Pope Francis backs the universal basic income

[AlNg]

Pope Francis has a book coming out on Dec. 1 called “Let us Dream”.
“In the book’s final section, Francis says, “I believe it is time to explore concepts like the universal basic income (UBI), also known as ‘the negative income tax’: an unconditional flat payment to all citizens, which could be dispersed through the tax system.” Francis said…The pope outlines several benefits he sees to such unconditional payments…”
Also:
“Francis notably points to the work of female economists like Mariana Mazzucato and Kate Raworth in impacting his thinking on the best ways to construct a more equitable economy. “Could it be that in this crisis the perspective women bring is what the world needs at this time to face the coming challenges?” the pope says. He points to the success that nations with female leaders have had in controlling the coronavirus pandemic and describes his efforts to put more women in leadership positions in the Vatican.”

Pope Francis talks about Uighurs, George Floyd and Universal Basic Income in new interview | America Magazine

 

[Irishmom2]

From the article, we have another example of Pope Francis saying something and then having to have the Vatican explain what he ”really” meant to say.

In the book’s final section, Francis says, “I believe it is time to explore concepts like the universal basic income (UBI), also known as ‘the negative income tax’: an unconditional flat payment to all citizens, which could be dispersed through the tax system.” Francis said it “may be the time to consider a universal basic wage” in April, but a Vatican official said then that the pope had not meant “universal basic income.”

I don’t understand the concept of a universal basic income or a universal basic wage. I don’t understand why the Pope would be speaking about either.

 

[MNathaniel]

Francis said it “may be the time to consider a universal basic wage” in April, but a Vatican official said then that the pope had not meant “universal basic income.”

Makes my head hurt trying to imagine what kind of “wage” doesn’t count as “income”. If that’s really what the Vatican official said, I don’t understand it.

 

[AlNg]

Makes my head hurt trying to imagine what kind of “wage” doesn’t count as “income”. If that’s really what the Vatican official said, I don’t understand it.

A wage refers to a payment made by an employer to his employee for the work performed by the employee. Income, such as social security income, refers to money coming in from some source but not necessarily from an employer.
Wages are a form of income. But incomes don’t have to be wages.

 

[MNathaniel]

So you’re repeating what I said? Yes, as we can all be agreed, wages are a form of income (and not all forms of income are a wage).

So it’s mystifying why a Vatican official would ‘clarify’ the Pope’s “universal basic wage” comment by saying the pope did not mean “universal basic income”. I guess at the time that Vatican official might have been trying to pass off the Pope’s comments as referring to minimum wage laws?

Which it sounds like this new book contradicts, if what’s being said here is accurate and Pope Francis speaks of UBI specifically.

 

[AlNg]

Pope’s “universal basic wage” comment

In the April statement, I think it really was universal basic income because in the original text, Pope Francis used the expression, “el salario universal,” that is typically used in Spanish to refer to the universal basic income even though salario can be translated as wage.

 

[Maximian]

The Pope is entitled to his opinion, but I do not share it.

The biggest problem with minimum wages is that they are nice for those who have work but what about those who don’t and would rather work for less than not at all?

 

[Xarto]

I don’t really understand UBI, how is it different to Social Welfare? Will it affect those who are already employed?

 

[Montrose]

Finland had a two year trial with 2000 unemployed giving them a universal basic income and it was widely accepted at the end of the two years that the experiment was a failure.

 

[dochawk]

I don’t understand why the Pope would be speaking about either.

Speaking as an economics professor . . . when Catholic bishops try to talk about economics, they consistently demonstrate that they don’t understand the issues involved. Having Rome as one’s see does not create an exception.

The notion of UBI is that everyone gets it. Employed, unemployed, wealthy, poor, etc. If someone earns a wage, it’s on top of that. One doesn’t have to be willing to work to receive it (Recall AOC advocating that a few months ago?)

The fantasy is that the UBI is enough for people to have a dignified lifestyle. The ignorance is the belief that the economy produces and will continue to produce enough to do pay it.

It is possible that in the future, automation will take over enough of production to make this possible. Attempting to tax the current economy at the level needed to support this would strangle it.

No, the wealthy don’t have enough that we can take it and make this payment more than briefly.

And the so-called “New Monetary Economics” is nothing more than the old running of the printing presses that led to the hyperinflation of the Weimar Republic and the even worse Serbian hyperinflation.

 

[Irishmom2]

Thank you, @dochawk for the explanation. So no, it doesn’t sound like it would work.

 

[AlNg]

when Catholic bishops try to talk about economics, they consistently demonstrate that they don’t understand the issues involved

Yes. It looks to me like a UBI coupled with open borders and free medicare for all would be a disaster for the American economy.

 

[Tis_Bearself]

I don’t understand the concept of a universal basic income or a universal basic wage. I don’t understand why the Pope would be speaking about either.

It’s supposed to be so everyone can afford the basics like food and shelter.

