SuperDole (RIP?)
September 11, 2020 12:34 AM   Subscribe

An ode to Pandemic UI (thread) - "The extra unemployment insurance benefits that were handed out by the U.S. government in the early months of the pandemic to people rendered jobless by Covid-19 represent one of the most extraordinary and successful programs in the nation's history. The $600-a-week in assistance, often referred to as 'pandemic UI', was so generous that it caused an unprecedented spike in Americans' disposable income."[1,2,3]
Despite a huge rise in unemployment, the poverty rate actually fell, thanks to these benefits. Most Americans are still able to pay their rent, holding off a much-feared wave of evictions. And amazingly, pandemic UI managed to accomplish this without keeping Americans out of the workforce.
  • @marcus_ismael: "A direct cash transfer program (with some minor means-testing) in the middle of a pandemic worked in the United States to keep millions alive and in their homes - myself included. AND it did not discourage people from entering the workplace. We absolutely need to extend it."
  • @marwilliamson: "The question should not be 'what it will cost us' to provide Medicare4All, college tuition, college loan debt cancellation etc. The question should be how much it has already cost us as a society that so many Americans live lives of chronic economic despair."
  • @interfluidity: "political stability under increasing inequality demands pervasive surveillance and manipulation... if you don't want poor people invading your suburb, support a social democracy in which there are no poor people to fear... government is the most important technology humans have invented. and we are forgetting how to do it."
  • @LeavittAlone: "And the right wing certainly understood this when they set out to dismantle all the public goods and services, first in NY and CA and now the world."[4]
  • @dylanmatt: "Fascinating paper by @zfurnas and @timlapira about the evisceration of Congress's institutional knowledge in recent decades.
The pandemic is giving the US a chance to fix its embarrassing unemployment benefits - "Top economists tell us what the future of this crucial system could look like."
Looking forward, Evermore said she expects Congress to enact permanent changes to the unemployment insurance system to allow access to aid for more workers, like those in the gig economy, and to allow for better benefit availability in states that have cut funds.

"If that doesn't happen, then we will have to deal with it state by state and that could be a big problem because state trust funds will run out and there will be a pressure to cut benefits like states did after the last recession," she added...

Shierholz said the funds provided much-needed monetary support to the "utterly neglected" state UI programs, which had been using a computer program from the 1970s. The computer program hasn't been taught for decades.

In the future, Shierholz said she hopes the federal government takes more responsibility for administering unemployment benefits in times of crisis. The patchwork of statewide rules and standards creates an inequality problem: not including the $600 bonus from the stimulus package, unemployed workers in Massachusetts can get access to as much as $1,220 per week for 26 weeks, while Georgians can get just $365 per week for 12 weeks.

"And I'm not just saying we should federalize the program because I'm national-oriented," Shierholz said. "Many things make a lot of sense to be administered at the state level — UI isn't one of them."
'A tale of 2 recessions': As rich Americans get richer, the bottom half struggles - "The trend is on track to exacerbate dramatic wealth and income gaps in the U.S., where divides are already wider than any other nation in the G-7."
Some economists have begun to refer to the recovery as "K-shaped," because while some households and communities have mostly recovered, others are continuing to struggle — or even seeing their situation deteriorate further.

“If you just look at the top of the K, it’s a V — but you can’t just look at what’s above water,” said Claudia Sahm, director of macroeconomic policy at the Washington Center for Equitable Growth. “There could be a whole iceberg underneath it that you’re going to plow into.”
The US needs direct cash payments through this crisis — and the next - "The economic stimulus would kick in automatically and be big, quick and efficient."
All of the past six recessions began with a sudden rise in the unemployment rate of half a percentage point, according to Claudia Sahm of the Washington Center for Equitable Growth. She suggests that as soon as unemployment rises by half a point, the government should send out direct cash payments. These would continue until the unemployment rate falls back to a level no more than 2 percentage points higher than when the payments started.[5,6]
Is it Legal for the Federal Reserve to Provide State & Local Governments Unlimited Credit Lines? - "My main criticism of the Federal Reserve for some time has been the lackluster pricing on the Municipal Liquidity Facility and the Fed's relative neglect of state and local finances in its crisis response. As a result, I think it is important for me to bring these overlapping arguments into one place. The Federal Reserve has the clear legal authority, without invoking emergency 13.3 powers, to offer unlimited credit lines to state and local governments."[7,8]
  • Could Digital Currencies Make Being Poor Less Costly? - "Right now, more than 70% of the world's central banks are exploring the merits of central bank digital currencies (CBDCs) — electronic versions of their national fiat. This is a bigger deal than you might think: A national digital currency could reduce reliance on commercial banks as the principal interface for money management and increase optionality for consumers, many of whom are beyond the reach of physical bank branches or excluded from the financial system due to poor credit or lack of funds."
  • The surprising truth about digital currencies - "Central banks all over the world are planning to launch digital currencies. Fueled by competition from private firms as well as increasingly charged geopolitical ties, authorities believe cash may soon no longer be king."[9,10]
  • Scholars Believe China's Digital Currency a Return to Planned Economy - "Si believes that, if the Chinese government fully implements digital currency, 'transactions will be completely under government supervision, which is conducive to the growth of government revenue. If digital currency is implemented, it may be a public-private partnership in the 21st century. In other words, private wealth can become public owned overnight, if the government chooses to do so'... Its characteristic is the control over currency use and material distribution. One can consider digital currency such as food stamps, meat coupons, travel passes, transportation documents, and permits for big-ticket purchases in the digital age."
How Money Became the Measure of Everything - "Two centuries ago, America pioneered a way of thinking that puts human well-being in economic terms."[11,12]
Today, well-being may seem hard to quantify in a nonmonetary way, but indeed other metrics—from incarceration rates to life expectancy—have held sway in the course of the country’s history. The turn away from these statistics, and toward financial ones, means that rather than considering how economic developments could meet Americans’ needs, the default stance—in policy, business, and everyday life—is to assess whether individuals are meeting the exigencies of the economy.
Why Isn't Modern Monetary Theory Common Knowledge? - "As far as theories of money go, I think modern monetary theory (MMT for short) is the correct one. But having a correct theory of money is a bit like having a correct theory of traffic lights." (@blair_fix: "To understand money is to understand the arbitrariness of our social order. That's why most people refuse to do it.")
Traffic lights (like money) are a social convention. We agree that red means stop and green means go. Why we’ve chosen these particular colors is an interesting question, as is why we choose to put traffic lights where we do. But the fact that red means stop and green means go just is. It’s something we’ve defined to be true. The workings of money are similar. True, money is more complex than a traffic light — but only in application. In conceptual terms, money is equally simple. It’s a social convention that we’ve defined into existence.

To frame our discussion of money, let’s begin with what it isn’t. Money isn’t a thing. True, money can have concrete forms like dollar bills and metal coins. But it needn’t. It can be as abstract as digits in a bank account, or tallies on a stick. Money is an idea. It’s an agreement to tie our social relations to a unit of account. To understand money creation, we need only look at the principles of double-entry bookkeeping. Debt goes on one side, credit goes on the other. The two sides carry opposite signs and so cancel out. This allows us to create money while simultaneously balancing our accounts.
MMT blows the cover on the fictional world of mainstream economics that serves class interests - "We agree with everything but don't want anybody to know anything! That is where the evolution of Modern Monetary Theory (MMT) is heading at the moment."
The critics started off just shouting insults – getting as many nasty epithets into an Op Ed as possible – in between sniping about ‘printing money’, Zimbabwe, chaos etc. That showed they were realising that their dominance was under threat. Then the criticisms were along the lines that what is old in MMT is correct and what is new is incorrect and variations on that argument. The variation ranged from ‘we knew it all along’ claims to denial that there was anything interesting to know – which always amused me. More recently we are hearing the story line – MMT is correct (although they don’t express it that way) but god save us if anyone finds out.

An MMT understanding allows us to appreciate that most choices that are couched in terms of ‘budgets’ and ‘financial constraints’ are, in fact, just political choices. Given there are no intrinsic financial constraints on a currency-issuing government, we understand that mass unemployment is a political choice. Imagine if citizens understood that.

An MMT understanding lifts the ideological veil imposed by mainstream economics that relies on the false analogy between an income-constrained household and the currency-issuing government. Households always have to finance their spending choices, through earned income, savings, asset sales or through borrowing. A currency-issuing government spends by instructing its central bank to type numbers electronically into relevant bank accounts. All the elaborate accounting structures and institutional processes that are put in place to make it look as though tax revenue and/or debt sales fund spending are voluntary smokescreens, which serve the purpose of imposing political discipline on government spending. Insiders know this, but actively decline to share that knowledge with the public...

