You perceive getting a tax credit to be stigmatizing and feel that those who get tax credits are stigmatized? Okay. Your milage varies but I think few drive a similar car.
Not sure what about the rest confuses you.
Cost of product + additional cost of product due to VAT >> cost of product without VAT. This is true even if cost of product after extensive automation occurs < cost of product before automation. Moreover that total additional cost of product is as big as the UBI if not greater.
VAT is not an income or wealth tax to the very top earners of technology companies; it functions more like a sales tax, getting passed on as increased costs of products (and services) Paradoxically it is possible that it might even function as a regressive taxation, at least the robotrucking one: shipping costs are a pretty fixed amount bases on size and weight whether the item is cheap or expensive, consequently the the VAT adds a smaller percent to the cost of an expensive item than to an cheap one.
I don’t think UBI per Yang is intended to fix the income inequality gap so much as it is to provide a safety net and more options for a lot of people who are currently without either. The price of covering them is to extend coverage to all, even those who need it least. His ideas about human-centered capitalism and changing the metrics for success go more towards the inequality issue.
You may be right that UBI functions as a tax credit, but given the choice between the following campaign promises: “Here’s a tax credit of X dollars per Y income capped at Z amount per year!” and “Here’s $1,000 cash per month for life!” one is definitely catchier than the other.
I had the same question. Perhaps for those without income instead of a tax credit they receive negative income tax? Maybe DSeid will clarify what he meant. But I think this all speaks to why Yang is calling for UBI and $1K cash in hand per month vs. some kind of tax incentive; in politics simplicity speaks louder than complexity.
In my mind, one of the interesting parts of UBI is how it aids labour mobility, in that you can quit your job and look for a new one or start your own business. Also, how it might affect people looking for a first job or planning retirement. Once you have means testing and only give it to people who have a job, it has long ceased to be UBI.
And one potential outcome of labor mobility is increased movement from the coasts back to the heartland. $1,000 per month will go a lot further in Bloomington than in Boston. It’s not hard to imagine a pair of parents with an extra $24K per year opting out of the big city life to raise their kids in the country air.
Yang’s plan as expressed does not eliminate current safety nets, which covers many of those with no income. He does not advocate this replacing those programs. A negative income tax (the Milton Friedman approach) that replaces safety nets this is not.
Neither an expanded EITC or Yang’s UBI is actually universal. In that way they are the same. Adding graduated levels and phase outs to UBI as well makes it pretty much exactly the same. Note Rubio’s EITC proposal when he was running included both expanding it and making it a monthly payment, so an EITC plan could be monthly as well.
It’s a very clever sales pitch, appealing to a coalition of people from all over the current political spectrum. In terms of its challenge to the status-quo, it’s even more radical than what Sanders and Trump were offering last time out, but without the historical left/right baggage that each of them carry, making it seem less threatening to those of a moderate disposition.
In electoral terms, it’s quite possible someone could make a push for the big chair with a pitch like this in the future. But, if it has any effect in this cycle, it’s much more likely just to harm the Democratic nominee by making them seem more establishment and less inspiring.
In policy terms, taxing tech where it makes humans redundant is a nice idea. Supernormal profits are made therein, and it’s entirely reasonable for the state to skim some off to pay for the socio-economic consequences. At this point in time, though, UBI would be a terrible idea. It’s far too radical a change, psychologically. I can imagine a future society where people could accept a UBI as part of the social contract and submit to control of its level by technocrats tasked with minimising poverty and other negative outcomes. But right now it could only be implemented in a clientist fashion: literally, but legally, bribing the electorate to vote for you. That does not end well.
Mind you I didn’t listen to Yang’s nearly 2 hour Rogan interview but I have read that he there stated:
On his website he apparently does state otherwise, that there would be an option: “Current welfare and social program beneficiaries would be given a choice between their current benefits or $1,000 cash” Unemployment benefits are often about $450/wkk … at least while someone qualifies I’d doubt they’d jump at the UBI option.
Meanwhile I found something interesting to this discussion, a Treasury Issue Brief: The Distribution and Evolution of the Social Safety Net and Social Insurance Benefits: 1990 to 2014. I’d call your attention to figure 1 on page 6, which shows "that the bottom decile received the largest average total benefit (an average of approximately $14,180) from the social safety net and social insurance programs, as they have since 1990.
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So if his website is to be taken at face value the lowest decile does not get meaningfully more money from UBI (but will have to pay the cost of the VAT buried into the higher than otherwise would be costs of goods and services)
Now reading that literally might not be fair to do. He likely does not include Medicaid as part of his extant government benefits test (although he explicitly includes “food stamps, disability and the like”). But even not counting Medicaid, the fact remains: net from the government the lower deciles won’t be seeing much of an increase while they experience the increased costs as much as anyone while the higher deciles in general (smaller fractions get any benefits and the benefits they get when they do are much less) generally in net get close to the full extra $12K that they would not otherwise have. Even exempting Medicaid, the closest to getting the net of the full $12 is the top 10%, very close; the least net benefits go to the lowest 20%. And again, all pay the cost of the VAT by way of higher costs for goods and services.
