An issue with local charity administration if those charities are funded by governments is that our precedents require that they be administered in a thoroughly neutral, nondiscriminatory manner that also does not discriminate against foreigners (of any immigration status), out-of-staters, or any other protected status. Then the entities themselves are double-regulated by 501(c)(3) status, which also requires similar neutral standards even if the funding is private and not from any government. This makes it so that every charity "spigot" can potentially cause a lot of problems. Determining who is truly needy while also complying with the regulations is very challenging and expensive. Charities generally do not have the bandwidth to do real means testing that also complies with nondiscrimination requirements.
These precedents also make it so that any state that rises above the norm in charitability attracts indigents in large numbers. Most famously, this happens in San Francisco, but it also happens in colder locales like Minneapolis, Burlington, VT, and other places. So, what do? I think the best bet would be work programs of various kinds, in part because they can turn profit for the state, don't necessarily involve charities, can pay in-kind rather than in-cash, can be administered in more discriminatory ways, and are better for morals. The weakness of that approach is that it can be highly disruptive to many markets within a state. This was also FDR's inclination on the point of workfare vs. welfare, so this approach can be pitched in a bipartisan way if you put the right spin on it.
It will not be politically possible to keep it insufficient. The creation of insufficient UBI will give demagogues a number to rally around raising, and because the population receiving the benefit will be huge, the voting base to do so will be as well.
Current welfare is a bit different, because most people aren’t on any given program, and it’s at least a bit shameful to be on, eg, food stamps. Won’t be the case for UBI.
There is a stigma around being on cash welfare, but I'm not sure it exists for the most expensive welfare.
I don't see many people feeling a stigma about being on Medicaid. But Medicaid costs a lot of money for a family of four despite being heavily subsized through differential reimbursement rates. You could say the same about ACA subsidies. I don't see any stigma surrounding free student lunch subsidies, even though your basically admitting you aren't even feeding your own kid.
Most aid that people receive is mediated through health and education spending, which they don't feel particularly guilty about receiving.
I take it as a given that the governments tax/spend capacity is fixed based on what it can maximally do without causing a noticeable financial crisis in the medium term. Under this assumption either the government will give people in-kind health and education resources we all seem to think are a waste or active detriment or it will give everyone cash, but the total spending will be the same either way.
750 a month and also eliminate medicaid? In effect, this is basically just abolishing medicaid as best i can tell. The cash part is much smaller than the medical care part
We need universal Job Guarantees, so everybody has a job. Even if it is low value litter pick up, with higher than market wages (but still low). No government hand out helps poor people earn higher self esteem.
In a political environment where there are constant calls to increase the min. wage, it’s certain that whatever the UBI #, it won’t be high enough according to the anti-capitalists, and those against inequality. (Why not Universal Harvard Diplomas?)
The current govt benefit cliffs are terrible, and should be fought against directly with ramping down, in the politically hard and slow process one by one. Not trying quick fix magic bullet UBI.
Tho a single digital govt benefit card, consolidating all govt benefits in a credit card style would help.
Society, thru carrots not sticks, needs to encourage, support, and reward work. Especially for low IQ folk, who need more guidance, direction, even orders, in order to do productive work. It should be politically clear that those without jobs are choosing that lifestyle choice-which makes them mostly the undeserving poor. The deserving poor, those willing to work, should all have jobs, or job offers they’ve rejected.
There is a lot of work that could be done. America looks like s**t. There is a lot that needs to be done too, in terms of land restoration, if we are to have any success at stemming biodiversity loss. I know of no one in that world who wouldn't welcome an army of helpers (in lieu of the grey-headed Boomers that show up to volunteer for everything, and will not be around much longer).
If we had known we were going to have this large non- or under-working population forever, and that it would be the most fertile of our citizenry, would we have gotten rid of the CCC for instance? Does it now seem "wasteful" in light of what came after?
The concerns about incentivization are quaint. We have chosen to be this kind of society, we have chosen who will have the babies. Now the only thing to do is to be honest about how much we get to moralize about it. The answer is not much, but I still think there's room to consider what will improve lives the most.
