I know a few upper-middle class small business owners (all non-retail sectors) whose businesses weren't substantially affected by the pandemic, but who basically got a free handout as part of the program.
Two mentioned how they were initially hesitant to apply for money, but then worried that if they didn't, their business could take a downturn after it was too late. Then as long as they spent the money on payroll (which they had to pay for anyway), they didn't have to pay it back, even if their business didn't show any losses. I shudder to think of how much the bigger players yanked out of it.
I was doing some work for a $30MM/yr ecommerce retailer whose business was up 30% YoY pre-pandemic and began a trend of doubling in April 2020. They were still hiring and got ~$600k for free. Another $50MM/yr company had flat/slightly up revenue and got $1.2MM. Both companies are notoriously stingy with W2 worker pay and bonuses, and remained so even after getting bailouts.
The bulk of the funds should have been allocated to retailers and restaurants that were literally forced to close by local and state orders.
Funds that went to large non-retail businesses, like airlines, should have had far more strings attached. As the CARES Act was written, it placed a 12 month moratorium on stock buybacks, dividends, and executive pay increases but allowed those restrictions to be waived by the Fed and/or Treasury on a case by case basis, and they often were waived. Those restrictions should have had a time horizon closer to 5 years, and no waivers should have been permitted.
In many ways, this mirrored the bank bailouts of 2008-9. If the government is going to save your corporation from extinction, then it needs to receive something in return - at a minimum, shareholders need to take a haircut as they would in a bankruptcy proceeding. The policy objective should have been to protect the overall economy from the demise of critical industries, not the preservation of existing shareholder wealth.
For a counter example: in Germany business subsidies for COVID excluded payroll, which for many service businesses meant it wasn't worth applying. The idea was that payroll expenses could already be reduced by sending people home using the short-time work subsidies, which goes something like this: you reduce an employee's hours by X% and the government pays the business XY% of the employee's salary.
In practice this meant small, founder-led service companies were hit harder because working business owners couldn't take advantage of this and cutting hours also meant not being able to invest as much time in rebuilding or pivoting. Additionally the subsidies also barely covered stocking expenses (e.g. for losses from perishable goods expiring during lockdowns) so the only type of business that really benefited were medium scale companies with enough financial reserves to survive sending every employee home while the subsidies would cover a large chunk of recurring business expenses, i.e. mostly manufacturing companies.
There were also some additional subsidies but they used almost surgical precision to similarly limit who could apply, e.g. solo entrepreneurs without employees (but again, not covering payroll) or companies that had more than X% of employees working at least Y% short-time while also having at least one employee out of short-time mentoring someone in a job training, or a tax rebate for companies paying out "COVID bonuses" to employees (which in practice just translates to giving tax subsidies to large companies paying out bonuses to senior executives in the middle of a pandemic).
If you don’t show losses, and the loan was forgiven, it becomes taxable revenue. As a C corp, Trump got those taxes down to 21%, so it was only mostly free.
A friend worked for a company that used the Canadian equivalent during a period of record growth. As they doubled their headcount, they got the gov to pay for it all.
Friends I know run a small Canadian documentary film production company. They received a hefty chunk of change in the early days of the pandemic that they really didn't need.
We felt a bit guilty taking some of the money from the handout, until we saw how much more all the companies around us took. It all got snatched up as quick as companies could adjust their numbers to qualify.
While we were affected by a reduction in orders at beginning of the pandemic , we would have survived without layoffs anyway. But we decided to take the money and hold on to it in case the situation got worse. Now we’re sitting on a pot of gold that is supposed to help our workers from losing their jobs, but our current biggest labor issue is short staffing.
And giving everyone raises after a record year of inflation isn’t exactly a headline statement. It’s more like - “our workers would have made less this year than last year if we hadn’t given them raises… and probably would’ve quit. So, we had to give them raises.”
"I went to the market and offered $2 for a loaf of bread - the shopkeeper said no. So I offered $3, but he still said no. This must mean that no amount of money could possibly buy a loaf of bread and not that the price of bread has risen above what I offered."
I got a free handout as an employee without my job being affected by the pandemic at all. Missing chips currently do affect my job a bit, but still not as much as people working (or currently not working) in production. We just raise prices too, but we needed to send people home in the meantime.
Don't know how much the chip scarcity is related to Covid or if it is just useless coin miners.
> The government can't even give our money away with a basic level of competence?
Lots of people in the executive wing and their friends/cronies benefited: it was competence, but in the way one would hope. A member of cabinet resisted[1] releasing names of companies that benefited from PPE loans to congress, calling it "proprietary information" - that was not an accident or bumbling.
The US lacks the state capacity to tell who was going to have trouble with COVID-19 closures, and who wouldn't, so a whole lot of money just had to go to people that had no need for it whatsoever.
Regarding PPP, every local tech staff augmentation company got a few months worth of payroll out of it. For those of you not in the know, their model involves hiring developers at $x an hour, and then placing them at large enterprises for $x+y, often for years at a time, as those companies would rather have contractors than employees.
So where does the money go? Straight to the owner's pockets, as lockdowns only changed staffing needs in a very small number of companies. So if your sole proprietorship staffing company employs 25 of those developer-contractors for, say, 180k and a couple of HR staff, you could get million dollar "loan", that would be forgiven in a few months, as you didn't fire any of them.
Needless to say, the people in charge of that kind of company were very happy about the PPP program.
> The US lacks the state capacity to tell who was going to have trouble with COVID-19 closures, and who wouldn't, so a whole lot of money just had to go to people that had no need for it whatsoever.
I love how it’s so critical that we means-test individual welfare so that no dollar can possibly go to someone who doesn’t need it, but when it comes to means-testing corporations for handouts, all of a sudden it’s impossible to determine which corporations need the help and which ones don’t. So just dump money on anyone who fills out the paperwork. If welfare and food stamps just went to anyone who applied, politicians would be up in arms.
Those are the political conditions imposed by the ruling party at the time; the measures did get actual money to the public, but to do so it was necessary to pay off everyone who might have objected.
The PPP was designed to obviously benefit the businesses that needed it the least:
1) For any business that is fine or growing with COVID. PPP is free money.
2) Your business is in severe trouble with COVID, so you can't even have employees working productively. You can just give them the money, or use the PPP loan as a bridge loan, but you have to pay it back. It's low interest, but relatively short term and you had to start paying it back before COVID is even over.
I think in hindsight all of these loans should have clearly been truly loans, probably leveraging the existing SBA disaster loan program. This is a great program, was already working and distributed some money in COVID. 30 year loans at like 3%, with a personal guarantee.
Basically for any business owner who just needs money to bridge a disaster (the purported target of the PPP), this is way better. And anyone who doesn't need the money, won't take it (saving the taxpayers billions). It's unclear what the losses on this overall would have been, since its a loan, but I think its reasonably likely to be in the $10B to $100B range (instead of the $953B the PPP turned out to be).
In hindsight, it should have been structured like Germany's Kurzarbeit ("short-time working") program. Impacted businesses simply furlough employees they don't have work for. Employers continue to pay furloughed employees 70% of their salary, and the government reimburses businesses for the cost of the furloughed employees' salaries.
There are no loans, no unemployment insurance. There is nothing employees need to apply for, and no Byzantine rules. Employees just get furloughed and continue to get 70% of their paycheck in the exact same way they always have, and businesses get reimbursed.
When the crisis is over, businesses bring their employees back to work, and there's no major economic churn. Everyone goes right back to what they were doing before, assuming they still want to.
There were some employers who did this. They forced their ex employees off unemployment. The employees didn't like this because unemployment paid significantly more than their old wage. Ppp essentally forced some people back into poverty.
> I’m not american but I’m struggling to understand how someone‘s unemployment can be higher than their wage.
Unemployment in the US is state-based, and usually a fraction of recent-past monthly income. During the pandemic, there was an emergency boost designed to bring the average unemployment benefit up to full wage, but this was implement (for simplicity) as a flat $ amoung on top of the usual state unemployment benefit, not a change to the formula. So, lower wage workers ended up above 100% of their recent-past wage while the emergency enhancement was in effect.
In hindsight, the government shouldn't have precipitated the conditions that justified these "loans" in the first place. The whole putative point of this (reducing covid deaths) was obviously ineffective and/or a red herring. Of course, if you think the actual point was liquidation of Kulaks, it was quite effective at that.
Look at their definition of lockdown. It includes all forms of non-pharmaceutical intervention. This includes border closures, shelter in place, and everything else that was tried in one big “lockdown” category.
The same study found that limiting indoor public meetings (bars, etc) WAS effective. But, thats
just a subset of “lockdowns”.
AFAIK the main purpose first and foremost was to prevent the health system from collapsing. Everything else was secondary. Take the spike out of the incidence rate to spread hospital admissions out over time.
It would not affect how many got infected, not even deaths directly - the only way to reduce deaths would be if in the meantime better treatments could be developed, more people getting vaccinated, and enough hospital (especially ICU) capacity for the severe cases being available. So death prevention was an indirect effect and not the direct target.
For some strange reason, I rarely see this main target being mentioned in discussions, especially not of the "deniers", for example when they point to "it's my own problem the government should not tell me what to do", neglecting that having to be hospitalized does make it everybody else's problem too.
The question is not the death rate, even if it was exactly the same (which I highly doubt, given that we achieved a significant vaccination rate demonstrably reducing severe cases, and better treatments), the question that the COVID measures should be evaluated against is if we indeed managed out spread out the wave(s) over time. In the end almost everybody will have been in contact with the virus, preventing that never was the goal, only to spread it out over time.
That said, I'm also curious how someone could claim "Lockdowns had little or no impact on COVID-19 deaths". Do they really claim with even more stressed ICUs and more severe cases because of less vaccinations (which only became available later) there would have been the same number of deaths? That sounds more than a bit strange to me.
That said, I'm not at all opposed to critical review of the measures. Many did seem a bit off, for example continuing to limit outdoor movement when it had already been shown that the main problem was prolonged closed-room indoor exposure.
I also see curious patterns when I look at the incidence map of Germany. Right now the southern East German states, the ones with the most opposition to COVID measures, are much lighter (much lower incidence rate) -- https://www.zeit.de/wissen/aktuelle-corona-zahlen-karte-deut... (at the time of posting this link those mentioned states are significantly lighter than the entire rest of the country, for the second time, at other times they were/are deeper red)
Just a few weeks ago they were the deep red ones. The newspapers only reported when those regions had worse numbers, now for the second time their numbers are much better than that of the rest of Germany for the second time and again not a single mention of it in the media. I don't want them to interpret it, I think that remains open without good study, I'm only talking about merely even just mentioning the fact, but nothing. That is quite some selective attention to only the negatives.
> AFAIK the main purpose first and foremost was to prevent the health system from collapsing.
You're arguing against the wording of the title, but the overall conclusion is clear - that lockdowns (in the common use of the word) did not have the effects that were used to justify them.
This paper was written by an economist, not an epidemiologist. And, if I'm looking at it correctly, a grad student at that. It's lacking some levels of detail - like it blanket says lockdowns failed, but defines lockdowns in a way that is not necessarily common use. Then admits at least one type of lockdown was successful, but states that as an aside, leaving the title and conclusion intact.
I worked on a paper that showed that the "Paycheck Protection Program loans increased employment at small businesses by only 2%, implying a cost of
$377,000 per job saved" in April 2020: https://opportunityinsights.org/wp-content/uploads/2020/05/t...
It still hurts me to read. Over a third of a million, 7 times the average salary, to save a job during the pandemic under this plan
But then they would never work again! Look at where rent moratorium and $6,000 got us!
/s
Sorry, hearing this ^ bs logic every day in outlets from WSJ to NPR is beyond frustrating. We have helped our citizens so little during a pandemic it has shaken my already cynical core.
