What's the difference in theory and practice between UBI and changing the standard deduction/marginal rate? Like if we give out $6k a year to everyone through a $500 check, what is the difference in how that money is spent versus if we increased the standard deduction to where people would pay $6k less in taxes? (assuming that people are in fact paying at least $6k)

I get that this is partly an experiment to figure this out, but what does the current theory say?

That's the big difference. UBI most helps the people who are paying the least tax right now, such that a pure deduction wouldn't do anything for them. It's a "negative regressive" tax, whereas an increase in deductions/decrease in marginal rates—or a tax credit—is a "negative progressive" tax.

> What's the difference in theory and practice between UBI and changing the standard deduction/marginal rate? Like if we give out $6k a year to everyone through a $500 check, what is the difference in how that money is spent versus if we increased the standard deduction to where people would pay $6k less in taxes? (assuming that people are in fact paying at least $6k)

You've partly answered your own question. One of the big differences is that people who wouldn't have paid at least $6k in taxes wouldn't get the full benefit. It's also true that the standard deduction is a deduction of your taxable income. Depending on your tax bracket, that's going to reduce the amount you owe by a different amount.

We could instead talk about doing it as a tax credit similar to the Earned Income Tax Credit, but giving it to everyone equally regardless of whether they're working. This would be more like a basic income. If we can pay people the tax credit at finer intervals instead of in one lump sum at the end of the year, that's even better.

The disadvantage is that people would still have to file tax returns. The people who need the money the most are also the ones who are least likely to be able to navigate the system. If it's exactly the same amount of money to everyone unconditionally, then we reduce the bureaucratic burden by not tying it to the tax system.

Here's a video where I answer the question of why basic income should go to rich people. I advocate keeping the complexity separate from the cash benefit system and putting all that complexity on the taxation side.

https://youtu.be/ylm1jN9cMRQ?t=430

Avoiding trapping people in positions where they need a dead end job with no advancement potential which forecloses opportunities for self-improvement is, indeed, one of many arguments for UBI.

> I thought the fundamental macro issue was that as automation of one kind or another becomes an increasingly inherent part of new technologies, it will inevitably depress the human job market beyond its ability to employ enough people to maintain the economy.

That's less credible of an argument than that it will create a rate of change of needed skills which will leave people stuck who cannot afford to retrain.

Short of AGI or output levels so high that diminishing returns make greater output of minimal value, automation should multiply the value of human labor while shifting skills in demand.

It's interesting that this question has two clear, opposed answers:

The answer from Economics: it's impossible to just give everyone money, because you just devalue your currency. In essence, given a fixed pool of "stuff" to buy and sell, the "buying power of the total pool of circulating currency" remains constant no matter what you do to your monetary policy. And, because certain things have elastic supply but inelastic demand (like housing), the owners of those goods (rentiers) can suck all benefits of wealth redistribution right back out of the economy.

The answer from Technology: it's certainly possible to just feed everyone for free, or to otherwise enable "free" increases in net global utility. An agrarian co-op covering just the current arable farmland of the United States, with all possible economies of scale due to centralization of resource processing, could probably feed the whole world using maybe 10,000 farmers. Eventually even those people could be replaced by robots (and the people producing the robots and doing the maintenance on the robots, too.) This rounds off to literally no human having to do work, for every human to be able to eat.

So, the disconnect: if we can (or could, in theory) increase net global utility with public-works projects, then why can't we increase net global utility with money? What's the economic difference between a world where robots grow all our food for us, and a world where we have the robots "grow" some free money instead (y'know, like by mining Bitcoin or something), and then use that money to pay the human farmers to grow the food? It seems like there's some part of market capitalism not working out for us here, if one world is possible and the other isn't.

But the reality is that inflation isn't about the amount of money "in the economy." It's about the rate at which money is flowing through the economy. That flow is the level of spending. To keep prices stable, we have to keep spending balanced with production.

The reason why we can make this distinction is because money doesn't just perpetually circulate through the economy. It flows through the economy like a river from consumers to producers to the financial sector. It's true that money in the financial sector gets "reinvested," but in order for that money to support consumer spending, you have to be able to connect the dots and tell a story about what mechanism is getting money into the hands of consumers.

Basic income is a possible mechanism for that. If we want to, we can continue to use taxes or create jobs to force "existing" money is flowing back into the hands of consumers, but what's the point? Why not just hand them new money instead?

I've written a blog post about this.

http://www.greshm.org/blog/money-does-not-circulate/

I was curious about this so I did some digging. Alaska effectively has a UBI, or at least a program that is quite close to it. When the program came what's interesting is how it reduced poverty. However, two decades later, inflation has caught up and now Alaska's poverty rate is 15th lowest in the nation at 11.1%. In comparison, right before their oil UBI took place their poverty rate was 10%. The program is still helping reduce poverty when compared to other states, two decades later, but not as much as I'd like to see.

I suspect if it was a country wide UBI, instead of an entire state, inflation would catch up at a quicker rate than we're seeing in Alaska, but it would still be at least a decade before it would balance. Likewise, I suspect that inflation will never come completely to the level of no UBI, but I don't have data to back that suspicion up.

>Is it even possible to give everyone free money?

If we absorbed the social security tax, merging everything into one large UBI program. Lets say we want to balance near min wage workers so they get as much as they give, but support people who are in poverty as one hypothetical UBI. In the US the poverty rate is 17.3%, so given people who work near min wage pay about as much taxes as they get from the UBI (which would help reduce inflation, and because we pay 6.2% of our income in social security up to 128k: 0.062*1.173 is 7.27%.

We'd pay almost exactly a 1% tax bump to pay for a UBI, plus the money the UBI gives (eg, if we got $400 a month we'd have $400 more in taxes + the 1%), to gives out the same amount as social security does. However, realistically the UBI would have to give a bit more than social security currently does, or the elderly might not like it, for psychological reasons, and a 1% tax raise on near minimum wage works isn't a good idea, so lets do some more math.

Lets say 50% of the country is paycheck to paycheck (some studies say it is as high as 78%, so ymmv on this stat). If it's a 1% tax bump across the working country, and 50% we don't want to be taxed higher than they already are, then it's a 2% middle class and upper class tax raise. Then given an increase for the reasons above, if it's a 1.5% tax this becomes a 3% tax bump for half of the country to pay for it. Then, of course, there is making tax brackets out of that as well.

So long story short, is it possible? Yes, yes it is.

Is it a good idea? I'll leave that up to you.

> Alaska's poverty rate is [...] 11.1%. In comparison, right before their oil UBI took place their poverty rate was 10%

That implies to me, at least, that their poverty level has gone _up_ not down.