Wednesday, 18 January 2017

Killer Arguments Against Citizen's Income, Not (5)

Emailed in by Lola, more innumerate and illogical drivel from mises.org, first he outlines a few of the obvious advantages, and then…

Where UBI Proponents Go Wrong

A universal basic income is not the god-sent welfare policy that it initially seems to be...


Maybe it is not "god-sent", but it is far better than the status quo. That is the point here, compare UBI with the existing system and see which is better.

It does not create incentive to work.

It reduces disincentives to work at the bottom end compared to existing welfare system (plus myriad other advantages - compared to the current welfare system) and that'll do for now.

It won’t help solve unemployment, and it will not alleviate poverty.

It will discourage employment a damn sight less than the existing welfare system. He's pointed that out himself. And assuming it is pitched at the same level as current unemployment benefit rates, maths tells us that it will do just as good a job at alleviating poverty (and real world trials shows it does better, for a given total spending).

The truth is that a UBI will exaggerate all of these factors in comparison to what would exist in a more unhampered market.

That is not comparing like with like.

There is even reason to think that it would be worse in the long run than traditional, means-tested welfare systems.

Load of shit. Why..?

First, UBI does not eliminate the disincentives to work that are inherent in welfare programs...

Yes it does.

... it simply moves them around. This program must be financed after all, and any welfare system, including the UBI, is necessarily a wealth redistribution scheme. Wealth must be forced from those who have it to those who do not. This means that at some point on the income ladder, people must go from being net receivers of benefits to being net payers of benefits.

Having displayed his inability to follow a logical train of thought, the author now lays his innumeracy bare.

Whether (and which) other taxes would be increased depends entirely on how high the UBI is pitched. For the umpteenth time, if it were pitched cautiously at current unemployment benefit rates and were to replace unemployment benefits, tax credits and the tax free personal allowance, headline tax rates would not change. Most people would break even give or take 1% or 2% of their income. People would soon adjust.

The progressive taxation that is necessary to finance a UBI means that the more a person earns, the higher percentage of their wealth will be taken from them. The work disincentives are therefore still very much present in the tax system. They’ve simply been transferred onto different, higher income groups of people.

Having not taken a few minutes to do any workings and establish that tax rates would not have to change anyway, he appears to rule out the possibility that taxes could be collected from land values rather than incomes. This has no disincentive to earning more/working harder etc, if anything, LVT encourages people to do more proper work (to generate the income to pay the LVT).

Admittedly, how taxes should be raised is a different topic to how taxes should be spent, but he then drifts off via some irrelevant wishful thinking and ends with this...

This matters because the number one cause of the high cost of living is artificial scarcity created and maintained by monopolies, cartels, and the government that serves their interests. Artificial scarcity imposed by cartels and a servile state is the primary cause of soaring costs in a variety of sectors.

Does he not realise who and what he is talking about? Can he not think his logic through to land/land owners, banks/bankers, holders of other privileges (radio spectrum, landing slots, patents and copyrights, taxi driver permits, whatever etc)? Which of course tells us where governments should be getting their money from.

27 comments:

ThomasBHall said...

His job depends on him not understanding it? ;)

Bayard said...

It is hard to see what people have against UBI. The rich would not have to pay any more tax. Are all the opponents secret members of the yellow star brigade (if we must give the unemployed money instead of starving them back to work, which is what would happen in a properly ordered society, at least we should make it obvious who's getting paid to do nothing and who isn't)?

L fairfax said...

I am not 100% sure that UBI is a good idea, but even I think that this
"First, UBI does not eliminate the disincentives to work that are inherent in welfare programs...
"
is rubbish.

Mark Wadsworth said...

TBH, probably.

B, yes, that does play a large part in it. Like state pensioners who boast about not claiming benefits. Pol's like the system as is because they have an easy hate group to blame everything on.

LF, ta.

Sobers said...

Can someone address my problem with a UBI, or rather the reason why I think one could never be introduced?

Firstly I'd say that I'm in favour of a UBI over the current benefit system, however as I see it the main sticking point for any UBI is the current system already gives many people more than the UBI would, and therefore it is politically impossible (regardless of cost/practicality etc) to introduce a system that results in current benefit claimants losing income. Effectively a UBI would be benefit cut for many, and as such is a political no go zone.

