The Dim-Post

March 29, 2016

Still struggling to grasp the UBI

Filed under: Uncategorized — danylmc @ 7:10 am

Via Stuff:

A new study by the Taxpayers’ Union has rubbished a Universal Basic Income (UBI), which the Labour Party is investigating.

discussion paper from  Labour  raised the possibility of a UBI,  where every adult New Zealander would receive $11,000 a year ($211 a week) in exchange for scrapping many current welfare payments.

The paper says a universal income would help to remove the insecurity associated with low wages or insufficient welfare benefits, which bred “personal shame, stress, [and] mental health problems”.

The Taxpayers Union’s Jordan Williams said it was “startling” Labour was considering the policy.

The proposal is part of the party’s Future of Work Commission, a project to look at the impact of new technologies on careers and the workforce.

The Taxpayers’ Union has come out swinging at the idea, saying its study shows the introduction of a UBI would mean record-high tax rates, and potentially result in another recession.

Firstly, I still find it (a) amazing and (b) depressing that the ‘Taxpayers’ Union’ works as a propaganda tool. On the other hand, Labour’s ‘discussion’ (‘We’re looking to give you all free money! Oh, we haven’t figured out how to pay for it yet. This is just a discussion!’ ) seems like a PR stunt, so maybe the Taxpayers’ Union is what they deserve.

Secondly, I’m still having trouble imagining how a UBI would actually work. Comments on the previous posts were very informative, so please help me out some more. How would payments differ between:

  • An unemployed 18 year old living with their parents
  • An 18 year old living away from home studying at university
  • A single parent with three children under five
  • A parent with three children under five with a partner on a high income
  • A person suffering from a serious chronic illness preventing them from working in perpetuity

Or do they all get the same amount?

72 Comments »

  1. There’s no point to this discussion. The maths doesn’t work. And discussing it won’t make it work. Its a free hit to National. Thanks Grant.

    Comment by Art Croft — March 29, 2016 @ 8:02 am

  2. Two options. Either they all get the same – which means some people get less than they get now, or some people get an awful lot more. Or they don’t all get the same, in which case the effective marginal tax rates for those who get a needs-based allowance become a problem again, and the bureaucracy of administering needs tested benefits doesn’t get removed.

    I see the argument that taking someone on a lowish marginal tax rate, and putting them on a high marginal tax rate plus a fixed and universal allowance may reduce the incentives to work. Your marginal dollar of income is now taxed at a much higher rate. There is some evidence that second income earners dropped out of the workforce, or curtailed hours, due to the EMTR associated with WFF. I can believe that would also apply in this situation.

    Comment by PaulL — March 29, 2016 @ 8:13 am

  3. “Or do they all get the same amount?”

    https://en.wiktionary.org/wiki/universal

    Comment by Ortvin Sarapuu — March 29, 2016 @ 8:13 am

  4. Surely children would get a proportianal UBI so three kids would net more than one. Could probably save money by firing WINZ case managers. Considering WINZ’s current policy of not telling clients about all benefits available, and the fact that benefits were set to be below the cost of living *in 1991* it may eventually be time to correct the balance. IN fact think of all the wasted energy and stress involved precarious living, which feeds into all sorts of bad outcomes for society.

    We have some universalism – look at Superannuation, meddling with the age of entitlement or other IMO cost Labour my vote last election. Universalism is the position that its better that someone who doesn’t need the money gets it, rather than some who needs money not getting it.

    The best thing about a UBI is it gets rid of the category of beneficiary, National favourite whipping boy.

    I doubt this policy will come to much because children can’t vote and rich superannuants do.

    Comment by Dan — March 29, 2016 @ 8:40 am

  5. You can have a UBI for children as well. This would be at a reduced rate.

    The numbers can be made to add up. Its important to remember that having a relatively high tax rate (around 40%) on the first say $70k of income would be ok from the point of view that the average tax rate is much lower and the end results is still a progressive tax system.

    Comment by swan — March 29, 2016 @ 8:50 am

  6. Everybody gets the same, an amount that is sufficient to survive. That such is inadequate for most is a feature, not a flaw of the concept. The idea behind a UBI is that everyone is liberated from fear of failure but not fed enough to live fat and fallow.

    To have what you want, rather than what you merely need, one will have to work and the reason famous liberal economists liked the idea is they had faith in their belief peoples drive and will for more would not be hindered by having enough to survive guaranteed.

    A UBI is for labour what bankruptcy and limited liability is for capital, permission and subsidy to fail. So a labourer can refuse unrewarding work, train for what their not sure they will be good at, risk trying what they worry they may fail at. Wealth hates the idea because it would do away with the imbalance in opportunity and fortune that compels people to do shit work for shit pay and wealth fears having to pay fair and increased wages to have shit work done.

