a distributor of charity, since they feel the state can do a better job of taking care of the needy than they can.)
> All of those things have displayed discrimination against groups they don't like in the past, or have an overt or covert missionary agenda.
The welfare office discriminates against groups they don't like? It has an overt missionary agenda? This is news to me.
This probably works well in upper class neighborhoods, but a good portion of the US don't live in communities with much to spare. People unable to afford a $400 emergency or who rely on schools to ensure their children have at least one good meal a day generally dont have much to share with their neighbor. Most of the community organizations that serve those communities are in the same boat. Your suggestion also removes a good portion of people who don't attend religious services. Charities are limited in what they can provide.
Unemployment is difficult. For example to be eligible, Florida requires "You must be able to work, available to work, and actively seeking work. This includes being able to get to a job and have child care if necessary." Not many people hiring in the middle of a pandemic and further complicated by the closing of schools.
"Not by throwing money at everybody, most of whom do not need it." ~75% of Americans live paycheck to paycheck and 40% of US citizens cant afford a $400 emergency meaning that most of them do indeed need it.
"Don't shove your political agenda down people's throats in the middle of a pandemic." - You seem upset which I can completely understand in this stressful time but please note; looking to ensure that people, especially children have food to eat and can afford their most basic of bill should not be seen as a political agenda, its simply trying to be a good human.
Give everybody $1k? Who's everybody? If you're in this country illegally, do you get $1k? What about people who got stranded here due to border closures? How are you going to identify people? How will you stop fraud, double dipping, etc?
Maybe instead of creating a new bureaucracy in the middle of a crisis, use the existing systems that are already in place and just pump more cash into them?
The existing systems you mentioned before are not setup for mass distribution. There is no way the local unemployment office can scale up to 100x. In addition we are not going to just give money to the other private entities to distribute as they are not equipped to do so.
We need to be A-10 Warthogging cash now and not let the perfect be the enemy of the good.
$1000 per adult and $500 per kid.
In fact if you go for any sort of loan they are not allowed to factor the $1k into your income.
If they do that, the costs of living goes up by $1k universally and it's a waste of time.
After all, only 40% of Americans are able to cover an unexpected $1000 expense. That's the really sobering number, in my view:
https://www.cnbc.com/2019/01/23/most-americans-dont-have-the...
There is zero reason to believe that the service and retail industry will be back to normal in a few weeks.
If you really believe that things will remain disrupted for a long time, it seems like you could see this as a great opportunity for a basic income experiment, huh?
I uhhhh. People's ability to work and live is important. That's what we get out of it. People not starving or living in poverty is, surprisingly enough, pretty important to the economy and the ability to sell luxury goods. Regarding 'useful data':
https://www.inverse.com/article/53466-basic-income-canada-s-...
And articles from the institute that performed the study:
https://www.basicincomecanada.org/nearly_half_of_basic_incom...
https://www.basicincomecanada.org/ontario_government_defends...
I would like to see an 1 euro/month basic income. Then we get a good idea what it costs to distribute. Then we should gradually increase it by an equally insignificant amount so that we can gradually observe who should but doesn't get it and how much fraud we have to deal with.
With 100 euro extra we can at least silence the folk who for the last 100 years barricaded the discussion by saying they would continue to work themselves but others... others will do this and that. Popular variations: Wimmen will stop obeying their husband. Men will use the extra money to buy alcohol. Kids wont seek jobs. etc
I think Keynes 15 hour work week provides a good hint. Wealthy people actually work more.
I think the silver bullet basic income is silly for other reasons. Our economic model is to optimize for wealth extraction. Give people 50, 500 or 1000 extra and rent will go up by exactly the same amount.
I'd still be willing to pay for the distribution experiment.
But does it actually matter what I think?
Whereas if you make the assistance "we pay the amount of your mortgage" instead of "we pay $1000" then you're giving much more of the money to affluent people, who presumably need it less.
If the landlords desperately need that rent just to do basic maintenance and repairs, and don't have enough saved to deal with a possible problem that might happen in the next month, then they don't deserve to own the property.
I'm not saying you're wrong, but what's the argument for that? On its surface, the proclamation that they 'don't deserve to own their property' seems a little draconian to me. What if a repair is required that was unforeseen and not basic?
If the repair is not basic, then it sounds like it's going to be very costly. If it's very costly, then the tenants missing a month or two of rent is not going to be enough to make a difference on the landlord being able to afford it. After all, the amount of money they should be raking in above the mortgage on the property is not generally going to be a large fraction of the total rent. So if the landlord can't swing a few hundred dollars for an unforeseen repair, then they aren't in sufficient financial shape to be owning and renting out that property, since the landlord (in normal circumstances) is fully responsible for keeping the property in good repair at all times. "I can't afford it" is not a valid excuse for not doing repairs, and the court system agrees with me.
