Colleges in Dire Financial Straits

[marshwiggle]

I'm getting confused.

Is UBI a Canadian program?

The pandemic has made it a matter of discussion in lots of countries. Although there was a pilot program in Dauphin, Manitoba in the 70's.

So I don't have a specific detailed program that I'm riffing on. One of the fascinating things about the idea is that it has support on both the left and right, and understandably so, since the existing system in many places is expensive but still often ineffective.

My vision would be one that is universal; i.e. would apply to every adult, but would replace *all of the government income support programs now, with an adjustment to the tax rates to make the whole thing revenue-neutral. The only difference between how poor and wealthy people would experience it is that poor people would get cheques in the mail, while rich people would just have it reduce their tax bill.


*Whether it's unemployment insurance, welfare payments, disability benefits, maternity or parental leave, or old age pension payments, they all essentially amount to the same thing- compensation for peoples' lack of employment income.
(Since I'm in Canada, healthcare is entirely separate, so it isn't affected. I don't really know how Medicare/Medicaid work in the US. And in Canada maternity/parental leave is government-financed from employment insurance premiums, even though some employers will top it up.)

[Mobius]

Finland had an experiment, too, recently. But it was money on top of existing welfare benefits they were getting.

[Stockmann]

If more people are eligible for welfare payments (even if it doesn't rise to "universal" levels), then the cost of welfare goes up unless payments are cut (the "peanuts" UBI scenario). The arithmetic doesn't change regardless of incentives or disincentives to work - and I agree poorly thought-out rules can create incentives for illegal work/disincentives for legal work (which is why I think time limits works better than means testing, and perhaps tying the amount and/or duration of payments to income tax paid).
The experience of places with de facto UBI is that a lot of people just cease to work - hence the reliance of Gulf states on immigrant labor, from maids to chefs to senior engineers to construction workers. The European welfare experience is much the same - for instance, pre-Brexit there was at least anecdotal evidence of places in northern England in particular with lots of young British adults living off the dole and businesses bringing in construction workers from Poland and farm workers from Romania. This was not illegal immigration, so it wasn't just a way of evading legal labor rules, but "new EU" citizens were initially ineligible for welfare payments.

[dismalist]

The arithmetic doesn't change regardless of incentives or disincentives to work... 

The size of the average payment depends on us. That arithmetic we control. We can be generous or miserly, as we wish.

The incentive to work depends on the margin -- how much of an earned dollar the UBI or welfare recipient gets to keep.

To finance what some think the right way of handling the UBI is, namely everybody gets one, obviously taxes would have to rise pay those who currently do not receive welfare payments. But as has been pointed out, that would be a wash for middle class and up, and would depend on the tax code in the final analysis.

Let not the sum of UBI, whatever it turned out to be, distract from the property that it's a way of making some people better off without necessarily making anyone worse off.

[marshwiggle]

If more people are eligible for welfare payments (even if it doesn't rise to "universal" levels), then the cost of welfare goes up unless payments are cut (the "peanuts" UBI scenario). The arithmetic doesn't change regardless of incentives or disincentives to work

This assumes the arithmetic doesn't involve any changes to the tax system. For instance, in Canada there is a "basic personal exemption" of $12k or something like that; income below that doesn't get taxed. With a UBI, it would make sense to eliminate that. So everyone gets the UBI, but every dollar of earned income is taxed.

The obvious point with a UBI is to adjust the tax system so that above some level, the UBI doesn't raise anyone's income above what it is now. (But again, for the sake of simplicity of  operation, everyone gets it; it's just that people with a high enough income will just opt for the UBI to be deducted from their taxes payable, rather than receiving a cheque in the mail.)

- and I agree poorly thought-out rules can create incentives for illegal work/disincentives for legal work (which is why I think time limits works better than means testing, and perhaps tying the amount and/or duration of payments to income tax paid).

Time limits still don't address the threshold effect. If a person on benefits gets an employment opportunity, unless it's high enough to make them better off than benefits do, there's no point. With a UBI, a part-time job is worth taking, and it starts paying taxes to offset the cost of the UBI. Seasonal work is also worth taking with a UBI. Someone with a disability who wants to try easing back into work can do so with a UBI. A new parent who has been on leave after the birth of a child can also try part-time work.

Time limits just continue the "all-or-nothing" problem of the current system, only with a doomsday clock.

The experience of places with de facto UBI is that a lot of people just cease to work - hence the reliance of Gulf states on immigrant labor, from maids to chefs to senior engineers to construction workers. The European welfare experience is much the same - for instance, pre-Brexit there was at least anecdotal evidence of places in northern England in particular with lots of young British adults living off the dole and businesses bringing in construction workers from Poland and farm workers from Romania. This was not illegal immigration, so it wasn't just a way of evading legal labor rules, but "new EU" citizens were initially ineligible for welfare payments.

Again, many of these problems are because it's all-or-nothing; unless work makes enough money to replace benefits, it's not worth doing at all. The UBI changes this completely so every dollar earned makes someone better off. (And every dollar earned generates taxes.)

[dismalist]

So everyone gets the UBI, but every dollar of earned income is taxed.