    But do the numbers work? Well, if not now, I suspect they might begin to as automation reduces the amount of actual employment available – we may find ourselves choosing between reducing routine work hours or something like a UBI.

    Comment by Fentex — March 29, 2016 @ 9:08 am

  7. Surely children would get a proportianal UBI so three kids would net more than one.

    I thought so too. But that would have a fairly high cost to it, and people keep telling me that a UBI is zero cost – that it is just a change to the tax system

    Comment by danylmc — March 29, 2016 @ 9:11 am

  8. My rough UBI proposal is this:

    UBI – 11000

    Child – 3000

    tax rate up to $70k – 40%

    tax rate beyond $70k – 33%

    This would work, give or take. You could also adjust GST.

    So, its an option.

    Comment by swan — March 29, 2016 @ 9:20 am

  9. I think the elephant in the room is a capital gains tax. That’s a huge swathe of economic activity that isn’t currently being taxed. I expect you could make UBI work by bringing in a CGT. Somewhat annoyingly, though, Labour have put a clear line in the sand that they WON’T implement a CGT, so I don’t know why on earth they’re bringing this up because it’s a bit of an unstoppable force/immovable object situation at the moment.

    Unless this is a long term plan to slowly soften people up for CGT, which would be smart. If they can get enough people on board with a UBI, then it will be much easier to sell a CGT. But as it stands you can’t really sell either of the 2 in isolation, much less pay for a UBI.

    Comment by SG — March 29, 2016 @ 9:24 am

  10. @SG there may be a number of economic activities that aren’t taxed, but there are also a bunch of indirect taxes.

    Comment by Robert Singers — March 29, 2016 @ 9:43 am

  11. @Robert: not on capital gains. Or at least not enough to outweigh the fact that there’s no direct tax on capital gains.

    Comment by SG — March 29, 2016 @ 10:22 am

  12. I remember the universal child benefit that meant I was only malnourished twice growing up. My father was an alcoholic who gave my mother no money and lots of times the only thing that kept the family feed was the $10 per week. A UBI would ensure that families that have women part time/ not in paid workforce are paid for the work that they do, and ensure that money comes into the household
    . Also as we get a diminishing workforce as automation hits we will need to (1) tax corporations correctly (2) work out how to keep people occupied in work that is of value.

    Comment by Lucy — March 29, 2016 @ 10:23 am

  13. >how would payments differ between:

    How is it possible to answer those questions without a detailed policy having been proposed? The best anyone can do is speculate on how taxes and benefits could be adjusted so that these people don’t gain or lose by much. Then we’ve worked out the neutral switch. Which is neither necessarily the best UBI, nor what Labour is proposing. Nor does it take into account anything else about the system than the payments comparison. The freedom from being forced to prove all sorts of things about yourself on a weekly basis to the government, for instance. And the abatement of the massive disincentive to work that comes from a benefit that is given on the proviso that you aren’t working or can’t work. Or the economic stimulus from the redistribution. Or the introduction of a new tool for inflation control to the government arsenal.

    There’s lot of ways this could be done. Having a discussion about them isn’t that much of a free hit. Mostly it’s signalling that Labour is finally opening up a dialogue on an idea that has been so far considered impossible to discuss. Once it gets down to it, it does look like quite a lot of right wing people even think it’s a good idea, depending how it’s done. It is, and always has been, one of the more capitalistic versions of socialism ever proposed. Welfarism is much more of an extreme change, and we already did that one in the 30s. It’s a far less militant, far more consumerist oriented idea. Instead of class warfare and hard-won rights to benefits, we get a universal right, and class boundary erosion. The destruction of the elites is not part of the idea at all. It’s very much more of a “rising tide that raises all ships” idea.

    It’s the version of socialism that actually has an answer to the 1%. Instead of railing impotently and bitterly at this unassailable group of modern aristocrats, it simply acknowledges their position and finds a way to make the most of what is an endemic problem with capitalist society. If we must have an aristocracy of production, then we could at least have a democracy of consumption. If large corporations must control production, we can at least empower the people at the bottom to direct what it is that gets produced, by giving them spending power. It’s not as good as it could be (from an equalitarian socialist POV), but it’s a damn sight better than disempowered poverty. The ability to direct spending power sets the elite production groups against each other, stimulating them to do what market efficiency theory has always said they should be doing.