What it’s more likely to do is just drive up inflation by the amount of the basic income or wage.

There are some ways to implement the concept better, such as via rent vouchers and EBT cards. That way the government at least has a modicum of control over what people spend their benefits on, and can have some protection for the recipients, like requiring landlords to keep their property up to code and restricting what foods EBT can be spent on. As well as limiting the benefits to persons actually in need.

The Pope may be seeing these things through the lens of countries where he has lived, such as his home country where poverty is way worse than in US, or Italy where a lot of people unable to find pick-up work have turned to crime. I can see him thinking that a basic income would remove that problem. However, the Pope is not an economist.

 

[Tis_Bearself]

The Pope is entitled to his opinion, but I do not share it.

I really don’t think any rational person with knowledge of economics thinks this is a good idea. The only people I know who would like it are the chronically jobless and broke who think of it as “hey wow free money.” Of course if it were put into practice, they’d whine because the rich doctor up the road was getting it too.

 

[Annie]

Of course if it were put into practice, they’d whine because the rich doctor up the road was getting it too.

And the rich doctor would complain because lay-abouts would be getting it…

 

[Annie]

Speaking as an economics professor .

What about doing it in conjunction with the Fair Tax idea that was popular a few years ago? That had a sort of component that was a return of the taxes spent on food and medicine which would be like a UBI.

 

[dochawk]

What it’s more likely to do is just drive up inflation by the amount of the basic income or wage.

Nailed it in one!


Yes, that’s the initial first order estimate of inflation. But then it sticks around . . .

There are some ways to implement the concept better, such as via rent vouchers and EBT cards.

EBT more than rent vouchers.

I had no idea what “section 8” was when I went looking for apartments decades ago. I noticed that every complex with “section 8 welcome” in its ad was, well, disgusting.

And then practicing law and dealing with landlords and tenants . . .

The money is better used to support a path to ownership. People simply take better care of what they own.

like requiring landlords to keep their property up to code and restricting what foods EBT can be spent on.

both of these, yes.

In the long run, UBI might be possible to phase in. I toy with the idea of a tx on robotic production being redirected to this path, and as production increases, the UBI would increase with it.

through the lens of countries where he has lived, such as his home country where poverty is way worse than in US,

There is a level of wealth inequality at which the rich could be taxed enough so support a modest stipend for all. The US and Europe, however, aren’t even close to in range of that. It would need a situation of “idle rich” owning practically everything, as opposed to a “working rich” and “entrepreneurial rich”.

There was a fascinating study done a couple of decades ago in which (anonymized) US tax returns were pulled for a large sample of people ten years apart. The majority of the upper quintile (top fifth) were in the bottom three quintiles (bottom 60%) ten years earlier. The top 1% largely weren’t the same, either. The US has a staggering level of class mobility, and super-high tax rates would take away the incentives that drive it.

 

[dochawk]

What about doing it in conjunction with the Fair Tax idea that was popular a few years ago?

There were a couple of things running around with that name.

If you replace the income tax with a consumption tax (like a VAT), then, yes, wonderful things happen. Newly created wealth wouldn’t be taxed away if reinvested, but would wait until there was even more of it and it was consumed. The problem is that most of the folks that push such things see a VAT as additional revenue on top of an income tax, rather than a replacement.

Production would be higher under a consumption tax scheme than income taxes. I would want the constitutional for the VAT type tax to be include the repeal of the income tax (an amendment is needed, for the same reason as the income tax was struck down without one: it’s a direct tax that can otherwise only be imposed proportionally to the state populations).

And there should, indeed, be exclusions for basic food, mdicine, and perhaps even housing–but then, as the UBI grows over time (if that’s the approach taken), these exemptions could be phased out. In fact, the fixed amount of a UBI instead would cause less distortion).

Also, right now the US is at a trade disadvantage with Europe and other VAT places due to our sole reliance on income tax: VAT can be refunded on exported products, but a similar rebate of income tax is prohibited under international trade agreements.

[ok, and the stupidity of corporate taxation is a topic for another time, maybe on @tis_bearself’s new site.]

 

[AlNg]

If you replace the income tax with a consumption tax (like a VAT), then, yes, wonderful things happen.

I like that idea. No income tax forms to fill out. Just a sales tax paid when you buy something.

 

[Annie]

There were a couple of things running around with that name.

But it seems like everyone in Europe hates the VAT tax?

Anyway, the one I was talking about eliminated income tax by constitutional amendment and replaced it with a federal sales tax at point of sale. The sales tax was high at 30% but captured all people (like drug dealers who often do not pay income taxes). Additionally, they considered that with the removal of income tax, prices would go down because of businesses not needing accountants and lawyers anywhere near as much, so the increased sales tax would not seem like the entire 30%.

At the end of the month, a percentage equal to (average? median?) spending on essentials such as food and medicine would be returned to each person. Voila! Instant UBI.