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I've never understood the fixation on the "work incentives" debate surrounding Basic Incomes, since the real world data suggests the impact on labor participation is slight, at least for a subsistence level BIG.
the combined MTR of benefit reductions and taxes can be very high.
But what if we suspended the FICA and made the income tax highly progressive so that people drawing a BIG and/or working at low wage jobs pay no taxes ? (other than consumption and property taxes) If low income people don't want to work because taxes take a big bite out of their paycheck, that's a problem with the not-so-progressive tax system, not a problem with Basic Income.
fund a UBI by filling the holes in the income tax base.
Uh, no. A subsistence level UBI would cost roughly $2.5 trillion. Plugging loopholes would not generate $2.5 trillion.
I've yet to see a satisfactory discussion of the "pay for" aspect of a UBI (other than the Swiss proposal, where they actually did the math and propose a big tax increase on the rich as well as eliminating most existing safety net programs). UBI proponents either ignore the issue or propose some gawd-awful new tax like a 30% sales tax.
You can make the economics of a UBI work, but it will require a huge tax increase, preferably a highly progressive tax. While I'm not one to dwell on political viability, the political difficulty of a big tax increase is a strike against the UBI.
"'ve never understood the fixation on the "work incentives" debate surrounding Basic Incomes, since the real world data suggests the impact on labor participation is slight, at least for a subsistence level BIG."
The 'real world data' since the second world war says that any free money given to people without work, and even some with a monetary contribution, is dismantled politically.
That is the reality of the situation. In human society you have to convince others that you are worth the corn that *they* made.
The UBI job is implicitly 'Spend the money I'm given'. That job is considered insufficient recompense by others in society.
UBI fails because it doesn't take into account the reality of human behaviour.
The work is there to discharge the 'quid pro quo' requirement hardwired into the human brain.
" subsistence level UBI would cost roughly $2.5 trillion."
Dan, just to add some perspective, for this FY, we are on track for US govt spending of 4T or so, so we are already way over the 2.5T basic subsistence .... many people not being allowed to participate though...
But our budget deficit is only $0.6 Trillion, last I heard. If we tack on $2.5 trillion then we might be in inflationary territory. . Even from a functional finance perspective, there is always a cost to deficit spending -- there is the opportunity cost of not spending on other things.
For example, we lack universal health care, we lack affordable college, our infrastructure sucks, we lack a pension system that you can actually live on, we might want to get rid of the regressive payroll tax, and we should be investing heavily in clean energy, just to name a few things. To me those things should take priority over sending a UBI check to well-to-do people.
I try to be open minded and willing to consider either a means-tested BIG or a UBI (or even some sort of JG if it is well designed), I'm just saying it is likely that a UBI would require a hefty tax increase.
@Neil Wilson, what is the quid pro quo for the billions we give millionaire farmers and ranchers in agricultural subsidies? In essence, we have a BIG for millionaire farmers and ranchers.
Where is the quid pro quo for the subsidies we give to the oil industry?
And so forth. We're not a democracy let alone an informed democracy. We're an oligarchy and the oligarchs are usually able to control public opinion since the oligarchs own the media. We don't know what is possible in an informed democracy because we've never had one. :-) But we can look at Iceland and Switzerland for some clues about what is possible.
"what is the quid pro quo for the billions we give millionaire farmers and ranchers in agricultural subsidies? "
Bridging to the 'well some rich people seem to get away with it' argument won't make UBI work. There are lots of reasons why rich people get away with it. Mostly because they are better at propaganda than poor people and rarely get found out.
UBI is a systemically flawed idea and has no chance of staying in place in any human society.
Dan, the problem is scale. The problems began with the advent of surpluses, and while surpluses enabled civilization (urbanization), a professional warrior class and an intelligentsia (originally a priestly class), centralization of power, and higher level organization, bringing greater economic potential, this made societies more complex and with complexity emerges both opportunity and challenge. This is the story of natural evolution and also human development.
Agree, Tom. People in a closely knit tribe are willing to look out for each other, but it's difficult to make that communal system work in a nation state where people don't know each other and have different races, values, etc..