    Comment by Ben Wilson — March 29, 2016 @ 10:23 am

  14. Swan: That UBI would see every pensioner and every person on the DPB take a drop in income. Do you see any Government cutting the pension of every retired person?

    Comment by dpf — March 29, 2016 @ 10:24 am

  15. @dpf the “pension” is a UBI for those over 65 and the DPB no longer exists. Back to your cave.

    Comment by SPG — March 29, 2016 @ 10:38 am

  16. @SPG: I think DPF’s time spent mostly ‘discussing’ policy with Kiwiblog commenters has given him an exaggerated idea of the intellectual coherence of his zingers.

    Still at least he didn’t bring up the Soviet Union.

    Comment by Ortvin Sarapuu — March 29, 2016 @ 10:42 am

  17. Danyl, go for a dig in the archives.
    Sue Bradford put up a version of UBI when she was in Parliament.
    The policy forum archive has long & involved discussions on the concepts.

    Labour, otoh, could have got their concepts from anywhere, although I see the hand of Aunty Helen pointing to Scandinavia, where it’s called something else, but does roughly the same job.
    ‘Rattle Jacinda Adern & see what falls out’ might be useful, too.

    Comment by anarkaytie — March 29, 2016 @ 10:59 am

  18. DPF,

    This actually assumes NZS would be largely untouched.

    I know the current government is afraid of changing paint colours if polling doesnt show people in favour, but yes, goveenments that show leadership have existed in the past and could do so in the future. Most likely option is increasing the super age.

    Comment by swan — March 29, 2016 @ 11:04 am

  19. Something that hasn’t been discussed much is the potential impact on the rental market and low end property prices

    I wonder how well the slumlords currently milking hugely distortion accommodation supplements will bear up without their State handout?

    Comment by Gregor W — March 29, 2016 @ 11:17 am

  20. 1) An unemployed 18 year old living with their parents
    2) An 18 year old living away from home studying at university
    3) A single parent with three children under five
    4) A parent with three children under five with a partner on a high income
    5) A person suffering from a serious chronic illness preventing them from working in perpetuity

    1) 18 yo Gets UBI, each parent gets UBI
    2) 18 yo Gets UBI
    3) Parent gets UBI, children get UBI or UBI at a reduced rate (depends on the system chosen)
    4) Parent gets UBI, partner gets UBI, children get UBI or UBI at a reduced rate (depends on the system chosen)
    5) Gets UBI (may get extra disability allowance, if available, outside of the UBI system)

    Comment by david — March 29, 2016 @ 11:28 am

  21. If you read the policy paper Harris and Bierema basically suggest that Labour would (a) keep the current welfare system as-is including Super, with the exception of the benefits that are currently paid out at ~$11k pa (although that $11k figure ignores the accommodation supplement so be very careful especially in Auckland/Wellington/Christchurch) though they don’t really phrase it like that, (b) give every adult $11k pa and (c) recoup the cost by increased taxation on the rich.

    So to go through, (a) would get $11k pa, (b) would get $11k pa, (c) would maybe get the same, maybe more if they qualify for the Sole Parent Support, and I dunno what’s happening to the accommodation supplement here, (d) would depend on the details of the tax structure, and (e) would get the Supported Living Payment, I think.

    Comment by Keir Leslie — March 29, 2016 @ 12:04 pm

  22. 19 – alternatively, how will people currently in receipt of the accommodation supplement manage to pay their rent when unemployment beneficiaries lose an average of $2,000 pa and sole parent support recipients lose ~$4,000 pa? If getting rid of the Accommodation Supplement was easy, someone would have done it already.

    Comment by Keir Leslie — March 29, 2016 @ 12:10 pm

  23. The thing about New Zealand tax and welfare I’ve never understood is why people are taxed on the first dollar they earn. It doesn’t make sense on so many levels.

    In the UK individual tax payers don’t pay anything 10,000 pounds, about NZ$20,000. Australia’s is about the same amount A$18,000.

    Apart from anything else, having a tax free threshold at this level would reduce the cost of collecting tax because it would take a high number of taxpayers out of the system. It must cost a fortune for the IRD to chip piddling amounts from low-paid weekly salaries only to pay some of the money back later in refunds.

    Comment by Bill Bennett — March 29, 2016 @ 12:35 pm

  24. Lucy: ” I remember the universal child benefit”

    Indeed: me too. It helped keep afloat our large family – impoverished through no fault of our own.

    Ben Wilson: “It’s not as good as it could be (from an equalitarian socialist POV), but it’s a damn sight better than disempowered poverty.”

    Exactly. As those of us who grew up in disempowered poverty can attest.

