Pesky Data!

Andrew Yang’s campaign for the Presidency introduced the UBI , or Universal Basic Income, to millions of Americans unfamiliar with the concept. He put that policy debate “on the table”–following which policymakers have ignored or ridiculed it.

In previous blogs about the UBI, I have acknowledged how unlikely it is that contemporary American lawmakers would pass, or even consider, such a program. But research suggests a high probability that  millions of jobs will be lost to automation within the next 15-20 years– a probability that will present a daunting challenge that America’s current inadequate and bureaucratic social safety net is clearly unable to meet.

The right-wingers who believe that taxation is theft, and the contemporary Calvinists who believe that poverty is the result of sloth and/or moral defect, respond to UBI advocacy with horror: those sluts who are producing babies in order to get added welfare payments of a munificent 150/month would obviously become an even greater burden on the “makers.”

Pilot programs and academic research continue to crank out evidence to the contrary. Those programs continue to multiply:the latest effort is in Germany, where a Basic Income Pilot Project will start next spring and will send 122 people €1,200 ($1,422) per month for three years. No strings attached. The study, initiated by the German Institute for Economic Research and My Basic Income, a Berlin-based nonprofit, will investigate the effects of an unconditional basic income.

Recently, a new multi-agency report backed by the United States Agency for International Development reported on a project to compare the effectiveness of workforce training programs with direct cash transfers. It found a “marked increase in entrepreneurialism, well-being and productivity within the cohort that received only cash.” Other experiments have found that unrestricted cash payments went for food, medicine and education, and did not–as cynics warned– increase joblessness or substance abuse.

Our policymakers, of course, prefer ideology to pesky evidence…

There actually is substantial data showing that, contrary to Americans’ deep cultural disdain for social welfare programs, a UBI would be both efficient and socially unifying.  Universal programs escape the stigma of benefits targeted to the poor.

Aside from the ideologically-grounded and empirically dubious belief that “handouts” encourage sloth and vice, the major objection to a UBI is cost. My own proposal for finding the money to pay for such an expensive program would begin with ending fossil fuel and other subsidies that have long since outlived any usefulness they may have had, and curtailing our bloated military expenditures–all measures that are overdue in any case. But there are several other approaches.

A while back, William Gale of the Brookings Institution’s Hamilton Project made a persuasive case for coupling a UBI to a tax that would pay for it– a 10 percent Value-Added Tax (VAT).

As he pointed out, a VAT is a national consumption tax—like a retail sales tax but collected in small bits at each stage of production. It raises a lot of revenue without distorting economic choices like saving, investment, or the organizational form of businesses. And it can be easier to administer than retail sales taxes. The big problem with such a tax is that it is usually regressive–but interestingly, not when combined with a UBI.

As I explained in an earlier post,

The Tax Policy Center estimates that the VAT in conjunction with a UBI would be extremely progressive. It would increase after-tax income of the lowest-income 20 percent of households by 17 percent. The tax burden for middle-income people would be unchanged while incomes of the top 1 percent of households would fall by 5.5 percent.

It may seem counter-intuitive, but the VAT functions as a 10 percent tax on existing wealth because future consumption can be financed only with existing wealth or future wages. Unlike a tax imposed on accumulated assets, the VAT’s implicit wealth tax is very difficult to avoid or evade and does not require the valuation of assets.

Assuming that Gale’s numbers are sound, a VAT would generate more than enough money to pay for a UBI. Meanwhile, a growing body of research confirms the benefits of the UBI approach to social welfare.

But this is America, where Republican senators are climate change deniers. America, where Republican governors dismiss overwhelming evidence that mask wearing helps abate a pandemic. America, where lawmakers reject the very idea of implementing the sort of national healthcare programs that work well elsewhere.

America–where our lawmakers pay absolutely no attention to evidence contrary to their preferred beliefs.


  1. The real issue about UBI is the American psyche – you just don’t hand out money…For evidence, consider the outrage from both sides at the rampant misuse of the emergency Covid funds. There are multiple ways to get at inequality that might be “acceptable” from a cultural perspective – why beat your head against the wall for UBI – not to mention that it just might get incorrectly called “socialism”. How to turn the House over to the GOP. UBI is DEM suicide.