I used to listen to a podcast I enjoyed about a small and rapidly growing tech company in Oregon, someone I had personally met a few years back at a conference - which is where I first learned of the company; they work in the e-commerce space and I enjoyed listening to the founder talk about the trials and tribulations of growing his company; when covid hit, the company grew like gangbusters (like just abut every online business), and he would talk about the skyrocketing business growth and all of the money they were making.
Then he also went on to talk about how he was lining up at the public trough to get welfare from the government (PPP) to 'help' his business - was so thoroughly disgusted by the lack of ethics and have never listen to the show again, and lost all respect for this founder as well.
I will never understand rich people making money hand-over-fist and still willing to take money from taxpayers who make a fraction of what they do so they can have even more
(are you listening Elon? this story is not about you, but it could be.)
So in your opinion it was the companies fault that they didn't purposely leave a competitive advantage on the table while their competition surely utilized it?
It seems that you judge from a place of detached ignorance. We are going through a pandemic and that business owner may very well be worried the bottom will fall out any moment and if that owner has employees it is their responsibility to prepare as much as possible during times of uncertainty.
I find it unethical that you would judge the company rather than blame the core root of the problem which is the incompetence of the handouts in identifying rather easily that this company was growing and thus not in need.
For all you know the owner would very much prefer he didn't qualify for those loans alongside their competition. Blaming the company solves nothing but does create division. Blaming the program, however, has the potential to solve every problem you have with the situation.
>>So in your opinion it was the companies fault that they didn't purposely leave a competitive advantage on the table while their competition surely utilized it?
Yes, absolutely. People who are making money hands over fist should not be lining up for corporate welfare just because everyone else is.
It's too bad so many people are OK with disgusting behavior - just because 'everyone is doing it'.
How much better could we take care of people that truly needed assistance, if we didn't have to worry about making sure that the large numbers of people who don't actually need the help, weren't also lining up at the trough.
Amazing to me that people will continue to make excuses for rich pr*cks that abuse the system to enrich themselves at everyone else's expense.
>>So in your opinion it was the companies fault that they didn't purposely leave a competitive advantage on the table while their competition surely utilized it?
Are you OK with upper middle class and rich people getting in line at 'no questions asked' food banks? even though they don't need the help? taking away food from people that actually need it?
Nope, but I actually want to solve problems rather than start drama, which is why I blame the mis-allocation of public resources towards providing upper middle class with food from food banks.
If you're looking for problems, blame is easy to throw around. If you're looking for solutions you have to start with the processes that can be held accountable and changed. You can wish all you want, but your moral judgement isn't going to change the actions of people you don't know.
What _will_ work however is demanding that public resources are allocated appropriately. That's because the government works for us, but that person you want to denigrate owes you nothing.
>I will never understand rich people making money hand-over-fist and still willing to take money from taxpayers who make a fraction of what they do so they can have even more
The two are correlated because our economic system rewards that very cut throat greedy behavior. Those behaviors mixed with some luck and skill are often how those very people became rich in the first place.
Devil's advocate: is this altogether a bad thing? Hear me out (thought experiment). COVID relief wasn't supposed to be welfare. Its purpose could be viewed as being not a safety net, but rather compensation for allowing the economy to be shut down.
In that sense, it makes sense that much of the recompense goes to the people who were asked to shutter their businesses, put up signage and buy new equipment and reduce capacity, make their employees check vax cards at the door, etc.
"Relief" could be a misnomer for a fair payment in return for cooperation with a government lockdown program.
By the same logic, when British Empire made slavery illegal, they owed reparations not to people they enslaved, but to business owner's who could no longer keep slaves and lost their 'assets'.
But that suffering wasn't increased by paying off the former slave owners. If anything, it may have reduced it by making it politically feasible to end slavery earlier.
The entire thread is speculation, doesn't seem very useful to ask one side for evidence without asking the other. If all you care about is people evidencing their claims, you probably should've asked at the first assertion, not the 2nd/3rd.
No doubt, but that was what the British did. I made only a statement of fact.
Also, as you can see from the other replies, there were other considerations at the time. Compensation to the slave owners is morally repugnant, and yet the alternative might have also had morally repugnant consequences. In any case, that is what they did.
No I agree, and I think it made sense for you to reply with that honestly I might have had you not, but I think it is fair to say that it’s at least morally counter intuitive
> I think it is fair to say that it’s at least morally counter intuitive
Only in that as a society, we seem to have decided (or come to through emergent behavior) that viewing sweeping socioeconomic changes and what might actually result from them with anything other than a cursory surface analysis is too much effort. :/
That is the insight that is why I started this comment thread in the first place. Honestly, I was hoping for more interesting discussion on HN from it than I got.
Spending a 10s of millions of dollars to avoid 100s of thousand of deaths would be a deal many rationale people would be willing to make. It’s the ultimate ends justifying the means.
It is bad to keep citing 2008 money as if it were a handout. Much of the money was paid back with interest, and the government MADE money on those loans. Look up the “maiden lane” loans for an example.
It's bad to keep countering complaints about 2008 as if the balance sheet is all that matters. The ethical complaints aren't about the money, but about the incentives and disincentives for certain behaviour, and the constant preferential treatment for a certain class of people above others. The cited reason for buying the bank debt instead of the home owner debt was "moral hazard", which actually applies to them both, but you don't need to guess which group was exempt from that consideration.
The worry was about creating moral hazard — the idea being that we would set a precedent that would drive the banks to be even more risk tolerant. Ultimately, everyone decided that the risk of bank collapse and bank runs were worse risks that the possibility that moral hazard would be the outcome.
>The cited reason for buying the bank debt instead of the home owner debt was "moral hazard"
The moral hazard was the smallest of the problems. The complexity of how to do so seems like the much bigger issue. What does "buying homeowner debt" even mean when much of that debt has been securitized?
Paying mortgages, or a percentage thereof, for people? If it's considered an interest free loan on which the people would pay back in their taxes or on any sale of the home initiated by the owner or as inheritance fees, possibly with a maximum delay before payments must be attempted, then that seems fairly straightforward to me.
How would the government have capacity to do this? It's much easier to just purchase bundles of mortgage backed securities. From the moral hazard standpoint, I think they were worried more about the lenders rather than the lendees. Under this arrangement, even the shadiest of private lenders get rewarded. Under TARP, at least it was just banks that got bailed out, and they could buy the MBSs at a discount.
> How would the government have capacity to do this? It's much easier to just ...
I don't find the argument that "it's hard to track and manage that" valid or compelling for an organization which includes the IRS as one of its constituent parts.
Actually paying portions of mortgages would both keeps the banks solvent as well as keep the people capable of pulling through with assistance from taking the burden of the problem because of what might be temporary issues (a recession and lack of work). It's a much more market based solution than "throw money at banks", in that it doesn't subvert the market entirely, just supplements it.
They would still need to allow people that had no hope of paying their mortgage to lose their homes, and something different might be needed for that to keep that subset of the problem space (which might be a large subset, a lot of lenders were fudging number to get people into homes they couldn't afford) from still causing things to spiral out of control, but there was no guarantee that the first part of TARP was going to be enough either, so it's not like "the situation needs to be closely monitored for future needed intervention" wasn't an assumed part of any proposed plan.
>I don't find the argument that "it's hard to track and manage that" valid or compelling for an organization which includes the IRS as one of its constituent parts
Doesn't this article highlight what happens if you haphazardly throw together a complicated relief effort overnight? The money ends up in the pockets of the rich anyways.
>Actually paying portions of mortgages would both keeps the banks solvent
Exactly, which is part of the problem I'm highlighting. Under this arrangement, the lenders and mortgage backed securities holders don't get punished at all. If the homeowners get to keep the their home, that means the lender gets everything that they asked for. If the homeowner receives government assistance and loses their home anyways, the lender still ends up with government money. Lenders are literally getting rewarded for their reckless lending.
Presumably with TARP, the Treasury negotiated the purchase prices with the banks to make sure that they were punished, but not so much they'd collapse.
At some point you have to figure out how to make the best tasting lemon drink you can out of the lemons you have. Making sure the rich don't get the money is less important to me than making sure the poor and less than rich actually get good outcomes. There's a word for punishing people even if it hurts you and in a way that could be avoided. It's called spite. We should care about helping the poor, and if possible, in a way that's not overly generous to those that don't need it. But we shouldn't be afraid to help the poor just because it also benefits those we deem not worthy.
It's a somewhat subtle but I think very important distinction that needs to be considered in these discussions of the rich benefiting in these instances. It's almost impossible to prevent people other than those targeted from benefiting, and those with the most flexibility (which comes with money) are those most likely to be able to take advantage in some way of programs not aimed at them (if you help people in poor physical health by supplying money for physical therapy, companies that offer that service will benefit). Trying to prevent that at the expense of the people you're trying to help is not beneficial to anyone (especially since economically the input resources and output outcomes are not always linearly related).
I'll describe it by the ultimate objective: most people keep their homes, and the lenders who encouraged and inflated this bad debt lose money on it instead.
The government makes money when they give poor people money, too, and not only that, but other folks make money too because poor folks tend to spend their money. This is without having to keep track and collect loans.
What are you talking about? This isn’t trickle down economics. This is just literally paying back interest on a loan and not going bankrupt (Bank of America, Merrill Lynch). There is an immediate first order return and the second order return of not letting the largest banks fail was widely believed to be positive even in retrospect by both Democrats and Republicans.
Do you even know what trickle down economics is? I’m guessing no and that’s why you didn’t post any sources. Long story short, it’s about taxation policy, which has zero overlap with “loans for banks vs handouts for poor people”.
"You’re considering secondary effects, which would have also happened with the money loaned to the banks."
Quote, you. The effects of such a thing simply aren't the same. Poor people aren't helped when you give folks money at the top - which is, after all, what the taxation policy does. It isn't uncommon to include things that aren't strictly taxation in this.
> It is bad to keep citing 2008 money as if it were a handout.
So if I make reckless decisions because I am greedy, the govt should bail me out and then if some of my investments work out in the end I can return the govt's money.
That's actually the strategy, yes. It sounds like it might be bad, but...it isn't? In practice, people don't want to take risks that are irresponsible, they want to make money.
I'd also point out that it was not the riskiness of the assets that the government bailed out. It was the complexity of valuation that reduced the short term liquidity in those CDOs and other collateralized and securitized debt products. When they were actually unwound, it turns out the risk was lower than people thought it would be.
> In practice, people don't want to take risks that are irresponsible
Yes that was the same argument used by Alan Greenspan when he said investment banks dont need regulation because they wont take risks that are irresponsible, yet Lehman and Bear Sterns and others imploded because they did not understand the risks. This is precisely why you should not socialize the losses, if they fail let them fail or else you regulate them so they they dont take excessive risks.
> It was the complexity of valuation that reduced the short term liquidity
It was so complex that the bankers themselves did not understand it.
If that's the argument, then the money should have been spent on free preschool, community centers, and after school enrichments, since those have the highest ROI.
Preschool is like a 9-12x return on investment; it's bonkers.
Why is spending money on the rich considered an investment whereas spending money on the poor is considered welfare? For example, it is clear that investments made in public school education has much higher returns.
> it is clear that investments made in public school education has much higher returns
do you have evidence of increasing funding to public education directly resulting in better outcomes in general? obviously better schools are usually better funded, but i can't imagine how throwing money at a bad school would result in better education...
> but i can't imagine how throwing money at a bad school would result in better education...
...what?
How about hiring better teachers. Building nicer facilities. Funding extracurricular/after-school activities. Smaller class sizes. Better equipment (computers, technology, textbooks). Better/more support staff (counselors, etc).
The list goes on... I would much rather go to a school that had plenty of money than go to a school that was on a tight budget. And yes, I would almost certainly get a better education at the former.