That is the crux of the issue. We might be offended but willing to support the continuation of these voluntary fiscal rules (derived from the fictions) if the policy outcomes were advancing well-being for all. But the neoliberal reality is that, even within the fictional world we operate in, governments use their fiscal capacity to serve special interests at the expense of the rest of us. So these disciplines that are placed on them by the ‘fictional world’ really just serve class interests. There is never a shortage of currency when a bankster needs to be bailed out or some invasion of another country is pursued. MMT blows the cover on that scam. And that is the real reason there is so much hostility towards our work right now.
Our Money Where Our Mouth Is - "To deliver on our promises to ourselves and each other, we must embrace a bold, inclusive, and realistic vision of public finance." (@RaulACarrillo: "an essay about MMT, knowledge, power, and violence")
I would humbly suggest that any cooperative vision of safety and justice requires a more cooperative vision of public finance to support it. At the local level, we should move toward community control over actual budgets and labor they support. But we should also reassess the entire architecture of public finance in the United States...

In order to dismantle our broken world and build a new one, we need to think about the monetary system less in terms of “tax-and-transfer” and more in terms of “create and destroy.” When we talk about D.C.’s fiscal responsibility, we should insist Congress spend more money—on us—and cease spending on activities that hurt us, because they hurt us. Making this case requires a deeper view of what money actually is—not a scarce natural resource, but an abundant social resource. This is a central insight of MMT. Thinking this way begins with a quip former Sanders economic adviser Stephanie Kelton often shares: once we recognize that “money doesn’t grow on rich people”—much less poor people—we gain more breathing room for policy creativity. Instead of getting punished, we can finally get paid.[13]
  • @AOC: "The pantry is absolutely not bare. We need massive investment in our country or it will fall apart. This is not a joke. To adopt GOP deficit-hawking now, when millions of lives are at stake, is utterly irresponsible. Hold the line. Win. Lead."
  • @JosephNSanberg: "When you hear politicians say 'we can't afford it" what they actually mean is 'this isn't important to us.'"
  • @interfluidity: "i mean if he feels that way, they can just adopt a Warren/Sanders-style wealth tax, right?"
  • @DeanBaker13: "Remember, it's always fun to ask your favorite deficit hawk why they never include the implicit debt created by government-granted patent and copyright monopolies in their debt calculations."
  • @ddayen: "Functionally speaking there are no prices in American health care, the prices are 'whatever we can get away with, if you don't catch us and publicize it.'"
  • @DeficitOwls: "An important piece of MMT-adjacent work that should get more attention is Bill Black's work on 'control fraud', so here's a short thread on that. Control Fraud is when managers loot a company for profit, taking actions that generate record short-run profits then collapse."
  • @Noahpinion: "The fact is, economists don't really understand hyperinflation very well. In my opinion they should be trying harder to understand it, because it represents the government's only true financial constraint."[14]
  • @csissoko: "If Fed is really supposed to be DoLR, then need public FedAccounts (as per @MorganRicks1 @LevMenand) + Duffie's CCP for Ts, so the DoLR can bypass dealer banks. Then Q is whether resulting direct monetary stimulus every time DoLR is needed is good policy."[15]
also btw...
Give Money to Babies - "New Jersey's 'baby bonds' plan is a potentially transformative effort in the fight against inequality."

How to End America's Loneliness Epidemic - "Americans get very little vacation... giving people more time off will be conducive to human relationships. But also, providing for people's basic material needs would free them to focus on their social needs. Things like national health care and cheap housing, in addition to more vacation, would free Americans to focus on their social lives."[16]

Meanwhile In Germany: University Offers Idleness Grants - "A German university is offering 'idleness grants' to applicants who are seriously committed to doing sweet nothing. The University of Fine Arts in Hamburg advertised three €1,600 scholarship places on Wednesday to applicants from across Germany... The application form consists of only four questions: What do you not want to do? For how long do you not want to do it? Why is it important not to do this thing in particular? Why are you the right person not to do it?"

Germany is testing a universal basic income of about $1,400 a month - "Somebody does one of these UBI tests every few years, and it always ends up the same: allows people to overcome the poverty trap and quantifiably improve their lives, then everyone says 'well, sure, but could it work when scaled up to everyone?' and we never find out."

% of Americans who say they favor a $1K/mo universal basic income for all adult citizens - "Pew."
White 35%
Hispanic 63%
Black 73%

GOP 22%
Dem 66%

Upper income 31%
Middle income 40%
Lower income 63%

Total 45%
posted by kliuless (66 comments total) 112 users marked this as a favorite
 
Absolutely exceptional post, many thanks kliuless
posted by moorooka at 1:15 AM on September 11 [8 favorites]


Massive, massive post here. Lots to digest. Thanks, kliuless.

As an outsider, I'm often stunned to see how overworked, isolated, unorganized and lonely American workers seem to be. Of course, any loosening of the grip will allow people to take more care of themselves and then maybe even have the time and energy to start asking uncomfortable questions and organize etc. It will be a hard-won fight if they ever get there.
posted by Harald74 at 1:34 AM on September 11 [11 favorites]


thank god for my COVID cash stash so I can hole up with my immunocompromised roommate playing League of Legends while all this blows over

Also I suspect this is a major reason service worker unions have been having a pretty good moment in Portland; people are living off the CARES money so they have time and energy to work on union campaigns. Mine just organized a picket and we had like 6 other groups come out in solidarity. Universal basic income would make organizing so much easier on a lot of levels; that's probably a major reason the ruling class hates it.
posted by Gymnopedist at 1:41 AM on September 11 [11 favorites]


I am not for $1000 a month UBI. I am for at least twice that amount. The $600 a week came close to that and look at what it did. UBI should start at the definition of poverty for a family of 3, not a single individual. Now, that doesn't guarantee that people won't struggle, but it does mean that people who lose their jobs can still cover basic essentials for children - caveats on cost of living abound.

In NYC, $24K still wouldn't cover the rent for even a single bedroom apartment, but it would provide a solid stopgap, and reduce either distance compromises that people make, or the number of jobs they are forced to take in order to provide basic needs. In addition, it would provide some level of pooled and collective bargaining by communities and labor groups, because there can be greater solidarity when you know that you don't have to risk your own financial safety if you say something and risk retaliation.

This shouldn't just be about surviving national emergencies like Covid, wildfires, floods, hurricanes and tornadoes, as well as personal emergencies like job loss and illness. This should be about ensuring every American has the opportunity for basic human dignity.
posted by Nanukthedog at 3:53 AM on September 11 [17 favorites]


You know, defining a "poverty level" and then not doing anything to keep people above it is really callous.

I am not sure why this struck me just now, but a willingness to label -- and then ignore -- human suffering is shocking.
posted by wenestvedt at 4:28 AM on September 11 [49 favorites]


Kliuless, thanks, this is going to be one of my favorite posts. Money and power always go hand in hand, and these articles go into great detail showing how money flowing out of the middle and lower classes both empowers the upper classes and chokes the life out of our democracy, with fewer resources to fight voting disenfranchisement, to stay out of jail, to fight for unions, and on and on.

If the lower classes can't get power and money to start flowing the other way, things aren't going to get better. They'll keep getting worse.
posted by Wilbefort at 5:38 AM on September 11 [2 favorites]


As always, kliuless, an astounding and meaty post.

"Americans get very little vacation... giving people more time off will be conducive to human relationships."

I feel like this ties into some of the ideas of the late David Graeber about bullshit jobs and the growth of bullshit elements in non-bullshit jobs, where he wasn't necessarily talking about entirely eliminating bullshit jobs (a concept many folks seemed to have missed in previous discussions) maybe as much as he was talking about trying to get companies and our culture to think about whether it's a good idea to force people to be plunked down in one place for 40+ hours a week just because they're "full-time" employees. If it's "worth" $50k to a company to pay an employee to do 15-20 hours of actual work a week, pay them the same, let them show up for those 15 hours, and let them do what they want with the rest of their time, don't create busy-work to pointlessly occupy them for 20 hours.
posted by soundguy99 at 6:01 AM on September 11 [13 favorites]


If it's "worth" $50k to a company to pay an employee to do 15-20 hours of actual work a week, pay them the same, let them show up for those 15 hours, and let them do what they want with the rest of their time, don't create busy-work to pointlessly occupy them for 20 hours.

From what I have seen, it is way easier to do this in the new and still evolving "work from home" scenario than it is in the office, where there has always been that culture and expectation of people being physically present for 40 hours per week.

