What you really mean when you claim to support “UBI for job automation”: Part 1
Author’s Note: Though I’m currently a governance researcher at Convergence Analysis, this post is unaffiliated with Convergence. The opinions expressed are solely my own.
You’ve seen it a dozen times at this point. You’re probably broadly aligned philosophically, but haven’t thought terribly deeply about the details. You generally support Andrew Yang’s $12k / year “Freedom Dividend” as “moving in the right direction”, even if it’s economically flawed.
The argument goes roughly like this: “All of our jobs are about to be automated away with AI technology and robotics! We’ll end up soon in a post-work society with massive unemployment unless we can find a way to distribute the benefits of AI automation fairly. We need a universal basic income to protect humans.”
To recap—universal basic income is a proposal to give every individual in a society a sum of money on a monthly or annual basis, to provide a “universal safety-net” for those who are unemployed or enable greater financial flexibility. A very common proposal for the US is on the order of $1k a month, or $12k a year[1].
Personally, I’m fairly aligned with the direction of this argument. But it strikes me as painfully simplistic. Our social welfare systems have been incrementally built over decades, targeting measurable improvements for vulnerable demographics. Effective taxation and redistribution is dependent on thousands of economic factors, with winners and losers for every decision.
So—I decided to explore. What would an actual implementation of “UBI in the face of increasing job automation” look like? As a casual proponent, what specific policies do you actually support to achieve your socioeconomic ideals?
A couple big takeaways from this research:
Part 1: If your goal is a universal safety net, you probably don’t actually want UBI. You want some form of a targeted negative income tax (NIT) that also provides direct payments. In practice, you might only want minor (US) policy tweaks to the Earned Income Tax Credit (EITC).
Part 2: If your goal is to transfer the wealth generated by automation, you probably actually want global tax reform to better enforce corporate income taxes. You might also support some form of a progressive income tax on the largest multinational corporations.
Let me share a hot take. After doing this research, I think that if you support UBI (as popularly structured as a $X,000 monthly benefit for every citizen), it’s not because it’s an economically sound proposal. It’s because it aligns with your ideological stance, is easy to reason about, and trendy in the public discourse.
I’ll explore Part 1 in the post below, and Part 2 separately. Let’s dive in!
Quick Assumptions
I’m going to focus specifically on US policy here. Why? Well, in part because it was plenty complicated for me to evaluate just the US.
More concretely—revising a single nation’s social welfare system is realistic and has precedents for implementation. Global wealth redistribution via governance is well outside the Overton window and I don’t see a clear path for the political support to arise yet.
Most of the big “AI overlord” corporations we’re worried about are based in the US. Presumably, if a global “UBI for job automation” were to be mandated, it would have to be aligned with US policy[2].
I’m going to focus on practical government policy, rather than proposed charitable & voluntary donations by individual AI corporations.
Sure, it’d be great if the people at the top of the capitalist food chain eventually decide to reject capitalism for the good of human society. I’m not counting on it myself.
Everything is highly, HIGHLY simplified. This is a concise opinion piece, not a comprehensive report. I’d love to discuss relevant details in the comments.
It’s easy to want Universal Basic Income. It’s not easy to pay for it.
Let’s jump straight to the obvious problem—such a program is absurdly expensive. Chugging the basic numbers: $12k per person, with roughly 330 million Americans, is $3.96 trillion per year. The federal budget is currently $6.1 trillion per year. So a UBI would immediately increase the entire federal budget by ~40%.
Of course, there are tons of ways to reduce this overhead[3]. In particular, UBI is designed to simplify and replace income welfare programs, such as food stamps or unemployment benefits. These add up to roughly $450 billion. In particularly extreme arguments[4], it replaces all of Medicare, Medicaid, and Social Security, which add up to $2.75 trillion[5]. Altogether, every social welfare program combined is still much less than the proposed cost of UBI.
Replacing social welfare with UBI 1:1 is regressive
The problem with paying for UBI by reducing social welfare is that in essence, such a redistribution is regressive (in the sense of a regressive tax).
What that means is: every dollar you move from unemployment benefits to UBI is money moving from unemployed people to more-employed people. Redistributing money from Medicaid is moving money from low-income to higher-income earners. And so on[6]. Paying for UBI primarily by replacing social programs would actually have the net opposite effect of what you wanted from UBI, which is more security for the disadvantaged[7].
So to pay for UBI, we probably need to raise taxes[8]. Significantly.