There were also side effects, i.e. many small banks closing because they were not 'worth' being saved. So what we saw was big banks getting an infusion, paying it back and finding themselves at the top of a more consolidated market thanks to the US Govt.
Citizens took home trillions this time around. The 2008 money was loans, that were paid back with interest. The citizens this time around got socialism (and related inflation). 2008 had neither.
Have a look at the first chart in the article. It shows $844B in stimulus checks and $666B in enhanced unemployment benefits. That alone is $1.5T paid directly to citizens, even without counting anything else.
844B stimulus checks, 666B unemployment compensation, 145B other income security, 828B for paycheck protection (money lent to business to pay paychecks - goes to the people nearly as directly as the stimulus, and allows business to stay afloat)....
It doesn't count the tax credits and other things that added to citizens handouts.
A lot of the other categories went also directly to paying citizens. Read some about what happened.
Devil’s advocate, hear me out (thought experiment), what if the economy is made up of people other than business owners? What if economic function needs both businesses and individuals to survive?
Where, out of curiosity, did you find the objective fact that the free money giveaway wasn’t meant to be welfare? It certainly helped a lot of people… fare… better?
Is it possible that a person could be made so averse to the idea of “welfare” through conditioning that, when they see it plainly in front of them, their knee-jerk reaction is to invent a whole new reality to justify making sure the biggest benefactors of society remains squarely “those who need it least“?
If you took your stimulus, or a PPP loan, or avoided eviction due to moratorium, or were in any way given a tiny sliver of help directly or indirectly using government funds, you are a welfare recipient. You can no longer claim having pulled yourself up by your bootstraps! Ever!
The thought is so painful to so many Americans that they literally would rather just starve at the feet of the rich out of some fever-dream version of earned righteousness.
When I was in jail, a MAJORITY of the people in there were scamming the COVID handouts. I remember one cellmate who had obtained $25,000 in COVID funding to buy PPE for his non-existent business (he was in jail for something unrelated).
The guys in my block all had girls on the outside who would do all the paperwork for them for about 25% cut of whatever they made. The prisoners would feed them all their personal information and a few weeks later the fixers would put a substantial amount of cash onto their commissary account. It was a total production line affair. The fraud was substantial.
I think the second graph in this story is perhaps answering the 'wrong' question.
Yes the richest 20% received the most from these programs. But the top 20% usually receive the most. The rescue plan was not advertised as the dawn of a new era of redistribution. It was an expensive bandaid to try to stabilize a bad situation. It wasn't _trying_ to give more to the poor.
I think the right graph would compare rescue plan funds received by each income quantile against the actual income distribution. The better question it illustrates is roughly, was the inequality in the rescue plan funds distribution greater or less than the general income inequality?
In particular, if ordinarily roughly >50% of the income goes to the top 20% (I think that's true), and the graph in the article shows that maybe a bit less than 30% of the rescue plan funds went to the top 20% (>600B / 2.2T), then yes we should regard the rescue plan as benefitting the rich, but to a lesser degree than like, the whole rest of the economy.
If you want to complain about ways that we needlessly hand money to the rich, shouldn't we start with the ways which are most unequal? How about the fact that we distinguish capital gains from earned income? How about the mortgage interest deduction?
No surprise there. Who are the rich? The politicians and bureaucrats who implemented these ideas, along with their buddies who fund their campaigns and junkets, and offer cushy board positions and lobbying gigs if they ever do leave their government posts.
Were there countries that did a better job than the US in regards to the economic response the pandemic, particularly with respect to fiscal stimulus? Is any other country as close the the US to prepandemic GDP trendlines?
I wouldn’t be surprised if there are but I’m honestly not aware of them.
> European countries did better: governments encouraged struggling employers to keep workers on their payrolls with reduced hours, and then made up some or all of the pay gap. Unlike the ppp, such programmes were usually aimed only at struggling firms that needed to cut salaries (though they were not always well targeted: a share of beneficiaries in Britain continued to pay dividends). Yet despite the flaws in America’s programme, the study’s authors argue that Congress was incapable of doing better. Crafting a targeted policy would have been hard, expensive and slow. Many countries that kept workers in jobs had programmes in place already: some of the most successful—including France, Japan and Germany—simply increased coverage and benefits at the onset of the pandemic. If America hopes to waste less money in future crises, it should plan ahead.
On the one hand, the S&P 500 has outperformed the FTSE for just about any period in the last five years.
But that’s not necessarily due to the PPP. Stimulus checks and unemployment insurance were the majority of the $2.2 billion effort. European countries were more efficient with their version of PPP (and perhaps general pandemic assistance programs) because they leveraged existing programs that touched payrolls.
From the article:
> Many countries that kept workers in jobs had programmes in place already: some of the most successful—including France, Japan and Germany—simply increased coverage and benefits at the onset of the pandemic.
I'm curious too. But I would suggest that the U.S. has very deep pockets and can throw a lot of money at a problem. That doesn't mean it was a "smart" response by the U.S.
I think it’s totally fair to criticize the response and suggest it could have been better, I meant it more in terms of the people complaining never seem to entertain the counterfactual of how bad things could have ended up with no/poor fiscal response.
Well said! In hindsight, it is easy to forget that there was a lot of FUD at the time.
These programs were created quickly - some countries had better infrastructure to handle this than the US - but the alternative could have been an underwhelming response to an even larger problem.
The graph showing the PPP loan distribution by income is kind of unsatisfying because there’s a broad range of incomes in the richest 20%. It would be much more convincing if there was more granularity in that graph. The 80th percentile household income is in the low to mid $100k range. If you have children and live in an expensive city, you’re not rich even if there are a lot of people worse off compared to you.
This is not to say that I’m disputing the reporting showing that there was abuse of the PPP program.
And no one was worried about "socialism" when the tax payers gave tons of cash to the rich. Certain people only seem to worry about "socialism" when it helps regular people.
>so I don't think you can claim that no one is worried.
No that isn't what I claimed, I claimed no one was worried. Using an article written almost two years after fact as proof against my claim doesn't make a whole a lot of sense.
Now obviously my no one claim is hyperbole but the fact the bill's passing was near-unanimous is my point. Using one of the very few no votes in congress as proof against my claim would make a lot more sense.
yeah, an article in a publication where the authors are anonymous because the views published in it are painfully true enough to make you real life enemies
Let's not forget that a lot of people were distracted with other things: Trump getting impeached for the second time and a global pandemic are the two that come to mind
My business received about 1.25M from PPP. It was essential cash flow for us and helped save the business (from a cashflow pov) but it was also 100% a massive handout. On a systemic level it makes some sense I guess, but at a micro level it seemed like a bailout to the people who needed it the least. There is also basically no reason it had to be a handout vs an actual loan that required repayment.
COVID was the largest wealth transfer in our generation, from children as young as kindergarten (who will pay prices with the reduced social and IQ growth due to quarantine and school shut downs), millennials and GenZ to boomers.
> Harvey Norman repaid all the wage subsidies for its “controlled entities”
The businesses that were claiming the cash were the franchisees of Harvey Norman. Not the publicly listed company (and it's owned subsidiaries). It could well be that those franchisees were indeed justified in claiming the Jobkeeper subsidies.
I love picking on Gerry Harvey/Harvey Norman us much as the next guy, but this time it is unwarented. Pick on the plenty of other ASX (publicly) listed companies that used the money, didn't repay, and still dished out dividends to their shareholders.
For example, Premier Investments (ASX: PMV) received $87m over two years, paid back $15.6m. In that period, they paid out $1.04 per share of dividends! They have as of writing 158.99M shares outstanding, so why did Just Jeans, Smiggle and Jay Jays need Jobkeeper? All that cash went straight to the shareholders pockets.
Another example of how hyper focusing on jobs is counterproductive. You were afraid these jobs would be lost. It is conceivable that you could let these jobs just die and then give this money to the newly unemployed. But no, you stilll have that puritanical / protestant devotion to work itself.
No surprise there - after all, the state is the strong arm of the wealthy. Pretty much every time there's a big round of handouts or tax cuts, they go to benefit the richest in society.
I thought it was obvious at the time that some of the money would end up going to people who didn’t need it. But we were okay with that, to an extent, because enough would get to the people who did need it
> Crafting a targeted policy would have been hard, expensive and slow.
How about simply stating that any firm paying dividends to shareholders or bonuses to execs could not have the loan forgiven? It wouldn't be perfect but it'd cut out the most egregious snakes. Hindsight yadda yadda.
The same thing happened in Australia. Cash to businesses who could show an impact by Covid, but a lot of that money went towards bonuses and dividends. Crazy.
I still can't understand why they created this bizarre program through bank lenders and the SBA, when they really only needed to send checks directly to people or employers based on the Social Security records. There was, as usual, a sizable handout to banks, in the form of a 1% processing fee.
[EDIT] - Ignore. The article summary and the article are unrelated so my comment is unrelated.
I can't read beyond the summary, but this is true in my experience:
> Its hastly designed scheme sent much of its relief money to people who didn't need it
My neighbor's granddaughter (age 18 or so) got relief money to the tune of more than she had ever earned in her life. She got purses. Many of them.
My wife's friend got relief money atop unemployment. She was a waitress and stopped working during the time and she was making more than she could if she was working.
A buddy's friend's work strategically cut hours so employees could get the relief checks atop their pay for a net pay increase.
On the other side, my dad's work dried up and he was able to stretch things due to the checks.
The article is about PPP, which gave out forgivable loans in the hundreds of thousands of dollars to businesses and self-employed individuals. The total cost of this was about the same as the direct payment stimulus checks, but went to about 10m borrowers rather than the ~150m who received the checks.
As for your anecdotes, it was sort of the point of giving people money that they would spend it, "stimulating" the economy. It was not intended to become a nest egg or to satisfy some cosmically appropriate amount of money for an 18 year old to have. It's macroeconomic policy, not moral policy. In many cases, the cost of doing means testing so you don't accidentally overpay someone you think is undeserving is more than the amount saved.
a religious school on same block as my house in nyc which refused to close down when there were dead bodies in trucks and also secretly served as wedding hall when wedding hall were shutdown, got 12 million dollars in loans, probably also got loan forgiveness.
Anything other than direct cash transfers to individual humans is likely to have this effect. Institutions are simply always going to be able to navigate and take advantage of complex government programs better than real human beings.
UBI or stfu.
Time to try some trickle up economics.
Also, for the love of god, let's stop prioritizing saving "jobs" that may or may not be necessary for civilization and start prioritizing real people's well being.
Please don't post ideological flamewar comments to HN. They make threads predictable, tedious, and usually nasty. We're trying for something different here: thoughtful, curious conversation. To the extent possible on the public internet.
But "UBI or stfu" was pure flamebait and obviously against the site guidelines, especially since UBI is one of the classic generic flamewar topics. (From https://news.ycombinator.com/newsguidelines.html: "Eschew flamebait. Avoid unrelated controversies and generic tangents.")
"Time to try some trickle up economics" is just ideological rhetoric, which is flame fuel. And "for the love of God" is more internet flamey tropiness.
UBI is a pipe-dream. Look what happened when we tried it on a small scale with stimulus to "everyone". Rents went up 20-40% across the board, and demand exceeded supply in most industries. This will happen in any UBI scenario - the cost of goods will rise to meet whatever money people have.
The reason is simple - we are not in a post-scarcity society. I don't know why people think we are. Desirable apartments, land, products and myriad other things still follow supply and demand. If you increase demand, and supply stays the same, you will get higher prices. And no, UBI will not encourage companies to increase supply - with what workers will they do it?
I don't think you can blame that on the stimulus. There are tons of other forces driving up prices, including iBuyers and the lack of affordable new construction. The stimulus barely paid a month of rent for most people.
I agree. I attribute the rent increase mainly to low interest rates. At high interest rates it's unlikely that landlords would have enough bargaining power to capture the UBI through rent increases.
