An Honest Discussion About A Universal Basic Income

In this video we go over the pros and cons of a universal basic income. The US government spent over $5 trillion of economic stimulus and relief payments during the pandemic of 2020 and 2021. This is enough money to give every adult in the country $1,000 per month during this 2 year period. Would the money have been better spent just giving it directly to the people?

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0:00 - 1:48 intro
2:46 - 4:14 What is UBI?
4:15 - 5:19 Existing welfare systems
5:20 - 6:42 Cost of UBI
6:43 - 11:44 Taxes
11:45 - 14:20 Inflation
14:21 - 15:40 Starting the conversation

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[GriftyMcPants]

The 70% marginal tax does not apply to a person's entire income. It starts taking effect after an amount, $10 million for example. So your $10, 000, 001st dollar is taxed at 70%. This is a very important detail.

[oscarhuzell]

"no one can predict the future, least of all economists" is a perfect catchphrase!

[klankungen]

I read about the finish experiment where some people (I think it was 10000 people) got an UBI for a few years. The experiment was intresting. The wellfare system in place basically makes it so that if you get a job or start a bussines you will start paying taxes at about the same rate you lose your unemployment benefits making it hard for some to see any reason to put an effort in it. With the money being unconditional the people in the experiment were able to start bussineses and get jobs and get the full benefit imediatly and the most drivven entrepreneurs were able to re use all the money they had earned to keep the bussines growing since they didn't lose their benefits and had to give them self a salary imediatly. Some of them stated that it would be imposible for them to get to that point in the traditional wellfare system in place, even though it is more generous than most.

[StuartChignell]

One of the challenges with a ubi is that you either do it or you don't. "Toned down alternatives" definitely won't work. For a ubi to work it has to hold people at or just over thr poverty line and it has to be UNIVERSAL. Anything less won't work.

So the the alternative can't be a toned version it has to be something completely different. More likely a raft of alternatives from improved welfare systems to addressing the power imbalance between employees and employers and way more besides.

[JHZech]

What's missing from the conversation is one good idea from UBI, just reducing bureaucracy. Welfare doesn't have to be universal, but it also doesn't have to be split among a hundred different programs that make it difficult to use and costly to operate. Giving people a single check that gradually phases out to a certain income threshold wouldn't require trillions in spending while making it cheaper to operate (so more money for the program itself) and much easier to use for those who need it.

[FirstRisingSouI]

If we implemented a UBI, I'd suggest we set it as a percentage of the GDP per capita, not a fixed dollar amount. That way, it would function as a share every citizen holds in the success of their country, and as a bonus the GDP per capita would actually mean something. It would also save politicians from wasting their time on debates about raising the amount as the economy grows, like we see for the minimum wage.

For that matter, we should probably tie the value of minimum wage to inflation, rather than having a set amount.

But alas, these ideas are common sense solutions to make life better for the people, and that does no good for politicians and business owners' careers, so I don't see much hope for them.

[LoserEater]

I think one of the biggest benefits of UBI is a better upbringing for children of poor households who are heavily affected by a stressful family life, and who may perform better in school, be less incentivized to do criminal activity, get better a education, and contribute more to the economy than they would otherwise. Early UBI-studies have shown signs of this effect.

[nonesomanynone]

In the case of UBI I think that the problem really comes down to how it is conceptualized since the whole thing is predicated on our current economic model. Current, of course, means an economic model that hasn't changed substantially for hundreds of years. My observation is that, especially in the common parlance, economics is nearly entirely focused on the concept of currency - fiat currency to be exact. The problem is that economics is actually about the distribution of resources and currency, fiat or otherwise, isn't a resource in and of itself, but rather a measure of the ability to acquire arbitrary resources. Put another way, much like saying that "I want 10 feet" doesn't make any sense unless it is followed by "of X", saying "I want 10 dollars" only makes sense if one has an idea of the resources they intend to acquire. Acquiring money for the sake of acquiring money is a pointless endeavor.

