Universal Basic Income

Hey!
No getting political in Red Room.

It looks like Bernie, Kamala Harris and Ed Markey are going to float a $2,000 a month stimulus bill.

https://www.msn.com/en-us/news/poli...until-the-coronavirus-crisis-ends/ar-BB13NKY8

TLR $2,000 a month for everyone making up to $100k with a phase out cap of $120k until 3 months past the emergency being declared ended. It's not tied to SSNs, so there's plenty of open windows for noncitizens to get in on the free money*.

Wouldn't that run hundreds of billions of dollars a month? And the estimate for a vaccine is some time next March? So this would go on at a minimum until June 2021? Where's the money going to come from? They sure as hell won't be cutting any social services to pay for this, so what? Enormous tax hikes on the wages of the few businesses still operating, the essential services? (stopping at, no doubt, the income bracket of most senators) Just print it? (hello hyperinflation) Who's going to work any minimum wage type job if the 91% tax rate to pay for their coronabux just isn't worth it?

Politics is the art of the possible, after all.

It is better for commerce than giving it to the rich or businesses. The money is going to go to the businesses anyway because the people who get it need to spend it. It can't come from the rich because eventually it all goes up to them in profits anyway. It is the only way it is going to work because people in debt trying to survive have no ability to consume much anyway. Without the mass of customers your businesses are not going to be in business anyway. Businesses cannot survive on the purchases of the 1 percent. There are only so many people who can make expensive cars and overpriced bling. The stuff that sells and drives the whole chain of the economy are the things sold to the middle class and poor people, and those people can't afford not to spend their stimulus and put it in the bank.

It is basic economics you dimwitted fool. Trickle down economics does not work because it does not create demand. Demand is the basic stimulus of supply, and nothing works without it.

Results of a study in Canada for a program similar to UBI.

Read an article the other day about how welfare cuts made 25 years ago have caused more long term costs than they saved in budgets. Even the guy who created the policies is looking back wondering WTF was he thinking?

found it


Twenty-five years after ‘welfare diet’ debacle, social assistance still hasn’t recovered from Mike Harris cuts


Twenty-five years ago this month, then Ontario premier Mike Harris slashed social assistance rates by 21.6 per cent.

In response to criticism of the cuts, Harris’s minister in charge of social services, David Tsubouchi, put forward a shopping list — later dubbed the “welfare diet” — to prove that welfare recipients could survive on the new lower rates by adhering to a $90-a-month grocery budget.

Tsubouchi’s list, which included nine servings of pasta but no sauce, and did not include butter, salt or other pantry staples, was widely ridiculed.


“It is totally out of touch with reality and is consistent with the stupidity and the ignorance of this minister,” Liberal MPP Dominic Agostino said in the legislature at the time.

A quarter-century later, social assistance rates still haven’t recovered and continue to lag behind inflation. Meanwhile, the cost of food, particularly good food, has risen sharply.

“It’s becoming harder and harder for someone who’s poor to eat a healthy diet,” said John Stapleton, a social policy analyst who worked in the provincial bureaucracy for nearly 30 years — including under Harris’s government — and now runs his own consultancy.

Stapleton has been shopping Tsubouchi’s “welfare diet” every year for the last decade and charting rising food prices. While Stapleton says Tsubouchi’s suggested diet is neither good nor healthy, he finds it a “useful benchmark” to measure the steep increases in food costs against modest gains in social assistance.

Stapleton’s report, which will be published Monday, shows that while inflation, as measured by the Consumer Price Index (CPI), has risen 56 per cent since 1995 and social assistance has increased by 41 per cent, the cost of the “welfare diet” has nearly doubled. He also found that the cost of healthier foods, such as fruits and vegetables, has increased more than the overall cost of food.

With the “double whammy” of social assistance lagging inflation and food prices outpacing it, single social assistance recipients “simply can’t afford” a reasonable diet, Stapleton said.

“Most of the talk that we have about social assistance is that people can’t pay the rent. We should also say that they can’t pay for food either.”