    People who rail against proposals of this sort on the basis of likely hits to the tax system aren’t thinking clearly enough about what our contemporary society is like for the precariat. Let alone what lies ahead, as technological advancements lay waste to the “middle class” job market.

    Comment by D'Esterre — March 29, 2016 @ 12:49 pm

  25. 21. That paper is not Labour policy, just a backgrounder they commissioned. So don’t assume they agree with all its points.

    Comment by MeToo — March 29, 2016 @ 1:00 pm

  26. 1. An unemployed 18 year old living with their parents
    2. An 18 year old living away from home studying at university
    3. A single parent with three children under five
    4. A parent with three children under five with a partner on a high income
    5. A person suffering from a serious chronic illness preventing them from working in perpetuity

    My understanding is that 1, 2 and 5 all get the same – that is, the basic UBI. For 3, he or she would get the basic UBI plus the UBI (at a lower rate) for each of the three children. Person 4 would get the same as person 3 but the family would of course also get the partners’ basic UBI. So household 4 would have more taxpayers’ cash going into it than 3, although would also be paying more tax.

    Comment by Matthew Hooton — March 29, 2016 @ 3:41 pm

  27. What would be the costs of doing nothing in the long run? We’re seeing a glimpse of it in the 2016 Presidential elections, where a sizeable chunk of the new ‘precariat’, feeling left behind by economic globalisation and automation, have turned to candidates like Trump and Sanders out of anger and desperation. There’s a bit of that in Europe as well. And speaking of Europe, a worst case scenario would be if things went Weimar and political extremists actually become the government.

    And the last word goes to the late, great George Carlin, though I may have posted this before.

    “The upper class: keeps all of the money, pays none of the taxes. The middle class: pays all of the taxes, does all of the work. The poor are there…just to scare the shit out of the middle class.”

    Comment by Kumara Republic (@kumararepublic) — March 29, 2016 @ 3:58 pm

  28. Let me make this very clear Danyl, a UBI would cost a lot more money, it would not be tax neutral. Anyone who says otherwise either doesn’t know what they are talking about or is talking about something else and not making it clear that it is not a UBI.

    A UBI that would not result in any income decreases from current beneficiaries would be prohibitively expensive. I think this would stop the idea from ever taking off on the Left. However I think there is a way around this. By taking very aggressive policy actions to reduce the price of residential land, and by build more and smaller living spaces, this would reduce the amount of money required to be paid for rent and thus the total UBI amount. Landowners would lose out, but hey, they would still own the land so they are not losing everything. Many mortgages would have to be written off, it would be messy, and the banks would lose big time, but honestly, fuck the banks.

    At the end of all this I see a UBI costing NZ about $30 billion extra, with all of it coming from people earning more than the median wage (about $40k).

    The only special benefits I see continuing are for those with clear and sustained disabilities and/or sicknesses that have ongoing costs.

    Something I have not seen discussed much is the effect of a UBI on crime, especially small-scale crime. I think it would fall dramatically.

    Comment by Korakys — March 29, 2016 @ 4:04 pm

  29. For 3, he or she would get the basic UBI plus the UBI (at a lower rate) for each of the three children.

    I think that Harris & Bierema* suggest that you would instead of having a child UBI just keep the sole parent support. Although obviously you’d have to account for WFF.

    Similarly, for 5, I think they’d get the equivalent of the Supported Living Payment which would I think be somewhat north of 11k, where the basic UBI seems to sit.

    * Well, they talk about “supplementary payments” for various groups, which is I think code for, and will end up with, “no-one will be worse off than they are at the moment re: benefits”. Yes, I know it’s not “official Labour policy”. But I think you can figure out the basic shape of the proposal from that, if Labour were to go down that route.

    Comment by Keir Leslie — March 29, 2016 @ 5:21 pm

  30. I don’t quite know what Labour is up to with floating a possible UBI in this way.

    On the face of it opening up a conversation is a good idea. But now that people have started to put some figures to various concrete scenarios – as one would expect – Labour is accusing people of lying and the media of being unfair.

    Comment by NeilM — March 29, 2016 @ 5:42 pm

  31. @anarkaytie: Which Scandinavian country has a UBI?

    Comment by Ortvin Sarapuu — March 29, 2016 @ 5:43 pm

  32. Looking at the implementation options in the Harris & Bierema paper all options seem to include giving a pile of money to people who don’t need it, with the consequent need to tax more or cut benefits. In practice it just seems likely to just swap one set of distortions from another. The ‘Progressive Model’, which seems the most feasible from a political perspective (fewest losers), doesn’t seem to have any particular needy target group that would be better off under UBI than the current system. The paper also misuses some evidence against paying benefits. Sure more money to a struggling family will most likely be spent well on high marginal benefit stuff like shoes and doctors visits but those folk aren’t being targeted by the UBI and already generally get more than $200 per adult in benefits and tax credits. Giving that $200 a week to unemployed spouses in high income households, a generous universal student benefit and folk who want to take a few weeks off between jobs doesn’t seem like a good reason to increase the taxes on the Mclauchlan household.

