Blog

What Could We Do Instead?: Negative Income Tax

My post from a couple of days ago was harsh towards a few UBI alternatives, but there is one which I feel might work well. In an earlier blog post we suggested that American economist Milton Friedman was a UBI supporter. Strictly speaking, that isn’t true, what he advocated for was Negative Income Tax (NIT).

A NIT is an income tax rate which is negative below a certain level. That is, if your income is below a living wage the government supplements it until you reach a pre-set liveable standard. As a person’s income rises the amount they receive decreases until they reach this threshold. However, in order to avoid disincentivising work, the drop in NIT is less than proportional to the rise in income. So basically you’re still getting more money when you work more.

In practice this works like a UBI because it establishes a basic income that everyone will have. Especially when you take into account the fact that most UBI plans increase income taxes, taxing back the UBI they pay to wealthy citizens.

However, the upfront cost is lower which makes it appear cheaper and it would involve a less significant overhaul of the welfare and social system. Making it, perhaps, a more widely palatable policy proposition.

It should be noted that this policy has a slightly different ideological bent to it, which might change how it is understood socially. Although it’s incorporated into the wider tax system, the negative tax is only applied to those with a low income so in effect it might be seen more like existing welfare with its associated stigma, rather than a UBI which would be a universal right for all citizens.

Do these ideological differences matter or is it more important that it’s the same in practice? Let us know what you think in the comments below!

JD

 

Advertisements

What Could We Do Instead?: Alternatives to a UBI (And Why They’re Not As Great)

Obviously we support a full UBI – that’s why we started this campaign – but it’s undeniable that it’s a radical policy, so people have suggested alternatives which might be more palatable. We thought we’d take a look at a couple of these and why they might not be as good.

The first of these is very straightforward; a Partial Basic Income. This works much like a normal UBI in that it’s a universal sum transferred to all citizens on a regular basis, the only difference being that it’s not enough to cover basic living costs.

The most famous example of an existing partial basic income is the Alaska Permanent Fund which gives all the citizens of Alaska $1000-$2000 a year, as a citizen’s dividend funded by oil revenues. As good as that sounds it wouldn’t end people’s dependence on work for survival, so it defeats one of the main purposes of a UBI.

Another idea that’s been suggested by some is a targeted basic income. This is different from a UBI because it lacks the Universality. It would involve giving a basic income to members of a specific group, the most common candidate being women as they are often associated with socially-beneficial unpaid work.

Although targeting by demographics would likely just reinforce social stereotypes and norms, the idea of giving a basic income to people doing unpaid work is interesting. However, once again, this does not remove people’s dependence on work and the bureaucratic hell of having to prove what you’re doing and justify why it’s worthwhile seems both exhausting and costly.

Ultimately we think a full UBI is worth fighting for but what do you think of these suggestions? Let us know in the comments below!

JD

Won’t Everyone Stop Working?

One of the big fears when it comes to a UBI is that everyone will just stop working and the economy will come crashing down.

But just think about yourself. Imagine you suddenly find out that you’re getting a guaranteed income, are you suddenly just going to sit at home doing nothing? Sounds pretty boring.

Most of us would still study to go on to a fulfilling career, or we might be able to dedicate more time to writing or photography or design or whatever we feel passionate about.

A lot of part time or casual jobs especially in retail or hospitality might suddenly be empty but many can be automated (think about the screens where you can order at McDonalds already).

Keep in mind that a UBI is only meant to cover the basic needs of food, water and shelter. If you can’t think of any careers that look interesting or you’re still studying and want some spending money you might still take these jobs, but you’ll be able to cover basic expenses without it.

Even if you have your basics covered most people will still work because they want to, and the research supports this. As we outlined in a previous post, a UBI experiment in Canada showed that the only groups that worked substantially less when they got a UBI were mothers with newborn babies and teenagers who could spend more time studying which led to higher graduation rates.

The whole point of a UBI isn’t that people won’t work, it’s that they have the option to choose where they work. They can do the things they love, and they don’t have to accept shitty jobs for the fear that they’ll starve to death if they don’t.

Let us know what you think below. What would you do if your income was taken care of?

JD

Isn’t It Impossible to Finance?

We kind of touched on this weeks ago when looking at the cons of a UBI, but since that seems to be the main criticism from people who are against UBIs we thought we’d take another look.

To be fair a UBI would be pretty expensive so that’s a pretty good criticism, except for the fact that it’s wrong.