The COVID-19 pandemic has exacerbated food insecurity for low-income people, according to various reports. In Toronto, the Daily Bread Food Bank reported last month that visits to food banks in the city had increased by 25 per cent during the pandemic.

Valerie Tarasuk, a professor of nutritional sciences at the University of Toronto, said Stapleton’s report shows that social assistance rates should be indexed to something that reflects the actual costs of living.


“The adequacy of welfare incomes have been a problem for a long time in Ontario and I think this report suggests things are getting worse,” she said.

The monthly rate for a single person on Ontario Works today — $733 — is $79 lower in real terms than the $520 it was in 1995 after the Harris cuts, according to Stapleton’s report.

If the monthly rate were adjusted for inflation based on the amount before Harris’s cuts, it would be $1,053.93 today — a 44 per cent increase.

The Star sent questions related to this story to Ontario’s Ministry of Children, Community and Social Services, asking whether Minister Todd Smith believed current social assistance rates were appropriate, whether they should be indexed to some kind of cost-of-living measure and when the ministry will be reviewing the rates. A ministry spokesperson ignored the questions and sent a 378-word statement, which says, in part, that the ministry is “working to build a more responsive, efficient and person-centred social assistance system that will get people back to work and help the economy recover from COVID-19.”

The province is developing digital applications and a centralized intake to streamline and modernize the application process, the spokesperson said. They are also working with the Ministry of Labour to “improve access” to employment and training services.


“These changes will transform the system so that it provides better support for our most vulnerable, allows front-line staff to focus on results for people rather than paperwork, and helps people get back to work and contribute to building a thriving Ontario economy.”

Tsubouchi, now 69, admitted in a recent phone interview that, as a rookie minister in Harris’s cabinet, he was naive and unprepared. His “welfare diet” shopping list and his infamous advice that welfare recipients haggle with shopkeepers on dented cans of tuna were evidence of that.

“Was I a good communicator at the time? No, clearly I wasn’t.”

Tsubouchi, who was the first Japanese Canadian elected to a Canadian legislature, said that as a “red Tory” who grew up in poverty, he was ill suited to be Harris’s hatchet man. But he said the cuts to social assistance were a key plank in the party’s platform and he had to implement them.

“I had to do the job … Did I agree with everything the government did? No.”

Pressed on whether, 25 years later, he believes the cuts were a good idea, Tsubouchi avoided a direct answer.

“I believed that we needed to do something to bring some sensibility in terms of running the government.”


RELATED STORIES

GTA
Who is left behind in a cashless society?
Aug. 19, 2020

GTA
Why Ontario should follow California’s lead by using a ‘health equity metric’ to guide pandemic reopening plans
Oct. 13, 2020

GTA
Has COVID-19 created universal child care’s moment in Canada?
Sep. 21, 2020

No. Was never tried on a large scale. And for good reason. It's a nice sounding idea, a utopia, but very basic Economics scream NOOOOOOOOOO! It can't possibly work and even small scale trials were abandoned early.

Citation needed.

This is a good thing ... but I would just note that it's targeted assistance, not UBI.

Interesting. Forgive my presumptions, but you're one of the last people I'd have ever suspected of holding to such a view.

As I pointed out, it wasn't exactly the same thing, but it does show that just handing poor people money isn't automatically doomed to failure. And, as the article points out, it offers some advantages over smaller payments spread out over a period of time.

The 2000/month program here cost us about a total of $70B
that's kept people with their incomes lost housed, fed, and buying stuff. IOW, they're recirculating almost all of that money domestically.

In that same time, the 20 richest people in the country are up nearly $40B between them. Most of that money will go into their high scores down in Grand Cayman.

Which is truly unsustainable using even the most basic of economic theory?

Real question... how would you control for inflation in a UBI society? Wouldn't that be inevitable?

Why would it be more inevitable than with any other form of spending?

Depends what we're talking about.

Most consumer products or services shouldn't see a change, other than a slight increase in how many people can afford them.