Let’s assume, for right now[9], a majority of that will come from individual income taxes and payroll (Social Security / Medicare) taxes, which make up 86% of the US’s $4.4 trillion in revenue. At the very least, we’d need to restructure our entire individual income tax system to at least somewhat accommodate for that ~40% budget increase.
For most people, UBI is just a tax credit (and maybe higher taxes)
This brings us to the next point, which seems obvious when you think about it. Any individual paying above $12k in taxes wouldn’t actually receive payments from the government—they’d receive a tax credit equivalent to $12k a year. As per the “leaky bucket” theory, I think almost everyone is against the idea of paying higher taxes to the IRS, only to have the IRS mail them back that same money via a UBI check once a month.
Let’s model what a practical implementation of UBI tax credits looks like today. For simplicity’s sake, let’s assume you’re in California, and individual income taxes are bumped up 30% across the board to pay for UBI. Here’s a rough approximation of how your taxes would change:
Below ~$46k[10]: you’d receive a recurring check from the IRS for $12,000 minus your personal taxes. At $46k, you’d pay roughly $0 net taxes.
From ~$46k to ~$125k[11]: you’d save somewhere between $0–$12,000 in taxes via a UBI tax credit. At $125k, you’d pay roughly the same as your net taxes today.
From ~$125k upwards: you’d just pay more in total taxes after income tax reform and a UBI credit.
Does this sound less exciting than receiving money in the mail every month? I certainly thought so. In practice, for households making above ~$46k today, UBI would be just a (massively complicated) tax adjustment, not an actual supplemental income.
What is the actual goal of a UBI policy?
Let’s take a step back from this exercise. What’s our end goal here, and why are we even considering the gigantic challenge of fundamentally restructuring the US tax and budgetary system?
Presumably, we want UBI to protect against job automation. But really what we all mean when we say that is—we want a universal, simplified safety net that protects the disadvantaged, unemployed, and lowest-income individuals in our society.
Doing this analysis, it’s apparent to me that the means don’t justify the ends here. I don’t support UBI because I want to totally overhaul the US tax and budget system (though I do support higher taxes on the wealthy). I support UBI because I believe in a philosophy of basic human rights in a world soon-to-be-dominated by AI.
It seems, to me, that the main point of UBI is to protect the first category of people (earning under $46k a year) and provide them with a basic income so they can worry less about their basic needs.
Is there a more limited-scope policy that directly targets this category of people? There is! It’s called a negative income tax.
When you say you want UBI, why you actually just want a negative income tax
A negative income tax is exactly what it sounds like. Below a certain threshold, your income tax is negative, and the government will pay (subsidize) to you a recurring payment instead of you paying taxes. As your income increases, this benefit reduces. At some level of income (e.g. ~$46k), you’ll stop being paid by the government, and start paying taxes normally.
Does this sound somewhat familiar to the UBI system I described above? That’s because it is – a negative income tax (NIT) is nearly economically identical to a universal basic income. From an economic perspective, it is possible to set up a NIT and a UBI system such that the financial end result for individuals is the same.
This article from the Adam Smith Institute explains more thoroughly, and includes a helpful diagram showing the impact of an NIT and UBI on tax rates:
Of course, it must be noted that there are other very important differences between the two schemes such as payment frequency and timing[12], and the actual implementation (particularly marginal tax rates) matters a ton.
Why would you prefer a negative income tax (NIT) to UBI? I can identify a few main reasons:
A NIT can be targeted in scope and cost: Instead of adjusting the tax treatment and benefits for the entire nation, you can solely focus on the category of individuals earning below ~$46k: the people most impacted by UBI anyways.
A rough estimate suggests you could drastically reduce the tax bill from the $3.96 trillion previously described to perhaps around $650 billion[13].
Consequently, you could avoid the universal tax reform required to fund and account for UBI.
It doesn’t require replacing the entire social welfare system: On top of such a reform being regressive as previously described, eliminating existing social programs would result in massive political blowback.
It’s more politically feasible: For the reasons above, and because NIT can be viewed as a means-tested program with historical precedent rather than a universal entitlement.
Importantly, a negative income tax can still achieve the same goals as UBI: a comprehensive safety net for the disadvantaged.
The US already has a (limited) negative income tax in place!
A negative income tax is nothing new to the US government. Back in the 1960s, the Reagan administration proposed the Family Assistance Plan (basically a NIT for families) and conducted several studies, none of which were well-run enough to be conclusive.