How do you know it goes to a mortgage? The property could be owned by a retired couple and the rent is the income they live on, or a charity and the rent is how they fund their operations.
Or it could be owned by a regular old smelly landlord who just takes the rent money and invests it in the S&P 500 -- which, if you take it away multiplied by millions of landlords, does a Bad Thing to the stock market right when you want the opposite of that.
Sometimes rent includes utilities. What does the landlord pay that with?
I imagine you also expect to waive property tax or the landlords would have nothing to pay that with either, but then what are you using to fund local governments?
You can't just delete an industry and expect it to have no untoward effect.
If the landlords are retired, they have Social Security and probably other sources of income. If they can't live on that, then they're living beyond their means and don't need to be landlords.
If landlords can't float a little money to pay utilities, then they're in desperately bad financial shape, and shouldn't be landlords. What are they going to do when one of their tenants doesn't pay rent? Just let the utilities for other tenants get turned off? I'd be OK with simply seizing the properties from landlords that can't manage their properties properly.
Then what about all the other ones? Are we also suspending utility bills? Car loans? Property tax? Grocery bills?
Why should someone paying the same total amount in recurring expenses have more of them waived just because they happen to pay more in rent and less in transportation and utilities than somebody else?
This is pretty common everywhere across the developed world. The majority of OECD nations have a lower median wealth figure than the US, including Sweden and Germany (their median wealth figures are particularly shockingly low, given the affluence those nations should have vs their national output and given the high German savings rate).
The OECD labor force participation rate is such that about 28% of persons 15-64 do not work. Of the 72% group, a solid 1/3 are typically working jobs where they struggle to make ends meet month to month. The only way a lot of people will have a spare $1,000 in cash for random emergency expense, is if you directly transfer cash to them, and even in that case they will inevitably need to spend it sooner than later.
That's true but there are only a handful of countries doing worse: https://data.oecd.org/inequality/income-inequality.htm
- don't need to keep beating the dead horse about American healthcare
- cars. In most European countries a car is not absolutely vital. A lot of America is "drive til you qualify", and car issues can easily be above a grand. You need a car to go even to the closest store many times, so quarantine would not really get rid of your need for a car.
you're talking about cities, in rural places, europe is not different than the US.
We live just ouside a mid-sized UK town (and cities down to small/mid sized towns covers a really high % of the population). Between public transport and good cycle/pedestrian routes, a car is not a major living requirement for many.
Swedes and Germans aren't going to have to pay a $13k deductible if they have an unexpected surgery, for example.
Sure, these nations might have lower median "wealth" figures, but they also typically have lower costs of living (maybe not Sweden, but Germany does). These countries also have much better safety nets than the US. And if the German savings rate is high, that means they can weather a crisis better than the average American. Americans may make more money, but when they blow it all on an enormous car payment for a giant SUV and a mortgage for the biggest house they could possibly get given their salary, and don't save anything, that leaves them in a precarious position when they have a temporary loss of income.
How much does a trip to the ER in an ambulance cost the patient in those countries?
If we apply this article's suggestions to your situation: 2,500 (2 adults, 1 child) * 12 months is 30,000 /year.
Like you said, too many people live paycheck to paycheck and our minimum wage keeps it that way. You can barely survive on it.
And I agree. I don't think the federal government should frame these things in terms of absolute $ amounts (I see the same thing in e.g. tax brackets and tax credits). The amounts should ideally be adjusted based on the COL and the dollar's purchasing power in the citizen's local area.
It costs about $75 billion a week to pay the hourly workers of America. We can do that, even if it's only a fraction for the companies that don't have the cash on hand to do it for 4-5 weeks.
Luck may not be the only factor. It sounds like you live responsibly/frugally as well, and reaping the benefit from it now.
I made a couple of good decisions, and put in some effort, sure. But a lot of people work harder than me and make harder decisions every day, and they are doing a lot worse than me. What separates me from those people? Luck, mostly.
If your Ferrari-renting, living above their means counterparts are bailed out while your frugal living means are not rewarded, then you are incentivized to live above your means when things return to normal.
They’re not any less thoughtful with their money than I am (in fact probably more so), it’s just a matter of circumstance.
It was luck.
People who have money saved will just dip into their savings and keep spending. At a reduced rate, but not at a rate that falls off a cliff.
But people who live paycheck to paycheck will just stop spending. Because they can't spend. And the money they didn't spend means reduced cash flow for someone else. Which means that other person (or business) won't spend.