I am something of a CCC-tourist so have read lots of kiosks. People who were in the CCC in the 30s spoke later about how much they appreciated it, not least the fact that some of them got regular meals for the first time in their lives. It was a good program that yielded good things.
The difference in the 2 acronyms UBI and CCC is that the former doesn't teach you any skills. Nor, I think, do people feel any gratitude for it. That's just human nature, understandable - you receive a check every month - that's your due. And so yes, I agree with the poster above, the number can only be exploited by demagogues.
[A friend of mine attended a family reunion - one of those extended family things people do down here, where you don't really know well all these people descended from your great-grandparents or whatnot - and by listening found two things about "her people": they were all rabidly suspicious of government; and a large number of them had figured out some way to get a government check, e.g. getting every family member declared disabled was but one example. They were working any angle.]
I'm pretty sure that actually, almost no matter what level of UBI you choose, there will be an entire economy based on providing the required/desired living standard to that income based on the volume of people who would be at that income. It wouldn't be anything the reformers want, of course, but it would provide shelter, alcohol, drugs, and McDs for almost exactly that amount in a kind of unofficial bundle.
1) Re: "Medicaid, food stamps, and so on are income-targeted. You lose all of your benefits once you get a regular job or marry a working spouse. So it’s not worth working."
Why can't economists figure out how to phase out income-targeted and in-kind benefits (Medicaid, Food Stamps, housing subsidies, etc) gradually in order to balance welfare and incentives to work?
2) Re: "think of my proposal as an inadequate UBI (that is, not enough for people to live on), supplemented by local charity."
I understand the advantages of local knowledge in identifying 'the deserving poor' and in monitoring efficiency and effectiveness of welfare (charity). However, local welfare (charity) might discourage migration to opportunity, if local authorities naturally know more (and care more) about longstanding residents' need or desert.
3) A remarkable empirical and analytical study by Hilary Hoynes and Jesse Rothstein about UBI research emphasizes how little we know:
"we know little about the role of universality. Does a universal program meaningfully reduce stigma and increase social inclusion, communicating that recipients are valued by society? Are there important general equilibrium effects, operating either through changes in wages due to supply shifts or to the additional demand created by consumers with more money to spend? We have very few studies of universal programs that use credible research designs, so we know little about this. [... .] Experimentation aimed at identifying parameters and mechanisms (Ludwig et al. 2011, Rothstein & von Wachter 2017, Deaton & Cartwright 2018) would be more useful than evaluations of small UBI pilots."—Hilary Hoynes & Jesse Rothstein, "Universal Basic Income in the United States and Advanced Countries," Annual Review of Economics 11: 929–58 (2019) at pp. 953-4.
"welfare spending amounts to about $42,000 per family of three in poverty per year, which would be more than enough to lift them above the poverty line if it were distributed to them directly."
When you start off with an absurd statement, it's hard to get a reasonable outcome/solution. I don't know what the "waste" and admin costs are but after subtracting that, an able-bodied family of three doesn't get anything close to an equal share of what remains.
First, Medicaid spending is about $6500 per enrollee so Medicaid spending averages $19,500 for each three people. That leaves only $22,500 that could possibly be distributed as cash.
If we look at Medicaid spending more closely, average amounts are small compare to disabled, seniors, and even new enrollees. Comparing those groups to adults and children (which I assume exclude those other groups), ballpark estimate is they eat up a third to half of the spending. I don't know if the ratio is higher or lower for housing, food and other spending but clearly an average able-bodied family isn't getting close to $22,500. And don't forget to substract the "waste" and admin.
I think it is worth noting that $750/mo doesn't even buy Medicaid coverage for the average able-bodied family of three. If one wants charities to pick up the slack, I'd say it's a pretty big ask for them just to cover the added cost and care needed for the disabled and seniors. Maybe it would work, maybe not. It certainly is not an outlandish idea. But you are asking them to cover a lot of the cost for all welfare recipients. Color me skeptical.
I should have acknowledged that moving from government to private charity would likely help move some people from public support toward self-sufficiency. But how many? How much? How quickly? That part would be great but can it be accomplished?
