But this is not what basic income is about, is it? As far as I know, basic income means that everybody receives a fixed income, rich or poor.
What happens in Denver is just a social project, the only thing mildly special about it is that recipients didn't have to do anything in return. But there have been many of such projects in countries all over the world.
This is still a study about UBI, it's looking at differences based on how the income is delivered. A part of UBI, different from other types of aid, is that the recipient can spend the money however they see fit. There are question about how well this will work. Will the recipients benefit or suffer by not being restricted in how they spend? Will they benefit or suffer by being given the money all at once at the beginning of the year vs receiving monthly sums? These are good questions without obvious answers.
If you want to understand more about their study, their methods are available. It answers a lot of the comments below. They do make a distinction and call this "Guaranteed Basic Income" since it targets a subset population: https://static1.squarespace.com/static/64f507a995b636019ef88...
No, it isn't. You can't study UBI by giving income to people who don't currently have income. To study universal basic income, you have to give it to everybody--the same amount--including people who already have income, even people who don't need any additional income. And then you can look at all of the effects, negative (people ceasing to work, or not working as much, because they are now guaranteed a certain amount of income independent of how much they work--meaning that overall production of goods and services might go down even as demand goes up) as well as positive (people who previously didn't have income now having it and therefore having more options).
Studying having the spending of the income not be restricted might be worth doing, but that still doesn't make it a study of UBI, because having the spending be unrestricted is not the critical feature of UBI. We already have social programs that give income whose spending is unrestricted, such as SSI and SSDI. What we don't currently have is a program that gives the same income to everybody regardless of need or anything else. That is the key feature of UBI that would need to be studied if you want to claim to be "studying UBI".
Also, you need to consider how it is payed for. It does not just mean that everyone suddenly have an additional income on top of everything they used to have. You now also have money circulating in the economy in new patterns. And you also have new taxation used to finance it. Taken together, this will impact prices and costs, and will drive inflation. The effect cannot easily be predicted. But looking at individual behaviour in a limited experiment where everything else stays the same does not cut it.
If you only include homeless people statistically you can expect that they will make poorer financial decisions than the rest of the population.
Also there are other implications, I’m not even sure what’s the point in calling this UBI (the data might of course be still valuable for other purposes).
> If you only include homeless people statistically you can expect that they will make poorer financial decisions than the rest of the population.
Where are you getting this? The article is indicating that only people experiencing homelessness were given this, and its indicating quite a few of the participants of the study got off the streets and even out of shelters.
Not everybody is homeless due to their financial mismanagement, some people just get runs of bad luck.
> The article is indicating that only people experiencing homelessness were given this,
Yes, which is why this is a has nothing to do with UBI. Cash based welfare payments are not a particularly novel idea and there is plenty of data why do they work/don’t work.
> Not everybody is homeless due to their financial mismanagement, some people just get runs of bad luck.
Of course. However on average they are probably significantly more likely to mismanage that money than other groups.
>There are question about how well this will work. Will the recipients benefit or suffer by not being restricted in how they spend? Will they benefit or suffer by being given the money all at once at the beginning of the year vs receiving monthly sums? These are good questions without obvious answers.
Shouldn't they worry more about questions that are related to whether UBI gets implemented in the first place? For instance, whether there's a work disincentive associated with it, or whether the program is cheaper than regular welfare. Figuring out answers to the questions you listed is putting the cart before the horse.
> As far as I know, basic income means that everybody receives a fixed income, rich or poor.
People frame it like that, but in practice it would be offset by increased taxes for most.
For example, everyone gets $20,000 per year as "universal" basic income. However, your taxes go up $20,000 per year or more because you weren't in the lowest tax bracket. We have to pay for the UBI somehow.
UBI of a substantial amount would be incredibly expensive. Expensive to the point that the taxes would have to dip all the way down into the middle class to make it work. So for the average person, that UBI would come in and then go right back out as taxes.