  2. Great essay. Of course. But the “Calvinists” are embedded in religious dogma that carries over into their politics. The “policy” makers are elected to office by these backward, self-serving ideologues. The work ethic has eroded for a long time. Automation has eliminated jobs for centuries. Nothing new there. In fact, automation is the wrong argument to make. Somebody has to build the machines, don’t they?

    The thing that the Calvinists bury their heads beneath is that PEOPLE RECEIVING AN UBI WILL SPEND EVERY DIME OF IT. When that happens, they are paying the sales or VAT at the point of sale. Oh, and what they buy tends to keep people working. A “meager” UBI is not giving “free stuff to ‘those’ people.” It is keeping food in their bellies so when they CAN work, they will.

    BTW, I don’t know if they’re still relevant, but pre-COVID, 75% of welfare/SNAP benefit receivers were only on those programs for 6 months or less. But no… Republicans will never look at this, because their Calvinists won’t let them. See, most Calvinists have never been poor, seen really poor people or live near poor people. Out of sight, out of mind. You know, just like Jesus taught them.

  3. Irvin–and anyone else who wondered–My site went down this morning, but my wonderful “tech support”/webmaster (aka middle son) fixed it!

  4. Well, if those darn conservatives won’t give us a UBI, we should all fret, pick up our cookies, and go home. Or, maybe if we get all liberals voted into office, they will give us a measly UBI then.

    I love these words, “…contrary to Americans’ deep cultural disdain for social welfare programs…”

    What does that mean exactly?

    Which Americans don’t want sufficient income each month to pay for all their bills, food, education, and sock away a few hundred dollars for retirement? Add to that number those wanting to live comfortably without using a credit card to supplement their insufficient wages?

    I can’t imagine any human being living in this country or any other which wouldn’t raise their hands for such a deal regardless of their certain political beliefs.

    So, let me ask since our free and independent press was established to care for the people, why aren’t they asking for it? Why aren’t all the newspapers and TV shows talking about it? Why aren’t the American people told how UBI’s work?

    Don’t our media experts provide sufficient detail to explain why the USA needs a banking system? Don’t we have books written each year to explain how capitalism actually works? Aren’t teachers instilling principles of the monetary systems? Don’t our young minds get taught about how a democracy balances the power of a feudal system or fiefdom?

    Despite the teacher’s best efforts to teach our children about math, social studies, reading, and English, our kids fail internationally.

    If all I have to do is say “socialism” to get a grown adult to shiver in their boots, what is voting going to do? You’re already a serf.

  5. There is way too much Puritanical, and Calvinist dogma imbedded in our culture, and the conservatives who hold these perspectives do not care a whit about anything else; especially inconvenient facts, or data.
    I am reminded about “White Trash, the 400 Untold Year History of Class in America,” by Nancy Isenberg, in which she discusses Great Britain’s desire to unload its “Garbage People” on the shores of North America, in the 1600’s. They were too caught up in their business as usual, as it were, to notice, or perhaps care, that it was their very highly structured class system that had created such an underclass, whose existence they bemoaned.
    We have a structured class system, despite our myth to the contrary, and our politicians certainly do not belong to the financially struggling (under)class. The only use they seem to have for it is to manipulate it at election time.
    I am glad that you brought up the issue

  6. Manufacturing jobs lost now vs 1970. Look at the major manufacturers within 100m. of Indy and the products also mfg. in the Calumet Region.
    Modern TV set requires about 10% labor now vs 1970. RCA had 12000 factory workers then from Monticello to Bloomington, all gone.
    Auto/truck assembly-robots do all the welding and painting, sophisticated material handling systems have replaced humans. About 50% less labor now than 1970.
    White goods(washers, dryers, refrigerators) require about 50% labor now vs 1970 due to both automation and process improvements.
    Steel mills require about 10% of the labor now vs 1970 per ton of steel because of a major process improvement over the open-hearth of yesteryear.
    The job market has changed from manufacturing to less skilled services industries with minimum wages other than the medical profession. This is now the information age requiring far less personnel with better training(schooling).
    A sad political commentary regarding 1st job – say fast food – in 1970 a young person did work in fast foods until a better paying and superior benefits job became available, now that young person has no avenue to a non-existent factory job. Minimum wage is pure starvation if the young person had to live on their own.