What’s the difference between income targeted and needs targeted? Both would have a substitution effect unless needs targeted means that someone is assessing whether someone “could” work but prefers to receive benefits?
Perhaps the size of UBI should be contingent on the transition to funding the bulk of government from taxes on work and investment (the current system) to taxes on consumption (which raise less overall than work and investment taxes at the moment, but, with UBI, could be relied upon more heavily to the extent that universal benefits sufficiently offset the regressive nature of consumption taxes). Does it not seem as if there is room here to advance goals of left and right alike by simultaneously reducing poverty and improving tax policy to encourage more work and investment? Given the cost of economic insecurity, it seems as if UBI could, properly designed and implemented, have both the supply side and demand side effects that both sides desire. CBO and JCT should be working on dynamic models that account for all of these factors, and, with AI and enough human expertise, should be able to develop a menu of legislation and policy impacts sufficient for the House Ways and Means and Senate Finance committees to engage in tax and budget policy to make U.S. fiscal policy great again.
The UBI will be the new minimum wage. Voices demanding it be raised will be legion, no matter what level it is at. There will be complaints that no-one can be expected to raise a family on the UBI, that it's unconscionably low. Voices pointing out the drawbacks of increasing the UBI will be viewed as heartless shills.
Meanwhile, the "needs-targeted system of benefits" to augment the UBI will expand to become... a needs-targeted, income-limited system of benefits, very much like what we have now.
Your proposal is fine, except for the fact that it falls apart for the same reason the 'social safety net' falls apart. If we had a system of government which could rationally build up a UBI, pay attention to the results and adjust on the margins as need be we could also make SS/Medicare/Medicaid/Food stamps work. The issue is not in the giving of money- charity can work (or can not work), the problem is in creating an unaccountable entity that has massive spending power at not cost to itself (and indeed benefits itself to spend more). Start with a $9,000 a year UBI and in a decade you will have dozens of 'small' side programs to help the 'truly unfortunate', and in 20-30 years you have an unwieldy mish-mash of expensive, ever growing programs that are impossible to meaningfully reform.
I think it boils down to welfare being a safety net, UBI needs to be insufficient to stop people making a nests on said safety net, or it wont be a safety net any longer, it will be a slum. Once everyone has UBI, whatever that amount is, costs will rise to absorb it all as the people that want primary access to the goods and services will trade their own productivity for it while people that want to stop being productive will be competing with their peers for whats left.
UBI will create a larger lower class, people will move to poorer areas to try make it stretch and those areas will then need people to move to supply services like health care, which in turn will gentrify it and price non productive people out.
maybe we could collectively focus on actually making the age of automation, also an age of abundance. a timeline where the basic needs can be met at an insanely cheap price.
this might just be a better solution than a UBI implementation, which would essentially make people dependent on charity of the society, or worse yet, of just the powerful people.
My hunch (just a hunch) is that a UBI more generous than Arnold suggests would be more efficient. It's an empirical matter worth exploring, but I think the population of economically unproductive adults (through no fault of their own and irremediably) is larger than Arnold's proposal might imply. If my hypothesis is correct, then a small UBI supplemented by private charity might not be enough to sustain all of the unproductive adults (and their children) even at the poverty level. Again, this is merely a hypothesis and an empirical question. That said, I agree with Arnold's broad proposal in terms of incentive effects and encouraging able-bodied adults to work.
P.S. If I remember correctly, Menachem Yaari (Yale and U. Jerusalem economist) wrote in the 1970s about the topic of efficient welfare and labor participation.
An issue with local charity administration if those charities are funded by governments is that our precedents require that they be administered in a thoroughly neutral, nondiscriminatory manner that also does not discriminate against foreigners (of any immigration status), out-of-staters, or any other protected status. Then the entities themselves are double-regulated by 501(c)(3) status, which also requires similar neutral standards even if the funding is private and not from any government. This makes it so that every charity "spigot" can potentially cause a lot of problems. Determining who is truly needy while also complying with the regulations is very challenging and expensive. Charities generally do not have the bandwidth to do real means testing that also complies with nondiscrimination requirements.