Do you accept this point (there would be many losers under a UBI vs now), and if so how would you propose to get round it?

I think a UBI is like the man asking directions to get to Cork, only to be told - Well I wouldn't start from here. Starting a UBI from scratch would work fine, shifting from a means tested system to a universal one just can't be done, in political terms.

Lola said...

MW. well done. Cross posted link to this article on the Mises.org comments. Let's see what that does?

Dinero said...

" Incentives to work "
IF the only difference between UBI and the current system is that is that the payment is not reomved when someone takes work then there is no inherant reason that the treatment and status of unemployment is different from what it is in the current system.

Lord Kieran said...

I was directed here by a comment on the Mises article

We seem to have fundamentally pretty similar views on the issue, and this is a great article. I wrote something similar on my own blog which is, as yet a few days old (Here: https://theradicalcentre.wordpress.com/2017/01/19/on-mises-the-dangers-of-a-universal-basic-income/ if you want it).

I'm fairly delighted to learn that I'm not the sole person with this kind of viewpoint in the UK. Keep it up!

Mark Wadsworth said...

S, correct. The few who would lose out are mainly single mothers. Whether that's an argument for or against ubi is up to you.

Mark Wadsworth said...

L, ta.

D, not clear.

Mark Wadsworth said...

LK, good article.

Dinero said...

To carify -
In principle , if the man feature of UBI is that it is a payment that is not removed when work is taken then the the stipulations on receiving Unemployment benefit while unemployed could also appply to UBI while unemployed. The main feature of UBI in your post is that it is not withdrawn when work is taken.

Sobers said...

You also have to factor in the interplay between the UBI and the disability benefit system - if DB remains and is not replaced by UBI there is still a massive incentive to game the system by getting yourself 'on the sick'. If on the other hand DB is replaced with UBI its almost guaranteed that many people will lose income as a result.

Basically having thought about it, I think there is a reason wealthy countries don't have UBIs - namely that welfare starts out as means and needs tested, because thats all a country can afford, to give something to the very poorest and neediest. This system then grows as the country gets wealthier, until one reaches the position where the country is wealthier enough to afford a viable UBI. However at that point the means and needs tested benefits often will provide a better living for those that qualify than the UBI could. Ergo its politically impossible to move from one to the other without significant numbers of losers, or reforming the UBI in ways that effectively make it no longer a UBI. Hence why no wealthy countries have ever made the switch.

Mark Wadsworth said...

Din, you can make up your own rules. To my mind, a nice starter UBI would be the same as income support etc £73.10 a week per UK resident British citizen, no questions asked, no rules whatsoever.

S, yes, IB is £20 a week more than IS, so what? In the CI calculations we assumed that those entitled to IB would get another £20 on top of their CI. Who should qualify for IB and disability benefits and how much they should be are medical questions, not economic ones.

As to the transition, that can be done gradually over five years, step by step, it's no big deal. It's Housing benefit that's the really big problem and the big distortion.

Sobers said...

"IB is £20 a week more than IS"

No it isn't, there's all sorts of gradations depending on how incapacitated you are. It couldn't be replaced by a flat rate extra payment without many losing out. And surely once you stop UBI being U, its no longer a UBI. You've got a needs based welfare system again, with all the problems that brings. Plus an immediate place for tinkering to start - once you've conceded the principle of universality, its going to be hard to stop the next step 'Single mothers should get higher UBI!' 'Pensioners should get higher UBI!' etc etc. Every hard case will call for more UBI for their specific issue, and before you know where you are you're back at square one, except the who thing costs a lot more because now everyone gets something.

Its impossible to replace a complex means and need tested welfare system with a simple UBI system, even a gradated one, without either there being many losers (which is politically unacceptable) or it being so generous that no one loses out, in which case its unaffordable.

DBC Reed said...

Strange how we bemoan the demise of the Land Tax tradition but never consider the Social Credit movement. 1984 is Orwell's explanation of how the nations of the world can be kept at full productive capacity before destroying the products again through endless warfare.The SoCred argument that you would have to distribute spending power to the unemployed to buy the products of Robot Factories via the State taking over/back the power to create credit from the banks becomes increasingly blinking bleedin' obvious.

Bayard said...