There’s quite a few straightforward ways to finance a UBI, here’s a couple:

The most straightforward way to do it would be changing some of the taxation and spending systems the government uses. A number of people have written specific plans of how to do this (LINK). Unfortunately these are mostly by Americans, but they give us some idea of what we could do. Mostly it involves raising taxes, either corporate or income taxes, and closing a number of tax loopholes, combined with reducing the current welfare spending which would be replaced by a UBI.

Another, more radical, approach is for governments to simply print more money and give this to people. This approach is often opposed because people think it will lead to high inflation. Basically they fear that printing more money will lead to prices going up which would make the money  useless, but new research suggests that the inflationary effect would be very small if they exist at all.

Finally, a suggestion that could be part of the first solution but deserves its own mention. As we mentioned in a previous post, tech companies are making massive profits off your data. Although the profit they make off any individual’s data is pretty small (definitely not enough to make a UBI) taxing these profits throughout the industry would be a major source of revenue which could be distributed among the people who are creating these profits, ie you.

What you think of these ways of financing a UBI? Let us know in the comments below!

JD

Going Forward

I have decided not to write any posts this week as I need some time to re-think this campaign and where I’m going with it, but never fear I’ll be back to posting regularly next week!

I’m planning to write a couple of posts answering your questions next week, so in the meantime let me know any questions you have about UBIs, how they work, my thoughts about them or anything else (the trickier the better :P)  by commenting below or through Facebook or Twitter.

Hope you have a great week!

JD

What do Martin Luther King Jr, Milton Friedman and Friedrich Hayek Have in Common?

If you read Monday’s post (or if you have any idea what this blog is about) you can probably guess that the answer is that they all supported UBIs.

Those last two, by the way, are very famous (and very conservative) economists. Which might seem strange, but there’s actually a very strong case for supporting a UBI among conservatives. Although often supporting lower levels of government intervention, they both assumed that in a society where there is plenty nobody should be without food and shelter, and UBI is a much more direct and liberal way of achieving this than the current welfare system.

In fact, Friedman went so far as to design a form of UBI called the “negative income tax” and it was this system that Nixon used when, at one point, he attempted to legislate a UBI. This ultimately failed, not because people were opposed to it, but because opponents thought it was too low. Although it might seem surprising to us now, the idea always had strong support among conservatives.

Dr Martin Luther King Jr., on the other hand, is a less surprising feature on this list. He’s known for having fought for human rights and supporting a UBI fits right in with that. In fact in 1967 he wrote a book called Where Do We Go from Here: Chaos or Community? In which he talked about poverty, its devastating effects and how to end it with a UBI.

Of course these people all lived in a different time but the fact that the idea of a UBI has persisted is a testament to its enduring and timeless nature. It’s time that we did what all these people and more believed was right and enact a UBI for everybody’s sake.

JD

What Do Mark Zuckerberg, Elon Musk, Bill Gates and Stephen Hawking Have in Common?

Apart from being zillionaires and generally considered geniuses?

Congrats if you answered that they all support UBIs. Although if you’re following this blog that answer shouldn’t surprise you much.

So why are all these well-known and well-respected figures suddenly showing their support for UBIs? There are a couple of reasons actually, but overall the mood in Silicon Valley is that with current technological advancements it will be necessary within the next few years. And if anyone knows about the current advances in technology it’s them.

So let’s take a look at some of the reasons they’ve given for this.

Firstly, as we went over in a previous post, increased automation and robotics are making many of the jobs that currently exist obsolete. Technology has always done this, but the general sentiment seems to be that the rate at which it’s happening now is unprecedented and so unprecedented measures are needed.

Even if new jobs are created by this technology it seems unlikely that they will spring up at the same rate as they are disappearing. Also, as Rutger Bregman has pointed out, many of these jobs are likely to be unnecessary and unfulfilling. Wouldn’t it be better to let people find their passions with a guaranteed income than to force them into pointless and unfulfilling jobs?

Also, remember that these days just by existing you’re creating profits for companies. Harvesting your data creates massive profits so it makes sense to tax part of that and distribute it back to the people who are creating these profits. After all, most of these profits come from advertisers buying the data, and they won’t be very interested if none of us have an income to buy the things they are advertising.

Let’s hope that the support of these industry leaders will help both people and politicians understand why a UBI is necessary, now more than ever.

JD