  7. Todd, wrote, “If all I have to do is say “socialism” to get a grown adult to shiver in their boots”.

    Oh lordy, here in Hoosierland if I mentioned, I was a Bernie Bot looks of fear and horror would take over. You would have thought I was a Viking Warrior disembarking from a ship with sword and shield to loot and pillage the country or a Communist (same thing I suppose).

    If I tried to explain Medicare for All (Single Payer, or free college or trade school tuition- Some stared with cow like incomprehension, most asked – Who will Pay for it??

    If I retorted the tax loopholes that favor the rich should be closed, these proles rise up out of their trenches to defend the Uber wealthy billionaires.

    I have tried to avoid discussing Socialism vs our Steroid Capitalism, instead focusing on what policies Socialism brings to the average Jane or Joe. Equality and Stability is the goal of Socialism from birth to death.

  8. If those so called “sluts” had good access to birth control and yes, even abortion, we might have fewer children living in poverty. And yet, conservatives work to limit women’s access to such health care. So, they evidently believe in policies that continue to keep women from rising out of poverty. Not only do they deny access for women to reproductive health care, they also want to deny people access to a social safety network. Children are wonderful. And children must be provided for which can be an economic weight on their single mothers.

    Such policies also lead to a rise in health care costs because people living in poverty deny themselves the health care they need until they are critically ill.

    And yes, it is not a large jump from the Calvinist belief in predestination to the belief that poor people are just lazy, worthless parasites on the economy who were predestined to be imprisoned in poverty. It keeps parents and their children trapped in poverty. It ignores the simple truth that most of those people want to work, want to be independent of the government’s welfare programs.

    So many people are now moving from the middle class into poverty due to AI and automation. We need fiscal policies that provide education for these people so that they can transition into fields of work that provide a livable wage. And I believe a UBI would help them with that transition.

  9. Planning for the future requires educated guesses about how the future will be different than the past. That’s problematic because it’s very tempting to guess that not based on data but based on bias confirmation, thinking that the world will evolve in ways that make me more right. Also the future leaves fewer clues in the present about the future the faster change is realized. In fact as the future reaches us both the problems and the resources available to address them evolve and surprise us. In the case of climate change look at how precipitously the cost of wind and solar power energy harvesting fell. As if all of that is not problem enough almost all of us suffer from a shortage of imagination, the dreaming of possibilities over memories, the realization that everything is temporary and will be replaced over time due to the restlessness of just a few of us.

    All of those problems means that we always get many things wrong about what happens. False starts towards a future never realized. Risk always results in both failure and success.

    We don’t like risk, we like safe, which is one of the reasons that relatively few people actually imagine the future into existence and most of us are just carried along. That’s one of the reasons for wealth distribution as extreme as it is here. Those willing to take those risks have to be wealthy enough to be able to afford failure but when success happens instead, they win big. Most people plod along not taking those risks earning only enough to cover the present and hoping that things don’t change too much.

    All of this just is but history tells us that the extreme wealth distribution that reality plus progress leads to becomes socially unstable. That’s what planning for the future needs to consider.

    Politicians have discovered that there’s a sweet spot for them in funding their career in gathering votes by performing for the wealthy using government to create the best future money can buy. Unfortunately that takes government out of the business of preparing the country for the actual future and instead moving the country through what’s best for the wealthy today even at the expense of everyone beyond that.

    Will the history of the future record that these thoughts were our national mode of failure?

  10. I still believe that corporate tax needs to be in a separate pot to pay a universal wage to employees that have been replaced by AI, to pay for infrastructure in relation to improvements that benefit their bottom line, for legal protections and international court cases against overseas corporations and governments, contributions to the military budget and environmental protections, and universal insurance for employees whose positions have been eliminated, and any and all reeducation expenses. Money that these corporations set on to supposedly reinvest sometime in the future needs to be taxed at a high level also! This amount is in the trillions of dollars.