    Comment by Richard — March 29, 2016 @ 7:04 pm

  33. I think whole thing looked a bit Grant and TED’s big adventure down under.

    Unless there’s a real commitment to s major overhaul of the tax and welfare systems then there probably more straight foward ways of dealing with marginal tax rates.

    As for The Future, I’d opt for just making sure the education and health systems ensure a basic level of resilience to whatever technology throws our way.

    Which has worked in the past.

    Comment by NeilM — March 29, 2016 @ 7:12 pm

  34. > ‘We’re looking to give you all free money!

    That’s the sort of conceptual framing a UBI is in part intended to remove. The idea is to move from the absurd framing we have now, where many people understand their pretax income as a reward for good behaviour that the ebil gubbermint takes a bite out of, to that of the economy being a collaborative system that is productive enough to provide the basic necessities of life for all.

    It’s certainly saner to have a high tax system that redistributes to consumption for the less well off than the high tax system that was used to fund the mass production of insane levels of unusable military hardware.

    Comment by L — March 29, 2016 @ 7:46 pm

  35. > Looking at the implementation options in the Harris & Bierema paper all options seem to include giving a pile of money to people who don’t need it,

    Our current economic system does that in spades.

    Comment by L — March 29, 2016 @ 7:47 pm

  36. Do you people not read books at all? SG (#9) you come closest to it when you suggest that a CGT is the elephant in the room; please read Gareth Morgan’s Big Kahuna and try to understand why a Capital Tax (not a CGT) but a tax on capital, (similar to the Capital tax we pay on our houses by way of rates, but covering all capital) absolutely has the capacity to raise the revenue required for a UBI, and at the same time has the ability to remove the distortions that our present taxation system drives in our present investment strategies to actually have a stimulatory effect on the economy. By the way, not a 100% GM fan – think some of his ideas are bat-shit crazy, but read the book and draw your own conclusions. It will also educate you in terms of where our taxation system has come from and why we have the system we have at the moment.

    Comment by Nick Easterbrook-Smith — March 29, 2016 @ 8:00 pm

  37. The idea is to move from the absurd framing we have now, where many people understand their pretax income as a reward for good behaviour that the ebil gubbermint takes a bite out of, to that of the economy being a collaborative system that is productive enough to provide the basic necessities of life for all.

    Those silly people who don’t understand their politics is wrong! I’m sure they’ll come round.

    Comment by Richard — March 29, 2016 @ 8:26 pm

  38. You can give everyone a UBI at less than the current unemployment benefit rate, and then give other benefits (presumably including a small unemployment benefit) on top of the UBI. Keith Rankin describes it here:
    http://thedailyblog.co.nz/2014/04/04/universal-basic-income/

    Comment by Can of Worms, Opened — March 29, 2016 @ 8:37 pm

  39. @37

    Why not simply increase the minimum wage and the unemployment benefit? That’s much simpler and potentially a lot less expensive than a UBI. Also it’s not politically suicidal, notwithstanding that a UBI might have merit.

    Comment by Ross — March 29, 2016 @ 9:14 pm

  40. @38

    One of the big advantages of the UBI is to raise the wealth of the lowest-paid workers, so that moving into work will always make you financially better off. Currently people moving from the unemployment benefit to working may find they’re not much better off, because they lose their benefit in return for getting the wages. A UBI that was a significant proportion of the size of the unemployment benefit would reduce that effect.

    Another reason for advocating the UBI is the idea of distributing a share of the country’s wealth to everyone, because the country’s natural resources belong to everyone. That idea particularly makes sense if it is funded from mining royalties, land leases or water rates.

    Comment by Can of Worms, Opened — March 29, 2016 @ 9:34 pm

  41. @Ross: Given that the message we’re given is that those on the unemployment benefit are lazy at best and criminals at worst, raising the benefit does sound quite a lot like political suicide.

    Comment by Ortvin Sarapuu — March 29, 2016 @ 9:37 pm

  42. Given that the message we’re given is that those on the unemployment benefit are lazy at best and criminals at worst

    That message comes from RWNJs, so I don’t think we need to give it much thought.

