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One of my absolute favorites was someone identifying himself only as “Side Hustle King,” who would ask his followers, “Would you rather get paid $1,000,000 right now or $50 every month for the rest of your life?
To save you some arithmetic: Unless you plan to live at least another 1,667 years (which is what it would take to make $1 million in $50 monthly increments) and do not care about inflation, Side Hustle King is mistaken.
GiveDirectly, a charitable nonprofit that sends cash directly to low-income households, has identified another such case, one where the answer was a little less obvious.
The explanation they arrived at was that the big $500 all at once provided valuable startup capital for new businesses and farms, which the $20 a month group would need to very conscientiously save over time to replicate.
I visited one of the villages receiving the 12-year UBI back in October 2016, and even then I observed people putting together ROSCAs and making plans to accumulate cash to invest.
As you might expect, given how entrepreneurially minded the recipients are, the researchers found no evidence that any of the payments discouraged work or increased purchases of alcohol — two common criticisms of direct cash giving.
I like that they included the mental health component. Long-term steady payments are best for mental health and can fairly easily be converted into lump sums by pooling payments and rotating payouts with others receiving UBI.
This is important because lump sums are most likely to spur entrepreneurship since they have the capital to invest, immediately, in a new venture. (But the unpredictability of starting a new business also means they are less happy.)
It’s nice having some hard data to support how we should go about UBI. Now we just need to revert taxation to what it was like a century ago to pay for it.
The explanation they arrived at was that the big $500 all at once provided valuable startup capital for new businesses and farms, which the $20 a month group would need to very conscientiously save over time to replicate.
I don’t know anything about rural Kenya, but I’m skeptical that these particular findings could be applied to bigger economies. The market in the US seems extremely hostile to small businesses, so investment typically looks more like stock market participation and massive private equity for risky tech startups.
In that environment, I would bet that the steady passive income would perform better.
$500 isn’t much, but $10-20K is enough capital to start a lot of businesses.
Using numbers from this source and doing a quick calculation shows that US median income is 27.8× larger than the median income in Kenya, so $500 in Kenya is analogous to ~$14K USD. So that scans with my ~10-20K estimate.
Developed countries could afford the equivalent of a $10-20K UBI with equitable taxation models. Most households would end up in a better financial situation net taxes, and those who end up in a worse situation financially are doing just fine. (The US could afford a big chunk of this just from switching to a single-payer healthcare system!)
If you’re earning over $1MM/yr, then who the fuck cares if you’re only taking home 20¢ on the dollar of marginal income? You can already afford to buy a whole house every year.
I think Western economies need to seriously prepare for this within the next few decades. Manufacturing automation and AI will continue to marginalize labor and social services will continue to expand to fill the gap.
UBI or ultimately a resources based economy could become the only way to provide for a population that once could afford to stoke the fires of consumerism. We will probably find ourselves there on accident. Meaning, the transition will be a disaster.
Income tax for the highest earners in the USA, as an example, used to be 93% tax
You read that correctly and I believe my number is accurate.
Rich assholes bought PR machines to convince the public that system was unfair to them. So they lowered taxes on the rich. However, that lost tax revenue had to be made up some how. So the poorer pay more So the rich can piss on them from on high - err so the rich can trickle down.
Low taxes for the Uber wealthy is a relatively new thing.
Ahhhh. That’s one of the things that infuriates me. How people will vote based on the fact that they may get rich one day and so not want to hurt their potential future self, not realising that the way they vote will never allow them to get into that position, except from with a stroke of luck.
You can also donate to them. They provide direct cash transfers to the worlds’s poorest communities, as well as ongoing research into the effects of things like UBI.
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🤖 I’m a bot that provides automatic summaries for articles:
Click here to see the summary
One of my absolute favorites was someone identifying himself only as “Side Hustle King,” who would ask his followers, “Would you rather get paid $1,000,000 right now or $50 every month for the rest of your life?
To save you some arithmetic: Unless you plan to live at least another 1,667 years (which is what it would take to make $1 million in $50 monthly increments) and do not care about inflation, Side Hustle King is mistaken.
GiveDirectly, a charitable nonprofit that sends cash directly to low-income households, has identified another such case, one where the answer was a little less obvious.
The explanation they arrived at was that the big $500 all at once provided valuable startup capital for new businesses and farms, which the $20 a month group would need to very conscientiously save over time to replicate.
I visited one of the villages receiving the 12-year UBI back in October 2016, and even then I observed people putting together ROSCAs and making plans to accumulate cash to invest.
As you might expect, given how entrepreneurially minded the recipients are, the researchers found no evidence that any of the payments discouraged work or increased purchases of alcohol — two common criticisms of direct cash giving.
Saved 81% of original text.
I like that they included the mental health component. Long-term steady payments are best for mental health and can fairly easily be converted into lump sums by pooling payments and rotating payouts with others receiving UBI.
This is important because lump sums are most likely to spur entrepreneurship since they have the capital to invest, immediately, in a new venture. (But the unpredictability of starting a new business also means they are less happy.)
It’s nice having some hard data to support how we should go about UBI. Now we just need to revert taxation to what it was like a century ago to pay for it.
I don’t know anything about rural Kenya, but I’m skeptical that these particular findings could be applied to bigger economies. The market in the US seems extremely hostile to small businesses, so investment typically looks more like stock market participation and massive private equity for risky tech startups.
In that environment, I would bet that the steady passive income would perform better.
Maybe? It depends on scale, I think.
$500 isn’t much, but $10-20K is enough capital to start a lot of businesses.
Using numbers from this source and doing a quick calculation shows that US median income is 27.8× larger than the median income in Kenya, so $500 in Kenya is analogous to ~$14K USD. So that scans with my ~10-20K estimate.
Developed countries could afford the equivalent of a $10-20K UBI with equitable taxation models. Most households would end up in a better financial situation net taxes, and those who end up in a worse situation financially are doing just fine. (The US could afford a big chunk of this just from switching to a single-payer healthcare system!)
If you’re earning over $1MM/yr, then who the fuck cares if you’re only taking home 20¢ on the dollar of marginal income? You can already afford to buy a whole house every year.
I think Western economies need to seriously prepare for this within the next few decades. Manufacturing automation and AI will continue to marginalize labor and social services will continue to expand to fill the gap.
UBI or ultimately a resources based economy could become the only way to provide for a population that once could afford to stoke the fires of consumerism. We will probably find ourselves there on accident. Meaning, the transition will be a disaster.
Do you mind elaborating on the tax bit? I’m intrigued.
Income tax for the highest earners in the USA, as an example, used to be 93% tax
You read that correctly and I believe my number is accurate.
Rich assholes bought PR machines to convince the public that system was unfair to them. So they lowered taxes on the rich. However, that lost tax revenue had to be made up some how. So the poorer pay more So the rich can piss on them from on high - err so the rich can trickle down.
Low taxes for the Uber wealthy is a relatively new thing.
Ahhhh. That’s one of the things that infuriates me. How people will vote based on the fact that they may get rich one day and so not want to hurt their potential future self, not realising that the way they vote will never allow them to get into that position, except from with a stroke of luck.
Here’s the writeup from GiveDirectly itself: https://www.givedirectly.org/2023-ubi-results/
You can also donate to them. They provide direct cash transfers to the worlds’s poorest communities, as well as ongoing research into the effects of things like UBI.