The political failure that resulted in the extra benefits not being extended is really sad to me. That money was directly helping so many people and by extension propping up a lot of the economy. I don't agree but can see the logic for capping the extra money so that people aren't earning more on unemployment than they were working (again, I disagree strongly and don't care if someone is making more, but I get that that is a dealbreaker for a lot of people), and other adjustments that you might make to it, but the program should have been extended. Really disappointing that it was blocked and negotiations didn't appear to be in good faith.

I'm all for some type of UBI, but only if it is a supplement to existing safety nets, not an opportunity to destroy everything currently in place.
posted by Dip Flash at 6:39 AM on September 11 [3 favorites]


Looking forward, Evermore said she expects Congress to enact permanent changes to the unemployment insurance system to allow access to aid for more workers, like those in the gig economy, and to allow for better benefit availability in states that have cut funds.

In the future, Shierholz said she hopes the federal government takes more responsibility for administering unemployment benefits in times of crisis. The patchwork of statewide rules and standards creates an inequality problem: not including the $600 bonus from the stimulus package, unemployed workers in Massachusetts can get access to as much as $1,220 per week for 26 weeks, while Georgians can get just $365 per week for 12 weeks.

HOLY FUCK THIS.

I work in an industry (providing tech gear and services for live events) that has been almost entirely shut down since mid-March. And it's an industry where a TON of workers are "independent contractors" - gig workers - rather than full or even part-time W2 employees. (Yes, this is a structural problem with the industry that needs to be addressed long-term, but in the short term . . .) So many folks are entirely ineligible for any UI benefits except for the $600 PUA and maybe $100-150 a week as part of the CARES act expansion to cover gig workers. It's utterly ridiculous that there's even the slightest debate about folks unemployed through no fault of their own getting basic living expenses covered.

And having personally gone through the UI wringer both shortly pre-COVID and during COVID, it's painfully obvious that creating and enforcing some REALLY FUCKING BASIC Federal standards and practices that apply to ALL states would have done wonders. That's what's so fucking frustrating about this - I got no problem with giving states some leeway to determine their current and immediate needs for unemployment compensation, and absolutely let's talk about instituting some form of UBI, but from a simple basic "How Does the Modern American Economy Work 101" level, allowing some states to basically go, "Fuck you, you'll get nothing and like it" is intolerable.
posted by soundguy99 at 6:41 AM on September 11 [12 favorites]


From what I have seen, it is way easier to do this in the new and still evolving "work from home" scenario than it is in the office, where there has always been that culture and expectation of people being physically present for 40 hours per week.

Yup. Big Picture I hope we're going to see a major cultural change around this, with knock-on effects like if companies are using half the office space they once were because folks are working from home, then we can turn those spaces into housing and/or reduce rents so small businesses can afford them.
posted by soundguy99 at 6:48 AM on September 11 [2 favorites]


If it's "worth" $50k to a company to pay an employee to do 15-20 hours of actual work a week, pay them the same, let them show up for those 15 hours, and let them do what they want with the rest of their time, don't create busy-work to pointlessly occupy them for 20 hours.

My experience over the past 15 years is that industries which were inefficient enough to have workers paid 40 hours to do only 15 hours of real work are getting eaten by more efficient companies who are motivated enough to do the work better and faster. Particularly hungry competitors from Asia.

If you're not at the cutting edge of delivering great value product to the customer, a competitor from overseas will do it better, and your entire company will close down and your whole team is out of a job.

Either that, or you're lucky to be in an industry that is protected from competition - either because it's inherently not something that can be manufactured overseas or outsourced, or the profession has erected significant barriers to entry (professional qualifications) to restrict supply.

Splitting a job into two part time roles doesn't work well either in my experience. In the role I have I'm responsible for about 200 contracts globally relating to my area of expertise. Another team splits this role between two part timers doing 3 days a week each with 1 day overlap to handover work, so the company is effectively paying 6 days to get the same work done, and possibly with less efficiency because at any one time if you ask that role about a particular contract it's a 50% chance the answer is I don't know, wait until tomorrow for the oher person.

I think it's unfair to characterize this as "greedy companies chasing marginal returns" when it's the customers that repeatedly put us out of business. You can't force customers to pay more for inefficient companies.
posted by xdvesper at 7:24 AM on September 11 [2 favorites]


I think that one elephant in the room here is that rent is rent, and that UBI without rent controls and tentants rights is effectively a transfer of wealth from the public to the rentier class.

We need universal basic income, that is very clear, but the somewhat more radical but equally important corollary to this - that follows from the notion of shelter as a basic human right - is that collecting rent should be illegal.
posted by mhoye at 7:29 AM on September 11 [25 favorites]


You can tell it was partially effective because the Republicans discontinued it and replaced it with a 50% lower amount.
posted by srboisvert at 7:33 AM on September 11 [6 favorites]


xdvesper I think there are other kinds of efficiency than those that prioritize making the most possible money.
posted by aniola at 7:49 AM on September 11 [8 favorites]


I think that one elephant in the room here is that rent is rent, and that UBI without rent controls and tentants rights is effectively a transfer of wealth from the public to the rentier class.

People like to say this, but this is one place where market effects still hold. The rental market is sufficiently fragmented that there isn't really a cartel in most places, and the landlords who decide to spike rents will see vacancies while the rest undercut them.

Saturated markets like in big cities will see folks move away as there's less pressure to find a "good job" when UBI provides steady income.

Between UBI and universal healthcare, a lot of the leverage and hold of a job is removed, and people are much more free to move toward a better (and cheaper) place to live.

If UBI did become a thing, you might see a large boom in housing as construction companies and banks would be salivating to capture a new class of homeowner who previously was considered a risk for a mortgage.
posted by explosion at 7:52 AM on September 11 [4 favorites]


Some folks I know briefly did a rent strike. Then their live-in landlord (who owns a total of one house, the one she lives in) sat them down and showed them spreadsheets mapping exactly where their rent money has gone/goes/will go, and then they all voted to give themselves a rent increase.
posted by aniola at 7:54 AM on September 11 [11 favorites]


And, it's dependent on, first, qualifying for your particular State's 'unobtainium' measures. So, people like me who have multiple jobs fail to qualify and get zilch except for the pay from one essential job.

The entire system is based on restrictions.
posted by mightshould at 8:10 AM on September 11 [2 favorites]


It took ages for me to get my unemployment money, after my employer lied about my lay off to the regular unemployment bureau, effectively icing me out of the benefits I should have been given 🙄 PUA saved my ass from starvation.
posted by gucci mane at 9:34 AM on September 11 [4 favorites]


When there's a massive unemployment shock like Covid, printing money and providing a temporary super-sized version of unemployment benefits, as described by Noah Smith's Bloomberg article, is totally the right thing to do. In the US, there should also be a massive transfer from the federal government to state and local governments - cutting services to match falling tax revenues is completely counter-productive and misery-inducing.

But I'm afraid I have to pour cold water on the idea that it's possible to provide a Universal Basic Income by printing money. You can print money to pay for temporary spending, like Covid emergency spending (paying it back afterward, like wartime debt), but not permanent spending, like UBI. As Paul Krugman points out, printing money puts downward pressure on the unemployment rate: the recipients use the additional money to buy more goods and services, and producing those goods and services requires more workers. When unemployment is high, this isn't a problem. But once we're back at full employment, unemployment can't drop any further (there aren't any more workers to produce those goods and services), and so instead you get inflationary pressure and higher interest rates.

This is true of any permanent program, not just UBI. Whenever anyone proposes new permanent spending, we also need to figure out how to raise more tax revenue to pay for it.

Why Universal Basic Income isn't workable.
posted by russilwvong at 9:40 AM on September 11 [1 favorite]


It's been absolutely terrifying to see how many people, from across the political spectrum, have unquestioning adopted the awful capitalist idea that people making more from unemployment than they do from their jobs is a bad thing, and that the solution is to make unemployment even harder to get and less beneficial.

Because it has always seemed to me that if the problem is that people are making more on unemployment than they are from working, maybe the solution is for employers to pay a living wage. But, apparently, since that would involve employers taking only extremely large profits instead of ludicrously large profits, this idea is total anathema and will Ruin American Business.

So, instead, the unquestioned right thing to do is further immiserate and degrade American workers in the service of the almighty God PROFIT.

