For those following the Democratic primaries there have been some solid policy positions floated as part of the general debates.

One of the more interesting candidates in my book is Andrew Yang and one of the primary issues he brings to the table is Universal Basic Income (UBI).

I was fascinated to see how it would play out in an American context given the hyper-capitalistic nature of that country. I really believed he would drop it at some stage.

Instead he has seen quite a few presidential hopefuls off and is still in the race albeit just and it seems he is still gathering converts, not just from the left either.

Here is a Youtube podcast from Joe Rogan interviewing him. While it goes for over an hour they pretty well get straight into UBI at the start.
http://www.youtube.com/watch?v=cTsEzmFamZ8

I feel Yang has really elevated UBI into the political discussion in the US and given it a degree of credibility it would not have otherwise enjoyed. It will be interesting to see how much traction in gets after him.

Sounds like a really bad idea. Hope he has something worthwhile also, because that policy would be a dud.

If you want to find a socialist/communist, just look for someone who wants to give away something that is not theirs to give, someone else's money.

Dear NNS,

Joe Rogan is hardly a leftist and until he really started thinking about the impact of AI he was dead against any notion of a UBI. He has changed his mind. Andrew Yang has essentially taken the same path as he relates in the start of the video.

Alaska is one of the most conservative states in the US yet it has a form of UBI.

Republican president Richard Nixon came the closest to introducing a version of it;

"This led to the Family Assistance Plan (FAP), an ambitious social welfare program prepared by the democrat senator Daniel Patrick Moynihan (1927-2003) on behalf of Republican President Richard Nixon’s administration. The FAP provided for the abolition of the aid program targeting poor families (AFDC) and incorporated a guaranteed income with financial supplements for workers which came close to a negative income tax scheme. It was publicly presented by President Nixon in August 1969, adopted in April 1970 by a large majority in the US House of Representatives, rejected by the relevant Commission of the US Senate in November 1970, and definitively rejected in 1972, despite several amendments meant to assuage the opposition, owing to a coalition between those who found it too timid and those who found it too bold."
http://basicincome.org/basic-income/history/

I would be interested in hearing which of Yang's arguments you find objectionable or without basis because I can't find any.

Dear Hasbeen,

So obviously you are not prepared to change your entrenched views on this and probably didn't even bother clicking the link.

Progressive minds with new ideas helped create Medicare, something you have admitted you rely on heavily. That too is "someone else's money".

The Alaskan scheme is funded through its oil revenues. Why can't a similar one be set up here with a decent mining tax?

We have already established a targeted welfare system which is effectively an established UBI.

No to UBI, since this will be the excuse to abandon the targeted welfare system, as the wealthy find ways to avoid tax and qualify for UBI.

What is needed is a means test applied to existing welfare benefits across the board, to prevent the plunder of the welfare dollar by the wealthy.

Dan

Dear Diver Dan,

The word universal in the title means just that, for everyone over the age of 18, rich or poor.

It is just like Medicare. All should be able to access it. The moves now to say the better off are obligated to get private health insurance and use private hospitals is just another insidious way of dismantling it.

Yang calls it a "freedom dividend".

From his website;

"Andrew would implement the Freedom Dividend, a universal basic income of $1,000/month, $12,000 a year, for every American adult over the age of 18. This is independent of one’s work status or any other factor. This would enable all Americans to pay their bills, educate themselves, start businesses, be more creative, stay healthy, relocate for work, spend time with their children, take care of loved ones, and have a real stake in the future.

Other than regular increases to keep up the cost of living, any change to the Freedom Dividend would require a constitutional amendment.

It will be illegal to lend or borrow against one’s Dividend.

A Universal Basic Income at this level would permanently grow the economy by 12.56 to 13.10 percent—or about $2.5 trillion by 2025—and it would increase the labor force by 4.5 to 4.7 million people. Putting money into people’s hands and keeping it there would be a perpetual boost and support to job growth and the economy."
http://www.yang2020.com/policies/the-freedom-dividend/

UBI = utterly bad idea.

Though small trials of it have ben successful, there would be very big problems scaling it up, and the benefits from it could quickly be wiped out by increasing land prices.

UBI is inefficient. It would cost the government a lot of money, but the government would get nothing in return.

And most importantly, UBI is not what's needed. Jobs are.

with Trump making an absolute mockery of his naysayers when it comes to employment, economy and trade deals you would think the marxist would at least ease off. Instead they love to destroy success.

While I'm not directly opposed to a UBI for Australia I think a negative income tax is the better way to go.