We have fairly decent rent control (at least until the conservatives got in last election) in Ontario. Rates can only go up 1-3% annually on an incumbent tenancy IF the tenancy predates the revisions to the residential tenancy act. Once vacated, an apartment can be repriced at whatever the landlords can get. Case in point, I live in a small building of 12 studio units that average about 300 sq ft. When the building changed owners a few years ago they managed to convince about half of the tenants to leave. Those places were given cheap makeovers and now go for double what I pay. Factor in that relocating would place me into that price range and I am planning to be here till I die.

I think the next step forward is actual price controls on real estate by reinforcing the notion of "land tenure" over "ownership" as an attempt to curb speculative inflation.

UBI wouldn't fuel inflation any more than buying a war does. Raise interest rates if the economy heats up too much.

I think people assume UBI would be paid for by printing money (virtually). It'd have to be financed by bonds and paid for by taxes. Some inflation would help wipe out the bond debt.

Money is a funny thing. I'm still not sure how it gets created (no I'm not talking about minting it). But my partial understanding is as long as debt isn't out of line with GDP, the more debt the merrier. If you create wealth (i.e. cellphones) how do people have wealth to pay for it? It's a chicken/egg thing (yes Ed, I'm looking at you).

Read The Deficit Myth by Stephanie Kelton. Debts and deficits aren't themselves a problem at all (as long as you borrow in your own currency.) Inflation does impose limits on spending but - as you say - there are ways to reign that in too.

Let's say I'm a landlord and I rent property to a family. Their rent pays my mortgage on the property plus a little profit for me. Now, UBI goes through and I get a fresh, crisp, $1000 bill in the mail every month. Sweet. My tenant gets it too. At the same time, I'm assuming my taxes will go up a little to help pay for everyone getting UBI. So do the taxes on the bank I pay my mortgage to. It's not unreasonable for me to raise rent on my tenant now that I'm incurring additional expenses in the form of taxes. Same goes for the bank... and so on and so on... That's inflationary pressure.

This would increase the Producer Price Index or PPI. It would have to because the change is universal.

a little lost on how your tenant having additional income affects your property taxes/assessment?

Consider UBI as a negative income tax. if you're making $80K above the basic personal minimum/exemption, you don't qualify. If you're making that sub poverty level however, you'd qualify for the difference. Not seeing that adding more than a few nickels to the average professional's tax burdon.

As soon as you exclude anyone from the program, it's no longer "universal" basic income, just another redistribution scheme.

The question then becomes is the UBI still enough to offset the inflationary increases? Otherwise there's a potential for a runaway feedback loop.
@AlphaMan

1. You are assuming taxes would rise for the lower and middle classes.

2. That is not how prices work. Supply and demand determine price, not inputs.

Why would you need to raise the rent when you yourself have the extra $1000? Do you think your taxes will go up by MORE than $1000 a month? (In this scenario).

Prices in housing would rise if more people could enter the market for housing as a result of the UBI. To use a crude example: if two homeless people get UBI and decide to share an apartment rather than living on the street, then the demand for apartments increases. Since the demand can increase immediately, but the supply cannot, one would expect the cost of rent to rise.

So the TL;DR version is this:

More people having extra money isn't going to cause inflation.

More people spending having extra money and then spending that extra money on goods and services that previously weren't going to be bought makes the demand for those goods and services to rise, which causes the prices to go up, at least until the supply catches up to the new demand.

There could be inflation, too. In an environment where there's a relative scarcity of housing, people will bid the price up to some equilibrium level. If everyone suddenly has $1000 extra dollars, the price can be bid up higher.

We saw this with the economic stimulus checks that went out in the Bush (43) years. One consequence was that the price of big-screen TVs went up, because suddenly there was more demand for them, and people were able and willing to pay more for them.

I’m sure it will equilibrate at some point but I don’t know where that is. That was kind of the point I wanted to make. To some extent, UBI seems to be the snake eating its own tail.