    Comment by Ross — March 29, 2016 @ 10:00 pm

  43. Currently people moving from the unemployment benefit to working may find they’re not much better off, because they lose their benefit in return for getting the wages

    An increase in the minimum wage will partly address that. But someone moving from unemployment to employment should be able to earn more before their benefit abates.

    Comment by Ross — March 29, 2016 @ 10:27 pm

  44. So Danyl. You’ve had some answers to your questions… what do you conclude?

    Comment by Antoine — March 30, 2016 @ 3:29 am

  45. NeilM @ 5:42 pm says: “Labour is accusing people of lying and the media of being unfair.”
    That is what Labour does. Next they’ll say people are being vicious towards them. It makes them feel better and compensates them for continuing to bomb out in the polls and at elections.

    Comment by Matthew Hooton — March 30, 2016 @ 4:57 am

  46. How dare you Matthew? Andrew Little is a true leader,and everything he says just inspires people to do better. …. for New Zealand, I mean.

    Comment by leeharmanclark — March 30, 2016 @ 7:04 am

  47. Matthew Hooton tried to get an leading let wing journalist killed by Chinese gangs. Think about how much credibility he has.

    Comment by Sanctuary — March 30, 2016 @ 8:46 am

  48. > Those silly people who don’t understand their politics is wrong! I’m sure they’ll come round.

    Or they’ll die off. The fun thing about politics is that it changes over time.

    Comment by L — March 30, 2016 @ 9:20 am

  49. Or they’ll die off. The fun thing about politics is that it changes over time.

    Except it doesn’t.
    All those ‘stick it to the man’ hippies seamlessly converted to the socially-liberal centrist middle class without a skerrick of cognitive dissonance.
    They’re now in the process of converting to economically conservative retirees, worried that the State is going to loot their super and property portfolios.

    Comment by Gregor W — March 30, 2016 @ 9:35 am

  50. Some things to consider re a UBI:

    A UBI is a policy that addresses several different issues at once. To me the most important are high EMTRs and the associated bearuacratic difficulty in moving from welfare to work. For someone out of work, picking up a few hours labouring or whatever should be the simplest thing in the world to do. And it should benefit the worker with income. Currently we have large numbers of workers with EMTRs about 75% all told, and some above 100%. Thats ridiculous. But apparently the National Party has no interest in this issue.

    Comment by swan — March 30, 2016 @ 10:02 am

  51. The rest of my comment:

    The issue of equalizing entitlement (that Danyl is pointing to with his post) is not a necessary feature of UBIs. Equalizing entitlements not necessary to get high EMTRs sorted. To be sure, the more fine grained your entitlements are the more complicated your system will be and the more difficult it will be to address high EMTRs and associated difficulties in getting people to work. But that doesnt mean we shouldnt try.

    Comment by swan — March 30, 2016 @ 10:07 am

  52. To me the most important are high EMTRs and the associated bearuacratic difficulty in moving from welfare to work

    I’m coming around to agreeing that this is the key issue to resolve. But UBI seems like a very problematic way to resolve it.

    Comment by danylmc — March 30, 2016 @ 10:12 am

  53. Try this for some information http://morganfoundation.org.nz/taxpayers-union-critique-ubi-just-bonkers/
    With regard to the most vulnerable groups, including sole parents, those who cannot ever do paid work, the UBI could not replace the necessary in kind/additional services .For example at home care for those with limited mobility. These services would either stay in place or preferably be reviewed to improve outcomes for these groups, as things are pretty rubbish for kids living in deprivation and those with a disability (often not mutually exclusive) under the current policies.

    Comment by Jess Berentson Shaw — March 30, 2016 @ 10:39 am

  54. Fun fact: The Greens suggested a UBI in 2013 and went into the 2014 election with it as a part of their economic policy. Funnily enough, Danyl didn’t feel the need to grapple with it back then, despite the fact that he voted for it.

    Comment by Ortvin Sarapuu — March 30, 2016 @ 11:20 am

  55. @Gregor

    > Except it doesn’t.

    Sure it does. You’re just thinking about a too short time period. Try the last 100 years rather than the last 30.

    Comment by L — March 30, 2016 @ 11:45 am

  56. Sure it does. You’re just thinking about a too short time period. Try the last 100 years rather than the last 30.

    Shit then! Lets go whole hog and talk about how the Enlightenment changed stuff.
    Please…

    Comment by Gregor W — March 30, 2016 @ 11:50 am

  57. Fun fact: The Greens suggested a UBI in 2013 and went into the 2014 election with it as a part of their economic policy

    Pretty sure the Green policy is to investigate the UBI. Which is what Labour are (sort of) doing, but it’s a much bigger deal when one of the two big parties announce something like this.