It's insane, and toxic, and it goes to show just how thoroughly capitalist dogma has become accepted as the law of the land.
posted by scrump at 9:57 AM on September 11 [27 favorites]


Why is it OK to print trillions of dollars of money and label it "tax cuts"? That doesn't seem to trouble monetary policy nerds.
posted by maxwelton at 10:28 AM on September 11 [6 favorites]


maxwelton: That's the "starve-the-beast" two-step. First cut taxes, then use the resulting deficits to push for spending cuts. Stephen Gordon on Stephen Harper's success in using this strategy in Canada. (Trudeau escaped this fiscal straightjacket by using debt-to-GDP as the fiscal target.)
posted by russilwvong at 10:45 AM on September 11 [2 favorites]


Change my mind: Inflation is primarily a problem for people who already have a lot of money (it devalues the money they're sitting on), and mostly a non-issue for people who, like most Americans, don't have any significant savings or money invested, so long as they're getting enough money out of (whatever policy is causing the inflation) to offset that inflation. Tax cuts for the rich are therefore a non-issue to billionaires who still save more money than the resulting inflation costs them, while UBI is, to them, a double-whammy - increasing the purchasing power of the serfs beneath their feat by giving them money while simultaneously eroding the purchasing power of existing wealth through inflation. Even in the scenario where UBI money ends up immediately consumed by landlords and other necessities, the social benefits (being less tied to jobs or geographic locations - which is still true if a job is only, say, 70% of your income instead of 100%) still exist. The downsides of the resulting inflation from printing that much money primarily hurt the stock market and the giant stockpiles of cash in offshore bank accounts.

I am no economist, so I'm happy to have somebody explain to me why that's wrong, but that's always seemed to me like the honest answer to maxwelton's question. Tax cuts are class warfare in the "usual" direction, UBI is class warfare in the other direction.

There's plenty of reason to believe that the true inflation rate is higher than the government has been claiming it is for decades, anyhow. And yet the minute somebody mentions UBI the handwringing about inflation starts up immediately.
posted by mstokes650 at 10:59 AM on September 11 [7 favorites]


This is true of any permanent program, not just UBI. Whenever anyone proposes new permanent spending, we also need to figure out how to raise more tax revenue to pay for it.

Yes, that's why all proponents of UBI also favor tax increases.

The problem is that a lot of folks don't understand that federal budgets are unlike anything else. Not like state or municipal, business or family. The Federal government doesn't tax to raise money and then spend that money. It taxes to destroy money, and spends to create money.

It can create as much as the market will accept from it. Period.

Taxation under MMT serves to destroy money to keep inflation under control, and to redistribute wealth.

Conservatives are obsessed with eliminating debt, and they either don't understand that debt is in fact necessary to have a currency, or they do understand it and are hoping to strangle Federal government. A balanced budget is not the only way to keep a currency stable. We could have a targeted deficit ratio, and as long as we don't deviate from that, the market demand for our currency remains stable.

But of course, we don't need to "raise more tax revenue." We can also "shift spending." The US Federal budget has an exceptional amount of bloat in its military and police spending. If we stopped giving the Army carte blanche to buy new toys, we could easily give some of that money back to the American people.
posted by explosion at 11:04 AM on September 11 [11 favorites]


explosion: Yes, that's why all proponents of UBI also favor tax increases.

In Canada, Jonathan Rhys Kesselman has run the numbers, and it looks like UBI would require improbably high tax rates.

mstokes650: Change my mind: Inflation is primarily a problem for people who already have a lot of money

Right now inflation isn't a problem at all - as Ralph Hawtrey says, worrying about inflation in the midst of high unemployment is like "Crying Fire, Fire in Noah's flood." And inflation which is somewhat higher but still steady, say 3% or 4% instead of 2%, would certainly benefit debtors at the expense of creditors.

But once the Covid economic crisis is over and we're back at full employment, the 1970s demonstrate that it's not easy to keep inflation steady. Once people are expecting an inflation rate of 4% to erode their incomes, they'll need higher incomes to compensate, resulting in inflation going higher. To keep it steady, you need fiscal tightening (tax increases, as explosion says) or monetary tightening (higher interest rates). The monetary tightening of the early 1980s was particularly brutal. In Canada, mortgage rates reached 20%.
posted by russilwvong at 12:34 PM on September 11 [4 favorites]


It can create as much as the market will accept from it. Period.

This this THIS. Remember QE? QE2? QE3? QE4?

The M0 has quintupled since the 2008 crisis. Where's the inflation? Quintupling the money supply you'd think would come with massive hyperinflation. Why hasn't there been massive inflationary pressure? I'll give you a hint. Billionaires have too much money to spend it all and there's been a spate of "billionaires increase their fortunes $X during the pandemic" stories.

So much money is just flowing into the bank accounts of billionaires and it just gets parked. The economy isn't assets, or debt, or any other real thing. It's about the velocity at which those things get handed from person to person. If one person is stopping the flow, well, if you dammed Niagara Falls what happens to Lake Ontario? Upstream is flooded and the downstream is bone dry. Doesn't that look like our current economic situation right now?

The Fed has literally been printing money non-stop for over a decade and we can't get the inflation rate even slightly aroused. Why? Because none of it is going to the people who would actually spend it.
posted by Your Childhood Pet Rock at 1:35 PM on September 11 [29 favorites]


Inflation is primarily a problem for people who already have a lot of money

There are many different kinds and manifestations of inflation, so it's wrong to categorize it generically.

"But once we're back at full employment, unemployment can't drop any further (there aren't any more workers to produce those goods and services), and so instead you get inflationary pressure and higher interest rates"

Labor Force Participation Rate

Unemployment Rate

You can see from these charts, even as the unemployment really did trend downward due to Trump's stimulus [and we were pretty much at full employment], the labor participation rate fell [fewer people chose to work]. So this shows there are LOTS of people that don't react all that much to employment stats for various reasons, and who could become employed as inflationary wage increases (one type of inflation) hit. These charts show we are a long ways from the effects Krugman is talking about. This is also is also completely ignoring immigration rates for employment. And that goods are made around the world, and countries experience various economic conditions which effect local employment rates, which dull the effects of inflation.
posted by The_Vegetables at 2:08 PM on September 11 [1 favorite]


Some folks I know briefly did a rent strike. Then their live-in landlord (who owns a total of one house, the one she lives in) sat them down and showed them spreadsheets...

If somebody only owns the home that they live in, then they are not a landlord.
posted by moorooka at 2:40 PM on September 11 [1 favorite]


The_Vegetables: These charts show we are a long ways from the effects Krugman is talking about.

Sure, there's no question that when unemployment is high, inflation is not a problem, no matter how much money the central bank prints. The point Krugman is making is that you can't run large deficits permanently, because eventually you'll run out of workers to produce the additional goods and services.

Your Childhood Pet Rock: So much money is just flowing into the bank accounts of billionaires and it just gets parked.

Inequality definitely appears to be a large part of what's going on. Mian, Straub, and Sufi describe what they call "indebted demand": high debt levels basically mean that high-income lenders are lending money to everyone else. That results in a stream of interest payments going to high-income households, which have a lower propensity to spend. So when debt levels are higher, the economy needs more fiscal or monetary stimulus to push it towards full employment. The Economist:
A new paper by Atif Mian of Princeton University, Ludwig Straub of Harvard University and Amir Sufi of the University of Chicago expands on the idea that inequality saps demand from the economy. Just as inequality creates a need for stimulus, they argue, stimulus eventually creates more inequality. This is because it leaves economies more indebted, either because low interest rates encourage households or firms to borrow, or because the government has run deficits. Both public and private indebtedness transfer income to rich investors who own the debt, thereby depressing demand and interest rates still further.

The secular trends of recent decades, of higher inequality, higher debt-to-gdp ratios and lower interest rates, thus reinforce one another. The authors argue that escaping the trap “requires consideration of less standard macroeconomic policies, such as those focused on redistribution or those reducing the structural sources of high inequality.”
For example, if you can fund "helicopter money" during a crisis with higher taxes on the rich, that should increase aggregate demand and reduce unemployment: people who are income-constrained are more likely to spend the money on buying goods and services, reducing unemployment.

But that's not the same as a permanent UBI: Jonathan Rhys Kesselman's numbers suggest that improbable levels of taxation would be required to fund a permanent UBI.
posted by russilwvong at 3:46 PM on September 11


@interfluidity: "... if you don't want poor people invading your suburb, support a social democracy in which there are no poor people to fear..."

Upper-middle class white America conflates "poor" with "Black or Latinx" and therefore it's not strictly about money.

Could Digital Currencies Make Being Poor Less Costly?

Just the opposite. Digital currency requires people to have things like a checking account and a permanent residence. Digital currency will starve the poor to death.
posted by tzikeh at 3:51 PM on September 11 [1 favorite]


it looks like UBI would require improbably high tax rates.