The real question shouldn't be whether there is enough currency to meet people's needs, but rather whether or not there are enough resources. More specifically we have to ask what are the basic physical and psychological needs of an individual and do we have the resources to meet those needs. Insofar as the absolute basics are concerned (food, water, shelter, etc.) I believe the answer is, unequivocally, yes. Medicine is a bit stickier of an issue, although I refuse to believe that it, or any other issue, is inherently unsolvable if you put some effort into re-conceptualizing the problem. If we were to establish a minimum quality of life and build our economic system on that moral imperative we could remove a large chunk of the abject suffering that exists in the world.

With every passing day we move closer to a post-scarcity world and, while this generally though of as a positive, it will be disruptive and dangerous. Our current economic system is ill-prepared to handle that reality without the world turning dystopian. We talk a lot about the individual's responsibility towards society, but rarely in my experience do we talk about society's responsibility to the individual.

"Ask not what your country can do for you — ask what you can do for your country, " is a fine sentiment in certain contexts. One can ask what the individual can do for their community, but framing it to exclude community's responsibility to the individual is absolutely reprehensible.

[wilsonli]

Two thoughts about the inflationary effects of UBI:
1) If the system is designed in a way that middle-income earners roughly break even, then the inflationary impact should be minimal. I think there have been surveys that showed that, if given more money, most people on the lower end of the income scale would use it to pay off debt. If that is wrong, and there are indications that inflationary pressures would be high, you could design it such that the payments phase in over a period of a few years. Also, once you reach a steady state (supply catches up with demand), inflation will return to normal.
2) Let's think about what it means morally if inflation is expected to increase a lot in an economy upon the implementation of UBI. From what I remember of my college econ classes, there's a term for the kinds of goods and services that low-income people buy - necessities. Wikipedia defines it as "product(s) and services that consumers will buy regardless of the changes in their income levels, therefore making these products less sensitive to income change." If merely bringing lower incomes to a lower-middle income results in a significant changes to the consumption of necessities, doesn't that mean that previously, your economy wasn't allowing people to get what they need, either to survive or to keep pace with change? Now linguistically, we can quibble over different definitions of "need" and "necessity", but IMO there's a good reason we use these words, and they really illustrate the problem here.

[donovanmarks]

I think the proposals for UBI are the middle ground in the "what if automation" thought experiment. They are the middle ground between just letting the extra people starve and completely socializing all the benefits of automation.

[cainebez]

I think if we implemented a system akin to UBI, it'd be better off to go for a negative income tax bracket ala Milton Friedman's proposal.

Starting from $0 taxable income up to a set amount, the negative rate dictates how much money a person gets as a % of the difference between their taxable income and the bracket's cap.

For example, say we had a negative tax bracket from $0 - $40k at 30%, for simplicity. In affect, this would mean that for every dollar you earned through taxable income (up to $40k), you'd receive 30c less from government:
Someone earning no taxable income would receive (40k-0)*.3 = $12, 000 p/a
Someone earning $20k would receive (40k-20k)*.3 = $6, 000 p/a which in addition to what they earned would total $26k income that year.

Depending on size of the bracket and the rate this could be manipulated to improve incentive to work at low income or lower costs to government. For comparison, imagine this bracket is instead up to $24k at 50% to minimise government costs. So up to $24k, every taxable dollar earned would only net you 50c:
Someone earning $0 would receive (24k-0)*.5 = $12, 000 p/a
Someone earning $20k would receive (24k-20k)*.5= $2, 000 p/a, which in addition to what they earned would total $22k income that year.

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One advantage of this system over UBI is that it avoids giving money to people earning large amounts of taxable income who do not need it.
Another use is that this can be used to replace welfare for unemployment, as it avoids creating a system where a person can be better off financially by not working at all versus working part-time or full-time (though it lacks the advantage UBI has in not affecting incentives at all). If desirable, one may also consider it worthwhile to have things like disability and single-parenthood increase the size of the bracket, in effect targeting vulnerable welfare groups to get more money due to higher costs of living/less opportunity to earn income.
One potential issue though, is the need to review people's income more frequently in order to provide the negative tax benefits more frequently rather than an annual lump sum. How much this might impact the economy (for good or bad) is uncertain, but given how automated the tax process is in advanced economies, this could prove fairly simple.