What's a scenario in which adding $20K to my income results in more than $20K in additional taxes? The highest marginal tax rate in the U.S. for 2023 is 37%, and it kicks in after about $578K for a single filer. So increasing my income by $20K increases my tax bill by at most 37% of $20K.
It is not the tax on the UBI that is referred here. It is whatever tax will be neccessary to finance it. You can't reason about this by looking at the current rax system, since it would most likely need to change.
Realistically you may be correct - however, it is within the realms of possibility that enabling poor people to take part in the economy will drive value creation, and that this increase to the tax base could fund UBI.
Stock buy-backs don't create any value, or, if they do, it is obscure to me. You may get a one-time bump in capital gains tax, but it's nothing to build an economy on.
A million new dishwashers, though - that's taxable profit and increased emploment. Could UBI drive a virtuous cycle in which everyone gets richer? It certainly looks from here like inequality fundamentally shrinks the pie, even if it works out nicely for some eaters.
A UBI based on an income tax is not feasible due to the feedback cycle it would engender. As the UBI goes up the % of people who would make the same or greater incomes by quitting and taking UBI would go up. Raising UBI would be extremely popular politically and would go up quickly. This would either drive inflation out of control or erode the income tax base over time until it no longer could support the UBI. Either way it dooms the economy.
> As the UBI goes up the % of people who would make the same or greater incomes by quitting and taking UBI would go up.
That’s not how UBI works. It’s not tied to quitting one’s job. Anyone working earns income from salary/wages in addition to their UBI. Unlike many existing entitlements, there is never a financial incentive to work less.
That's not what I was saying. I was saying that as UBI goes up in $$$ that more people will hit the point where they can live nicely on just the UBI, where they extra income from working is just not worth it due to the increasing taxes minimizing it's reward factor.
But they are not giving it to everyone, just to homeless people. That does not warrant the "Universal" part of the name.
EDIT: I think I misread the whole thing, it really does not say "Universal" anywhere :) Anyway, I think someone, soon will try to use this project as an argument in favor of UBI, which is ridiculous.
But the UBI works completely different at small and large scales. When you test it at small scale it seems to be working exactly as expected. But when you try to introduce it globally (I mean, for the whole country), then it suddenly starts affecting economy as whole, and the only result you get is inflation, and no one is better of with UBI compared to their previous situation. When the news breaks that everyone will be getting free money the natural reaction of all the sellers and service providers is to raise prices.
I mean, I know UBI haven't been tried at whole country scale, but the populist government in my country came pretty close, trying to bribe people with things like social security payments for parents (you get paid a pretty penny monthly for each child you have), or giving extra pension raises to retired people - basically giving away free money to everyone. And guess what? Inflation in my country peaked at 19% in February, luckily it fell down to like 8% in September.
Inflation is not the only component of UBI, far from it, social effects are pretty important too. "Do humans still feel compelled to work when their income is guaranteed" is a critical question that does not require a nationwide test to investigate. I wouldn't be so quick to write off the results here.
The problem is: those humans still need to rent apartments, pay their bills, buy some clothes and food. A person who has UBI + salary will always be able to outbid a person who only has UBI when buying all those goods and services (which are limited in quantity, so you have to compete for them. That's how economy works, at its core: it is a way of managing scarcity).
Which means that after short adjustment period, the prices will rise and you will still need the salary from that shitty job to survive.
It encourages work. The current system which can punish you for trying to improve your situation, with UBI it's always in your best interest to work.
Also, the average person will not have their income increase significantly with UBI. The money has to come from somewhere, and taxes will offset the gains for most. Wealthy folks may see their income reduced by a few percentage points. Poor people can easily see their income doubled.
Another factor to consider is that apartments, clothes, and food are not flatly limited, they're elastic. Currently people with no money cannot participate in the market, so UBI has the potential to drive prices down through demand as well. We're seeing a negative example of this with the current housing market; prices are rising quickly because only wealthy people can afford a house, and less and less affordable housing is created as it's not as profitable.