"Its impossible to replace a complex means and need tested welfare system with a simple UBI system, even a gradated one,"

Agreed, that is why no-one is suggesting it (apart from you) even to use as a straw man. You appear to be missing the point of UBI. It is universal because everyone gets it, not because it replaces all other welfare payments. "Universal" in "Universal Credit" uses a different meaning of universal. To be truly universal in the way you are suggesting, it would have to replace the state pension as well, which is obviously a nonsense. Thus it is perfectly possible to have UBI plus disability benefit or housing benefit or any other benefit that benefits only a small proportion of the population. Housing benefit is a nonsense, but that is a completely different argument.

Derek said...

The UBI can be viewed as welfare, which is what it is for a some of the population. Or it can be viewed as a tax cut, which is what it is for most of the population.

I thought the Mises.org site was supposed to be in favour of tax cuts?

Mark Wadsworth said...

S, you are contradicting yourself and missing the point. "Universal" just means "universal" so everybody gets it. It's like the right to vote, get treated on the NHS or use the local library.

If you want to have a low level UBI and extras on top, that's fine. Whether those extras are extra for disability, for housing costs, for old age or anything else is irrelevant. Everybody runs the risk of becoming disabled, homeless or becoming old, so those are still universal entitlements. Like the NHS, everybody has the right to certain services for free or low cost, even if the lucky majority seldom do.

IMHO, the more stuff you can replace with UBI i.e. higher UBI and no more IB, or no more Housing Benefit, the better, but that is implementation and not principle. There is a sliding scale of how much gets replaced with UBI. In extremis, we shut down NHS and state schools and people pay for private insurance (which I don't agree with - look at the USA) or give every parent education vouchers (which I do agree with).

DBC, yes.

B, ta for back up.

D, correct, the higher taxes are matched with higher UBI. Basic maths, but some people don't do maths.

Mark Wadsworth said...

S: can you clarify this point please:

"Its impossible to replace a complex means and need tested welfare system with a simple UBI system, even a gradated one, without either there being many losers (which is politically unacceptable) "

Can you firm up on "many losers"? In percent of population? Fact is, under the original 2013 CIT proposal, the number of "losers" is about one-tenth of existing welfare claimants and the bulk of those "losers" would be single mothers. The CIT thinks this is a problem, I don't.

Or is this some fact free rant, like the objection to LVT that "many households would pay more tax", well it's a few percent of the population, but a few percent of 27 million households is still one or two million. Is that "many" or "a few"?

L fairfax said...

I am concerned that no politician will have the discipline to keep a UBI universal and will not add a few pounds here and there.
I hope I am wrong.

Mark Wadsworth said...

LF, there's nothing that can't be messed up.

It's the overall principle and general direction of travel though, if people understand flat tax + UBI = better that means testing and all the different rates of taxed; taxes on land better than taxes on earnings; taxes on transactions like VAT or SDLT are the worst taxes etc.

I would be grateful for any steps towards UBI, flat tax or LVT or away from transaction taxes like VAT or SDLT.

Bayard said...

"Pol's like the system as is because they have an easy hate group to blame everything on."

Brexit + UBI and the tory* pols would be struggling, having lost their three major hate groups: those on the dole, benefit fraudsters and immigrants.

* I'm not sure if this is my neologism, but I suggest small "t" tory as meaning Tory or Blairite.

Mark Wadsworth said...

B, that's why the mail express graph is inventing a new hate group, the snowflakes, which means everybody who has been deliberately priced out of buying a house.

L fairfax said...

I thought that snowflakes were those who go crazy because of Brexit,Trump, UKIP etc - Although the snowflakes I know have got houses and don't care about those who are priced out.

Lola said...

MW. Oh now. Come come. 'Snowflakery' is only tangentially about not being able to buy a house: in the UK. Snowflakes are everywhere in the world. Look up the urban dictionary definitions.

Personally I think it refers to those who have been 'educated' that everyone should have prizes...

Mark Wadsworth said...

LF and L, yes, "snowflake" originally referred to people who take offence vicariously on behalf of people who weren't offended in the first place etc, load of wankers, but that's just a vocal 1% of 1% of the population and not representative of any particular age group.

In the meantime, the commenters and hacks at the Mailexpressgraph, not to mention Twitter, are gradually applying it to anybody under 40 who complains justifiably about anything e.g. high rents and high house prices and student debts "They waste it all on avocado toast and iPads" is the stock response.