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Quantifying Utopia: A UBI Calculator for the USA

by ARGeezer Thu May 16th, 2013 at 03:10:20 PM EST

Beta: Universal Basic Income Calculator  New Deal 2.0  Mike Konczal

Click here to try a new Universal Basic Income calculator. You can click on which programs you'd like to turn into a UBI, and what taxes you'd be willing to put into motion, and it will tell you how large of a UBI can be supported with those resources. You can also type in your own numbers if you are interested.
[editor's note, by ARGeezer] Inserted blockquotes around first paragraph.


What is this? Below is from Konczal's weekend post on WaPo's Wonkblog:
Thinking Utopian: How about a universal basic income?

In light of the recent Oregon Medicaid study, several people have discussed the idea of taking parts of the social insurance system and replacing them with cash benefits. This naturally brings up the debate about whether it should be a policy goal for the United States to adopt a universal basic income (UBI). These poverty-level targeted incomes are universal and unconditional, so everyone would get them regardless of their income, status or work participation. Wonkblog's Dylan Matthews wrote an overview of universal basic incomes and some proposals for such a system last year.

....

First, what are some advantages of providing a universal basic income? To those on the left, a UBI would create greater equality by ending poverty and providing a minimum living standard. It would also increase bargaining power for workers, who could demand better working conditions with a safety cushion. As Erik Olin Wright argues in Envisioning Real Utopias, such bargaining power "will generate an incentive structure for employers to seek technical and organizational innovations that eliminate unpleasant work," which would "have not just a labor-saving bias, but a labor-humanizing bias."

The fact that it is universal is crucial. This eliminates income traps that can cause severe work disincentives. A UBI answers the Foucauldian critique about the welfare state being a way for the state to stigmatize and control marginalized populations. There are no state officials determining whether or not a single mom "deserves" help or drug tests and other invasive, humiliating requirements. Others see UBI as a way of recognizing the value of decommodified caregiving and other cooperative, non-labor activities, by making sure there is space in the economy to both reward and carry them out


I am not comfortable in leaving medical care to the 'free market', and therefore, pending a clear understanding of what would replace Medicare and Medicade, I left them out. But including Social Security, Disability Insurance, Unemployment Insurance, SNAP (Food Stamps) and All Other Income Support gives a UBI of $4710/month. That substantially exceeds the combined SS income my wife and I receive. And for many in my community, some of whom I know personally, it would constitute anywhere from a doubling to a greater than ten fold increase in income. With Partial Phase-Out, where the UBI award declines linearly from $25,000/year from non UBI income to half at $50,000/year non-UBI income, PPO-UBI income rises to $6001/month - over twice our current income. Better yet, with the stimulus such a plan would provide, my skills, along with those of others now not in the workforce, might well be sufficiently back in demand that I would be making more from work than from the UBI.

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There are at least two elephants in this room. The first are the assumptions and procedures Konczal used to create the calculator and the second is the SeriousTm problem of inflation. But it is useful if even it only suggests what alternative use could be made of existing financial flows.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu May 16th, 2013 at 03:43:09 PM EST
Hell, a monthly income of $4750 would be a pretty substantial raise even for me, and I figure I'm probably earning at my current job more than I'll ever get anywhere else I work for the rest of my life.  Bloody hell.
by Zwackus on Thu May 16th, 2013 at 11:59:16 PM EST
[ Parent ]
Perhaps it is just an indicator of just how much is being skimmed by the financial sector - or his numbers are seriously flawed.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri May 17th, 2013 at 01:56:37 AM EST
[ Parent ]
Is this actually per month, or per year?
by Metatone (metatone [a|t] gmail (dot) com) on Tue May 21st, 2013 at 03:23:59 PM EST
[ Parent ]
Per year, as it turns out. My mind originally refused to believe that he was proposing such figures as a yearly benefit, but that turns out to be the case.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue May 21st, 2013 at 11:10:16 PM EST
[ Parent ]
Assuming a rude Say's Law approximation the USA has about a $15 trillion/year GNP with a total population around 300 million. If that GNP is divided equally amongst the population that gives every citizen $50,000/year. $50,000/child would be one Hell of a fertility incentive, so we would probably want to refine the distribution. If we reserved half of the GNP for the UBI that would still give each individual $25,000/year.

If we provided child care benefits that averaged half of an adult income per year, but that started around $6,250/year and rose to $18,750/year by age 18 then a household with two adults and one child would have an average family income of $62,500/year over the period from birth to age 18 and less of the GNP would be consumed by the UBI. I think that would seem pretty good to the bottom 50% of income earners in the USA.

This sort of change in the income distribution is really starting to sound "utopian". But I think such a society would be much more liveable. I also think that it would stimulate a lot of people to think about the consequences of the current political economy. The first step towards change is imagining that things could be better.  

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri May 17th, 2013 at 02:47:00 AM EST
When the institutions gets so undermined that gradual change looks pointless, it appears to stimulate the utopian responses.

I like this attempt. I tried to do a back of envelope calculation for Sweden a while back and concluded that it is far from a trivial exercise. Also like the option of getting rid of the military.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Fri May 17th, 2013 at 10:12:16 AM EST
[ Parent ]
After a night I am still concerned about Konczal's assumptions and the numbers, which I find too generous by far, which is what led me to my own back of the envelope calculations. He appears to be dealing entirely with individuals, whereas there is a considerable household level component to current income distribution. Further, leaving the military and health care costs aside, the $4710/month payment, ($56,520 yearly), I derived from rolling in all the transfer payments on his calc. sheet is perilously close to the per capita share of national income I approximated by dividing rude estimates of GNP by an approximation of the US population.