These precedents also make it so that any state that rises above the norm in charitability attracts indigents in large numbers. Most famously, this happens in San Francisco, but it also happens in colder locales like Minneapolis, Burlington, VT, and other places. So, what do? I think the best bet would be work programs of various kinds, in part because they can turn profit for the state, don't necessarily involve charities, can pay in-kind rather than in-cash, can be administered in more discriminatory ways, and are better for morals. The weakness of that approach is that it can be highly disruptive to many markets within a state. This was also FDR's inclination on the point of workfare vs. welfare, so this approach can be pitched in a bipartisan way if you put the right spin on it.
It will not be politically possible to keep it insufficient. The creation of insufficient UBI will give demagogues a number to rally around raising, and because the population receiving the benefit will be huge, the voting base to do so will be as well.
Current welfare is a bit different, because most people aren’t on any given program, and it’s at least a bit shameful to be on, eg, food stamps. Won’t be the case for UBI.
It is even worse than this- the present system of welfare benefits will either be resurrected very rapidly or never disappear in the first place.
There is a stigma around being on cash welfare, but I'm not sure it exists for the most expensive welfare.
I don't see many people feeling a stigma about being on Medicaid. But Medicaid costs a lot of money for a family of four despite being heavily subsized through differential reimbursement rates. You could say the same about ACA subsidies. I don't see any stigma surrounding free student lunch subsidies, even though your basically admitting you aren't even feeding your own kid.
Most aid that people receive is mediated through health and education spending, which they don't feel particularly guilty about receiving.
I take it as a given that the governments tax/spend capacity is fixed based on what it can maximally do without causing a noticeable financial crisis in the medium term. Under this assumption either the government will give people in-kind health and education resources we all seem to think are a waste or active detriment or it will give everyone cash, but the total spending will be the same either way.
I tend to think cash is less dangerous.
Yes. See the discussion of stigma at the essay by Hoynes and Rothstein (link at my comment in this thread).
750 a month and also eliminate medicaid? In effect, this is basically just abolishing medicaid as best i can tell. The cash part is much smaller than the medical care part
A comment I came here to write.
We need universal Job Guarantees, so everybody has a job. Even if it is low value litter pick up, with higher than market wages (but still low). No government hand out helps poor people earn higher self esteem.
In a political environment where there are constant calls to increase the min. wage, it’s certain that whatever the UBI #, it won’t be high enough according to the anti-capitalists, and those against inequality. (Why not Universal Harvard Diplomas?)
The current govt benefit cliffs are terrible, and should be fought against directly with ramping down, in the politically hard and slow process one by one. Not trying quick fix magic bullet UBI.
Tho a single digital govt benefit card, consolidating all govt benefits in a credit card style would help.
Society, thru carrots not sticks, needs to encourage, support, and reward work. Especially for low IQ folk, who need more guidance, direction, even orders, in order to do productive work. It should be politically clear that those without jobs are choosing that lifestyle choice-which makes them mostly the undeserving poor. The deserving poor, those willing to work, should all have jobs, or job offers they’ve rejected.
There is a lot of work that could be done. America looks like s**t. There is a lot that needs to be done too, in terms of land restoration, if we are to have any success at stemming biodiversity loss. I know of no one in that world who wouldn't welcome an army of helpers (in lieu of the grey-headed Boomers that show up to volunteer for everything, and will not be around much longer).
If we had known we were going to have this large non- or under-working population forever, and that it would be the most fertile of our citizenry, would we have gotten rid of the CCC for instance? Does it now seem "wasteful" in light of what came after?
The concerns about incentivization are quaint. We have chosen to be this kind of society, we have chosen who will have the babies. Now the only thing to do is to be honest about how much we get to moralize about it. The answer is not much, but I still think there's room to consider what will improve lives the most.
I am something of a CCC-tourist so have read lots of kiosks. People who were in the CCC in the 30s spoke later about how much they appreciated it, not least the fact that some of them got regular meals for the first time in their lives. It was a good program that yielded good things.
The difference in the 2 acronyms UBI and CCC is that the former doesn't teach you any skills. Nor, I think, do people feel any gratitude for it. That's just human nature, understandable - you receive a check every month - that's your due. And so yes, I agree with the poster above, the number can only be exploited by demagogues.