That there is a problem headed our way is beyond doubt although I remain sceptical as to the timeline some are talking about. For example Yang is suggesting, based on expert advice, that the apocalypse for the trucking industry is coming in the next ten years. That it is coming is beyond doubt but they were predicting it would happen 10 years from now ten years ago ie in 2010 driverless trucks and cars were predicted for 2020. So 2030? Maybe, maybe not. But sometime, definitely. Retail on the other hand will feel it first. Even Maccas, where they employ low paid kids, finds it cheaper to use automated ordering.

So timing unclear, but effect absolutely certain.

Based on Yang's number and extrapolating to Australia, a UBI of $1000 per month would cost us around $80 billion per year. (an NBN year in year out).
But $12000pa is hardly going to cut it. Once introduced the call to equate it to the pension would be immediate and ultimately irresistible. So perhaps $200b per year

Alaska pays for it with oil money. Let's start fracking and do likewise.

So a negative income tax? This would need to be combined with the removal of the minimum wage. The employee would get paid less from the employer but make it up through the tax system. The employer, paying lower wages, would find automation less attractive and therefore would delay the introduction of automation.

So for example, the truckie can't compete with a driverless truck if he's paid anything like a living wage. But if his wage was halved and the balance made up from negative tax, then he would be able to compete, at least for a while.

/cont

/cont

The advantage of the negative tax is that it is self-correcting. All previous employment disruptions eg computers were predicted to decimate jobs. They didn't. This time probably will be different but that's not certain. A UBI locks in payments irrespective of the jobs market. A negative tax responds to the rise and/or fall in the jobs market as it eventuates.

So I'd say UBI is a good solution but not the best solution.

mhaze,
We want MORE automation, not less!
'Tis stupid to pay people to do what a machine could when there's no shortage of more worthwhile things they could be doing instead.

Dear mhaze,

Thanks for the response.

Firstly why fracking? Qatar receives roughly 30 billion PA on its gas export royalties while we get about 1 for about the same volume of gas. Adequately collect royalties and stop multinational tax avoidance and we would get there in a canter.

The driver to the economy of a UBI needs to be taken into account as well. Tax receipts will obviously rise with the increase in consumerism and assist in mitigating the cost.

One of the attractive features of a UBI for me is that is allows for better more humane changes in the workforce. Whether it be coal miners or production line workers in car factories as Yang says, retraining especially high school educated middle aged men into coders is a fantasy. A UBI offers a decent bedrock for workers transitioning to different sectors.

Any government has a duty of care to its citizens, especially if they have been the subject of depreciations due to government policy or even the world economy. While jingoistic I do like Yang's framing of this as a freedom dividend. The point he makes in response to questions about a general reticence in the US to accept money for nothing is to equate it as receiving a dividend on shares. You may not have work in the business but still the cheque arrives.

SteeleRedux

No I'm not a favourite of it. I agree with Aiden here 100%. Giving money away for jam is bad policy.
What is a much more fruitful policy, is for Governments to ramp-up construction of social housing urgently.
It can, by entering the housing market this way, manipulate the market by adding to supply and setting rents which will then be reflected in the private market.

Very quickly, with this policy, there will be a much less need for wads of cash supplied through whatever system of welfare, and down comes the actual need for it.

So win win here. Less welfare payments and more skin in the game by holding asset value in social housing, for Government .

Social housing can then be sold off to selected tenants, adding to the returns on the investment for Government as well, capitalising on capital gains in the manipulated market.

There is an urgent need to bring down the overpriced property market values, and this will work quickly.

The building and kindred industries will be stimulated, adding to the need for apprentices, beniffiting education and unemployment.

The short and the sweet of it is, it is a positive to invest rather than Father Christmas wads of money to the majority of the country who have no need for it.

Dan

To SR

My Issue with UBI is the basic issue of where is the money coming from to fund a UBI. If it's coming from income taxes, then that does more harm then good. It means the same amount of money given to people's leg is taken out from them through their income, plus a little more for those that have no income. An extra $1000+ taken out in taxes means there's not much left for those in a regular middle class job. Getting by with increased costs is hard enough without adding a massive tax removing more income to pay for it.

On the other hand if the money comes from sales from another industry, like say housing (which already is taxed quite a bit for other programs), that only makes that industry's market that much more unaffordable. No industry is going to make enough to support a universal monthly income of $1000 for each individual in the US. There's just no way to support it. Even if it's taxed out of oil and gas industries having them support the population will bleed them dry. No business industry can survive that kind burden to be taxed for it.