    The civilian tax pot would pay for all things civil, infrastructure, universal medical, education, transportation, Social Security contributions with no wage ceilings. In other words, the wealthy would continue to pay Social Security taxes on all wages no matter how high. Also, wealth that is removed from this country by corporations and the wealthy would be subject to tax at an extremely high rate! Because if they don’t want to pay taxes, that money should be taxed for its taken out of country. And if their primary source of income is from this country, then that money also should be taxed even if they are overseas.

    Religious organizations should be taxed, that money should go towards the social safety net. If people donate money to charitable organizations, those charitable organizations should not be religious in nature! As it’s set up now, the government gives charities of a religious nature as in Catholic charities, for example, money to distribute. This type of behavior started under the Reagan administration. But really took off under George W. Bush. Civil type charities nonreligious in nature who claim to be nonprofit, should have a rigorous transparent infrastructure concerning wages to not exceed something like $.10 on the dollar. So majority of money that gets donated goes to where it’s needed.

    But, I agree, universal basic income will eliminate a lot of the need for some of this charity work or most of this charity work. For disasters, we have FEMA, and the authority of FEMA is already quite extensive. And it should be used to it’s fullest extent and funded appropriately.

    Of course there are tons of things that need to be added to all of this, but, the corporations and wealthy need to share the burden, it should not fall on the average American citizen. I don’t think we want to end up in a dystopian soylent green society!

    Some of these things can be accomplished as some harsh executive orders by Joe Biden. Sense precedent has been set by the GOP and this currant administration with the executive branch having unlimited power, it would be time to use the bully pulpit and power of the executive to bypass some of this political kabuki in the Senate. One of the 1st things on the agenda should be making Puerto Rico and Washington DC the 51st and 52nd states in the Republic.

    Depending on the state of the union during Biden’s inauguration, emergency powers carry a lot of weight. If Congress is not in session, he can appoint who he likes, and do it immediately without any warning to those who might try to stop it.

  11. Dan and Monotonous make good points today. As AI continues to improve and displace formerly skilled as well as unskilled workers it becomes increasingly difficult to end wage inequality, and the word is out that “we ain’t seen nuthing yet; just wait another 15-25 years.” Robots don’t join unions, so capitalists will finally and for the foreseeable future truly own the means of production largely unimpaired by humans who want a bigger piece of the pie – or just a piece.

    However, this capitalistic nirvana may contain the seeds of its own destruction unless we adopt some more (Horrors!) socialistic measure in distribution of the income and wealth generated by such an economy. Robots don’t buy goods and services and unless humans have the wherewithal to buy such goods and services then where is the market for these efficiently produced goods and services? Yes, it takes some human effort to build the robots, but not nearly enough to account for the loss of human labor in the process, a process in which robots will also participate.

    Government will clearly be called upon to even out such upcoming disparities, and we can expect the usual hue and cry of socialism from libertarian and prairie schooner Calvinists (aided and abetted by campaign contributing capitalists) who want to apply 19th century frontier economics to 21st century economics – as though nothing happened during the interim to call for a new approach. As for socialism, we already have a mix; a solution to the coming redundancy of human labor and how to fairly distribute the proceeds from the wealth created by this new economy will make Yang’s current UBI look like a right wing proposition.

    So what will that new economy look like? It’s beyond my pay grade to describe. Expect a brawl.

  12. John Song,

    WADR – if Biden wields “emergency powers” toward PERCEIVED far left policies you will see a DEM bloodbath in 2022 and 2024. And, as a bonus, the respect for government, the Presidency and our democracy will erode further toward zero.

  13. UBI resembles the pandemic in that it is self-correcting. In both cases, when the situation gets bad enough, even the strongest resistors will see the light (as has happened time and again in various red states) and join in a demand to do things (like fighting a pandemic or saving the economy) in the most effective way possible. In the case of Covid-19, we might not reach that point nationally thanks to the coming vaccines. But there’s is no averting that moment in the financial crisis when it’s obvious to all that the wheels are coming off. Then the UBI will skyrocket in appeal. This assumes that Trumpism will enjoy the early demise it so richly deserves.