    Comment by danylmc — March 30, 2016 @ 11:51 am

  58. Sure it does. You’re just thinking about a too short time period. Try the last 100 years rather than the last 30.

    Good point, a 100ish years ago whole nations took Marx’s absurd framing of economics seriously – nowadays not so much.

    Comment by Richard — March 30, 2016 @ 11:57 am

  59. Most of us would agree with shifting more of the tax burden from income to speculation and inherited wealth. But the self-appointed unelected upper house called Generation Rentier remains a big obstacle, and an accident of history is still the only thing guaranteed to dislodge it and the prevailing fiscal orthodoxy of the current generation.

    Speaking of the prevailing fiscal orthodoxy, its loudest cheerleaders should remember that one of their idols, Milton Friedman, proposed a “negative income tax”. And another idol of theirs, Roger Douglas, had it on the table when he was David Lange’s finance minister.

    Jess #53: That I can strongly relate to, having had an undiagnosed neuro-deviant condition that was poorly understood for until very recently, and the job market discrimination that goes with it. My experience of WINZ in its current form is that it prioritises inspiration porn over getting people into gainful employment.

    Comment by Kumara Republic (@kumararepublic) — March 30, 2016 @ 1:03 pm

  60. If you give every adult the same amount of money, in this case $211 per week, in exchange for scrapping many welfare initiatives, then you are giving the rich the same amount as the poor. The whole idea of a UBI was floated on the premise that 46% of jobs are under threat within the next 30 years because of expected advances in technology, and this will affect rich and poor alike but poor unskilled workers more so, so why is it acceptable to have a UBI that gives the same amount of basic income to everyone of all socio-economic backgrounds and then scrap welfare payments? The poor will be worse off. What about sickness beneficiaries? I didn’t expect this from Labour. Along with their silly idea to provide three years of free tertiary education for people in the future, we will have a ‘lost’ generation of tens of thousands of people who had to pay a lot for their tertiary education, and we will have even more of a gap between the rich and the poor.

    Comment by Daniel Lang — March 30, 2016 @ 1:24 pm

  61. What all of those knee-jerk articles about mechanisation miss is that all those jobs you eliminate are also your target market. If the market for your product shrinks rapidly how are you going to pay for your expensive robots?

    Comment by Robert Singers — March 30, 2016 @ 1:45 pm

  62. Robert Singers: “How Will You Get Robots to Buy Cars?”

    http://quoteinvestigator.com/2011/11/16/robots-buy-cars/

    The usual suspects who dismiss the “Luddite fallacy” out of hand basically counter-argue that any cost savings from mechanisation will automatically be passed on to said target market with less disposable income. They conveniently forget that in practice, rentiers often dominate, which is the real issue with technological disruption rather than technology itself.

    http://motherboard.vice.com/blog/the-rich-and-their-robots-are-about-to-make-half-the-worlds-jobs-disappear
    http://www.techworld.com/blog/machination/platform-capitalism-how-many-cars-will-robot-buy-3613081/
    http://motherboard.vice.com/en_uk/read/dont-fear-the-robots-taking-your-job-blame-the-monopolies-behind-them
    http://www.computerworld.com/article/2485706/emerging-technology/as-the-digital-revolution-kills-jobs–social-unrest-will-rise.html

    As it stands, the new jobs created tend to be at either end of the scale – plum jobs that often require post-graduate education on the one hand, and low-wage dead-end jobs on the other.

    Comment by Kumara Republic (@kumararepublic) — March 30, 2016 @ 2:46 pm

  63. If the market for your product shrinks rapidly how are you going to pay for your expensive robots?
    How is that any different to the situation we’re in now, where the market for Blackberry devices and flip-phones has shrunk to, basically, nothing?

    Piano makers didn’t starve to death when the radio came to our homes, and the families of blacksmiths didn’t die homeless when the motor car arrived on our streets.

    Comment by Phil — March 30, 2016 @ 2:52 pm

  64. Piano makers didn’t starve to death when the radio came to our homes, and the families of blacksmiths didn’t die homeless when the motor car arrived on our streets.

    Probably because there is pleasure to be had in the act of playing music, and there were plenty of horse around when cars first hit the streets.

    Comment by Gregor W — March 30, 2016 @ 3:36 pm

  65. Robert Singers: “How Will You Get Robots to Buy Cars?”

    http://quoteinvestigator.com/2011/11/16/robots-buy-cars/

    The usual suspects who dismiss the “Luddite fallacy” out of hand basically counter-argue that any cost savings from mechanisation will automatically be passed on to said target market with less disposable income. They conveniently forget that in practice, rentiers often dominate, which is the real issue with technological disruption rather than technology itself.