In many cases, it will be a huge domino effect. Enough people take the paycheck-to-paycheck approach that there are essentially large numbers of people who have been moving synchronously, in lock step with each other. If one stops moving (spending), they all stop.
If spending stops, that means economic activity stops. Which is close to saying the same thing as saying recession.
Putting cash into people's hands counteracts this. The people who operate paycheck-to-paycheck are the main problem area that needs to be addressed to achieve the goal of keeping the gears turning. And when they receive $1K, they will spend every cent immediately, which is exactly what you need them to do. (People with savings aren't the main problem area, but they will also spend some of it.)
Economically, this is going to be very ugly for a lot of people, but putting $1K into people's hands could make it a lot less ugly compared to the alternative of not doing it, and I think that's all this is aiming for.
I take home $465.62 a week so it would be a little over 2 weeks of take home pay for me. I could absolutely use that.
Add to that I'm supposed to be getting married in 68 days and who knows what's going to happen now. I don't even know if the courthouse will be open to get the marriage license (it's only good for 60 days).
None of this is good for my sobriety. 7 months 25 days, 15 hours. I got this. I can keep that number growing.
I'm the GP who started this huge thread but I just want you to know I got my GED in 2007 right before the last recession. Don't be so hard on yourself - you could have a remote job working for a company in SF like me :). It took a lot to get here but almost anyone can do it.
> Add to that I'm supposed to be getting married in 68 days and who knows what's going to happen now. I don't even know if the courthouse will be open to get the marriage license (it's only good for 60 days).
Why not just go down to the courthouse tomorrow and get married? Can you think of a better time? You're not going to disappoint anyone by cancelling the event.
> None of this is good for my sobriety. 7 months 25 days, 15 hours. I got this. I can keep that number growing.
Every day I wish I could get sober so in a way you have a wealth that I deeply desire :) Keep it up, it has got to be worth it.
Good luck and don't wait for the dust to settle to find yourself in a better position. I'll try to do the same thing.
Unlikely. I'm not a programmer and have no desire for it. Everything else remote wants people with years of experience and a degree in something like marketing or only hires via short term contracts for stuff like customer service/support and doesn't actually want to make you a proper employee. At least in my experience over the past few years.
A lot of places just flat out require a bachelors degree (especially startups once they get some investor money).
I am not a programmer(but do computer things) but I didn’t do this stuff when I got my ged. Anyways I want to emphasize that your sobriety is really amazing and I genuinely look up to people such as yourself who can make it happen.
To get to this length I had lots of shorter ones building up to it. The previous 5 being 69 days, 27 days, 38 days, 127 days, 33 days, now into this stretch.
I've actually found this most recent stretch fairly easy, I avoid the liquor aisle like the plague at the grocery, I stopped using one drugstore because the liquor is kept at the counter and I stopped eating out (although that was rare anyway).
It's definitely a struggle most days still, sometimes even catching a whiff of hand sanitizer will put me in that mental space but since I've been basically bathing in hand sanitizer as we hot bunk desks at work with another shift, I've not had it trigger me since COVID-19 started popping up in the United States.
I think most of my success is just pure laziness. If I'm at home and get the urge for a drink, I'd have to get dressed and go out and then it becomes a 30 minute chore and I find I can talk myself out of going.
Using an app has helped a lot too, it gives me notification every morning and I can open it when I want a drink and watch the seconds tick by.
"Annual income twenty pounds, annual expenditure nineteen [pounds] nineteen [shillings] and six [pence], result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery."
– David Copperfield, by Charles Dickens
The Fed, which has no legislative oversight on this kind of thing, lowered interest rates to 0% and is buying $700B of treasuries to stabilize the banks. So you know, only twice that much authorized to make things marginally better for banks and the stock market.
So I think maybe pretend that it was actually $2k per person. Other than losing your job this seems like a reasonable amount to hunker down and not eat out or go to events for 6 weeks. But if you lose your job long term... I think the effect is going to be much longer than a few weeks of people working from home.
1k is considerably less than even unemployment, which is also not enough for a huge portion of society. I would say 3k is probably the bare minimum for 1 month of self-isolation. Essentially expanding unemployment (just over 2k) to everyone.
You are way out of band. The average American can't afford an unexpected $500 bill, lives pay-check-to-pay-check and doesn't have education beyond high school. $1k month would be HUGE for the average American.
Most common jobs are truck driving, retail workers, food prep and service.
You probably just live in an echo chamber where most people you live around and associate with are college educated people in professions like IT, Marketing, Accounting, etc.
That $1k only works if it is on top of normal wages.