    If vanishing jobs were the only symptom of capitalism’s failure, I would not be so sanguine about my prediction. However, there are so many weakness of that system on so many fronts that its demise is a near certainty. We’ve discussed many in this forum, but an important one that is less seldom cited is, “I think anytime that you go to the extreme of any mode of economics, be it capitalism or socialism or communism, you have these feedback mechanisms that make the system turn in on itself.” (Serj Tankian). If you are not in the top 20%, doesn’t that thought capture where we are in the evolution of capitalism? How much longer can the top 20% flim- flam the bottom 80%?

  14. I’m afraid I have to disagree, Gerald. It wouldn’t take long at with the wisdom on this blog, to destroy the fraud known as capitalism.

    Pete mentioned the “risk” associated with capitalism, but let’s start with a bank. How much risk and skill does it take to run a bank. All you have to do is manage a spread between the cost of funds and lend money out to customers. It’s really not complicated at all.

    If we have a central bank for the US government that prints the money and hands it to us for almost no cost, so we can lend it to customers at an inflated rate. If we can get more customers to borrow at higher costs we can make more money.

    What we learned during the GWB and Obama years is if we screw up this spread for whatever reason, the Federal government will print more money and give it to us or trade us bad stuff for more free money.

    Where is the risk?

    Now, all take a jab at it to see if you can make it more complicated, but the premise is the same. They use a lot of fancy acronyms and words.

    When I was a young banker, they would talk about inflation, but how complicated is it really?

    These CEOs make $24,000,000 a year managing this spread; how hard could this be?

    If I can borrow at 0% and loan it out at 12%, we could make a bundle. And if we all made really shitty decisions and lost all our money, the Fed would give us more and make it alright. And if we did really shitty stuff like traded drug money for drug cartels and got caught, the government would charge us a fee, but our shareholders would have to pay for it. To make it even more rewarding, all the politicians we own would work with our accountants to make sure we could write off our fees and fines, so we don’t have to pay any more in taxes than we should.

    And, if we got larger and larger, we would still be guaranteed our spread. If we laid a bunch of employees off, cut their benefits, or found computers that could do the work for the workers, we’d make even more money and could all buy yachts and float around on the ocean sipping champagne.

    Enough from me; complete it all up or spend another week talking about it, but then we must move on to the next subject.

    Now, who is keeping us from getting what we want and why?

  15. Todd, nobody has even explained why we need a post office, so I don’t think there is any hope to explain something more complicated.

  16. Lester, it seems to me, that if people are doing better, by policies enacted by executive order or emergency powers, then those people are more inclined to ride the wave so to speak.

    New deal programs such as infrastructure and such will make a huge difference in people’s pocketbooks. Working on other programs might take longer.

    The point is, are you going to play hardball? Because the GOP seems to play hardball and everyone else is using a boxing glove and a broomstick!

    Barack Obama tried to be inclusive with the GOP and they kicked him in the teeth so, we’re telling Joe Biden to do the same thing?

    Once you’re in power, use the power that you have at your fingertips. The Democrats didn’t abuse the power, but the Republicans sure did and set precedent! So, what’s good for the goose is good for the gander.

  17. Next time you hear someone ranting about the evils of socialism, ask them if they returned their stimulus check. After all, keeping it would be active participation in socialism.

  18. Todd – My effort today assumes we continue to have a (mostly) capitalistic economy, and John – You make a good point in that if UBIs are eaten up by yet further expansion of medical costs we will have only guaranteed the medical industry that their bills will be paid by people. It is far past time when we need universal coverage (with regulation to match).

  19. I do expect that Biden will need to use both Executive and Emergency powers just to get stuff done that most Americans agree and are comfortable with – UBI ain’t one of those. When he does those other things, while the GOP may grouse about abuse of power, the populace will see it “good hardball”.

  20. Well, sometimes an event tells those of us with an intellectual, scientific and curious mind how far America has declined.

    Giant Arecibo radio telescope collapses in Puerto Rico. A huge radio telescope in Puerto Rico that has played a key role in astronomical discoveries for more than half a century collapsed on Tuesday, officials said.

    The telescope’s 900-ton receiver platform fell onto the reflector dish more than 400 feet below.

    The US National Science Foundation had earlier announced that the Arecibo Observatory would be closed. An auxiliary cable snapped in August, causing a 100ft gash on the 1,000ft-wide (305m) reflector dish and damaged the receiver platform that hung above it. Then a main cable broke in early November.