    As it stands, the new jobs created tend to be at either end of the scale – plum jobs that often require post-graduate education on the one hand, and low-wage dead-end jobs on the other.

    Comment by Kumara Republic (@kumararepublic) — March 30, 2016 @ 3:44 pm

  66. Oh, never mind, they finally appeared.

    Comment by Kumara Republic (@kumararepublic) — March 30, 2016 @ 3:51 pm

  67. @Kumara

    Robots will simply destroy us https://youtu.be/W0_DPi0PmF0

    Comment by Robert Singers — March 30, 2016 @ 3:59 pm

  68. “I’m still having trouble imagining how a UBI would actually work” As Ben Wilson says, it depends how you construct the thing and what values underpin it. What do you value – the emancipatory potential of a UBI or its economic value? Maybe you are concerned with poverty alleviation, in which case you also need some sort of welfare top-up for single parents and people in expensive accommodation (e.g. Aucklanders, Queenstowners)? Some numbers have been crunched on how much money different households need to survive, based on a MSD report: http://briefingpapers.co.nz/2016/03/a-universal-basic-income-may-be-a-good-idea-but-we-will-still-need-social-security-that-works/

    Comment by MeToo — March 30, 2016 @ 4:25 pm

  69. Having looked over the thread again there seem to be a lot of people answering Danyl’s question of how a UBI would work by talking about a particular model with a single or few objectives in mind. Which kinda indicates the problem with the whole UBI background paper is that it really crafted as a solution looking for a problem. It was always going to put the concept on a hiding to nothing going about it that way.

    Comment by Richard — March 30, 2016 @ 6:26 pm

  70. @Danyl

    If the problem is the way the jobseeker’s benefit abates when you get part time work, then the solution is surely to change the way the jobseeker’s benefit abates when you get part time work…?

    But that is not Labour’s problem definition.

    A.

    Comment by Antoine — March 30, 2016 @ 11:53 pm

  71. UBIs are not complicated.

    Countries have tax rates and benefit systems that start at giving you $X,000 per year because you’re acceptably not in work and also taking about 40% of what you earn if you are, in a series of arbitrary steps and bullshit abatement rates that also give $Y,000 per annum to a lot of people as tax breaks on their first chunk of income, no matter how high their earnings. Then there’s credits and such that give some other number of thousands to people for having kids or whatever, and also a bunch of free stuff for kids like school and healthcare.

    The UBI changes that to a flat tax on a flat benefit that gives everyone $Z,000 and takes about 40% of their income if they are in work. Plus reducing the amount you give to kids on account of all the compulsory free stuff they get from the state anyway, which is very good for them.

    It’s not more complicated. It’s massively less complicated than tax brackets and benefits and shit. If you earn $70,000+ pa right now you dodge the 33% rate by $660 on the 48k-70k bracket, $5,270 on the 14k-48k bracket, and $3,150 on the 0-14k bracket, which is almost identical to just giving everyone $9,080 pa and also having a flat 33% tax rate, except they give you less than that now if you’re unusually poor. It’s not even different. Set the top rate at 39% like Labour had it and it’s more like a $13,280 tax break already in place for most earners, which is now most adults.

    And you don’t even have to have a low top tax rate, because you can stick a luxury tax of whatever you like on incomes over $300k pa (or whatever level that few people actually earn) and set it to 60% or 95% or whatever your socialist little heart wishes.

    If you want more for disabled people, or whatever, you can do it through free services or budgeting for it in the education and health systems and also continuing to pay special one-offs for fixing up transport options and homes and businesses for chair access or whatever else, out of ACC or IHC or some other TLA.

    If it costs more, it’s because more people get anything at all and can thus participate in the fucking economy, which will naturally structure itself to serve the basic needs of EVERYONE, instead of just everyone who the state approves of it serving. This is not a bad thing.

    Comment by tussock — March 31, 2016 @ 9:45 pm

  72. Well it seems the Panama papers suggest that the world we see that folk have argued over the affordability of a UBI above, is so much smaller than the world there really is, that the discussion needs to be had all over again in light of the additional US$21 – $32 trillion dollars of untaxed capital that is floating around:

    http://www.theguardian.com/commentisfree/2016/apr/07/panama-papers-taxes-universal-basic-income-public-services

    [I don’t expect anyone to see this I just thought here is the place to post it rather than divert a live thread🙂 ]

    Comment by Joe-90 — April 8, 2016 @ 11:49 am


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