As you know, one of the political challenges for social programs in the US is that whites don't want to support programs that are perceived as helping people of color.
People in a closely knit tribe are willing to look out for each other, but it's difficult to make that communal system work in a nation state where people don't know each other and have different races, values, etc..
I'm in favour of a unconditional guaranteed income, but I'm not for a universal basic income. From my point of view, a UBI would essentially be a tax cut for the wealthy, and at the same time the right would try to cut other programs that currently help people, that seems to be the crux of the rights desire for a basic income, just another opportunity for cuts to welfare. And of course, tax cuts for the rich.
We could go over this a hundred times and be no closer to coming to an agreement, I find the rigid fixation on a JG tiresome to be perfectly honest. The idea that the poorest people have to become performing monkeys to please the public, so they'll allow them some pocket money to stay alive, is perverse. People are born landless, and in poverty due to the actions of countless governments in the past, the last thing those people want is yet more authoritarianism from the state. Access to a job, or education should always be available, but only after they have an income first.
I've said it before, and I'll say it again, the resentment people have towards benefits claimants stems from the fact that people believe they're funding them with their taxes. The proof that it has absolutely nothing to do with the desire for any kind of reciprocity is verified by the vitriol those same people direct at public sector workers, these people are all seen as takers as well. Again, this comes from the fact that people believe they're paying for them with their taxes.
James: The idea that the poorest people have to become performing monkeys to please the public, so they'll allow them some pocket money to stay alive, is perverse. True, but that is not the MMT JG. That was not what the WPA was. That describes actual welfare / BIG systems and what they have a strong natural tendencies to become much better.
People are born landless, and in poverty due to the actions of countless governments in the past, the last thing those people want is yet more authoritarianism from the state. Access to a job, or education should always be available, but only after they have an income first.
I think a good way to determine what people want is to ask them. Those people answer that they want jobs, not handouts. That they want a JG, more than a BIG.
Not because of some delusion or morality or crazy work ethic. But because they are thinking logically, and the usually comfortable people who rate a BIG over a real JG aren't.
Of course anybody would prefer money for nothing over money that you have to work for, for themselves. But poor people prefer the JG policy over the BIG policy, because they know the first works, and would end poverty forever. The second in practice is a sham, a lie they see every day.
And the poor see that the authoritarian alternative is the BIG, not the JG, which can and will enhance freedom. The poor and the rich understand this. That's why the poor want a JG and the rich rabble hate it. But the middles get it backwards. Oh well, if they keep getting things backwards there won't be any muddled middles any more.
I've said it before, and I'll say it again, the resentment people have towards benefits claimants stems from the fact that people believe they're funding them with their taxes. The proof that it has absolutely nothing to do with the desire for any kind of reciprocity is verified by the vitriol those same people direct at public sector workers, these people are all seen as takers as well. Again, this comes from the fact that people believe they're paying for them with their taxes.
That is pretty much it, along with "people born on third base that think they hit a triple."
the resentment people have towards benefits claimants stems from the fact that people believe they're funding them with their taxes. The proof that it has absolutely nothing to do with the desire for any kind of reciprocity is verified by the vitriol those same people direct at public sector workers, WELL SAID, @JAMES
I think a good way to determine what people want is to ask them.
@Calgacus there is a name for that -- it's called a JIG.
think a good way to determine what people want is to ask them.
Dan Lynch: @Calgacus there is a name for that -- it's called a JIG.
No, it is called polling - organized asking. Anybody who supports the cruel, authoritarian idiocy of a BIG without a JG could find a poor person and ask and learn from them.
All the MMTers support a "JIG". We currently have weak and fake and dying "BIGs". What we don't have is the essential, the JG, which would revive and enable more generous "BIGs". As others have said, I don't think you understand what the JG is, which imho the coiner of the term JIG has trouble with too. A BIG doesn't allow the asking; the MMT JG/JIG does.
16 comments:
I've never understood the fixation on the "work incentives" debate surrounding Basic Incomes, since the real world data suggests the impact on labor participation is slight, at least for a subsistence level BIG.
the combined MTR of benefit reductions and taxes can be very high.