That "improbably" is doing a lot of work in that sentence, since AFAICT Kesselman is running those tax numbers across the Canadian population as a whole, leading to sentences like, "With existing programs, the marginal effective tax rate has been calculated to be high already for many families. It typically exceeds 60 per cent for households with children and incomes in the clawback range of $20,000-$40,000, and it can be considerably higher for those receiving income-tested benefits such as daycare or housing subsidies"

Which, hey, maybe he's got a point, but he seems to be simply ignoring the widely understood if often unspoken prerequisite for establishing UBI - namely, that loopholes and tax laws need to be thoroughly overhauled so that corporations and the wealthy actually pay some fucking taxes. (This may be a far greater problem in the US than Canada.)

So I dunno that he's quite struck the death blow to UBI.

He's not wrong about this, though: "For employable people on welfare, particularly singles, benefits are miserly to the point of almost requiring beggary and thievery for bare sustenance. [. . . ] Ambitious strategies are also needed to go beyond ameliorating current poverty and reduce the incidence of poverty and low incomes in future generations. Children in poorer neighbourhoods need expanded programs of early child development and free school breakfasts. Major steps can be taken to improve counselling and other services to at-risk youth to encourage their high-school completion and subsequent education or training. Enhanced community centre activities and sporting facilities can further aid youth development."

If that's the best we can practically do in the near future, fine - I'll certainly take those over the current US situation. But loudly pushing for UBI may well be a workable strategy if it convinces politicians to "compromise" by significantly improving the social safety net in some version of its current form.
posted by soundguy99 at 3:53 PM on September 11 [3 favorites]


soundguy99: Which, hey, maybe he's got a point, but he seems to be simply ignoring the widely understood if often unspoken prerequisite for establishing UBI - namely, that loopholes and tax laws need to be thoroughly overhauled so that corporations and the wealthy actually pay some fucking taxes. (This may be a far greater problem in the US than Canada.)

In Canada there's been a couple changes to increase progressiveness of the tax system since 2015: income tax rates were raised on personal income over C$200,000, Harper's doubling of TFSA limits and income splitting (both favoring high-income households) were rolled back, and the favorable tax treatment of investment income within private Canadian corporations was limited.

There's often calls for a comprehensive review of the Canadian tax system. One promising approach would be to look at the Nordic countries - high social spending funded by high taxes on consumption, progressive taxes on earned income, and low taxes on capital income. A 2014 proposal.

- loudly pushing for UBI may well be a workable strategy if it convinces politicians to "compromise" by significantly improving the social safety net in some version of its current form.

Maybe. In the US, if we're talking about federal programs, it seems to me that coming up with something that will get past the Senate is the biggest obstacle.

In Canada, the UBI advocates I've seen are quite sincere about wanting UBI.
posted by russilwvong at 4:17 PM on September 11


US GDP in 2019 was $21.43 trillion.

US population in 2019 was 328.2 million.

That means we're producing over $65,000 in economically-measured (read: not household or unpaid) labor for every senior, working adult, and child.

The money is ABSOLUTELY there in some fashion. It's just a matter of distribution.

If you're asking if "we can," it's a matter of "can we gather the political will and make it happen," not "can we afford it?"
posted by explosion at 5:03 PM on September 11 [7 favorites]


In the United States, general government spending (across all levels of government) in 2018 was 37.8% of GDP, according to the OECD. Assuming that it was the same in 2019, that's about $24,700 per capita.

A preliminary problem is that general government revenue is only 33.3% of GDP, for a gap of about $2900 per capita. Closing that gap will require tax increases, spending cuts, or both. Assume it's possible to close the gap by bringing spending and revenue in line at 35% of GDP.

Suppose a UBI for the US would be $20,000 per capita (perhaps more for adults, less for children), or 30.6% of GDP. Say that it's possible to fund part of this by dropping existing programs, like TANF - say 5% of GDP. That means that existing programs + UBI will be 65% of GDP.

Am I making any questionable assumptions here? Because collecting that much tax seems like a pretty big challenge.
posted by russilwvong at 5:27 PM on September 11 [2 favorites]


Drop the military.
posted by aniola at 6:45 PM on September 11 [1 favorite]


US military spending is 3.4% of GDP.
posted by russilwvong at 6:46 PM on September 11




Those pie charts are showing military spending as a percentage of the federal budget, not GDP. For 2019, the Department of Defense budget was $700 billion (about 3.3% of GDP); including other spending and bringing it up to $857 billion makes it 4% of GDP.
posted by russilwvong at 6:57 PM on September 11


It’s not a net increase of $20K per person. Increasing total income increases taxable income, and it also means that tax rates can be increased in the mid range without impacting disposable income. So at a certain income level it nets out, such that the additional spending would be significantly less than 20K per person. It’s a redistributive measure that limits how low income can fall, not a universal measure that increases everyone’s income equally.
posted by moorooka at 9:16 PM on September 11 [2 favorites]


moorooka: not a universal measure that increases everyone’s income equally.

This particular proposal is literally called universal basic income. There's no level at which it nets out (since nobody's marginal tax rate is 100%).

It's true that UBI raises people's taxable income, automatically raising taxable revenue somewhat. Median personal income is around $33,000, and so the marginal federal tax rate for the median recipient would be 22%, reducing the net cost from 30% of GDP to about 23% of GDP. That's more than total US federal spending today (about 20% of GDP).
posted by russilwvong at 11:31 PM on September 11


This whole discussion around tax rates misses the point: The federal government doesn't need to raise taxes to pay for UBI. It can literally just print the money. The whole mechanism of "government funding" is the wrong way to think about this. Taxes don't fund the government. Calculating what comes in vs. what goes out is just comparing two somewhat similar numbers that in reality don't have much of a relationship between them. If you can't get your head wrapped around this then please ask yourself why QE doesn't need to be "funded" in the same way that you think UBI would need to be funded.

Now inflation is a (right now purely hypothetical) concern. But again conventional wisdom puts wool over your eyes. it's not about the increase in money: Inflation only happens when a society can't produce enough to satisfy demand. This can happen in money-poor societies as well if the whole system fails or as a result of external factors that restrict productivity (e.g. war, large scale enviromental disasters). It certainly doesn't happen because the state runs out of money (it can't).
posted by patrick54 at 12:09 AM on September 12 [2 favorites]


This particular proposal is literally called universal basic income. There's no level at which it nets out (since nobody's marginal tax rate is 100%).

The universality is in the security that nobody’s income can fall below a certain level. There wouldn’t be marginal tax rates of 100%, but obviously tax rates would rise and relative to the existing scheme of taxation you would have some recipients paying more than 100% of what they additionally receive under the UBI. The real boost in incomes would be at the lowest income range and would be almost entirely spent rather than saved, generating additional taxable income on the recipients of that additional expenditure. GDP would automatically increase in nominal terms and quite likely in real terms as well. And to the extent that the economy is not close to employing its full productive capacity, it could be largely financed by the Fed rather than by taxation without general consumer price inflation becoming an issue (the 1970s were practically a different planet economically). It’s an expensive program and I’m actually not a supporter of UBI (I prefer universal basic outcomes rather than some nominal quantum of cash) but I think that’s these back of the envelope calculations are i) exaggerating its cost and ii) pretending as though this cost represents a harder constraint than it actually is
posted by moorooka at 2:44 AM on September 12 [2 favorites]


The real boost in incomes would be at the lowest income range and would be almost entirely spent rather than saved, generating additional taxable income on the recipients of that additional expenditure. GDP would automatically increase in nominal terms and quite likely in real terms as well.

In other words, there's not a shortage of TVs but there is a shortage of people who can afford to buy those TVs.

It's almost like supply-side economics is a complete crock of shit.
posted by Your Childhood Pet Rock at 7:00 AM on September 12 [9 favorites]


If you can't get your head wrapped around this then please ask yourself why QE doesn't need to be "funded" in the same way that you think UBI would need to be funded.

Because QE can be stopped and started at will and the bonds bought can be sold and the money taken off the balance sheet. Even if it looks like a money printing bonanza it's still a tool to manage the money supply. If the inflationary pressure of UBI is too much the Fed can't just turn the tap off without fucking a lot of people. The Fed might not even be able to legally turn the tap off. Then what?

There's a lot of sinks around the world for US dollars which lets the US get away with a lot of atypical economic shit (like running a massive trade deficit for decades with no real consequence) but they're not bottomless.
posted by Your Childhood Pet Rock at 7:13 AM on September 12


The monetary tightening of the early 1980s was particularly brutal. In Canada, mortgage rates reached 20%.

So we have to go back to the 1980s to find the last time that monetary inflation caused housing to become too costly? You don't have to go back anything like that far to find times when house price inflation was over 20% a year, which is also a cost that's borne by people and drives them into poverty, or – and I think this is the reason it's considered OK – keeps them from being able to accumulate wealth.