True, but shitty jobs will pay a lot better and they will enable those workers to find meaningful lives outside their jobs. Having some money vs. no money at all makes a big difference.
That inflation is temporary. Most countries in Europe give money to parents and also have decent retirement payments. Inflation is not a problem, except for other external factors (Ukraine war, COVID measures).
That inflation is indeed temporary - it fulfills its role once the prices reach the level when UBI becomes irrelevant.
Imagine a country where average income is 2000 USD per month. Now, you give everyone UBI of 1000 USD per month, so the prices keep rising until cumulative inflation reaches 50% - now 3000 USD buys you exactly the same standard of living as 2000 USD used to do before.
So, inflation stops, but no one's life is better after UBI than it was before.
And of course if the government decides to raise UBI from 1000 USD to 2000 USD then the next wave of inflation follows, cancelling any gains once again.
> So, inflation stops, but no one's life is better after UBI than it was before.
This does not follow. Many people may find they have the same quality of life as before. This isn't a failure. The relative significance of $2k is much greater to someone making <$2k (>2x increase) than someone making >$2k (<2x increase). It seems like in terms of influencing behavior, the greater effect would be felt by the poor, and there's more poor.
> The relative significance of $2k is much greater to someone making <$2k (>2x increase) than someone making >$2k (<2x increase).
That only works on individual level, in a world without inflation. it does not work when when you give money to everyone. Yes, I agree, rich people won't even notice that extra $1k of UBI in their pockets. And they also won't notice a price of pizza going from $20 to $30. Poor people, however, will stay poor.
As a general principle: money is not a real thing. It doesn't exist. It's only a symbol, means of accounting. You cannot eat it, you cannot wear it. You cannot fix the poverty by giving everyone money if you do not increase the amount of goods available for purchase in the market at the same time.
Right, so it's always in people's best interest to work harder, but $2k buys a lot more pizza than $0, regardless of price.
> You cannot fix the poverty by giving everyone money if you do not increase the amount of goods available for purchase in the market at the same time.
Supply is elastic. Increasing demand should indeed increase supply.
> Supply is elastic. Increasing demand should indeed increase supply.
That's some Keynesian bullshit, supply is constrained by a lot of factors, demand alone can't increase it. And even when it does, the intermediate step is, guess what? Raising prices.
Because drawing conclusions about what happens if you guarantee income to everyone, based on studying a project that only guaranteed income to homeless people, is ridiculous.
> a small scale trial
Is not what this is. You can't have a "small scale trial" of universal basic income. That's the whole point.
No, what's ridiculous is claiming that conclusions from this study cannot apply to UBI. Nobody is claiming the study models inflation, it's about homelessness.
Basic Income is part of Universal Basic Income, and I think it's pretty reasonable to expect some conclusions apply to each.
No, you still misunderstand: "Basic Income" for some small groups of people works on a totally different principle than "Universal Basic Income" that applies to everyone. One is about giving a break to some unfortunate people, and helping them make a living in the current economic environment. The other is a complete overhaul of the economic reality we live in.
> Nobody is claiming the study models inflation, it's about homelessness.
Since most people are not homeless, I have no idea why you think this makes it reasonable to extrapolate anything from this study to the case of actual UBI.
> Since most people are not homeless, I have no idea why you think this makes it reasonable to extrapolate anything from this study to the case of actual UBI.
Some people are. They were given a basic income. Under UBI they would also be given a basic income. It seems crazy to me to suggest these are entirely uncorrelated.
> Not if it's only given to the homeless.
So I'll ask again, how does Basic Income for the middle class invalidate Basic Income for the destitute?
> They were given a basic income. Under UBI they would also be given a basic income. It seems crazy to me to suggest these are entirely uncorrelated.
I can't tell if you are trolling or are actually confused.
The issue is not that the homeless people were given a basic income. The issue is that everybody who wasn't homeless was not given a basic income. So only a small fraction of people were given a basic income in this study. That is what makes it invalid as a study of universal basic income.
> how does Basic Income for the middle class invalidate Basic Income for the destitute?