[futeramonfuturamet]

Theoretically, a UBI is meant to be a stepping stone to a post-scarcity system. A post-scarcity economy is a theoretical economic system in which basic necessities (like food) can be produced in such abundance that they become almost free. Though this post scarcity would require replicators, infinite resources, etc.

[brandon]

The only way this sort of thing would actually work is if it was done in combination with incentivizing low-income housing builds HEAVILY because if not good old supply and demand would kick in and low-income apartments would go up 700$ and we're almost as bad off as we were before. I think a video talking about options when AI takes over x% of jobs would be an interesting topic, definitely something I've thought about a few times.

edit: this comment really blew up, so I'd like to clarify a few things. First of all I do agree with the point many people made that affordable housing is a more important priority than UBI, making housing affordable could allow for a far far lower payout as it's a significant portion of many peoples expenses. Also I'm not by any means anti-working, I think this amount should be the minimum to have food and a leaky roof over your head while also working a reasonable part time job. Also "low-income housing" doesn't have to be an undesirable place to live, skip the hardwood floors, marble countertops and have one bedroom, it doesn't have to be expensive but still can look nice. Also empty homes are a huge issue that needs to be solved in someway too, and so is people's tendency to want to live in a city those issues aren't removed by offering affordable housing. I'm not an economist I'm just a normal guy weighing in my OPINION on this topic.

[Bern_il_Cinq]

For the record the $5 trillion excess COVID spending was just the directly COVID-related spending. The budget introduced authorized up to $14 trillion in excess spending, over 90% of which has been used if I’m not mistaken. Let’s never do this again please.

[chrisg]

Great video as always. Surprised though that there was zero mention of having a potential UBI program coincide with the implementation of a financial literacy/ education program. That would make the biggest impact of anything else by far. I received expensive private education throughout my childhood and adolescence, and never learned more than how to balance a checkbook. Even if I had just learned what compound interest was in high school my life would be completely different. Teach a man to fish….

[hehxP]

It's easy to forget that people with least money may and do actually generate costs for the society thats non neglible. The cost is probably bigger for countries with proper welfare, lesser for ones without it - but it's a cost nevertheless.
I'm highly impressed how in modern times with modern tools we still tend to use simplified models that fail to catch overall pictures and are easy to manipulate. But an actual deep dive analysis is not something easy, nor probably cheap to do, that could be neatly and easilly shown with trivial iconographics.
It's not a direct accusation here, as it's seen everywhere and the channel is pretty nice in bringing the topics in generall and doesnt seem too biased. I just would love to see a deeper dive than just that.

[dontmindme]

I'm in support for some form of basic income, but know that its success would be greatly affected by its implementation and how other economic policies are formed. Thank you for highlighting some of the difficulties in such a program! It's important discussions to be had

[thealohamu]

Can we have a video on the results of UBI research experiments rather than speculation of what we think can be or could be?

[BrendanKOD]

Of course beyond the economic aspects of UBI, one of the other elements is to look through the society at all the people making not so intelligent decisions and asking "How much of that is the result of mental impairment due to excessive stress? And would removing some of the stress of trying to survive while being underpaid improve things?"

[KDiaz-hyxx]

My interest in UBI is in balancing the labor economy. There is no "free" labor market in the U.S. Too people often have to take the job that they can get at whatever the pay may be, and it's not often tied to true demand. I would like to see flexibility in being able to leave a job (even temporarily) without it being financially disastrous. It's not like you can fall back on self sufficiency farming in a modern economy, if the labor market doesn't suit you. One truly does not have a choice! And because there is no choice, capitalist squeeze the working class by paying as little as possible while charging as much as possible for living essentials (also in part to poor infrastructure--like, you often can't opt out of owning a car in this country). UBI--in theory--does offer some relief there atleast.