My preferred policy would be to adjust interest rates to control inflation, and adjust UBI to control interest rates to keep them a healthy distance from zero.
The stimulus is absolutely a factor. I agree there are other things pushing on both the demand side of the equation as well as the supply side. But UBI will never increase supply - at best you'd craft it in such a way so as to be neutral (though I don't know how you'd pull this off - someone has to work the crappy jobs)
But UBI absolutely will increase demand - and therefore prices until the same equilibrium is met but at a higher price. Basically, the poor will still be poor, but the rich will be poorer too. If a race to the lowest common quality of life is what you want, UBI is the answer. For any other scenario keep looking.
Saying that UBI would be canceled out by demand increases sounds absolutely hyperbolic.
What would you do instead? Continue existing trickle down policies? Use weird neoliberal tax breaks that require an accountant to utilize?
If we continue down the path of the top 10% in the US owning 89% of stocks, we’re going to have bigger problems than slight price increases on essentials.
We already have the answer. 2019 was arguably the greatest year for the American economy on record. Real wages for the lowest quartile were rising at one of the fastest (if not the fastest) rates in history. Poverty as measured among Black families was at its lowest record since WW2. Unemployment was 3ish% and people were coming off the bench to work. Inflation was < 2% and in some measurements hovering around 0.
So what was the big secret? You won't want to hear it. First and foremost it was the tax cuts and jobs act. Yeah yeah, a giveaway for the rich the media says. Nonsense. Second it was getting the government out of the way of the economy and business. Removing regulations was absolutely a factor in the success. And finally it was using our influence to benefit the US first and foremost (tariffs, foreign policy etc). Of course the media has poo pooed all these things, particularly because of who was at the helm when they happened. And I don't expect anyone on HN to agree with me.
Have you looked at other (actual) UBI experiments people have carefully run and observed? Or are you just extrapolating from this one data point that hardly resembled UBI in the first place, never mind even remotely resembling a controlled experiment?
There isn't a single UBI experiment that remotely approximates what people mean when they talk about UBI. They are all small samples and all for limited time periods. The COVID stimulus was the closest thing we've seen on the scale required to get meaningful results.
How is a couple of isolated payments in the middle of a global pandemic that turned the entire world upside down the "closest thing we've seen" to an accurate UBI experiment?
You have to be kidding me. This is your big experiment?
"There are 175,000 24-year-olds in Gyeonggi, and for one year, each receives the equivalent of $220 in a locally negotiable currency per quarter via a credit card."
So 1000 bucks a person for a year. COVID stimulus plus child tax credit went to millions of people... and even the smallest amounts were more than this experiment in SK.
No, it's the first more-controlled experiment (more controlled than a pandemic!) I could think of off the top of my head. I don't know how to argue this when you seem to have no regard for the idea of controlling for other variables. Nor for the manner (like frequency) in which the funds are distributed. Nor for anything that I can see, other than the sheer amount of money dumped into the experiment. As if you can gauge accuracy by just looking at the amount of money dumped into the experiment? Aren't there a ton of other factors at play that can mess up the results (like the pandemic itself)?
But again, I'm not sure what else to cite when your only metric is the amount of money. I'm not claiming there was any other UBI experiment that spent this much money. If/when you consider other factors then there would be much more room for discussion.
You sure like to be condescending. Every one of your replies to me starts with condescension. And I mean... my guy... I don't really think any of your comments are particularly compelling. I'm very aware of the state of UBI research, and I don't consider any of it to be very meaningful. I guess you do - that's great. But to completely discount the COVID stimulus is... cognitive dissonance.
Ok, so now tell us what you believe WILL work. Because we’ve been trying “trickle-down” for 50 years now, and all we have to show is runaway wealth inequality, corporate “personhood”, and international conglomerates that can influence our politics while avoiding our tax.
This is also a pipe-dream. You can't automate plumbing, drywalling, framing and dozens of other construction jobs. They already can't find people to work those jobs - when you add UBI do you think there will be more of those workers? No. So who's going to build the houses? Who's going to make the supplies? Who's going to pick up trash? Moreover, who's going to be a nursing assistant, a home care aid, or even a teacher?
Your response is smug and glib. You can make 150k without too much trouble as a plumber. Or a mason. And still they can't find people. If you can't find people to work for those wages now, you think UBI will make it better? Please do explain that to me.
There are plenty of people who might still think that's bad value. Trades put a lot of stress on your body, and are not that easy, especially masonry from what I've heard.
If you think of people working in the service sector, like fast food, or retail, I don't think most of them would cut it as a mason.
Aside from that anyone who has a way to make similar money another way would probably do so instead, I certainly would.
>You can make 150k without too much trouble as a plumber.
So my 20 second research shows the average salary for a plumber is around $50,000, with 90% making under $75,000. I bet more would be willing to be a plumber for the kind of money you mention, but that's not standard.
I'm sure the few elites who own the vast majority of the wealth will agree and implement UBI in a way that doesn't enrich them or hollow out the poor and middle class. /s
To be fair, I at least agree in the sense that we need to reexamine this idea of creating/saving jobs as something virtuous in and of itself. I just don't see how there's a lick of chance in overriding human behavior that turns the powerful into opportunists.
1) Everyone, even those with extreme wealth, can be helped to see the benefit of raising the floor for everyone. There is a non zero possibility that anyone can lose their wealth, or their children or grandchildren end up losing it. In a world increasing ravaged by automation, UBI is an insurance policy not only for those in need now, but possibly for you and your progeny.
2) Wealthy elites will end up just as poor and desperate if there's no one to buy the output of their companies, rent their properties, or do the real work that keeps civilization running because we fall into a social death spiral as more and more people get left behind and the rumblings of violent revolution grows.
Free handouts don't "raise the floor" in a sustainable, long-term, or asymptotically effective way. Every dollar spent on UBI would yield better returns being invested in essentially any kind of R&D, unless your time preference is very high.
Right now, there's welfare cliffs and other problems with benefits that make it difficult to climb out of benefit dependency. In turn, current programs incentivize people to not do things that increase their income.
A UBI, instead, eliminates these problems and ensures there's always a reason to increase your income. This in turn removes deadweight costs, improves economic efficiency, and can be expected to produce gains that will compound over time.
Yes, letting the poor starve to death might be more fiscally efficient, as long as they don't riot or anything. But most don't view this as a reasonable policy option.
>current programs incentivize people to not do things that increase their income.
At what point do they have "enough" income? At what point can we stop chasing more money? The USA already has a really high average income. Why do we need more?
You get a subsidized apartment that’s fixed too 30% of your income so long as you make under 150% the federal poverty level. In 21 that was $12,880 for an individual meaning they would pay $322/mo for rent. I’m virtually every area of the country an apartment at that rent is impossible to find. Should this person really make themself homeless to earn more money doing abullshit job?
This is a welfare cliff and they’re everywhere. Healthcare, insurance, transportation, housing, food, clothing, charity, etc.
The real problem here is a society that is brainwashed into thinking it’s “normal” for a 21 year old to move out and get a place of his own, let alone doing it at minimum wage. I don’t even know why anyone would want to live alone at that age. Everything about life is both easier and more pleasant surrounded by close family.
Housing and meals have natural economies of scale. Even tasks like fetching medicine while you’re sick or waiting for package become easier.
It’s a travesty how many people these days think the standard course of action is to try to live as an island.
Easier and more pleasant isn't a universal. Some people have truly horrible families. Occasionally they themselves are the horrible family member, and the others are so much better off without them around.
> thinking it’s “normal” for a 21 year old to move out and get a place of his own, let alone doing it at minimum wage.
Well, parents aren't legally obligated to provide support past age 18, which means many don't. And youths that are wards of the state because of abuse or their parents becoming incarcerated, dying, etc, are not supported beyond age 18. So this is at least a frequent corner case we'll have to deal with, even if social norms change so that more parents support kids past 18.
If you require public assistance for housing and food, I think you don't have enough income.
But public benefits can phase out, leaving you in an awkward place where you have more income but less household resources and become unable to feed your family by virtue of making more.
I think it's important that to whatever extent we decide that some people need assistance, that we do it in a way that doesn't have a cliff and preferably doesn't have any phase-out at all, for the reasons I described.
Yes, the assistance is still economically distortive, but less so than otherwise. Everyone still has an incentive to increase their income and economic output.
This idea came to me from none other than Milton Friedman, in the form of the negative income tax.
If you are going to compare income of different people, can you please indicate the geographical region you pick, and how you decided on the size?
For instance, the income distribution of people within Beverly Hills is probably pretty OK - no need to redistribute anything there!
But if you zoom out, you can look at the entire world and realize that the poorest of the USA are richer than many people around the world and should pay their welfare
Since we are speaking about the US, the numbers I provided were us specific and anything that is done would be financed via us taxes, I'm pretty confident everyone knows I'm referring to the US as a whole.
"realize that the poorest of the USA are richer than many people around the world and should pay their welfare"
Why should us taxes subsidize world welfare (not that it already doesn't)?
Of course, when we're talking about a UBI, there are always some geographic distributions of wealth that one might quibble with: from large urban states to rural states. Taxes paying for UBI flowing out of California will exceed UBI flowing into California; taxes paying for UBI flowing out of Wyoming will be dwarfed by UBI flowing into Wyoming.
And, further, beyond the balance of transfers in absolute dollars-- $1000/mo in California impacts resident life less than $1000/mo in Wyoming.
I don't think this is a strong reason to not do UBI, but it's a confound.
would be interesting to see if a UBI actually caused more people to move to states like Wyoming and Montana. Many people too poor to actually move (lack of deposit, moving costs, etc.) would actually have the funds to move if they saved ubi for a few months. Leaving a HCOL for a LCOL state with a UBI would be a life changer for people if they were willing to do so.
One would have to be extremely credible to believe the claim that UBI would remove deadweight loss. Throwing any kind of massive wrench in the market can safely be expected to introduce it.
If UBI proponents ran on the platform of "eliminate all welfare and replace it with UBI" I would probably support them. But they don't, and they won't, because that's not politically tenable. I don't see a patronage angle where you can buy anyone's votes with that scheme, so it's never going to happen.
> One would have to be extremely credible to believe the claim that UBI would remove deadweight loss. Throwing any kind of massive wrench in the market can safely be expected to introduce it.
We already have the massive wrench in the form of benefits programs and EITC, etc. I say: restructure them to be UBI instead.
Milton Friedman advocated for a negative income tax which is much like a UBI, and most economists agree that giving out welfare in this means-tested way is extremely distortive. Maybe all these economists are "extremely credible": https://mitsloan.mit.edu/ideas-made-to-matter/negative-incom....
> If UBI proponents ran on the platform of "eliminate all welfare and replace it with UBI" I would probably support them.
I favor not quite this. I favor "eliminate most welfare and replace it with UBI". It will cost more, but it will also benefit a larger slice of people.
The proposals from the farthest left generally have UBI mutually exclusionary with receiving other benefits (from Yang et al.). So even there, we're talking about mostly eliminating other welfare.
In any case: refusing to discuss good ideas because we don't think they'll be politically tenable is a recipe for them to remain politically untenable forever.
I agree that UBI would be less distortive per dollar than what we have now, but unless there's a credibles strategy to make this happen, why bother discussing it? I suspect it's a pipe dream. Politics is a gang fight; any pretense of social optimization is just a thin veneer. Whose votes can you buy with the promise of UBI replacing extant welfare schemes? Every extant welfare scheme is a vote buying program which you're now nuking.
Even Yang proposed making UBI mutually contradictory with receiving other benefits.
> Every extant welfare scheme is a vote buying program which you're now nuking.
While some peoples' votes will be bought with welfare money, others will support it because they don't think it's OK to let the poor starve or don't want the poor to riot. E.g. me: I don't receive public assistance. I think welfare programs are necessary (though it's better if most of them are implemented in the form of a UBI).
