Yeah, it turns out that things like free health care, adequate food, good schools, and all that other socialist mumbo jumbo is actually good for productivity and the economy, too.
I grew up in Norway, that while it doesn't have UBI does have a safety net that meant the notion of ever living in poverty was just entirely foreign to me growing up, and for me at least I think that made it easier to take the decision to leave university and start a company.
The risk of ending unemployed was just never scary.
This was a worry for me when leaving my full time job in 2022 to work on open source. Our OSS project was able to pay rent, but was concerned about healthcare costs for my partner and me (NY state has extended COBRA coverage, but it's extremely expensive). My co-founder lives in Australia, which has free basic health care, so he was up for leaving his job before I was.
Taking the risk was one of the best decisions I've made, but if I had a chronic health condition/higher healthcare costs, probably would not have been comfortable.
It takes a good idea and a willingness to take a risk to start a business. I don't think that risk aversion is what's stopping new businesses, there are a lot of people who do a lot of what I consider too risky.
Instead, what I wonder is how many new businesses wouldn't be viable under a tax structure that provides ubi and health care. Not to be dismissive but that's definitely a concern in a world replete with fledgling businesses that mostly fail.
Yeah this is sort of the reaction I had. Removing "risk" with UBI and free healthcare and free childcare also removes the filters for a lot of people who would be bad at running a business. If you don't have the stomach to take the risk and do the work to make your idea a success, then maybe you shouldn't try.
We don't need millions of more failed businesses as the result of giving everyone UBI.
Why do you need people to make big risks livelihood to do business? People from affluent environment start businesses the most often and they dont really risk all that much. They know they will get help if it fails.
In fact, successful businesses started by people who can return back to good jobs if it fails are completely normal thing.
The data on UBI isn't out there, but it is notable that countries with similar tax rates to the US manage to have universal healthcare and more expansive safety nets. Some examples: New Zealand (tax rate ~30% less than the US), Korea, Switzerland, Australia, UK, Japan, Netherlands, Norway.
Americans really should be asking why we're paying a significantly higher tax burden than New Zealand and not getting similar services as part of the bargain.
Put another way: the US is incredibly rich compared to other countries. Our poorest states have higher GDP per capita than most rich countries. And our taxes are not particularly low. Our social issues are 100% about how we choose to allocate our shared resources. The good thing is we can always choose to make different choices.
Switzerland has mandatory healthcare insurance and subsidies for low income earners. The insurance is provided by private companies. It's not really universal healthcare system like in most EU countries.
Private insurance can work out fine if regulated well. In USA you have regulatory capture that makes services expensive. Impossible barriers to entry coupled with terrible regulation on price transparency and a lot of cartel like behavior.
New Zealand effective taxes rates are generally higher than the US, not lower unless you're doing something odd like comparing based on average local wage.
Switzerland, the Netherlands and Japan all use the Bismark model (contributions for insurance), so taxes don't really reflect the cost of universal healthcare.
The issue in the US is not an allocation problem. The average person in the US already pays more in taxes that are spent on healthcare than in any other country. We're just so inefficient with our spending that we only manage to cover a fraction of our population with it.
> New Zealand effective taxes rates are generally higher than the US
US tax rates are complex due to local variance and other factors. Tax rate on the median NZ income appears to be ~30%. Tax on median US is lower, but state taxes can add significantly. There is not a neat divide between red states & blue states here; Alabama & Georgia have state income taxes, for example.
> The average person in the US already pays more in taxes that are spent on healthcare than in any other country.
Several of the UBI pilot studies included new venture creation (including solo self-employment, not just classic business creation) as part of their measurements. The last few I looked at had zero difference in new business creation between recipients and control group.
A lot of the UBI trials have actually had disappointing results. The arguments usually claim that it’s not a valid test because it wasn’t guaranteed for life, or the goalposts move to claim that UBI shouldn’t be about anything other than improving safety nets.