    The collapse stunned many scientists who had relied on what was until recently the largest radio telescope in the world.

    We can spend billions on “Defense” every year against real or imagined enemies. Radio Telescopes – Science that does not put the greenbacks into the pockets of the Wall Street Military-Industrial Complex.

  21. ML,
    Of course scientific infrastructure is going down the toilet! When you have a political party that thinks of science like a bunch of troglodytes, there is no interest in anything scientific.

    Was the world created in 6 days? No!

    Were men running around with dinosaurs? No!

    Is the Earth getting larger? No!

    Does the Earth produce an endless supply of oil, continuingly renewing it? No!

    The list goes on and on and on so why should they worry about a radio observatory? Stupid is as stupid does.

  22. It took us less than a day to destroy one false myth after another. Someone mentioned the medical industry, which profits from sick people; what’s the motive for having a healthy population?

    If I was CEO of a hospital, empty beds are a drag on stock prices. What can we do to fill them up?

    As for oil production, ask the world’s brightest scientists to tell you how much we can safely burn in emissions annually. Do some math with population figures and long division. How much can we burn each year? Set a cap. If country A sends more emissions into the sky, send them a bill.

    You want to see how long things get turned around – switch priorities and motives.

    If we live on a planet with finite resources, how can we demand GDP growth per annum in each country by not taking one from the other? Isn’t this why we have weapons to kill others? Don’t we want their stuff?

    Look at what Israel keeps doing without any recourse. Bibi needs to sit down and STFU; create living places for the Palestinians, and coexist. If you can’t do it, get the fuck out of Israel.

    Does anyone else see that politics is just a bunch of adults who never left the playground mentality?

  23. Since the Fed. doesn’t go by budgeting restrictions like households, businesses and municiple governments, it’s beyond a lot of us to understand our options? I was told recently that we have “fiat currency” in US and the fed. can decide when to issue more currency. Maintaing the “value” of the currency is being manipulated by the players, who benefit from citizens not understanding?
    It seems that taking healthcare coverage out of the hands of business would go a long way in allowing more mobility & freedom for workers. Also it would make negotiations for salaries/wages a clearer prospect, with more currency to workers.
    Too bad capitalists have demonized the idea of “big brother” or socialism. Capitalists work hard to separate a unionized America, where mainstreet could get a better/safer way of life for the majority.

  24. Life is very simple – “Socialism” is evil and means giving money to “them” – “The Proper Order”, “Justice”, or “Good Government” means I get mine – “Keep your government hands off of my Medicare”

    It took me a while to be convinced that a UBI/VAT combination might not be terribly regressive, but I also share your pessimism. I think the VAT is the easiest part, but there is also some expense in setting up the infrastructure, not insurmountable, but we need to be realistic.

    As a second step, I can see jiggering the tax code to stop redistributing the wealth (and we should call it that) to the already wealthy. This is the fight with the “ALL TAXES MUST DECREASE EVERY YEAR” people (yes – they shout). Again, “pay your dues” – it’s the poor and middle that think they will become billionaires and hate taxing the rich as much as the rich do – Again – it is OK to tax me for things I want, but not for things other people want – simple American logic.

    However, if we can get those first two going, then we may be able to sneak in a UBI – remind people of the stimulus checks – but this will take time, or many of the comments will prove correct – a two-year Democratic push, followed by more Republican destruction of the non-wealthy. As John has pointed out, if people are doing better (infrastructure jobs?), they will be more accepting of some changes.

  25. Socialism and Capitalism have stood side by side for years in our country. Social Security (the average retiree gets back what they contributed in 5 years) Medicare, Medicaid, SNAP, free lunches, government food pantries and of course those pesky government funded schools.

    I am still not sold or self driving cars. The abuse a normal automobile takes in a normal year in Indiana (pot holes, rain, snow, etc ) just makes me a bit skeptical relying on sensors to drive my automobile. Where I can see technology of this sort taking over is fork lifts, automatic machines that will put and pick merchandise off the shelf are going to replace millions of jobs (think Amazon and Walmart) warehouse and retail jobs that will never come back. The service industry is shrinking and the food industry might never come back to where it was before the virus.

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