There are other measures in talks too, like eviction protection during the duration of the outbreak as a state-wide in California. Utility companies have agreed not to shut off power and water for those late on their bills. So $1000 would go a long way keeping people from not starving, and maybe even go further to cover all costs like you mention in your case.
I spend more than $1000/mo in Austin, but my essential costs (rent, food, utilities) have always been <$1000/mo.
$1000 won't cut it for everyone, but it will be enough for a lot of people, and disproportionately enough for people living from paycheck-to-paycheck. They've already had financial pressures to keep their standing expenses low. And keep in mind that this is per adult, not per household.
This is our opportunity to get basic income perpetually.
We should've had it decades ago already.
The people who need the most help are the people who are going to be homeless in a month. 1k will buy them a second month. This thing will not blow over in two months.
What would help, is for mortgage and rent payments to be suspended as long as the state of emergency lasts. Not deferred[1], suspended.
When economic activity stops, we have to stop rent-seeking from bleeding everything out of the system.
[1] Deferral doesn't work. A bartender living paycheque to paycheque, who lost his job because all bars were shut down is not going to be able to magic up six months of back-rent in September. His landlord won't see a penny of that owed money... But the landlord's bank will be demanding six months of mortgage payments.
Since they also won't need to pay rent or mortgage, they won't get kicked out of their homes, too. Which is about the most that people should expect when the economy grinds to a halt.
Otherwise, tough. We're in a state of emergency, that is preventing their tenants from getting paid. Just like their tenants, they'll have to deal with it.
> We're not going to re-engineer the economy in the next few weeks.
1. This is not going to blow over in a few weeks.
2. We sure as hell shouldn't empty the treasury into the pockets of landlords over a few weeks. They should not be the only people to walk out of this unscathed.
Suspending rents and mortgages is the only fair thing to do. It costs the state, and the taxpayers nothing, it puts everyone on an even footing, in terms of continuing to have a roof to sleep under, and it doesn't screw us six months down the road.
We need to tackle the financial consequences of the related economic crisis, but that can be done afterwards when all of this is over; right now what matters is tackling health issues and also the immediate financial issues of people being able to obtain core goods and services - and $1000 per person can buy a decent amount of food and necessities; let's sort out the rent debts when there's a vaccine available.
People have expenses, too. Food, transportation, healthcare. Hard to deal with when you don't have a job. The landlords will have to deal with their other expenses, too. At least they aren't going to get their properties repo-d, after their tenants stop paying.
You seem to be assuming landlords are “rich” and tenants are “poor”, which may be true in many cases but it’s not a given. If you want means-tested benefits, just hand out cash based on means.
Unfortunately whenever a president starts talking about this, he has a tendency to be shot.
Steve Keen's idea for a modern debt jubilee is more important for the long term growth of the economy:
http://www.debtdeflation.com/blogs/manifesto/
I get where you are coming from, but the current system is completely out of control, as always happens with a usury-based economy.
without much consideration by us commoners, we've come to accept that money must be injected into the economy through large financial institutions that gatekeep and rentseek.
money is literally the intermediary for trading the fruits of labor (not capital) with each other, and the closer money is injected into the system at the point value is created (when labor turns raw materials into desirable goods), the better.
I don't know what you mean about wealthy getting first dibs on money (if I am lending to someone why would I care if they are wealthy or not [aside from risk considerations]?).
My argument is simply that we cannot afford it. Any Ubi is either too low to live on or unaffordable. Want to give everyone 20k per year? In America that would cost about 5 trillion per year.
I really highly recommend reading Keen's stuff.
We can only afford Tesla's now, because rich people could afford them years ago. Same with all the other things we spend our money on ..
What is this comment? I seriously don't get it. Government money is money by the people for the people.
I don't want to get money for the same reason I don't want to go and run up personal debt.
http://blogs.reuters.com/great-debate/2013/01/14/why-public-...
There are three ways to make it possible: 1) issue government debt to pay for it 2) increase taxes to cover it 3) print money to cover it.
Number 3) will cause significant inflation, so it will effectively be paid for by tax on cash savings. High inflation is really bad, it’s a terrible idea.
1) has the problem of only working temporarily: you cannot indebt yourself indefinitely, at some point the service payments will become simply untenable.
2) is the only one practical, but the only way to make it work in practice is to increase taxes all across the population. In result, this will be $1000 monthly only for the very poor. For people around the median, this will balance out to zero or negative.
So, the only way this destroys debt bubble is by 1), inflation destroying cash debt. This is terrible: businesses will not have access to debt to finance operations, mortgages will not be accessible for people without significant savings to buy houses, etc. All around, a terrible idea.
Saying that this will lead to inflation is moot - this proposal will only take effect when inflation is explicitly desired.
https://www.investopedia.com/articles/08/fight-recession.asp
There is another way to do it without issuing debt, but while still controlling monetary policy.