Unfortunately I think the UBI that many people imagine is a lot higher than any UBI that would be mathematically feasible. Any UBI system that provided even poverty level wages would require significant tax increases to pay for it, far beyond what you could collect from the stereotypical “just tax billionaires” ideal. Try multiplying the population of the US by poverty level annual income and you’ll see that the sum total is a huge number. In practice, anyone starting a business would probably end up paying more in taxes under a UBI scheme than they’d collect from the UBI payments.
I actually did the math for US once, calculating how much more tax it would take to give everyone minimum wage. The resulting tax rate would certainly be fairly high, but not excessively so; several European countries have higher brackets today, and their economy doesn't collapse.
But also, are you accounting for all the means-tested welfare that such a program would replace?
> But also, are you accounting for all the means-tested welfare that such a program would replace?
Multiply the US population by the poverty level annual income ($15.6K) and the resulting number is higher than all US federal tax revenue combined. In other words, tax rates would have to more than double across the board.
Subtracting out existing social programs barely moves the needle. Are you sure you did the math, or were you just assuming?
Yes, I did the math. Wish I still had the spreadsheet.
It's not as simple as multiplying the population. The point is that if everyone gets that check, then you can raise the nominal tax rate much higher but still get the effective tax rate (i.e. income - tax + UBI) in reasonable territory. As I recall I actually went all in and also made it a flat income tax to see how much the UBI offset would work at making it effectively progressive, and that also works out.
The "classical" UBI argument from a liberal point of view (classical liberal, not US liberal) has typically been that UBI would lower the complexity and by extension cost of welfare by removing the needs to means-test. In Europe, UBI was typically more likely to be pushed by (by our standards) centre-right parties.
For this reason, UBI traditionally was seen negatively by the left, who saw it as a means of removing necessary extra support and reduce redistribution.
Heck, Marx even ridiculed the lack of fairness of equal distribution far before UBI was a relevant concept, in Critique of the Gotha Program, when what became the German SPD argued for equal distribution (not in the form of UBI), seemingly without thinking through the consequences of their wording, and specifically argued that "To avoid all these defects, right, instead of being equal, would have to be unequal".
Parts of the mainstream left today has started embracing it, seemingly having forgotten why they used to oppose it.
FWIW I'm far left and in favor of UBI, but one thing to keep in mind is that while it's a simple concept, details (i.e. amounts paid and amounts taxed) matter a lot. There's no reason why UBI can't be redistributive if one desires it to be so - you just use more progressive taxes to fund it.
And, of course, reducing the complexity and cost of welfare ought to be a left wing talking point as well! Again, it depends on what you do with the savings - sure, it can just be taken and used elsewhere, or you could maintain the spending but raise the bar on how much UBI provides.
> Any UBI system that provided even poverty level wages would require significant tax increases to pay for it
Or cutting other things to pay for it, in addition to smaller tax increases. And the costs go down once it's bootstrapped long enough to obtain the long-term economic benefits that grow the economy (which will take a while to materialize).
Honestly, my biggest concern with it is that people will (rightfully) worry that it won't last more than 4-8 years because the subsequent administration will attack it with everything they have, and thus treat it as temporary.
> And the costs go down once it's bootstrapped long enough to obtain the long-term economic benefits that grow the economy (which will take a while to materialize).
That's a major claim. Which places under UBI (or in one of the experiments) has that manifested?
> And the costs go down once it's bootstrapped long enough to obtain the long-term economic benefits that grow the economy (which will take a while to materialize).
We have a decent idea of the velocity of money of households at different income levels on the basis of how likely people are to spend all their money vs. holding on to them in ways that may or may not be as effective at stimulating economic activity.
In that sense it is not particularly hypothetical.
In terms of whether people will be more likely to e.g. start a business, that part is a lot more hypothetical. There have been some trials where there seems to have been some effect, but others where it's not clear.
That effect seems very much hypothetical. But that was not part of the classical argument for UBI, and I don't think it's a good idea to use it as an argument for UBI.