Your well-intentioned vote isn't enough to eliminate the system we have now. Getting the welfare schemes we have now in place took both credulous moral voters and the voting blocs who constitute the self-interested recipients of these welfare schemes. The recipients of the current schemes are never going to vote to get rid of the current schemes. They would net fare worse under a more efficient scheme. So who are you going to team up with to get the votes?
I am very confident that the modal welfare voter would prefer the current system, which was specifically designed to buy their vote, to any system which appeals to utilitarian-minded technocrats and costs within a factor of 2 of the current system.
Look, well-minding paternalistic peeps are behind the current system of "you can only buy some kinds of food with SNAP" and "you must spend this particular money with only certain providers of housing!" It's not the benefit recipient demanding that they be restricted in how they spend their benefits.
Less strings on the money is A) cheaper, and B) nicer for the recipient. I have no doubt that if you offered any poor person the choice between $600 in cash each month and $600 of section 8 credits, they'd take the former.
But, you know, you might deal with someone spending it all on crack (which is why we currently restrict the usage of funds). At least it'll be economically efficient, instead of them selling their SNAP card for crack for 50 cents on the dollar, like is the current outcome.
The cost of administering that $600 monthly award is way above $zero.
It takes entire agencies scores of hours to receive, verify, investigate and cure deficient applications, handle appeals, and execute wage garnishment orders due to their own overpayment/accounting errors -- not to mention approvals.
"Oh we just figured out you made too much money 5 months ago. Sorry bub, you gotta pay back The State the past 5mo of benefits, and re-apply" (with a 90 day waiting period... && Watch out kid, next time this happens it'll be a 180day wait.)
After that's done, they then turn around and do it all again every 6 months because they're forced to re-collect(and vet/process/cure) the same information again via a mandatory "beneficiary 6mo survey".
> The cost of administering that $600 monthly award is way above $zero.
It takes entire agencies scores of hours to receive, verify, investigate and cure deficient applications, handle appeals, and execute wage garnishment orders due to their own overpayment/accounting errors -- not to mention approvals.
Sure-- not sure if you're agreeing with me or arguing? It is more costly to give aid with strings attached and complicated qualification requirements, and it is worth less to the recipients.
[Not to mention the costs that this bureaucracy imposes on the recipients. Time that they spend jumping through hoops in a bureaucracy is time and attention they can't spend on bettering their situation].
Doesn't this argument justify stopping ANY spending that is not R&D?
For example, a dollar spent on healthcare keeping a chronically sick person alive is a dollar that could instead have improved the welfare of all future generations.
Is there a version of this argument that doesn't throw grandpa under the bus?
Yes, for any given time preference there exist capital allocations with equilibrated marginal returns between consumption vs capital investment. I'd argue we're not in one of those allocations, and if we are it must be associated with an extremely high time preference, and UBI would make it worse.
I agree your statement is logically correct from a utilitarian standpoint.
There's a little bit of "spherical cow" involved though. A more detailed model would recognise that R&D spend is not pure investment, and UBI would not be pure consumption.
Whether non-zero UBI today would good policy or not depends on an enormous number of facts about the world that I think it would be very difficult to come to an agreement on.
For example, at what level diminishing returns from R&D spending kick in, and whether UBI apart from increasing immediate welfare has any compounding benefits (human capital, civil cohesion, education, business starts, citizen science) vs mostly benefiting landlords and netflix.
I think we mostly agree except on our level of optimism about how UBI will realistically be spent. I would argue that my pessimism is extremely well-founded because present material conditions are an extremely strong (if noisy) indicator of an individual's capital allocation efficiency. If someone is in a position to start a successful business, or engage in productive citizen science, they are overwhelmingly less likely to be a net beneficiary of any welfare scheme.
I think there is a pessimistic utilitarian argument for welfare just because people have concave/risk-averse utility functions (of wealth) and it's possible that the dollar-cheap utility gains for people close to zero might outweigh the higher-order costs, but it strikes me as somewhat fantastical to imagine that there might be meaningful financial gains from a welfare scheme, because people with more welfare money might use the money to read a book or start a successful business or something.
You make good points here, thanks. It was interesting to think about rate of increase of utility over time, it did throw new light on the idea of UBI for me.
You as well. You make good observations about some of the possible higher-order upsides of UBI that are easy to gloss over. I think both of us are at the very least approaching this on a sound ontological basis, even if there's a lot of room for quantitative uncertainty.
The US isn't a corporation, it doesn't own my productive output, and random UBI recipients never paid for their shares.
If you set up a country with this idea from the start (a profit-seeking corporation with transferable shares), it might be a good idea, but probably no net beneficiaries of UBI would have shareholder status.
That analogy only works if we get UBI paid by profit of weapons sales, not taxes. Otherwise UBI is like your employer keeping half your paycheck and distributing 30% of the money to everybody, whether they earned it or not, while keeping 20% to administer the redistribution.
Sure, pegging it to GDP sounds like not a bad idea.
As the nation gets more productive, everyone's effective UBI goes up.
If the real value of the UBI gets to be too high and too many people stop working in balance with automated labor, then GDP starts to decline and people start getting worse off and increasingly incentivized to find some productive work to do.
Seems like it could end up being a self balancing system.
Citation needed. Who's to say that recipients wouldn't spend their income on personal R&D - finding out what fits them or developing useful skills - which could have a much higher return than the centrally-planned kind.
> Who's to say that recipients wouldn't spend their income on personal R&D - finding out what fits them or developing useful skills
Common sense. Half of everyone and 95% of beneficiaries of UBI will use additional marginal cash to do things like smoke weed and watch cartoons. Being a beneficiary of UBI is already extremely compelling evidence of inability to efficiently allocate capital (personal or monetary).
> which could have a much higher return than the centrally-planned kind.
I guarantee that forcing me to ""invest"" my labor by giving it away to random people will have vastly lower returns (personal and social) than letting me invest it myself. My suggestion is not to increase taxes and give the money to R&D departments - my suggestion is to not take more of my money at all. The fact that R&D is better than UBI only tells us that if we were to increase central planning at the margins, UBI is almost certainly not the utilitarian way to do it.
> Half of everyone and 95% of beneficiaries of UBI
> Being a beneficiary of UBI is already extremely compelling evidence of inability to efficiently allocate capital (personal or monetary).
The whole point of UBI is that it's universal and everyone is a beneficiary.
> I guarantee that forcing me to ""invest"" my labor by giving it away to random people will have vastly lower returns (personal and social) than letting me invest it myself.
The fact that organised societies have been much more successful historically than unstructured ones suggests you're wrong.
> The whole point of UBI is that it's universal and everyone is a beneficiary.
If I get a check for $1,000 every month and I lose $5,000 on taxes every month, I'm not really a beneficiary.
This is a wealth redistribution scheme. The wealth is being redistributed from people who are self-evidently efficient capital allocators to people who are self-evidently not. (That's a Bayesian judgement, not an absolute one.)
> The fact that organised societies have been much more successful historically
Please, I'd love to hear how "organized society" is synonymous with "welfare programs".
At first order it is, but at first order virtually any policy involves moving wealth around, and at first order any such thing is zero-sum.
> from people who are self-evidently efficient capital allocators to people who are self-evidently not.
Given that the biggest factor affecting income is parental class, that seems far from self-evident. More importantly, if we want to encourage the kind of higher risk tolerance that increases overall productivity on average, taking a chunk of upside to eliminate the downside makes sense. Putting $1m into a 50-50 chance that will produce $10m of value if it works out but leave you destitute if it doesn't is a positive for society, but irrational at an individual level; a tax system that leaves you with $5m if it works out and $50k if it doesn't aligns the incentives better. We already see that people who are lucky enough to have that kind of safety net by coincidence (e.g. rich families/friends) tend to be more entrepreneurial and willing to take the risks that do pay off than people who don't.
> Please, I'd love to hear how "organized society" is synonymous with "welfare programs".
I mean you can go right back to the Roman Empire and "bread and circuses". Organised society has always meant some level of support for those on the bottom.
> Given that the biggest factor affecting income is parental class
This isn't actually true; it's one possible explanation that seems OK under cursory examination of the evidence, and it's compatible with American university social "science" dogma, but it falls apart under careful inspection. The overwhelmingly more likely (but incompatible with field political dogma) explanation is that income is most strongly mediated by intelligence, which is mostly genetically heritable. This is why people tend to have similar incomes to their parents. (This persists through adoption; try to explain that as a socially mediated effect.)
Now, that said, this has nothing to do with the fact that people who would most benefit from welfare schemes are the least likely to be efficient capital allocators. We can make the observation that they are not allocating efficiently independently from asking why they are not allocating efficiently.
> Putting $1m into a 50-50 chance that will produce $10m of value if it works out but leave you destitute if it doesn't is a positive for society, but irrational at an individual level
The market already efficiently addresses situations like this which actually exist, using schemes like business loans and outside investment. There is no way in hell some financial knob the government can blindly turn would do as good a job at performing this function as banks and investors who are actually making a conscious decision and putting their own money on the line. In other words, for every marginal good bet this scheme enables, it's going to enable 1000 marginal stupid bets.
> (e.g. rich families/friends) tend to be more entrepreneurial
You've made the same (understandable) inversion of causality as before. In reality, the latter tends to drive the former. Obviously the causality is bidirectional to some degree, but I think people tend to vastly underweight the primary direction.
I agree that society could do a better job enabling outsized performers without means to get access to capital, but we already do a pretty good job and there is no way that some simple welfare system would do a better job than the intentional systems we have now.
> Organised society has always meant some level of support for those on the bottom.
This may or may not be true (I'm not much of a historian), but I do know that "some level of support" doesn't mean "far-reaching government welfare infrastructure". It can mean churches, waqfs, and so on.
> The overwhelmingly more likely (but incompatible with field political dogma) explanation is that income is most strongly mediated by intelligence, which is mostly genetically heritable. This is why people tend to have similar incomes to their parents.
This can't explain the whole effect, because:
- The effect of parental income on later income remains even after controlling with standardized test scores.
- Further, parental income seems to increase child IQ a little bit, even after controlling for parental IQ scores.
> This persists through adoption; try to explain that as a socially mediated effect.
(Formal, registered) adoption is virtually impossible for lower-class people, so studies have very little coverage of that.
> Now, that said, this has nothing to do with the fact that people who would most benefit from welfare schemes are the least likely to be efficient capital allocators. We can make the observation that they are not allocating efficiently independently from asking why they are not allocating efficiently.
But we can't even begin to talk about capital allocation if we're only looking at the output side and not the input side. The people who would benefit most from UBI would be mostly those who have seen little benefit from capital yes, but the overwhelming majority of those are people who never had much capital to allocate in the first place.
> The market already efficiently addresses situations like this which actually exist, using schemes like business loans and outside investment.
Access to those things is extremely class-gated.
> You've made the same (understandable) inversion of causality as before. In reality, the latter tends to drive the former. Obviously the causality is bidirectional to some degree, but I think people tend to vastly underweight the primary direction.
There are probably real effects in both directions, but there is certainly a significant difference from having a safety net. E.g. see the bump in people starting businesses once they hit the medicaid eligibility age threshold.
> There is no way in hell some financial knob the government can blindly turn would do as good a job at performing this function as banks and investors who are actually making a conscious decision and putting their own money on the line.
> I agree that society could do a better job enabling outsized performers without means to get access to capital, but we already do a pretty good job and there is no way that some simple welfare system would do a better job than the intentional systems we have now.
Maybe. Simplicity, transparency, and reliability can be a real gamechanger. At one point in the pandemic the government was trying to literally give away money to certain categories of small businesses but found it difficult, because the businesses that most needed the support were also those that were least efficient at navigating bureaucracies and processes. For an older example, Ramanujan won a scholarship to an elite school that was intended precisely to support cases like his (intelligent people from poor backgrounds), but lost it because, despite his mathematical brilliance, his grades in other subjects weren't high enough to meet the requirements.