[A friend of mine attended a family reunion - one of those extended family things people do down here, where you don't really know well all these people descended from your great-grandparents or whatnot - and by listening found two things about "her people": they were all rabidly suspicious of government; and a large number of them had figured out some way to get a government check, e.g. getting every family member declared disabled was but one example. They were working any angle.]
Yep. Most folks want as much free stuff as they can get and aren't bashful about elbowing their way up to the feed trough.
And in the end, why shouldn't they?
I'm pretty sure that actually, almost no matter what level of UBI you choose, there will be an entire economy based on providing the required/desired living standard to that income based on the volume of people who would be at that income. It wouldn't be anything the reformers want, of course, but it would provide shelter, alcohol, drugs, and McDs for almost exactly that amount in a kind of unofficial bundle.
1) Re: "Medicaid, food stamps, and so on are income-targeted. You lose all of your benefits once you get a regular job or marry a working spouse. So it’s not worth working."
Why can't economists figure out how to phase out income-targeted and in-kind benefits (Medicaid, Food Stamps, housing subsidies, etc) gradually in order to balance welfare and incentives to work?
2) Re: "think of my proposal as an inadequate UBI (that is, not enough for people to live on), supplemented by local charity."
I understand the advantages of local knowledge in identifying 'the deserving poor' and in monitoring efficiency and effectiveness of welfare (charity). However, local welfare (charity) might discourage migration to opportunity, if local authorities naturally know more (and care more) about longstanding residents' need or desert.
3) A remarkable empirical and analytical study by Hilary Hoynes and Jesse Rothstein about UBI research emphasizes how little we know:
"we know little about the role of universality. Does a universal program meaningfully reduce stigma and increase social inclusion, communicating that recipients are valued by society? Are there important general equilibrium effects, operating either through changes in wages due to supply shifts or to the additional demand created by consumers with more money to spend? We have very few studies of universal programs that use credible research designs, so we know little about this. [... .] Experimentation aimed at identifying parameters and mechanisms (Ludwig et al. 2011, Rothstein & von Wachter 2017, Deaton & Cartwright 2018) would be more useful than evaluations of small UBI pilots."—Hilary Hoynes & Jesse Rothstein, "Universal Basic Income in the United States and Advanced Countries," Annual Review of Economics 11: 929–58 (2019) at pp. 953-4.
Available at the link below:
https://www.annualreviews.org/doi/abs/10.1146/annurev-economics-080218-030237
"Why can't economists figure out how to phase out income-targeted and in-kind benefits"
The purpose of these things are to buy votes. Votes get more expensive as income goes up.
"welfare spending amounts to about $42,000 per family of three in poverty per year, which would be more than enough to lift them above the poverty line if it were distributed to them directly."
When you start off with an absurd statement, it's hard to get a reasonable outcome/solution. I don't know what the "waste" and admin costs are but after subtracting that, an able-bodied family of three doesn't get anything close to an equal share of what remains.
First, Medicaid spending is about $6500 per enrollee so Medicaid spending averages $19,500 for each three people. That leaves only $22,500 that could possibly be distributed as cash.
If we look at Medicaid spending more closely, average amounts are small compare to disabled, seniors, and even new enrollees. Comparing those groups to adults and children (which I assume exclude those other groups), ballpark estimate is they eat up a third to half of the spending. I don't know if the ratio is higher or lower for housing, food and other spending but clearly an average able-bodied family isn't getting close to $22,500. And don't forget to substract the "waste" and admin.
https://www.kff.org/medicaid/state-indicator/medicaid-spending-per-enrollee/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D
I think it is worth noting that $750/mo doesn't even buy Medicaid coverage for the average able-bodied family of three. If one wants charities to pick up the slack, I'd say it's a pretty big ask for them just to cover the added cost and care needed for the disabled and seniors. Maybe it would work, maybe not. It certainly is not an outlandish idea. But you are asking them to cover a lot of the cost for all welfare recipients. Color me skeptical.
I should have acknowledged that moving from government to private charity would likely help move some people from public support toward self-sufficiency. But how many? How much? How quickly? That part would be great but can it be accomplished?