America is #3 in the world in per capita public education spending (Luxumberg being #1). Which is the education system I always see Europeans maligned as producing “dumb Americans”.
Why is the production, distribution, trade and consumption of goods and services (aka, the economy) the highest priority?
Well, mostly because it's required to keep the vast majority of people in society alive and the effects of disruption are only second to war in terms of potential for misery.
It’s not, but we seem to have to keep convincing business people that they’re part of society, so it helps to be able to appeal to their pocketbooks, too.
Have you seen comparisons between American and Canadian productivity? It’s definitely more complicated than just socialist leaning government programs make the country more productive.
Not everything is measured in "economic output", not to mention that metric itself doesn't make any sense when comparing countries of vastly different size, population etc.
Life is not about checking off boxes on how much free stuff you can hypothetically get from the government either. That has tons of costs and risks just like everything else in life. It’s all relative.
Trust is irrelevant, families gain the after tax income of working mothers but society gains not just the pretax value but the actual value of work generated. Thus subsidizing childcare and moving the needle to align society’s benefits and family benefits is a net gain without the issue of trust being involved.
The same is true of quality public education etc, however creating US vs THEM narratives are politically powerful even if they don’t actually reflect reality.
Because YOU are paying for those benefits and they aren’t. If you truly don’t see how offering something for free would attract all the freeloaders, increasing the load on those who work, there’s no saving you.
What I am describing is you literally saving money.
If a government can convert a 1k outlay into 1.1k of tax revenue that same month you aren’t actually paying for those benefits you are getting a little revenue instead of zero revenue. Due to their debts operating across such long timescales people make the same basic argument for things that take longer to see positive returns, but daycare is a very short loop.
Can they convert $1K outlay into $1.1K of tax revenue the same month?
Given New Mexico's tax rates, it seems like it would be difficult to do so.
It looks like the program will cost about $600M next year. In order to generate more tax revenue than it costs, it would need to increase personal income somewhere on the order of $12-15B of personal income, taxable sales, business profit or some combination.
Now, a fraction of that will come from the childcare workers. Some may come from stay-at-home parents or parents working part time going to work, but given they say it'll save on the order of $12K/year/family, a family would need to increase their income by about $260K/year in order to pay $12K in extra state income taxes.
It's rare to see spending programs actually pay for themselves. Mostly when politicians talk about a program paying for itself, they preform verbal slight-of-hand, arguing that $x will come back as $x*y in economic activity. That is, of course, a lie, but no one calls them out the fact that economic activity ≠ taxes.
It doesn’t matter if New Mexico’s state government recuperates its revenue it matters if New Mexico’s citizens are better off. As such federal, state, and local levels are worth considering not just state taxes, including changes in other outlays such as healthcare subsidies. Effective tax rates on marginal income often exceed 50% for American families even ignoring the income stream from daycare workers and facilities etc. US Government spending being 40.5% of GDP those kinds of marginal tax rates should be expected.
Now as a low population state implementing this at the state level means most of that federal savings/revenue helps people outside of the state, but that’s the issue with implementing such programs at the state level rather than an issue with the type of program itself.
you are talking economics. you have to realize America is weird inherently racist country. Enough people here will rather be economically worse off as long as it means their taxes are not being used to support "those people"
How does it make sense to suggest your taxes are going to support something when it’s profitable?
I doubt many people would say they want to raise their taxes to cancel program X because it also helps people they don’t like. You could be right, but I think the more logical conclusion is they are simply being misinformed.
Simplest way to increase total absolute output is always to stop providing intake.
Obviously, this fails almost immediately; operative word "almost". Definition of "almost": longer than a moment. Definition of moment:
As it happens, high-trust societies have just spent the better part of a century teaching their constituents to "live in the present", atop half a millenium of teaching them that time is a thing linear, discrete, and properly scaled for decision making.
Ergo: if the time between doing something stupid and realizing you did something stupid is longer than your attention span, you're a perpetual motion device.