> This may or may not be true (I'm not much of a historian), but I do know that "some level of support" doesn't mean "far-reaching government welfare infrastructure". It can mean churches, waqfs, and so on.
Sure. But that style of non-guaranteed social support increases the pressure on poor people to live in a conventional, legible fashion, avoid downside risks, and conform. We gain little and lose much from encouraging the poor to be (literally and metaphorically) sober and miserable because it would be not costly but merely unseemly to enjoy themselves (especially - though far from only - when that enjoyable thing is potentially productive, but in a way that's not necessarily understandable to those in charge of that welfare infrastructure).
Economist Michael Hudson likes to remind people that Hammurabi created debt jubilees to increase overall wealth at the expense of debt. The more I think about the more I think there are some lessons there.
Pay the landlord, and landlord gets the money and tenant gets evicted.
Pay the tenant and the rent gets paid and no one gets evicted.
We saw this with the 2009 mortgate crisis - banks got bailed out and evicted homeowners. Had we paid the homeowners, I suspect most would have just brought their mortage current.
Not if the tenant isn't being required to pay rent. 2 years of government money in the name of COVID assistance and rent help...but nothing that actually meant it went to paying rent. Some tenants simply bought more stuff or saved it while the landlords are still going without rent payments.
The tenants no doubt received direct stimulus payments and never paid a dime of it in rent. There’s a reason why section 8 et al are paid directly to the landlords.
I never said it’s a dataset. It’s one of many examples of people receiving stimulus checks and not paying their landlords.
Hell, it’s the rationale thing to do anyway. If there’s a rent moratorium, you’re getting checks from the government, and you don’t have a particular large security deposit, why wouldn’t you skimp on the rent?
The landlord cannot evict you. Cannot call the police. Cannot really do anything. In fact, the landlords only chance of getting paid is to cajole you into signing up for rent forbearance.
The population received a significant sum of money but I haven’t seen a data set or statistic indicating people buying discretionary goods rather than paying rent.
I suspect that the real issue for landlords was the eviction moratorium which made it possible for some tenants to fall 4-5 months behind and forced landlords to live with it.
I suspect the rent moratorium spooked most small time owners from rentingtheir properties, so they sold and cashed out. Ideally those homes would have been sold to new owners, but it turns out big property management companies were waiting, flush with new COVID cash, and bought up those properties and increased rent.
So we saw the markets percentage of home ownership go down, and rent go up.
Land lords still exist in a competitive market and can't arbitrarily raise rents without collusion.
One way to alleviate this problem is to have a harsher tax on vacant properties to punish using housing as a store of value and creating artificial scarcity in the market, e.g. like how the DeBeers corporation made diamonds artificially scarce and scammed the world for the past century selling a shiny rock.
The thought-out version of this is called Georgism. It proposes a (close to) 100% tax on the unimproved value of land. Economists agree the tax can't be passed on to renters, for reasons I can't articulate.
I'm assuming by that they mean the value of the land.
And if it's done similar to an appraisal they see what market price is for a sale (which combines the value of the building + land). Then they can estimate how much it would cost to rebuild that building if it were completely destroyed. That's the value of the improvements. The remainder is the amount someone implicitly paid for the land.
This is not great because suppose it cost relatively little to physically build a house but you sold it for a huge amount because it's in some chic architectural style that hasn't arrived yet in this city. So your house was in a crazy seller market and unexpectedly sold for crazy tons. Now you are being seriously penalized for your boldness.
And what are we talking about 0.0001% of all homes ever built? Even less?
Someone can always come up with a contrived example to find a short coming in a rule or law. That doesn't make the law not sound or wise.
"Speeding shouldn't be illegal. What if there is a tornado behind you and you need to rush to get away from it, but you go faster than the speed limit to save your life? See, we can't have laws for speeding."
So far, our comments have boiled down to "Yes you can assess unimproved value of improved land", and "No, you can't, there is no way to get that number separate from the value of improvements."
So I'm going to try to say something different.
1. Here is the article that convinces me it is very possible to assess land separate from improvements. It details several strategies for doing so. Also properties are assessed in these ways already in many places.
https://astralcodexten.substack.com/p/does-georgism-work-par...
2. Accuracy of assessment does not need to be super high for this idea to work. You just need an assessment with the intent of assessing unimproved land. The tax does not need to be literally 100% of unimproved land value, it just has to be a high percentage. Let's say there is a +/- 30% accuracy of unimproved land value assessment. We can have a 70% tax on that assessed value. Some people would in actuality be taxed at 97.5% of land value, and some people at 52.5% of land value. Perhaps the unfairness of this discrepancy is a true downside. However, one could argue the same about property taxes now.
Sure you can. Unimproved value of the land is simply the value of the lot as a whole minus the value of building that sits atop (well, improvements aren't always buildings, but that's a simple example). You can approximate it by comparing it against the transaction prices of nearby lots that aren't improved, or by taking the construction cost out of the purchase price of the lot.
> is popular with politicians
Land value tax in general isn't that popular around the world, and Henry George's version of it, where all tax is replaced with just a land value tax, even less so. As far as I'm aware, there is literally no jurisdiction in the world whose sole tax revenue is from LVT. Economists and idealists like land value tax; politicians, who derive a lot of power from the wealthy landowning class (who in turn would be the most hurt by LVT), not so much.
> The bigger issue is with vacant properties being used as cash stores.
Land value tax would be an excellent way to curb real estate speculation.
Until you get the capability of temporarily creating a parallel universe and rolling it back, It's an unanswerable question, that's the point. Also you are confusing cost for price.
There's a delicate balance of property owners using their power to prevent new construction and densification in an attempt to keep their property values high by preventing competition and going too far where you destroy your local economy because the people who actually do the work can't afford to live there.
It is everything to do with supply. Location. Location. Location. People want to live in certain places. If there isn't enough housing there, prices go up. Building lots of housing in small places is not bad for the environment. It is much better for the environment than sprawl.
And what about when you’ve exhausted every square inch of land to shove more housing on? Then the city isn’t worth anything to anyone and you move on to the next city to ruin.
At some point, enough is enough and you have to accept that there’s no room for more housing without ruining the city. You could focus on reclaiming AirBNBs and vacant housing and you might be able to make a dent in the problem.
Just announce that your city is full and tell everyone to move on. Ruining the city will make landlords money and everyone unhappy.
> And what about when you’ve exhausted every square inch of land to shove more housing on? Then the city isn’t worth anything to anyone and you move on to the next city to ruin.
So Manhattan isn't worth anything to anyone? Funny, I thought it was one of the most valuable and productive places in the country and there were still swarms of people wanting to live there.
I consider high-density housing to be a separate conversation. I entirely agree that high-density housing should be encouraged and would largely solve this issue (assuming apartments can't rent out as AirBNBs like they do so frequently now). However, I don't want "we need more supply" to justify building more housing when we have enough developed land as-is to build high-density housing with ease.
They don't need to collude, they just need a public price signal - which advertised rent prices signal. As a landlord, it's something like a prisoners dilemma, only there is a much lower disincentive for breaking away to raise your price.
"can't arbitrarily raise rents without collusion."
???
There's no need for 'collusion' - term is 'inflation' - which will 100% happen when we start printing money at that scale.
It's unavoidable, almost by definition.
Housing costs are already skyrocketing and this is moving into rents already, at least largely in part because of of massive Fed Stimulus. In the short run it might be better to just give some cheques to people, but not over any period of time.
"term is 'inflation' - which will 100% happen when we start printing money at that scale."
So you get 0% inflation when we give money to the rich and bail out the banks, but as soon and you give a hobo $50 the entire economy crumbles and inflation spikes, right? Very conveneint ideology
You fabricated a bunch of ideas which have nothing to do with what I said.
'Very convenient fabrication'.
--> If you put a lot more dollars into the real economy by direct distribution, then rents will go up via systematic collusion. Most of that money handed out will be captured by landlords.
That has nothing to do with with what may or may not happen if you concentrate money in the financial sector via whatever means.
If you give a lot of money to the rich, I would expect to see inflation in the stock market. Coincidentally, the stock market has far, far outpaced inflation for probably at least 20 years now.
That's exactly what happened with student housing subsidies in NZ. Labour were elected and fulfilled a campaign promise by raising the housing allowance by $150 pw. Rents in Wellington rose $150 pw at the same time.
This is a bad example. Students are tied geographically to their respective campuses. With a UBI, individuals would be incentivized to relocate to lower cost of living areas to stretch their UBI farther.
The fact that housing is in such tight demand in certain areas is not an argument against UBI. To solve that problem we need to build more houses.
When I was a landlord I found it very difficult to even cover the mortgage, let alone cover association dues and maintenance. I would try to raise the rent a little in between tenants, and it would greatly reduce interest in the listing.
Likely NOT the landlord's personal domicile's mortgage, but the mortgage on the rental property itself. Landlords with mortgages on their rental property can go upside down on their notes too.
I bought a house just before the financial crisis and a decade later needed to move but I was underwater. I didn’t have enough money to sell it so I rented it out.
how did this not break your mortgage agreement? most private mortgages have a clause that states the mortgaged property will be your primary residence. specifically. it is to prevent private mortgages being obtained for rental properties.
Shrug. It never came up. I was all squared away with a good legal document for the lease, verified renters insurance, all that. Never even occurred to me the bank might take issue with it. Oh well, no harm done.
> We're talking about a mortgage on the rental property itself not on the landlord's personal residence.
Yes. Everyone in this conversation understands that. There's no relation between the amount and terms on your mortgage for your rental property and the market price to rent a given unit.
If I take a 20 year mortgage does that mean I should charge more rent than if I took 30 years because my payment is higher? Should I drop rent by half when I'm done paying my mortgage since I no longer have a payment? It's nonsensical.
There's especially no reason to expect that rent should cover 100% of the principal fraction of your mortgage payment. Taxes, maintenance, interest, etc. are pure costs which are understandably passed on to tenants. The principal fraction of a mortgage payment is not a cost, it is building your equity.
If rent is covering all costs and "only" 50% of the principal fraction of your mortgage payment you're still making a profit. Because you're paying, let's say, $1000 of the mortgage payment with your own money, but you're getting a $2000 increase in equity.
If the increase in equity should be satisfactory, that's an argument for just letting everyone live in the place for free. I mean, you're coming out ahead.
I know other landlords with multiple units. If they don't think something will be an income producing property, they won't buy.
My point is that you charge market price. Because that's how markets work.
Price to rent ratio varies very widely between different markets. If you don't want to buy in a market with a high price to rent ratio that's fine. There's simply no rule that guarantees a price to rent ratio such that rent covers all costs plus the full payment on a 30 year mortgage in all markets at all times.
Because that's how it normally works? Why would any renter pay that much? If they have that much disposable income each month, they could just buy instead of renting.
You aren't aware that plenty of people rent houses?
By renting instead of buying, you don't incur any of the costs or headaches associated with with home ownership or repair. There are also plenty of people who are only living in one place for a limited period of time, and additionally, plenty of corporations will rent out homes in decent locations if their employees need to be there for extended projects.
I am aware; I was a renter until a couple of years ago. I have rented houses in the East Bay (Alameda, CA) and Seattle, and in each case, my rent was 70%-80% of what the monthly payment on a 30 year mortgage on the same house would have been. The same was true of apartments I rented in Manhattan.
Maybe it doesn't work that way in other markets, but you'd have to be nuts as a renter to pay enough to cover your landlord's mortgage.
Let me assure you then, that in most markets, you will pay far more than the cost of a 30 year mortgage plus taxes and insurance for renting a house. You're subsidizing the cost of vacancies and also paying for some of the maintenance.