The real value is for people who need it; there’s no need for a billionaire or even someone earning six figures having UBI. It should be a graduated UBI, just like taxation. If you dole out “UBI” to everyone equally, you’re going to have too much inflation. You’ll still have some inflation in giving out extra money, but the effects will be less as we’ll be giving out money to those without a lot of spending power so that they’ll have more basic spending power. The economic value of UBI is that people who need income will have some, and perhaps some to save and/or to spend on occasional non-essentials. The benefit isn’t just for the bottom rungs on the economic ladder, but also for the rest of us who benefit from consumerism in a broader market.
This is where I already disagree with Yang - UBI should be primarily for those who would benefit the most from it.
Even if I don’t take Yang 100% seriously as a candidate, I appreciate the fact that he is talking about very real issues. Now if he’d only hire Paul Krugman as an economic adviser.
No, it’s still universal, as in universally, everyone has a basic minimum income, whether they earn it on their own or not. What you’re thinking of is a universal basic dividend; I’m talking about a minimum income that everyone receives, though most of us would receive well beyond that amount.
So if his website is to be taken at face value the lowest decile does not get meaningfully more money from UBI (but will have to pay the cost of the VAT buried into the higher than otherwise would be costs of goods and services)
Now reading that literally might not be fair to do. He likely does not include Medicaid as part of his extant government benefits test (although he explicitly includes “food stamps, disability and the like”). But even not counting Medicaid, the fact remains: net from the government the lower deciles won’t be seeing much of an increase while they experience the increased costs as much as anyone while the higher deciles in general (smaller fractions get any benefits and the benefits they get when they do are much less) generally in net get close to the full extra $12K that they would not otherwise have. Even exempting Medicaid, the closest to getting the net of the full $12 is the top 10%, very close; the least net benefits go to the lowest 20%. And again, all pay the cost of the VAT by way of higher costs for goods and services.
I guess the plan is it trickles down?
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The Treasury brief is interesting but it’s worth noting it provides data on a per household basis, while Yang’s UBI goes to all citizens 18 and over so it’s not an ideal comparison. Aid programs are also rigid and bureaucratic, which is an added cost that can be eliminated by direct distribution of cash. That said, I don’t think this is Yang’s attempt to level the playing field and pull people out of poverty overnight. What UBI would do is preserve the aid received by those who already get it and provide the safety net for that next level up - the huge percentage of Americans who don’t get aid but can’t come up with $400 for an emergency expense. We’ve normalised living paycheck to paycheck. It’s not normal. Those people would be the main beneficiaries. Free up a few tens of millions of people currently languishing in dead-end jobs from worrying about their basic survival and watch their creative and entrepreneurial energy transform the economy.
Yang has a lengthy explanation of why UBI would not be inflationary in his Reddit Ask Me Anything. I’d quote the whole thing but don’t want to fall afoul of forum rules. Mods, I hope it’s ok to include a few relevant paragraphs, and again these are Andrew Yang’s words:
“We have several natural hard-wired conceptions about money. 1. It is scarce. 2. If we all had more of it, it would lose value. 3. It corresponds to your value as a human being.
<<skipped paragraph>>
The truth is that our economy is up to $20 trillion – up $5 trillion in the last 12 years alone – and the amount of money $1,000 a month per adult would inject into the economy would not drive meaningful inflation based upon changes in the money supply. For example, the government printed $4 trillion for the banks in the financial crisis to no meaningful inflation.
If you look at your own experience, most things have not been getting expensive for you over the past number of years or have been improving for a similar cost: Clothing, electronics, media, cars, food, etc. Technology and improving supply chains tend to reduce prices or improve quality over time for most things.
There are 3 exceptions to this that are causing most of the painful inflation in America: 1. Housing 2. Education 3. Healthcare
<<skipped paragraphs>>
I have separate plans to try and reduce housing, education and healthcare costs that you can check out on my website. Those are the core causes of inflation in the U.S., NOT the buying power of our citizens. Putting money in our hands will not increase that pressure on us – it will decrease it greatly and increase our purchasing power to address those areas where inflation does exist.”
And just to be clear yet again, the above are Andrew Yang’s words not mine.
I find his reasoning sound and his argument compelling.
As Yang would say, it’s not left or right, it’s forward. Which may sound sales-y but damned if it’s not going to resonate with a lot of folks who have had it with puerile, zero-sum politics.
I’m not certain it cannibalizes the rest of the Democratic field more than it peels off the disenchanted Trump voters in the Rust Belt still waiting for their economic miracle. And if it does pull from the mainstream Dems, then Yang becomes the nominee. I’m not seeing a downside here.
Conservatives in the 1930’s thought Social Security was a terrible idea. Technology and wealth creation have undergone almost incomprehensibly radical changes in our lifetimes while social welfare and taxation schemes have scarcely changed at all. This is just an attempt to keep pace.