The link you provided I've still got to finish watching, but as of now those are the big issues that I can see.

Dear Diver Dan,

You get little argument from me regarding social housing.

However one of the attractions of UBI is that is kind of captures many other forms of assistance without the stigma of having to go cap in hand. It is assumed it would therefore reduce overall costs in administration. I think that is a fair call but would need real world testing to be sure.

Dear NNS,

You also need to take into account revenue from the stimulation of the economy that will result from UBI as well as the reduction in costs associated with the provision of a myriad of welfare schemes.

But thanks for being prepared to watch the video. There may or may not be some here who are commenting without clicking that link at all.

Dear mhaze,

I will add that the impact of automation is certainly biting into our workforce underemployment rates.

http://www.abc.net.au/news/2019-05-02/unemployment-vs-underemployment-1/11064638

And our workforce entrants are the most heavily impacted.

http://www.abc.net.au/news/2019-05-01/underemployment-by-age-1/11063678

These are ticking time bombs and people like Andrew Yang see UBI as a way of managing this transition and to date I'm struggling to find a reason not to agree.

Hey SteeleRedux,

I haven't yet watched the linked video, but I do plan to.

I tend to see flaws in ideas, and I think the idea of a UBI is inherently flawed for reasons I'll go into when I can find more time to firstly watch your video.
Maybe the information contained in your video will give me some food for thought, but I don't think it will change my mind based on the flaws I already see.

Whilst admittedly I'm being a little slack in not having yet watched your video, which is quite long;
I think you could also benefit from watching this shorter video which shows what happens within a mouse society, when they are given EVERYTHING they need to survive in luxury and have happy lives...

It's almost intriguing to see how their society breaks down, and the implications it has on us human society.

- This is a MUST SEE for everyone -

The Utopian Mouse Experiment.
http://youtu.be/5m7X-1V9nOs

The only thing that is inevitable about the future is that whatever we think the future will be like will be inevitably wrong.

It may be that we'll have more jobs than we can shake a stick or unemployment line at. After all every other employment disruptor from the early mills, to tractors, to word processors, to punch card computers, to the internet, all ended up creating as many or more jobs than they destroyed, despite predictions.Maybe the AI revolution will do likewise.

Equally, it remains possible that the AI revolution is being over-hyped. The driverless car certainly has been. Maybe the driverless truck as well. After all, the AI still struggles to distinguish real people from decals of people on the back of a bus. It wouldn't be the first time people devoted to a new idea have underestimated the problems and over-estimated problem-solving ability,

The upshot is we just don't know. We should have learned by now that getting ahead of a perceived problem can be costly and self-defeating if we misread said problem. eg NBN.

That's why I favour a negative tax system. It builds in a high degree of flexibility irrespective of the outcome. Less jobs? Well a negative tax system will provide sustenance/jobs to those who are left behind. More or equal numbers of jobs? Well the new jobs will be filled and the people won't qualify for the negative tax supplement. It also takes government picking of winners out of the equation and that's ALWAYS a good thing.

The ultimate aim of a western society is not to just create a system where more 'stuff' is available, but instead to create a system where all get to participate in and enjoy the benefits of the society. Just saying we'll leave people behind or throw scraps at them while the rest enjoy the new 'AI' driven society is both wrong and counter-productive. As SR's video explained, people NEED to feel part of a society and need to feel they are contributing. Paying people to sit at home and play video-games or whatever won't work.

mhaze,
However much automation we get, the Federal government will always have the means to create full employment. So please stop considering UBI as an alternative to proper employment!

And we certainly don't need negative tax - that would be very expensive, unfair and probably easy to defraud.

Hey Aiden,
Economists decree that we should never have full employment. Do you know why?
It's because capitalism requires a pool of 5% unemployed to prevent wage growth.

Giving everyone a free handout won't solve societies problems.
I believe it will create even bigger problems.

The answer I believe, is to:

Make use of that 5% unemployment that Capitalism requires by creating a base level socialist job system
(The job you have when you don't have a job)
and base the system on a 'handup' rather than a 'handout'.

Double dole for full time work doing things to help the government save money.

Check my recent post here:
http://forum.onlineopinion.com.au/thread.asp?article=20692&page=0#364474

I look at the bigger picture of what we've built, and this '(Optional) Base-level socialist jobs system' looks to me like the missing piece.

To SteeleRedux.

Economic stimulation is not an argument I see as valid. Think of it like this. If you pick a man's pocket and give some of the money back, that's not going to encourage him to spend more of his money. If anything it will cause him to spend less of it because he has less of it to spend on anything but bills.

