Posts by Matthew Hooton
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Polity: Eleventy billion dollars!, in reply to BenWilson,
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Polity: Eleventy billion dollars!, in reply to Alfie,
None of those are controlled experiments and, as discussed in my response to Keir, I don't see why one would be needed anyway. A UBI is self evidently better than the status quo, if that maths can work, if it solves the EMTR issue.
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Polity: Eleventy billion dollars!, in reply to Keir Leslie,
At $11,000 gross with no lower youth payment, the gross cost is $11,000 x 3,543,600= $38,979,600,000 in the first year. But the savings are nothing remotely like $25,o0o,000,000. And, under such a policy, there is still the EMTR problem (in fact the income tax system would become more complicated), there would be no administrative savings (and probably some increase) and no change to the indignity issue. That is, for example, a single person aged 25 or over with no kids who becomes unemployed still has to go to WINZ to apply for the extra $25 a week to bring their income to what it would be now.
In my view, such a policy would be worse than the status quo. But I don't see why David Farrar (or anyone else) was lying for talking about a c$40b gross cost and my range of $49b-86b for a policy that also provided extra assistance to people with children (and solved the policy problems a UBI is meant to address) was entirely legitimate. (The difference between my $49b and $86b depends on whether or not the policy replaces National Superannuation, which also affects the savings side.)
I don't think Labour will be proceeding with this at election time because they either go for something like the $39 billion preferred option with relatively low savings from the existing $25 billion welfare state, or they go with something like my $86 billion with the full $25 billion savings, but either way the tax rates required to fund the difference is not going to politically sustainable.
I also think the idea of doing a controlled experiment in two towns, as suggested here earlier, is absurd. The demographics of the two towns would have to be close to identical; the study would have to be longitudinal (and would people be able to move in or out of the towns through that study?); you would have to check you weren't just studying the effects of putting more taxpayer money into one town over the other; and you would have to control for shocks that occurred in one town but not the other (say, if a proper ETS was introduced and one town was a forestry town and the other a dairy town). I don't know that such an experiment is possible or what it would tell us.
It seems to me that a proper UBI (universal and enough to live on at a basic level, and allowing the abolition of other forms of support, so dealing with the EMTR and other issues) is so obviously better than the status quo that no such experiment is necessary and you would proceed with it if you could get the maths to work in the sense of the tax rates required not creating some of the same problems as the current EMTR problem,
It seems to me Labour hasn't thought any of this through properly, but other people have, for many years - and that Labour has just gone on gooey eyed at the leftie celebrity economist they brought out to their conference.
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Polity: Eleventy billion dollars!, in reply to Ian Dalziel,
I mean "universal" within a geographic area. A payment made to, say, only the 25-65 age bracket, that is not enough to live on, and is part of a system that then provides for higher benefits for people who are unemployed is not a UBI as most people understand it. It's a mere tax change.
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Polity: Eleventy billion dollars!, in reply to Hilary Stace,
So start small, universal and pilot through a randomised control trial (eg in two similar towns one with UBI and one without), and then develop incrementally. Why not in NZ? They are doing it in other countries.
Which are the countries such a controlled experiment is happening? How can such an experiment genuinely be controlled? A genuine experiment would have to forbid freedom of movement, wouldn't it?
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Polity: Eleventy billion dollars!, in reply to Hilary Stace,
If that is what is proposed then I am absolutely right that what it proposed is not a UBI but just the use of that term as political cover to increase handouts to some people and taxes on others, including on their homes. What you suggest would do nothing to address the EMTR issue, nothing to reduce the administrative cost of the welfare state, nothing to reduce the indignity people face when applying for assistance, and it would not provide an income on which anyone could live. So, ask yourself: what would it be for?
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Polity: Eleventy billion dollars!, in reply to andin,
doesn't quite work like that I believe
Really? Then it is not universal. I could imagine it could be from, say, age 25 until retirement, and you would leave youth benefits and National Superannuation in place. That would reduce the gross cost to around $40 billion - but it would also reduce massively the $25 billion saving from abolishing other forms of social assistance, so there would still be a very large fiscal hole. What is your understanding of what is being considered because I have seen no Labour MP yet say the plan is for it to not be universal.
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Polity: Eleventy billion dollars!, in reply to Keir Leslie,
But plainly it has been made clear which of your assumptions are not the assumptions Labour are making:
Where? When? Which one?
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Polity: Eleventy billion dollars!, in reply to Rae Sott,
See as mentioned above:
"higher ... company taxes, new taxes on carbon and capital gains, and a tougher IRD."
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Just a few brief(ish) points.
1) For those with a subscription or working for someone who has one (and I think students at some universities), the actual column is here: http://www.nbr.co.nz/opinion/ubi-just-cynical-ploy-increase-welfare-and-tax-mh
2) The column makes clear at the outset this is an idea not policy. The word policy appears only once, and in the sentence: "It’s difficult to think of a policy proposal with more going for it." I don't know why Rob claims I said it was Labour Party policy. The column also makes clear I support a UBI in principle and I outline the key policy benefits, especially around EMTRs, administrative savings and reducing indignity for beneficiaries. I mention the huge amount of work that Lockwood Smith did in opposition in the 2000s trying to make something like a UBI work. (In fact, and I don't mention this, I first encouraged him to do so when he became National revenue spokesman after the 2005 election).
3) The $86 billion gross cost assumes:
(i) a UBI is indeed "universal" in that:
(ii) everyone gets it from aged 18 until they die;
(iii) there is a top up for children under 18 as with the current Jobseekers' Allowance and Working for Families;
(iv) it is enough to survive on, and
(v) there are no financial losers among existing beneficiaries.4) Rob acknowledges I discussed the potential $25 billion saving if the full $86 billion model was implemented. He seems to have missed the bit when I said tax changes would be needed to bridge whatever difference remains, specifically "higher income and company taxes, new taxes on carbon and capital gains, and a tougher IRD." Is there anyone who thinks a UBI can be implemented without those things?
5) I criticise Andrew Little's "little helpers" for calling people liars for trying to put some numbers around a UBI. Labour has called for a discussion and public debate on its idea.
6) It is perfectly OK for Labour (or its paid proxies) to say that the $86 billion gross cost is too high. But then they need to say which of the assumptions in 3 above should be relaxed. If they won't relax any of those assumptions, then $86 billion gross is a fair estimate of what the policy would cost.
7) If a party wants to have a public debate on a major policy idea, that is great, but how can people debate an idea if they are told they are liars for considering the fiscal side? For example, if a UBI of the type I describe in 3 above could be implemented at a cost requiring tax increases of only $10 billion I would be all for it. Who wouldn't be? But how can anyone even begin to consider the matter without some parameters, including fiscal parameters? To initiate a discussion without providing some information on the fiscal implications is entirely disingenuous. It would be like National saying "we're thinking of $100 a week tax cuts for everyone", refusing to give further information and then calling people liars if they tried to work out what that might cost.
8) Labour still has quite a few MPs in parliament. I would have thought if Labour wants a public discussion on a UBI those MPs should be getting involved, rather than putting a staffer up on Public Address to rebut a column in the NBR. But far be it for me to give Labour political advice.