However, the ideas from this era weren’t discarded. In 1975, Ford’s administration implemented the Earned Income Tax Credit (EITC), which has been continuously expanded numerous times in the past 50 years.
In essence, the EITC is a negative income tax for low to middle-income Americans that provides primarily tax credits, not direct payments. That is, it provides no additional income for the unemployed, but reduces taxes conditioned on participation in the labor force. You can see how it works in this diagram:
The EITC has been an extraordinarily effective and widely regarded tool for reducing poverty in the US. Recent data showing that it lifted about 5.6 million people, including 3 million children, above the poverty line in 2018, and studies have linked the EITC to improved school performance and higher college attendance rates.
It differs from a “pure” NIT (that includes direct payments) in only two respects:
It’s heavily skewed towards individuals with dependents (e.g. children), with a maximum value of $600 in 2023 with no dependents but a maximum value of $7,430 for 3+ dependents.
It doesn’t provide unconditional payments to the unemployed, instead providing maximal tax benefits for those earning between $10k and $25k.
This second point is the core ideological difference between the EITC and a “pure” NIT, and is likely the main reason a NIT doesn’t already exist in the US. Let’s quickly deep-dive into why this is the key problem.
UBI / NIT policies reject the premise that “free-riders” must be discouraged, in contrast to basically all US economic policy
It’s well known that here in the US, we’re allergic to any type of program that provides “handouts”. Similarly, we strongly prefer systems that encourage maximizing employment and minimize “free-riding”:
We’re the only industrialized country that doesn’t provide universal healthcare.
Our Social Security program is only available contingent on individuals contributing themselves for 10+ years.
Federal welfare programs such as SNAP have work requirements to receive benefits.
Our (relatively small) unemployment benefits are contingent on actively seeking employment (“3 work search activities per week”, as if the state government is your tiger mom giving you the keys to the Honda Civic).
As a result, the EITC avoids direct payments for the lowest-income Americans as a core feature, not a bug. It’s intended to provide financial support alongside a strong incentive to work, as opposed to UBI / NIT (which have heavily debated incentives to work, depending on who you ask).
Because of its requirement to earn income, the EITC has been heralded for generating “strong labor supply incentives”[14]. Multiple studies have shown that the EITC has created “increases in employment among low-skilled unmarried mothers”[15], attributing to it up to “one-third of single mothers’ employment growth throughout the 1990s”[16].
Do you think good economic policy should incentivize people like single mothers to work, or provide them with unconditional benefits? If you’re an advocate of UBI, you might support the latter. However, it’s very clear where the US currently stands on this question—it’s strongly against unconditional payments.
In short—if you want direct payments for all to be politically viable, first you need to shift the deeply American worldview that we should minimize handouts and encourage employment at all costs.
Relatively minor tweaks to the EITC would achieve most of the goals of UBI
Redesigning tax policy effectively is hard and probably outside the scope of this article. But even from this quick analysis, we can identify a simple set of changes to the EITC that would get us 90% there.
If you want to provide an income safety net for all Americans, you likely support the following changes:
Expand the EITC to provide a greater tax credit for individuals without dependents (currently max $600). That is, shift the EITC to also prioritize reducing poverty for individuals, not just families.
Revise the EITC to provide direct payments to the unemployed, instead of cutting them out of the EITC to encourage greater employment.
These changes would establish a minimum basic income for all American citizens at roughly ⅙ of the cost of a generic UBI proposal today[17]. Here’s a simple diagram to visualize how this change would look:
Beyond this, you’d just need some tax finagling to provide these direct payments upfront and on a monthly basis, rather than as a lump sum in the following calendar year (after tax season).
Let’s summarize!
Here’s the high-level takeaways I learned from doing this research:
Actually implementing the prototypical definition of UBI (e.g. $1k / citizen / month) leads to unnecessary taxation & budgetary chaos.
Reforming income taxes would probably be necessary to “pay” for UBI.
Tax credits would be handed out to everyone already paying over $12k in taxes. Middle to high-income individuals would see a mix of increased taxes and tax credits.
On paper, the total budget increases by trillions of dollars, even though much of it is directly canceled out between higher taxes and immediate tax credits.
Replacing existing social welfare programs with funding for UBI 1:1 is likely a regressive transfer that will result in value flowing from disadvantaged to the more-advantaged.
Guaranteeing all citizens with a minimum baseline income is NOT the same as the prototypical definition of UBI. You can guarantee a minimum income without transferring payments to all citizens.
