The first results from the biggest basic income experiment • Hacker News Board

Re: The first results from the biggest basic income experiment

#101

Post by chiefalchemist » Sun, Dec 03, 2023, 5:39 PM UTC

BuyMyBitcoins wrote: post #47

It seems to me that every basic income ‘experiment’ is flawed because they don’t account for the externalities of higher taxes and the fact that the pool of recipients is limited enough that the market is unaffected. Giving a few thousand people a few thousand a month isn’t going to cause much on an impact on inflation and it’s not going to make rents go up across the market. Additionally, others outside the experime…

> To put it more succinctly, they are measuring the impact of a stipend and not a basic income program.

Most importantly, they're connected. As you noted, of course people are happy to get "free" money. But what happens when the markets eats up that extra and they are back to normal, or perhaps worse off? Happiness isn't going to stay high.

In theory, I like the idea of UBI but I'm also confident the market (at least in the USA) - specifically housing - is going to quickly eat up anything extra.

Re: The first results from the biggest basic income experiment

#102

Post by RA2lover » Sun, Dec 03, 2023, 5:42 PM UTC

SeanAnderson wrote: post #36

thanhhaimai wrote: post #25

Earlier quoted context omitted.

The U in UBI stands for Universal. Everyone gets the exact flat amount, unconditional. That means there is much less administrative cost (don't need to verify that people belong to certain income brackets for example). Overall, the theory is that it would reduce government wasteful administrative process, while being more effective at lifting people out of poverty. The experiments so far are positive.

Okay. So, in the case of America, it would either be relatively ineffective for those living in cities, or relatively enriching for those living in rural areas, yeah? It seems challenging to get everyone to agree on a fair number.

This also depends on population density, which is lower in rural areas.

Re: The first results from the biggest basic income experiment

#103

Post by bigfudge » Sun, Dec 03, 2023, 5:42 PM UTC

mypastself wrote: post #95

> researchers found no evidence that any of the payments discouraged work or increased purchases of alcohol — two common criticisms of direct cash giving. In fact, so many people who used to work for wages instead started businesses that there was less competition for wage work, and overall wages in villages rose as a result. The only part of the article that addresses pros of handouts in general. Surely the outcome…

There is not much evidence cutting taxes increases entrepreneurship. It’s much more plausible to me that UBI would have a much more proximal impact on the desire to start a business.

Re: The first results from the biggest basic income experiment

#104

Post by ethanbond » Sun, Dec 03, 2023, 5:46 PM UTC

pixel8account wrote: post #98

ethanbond wrote: post #56

Earlier quoted context omitted.

Rents are set by only two things: 1) the tenant markets’ ability to pay and 2) competition with other landlords. If every single landlord knows with certainty (2) that every single tenant in their market has increased their ability to pay (1) by $1000/mo, then every landlord independently will come to the conclusion that they can raise rents by $1000/mo. They know the tenants are able to sustain it, and they know oth…

Can you link to some study that confirms it? This sounds far too simplistic to be true, especially for something as complex and unpredictable as the economy.

It’s a special case of this: https://en.wikipedia.org/wiki/Henry_George_theorem?wprov=sft...

This says public investment will just increase aggregate land rents to at least the cost of that investment. UBI is effectively a gigantic “public investment” that is everywhere. It’ll get baked into land rents, which will then propagate into actual rents.

Re: The first results from the biggest basic income experiment

#105

Post by amazingman » Sun, Dec 03, 2023, 5:51 PM UTC

MagicMoonlight wrote: post #75

We had a basic income experiment. Entire countries were given thousands a month for not working. The wealthy used it to buy a nicer car. The poor shopped around on jobs but ultimately ended up in the same place. Inflation completely destroyed the global economy and people pumped the excess money into high risk investments like pyramid schemes.

You can't support that inflation claim when supply chains were completely wrecked in an economy hyper-tuned for just-in-time production. Without the inflation claim, your comment is a nakedly political non sequitur.

Re: The first results from the biggest basic income experiment

#106

Post by DFHippie » Sun, Dec 03, 2023, 5:53 PM UTC

Ajay-p wrote: post #46

crooked-v wrote: post #9

Earlier quoted context omitted.