A 3 bedroom, 2 bath home in a decent but inexpensive part of the DFW where I live will run you $2K per month. These prices will skyrocket as rental prices catch up to the mortgage market. But just for comparison, 2 years ago that same house would have been on the market for about $220K and would have had a monthly mortgage of about $1200 a month on a 15 year loan or $800 or so on a 30 year loan.
In my neighborhood now, people rent for considerably more than they would pay per month if they bought here. They want to live here but nothing is for sale. It’s large single family homes. Renters tend to be people who have frequent job transfers and people who are having custom homes built nearby.
Also I’ve never rented anything for less than what I could own something comparable. Maybe you can in some markets. But generally I expect to pay more monthly. It’s a trade off for avoiding everything that comes with home ownership. Down payments, maintenance, and the overall commitment. It’s hard to just pick up and move when you have to go through the process of selling, making contingent offers on another place, multiple closings, all that.
I have been a renter in NYC, Seattle, and the Bay Area; every single time, I looked up how much the property last sold for and calculated how much a mortgage on it would cost me per month. My rent was normally 70%-80% of the expected payment on a 30 year mortgage.
I was never paying below-market-rate rent, either! Maybe it doesn't work out this way if you're renting in an area with lower average property values?
Obviously there is no rule that it should. I know plenty of people that kept their old house (and mortgage) when moving and tried to rent it out to build some equity and make money.
That's a pretty arbitrary measure though - you're making "free" money either way to pay towards that mortgage while retaining the whole value of the asset while it is gradually purchased. Whether you've got enough to cover mortgage or not doesn't necessarily flip a binary switch making it a good investment or not.
Property ownership is a market barred from entry by a high buy in cost to account for some risk - but the risk is rather minimal and most properties are going to be value accruing over time. We can observe this by looking at how cheap general property insurance tends to be (unless you're in a really risky area - i.e. building a house in a flood plain).
Normally, rent on a property is significantly less than the monthly payment on a 30-year mortgage on the same property. Where were you renting out spaces where people were willing to tolerate rent that high?
Where does this "normally" occur? A house in my neighborhood would rent for over $3000 a month and cost about $1600 a month in mortgage / insurance / taxes, and that's been my experience when looking at any property anywhere in my entire city.
Manhattan, Seattle, the Bay Area. I haven't rented anywhere other than that, so I don't know how it works outside of those markets (which are admittedly unique as far as market fundamentals go).
I paid $1400/month for rent on a place in Alameda, CA. The last recorded sale of the property was for ~$400,000 a couple years before I moved in. That mortgage would be ~$2400/month given average interest rates at the time.
That's crazy comparative to most places I've lived. $1400 will get you a 2 bedroom apartment in a run down complex in the DFW area. Right now, $2350 gets you into a doublewide in Alameda.
Alternatively, UBI would provide a new income stream to literally everyone, increasing everyone's purchasing power. In a pure supply/demand scenario, the equilibrium price of essentially anything will increase accordingly, i.e. inflation.
It's a fair point that UBI would result in some shift in market dynamic. But ultimately, most people will still want to get a job to supplement the UBI income, and high demand areas will remain high demand.
Inflation isn't that simple. Sure, if you print a huge wad of money and give it out to everyone (ie. increase the money supply) then you'll get inflation, but that's not generally how UBI proponents intend it to work. The other side of it is increasing taxes on the other end of the progressive spectrum to compensate, leaving the money supply (ideally) largely unchanged.
Anyways, it'd still be better than quantitative easing, the current approach to keeping the economy running now that they can't lower reserve ratios or interest rates anymore, wherein (roughly) the government prints money to shove into the stock market so people who are already rich keep getting richer.
Traditionally, humans have to live where they can find a flow of capital via the jobs available. If every human has a baseline flow of capital attached to them specifically, regardless of where they live, it potentially opens up a ton of possibility in where people can live, because they can do less well paying jobs but still live a good life.
It is also worth comparing this to the current status quo. About ~17% of working age adults in West Virginia are receiving disability benefits[1] vs about 8% for California and New York.
The reasons for this are complex, but in short it is likely due to a mixture of cost of living (disability benefits go farther in LOC areas), economic opportunity (disability is "more attractive" when job opportunities are scare), and demographics (older, more blue collar, etc...). But regardless of how or why these discrepancies exist, we have essentially created a system which incentives our population to self-sort geographically based on their ability to contribute economically. That is of course problematic in and of itself, but this also means we have a real life pseudo "UBI experiment" that we can evaluate. And if you look at the data, nearly all of the states with high disability percentages are low cost of living states, particularly when it comes to housing prices.
So anyone who complains about how UBI would increase housing costs needs to first account for the fact that large swaths of the working age population are already receiving benefits similar in level to a UBI (disability is about $1600/mo). And despite the higher concentration of beneficiaries in areas like WV, we haven't seen much of any impact in real estate or local inflation. If anything we have seen the opposite.
This ignores competition between landlords though. If I get a UBI to supplement my income, maybe I can take that job in the smaller town instead of working in the big city. That spreads real estate demand over a much larger area.
I'm still not sure whether or not UBI will be a success, but there are some reasonable arguments in its favor.
Despite being an avid supporter of UBI, I had to downvote your comment for the "stfu" part.
I have noticed an unfortunate tendency towards fanaticism on the part of many UBI advocates.
This fanaticism does not do the cause of UBI any favors - it just gives it the patina of a policy supported by mentally unstable crackpots, when in fact, a lot of excellent, well-balanced minds have advocated for UBI.
It's far too simplistic to say UBI would go to homeowners.
In a supply-constrained environment, it's true that a higher capacity to pay would lead to higher prices, but that's not some general truth. If it were, you could say the same thing about wage increases. Any policy goal seeking higher incomes would be useless: it will all just go to homeowners.
Why bother with public education? Sure, it will increase incomes, but it's all just going to go to homeowners.
Saudi Arabia have the closest thing to an UBI and Saudi nationals notorious for having bad work ethics and low skills. The economy is pretty much run by foreign workers. The country will be completely doomed if it continues this path and the oil runs out. The government is trying all kind of policies to prevent this.
https://en.m.wikipedia.org/wiki/Saudization
This is a bad example with many compounding factors, not just the one variable being UBI. There are many differences between Saudi culture and ours here in the US, many differences in the way in this proposed, etc. Also important to note that this essentially applies to men of Saudi decent only. It is not UBI, it's missing the U.
The fed has written far bigger checks to wallstreet. QE for the last 2 years has been something like 9 _trillion_ dollars injected into banks and companies balances. The ~$3000 in direct cash stimulus to Americans over the same time was only about $800 billion.
Allowing the large and hard to replicate systems of human organization that are American corporations to collapse would be far more damaging than anything else. Even if you give people money to spend, if you let big business collapse domestically all that money will flow to large companies overseas.
The countries with the best outcomes, as noted in the article, did not give money to individuals, but to businesses.
Direct payments to people let them squander it while businesses failed, leaving people unemployed.
UBI feeds consumption, not production, and they are not the same thing. Lots of production is B2B and other aspects far removed from the consumption of the pipeline.
Throwing a few trillion directly at people is popular but demonstrably not as well spent as other countries showed.
"Many governments staved off damage by paying businesses to keep workers employed"
Not sure why this is relevant, but if by trend you mean higher growth, then over half of countries in the world had larger growth in 2018-2019 [1].
US (growth 2.2%) is 119th out of 202 countries, with Timor-Leste at 19.5% at the top.
Lots of big countries also outgrew the US over this period: Vietnam 7%, China 5.9, Ireland 4.9%, Poland, Hungary, India, Israel, UAE, Luxembourg, Ukraine, Latvia, Peru..... It's not like the US was anything special for growth.
Did you think the US was the country with the best growth? Or even near the top?
>Also, for the love of god, let's stop prioritizing saving "jobs" that may or may not be necessary for civilization and start prioritizing real people's well being.
The people who've finally managed to increase their wages and take-home pay thanks to the full-employment conditions that started in ~2019 or so might have something to say about that.
Utterly and laughably wrong. Anything other than basic education and viable community-level institutions is going to have this effect. Play stupid wealth transfer games and win zero dreamy wealth transfer prizes.
I have no doubt this will be proclaimed to have “worked!” on a small scale. But this is not engineering, this is society, and society scales much differently.
"for the love of god, let's stop prioritizing saving "jobs" th"
Printing money does not create value and we will generally suffer reduced standard living, some worse than others at least over time.
In the long run, the real economy creates vast consumer surpluses which are generally not even really accounted for. We are actually quite a bit richer than we were a generation ago.
'Direct Stimulus' might be better in the very, very short term to stave of serious harm, but in the 'mid term' it can be destructive, and in the long term it will absolutely be destructive.
Since the first wave of COVID in Canada, a lot of industries have been trying to open, but people have preferred to take their 'CERB' (direct payments) than work, which has accounted for reduced service and is one of the key drivers of inflation.
UBI payments are worthless if there's nobody to stock the shelve and nothing to stock them with.
Because that's how UBI will have to come into fruition i.e. under the auspices 'MMT' or some other made up term.
It's 100% politically impossible to raise taxes on the middle and upper 1/3 to to the extent necessary to pay off the bottom 1/4-1/3 of the population to (mostly) do nothing and that's not even starting to consider the instantaneous shock of inflation that will hit the moment it happens.
0% chance of this happening in any country, any nation, any situation - can't happen.
Ergo, the policy has to be hidden into some kind of 'magic money' theory or policy, which will invariably involve a lot of money and credit creation.
We're already seeing the effects of this today.
That's not to say we can't improve a lot of issues with regards to equality including possibly raising taxes and many other things - but it's far more effective to have people work on doing things of value, like attendants in retirement homes, making meals, then it is to give them free surpluses and have them mostly stay at home. UBI is much like Crypto, an interesting idea that does not add up in any meaningful way in our current context.
> It's 100% politically impossible to raise taxes on the middle and upper 1/3 to to the extent necessary to pay off the bottom 1/4-1/3 of the population to (mostly) do nothing
That's not the idea or reasonably foreseeable effect of UBI.
Rather ambitious near-term UBI ideas aim it right around the Federal Poverty Level, which is the income at which only about 13% of the population would be at or above their current real income if they had no other income, and those people are already largely getting some means-tested aid that would be replaced by UBI.
And, compared to existing means-tested aid, UBI reduces the disincentive to outside income.
You aren't paying the bottom 1/4-1/3 to do nothing.
> but it's far more effective to have people work on doing things of value
That's the central idea of changing to UBI (which allows people to work on things of value without immediately losing side) from classical means-tested welfare (which does not.)
> And, compared to existing means-tested aid, UBI reduces the disincentive to outside income.
Important point.
Especially people currently on disability are actively disincentivized from doing any amount of work. Worse, they're even disincentivized to do volunteer work out of terror that someone might report them as able-bodied and they lose their benefits, even if they are legitimately disabled and merely trying to contribute the tiny amount that they can.
1) Unions will not permit the dissolution of the systems in place.
2) 'Means testing' should not theoretically be hard - and - it's actually a rational thing to do (so long as you point out the disincentive is not there) - ergo a reform of these programs should yield much the same benefit. But they won't and they don't.
So the first fallacy is to not recognize that the means by which these things are organized has less to do with economic theory and more to do with organizational competence and efficiency - which we struggle with.
But on the other side of the equation:
3) We don't understand the nature of work, poverty etc.. Everyone thinks about homeless people as though they have the same life motivations as the rest of us, grinding away in the system, and that's wrong.
People in tent cities are already mostly opting between 'tent city squalor' and 'Amazon factory drudgery'. Yes, it's hard to get a job from a tent, but even they had the chance to work at the Amazon / Waffle House, they just won't want to do it.
Those people will not come out of tents for $500 a month even with the opportunity to earn more. In an absolute free market situation, they would live in tiny, semi-permanent structures and chill out.