A well-designed negative income tax (NIT) massively shrinks the scope & cost, and probably increases the political feasibility of UBI.
The US already has a limited negative income tax—it’s called the Earned Income Tax Credit (EITC). The main differences from a “pure” NIT are:
It strongly prioritizes families.
It provides benefits only for the employed.
As a nation, we haven’t already implemented a basic income in large part because of our cultural focus on maximizing employment and minimizing handouts.
2-3 key revisions to the EITC would be sufficient to match the high-level goals of UBI. You could achieve most of the same outcomes for about ⅙ the budget and tax impact.
Hope this was useful to read, and I’m happy to chat in the comments! There’s plenty I can still learn on these topics, and I don’t profess to be anything more than adequate in my knowledge of economic theory.
Some things I didn’t discuss:
The important difference in timing of payments between UBI (monthly payments up front) and NIT (yearly payments after tax filing), and how it impacts the poor.
Revising US unemployment benefits to achieve similar outcomes.
Re-introducing the expanded Child Tax Credit, which essentially was a UBI-like policy for families with children for one year post-COVID.
- ^
Note: There are a variety of “guaranteed income” experiments today that target specific demographics of need, rather than all citizens. I’d argue that actually implementing them will look more like existing means-tested programs or the negative income tax described later in this article than the most popular concept for UBI.
- ^
Though the EU has been successful at forcing global companies to abide by its policies (such as in data privacy or port standardization). It’d certainly be possible for the EU to leverage its citizens to enforce some form of a wealth redistribution policy on American corporations.
- ^
Other methods include expected reductions in homelessness spending, incarceration, or higher expected tax revenues from increased consumer spending.
- ^
“The UBI is to be financed by getting rid of Social Security, Medicare, Medicaid, food stamps, Supplemental Security Income, housing subsidies, welfare for single women and every other kind of welfare and social-services program”. Charles Murray is a highly controversial and conservative economist. Read more.
- ^
- ^
Also, people (read: septuagenarians with political power) who have been paying into Social Security for decades are simply not going to accept slashing their benefits. At $1.3 trillion, this is the largest piece of the “social welfare” pie.
- ^
A common solution to this is to give social welfare recipients the choice between their existing programs or UBI. Of course, this modification means the main beneficiaries of UBI ends up being those not on social welfare.
- ^
Yes, modern monetary theory implies that we could just acquire more debt indefinitely or deal with rampant inflation. Because this is a massive and recurring financial bill, let’s assume that some type of budget balancing here is economically rational.
- ^
I’ll revisit this assumption in Part 2 evaluating corporate income taxes.
- ^
Talent.com estimates in April 2024 that with income of $46k in California, your current tax bill is $9.14k. If you pay 1.3x that, your tax bill is $11.88k.
- ^
Talent.com estimates in April 2024 that with income of $125k in California, your current tax bill is $40.66k. If you paid 1.3x that, you’d end up paying approximately $12.19k extra in tax.
- ^
UBI is typically paid in advance and monthly, while NIT is usually calculated and paid retrospectively based on the previous year’s income.
- ^
Statista suggests 33% of US households earn under $50k a year. Assuming a uniform distribution of household income below this threshold (which is definitely incorrect) and linearly decreasing benefits from $12k at $0 income to $0 at $50k income, you could roughly estimate the total payments of such a NIT to be $12k * 330 million * .33 * 0.5 = $650 billion.
- ^
- ^
Ibid.
- ^
Ibid.
- ^
See “A NIT can be targeted in scope and cost” above for where these rough estimates come from.
To me it seems like UBI and negative income tax are just two ways to describe the same thing, two ways to write the same equation that give the same numerical results. It’s like arguing why 2x+6 is better than 2(x+3). More precisely, negative income tax sounds like “UBI, but you need to do tax reports”.
My other objections are relatively trivial compared to this, so shortly:
Simplicity of the system is a good trait, in my opinion. The current systems has various costs (time and money, but maybe more importantly, opportunities wasted by perverse incentives) associated with proving that you are eligible for some benefit. Plus you need to pay the people who verify all this evidence. Making the benefit universal would remove these costs.
Commenting on the basis of lessons from some experience doing UBI analysis for Switzerland/Europe:
On the one hand, yes, and its a key reason why NIT/UBI systems are often popular on the right; even Milton Friedman already advocated for a NIT. That said, there are also discussions that suggest the poverty trap—i.e. overwhelmingly strong labor disincentives for poor, from outrageously high effective marginal tax rates from benefits fade-out/tax kicking-in—may be partly overrated, so smoothing the earned-to-net income function may not help as much as some may hope. And, what tends to be forgotten, is that people with special needs may not be able to live purely from a UBI, so not all current social security benefit mechanisms can usually be replaced by a standard UBI.