1. Provision "dividend.federalreserve.gov" CRUD app (or just dividend.gov for convenience). Create "Fed" accounts, very similar to what you get with a Social Security Administration account at https://ssa.gov. Accept routing and account numbers from citizens. Issue debit cards with no fees to the unbanked. Provide local service at Social Security offices.
2. The Fed slowly buys up income producing assets (equities, fixed income, etc), and distributes the gains monthly to everyone. Many central banks go on buying binges to support asset prices already (the Bank of Japan already owns a significant amount of the Nikkei [1]).
You will eventually arrive at a UBI supported by the economic productivity of your country. Alaska does something smaller with oil revenue already [2]. This also keeps with Fed mandates to maximize employment and keep inflation around their 2% target (inflation will never increase because of structural demographics, the shift to a service economy, the transition to EVs and renewables, etc).
[1] https://asia.nikkei.com/Business/Markets/Bank-of-Japan-to-be...
[2] https://en.wikipedia.org/wiki/Alaska_Permanent_Fund
The only difference would be that instead of the Fed injecting the printed money through financial instrument purchases which benefit the top 5%, they would provide it to all citizens as a UBI.
While I'd like for it to be possible to pull $12k/year for every American out of thin air, there's simply no way.
12k / year for every american is likely too high. I think the Fed should still determine the amount of QE based on inflation and economic metrics, however that QE should be distributed via a UBI rather than used to purchase financial instruments.
But why go the roundabout way of going through QE to pay for UBI? Why not just increase taxes directly?
The answer is, clearly, because once you talk about increasing taxes to pay for something, you start thinking hard about numbers, and having them add up. When you talk about some vague ideas like the above, calculating the impact exactly becomes difficult, so instead one can just throw up their hands in the air and ignore the problem altogether. The impact however stays very real, as real as when you pay for it through taxation.
QE is different though, the Fed already has mechanisms in place to decide "how much" and is already printing money not paid for by taxes. Part of the goal of QE is actually to devalue the nation's currency in order to increase exports. The question is just how to best inject this printed money into the nation's economy.
In one way, QE is an extremely efficient (and very difficult to evade) wealth tax applied proportionally and instantly to any entity that holds USD. It would be very hard to pull that off with traditional taxes.
The government could also just print itself lots of new dollars, it's even more efficient. We don't do that, because the central banks are independent from government, so QE is a roundabout way of allowing government to print more money in a way that doesn't create high inflation expectations in future.
The biggest reason we don't do such taxes though is because they would be extremely distortionary. It's super easy to evade USD cash tax: just don't hold cash, buy stocks or real estate or some other real property. The USD tax will artificially inflate those assets, while at the same time, will require new cash-denominated bonds to be have payouts indexed by inflation.
The central bank could keep that independence but simply distribute the QE money to individuals as a one-time or traunched payment (I realize calling it a UBI is misleading as it implies it is ongoing). There should be no expectation that it is permanent or continues.
Right. This is a sensible (though unclear if the best) policy in context of exogenous shock. However, using this as a backdoor to introduce perpetual basic income of significant value, with some very vague hand-wavy plan how to pay for it on an ongoing basis, is rather silly, and that's what I was pointing out in parent posters.
Then we've done #3 via re-introducing QE via the fed. Both back in September, and again last week, and why yet again just 30 mins ago. While we call them short term loans, they still haven't been paid back since the start of the GFC. And not only have we continued printing more via the Fed, when the fed finally tried to get some companies to pay them back a year ago the repo market siezed up last fall. The fact that there was a flood of Treasury Securities on the market to pay for item #1 (it increased supply by 50%) likely had a lot to do with it.
If you want the economy to function, then get money in the people who will spend it. What's the factor? For lower incomes every extra dollar they have, introduces 1.5x or 2x or something into the economy. And for every dollar given to middle-high and high incomes only 0.4x or less actually goes into the economy.
Propping up assets isn't a functioning economy.
$4T a year, required to pay for monthly basic income of $1k to all Americans is much wilder than $1T of tax not collected over 10 years, yes. The former number is 40 times larger than the latter.
> Then we've done #3 via re-introducing QE via the fed.
No, we've done only small part of 3) via QE. QE over its history had bought around $4T of assets, which is a far cry from what's required to pay every American $12k/year. QE also doesn't directly "print money", and so Fed buying $4T of assets has much smaller inflationary impact than actually printing $4T and giving it to the government or people.
What I want is for people to be honest about how much basic income actually costs, and where will that money actually come from. Quite simply, you cannot double federal government spending overnight by some clever accounting trick or increasing taxes on "the wealthy": there aren't nearly enough wealthy people to cover that.