The issue is still that the money has to come from somewhere. Where is it taxed from to house a program of $1000 a month to everyone. If it's income tax then that does more harm then good (go back to picking a man's pocket, because in that case you have to pick more then a thousand out per working person in order to pay a thousand back for both those working and those unemployed).

No, economic stimulation is just as much bunk as the statement from an economists view of holding a 5% unemployment rate is bunk. The reason for the argument for UBI is to help those who lose their jobs, have a crap amount of income, or have been unemployed for a while. (Such as being on disability and needing assistance). If the UBI causes more harm by either taxing the income to make it work, (making it harder to pay for anything and causing more poor among those not super rich), or by killing one industry or another that has to shoulder the burden under tax weight; then the UBI is a bad idea.

I'm not saying there isn't a need for government assistance. Medicare, social security, and disability assistance exist for a reason. But I know that UBI is a bad idea and not the solution.

If you look at the real inherent FLAW of capitalism:
It's because 2 people go for a job, but only one person can have the job
It's really that simple.

- Someone Has To Lose And The Loser Gets Nothing -

The loser has no opportunity to improve his or her lot.
They're denied a place of value and worth within the community.

The loser of Capitalism therefore, is the person who did not get the job.

[It should be noted here however that one of the great benefits that underlies capitalism, is that it chooses the best person for the job based on merit, and this should never be lost]

So the question is how do we 'FIX' that FLAW of 'The Loser of Capitalism' - 'The person who did not get the job'?

You create a foolproof system.

You create an optional base level socialist jobs system that gives 'The loser of capitalism - the one who did not get the job' a second chance.

There's still a job for them, but it's the 'job you have when you don't have a job'.
This way people wont lose all they've worked hard for during periods of unplanned unemployment, family breakdowns, alcohol and drugs, etc etc.
They have an opportunity to stay busy and get twice as much money as doing nothing pays.

All it does is create an opportunity for people to be able to help themselves, and I think the amount it would actually save in all the services that go into helping people when things aren't going well in their lives would be seriously underestimated.
I think it would actually save the country billions.

And you don't have to waste as much money managing the unemployed if they're showing to be actively helping themselves.

" 2 people go for a job, but only one person can have the job
It's really that simple."

Yeah that's why we have 50% unemployment. Struth! how to totally misunderstand the real world in one easy lesson.

The bloke who missed the job goes down the road and gets another.

The fact is that capitalism is the great job creation system the world has ever seen.

The issue is that in the potential new AI dominated world, the job creating potential of capitalism may not work as well as it has over the past 3 centuries. So it MAY need some tweeking.

SR's favouring of UBI is one way of doing it. Negative income tax is another - I believe a more flexible system. The government merrily creating make-believe jobs isn't a solution. It the road to universal poverty.

Aidan,

I now you have these fantasies where governments the world over can spend 'til the cows come home, but I don't buy it. The revolution in AI potentially destroys the working class. Governments spending on all manner of job creation, thereby creating debt and inflation is a recipe to destroy the middle class. I'd prefer a somewhat better system. The iea that no matter what the future problem is, the government will make it all better is rather unlikely given the history of the last Keynesian century.

Armchair,
Capitalism does NOT require a pool of 5% unemployed to prevent wage growth. If preventing wage growth is the objective (and there's good reasons to think it shouldn't be, as wage growth has been very subdued lately) then 2.5% in all regions is a much better target than an average of 5% across the board. And when you have as much underemployment as we do now, neither of those is necessary.

You're certainly not the first to suggest the government create a sort of reserve employment pool. Professor Bill Mitchell has developed a far more detailed plan. Unlike yours, it involves the government creating proper jobs (minimum wage instead of the peanuts you're suggesting). You can find his blog posts about it at http://bilbo.economicoutlook.net/blog/?cat=23

Personally I'd like to see a slightly different approach: those paid to save the government money should be paid in proportion to the money they save the government!

__________________________________________________________________________________

Not_Now.Soon,
Economic stimulus is when extra money is added to the economy; if the government just increases the tax rate, it is NOT economic stimulus. There has to be either a fiscal stimulus (where the government borrows more) or a monetary stimulus (where the government reduces interest rates to induce the private sector to borrow more). Or there could be some sort of hybrid like QE, but that's not so effective.

Remember, when the government borrows money:
You are not obligated to pay it back
Your children are not obligated to pay it back
Your grandchildren are not obligated to pay it back
Even the people a hundred generations in the future are not required to pay it back.