When you mix drugs into the equation, incentives are more perverse. Where I live we have $1K a month means tested welfare, and many homeless opt for living rough during the summer (and taking a flat in the winter) because they'd rather spend it on crack. That dynamic is only exacerbated with more money.
Students fresh out of College, in the area that I live in all have a lot of side interests. I know many of them and I believe the average choice among them would be to take UBI, work on their documentary (which is not very good), go to the gym, and maybe work a few days now and again (serving coffee) for some money for the trip to Africa.
With free Uni, free Healthcare, almost free childcare (this is Canada), you've subsidized the entire cost of living and externalized all of the difficult work, ugly work, and especially the kind of work that takes a lot of time and professionalism to develop. Esp. those 'late stage career people' with significant responsibilities upon which we depend a lot aka 'the legitimate elite'.
Which is where the reality of the economics comes into play ... even if someone could make the argument that UBI 'is affordable' - which I would totally disagree with other than for a paltry amount, say $500 a month, the loss in productivity at the lower end would be substantial, to the point wherein we'd see large swaths of value evaporated, the cost of labour would rise significantly and incentive structures would start failing.
If we're talking just 'economic incentives' than probably just better taxation at the higher (getting rid of loopholes and higher rates on the ultra-rich), and a bump in mimimum wage would make a big difference because the allocation of that 'extra capital focused on the lower end' would still have some market efficiency and it would be oriented towards productivity.
That - and basic, communitarian social measures would work.
I believe UBI is like Crtypo or Bitcon - utopian solution that fails for fairly obvious reasons, like a kind of 'solve the equation' thinking that we technical people have that just doesn't work once you account for the more obvious social features of society.
I don't think there are any magic solutions. We have to raise our kids well, provide some kind of quasi-level playing ground, and accept some people will fall of the edge and have some way to help them and to try to minimize that.
Would you please stop posting unsubstantive and/or flamebait comments to HN, and please stop using HN for ideological battle? Those things are not what the site is for, and they destroy what it is for. We ban such accounts, regardless of what their ideology is, and regardless of whether we happen to agree or disagree (actually, we don't care—we just want to have an internet forum that doesn't suck).
You're welcome here as long as you use the site as intended. That means using it in the intended spirit (intellectual curiosity), and making posts that are more thoughtful and more substantive. If you'd please review https://news.ycombinator.com/newsguidelines.html and stick to the rules when posting here, we'd appreciate it.
Please don't post generic ideological comments to HN. They make discussion more predictable and therefore more tedious. Also, they evoke pushback from people with opposite passions, and the result is usually nasty and boring. We're trying for something different here: https://news.ycombinator.com/newsguidelines.html.
While all the while dangling that "And won't this program be awesome when you're one of the rich ones?" cookie in front of everyone. "Sure I might be poor now, but I am fully against any sort of wealth or inheritance taxes because it harms my fantasy that I'll be living on a private island by the time I die."
We give money to the rich and advertise it to the rich and hopefully temporarily poor.
Democratic socialism seems to be the label for the best mix of elements we've founds so far.
"Capitalism" doesn't mean "anything to do with markets", and tells you exactly who it's for right there in the name. Capitalism vs. not letting free markets exist to any substantial degree, is a false choice. Relying on that label as if approaches that aren't at least pretty close to what the US does are all diametrically opposed to capitalism and necessarily share nothing with it, is a way to end up arguing over things that aren't real and don't matter.
None, because you can't get around markets even if you try to regulate them out of existence. As seen in the article countries with good unemployment benefits also have higher rates of unemployment during normal times. And don't forget every job being outsourced to China/Vietnam/Africa.
If you confiscated all of Jeff Bezos' net worth you'd get something like $1000 for each American, once.
The way to help the working class is to ensure economic growth happens, because a rising tide lifts all boats.
> The way to help the working class is to ensure economic growth happens, because a rising tide lifts all boats.
This is just trickle down economics. The same catchphrase as "grow the pie to share it".
It simply fuels money to the rich as well, in a larger proportion than to workers. We are actually experiencing the results of 40 years of that ideology and it doesn't look pretty.
Growth is also looking like a very unsustainable way to support civilization.
We haven't had real economic growth in the US since the 70's when deindustrialization first began. If you discount by the real estate market's return instead of CPI you have negative or flat real growth. CPI includes a lot of goods that are long run deflationary like TVs, food, and cars.
I'd point you to China for an example of what "rising tide lifts all boats" actually looks like. And to add to that - it matters a lot what kind of growth is driving GDP increases. If you're just powering growth by increasing immigration (aka working population) that's not increasing per-capita GDP.
> Growth is also looking like a very unsustainable way to support civilization.
Again, depends what kind of growth you're talking about.
> "grow the pie to share it"
Wealth redistribution has never worked in history. In every case where it has occurred there has been a flight of capital leading to underinvestment and poverty, or war.
Maybe not, but we have no better a system than ancient Rome where votes were bought by wealthy politicians from the upper class. But even if you limit examination to recent history:
- apartheid South Africa land redistributions led to "most of the farms [failing]" [1]
- Great Leap Forward in China confiscated huge amounts of wealth from landowners, gave it to the government and peasants, and caused massive famine
- "There is no wealth to distribute" in Venezuela [2]
- USSR literally killed millions by forcing individual farmers to work in large scale collective farms
- socialist reforms in other Latin American states coincided with periods of economic stagnation
I will also leave you with this link [3] to a breakdown of Swedish government tax revenues. You'll see the majority comes from taxes on labor and products (VAT) rather than taxes on capital and corporate revenue. So even in so-called democratic socialist states there is not a lot of wealth redistribution happening.
> Wealth redistribution has never worked in history. In every case where it has occurred there has been a flight of capital leading to underinvestment and poverty, or war.
One need only to look at san fransisco to see how a rising tide lifts some boats but drowns many because there is no incentive to lift all boats, and all the incentives in the world to make sure a favorable few boats are lifted so very high
This is not very great logic. People try and argue the same about minimum wage and it falls in its face, because economists who practice critical thinking note that when minimum wage has been raised historically, inflation generally did not follow.
After reading about the history and impact of minimum wages it is a policy that I vehemently oppose. Minimum wage started in most places as a way to price a group of workers out of the market so some other group could keep their jobs at the pay they liked. Additionally, minimum wage fails to deliver on its promise of helping low income groups. It makes less jobs available to low skill workers making it more difficult to acquire skills that would increase the pay they could demand. Finally, as with any price fixing scheme a black market arises. This would be cash under the table type jobs. What is wrong with two people agreeing on a price for some work that is below what some far away bean counter thinks is acceptable?
A few years ago I would have wondered the same thing. After reading Basic Economic by Thomas Sowell I searched for more information to counter the book's claims on minimum wage. In the end I came to the conclusion that Sowell is right. Minimum wage is a net negative in society. Minimum wage is harmful to the low income groups the policy is supposed to help.
Even if that is an accurate assessment, the l goal if lockdown s was not only to stop people from getting sick, but to them from getting sick all at once & overloading the healthcare system in ways that would have caused more deaths. Getting the same number if people infected over a longer period of time is a useful tactic.
A ltierature review by economists is possibly the least-valuable class of paper you could cite short of actual blog posts.
This specific paper throws out anything that even mentions any effect but mortality, any paper that compares real-world results to predictive models, and includes papers from various dumping grounds an non-peer-reviewed outlets. Any paper which attempts to introduce rigor is dismissed. Some of the papers cited are actual blog posts. This paper itself is self-published by one of the authors. The second figure disagrees with its own source (it cites six specific weeks early in the outbreak, during which time the stringency index did not change, but the x axis is a range of unsourced claims). It cites the GRADE handbook to support its hyperfocus on mortality rates (to the exclusion of literally all other considerations) but fails to note that the GRADE handbook is a health care guide and healthcare institutions were in the process of being overrun during the period they investigate, basically making the now-classic "but it only has an x% death rate" misdirection we're accustomed to hearing from Facebook propagandists.
In short, this document is almost but not entirely worthless. It is worthless as a public policy resource, but it is highly valuable if you want to make noise about how the Danes should have followed Sweden's example in 2020.
It's just as well they don't seem to have bothered minting a DOI for this, because web forum comments are the only places it's going to be cited. It's sloppy work, basically cherry-picking datasets, and then using them to affirm the consequent. I'm embarassed for the authors.
Unless you have odd ideas about healthcare and hospitals, I think you overlooked a key part of OP’s question. Have you forgotten the horror that went down in NYC, Italy, etc? Hospitals were overwhelmed, patients piled up all over the place, the dead packed into refrigerated trucks, staff working endless hours, equipment shortages… and you suggest not locking down would have been the better course of action?! Wow.
Lol a largely government created problem coupled with government shutdown followed by a poor patchwork government solution and the lefty takeaway at HN is that we need more different government to make more government more better
Would a [premined, escrowed] stablecoin token make it easier to answer these kinds of Transparency and Accountability questions in regards to government spending and government stimulus funding beyond intra-governmental transfers of real value?
Said stablecoin token would be hosted on more or more resilient Distributed Ledger Technologies (DLTs; 'blockchains') with a - indeed more auditable - transaction record specification that supports multiple transaction inputs and outputs and an optional identifier such as an e.g. "coinbase field" to key auxilliary (unfortunately comparably mutable, offsite-backuped by which responsible parties) database records to.
The issue here is not transparency, it's who the money was directed to. This is a policy question, and what type of currency you use is totally irrelevant. It's already very easy to see who received money (https://projects.propublica.org/coronavirus/bailouts/), what we're discussing is whether it should have been given to different people.
So, in your opinion, the "And then where did the money go?" question is entirely distinct from the "Did those investments have the desired impact for the desired audience, per the predefined criteria for success?" question? Who were we doing capital investment for, in hopes of them raising additional separately-accounted-for monies? https://westurner.github.io/hnlog/#comment-25893860 re: https://www.usaspending.gov/
Oh, are you talking about tracking the money after it's been loaned out? Like for a given dollar we can see that it was loaned to Company X, then paid to an employee, then spent on rent, then spent at a restaurant, etc. If that's what you mean then I agree it would be useful for studying the impacts of stimulus policies, although I think there are a lot of other privacy impacts we'd need to consider.
You can always launder money to defeat such a trail. I'm not going to go into detail about how, just in case my ignorant ramblings have some novel techniques in there, but it's definitely possible.
Like with banning encryption, the privacy impacts would be felt by the little people, and the big bad actors would be largely unaffected.
So we rely upon reports apparently generated from reconciled alternate accounting systems to determine whether the funds were appropriated impactfully?
TheGivingBlock specializes in handling cryptoasset donations with tax receipts. (We don't yet (?) prefill returns in the US)
When you donate to a TheGivingBlock Cause Fund, you get a tax receipt by email and the donation is privately sent to each of the multiple registered nonprofit charities included in that particular Fund.
TheGivingBlock Cause Funds map to the UN SDG Sustainable Development Goals; are categorically aligned to the #GlobalGoals Goals, but not yet (?) to specific Targets or Indicators.
https://thegivingblock.com/donate/
How should nonprofits be evaluated in order to invest impactfully?
If somebody says "Strategic Alignment" again, will less-impactful cashflows be eliminated?
When the government nonprofit invests in government services, nonprofits, NGOs, international aid, and for-profit entities, how do we evaluate per-investment/per-allocation ROI according to the predefined criteria at regular intervals, potentially with incremental commitment?
So, the specific fund allocation control adjustments being requested here are presumably due to feedback (sensor data and nonlinearity) which may or may not be traceable to an actual funding suggestion allocation task item in the near future, presumably
Most of the highest-impact charities wouldn't score highly on a “what happens to the money” metric. Think of the good stuff the Gates Foundation has been doing, or the GiveWell top charities. It's a good way of measuring the benefits of cash injection, but that's all.