I do find it odd how many people who are so antipathetic to increased welfare benefits come out with the same kind of absolutely rehearsed arguments about why it's unaffordable and the numbers don't work, while failing to acknowledge that the status quo is unaffordable, and also that clearly the way that monetary policy is working at the moment are far from optimum for productivity. Partly (and this is the humanitarian enormity) it's obvious because of the number of people who are forced to barely subsist in exhausting underpaid work in so many rich countries, but also the waste in a money-burning economic model like that of Uber makes it very clear that money isn't being allocated in a way which is designed to optimise productivity. And that should really be a clear aim of any monetary system.
posted by ambrosen at 7:58 AM on September 12 [5 favorites]


If we want to pay for welfare may I suggest a simple way of closing the dutch sandwich and their brethren?

Jack the corporate tax rate to 30%. Book any revenue within US shores as taxable income. Then allow deductions from US sources at the full allowance. Then any deductions are scaled according to the percentage difference between the witholding tax of the country that any expenses are from. You pay a license fee for your IP to an Irish controlled company who's only getting taxed 6.25%? You only get to deduct 21% (6.25/30 * 100) of that amount. That'd bring in another half trillion at the least.

Stop letting the companies move their revenues offshore because it's bullshit.
posted by Your Childhood Pet Rock at 10:17 AM on September 12 [5 favorites]


I think that the monetary and tax policy issues are not insurmountable. The objections raised here and elsewhere are problems to be solved— and there are models that seems to show that solutions are possible.

I think the hardest part of passing UBI or even expanding unemployment insurance is the intersection of human psychology and politics. It seems very easy for right wing politicians to paint those recipients as free loaders and bar people who are exploiting our charity; and win office on that campaign. Jealousy driving a view that someone is getting something they don’t deserve has derailed a lot of our welfare systems. Consider the uproar when people found out that some people on expanded unemployment were making more than they were making working. While my reaction was like why the fuck in this rich country are people making so little money; to hear my right wing friends and colleagues it was an outrage — even though if those same people had to live off unemployment they would be bankrupt. These are the same folks chanting build the wall; but hire immigrants to clean their house, watch their kids and mow their lawn.
posted by interogative mood at 10:47 AM on September 12 [5 favorites]


UBI is unworkable because it doesn't allow politicians to performatively punish out-groups.
posted by inpHilltr8r at 6:37 PM on September 12 [5 favorites]


I've probably spent enough time here arguing that UBI isn't feasible. What do I think a positive agenda would be to reduce inequality?

(1) The Covid-19 pandemic and economic crisis are far from over. The Covid-19 response has included broadly distributed cash transfers to households, funded by issuing government bonds which are then purchased by central banks. That should continue until the pandemic is over. State and local governments will also need funding, since their tax revenues are down.

In Canada, CERB is being replaced with expanded access to EI and a new EI-like benefit. Provinces can borrow money by issuing bonds, so they don't need to cut spending.

In the US, the Democrat-controlled House passed another relief package months ago; negotiations seem to have hit an impasse in the Republican-controlled Senate. Because states can't borrow money, they're going to have to impose sharp cuts, deepening economic misery, unless they can get federal funding.

One idea to reduce inequality directly, in the US: establish a sinking fund to pay off the debt from Covid-19 spending once the pandemic is over, say within 10 or 15 years, to be funded by temporary taxes on wealthy households (say those with household incomes over $500,000).

Another option would be to allow inflation to exceed 2% for some period of time; this would benefit debtors at the expense of lenders. (Which the Federal Reserve is in fact planning to do.)

(2) On the tax side, look carefully at what the Nordic countries have done: because they have relatively high taxes as a percentage of GDP, they've designed their tax system to be as economically efficient as possible. They have high consumption taxes (the US lacks a value-added tax, Canada's GST is 5%), progressive income taxes, and low taxes on capital income. (Although low taxes on capital income are more important for the Nordic countries and for Canada, which are smaller open economies, than for the US. Stephen Gordon.)

Another idea that's gaining traction recently is to bring in a wealth tax (Piketty); or alternatively to rely on taxing capital income (i.e. taxing the income from that wealth), and to tax inheritances (Boadway and Pestieau).

(3) Raise taxes and spending to support better public services, including social insurance programs like welfare. Because public services are available to everyone, but the wealthy pay a larger share of the cost, this would also help with inequality.

patrick54: This whole discussion around tax rates misses the point: The federal government doesn't need to raise taxes to pay for UBI. It can literally just print the money.

Paul Krugman is an economist I take pretty seriously, and his view is that the commonly held view of MMT (you can just print money to pay for new programs) is wrong.

The current situation is that central banks are printing money to pay for temporary spending during a time of high unemployment, which is different from printing money to pay for permanent programs when we're at full employment (that's a recipe for inflation).

As Krugman says, progressives need a tax-and-spend agenda, not just a spending agenda. So the discussion about how much taxes would need to be raised is important.

Your Childhood Pet Rock: In other words, there's not a shortage of TVs but there is a shortage of people who can afford to buy those TVs.

When unemployment is high, that's pretty much correct. When unemployment is low, printing money results in more demand (people use the money to buy more goods and services), and you need workers to produce the additional goods and services (including TVs), so you end up with a shortage of workers. That's not at all the current situation (fears of inflation right now are like "Crying Fire, Fire in Noah's flood"), but we're talking about UBI, which is intended to be a permanent program.

(TVs are mostly made overseas, but that doesn't really change things - when you import more TVs from China, you need more workers to produce the goods and services which will be traded to China in exchange. The TV exporter in China accepts US dollars because there's something the US produces that people in China want to buy, e.g. aircraft.)

moorooka: I think that’s these back of the envelope calculations are i) exaggerating its cost and ii) pretending as though this cost represents a harder constraint than it actually is.

I'm not an expert, but Jonathan Rhys Kesselman certainly is. He's not particularly right-wing or conservative; for example, one of his reports (on the regressive effects of Harper's doubling of the TFSA) was published by the Broadbent Institute, which is affiliated with the NDP. So when he runs the numbers and says it doesn't look feasible, I take that pretty seriously. (When you say that the UBI would boost the economy, reducing the net cost, I'm reminded of the "dynamic scoring" used to justify tax cuts.)

ambrosen: I do find it odd how many people who are so antipathetic to increased welfare benefits -

I have to object here. UBI is very different from increasing welfare benefits, which are targeted. Raising welfare benefits is far simpler than trying to fund UBI. (In the Canadian context, the recent Canada Child Benefit - a consolidation and expansion of a patchwork of existing benefits - cut child poverty rates by a third, lifting close to 300,000 children out of poverty. A key part of its design is that it's not universal.)

So we have to go back to the 1980s to find the last time that monetary inflation caused housing to become too costly?

Housing is a whole separate issue - but also one that aggravates inequality. In Canada, we've experienced a massive rise in house prices: a windfall for homeowners, who are typically older and higher-income, at the expense of people who are trying to get into the market now, who are typically younger and lower-income. Looking at the US housing bubble, I think what we're seeing is a "natural Ponzi scheme" - people assume that price increases will continue, so they borrow heavily to get into the market, fueling further increases. For someone who overpays ("buy high, sell higher") and then finds themselves facing a falling market, this is a recipe for destroying wealth, not creating it.

In response, the Canadian government has introduced a mortgage stress test, requiring borrowers to be able to afford a mortgage if interest rates were 2% higher than they actually are; and is also pushing for more purpose-built rental housing. (At current prices, renting makes more financial sense than home ownership, at least in Toronto and Vancouver; purpose-built rental buildings provide security of tenure that condos and secondary suites do not.)
posted by russilwvong at 7:20 PM on September 12 [2 favorites]


OK, I get from a certain (I've got mine, sorry that someone else may starve) viewpoint UBI is unworkable. However, from a slightly different (You thought starving my family is really in your interest?) viewpoint the current system is unworkable to the point of violence. Get it, people are getting angry. Bad shit is gonna happen, and not just to the poor (the traditional victims). How many nice middle class people need to be harmed before the math starts to work? Keep telling me how bad you feel about the poor, I swear it's working, hopes and prayers people, hopes and prayers.
posted by evilDoug at 9:46 PM on September 12 [3 favorites]


to be funded by temporary taxes on wealthy households

Note that it's a fairly mainstream US Democrat/centrist economist position that higher taxes on wealthy households should be permanent.