But what if we suspended the FICA and made the income tax highly progressive so that people drawing a BIG and/or working at low wage jobs pay no taxes ? (other than consumption and property taxes) If low income people don't want to work because taxes take a big bite out of their paycheck, that's a problem with the not-so-progressive tax system, not a problem with Basic Income.
fund a UBI by filling the holes in the income tax base.
Uh, no. A subsistence level UBI would cost roughly $2.5 trillion. Plugging loopholes would not generate $2.5 trillion.
I've yet to see a satisfactory discussion of the "pay for" aspect of a UBI (other than the Swiss proposal, where they actually did the math and propose a big tax increase on the rich as well as eliminating most existing safety net programs). UBI proponents either ignore the issue or propose some gawd-awful new tax like a 30% sales tax.
You can make the economics of a UBI work, but it will require a huge tax increase, preferably a highly progressive tax. While I'm not one to dwell on political viability, the political difficulty of a big tax increase is a strike against the UBI.
"'ve never understood the fixation on the "work incentives" debate surrounding Basic Incomes, since the real world data suggests the impact on labor participation is slight, at least for a subsistence level BIG."
The 'real world data' since the second world war says that any free money given to people without work, and even some with a monetary contribution, is dismantled politically.
That is the reality of the situation. In human society you have to convince others that you are worth the corn that *they* made.
The UBI job is implicitly 'Spend the money I'm given'. That job is considered insufficient recompense by others in society.
UBI fails because it doesn't take into account the reality of human behaviour.
The work is there to discharge the 'quid pro quo' requirement hardwired into the human brain.
" subsistence level UBI would cost roughly $2.5 trillion."
Dan, just to add some perspective, for this FY, we are on track for US govt spending of 4T or so, so we are already way over the 2.5T basic subsistence .... many people not being allowed to participate though...
rsp,
But our budget deficit is only $0.6 Trillion, last I heard. If we tack on $2.5 trillion then we might be in inflationary territory.
.
Even from a functional finance perspective, there is always a cost to deficit spending -- there is the opportunity cost of not spending on other things.
For example, we lack universal health care, we lack affordable college, our infrastructure sucks, we lack a pension system that you can actually live on, we might want to get rid of the regressive payroll tax, and we should be investing heavily in clean energy, just to name a few things. To me those things should take priority over sending a UBI check to well-to-do people.
I try to be open minded and willing to consider either a means-tested BIG or a UBI (or even some sort of JG if it is well designed), I'm just saying it is likely that a UBI would require a hefty tax increase.
@Neil Wilson, what is the quid pro quo for the billions we give millionaire farmers and ranchers in agricultural subsidies? In essence, we have a BIG for millionaire farmers and ranchers.
Where is the quid pro quo for the subsidies we give to the oil industry?
And so forth. We're not a democracy let alone an informed democracy. We're an oligarchy and the oligarchs are usually able to control public opinion since the oligarchs own the media. We don't know what is possible in an informed democracy because we've never had one. :-) But we can look at Iceland and Switzerland for some clues about what is possible.
"what is the quid pro quo for the billions we give millionaire farmers and ranchers in agricultural subsidies? "
Bridging to the 'well some rich people seem to get away with it' argument won't make UBI work. There are lots of reasons why rich people get away with it. Mostly because they are better at propaganda than poor people and rarely get found out.
UBI is a systemically flawed idea and has no chance of staying in place in any human society.
@Neil Wilson, some people might say that capitalism is a systemically flawed idea and has no chance of staying in place. ;~)
Captilism has been marked by political and economic instability, and much bloodshed.
On the other hand, communal Native American societies lasted 10,000 years or so.
Dan, the problem is scale. The problems began with the advent of surpluses, and while surpluses enabled civilization (urbanization), a professional warrior class and an intelligentsia (originally a priestly class), centralization of power, and higher level organization, bringing greater economic potential, this made societies more complex and with complexity emerges both opportunity and challenge. This is the story of natural evolution and also human development.
Agree, Tom. People in a closely knit tribe are willing to look out for each other, but it's difficult to make that communal system work in a nation state where people don't know each other and have different races, values, etc..