What’s the difference between income targeted and needs targeted? Both would have a substitution effect unless needs targeted means that someone is assessing whether someone “could” work but prefers to receive benefits?
Perhaps the size of UBI should be contingent on the transition to funding the bulk of government from taxes on work and investment (the current system) to taxes on consumption (which raise less overall than work and investment taxes at the moment, but, with UBI, could be relied upon more heavily to the extent that universal benefits sufficiently offset the regressive nature of consumption taxes). Does it not seem as if there is room here to advance goals of left and right alike by simultaneously reducing poverty and improving tax policy to encourage more work and investment? Given the cost of economic insecurity, it seems as if UBI could, properly designed and implemented, have both the supply side and demand side effects that both sides desire. CBO and JCT should be working on dynamic models that account for all of these factors, and, with AI and enough human expertise, should be able to develop a menu of legislation and policy impacts sufficient for the House Ways and Means and Senate Finance committees to engage in tax and budget policy to make U.S. fiscal policy great again.
The UBI will be the new minimum wage. Voices demanding it be raised will be legion, no matter what level it is at. There will be complaints that no-one can be expected to raise a family on the UBI, that it's unconscionably low. Voices pointing out the drawbacks of increasing the UBI will be viewed as heartless shills.
Meanwhile, the "needs-targeted system of benefits" to augment the UBI will expand to become... a needs-targeted, income-limited system of benefits, very much like what we have now.
Your proposal is fine, except for the fact that it falls apart for the same reason the 'social safety net' falls apart. If we had a system of government which could rationally build up a UBI, pay attention to the results and adjust on the margins as need be we could also make SS/Medicare/Medicaid/Food stamps work. The issue is not in the giving of money- charity can work (or can not work), the problem is in creating an unaccountable entity that has massive spending power at not cost to itself (and indeed benefits itself to spend more). Start with a $9,000 a year UBI and in a decade you will have dozens of 'small' side programs to help the 'truly unfortunate', and in 20-30 years you have an unwieldy mish-mash of expensive, ever growing programs that are impossible to meaningfully reform.
UBI will just cause inflation to get worse.
I think it boils down to welfare being a safety net, UBI needs to be insufficient to stop people making a nests on said safety net, or it wont be a safety net any longer, it will be a slum. Once everyone has UBI, whatever that amount is, costs will rise to absorb it all as the people that want primary access to the goods and services will trade their own productivity for it while people that want to stop being productive will be competing with their peers for whats left.
UBI will create a larger lower class, people will move to poorer areas to try make it stretch and those areas will then need people to move to supply services like health care, which in turn will gentrify it and price non productive people out.
Giving poor people a thousand a month caused them to get more jobs. Giving them 6k up front caused them to get even more jobs
Percentage of Participants Working Full-time, Enrollment and 6-month Follow-up:[1]
Group A (1000usd/m): 18% -> 25%
Group B (6500usd one time + 500usd/m): 21% -> 35%
Group C (50usd/m): 22% -> 22%
[1]: https://drive.google.com/file/d/1gqtOfZG2sSanWgUdzn-lx-pwSXZKabj-/view page 22 (pdf page 23) figure 9
That's not UBI though.
maybe we could collectively focus on actually making the age of automation, also an age of abundance. a timeline where the basic needs can be met at an insanely cheap price.
this might just be a better solution than a UBI implementation, which would essentially make people dependent on charity of the society, or worse yet, of just the powerful people.
My hunch (just a hunch) is that a UBI more generous than Arnold suggests would be more efficient. It's an empirical matter worth exploring, but I think the population of economically unproductive adults (through no fault of their own and irremediably) is larger than Arnold's proposal might imply. If my hypothesis is correct, then a small UBI supplemented by private charity might not be enough to sustain all of the unproductive adults (and their children) even at the poverty level. Again, this is merely a hypothesis and an empirical question. That said, I agree with Arnold's broad proposal in terms of incentive effects and encouraging able-bodied adults to work.
P.S. If I remember correctly, Menachem Yaari (Yale and U. Jerusalem economist) wrote in the 1970s about the topic of efficient welfare and labor participation.