On the other hand, once you have a conditional welfare system that does not have crazily strong/large poverty traps, labor incentives might overall still be mostly stronger than under a UBI (assumed sufficiently generous to allow a reasonable life from it), once you also take into account the high marginal tax rates required to finance that UBI. This seems to hold in even relatively rich countries (we used to calculate it for Switzerland).
Of course, with AI Joblessness all this might change anyway, in line with the underlying topic of the post here.
This tends to be overrated; when you look at the stats, this staff cost is really small compared to the total traditional social security or the UBI costs (we looked at #s in Switzerland but I can only imagine it’s exactly similar orders of magnitudes in other developed countries).
I just skimmed the linked article, but it seems to me that it makes some “spherical cow” assumptions. For example, if you get a job, even low-paying, you should gain more money on the wage than you lose at social benefits. But you also need to consider additional costs of having job, for example the commute. And that’s often the problem in practice, that “wage > benefits”, but “wage—commute < benefits”. The article seems to ignore such things.
I agree that even with UBI, people with special needs should get extra.
Not exceptionally fond of the concept of ‘poverty trap’ as a talking point that tries to discourage social welfare, but I also have to note the very obvious and apparently intentional traps in the U.S. at least around—specifically—long-term disability once that is necessary for self-sustenance; including attempting substantial gainful activity on disability; marrying someone while on disability; accepting gifts of any sort while on disability; and trying to save money on disability. Some of the specifics have thankfully improved, but there’s just a bizarre number of gotchas that do aggressively penalize in some way most improvements in life situation, apparently as fallout from means testing.
(Oh, and you potentially qualify for sub-minimum wage jobs if you have a disability which impairs your ability to do that specific job, which … well, I’m not sure how this changes the equilibrium; it gives options and also makes you more exploitable if the wage decrease is more than the impairment.)
Never heard this mentioned explicitly, but I assume the idea is that you would lose the money, because your spouse has an income, right?
In my country (not USA) we have the concept of “full disability” and “partial disability”, and I know a guy who technically would be eligible for the partial disability, but he doesn’t bother doing the paperwork, because the money he would get would not be enough to survive… and when he gets any extra income, then he loses the partial disability, because apparently this cheater is capable of work. Which is kinda sorta true, but ignores the fact that out of many possible jobs, he must be looking extra hard to find one that is compatible with his specific health problems (no sitting, but also no hard work, accessible by mass transit because of no sitting in a car, etc.), and while such jobs exist, they are quite rare. (Basically, “partial disability” only makes sense for people who are also supported by their family.)
For this guy, UBI even on the “can’t really survive on it” level would be already a huge improvement.
Yeah, or even just not also on disability.
https://cdrnys.org/blog/disability-dialogue/the-disability-dialogue-marriage-equality/ discusses some of the issues around here at the time it was written, if you’re curious.
Yeah, that it as stupid situation as I expected.
A reasonable rule would be like “a person with health problem X gets Y money”, full stop. Anything else means regulating how people need to live (usually requiring them to make the worse choice) so that they do not lose the support.
Totally agree on the UBI being equivalent to a negative income tax in many ways! My main argument here is that UBI is a non-realistic policy when you actually practically implementing it, whereas NIT is the same general outcome but significantly more realistic. If you use the phrase UBI as the “high-level vision” and actually mean “implement it as a NIT” in terms of policy, I can get behind that.
Re: the simplicity idea, repeating what I left in a comment above:
Personally, I really don’t get the “easy to maintain” argument for UBI, esp. given my analysis above. You’d rather have a program that costs $4 trillion with zero maintenance costs, than a similarly impactful program that costs $~650 billion with maintenance costs? It’s kind of a reductive argument that only makes sense when you don’t look at the actual numbers behind implementing a policy idea.
You’re equivocating between real economic costs and nominal amounts of money transferred. Most of that $4 trillion is essentially fictional, taxed back again as soon as it’s paid.
As a software developer who works on object-level automation every day, I’m intimidated by the difficulty of attempting to definitively quantify ‘profit from automated tasks’ in a useful way.
For example, how do we define ‘automation’? “A task that formerly needed to be done by a human that now doesn’t need to be”? A printing press is automation by some interpretations of that insufficient definition.