"one-time payment of $1,000 to every adult who is a U.S. citizen or a taxpaying U.S. resident, and $500 to every child who meets the same criteria."
You're arguing against something nobody proposed. Please compare the numbers with whats actually being proposed.
> This is how we should manage the money supply, and it should be monthly.
Tax revenue has not decreased. The deficit is a spending problem not a revenue problem.
I'm not certain what you're getting at. The deficit is defined as the delta between spending and revenue. It's as much one problem as it is the other. Could you clarify what you mean?
Debt spends the same as money. We have already had the inflation, paid for with debt. Now the debt system is becoming unstable and will lead to deflation unless we put non-debt spending power in the average persons hands.
Read Keen's site, he explains the situation:
http://www.debtdeflation.com/blogs/manifesto/
Most economists view debt as a wash. "We owe it to ourselves." But, at Keen demonstrates, that isn't the case. We need a debt jubilee if we want the economy to function properly again, and he, alone and mocked by any mainstream economist who actually paid attention to him, came up with a modern, fair way to do it.
> Number 3) will cause significant inflation, so it will effectively be paid for by tax on cash savings.
Yeah, the same was said before QE was rolled about and it did not happen--as predicted Krugman and those that follow IS-LM models:
* https://krugman.blogs.nytimes.com/2015/02/12/qe-truthers/
* https://en.wikipedia.org/wiki/Zero_lower_bound
Stimulus now could be very useful, and 'helicopter money' is probably just as good as any other method:
* https://www.nytimes.com/2020/03/07/opinion/the-case-for-perm...
* https://archive.is/Z2TMK
So, refresh my memory: Was Reagan talking about this? Ford? (People attempted to shoot him twice, but not hit.) Kennedy?
For that matter, has a president ever seriously proposed this?
You sound like you're just making stuff up.
What are you talking about? Unless I'm forgetting someone, there have only been 2 assassinations, and one attempted one that famously failed. Lincoln was assassinated by someone who was mad about the Civil War. Reagan was shot by Sirhan Sirhan, but I doubt that's what you're talking about. Kennedy might be what you're talking about, but there's a lot of theories about what might have motivated that if you believe that it was orchestrated by someone and not the sole work of Oswald, with the biggest one I think being that Kennedy was planning to pull out of Vietnam. Anyway, even if your claim has merit, that's only a single data point.
And now the Ubi folks want this.
Nothing changes. Same BS.
What we need is to get over this pandemic as quickly as possible so we can stop disrupting trade and get people back to work. The news coming out of China is encouraging, and production seems to be slowly returning to normal.
Any discussion about UBI should be based on the long term merits, not a reaction to any current crisis. QE is a bit different, but honestly I think it does more harm than good much of the time, especially once it makes it through the political system.
The Fed steps in, makes some loans or buys some securities -- when the disaster abates, they get some money back from their loans and sell the securities for a profit.
I suppose I just get skeptical whenever a solution has been proposed that is apparently a panacea to all of societies problems. When 'x' has been purported to solve everything for 30 years, I start to get skeptical about x has any bearing on whatever disaster occured today.
The idea is to get money into the hands of people who will actually spend it - the poor will tend to go buy their kid a desperately needed new pair of school shoes, for example, whereas the rich will just throw it in with their other savings. Only one of those stimulates the economy in the short term.
I am not necessarily saying it's a bad idea, I am just jaded that solutions always follow existing political ties.
I am sure there are logical arguments for it. But there are also logical arguments for tax cuts right now.
I am just an idiot on the internet. All I can say is I get skeptical whenever an idea purports to solve any situation that arises.
1. The pandemic reveals major holes in the social safety net that people are pretty upset about.
2. One party wants the patch the holes, and they continue to feel that way. The other party regards the holes as grimly necessary to keep people properly motivated, or part of God's divine plan, or impossibly expensive to fix in spite of the fact that less wealthy countries manage it, or something, and they continue to feel that way.
therefore
3. Woo, both sides are equally crazy!!!
This is why we can't have nice things.
See how I can easily spin it the other way?
I hate to say it--and I hope this doesn't sound too flippant--but I think you're doing exactly what I described.
If you started out thinking that your ideology is clearly correct and the opposition has nefarious motives, then rather than this disaster leading anyone to question their beliefs, it will stand to reinforce them.
> If you started out thinking that your ideology is clearly correct and the opposition has nefarious motives, then rather than this disaster leading anyone to question their beliefs, it will stand to reinforce them.
If you're the kind of person who gives a damn about "motives" instead of ideas and policies, well... it is understandable at times, but that's not something to aspire to.