It already does exist in some places in the form of sovereign wealth funds, such as the Alaska Permanent Fund [1]. [1]: https://en.wikipedia.org/wiki/Alaska_Permanent_Fund

But that is derived from profits from the sale of Alaskan oil. It is not a wealth redistribution program, increased taxes, or reductions in spending elsewhere. Alaska is also a very costly place to live. It's also the only state that actually sells something and makes a profit which it can redistribute to its citizens. Maybe if America as a whole profited from the sale of its natural resources then it could, in theor…

The point of a UBI is not to redistribute wealth. It's to provide a minimum standard of living for everyone more efficiently than means-tested programs do.

If you're going to provide a minimum standard of living to everyone, a UBI does this with minimal distortion of incentives.

Re: The first results from the biggest basic income experiment

#107

Post by kmeisthax » Sun, Dec 03, 2023, 5:56 PM UTC

AaronM wrote: post #61

BuyMyBitcoins wrote: post #47

It seems to me that every basic income ‘experiment’ is flawed because they don’t account for the externalities of higher taxes and the fact that the pool of recipients is limited enough that the market is unaffected. Giving a few thousand people a few thousand a month isn’t going to cause much on an impact on inflation and it’s not going to make rents go up across the market. Additionally, others outside the experime…

Why would giving everyone basic income below a certain income level immediately cause inflation to match it? Inflation doesnt track directly to minimum wage, which seems to be a very similar principal.

Because in the 1970s, Saudi Arabia shut off oil exports to America, triggering waves of supply side inflation. This manifests both as increasing prices as well as economic stagnation, which mainstream economists thought wasn't possible. The prevailing interpretation was that this was caused by a "wage price spiral", i.e. that any wage gains by workers will trigger the inflation necessary to claw those gains back.

This is a valid assumption... in a perfectly closed economy where no new energy, material, or labor is available[0]. However, this is not actually the case for most economies - just the one where resource-cursed petrostates are deliberately conspiring to starve out democracy and we decide to let them do that. Energy literally falls on us from the sky[1], we can use it to recover disposed of material, and, if we need more than that, we've got an entire planet full of material to dig up.

In fact, states with lots of mineral or energy wealth already use UBI. Saudi Arabia and Wyoming basically have no income tax because oil and coal extraction pay for everything. Alaska goes one step further and gives state residents a dividend out of the state's permanent oil wealth fund. And, as far as I'm aware, none of these states have outsized inflation compared with the rest of the country / world.

tl;dr economists have a superstition about workers having money

[0] Not to be confused with degrowth, at least I think so?

[1] And when it isn't we have this metal called uranium that literally spews out heat from radioactive decay when you enrich it enough.

Re: The first results from the biggest basic income experiment

#108

Post by ethanbond » Sun, Dec 03, 2023, 5:56 PM UTC

jnwatson wrote: post #99

ethanbond wrote: post #27

Earlier quoted context omitted.

A UBI of $x/month will just yield rent increases of $x/month.

We already had a natural experiment for it over COVID. Rent didn't immediately go up. The price of everything went up sure to inflation. The Fed understands this. As soon as the checks start flowing, interest rates will rise to keep money supply flat.

It’s not that great of a natural experiment given all the other dynamics of inflow/outflow from cities, money supply changes, and eviction moratoriums.

Rent is higher than pre-COVID basically everywhere and they continue to rise faster than inflation so I’m not sure what this “experiment” shows.

Re: The first results from the biggest basic income experiment

#109

Post by somedude895 » Sun, Dec 03, 2023, 5:57 PM UTC

underyx wrote: post #60

BuyMyBitcoins wrote: post #47

It seems to me that every basic income ‘experiment’ is flawed because they don’t account for the externalities of higher taxes and the fact that the pool of recipients is limited enough that the market is unaffected. Giving a few thousand people a few thousand a month isn’t going to cause much on an impact on inflation and it’s not going to make rents go up across the market. Additionally, others outside the experime…

Great, so I guess it’s time to try UBI on a country scale then!

Sure, you go first

Re: The first results from the biggest basic income experiment

#110

Post by ethanbond » Sun, Dec 03, 2023, 5:57 PM UTC

danenania wrote: post #86

ethanbond wrote: post #72

Earlier quoted context omitted.

But then you’re talking about the effects of a high marginal tax rate, not UBI.

I'm talking about the effects of wealth redistribution vs. money supply expansion. Redistribution doesn't necessarily increase prices since the total amount of purchasing power in the market doesn't change. It's certainly not as simplistic as "rent gets increased in proportion to the amount of the UBI" as you're implying.

Taking into account redistribution, the story is even more bleak, not less. Lower income housing prices will rise faster than higher income housing prices.