Another idea that's gaining traction recently is to bring in a wealth tax (Piketty); or alternatively to rely on taxing capital income (i.e. taxing the income from that wealth), and to tax inheritances (Boadway and Pestieau)

*Why-not-both?-gif*

Although low taxes on capital income are more important for the Nordic countries and for Canada, which are smaller open economies, than for the US. Stephen Gordon.)

Gordon doesn't quite state this explicitly in that article, but I think it's fairly widely accepted that low taxes on capital gains have been one of the major factors driving income inequality in the US for the last few decades. (Pretty sure both Krugman and Stiglitz hold this position, for example.) So the "Nordic plan" probably isn't ideal for the US.

I mean, the grimly ironic thing is that all of these tax elements (and more) have existed in the US before - during the "American heyday" of the 1950's through the 1970's, the growth of America as an economic superpower that Republicans have such nostalgia for. (Admittedly, more social/cultural nostalgia than economic, but still.) Both the top marginal tax rate and the top estate tax rates were never below 70%, and the capital gains taxes, while a more complicated and changing situation, were more likely to be 25-35% rather than the 10-15% they have been for most of the 21st century.

Which I think complicates the discussion of UBI - if the US had been cruising along under basically pre-Reagan tax plans for the last couple decades (or longer. . .) we'd have a better set of data to use to figure out whether UBI is practically feasible, and a higher baseline government income wherein a tax hike to fund UBI might only be a few percent. But since our tax situation (among other economic factors) has been massively manipulated to favor corporations and the wealthy, we are now in such dire straits that folks (understandably) are of the opinion that the best, maybe only, way to put the brakes on this wealth transfer is to take the relatively drastic approach of funding some form of UBI by printing money and ignoring deficits.
posted by soundguy99 at 4:54 AM on September 13 [3 favorites]


soundguy99: I mean, the grimly ironic thing is that all of these tax elements (and more) have existed in the US before - during the "American heyday" of the 1950's through the 1970's, the growth of America as an economic superpower that Republicans have such nostalgia for.

The sad thing, as Piketty points out in Capital in the 21st Century, is that while it was happening, Americans thought the US was in decline. In Western Europe, on the other hand, the 1950s through 1970s are remembered as a golden era: in France they're called "Les Trentes Glorieuses."

Why? Because at the end of World War II, Europe and Japan had been hammered flat, and the US accounted for a full 50% of the world's economy. During the 30 years after WWII, despite strong and equitable growth, the US was experiencing relative decline, as Western Europe and Japan grew even faster. Then came the 1973 oil crisis and the stagflation of the 1970s. Reagan introduced the sugar high of large budget deficits, funded by tax cuts, and tax cuts have been Republican economic orthodoxy ever since.

Even if Reagan hadn't happened, though, I'm not sure how much difference it would make to the affordability of UBI. The key problem is the massive cost of UBI, around 20% of GDP. If the US had a more typical OECD level of taxation and spending, around 40% of GDP, trying to add UBI on top of that would still be daunting. That's certainly the case in Canada.

I suspect that (a) many UBI supporters are thinking it can be funded by printing money, and (b) those UBI supporters who realize it would need to be funded by raising taxes and cutting spending elsewhere aren't fully aware of just how massive the cost would be.

Right now the big economic challenge in the US is getting the Senate to approve more Covid funding for households (which should help with inequality, assuming that the cost is going to be borne by wealthy households), and also getting federal funding for state and local governments. I think UBI is a distraction: it's a simple and attractive idea, but unworkable. (Canadian economist Stephen Gordon dismisses it as a perpetual motion machine.)
posted by russilwvong at 1:12 PM on September 13


But it's not unworkable, that's as ridiculous an assessment as any other. It just means redistributing income (and wealth) from big earners to smaller earners. It's not hard math to do.

Let's pretend the earnings of 11 people are as follows. (Posit this is the money left to each after paying for other gov't functions.)

Let's say we make $20K the UBI, and everyone gets a check.
    Raw        UBI   Adjusted   Take Home
-----------------------------------------
100,000     20,000     60,000      80,000
 90,000     20,000     54,000      74,000
 80,000     20,000     48,000      68,000
 70,000     20,000     42,000      62,000
 60,000     20,000     36,000      56,000
 50,000     20,000     30,000      50,000
 40,000     20,000     24,000      44,000
 30,000     20,000     18,000      38,000
 20,000     20,000     12,000      32,000
 10,000     20,000      6,000      26,000
      0     20,000          0      20,000
-----------------------------------------
550,000    220,000    330,000     550,000
I would obviously like to see something more progressive than this "flat tax" format, but even in this you can see that the precious wealthy still get to remain wealthy but the people at the bottom are helped immensely by this type of redistribution.
posted by maxwelton at 2:14 PM on September 13 [1 favorite]


I think maxwelton's point is exactly correct but reveals a lot. There are no technical obstacles to UBI, but outside of near zero-interest rate times, its implementation would require taxes. If it is proposed as a permanent policy instead of a temporary measure in the middle of a recession, it only requires the political will to impose those taxes. It would greatly help people at lower incomes, even if it were paired with a flat tax.

But look at maxwelton's example. Out of the 550k GDP, 220k had to be redistributed. That's almost a 50% of GDP tax and transfer through one government program. That's enormous.

In the example, incomes are distributed flatly because it was just a example for the purposes of demonstration. But the actual US income distribution is skewed further towards the top income decile getting an even larger share of GDP than in the example. That means that the tax and transfer would be an even higher share of GDP in real life.

When sympathetic economists like Krugman tell UBI advocates that the scheme seems unrealistic, this is a political assessment, not an economic fact - that's true, but that doesn't make them wrong.

A UBI wouldn't replace the vast majority of US government expenditure, which is not tied to direct income redistribution. Health care still benefits from being run through government programs or government subsidized risk pools, and UBI proponents typically are against ending this funding. Social Security has some redistribution built in, but weakening that for a UBI seems like a bad idea and an even bigger political obstacle. So the cost of a UBI in the USA couldn't be signficiantly financed by ending other forms of redistribution.

There are ways of working around this political problem. By the numbers, the income redistribution of a UBI paid by taxes and a minimum income with gradual phase-out are equivalent, but the minimum income is much smaller as a fraction of GDP. If we said a minimum income of 20k with gradual phase out so that it was at zero by 50k and then paid for by progressive taxation on incomes above 50k, then the program with maxwelton's example would only have 60k expenditure and 60k taxed, versus 220k with a UBI.

But that means documenting incomes and not having a universal program, which essentially means it is just a new, though more streamlined, welfare program. Reactionaries could exploit this to gradually undermine it. That's true, but it misses the point. If you have the political climate where you can implement a UBI then you have the political climate to run a welfare program fairly and with dignity. If you have a political climate where the poor are scorned, then there are lots of ways to undermine the UBI despite its universality. Building a culture where the redistribution of a UBI is politically popular is much harder but much more important than how it is financed or the exact form the redistribution takes.
posted by Ktm1 at 12:00 AM on September 14 [2 favorites]


I think one advantage to something like my system is that it's very easy to explain, and everyone earning anything above 0 has some skin in the game, even if the benefit they get out is a lot more than they have to pay in. It makes it feel like a societal effort and I think would help engender pride and community.

And also know that when I implement this as dictator, "earnings" is going to include all the ways a person's fortune increases year-on-year, including appreciation, capital gains, etc., etc. And as Ktm1 notes, the actual redistribution chart probably looks something like:
       Raw        UBI    Adjusted    Take Home
----------------------------------------------
10,000,000     20,000     500,000      520,000
       ...
    10,000     20,000       9,000       29,000
         0     20,000           0       20,000
----------------------------------------------
         x        .3x         .7x            x
But the take-away is that it is self-funding, if only you let billionaires stop dictating policy. As inequality lessens, the rates can be adjusted. If the wealthiest person in our society was only, say, 100x richer than the poorest person, that rich person is still rich, just not obscenely rich. If that means no one gets to own a 400-foot "yacht" or 20 homes, boo-fucking-hoo.
posted by maxwelton at 11:42 AM on September 14 [1 favorite]


which is different from printing money to pay for permanent programs when we're at full employment (that's a recipe for inflation).

Again, we are nowhere near full employment, so it's a non-issue for literally decades. I don't care what theoreticals Krugman points out as issues. The facts say employment-induced inflation is a long ways off. If the labor participation rate was rising, then he might have a point. It is not. Not only that, if the participation rate and the employment rate were both relatively high, then we probably could decrease the UBI we were offering at the time. I don't see any reason that it should be 100% static.
posted by The_Vegetables at 12:31 PM on September 14 [1 favorite]


Late in the thread to interject with this now I supposed, but I've become convinced that in most regards a federal jobs guarantee is a better policy than a UBI. Maybe you can do both, but a jobs guarantee does most of the things that we'd want a UBI to do, and there's actual precedent in American politics for a limited form of that in the CCC. That wasn't universal by any means, but it was an enormously popular program that did a lot of good, both for the people who participated and in the work that they did.