It has an indirect and huge impact on all of us.
Everyone else who simply has to deal with a reduction in consumer spending should take some responsibility for overbuilding for an overheated economy. For whatever cause, the Fed has predicted a recession months ago.
1. For people who are living "paycheck-to-paycheck", this won't even matter. How far does $1000 get you in the US? A better policy would be a general amnesty on rent and interest payments for a few months, and temporary free healthcare.
2. For industries where it's a demand shock (e.g. travel), no amount of helicopter money will restart the demand. A better solution would be helping the companies directly, to the extent the government wants to help them survive, by e.g. tax write-offs or delays, emergency credit loans, or my favorite, emergency equity (the free-market solution, if your company cannot survive because of your poor panic, you don't deserve to own (all of) it).
3. For industries where it's a supply shock (face masks, hand sanitizers, possibly soon but hopefully not food), some kind of coupon-based rationing (with the government paying the producers directly) would be a better solution, providing just the necessities for survival and ensuring there's minimal waste.
That's kind of the point. With a nearly imminent lockdown, many people would not be able to pay for things that they have been paying all the time, and that will bankrupt companies and break the economy. A cash injection that allows you to pay for things that you're already paying for - and get the basic things you were already getting before - would be quite helpful.
It just delays everything by a month.
I fail to see how this solves the problem.
These sorts of micro-management solutions seem like the wrong approach to me. It is very hard to target them to people who really need it. Some people will still have jobs and don't need the assistance, some people can weather a couple of months without income, some people are retired and are living off their savings already, etc.
It seems to me that some sort of unemployment benefit program on steroids would be better. But that doesn't help with people who are self-employed. Perhaps there could be a special program to allow self-employed to take advantage of unemployment programs?
> companies affected
I'm wary of assistance in this area because it is next to impossible to understand all the ramifications of the bailout and businesses are generally better positioned to figure out how to "survive" in the new environment. I'd go back to my first comment above and focus on assisting people not companies.
> supply shock
This one I really wouldn't worry about as the market is going to address these shortages quickly. In fact I'm more worried about the government imposed shutdowns creating problems for companies who are trying to address these shortages (parents not working because they have to stay at home with kids, e.g.).
On the other hand, absolutely no-strings-attached money might see you spend it on something that you've needed for a while but haven't been able to afford.
It's always possible to do both.
> Furman proposes Congress pass a "one-time payment of $1,000 to every adult..."
But I guess the US will either do nothing or hand a lot of money over to the top income earners in the hope that they will “create ” jobs.
[1] https://www.cnbc.com/amp/2019/01/09/shutdown-highlights-that...
They just got their loan interest rates reduced. All with a nice excuse to cover for it.
You just don't realize you're in the top 10-20% of earners, and the difficulties of those underneath you.
You'd better put it aside and save it, because they're going to raise your taxes by $2000 to pay for it.
Isn't that the same overall effect as a lockdown and a direct cash payment?
If it has this caveat, it's essentially just UBI, not a response to coronavirus. I'm more sympathetic to UBI than I'd have once expected, but my observation is that any response that creates a potential post-virus entitlement is substantially less likely to pass, and at the moment, the priority should be getting some relief out there. This is suboptimal, but reality.
Additionally, not everyone in debt got there by way of lack of personal responsibility. One ambulance ride and ER would send many minimum wage earners into debt, even if they were responsible with their earnings.
It was also distributed via direct electronic funds transfer in the most case (as that's how the vast majority opt to receive a tax return), so it was pretty frictionless here because all of that infromation was readily on hand. That may not apply in the US, I don't know.
A solution to recessions is increasing Aggregate Demand. People spending money does just that.
It could take months if not years to do income and asset verification for every american and determine who would qualify
For example, if you normally make the median income of $30k, but quarantine put you out of work for 3 months, you’re down to $22,500, your federal tax bill is ~$2700, and so this is most you can get from tax rebate. If you have children, this is even lower.
While I agree that tax rebates are typically correct approach, here it’s not the case: they won’t help much those who most need it, and they’ll help most those who don’t need them at all.
in a weird way it dangerously exposes people as, according to "the economy", particularly not valuable. the framing will go: these people are literally doing nothing and we're supporting them financially, no questions asked. that will draw a fair amount of outrage, i assume, given that the US can't even get that done for older and poorer people.
that's why i think if you buy in to UBI, you sort of need whatever else Yang brought with it - measuring societal value differently, etc. otherwise you are looking at a situation where certain persons are going to be portrayed as truly valueless, bc in the US the economy dominates so much. and i don't think that bodes well for those people.