This question is irrelevant since middle class people were not given a basic income in this study. Do a study where middle class people are given a basic income and then we can talk.
> So only a small fraction of people were given a basic income in this study. That is what makes it invalid as a study of universal basic income.
You're arguing with a strawman. It isn't a study of Universal Basic Income. This is a study of Basic Income and it's effects on homelessness, so the results of this study should reasonably apply to other situations where Basic Income is provided to homeless individuals (as it would with UBI). To be clear, "the results" are the effect of basic income on homelessness, and only the effect of basic income on homelessness. This is not a blanket endorsement of UBI.
I've been very deliberate with my wording to avoid absolutes. You seem to be suggesting that we cannot model anything at all. Yeah, I think that's insane.
No, I'm arguing with what you actually said at the start of this subthread. See below.
> It isn't a study of Universal Basic Income.
According to you, it is valid input to decisions about UBI. Here is the original post of yours (responding to Detrytus) that I responded to in this subthread:
XXXX
> I think someone, soon will try to use this project as an argument in favor of UBI, which is ridiculous.
Why's that ridiculous? Testing a small scale trial on the people most likely to be effected by a larger scale program seems pretty reasonable to me.
XXXX
Your contention that the study is a valid "small scale trial" of UBI is what I and others are disagreeing with. Nothing you have said changes that disagreement in the slightest; you just keep repeating the same contention we have already disagreed with, without addressing the issues we have raised at all.
> "the results" are the effect of basic income on homelessness, and only the effect of basic income on homelessness.
Which has nothing whatever to do with UBI. Nor is it a "small scale trial" of UBI. It's a study of the effect of providing basic income to homeless people and only homeless people. You can't use the results of that to conclude anything useful about what would happen if you provided basic income to everybody. This has already been pointed out to you multiple times in this subthread.
> Your contention that the study is a valid "small scale trial" of UBI is what I and others are disagreeing with. Nothing you have said changes that disagreement in the slightest; you just keep repeating the same contention we have already disagreed with, without addressing the issues we have raised at all.
Sigh. I've been very deliberate with my wording, and I did not say Universal anywhere in my original comment. If this caused confusion, my follow-up comments should have made things abundantly clear, and I'm still waiting for a rebuttal.
If you insist on putting words in my mouth, know that you are arguing with a strawman.
If you offer free plate glass to all store owners, the stores with already broken windows will have a large benefit. What happens to the glass you gave to stores that don't need the glass? Do they sell it on eBay? Store it somewhere?
Exactly which is why the complaint the OP is making makes no sense. It’s Denver’s Basic Income Project and explicit in who gets it so complaining that it’s not universal is silly.
You bring up a good point. This project is indeed not another completely different project that it has made no claims to be.
In a similar vein, this is not the Alan Partridge Project, which is a band, and that fact was not mentioned in this article, furthering my initial confusion.
UBI is cannot be truly universal: you have to pay for it, which is sort of what I mean by saying it is means-tested isn't too far from the truth. Those who pay "into" UBI more than what they receive from it are "failing" the means-test here; those who get more UBI than they pay into it in taxes are "passing" the means test.
(Now, obviously, taxes are kind of a grab-bag: it is hard to see, directly, how much of your tax dollars go to any one particular appropriation. But the point stands, and I think an easy approximation would be taxes paid * (UBI paid out / total appropriations) or so.)
UBI is essentially equivalent to having a negative tax bracket, and that bracket would only apply to some people. Necessarily to compensate for that bracket, some or all of the upper brackets must go up, in order to fund the lower bracket.
I.e., if the government writes everybody a $10k check, but due to doing that I now owe $15k more in tax obligations each year … I've not in any material way received UBI, even if there's a $10k check in my account.
Like, if you just wrote everyone a $10k check per year the resulting national debt alone would be absurd…? How would that work?
What happens in Denver is just a social project, the only thing mildly special about it is that recipients didn't have to do anything in return. But there have been many of such projects in countries all over the world.