Are the economists concerns about inflation with a UBI justified? I really couldn't tell you. Could we give people jobs that paid an actual living wage, tailored to their abilities? I'm pretty sure we could.
posted by vibratory manner of working at 7:11 PM on September 14 [2 favorites]


vibratory manner of working: Agreed. Policies like the $15 minimum wage and the Earned Income Tax Credit (which boosts the income of low-wage workers) also fit in here. It's a lot easier to supplement someone's income to lift them out of poverty than it is to replace their entire income.

One basic question which UBI raises is, do we want people to work or not? (This is the "bullshit jobs" idea - that for many people, there must be some more productive way to contribute to society.)

To me it seems like the answer is obviously yes, although of course we should also provide collectively-funded social insurance programs to support people who can't work (e.g. the're elderly, disabled, or have caregiving responsibilities), or who are temporarily unemployed.

As I understand it, UBI is intended to give everyone the option of not working, and the assumption is that most people would continue working. If 30% of people were to stop working, that would have a pretty big impact. (Pilot UBI programs are often cited as evidence that there wouldn't be much impact on work incentives, but that doesn't tell us much because pilot programs are explicitly temporary - participants know that if they quit their job now, they'll need to find a new one when the program ends.)

Someone who's currently on CERB asked if there's some way he could avoid going back to work, comparing it to 40 years of slavery. Alternatives to working 40 years of life?
Think of Kant's meta-ethical rule: You should act in a way that would make sense if everyone were to do the same. If everyone were to stop working, all production of goods and services would stop. That includes the production and distribution of food. So most of us would rapidly starve.

All societies have ways to prevent shirking (avoiding work). On a small scale, like within a household, social pressure suffices. On a larger scale, most societies, including Canada, rely on private property. (The Soviet-bloc countries, lacking this institution, had to use a great deal of coercion and violence, and still suffered from low production.)

The Canadian economy is basically a giant pool of goods and services. When you work, you're adding to the pool; when you spend, you're taking from the pool. Your savings from work are a measure of how much you've put in, minus what you've taken out. That's what money is: it's a way to keep everyone from taking out more than they put in.
posted by russilwvong at 5:54 PM on September 15


What about the problem of available jobs being terrible - precarious, no benefits, unpredictable hours?

I think there'd be three ways to tackle this problem: (1) loose monetary policy (low interest rates / printing money) and fiscal policy (borrowing and spending money) to push the economy towards full employment, giving workers more options and bargaining power; (2) direct labor-market regulation, like requiring predictable hours; (3) a federal jobs guarantee, particularly during periods of high unemployment, so workers always have another option. Plus decoupling of benefits from employment, e.g. providing public health insurance.
posted by russilwvong at 9:57 PM on September 15


As I understand it, UBI is intended to give everyone the option of not working, and the assumption is that most people would continue working.

This is highly variable. For many proponents it's mostly intended as a supplement to work income, not a replacement, a "partial" basic income rather than a "full" income. And AFAIK this is how most if not all of the pilot programs have worked. (Possibly because the pilot programs tend to start from a position of addressing poverty and the physical and mental health issues that derive from it.)

I think many UBI supporters believe (or recognize) that giving everyone enough so they don't have to work ever is an impossibly large number. Trying to give everyone in the US, what?, $30 to $50 thousand a year? would overwhelm the economy. But giving folks something more like $500 to $1000 per month provides a crucial cushion for those who are working precarious low-pay jobs and "extra" money for middle-class-ish folks who will save it (thus increasing the pool of money available to banks and other financial companies for investments) and/or spend it on goods and services they otherwise can't afford (thus increasing employment - more houses, cars, and TV's sold means more people needed to make and move those products.) That's the "basic" part of Universal Basic Income.
posted by soundguy99 at 4:28 AM on September 16 [1 favorite]


And speaking of pilot programs, from vox.com this morning: A new study from Rwanda is the latest evidence for just giving people money. Where USAID participated in an 18-month study that started in 2017 comparing results from a job training program with results from just giving people the cash equivalent across about 40,000 young adults. The researchers had also done a similar analysis on a previous food & nutrition assistance program and found similar results - low income people are pretty darn good at improving their own lives if they have the resources.

(And, frankly, it certainly reinforces the question in my mind about how much various assistance programs rest on racist and classist assumptions that "those people" can't be trusted to manage their own lives responsibly.)
posted by soundguy99 at 5:53 AM on September 16 [5 favorites]


I’d like to see more evidence from the people saying UBI can’t work, namely proving that there’s any way our current system is actually working for anyone other than billionaires. It’s bad out here, in the real world if y’all hadn’t noticed yet.
posted by Drumhellz at 12:28 PM on September 16 [1 favorite]


The Canadian economy is basically a giant pool of goods and services. When you work, you're adding to the pool; when you spend, you're taking from the pool. Your savings from work are a measure of how much you've put in, minus what you've taken out. That's what money is: it's a way to keep everyone from taking out more than they put in.

There are so many things wrong with this picture of the economy I don't even know where to start. Where do capital gains, rents, established wealth, commodity surpluses, and so on come into it? Actually economies are really complicated!!!
posted by dis_integration at 5:03 PM on September 16 [4 favorites]


dis_integration: That's why I included qualifiers ("basically" and "your savings from work"). You can add services provided by capital to the picture - for example, an apartment building provides a service (housing) to renters. Does that change the picture? The point I was trying to make to the guy asking why he had to work is that goods and services don't just appear out of nowhere. Producing them doesn't just require capital - it requires labor. No matter how much capital we have, if everyone stopped working we would quickly run out of food.

soundguy99: "those people" can't be trusted to manage their own lives responsibly

Food stamps come to mind.

That said, Kesselman argues that we shouldn't just discard all in-kind benefits in favor of cash transfers:
In-kind benefits of both targeted and universal varieties are a crucial part of the current antipoverty policy package, and many warrant high priority for expansion. These benefits are often targeted at subgroups of the poor needing supports of particular kinds that cash transfers dispersed generally to the poor would not enable them to purchase in private markets. Additionally, the in-kind nature of many such benefits provides an implicit targeting mechanism that can reduce the over-reliance on income tests that cumulate to exert strong disincentive effects.

Some examples include legal aid, child protection services, immigrant settlement services, prenatal counselling and support, drug and alcohol rehabilitation, supportive services for mental health and counselling of at-risk high-school students. Other in-kind benefits that necessarily apply income tests include public and social housing, subsidies for private rentals, residential care, daycare services, and extended medical, dental and pharmaceutical coverage. Many of these programs have been compromised by deficit-pressed provincial governments, and they warrant higher priority for funds than preliminary steps toward a full guaranteed income.
posted by russilwvong at 8:44 PM on September 17


@EnriqueDiazAlva: "My guess is that everyone is about to learn the hard way that public support for public services is strongly dependent on state capacity to deliver them."

canada is nice(r) in that regard? also btw...

> Where do capital gains, rents, established wealth, commodity surpluses, and so on come into it?

@MaxGhenis: "A UBI funded by a carbon tax and land value tax would be a great start. But why not do it directly rather than through a SWF? The other funding proposals suggest an answer: the SWF's larger intent is socializing the means of production (which Bruenig not dispute)."[17,18]
posted by kliuless at 2:56 AM on September 18


The total personal income for 2019 was $18.6 trillion. Redistributed equally, that's about $60,000 per year for everyone including children. UBI aside, if instead we wanted to just lift those making under $20,000 to $20,000, that would cost around $500 billion, leaving $18 trillion to keep the lovers of inequality happy. Heck, for $500 billion, we wouldn't even need a special new program: by my back-of-the-envelope calculations, simply raising personal income rates back to what they were in 1960 (45% for the 1%, 60% for the 0.1%, 70% for the 0.01%) would probably raise $500 billion without any special new programs, wealth taxes, etc. The total federal receipts from personal income taxes are around $1.5 trillion, so this would only boost that by a third; since the top 1% pay about a third of that, this basically means doubling the total federal receipts from the top 1%, which would reduce their aggregate income by only 20%. And that's not even getting into the manifest feasibility of higher rates that could loosen up quite a bit more of that $18.6 trillion to make everyone under $60k better off. No inflation, no deficit spending, no MMT, and plenty of room for other taxes and programs as needed.
posted by chortly at 11:15 PM on September 22 [2 favorites]


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