However, I do not recall ever seeing in print, ANYWHERE, a number which approximates the per capita share of national income if equally divided. Unless I am simply unobservant that, to me, implies a taboo on this subject. Breaking that taboo could be the best result from such an exercise, though the SeriousTM response would be first to ignore and, if that proved ineffective, to focus ridicule on any errors in the process that led to the conclusion, combined with condemnation and scorn for breaking the taboo - all without ever acknowledging the existence of any such taboo.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri May 17th, 2013 at 11:08:53 AM EST
[ Parent ]
Does Konczal define income?  A standard practice of NCE and other RW'ers is to exclude all non-wage earnings,   e.g., the $10,000,000/yr "bonus" a CEO pays him/herself.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Fri May 17th, 2013 at 11:25:04 AM EST
[ Parent ]
That is just one of my questions, but I don't think it is appropriate to consider him a right winger or an NCE adherent. But NCE is the water in which we swim. I saw his article in New Deal 2.0 which is generally pretty progressive. (With the notable exception of a couple of editors who tried to become SeriousTM by participating in a Peterson Institute activity. They took a lot of shit for so doing.)

I suspect that he took a path similar to my BOTE calculations. A google of 'population of USA' gives a 2011 population of 311 million and the following World Bank figures:
GNI per capita: 48,820 PPP dollars 2011 World Bank
Gross national income: 15.21 trillion PPP dollars 2011
Gross domestic product: 14.99 trillion USD (2011)

The problem is I do not know as I have not found any place where he sets forth how he derived his calc. sheet.  

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri May 17th, 2013 at 12:13:00 PM EST
[ Parent ]
It may be based on US government spending.  That is, by rounding up the published state and local government budgets for various programs, and then putting them into the pool or not, and then dividing them by the US population.  That's what I'm guessing.  From what you posted above, it didn't look like his proposal was related at all to GNP or GDP, but rather a redistribution of current gov. programs with zero overhead.
by Zwackus on Fri May 17th, 2013 at 07:59:26 PM EST
[ Parent ]
I closely read his notes on the calc. sheet and found that he is only planning on distributing to the 221 million US citizens over 21. And I can replicate the numbers his chart gives, but there is a catch. For Social Security he shows an annual expenditure of $594 billion, which translates into $2,687 per adult citizen per year! That would be a disaster for likely greater than 95% of SS recipients. It is so bad that my mind assumed that the $2,687 was per month. But SS paid only about 60.4 million recipients in 2011 and the average monthly award was $1,230/ retired person, (which is different from 'all SS recipients'.) But that (probably high) number of $1230x12x60.4 million equals $891 billion per year SS expenditure, which is high, but ballpark. If the majority of the 60.4 million are survivor minors with small monthly awards to the surviving parent or guardian that could easily bring the total expenditure down to the value given of $594 billion.

I could not see how a program that paid out even close to $900 billion per year to ~ 20% of the population could be used to provide a larger benefit to the entire adult population. The answer seems to involve confusing months with years, aided by imprecise language.

Even clicking all the boxes but Medicare and Medicaid, including using all current military spending, progressive estate taxes and raising taxes by 3% of GDP only gets us to $10,968/year per individual for a UBI, but with a full phase out of the UBI between $25,000 and $50,000 per year, (which would mean it was no longer universal), would raise the (non) Universal Basic Income to $19,078/year per individual. This would lift a lot of families out of poverty, but would still cause a significant shortfall of resources to pay the SS benefits that are towards the top award, which is over $30,000/year per individual.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat May 18th, 2013 at 01:47:48 AM EST
[ Parent ]
Pardon my naivete, but shouldn't the surplus we're throwing around as a source of UBI be actual value added, rather than mere belief in the GDP figures?

I've seen all kinds of critiques of GDP/GNP as not actually reflecting the surplus available for redistribution as wages.

Personally, UBI should be hard basic, but include health care, which is a right by my lights in a civilized society (which I agree we should try...)

Align culture with our nature. Ot else!

by ormondotvos (ormond.otvosnospamgmialcon) on Mon May 20th, 2013 at 01:04:21 AM EST
shouldn't the surplus we're throwing around as a source of UBI be actual value added, rather than mere belief in the GDP figures?

It is not 'surplus' but total economic activity that is being discussed, and, in particular, the distribution of that total product. This gets confusing for several reasons, not least because discussion of changing the distribution is THE MAJOR heresy. But also the concept of profit and loss do not really apply to a nation that is sovereign in its own fiat currency.

By definition, with 'balance' referring to surplus vs. deficit, and pursuant to six centuries of accounting and business practice:

Private Sector Balance + Public Sector Balance + Trade Balance = 0

For countries which are part of a currency union profit/loss can be viewed as the trade balance, which, over time, comes to be a measure of the extent to which the country is owned by its own citizens. The reason that profit and loss do not strictly apply to a country that is sovereign in its own fiat currency is that the state can create additional money at will, though not without consequence. The big consequence about which monied people claim to worry is 'wage push inflation', however, in a time of high unemployment and falling demand, this is quite unlikely to occur.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon May 20th, 2013 at 10:31:03 AM EST
[ Parent ]
I get $22k while leaving medical and disability.

Align culture with our nature. Ot else!
by ormondotvos (ormond.otvosnospamgmialcon) on Mon May 20th, 2013 at 01:12:26 AM EST


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