Some changes in efficiency also have similar effects on productivity without being ‘automation’ (although much less scalable), for example a user that becomes highly proficient in the hotkeys of a complex platform may see massive improvements in their productivity, and subsequently eliminate jobs that would have been needed if they hadn’t become more productive.
I suspect if additional taxes were levied on ‘job automation’ it would merely create large incentives for companies to skirt around whatever the legal definition of automation was, and potentially hide it in things like the above example.
In the case where there was no ‘automation tax’ created, I would anticipate a NIT to be reasonable but not sustainable because I expect automation to continue to remove jobs at an accelerating rate in years to come. I do not expect tax revenue to increase at the same rate because my current understanding is that the most wealthy tend to also be those most proficient at exploiting loopholes in the tax system to evade as much as possible.
My takes here are almost entirely conjecture and I’d appreciate someone more informed to correct and/or clarify.
Thanks for doing this! It’s looking like we may need major economic changes to keep up with job automation (assuming we don’t get an outright AGI takeover). So, getting started on thinking this stuff through may have immense benefit. Like the alignment problem, it’s embarassing as a species that we haven’t thought about this more when the train appears to be barreling down the tracks. So, kudos and keep it up!
Now, the critique: doing this analysis for only the richest country in the world seems obviously inadequate and not even a good starting point; something like the median country would be more useful. OTOH, I see why you’re doing this; I’m a US citizen and numbers are easier to get here.
So in sum, I think the bigger issue is the second one you mention: global tax reform that can actually capture the profits made from various AI companies and the much larger base of AI-enabled companies that don’t pay nearly as much for AI as they would for labor, but reap massive profits. They will often be “based” in whatever country gives them the lowest tax rates. So we have another thorny global coordination problem.
I was also going to mention not accounting for the tech changes this is accounting for. So I recommend you add that this is part 1 in the intro to head off that frustration among readers.
From your title it seems that you are going to talk about UBI in the context of automation. This context immediately gives us the source of all the wealth that is to be redistributed via UBI—the gains of productivity due to automation . But then suddenly you start talking as if you don’t know where to get the money and investigate the option of replacing current welfare programs. This is super confusing. If you wanted to talk about UBI as a replacement for welfare, why mention automation?
When you compare UBI with NIT and existent welfare programs you do not mention the elephant in the room—UBI doesn’t penalize productivity. Also it’s not clear why would implementing NIT globally would not require dismantling current welfare system or doing a huge tax reform if implementing UBI would.
Another very important andvantage of UBI is that it’s easy to maintain. You do not need a huge bureaucracy tracking employment status of multiple people and their income, processing papers and validating that noone is cheating the system. You simply send money to everyone.
Re: “UBI in the context of automation”, that’s a great point and I can definitely see what you’re getting at! The answer is that this is part 1 of a 2-part series—Part 1 is how to implement UBI realistically and Part 2 is how to pay for it. Paying for it is an equally or even more interesting problem.
Re: penalizing productivity, it’s pretty unclear from the research whether NIT actually reduces employment (the main side effect of penalizing productivity). Of course theoretically it should, but the data isn’t really conclusive in either direction. Bunch of links above.
A modified EITC wouldn’t have pressure to dismantle the current welfare system because it’s a LOT cheaper than 40% of the US budget. Adding a pure UBI on top of the existing welfare systems would make redistribution like 70-80% of the US budget, which is a pretty dicey political stance.
Personally, I really don’t get the “easy to maintain” argument for UBI, esp. given my analysis above. You’d rather have a program that costs $4 trillion with zero maintenance costs, than a similarly impactful program that costs $~650 billion with maintenance costs? It’s kind of a reductive argument that only makes sense when you don’t look at the actual numbers behind implementing a policy idea.
Looking forward to the next part then.
I think as a general rule, when something theoretically is supposed to happen and we do not have conclusive practical data, its reasonable to assume that it indeed will happen.
Depends on the maintenance cost, obviously. But again the problem here is that our best theories strongly predict that impact will not be similar. NIT creates perversive incentives that UBI doesn’t. And incentives matter—economy isn’t a zero sum game.
So a more appropriate question is: Would you rather invest 4 trillions in a company which evaluation will go up or 650 billions in a company which evaluation will go down?
I predict that implementation of general NIT will face much more pushback than implementation of UBI. No matter how minor are the required tweaks to EITC they are politically unfeasible in US. Meanwhile, UBI has support all around the political spectrum, from leftists to libertarians.