Why? Because it contains them. Otherwise, where would they be? If they have little interest in holding down a job, they're probably out committing crimes, or sitting in jail for those crimes. So the thinking goes that UBI is a way to contain them without having to jail them.
I don't think this is the right way to think about this problem, but I think it's tempting to think this way.
A universal jobs program makes more sense as a form of containment; it needn't even be particularly onerous.
My objection to it is that it'll be too easy to go after social programs, which for some I assume is the point--"you have the money, you don't need SNAP/Medicare/Social Security/etc". This proposal seems too much like an opportunistic attempt to trial the UBI. It'll be moderately successful on some metric, I'm sure, and that'll be used to push a permanent UBI.
You're right that it'll require a pretty fundamental shift in attitude. Some folks will still think people like that are losers. That's fine. But maybe we'll get to a point where they won't think such people, losers that they may be, are doing anything they're not entitled to be doing. That's the kind of shift in perception that's required to make it work.
We're never going to agree with everyone else's choices. We need to agree that they're entitled to those choices.
The hypothetical group of stoned gamers being discussed are certainly entitled to choose to spend their time smoking weed and playing games. I don't see how it follows that they're entitled to me subsidizing their choices with my tax dollars. I think people who are capable of holding a job / productively contributing to society but choose not to are indeed losers, and I will continue to think that way because it seems to me to be an obvious truth. I truly hope that does not change.
Can you explain why I should think otherwise? I'm genuinely curious. I realize this is just a hypothetical but I can't imagine anyone having any sympathy for those people. There's also an argument to be made that enabling them is hurting more than helping, but I'm leaving that aside entirely for the moment.
People have choices, and choices have consequences.
Others have made the case far better than I could here. I wasn't actually trying to argue for or against it, just noting that 1) social perception of "freeloaders" is indeed a barrier to acceptance of UBI (as you succinctly demonstrate); but 2) relatively small shifts in perception could open a path for it, anyway.
The only thing I disagree with is that I should have the choice to not pay for other people's choices of not doing nothing. If they want to be like that, they can as long as they don't interfere with everyone else's choice.
I agree with the sentiment that everyone is entitled to do as they wish, even if I don't like it. This includes the choice to do nothing.
What I do not agree with is their choice to do nothing being subsidized by myself and everyone else who works and contributes to the economy and tax revenue. You are entitled to do whatever you want, but not on someone else's dime.
No one is entitled to things merely by virtue of existing, doubly so if they are able to work or provide for themselves and choose not to.
https://www.congress.gov/bill/116th-congress/house-resolutio...
I'd much rather have tax cuts to reduce money lost through the middle man, as the middle man always wants a cut. Meaning you'd lose far more money to the process than if you were to just reduce taxes.
We've tried this and it's a dumpster fire. The government builds low income housing which is 100% people in poverty and it turns into a slum. The government subsidizes home loans and student loans and it raises the cost of housing and education. The government subsidizes food and then restaurant workers who already have access to food can't use the money to fix their car or whatever it is they really need right now.
People know what they need better than bureaucrats do. If you give them money and they need food, they buy food. If you give them money and they need transportation, they buy transportation. If you give them food and they need transportation, you messed up, which is what consistently happens in practice when you don't give them money.
Nothing about that changes at the point where the amount of "tax" someone pays goes negative. They started getting a subsidy from other taxpayers when they paid less than $15,000, not when they paid less than $0.
So if you want to call a UBI a "tax credit" then go ahead, but changing the name to "tax credit" makes no mathematical or economic difference at all.
I'm all for reduced taxes though in some regards. So we agree in some areas and not others.
USD 1000 for every American (while low) strikes me as a sensible, effective, efficient, fast measure that helps the poor more than the rich. As such, unlikely it will come to pass in today’s USA.
I wonder how these kind of direct-to-consumer payments compare with traditional monetary policy (cutting interest rates, securities purchases) in terms of impacts.
https://www.nber.org/papers/w15421
"Only about one-fifth of respondents in the Reuters/University of Michigan survey report that the 2008 tax rebates led them to mostly increase spending, while over half said it would lead them to mostly pay off debt... [T]he results imply that the rebates provided only a modest stimulus to spending per dollar of rebate."
Sometimes you need to stem the bleeding to buy yourself enough time to fix the underlying problem.
I sincerely doubt that giving everyone a thousand bucks will save the restaurants and bars and movie theaters and retailers and cruise ships and hotels and airlines etc...
You can't just sat that universal health care isn't helping in Italy because things are bad there. Things might be even worse if Italy didn't have universal health care.
But even if we did provide universal healthcare, people who aren't working run the risk of losing their homes, access to food, and other necessities, so providing universal healthcare would only solve part of the problem that's being proposed.