As you know, one of the political challenges for social programs in the US is that whites don't want to support programs that are perceived as helping people of color.
Dan my point was that we are already spending at about a rate where by your numbers we are at about <2x subsistence levels....
rsp.
People in a closely knit tribe are willing to look out for each other, but it's difficult to make that communal system work in a nation state where people don't know each other and have different races, values, etc..
This is where networking shows promise.
I'm in favour of a unconditional guaranteed income, but I'm not for a universal basic income. From my point of view, a UBI would essentially be a tax cut for the wealthy, and at the same time the right would try to cut other programs that currently help people, that seems to be the crux of the rights desire for a basic income, just another opportunity for cuts to welfare. And of course, tax cuts for the rich.
We could go over this a hundred times and be no closer to coming to an agreement, I find the rigid fixation on a JG tiresome to be perfectly honest. The idea that the poorest people have to become performing monkeys to please the public, so they'll allow them some pocket money to stay alive, is perverse. People are born landless, and in poverty due to the actions of countless governments in the past, the last thing those people want is yet more authoritarianism from the state. Access to a job, or education should always be available, but only after they have an income first.
I've said it before, and I'll say it again, the resentment people have towards benefits claimants stems from the fact that people believe they're funding them with their taxes. The proof that it has absolutely nothing to do with the desire for any kind of reciprocity is verified by the vitriol those same people direct at public sector workers, these people are all seen as takers as well. Again, this comes from the fact that people believe they're paying for them with their taxes.
James: The idea that the poorest people have to become performing monkeys to please the public, so they'll allow them some pocket money to stay alive, is perverse.
True, but that is not the MMT JG. That was not what the WPA was. That describes actual welfare / BIG systems and what they have a strong natural tendencies to become much better.
People are born landless, and in poverty due to the actions of countless governments in the past, the last thing those people want is yet more authoritarianism from the state. Access to a job, or education should always be available, but only after they have an income first.
I think a good way to determine what people want is to ask them. Those people answer that they want jobs, not handouts. That they want a JG, more than a BIG.
Not because of some delusion or morality or crazy work ethic. But because they are thinking logically, and the usually comfortable people who rate a BIG over a real JG aren't.
Of course anybody would prefer money for nothing over money that you have to work for, for themselves. But poor people prefer the JG policy over the BIG policy, because they know the first works, and would end poverty forever. The second in practice is a sham, a lie they see every day.
And the poor see that the authoritarian alternative is the BIG, not the JG, which can and will enhance freedom. The poor and the rich understand this. That's why the poor want a JG and the rich rabble hate it. But the middles get it backwards. Oh well, if they keep getting things backwards there won't be any muddled middles any more.
I've said it before, and I'll say it again, the resentment people have towards benefits claimants stems from the fact that people believe they're funding them with their taxes. The proof that it has absolutely nothing to do with the desire for any kind of reciprocity is verified by the vitriol those same people direct at public sector workers, these people are all seen as takers as well. Again, this comes from the fact that people believe they're paying for them with their taxes.
That is pretty much it, along with "people born on third base that think they hit a triple."
the resentment people have towards benefits claimants stems from the fact that people believe they're funding them with their taxes. The proof that it has absolutely nothing to do with the desire for any kind of reciprocity is verified by the vitriol those same people direct at public sector workers, WELL SAID, @JAMES
I think a good way to determine what people want is to ask them.
@Calgacus there is a name for that -- it's called a JIG.
think a good way to determine what people want is to ask them.
Dan Lynch: @Calgacus there is a name for that -- it's called a JIG.
No, it is called polling - organized asking. Anybody who supports the cruel, authoritarian idiocy of a BIG without a JG could find a poor person and ask and learn from them.
All the MMTers support a "JIG". We currently have weak and fake and dying "BIGs". What we don't have is the essential, the JG, which would revive and enable more generous "BIGs". As others have said, I don't think you understand what the JG is, which imho the coiner of the term JIG has trouble with too. A BIG doesn't allow the asking; the MMT JG/JIG does.
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