Governments may sometimes decide to run surpluses in order to keep interest rates low, but that's irrelevant to the amount of debt they already have.

mhaze,
It's not that I have any fantasies, it's that I am aware of all the flaws in the counterclaims. But just to be clear, not all governments do have unlimited credit. Only those with their own currency do, and then only f the currency value is set by the market.

> The revolution in AI potentially destroys the working class.
Only if the government fail to set economic conditions that create more jobs.

> Governments spending on all manner of job creation, thereby creating debt and inflation
> is a recipe to destroy the middle class.
There's no credible mechanism for it to do so, and I suspect your claim is based on a fundamental misunderstanding of what inflation is.

An increase in the money supply does not constitute inflation.
An increase in the money supply faster than an increase in production does.

Automation is highly deflationary: it increases the rate of production much faster than it increases the money supply. It will result in widespread unemployment if the money supply is not increased to balance it. Please also keep in mind that employing people who would otherwise be unemployed also amounts to an increase in production.

The UBI (universal basic income) is an socialist bludger's unfunded wet dream that has the practicality of a lead balloon.

Only a moron with zero idea of economics would consider paying everyone whether they work or not and taxing those that actually do contribute to the economy to the hilt.

Dear Shadow Minister,

«Only a moron with zero idea of economics would consider paying everyone whether they work or not»

This is correct if the function you want to optimize is economic sucess and prosperity.

Having different goals in life does not make one a moron.

Y,

Economic failure with resultant poverty is not a great alternative.

Dear Shadow Minister,

Poverty simply means that people fail to have what is important to them.
If all people want is material goods, then OK, but what for example if they want to preserve their moral integrity?

When an employee needs to compromise their conscience by obeying their boss's unwholesome orders, just so they can feed their children - this is a form of poverty!

Having one's precious time on earth wasted on producing and consuming things that are not really needed, how more so things that undermine others, is a form of poverty.

When someone needs to trick others into purchasing products and services which they do not really need (it's called "advertising"), just so they can pay their bills - this is a form of poverty. Being exposed to that sort of noisy propaganda is a form of poverty as well!

Economic success, as measured by the GDP, is blind to all that.

Aiden. The same issue still remains. Where is the money coming from. If there is no source that is sustainable (such as taxes), then the answer is not for a higher debt. It would be an ongoing expense. An unreasonable debt that will never go away and collapse society. Want an example of debt collapsing society? Look at Venezuela.

Not_Now.Soon,
The money would be coming from the RBA.

It was not debt that collapsed Venezuela, it was their fixed exchange rate of the Venezuelan Bolivar to the US Dollar. They kept it fixed even when the price of their main export (oil) halved, so even the oil industry became uncompetitive. Coupled with a government implementing a peculiarly anti business form of socialism, a collapse was inevitable. Soon they lost the means to maintain the Bolivar's value. But still they kept its official value high, even though there was almost no opportunity to sell them at that price.

It was exactly the same mistake that was the main factor in the collapse of the Soviet Union!

Had Venezuela just let the market set the value of the Bolivar, the collapse could have been avoided. The market devaluing it would have enabled the country to export its way out of trouble.

Aidan, are you suggesting Australia banks foot the bill for American UBI? Andrew Yang is an American politician running for the democrate candidate of the US president.

Not_Now.Soon,
Do try to keep up! I have consistently opposed the UBI.
Threads drift, and the discussion between mhaze and myself that you jumped into was not about how to finance UBI in the USA, but about how to finance expansive economic policy in the general case (and implicitly here).

Aidan,

The delinking of the Bolivar would not have helped, as Venezuela relies heavily on imports. The heavy government expenditure coupled with the collapse of the oil industry due to incompetent management after nationalization was the cause of collapse of the economy.

Printing lots of local currency causes rampant inflation and rapid devaluation of the currency, and as much of the debt is in $US the economy is still screwed.

Typical Socialist incompetence.

Shadow,
Venezuela's heavy reliance on imports would not have prevented delinking of the Bolivar from helping. The higher price of imports would have reduced Venezuela's reliance on them. Meanwhile exports would've become more competitive, so the country would have remained able to afford the imports.

There was indeed plenty of incompetence, but with a floating currency the economy would have been able to withstand that. Yes there would have been inflation, but there would not have been hyperinflation.

Nor would they have needed to accrue US dollar denominated debt. Australia stopped doing so when Keating floated our dollar. When the market sets the value of your currency, borrowing in other currencies becomes unnecessary.