That's the Negative Income Tax [NIT] version, the simplest, and the one I like best. UBI has a more felicitous name, but that's all. :-)

It's important to get the arithmetic irrelevancy out of the way:

Create an NIT such that the total money spent on welfare remains the same, and just for the sake of illustration, is given only to those people already on welfare. Those paying for welfare are no worse off. Those receiving welfare cannot be worse off, for they are receiving the same sum, by assumption. Some will now work, for it pays. They will be better off. Some of those may even pay income taxes which they didn't do before. Makes the rest of us better off.

Worriers worry that not testing for "need" will turn current employees into lazy people who don't work, adding to the cost of welfare or UBI. Well, some not currently on welfare may well reduce their work hours [as a group, single mothers come to mind]. But, others will increase theirs. I can't prove it's a wash, and I don't care.  Am certainly not worried.

[dismalist]

So everyone gets the UBI, but every dollar of earned income is taxed.

That's the Negative Income Tax [NIT] version, the simplest, and the one I like best. UBI has a more felicitous name, but that's all. :-)

It's important to get the arithmetic irrelevancy out of the way:

Create an NIT such that the total money spent on welfare remains the same, and just for the sake of illustration, is given only to those people already on welfare. Those paying for welfare are no worse off. Those receiving welfare cannot be worse off, for they are receiving the same sum, by assumption. Some will now work, for it pays. They will be better off. Some of those may even pay income taxes which they didn't do before. Makes the rest of us better off.

Worriers worry that not testing for "need" will turn current employees into lazy people who don't work, adding to the cost of welfare or UBI. Well, some not currently on welfare may well reduce their work hours [as a group, single mothers come to mind]. But, others will increase theirs. I can't prove it's a wash, and I don't care.  Am certainly not worried.

Upon reflection, my last paragraph is wrong. Everyone now working has already escaped the trap part of the poverty trap with their labor. This shows what they prefer. There is no need to worry about increasing the welfare rolls by instituting a UBI.

[jimbogumbo]

What dismalist just said is also, IMO, one reason why so many jobs are currently unfilled. It especially applies to us 65+ers. A huge chunk of the population has hit retirement age, and simply doesn't want to work that hard any more, and people are frankly fed up with hours and hassles. Two cases in point: long haul trucking pays pretty well, but in part due to deregulation the marginal benefit has gone down significantly since the 1970s. The real push for driverless vehicles in in this sector of the economy, because the companies can't hire enough drivers. The other is a job that was a go to for many people, which is school bus driver. I could walk into any district in the Midwest today and be trained and driving as much as I wanted in a month (hired tomorrow, "fully" trained in a month). The hassle/annoyance factor of that job is not compensated enough at the margins to appeal to the older people at this time. Both of these sectors have been hit hard as well by the dramatic increase in local delivery drivers. We now have TWO Amazon distribution centers and a Walmart distribution center in my area. Plus FedEx, UPS etc. Shorter days, better conditions.

[marshwiggle]

So everyone gets the UBI, but every dollar of earned income is taxed.

That's the Negative Income Tax [NIT] version, the simplest, and the one I like best. UBI has a more felicitous name, but that's all. :-)

It's important to get the arithmetic irrelevancy out of the way:

Create an NIT such that the total money spent on welfare remains the same, and just for the sake of illustration, is given only to those people already on welfare.

What rule determines who would ever be eligible in the future?

[dismalist]

So everyone gets the UBI, but every dollar of earned income is taxed.

That's the Negative Income Tax [NIT] version, the simplest, and the one I like best. UBI has a more felicitous name, but that's all. :-)

It's important to get the arithmetic irrelevancy out of the way:

Create an NIT such that the total money spent on welfare remains the same, and just for the sake of illustration, is given only to those people already on welfare.

What rule determines who would ever be eligible in the future?

'Twould be a law like any other.

[spork]

College of Saint Rose continues its downward spiral: http://www.strosechronicle.com/fresh/doors-close-as-numbers-fall/.

University of Central Oklahoma has massive budget deficit and faculty layoffs are likely: https://www.oklahoman.com/story/news/education/2021/12/03/university-central-oklahoma-edmond-uco-enrollment-layoffs-financial-shortfall/8842060002/.

[Stockmann]

It's important to get the arithmetic irrelevancy out of the way:

Create an NIT such that the total money spent on welfare remains the same, and just for the sake of illustration, is given only to those people already on welfare....

So not universal at all, then. Perhaps existing welfare programs could be made more efficient by consolidating them in some ways, yes, but that has nothing to do with UBI. Regarding "arithmetic" it doesn't escape my notice that it's only me here, not any of the proponents of UBI, who is crunching any numbers whatsoever (the fear of all sums? - the proponents don't come up with even a ballpark amount, perhaps because any amount would either be completely unrealistically expensive or would be a lot less than Americans on welfare are getting), rather confirming that it's an innumerate idea. The proponents of UBI are, on the other hand, moving the goalposts - first it was to be paid by existing welfare spending (althoug nobody clarified which welfare programs would disappear - would Medicaid? Head Start?), then by taxing all income, abolishing personal allowances, and now it's not "universal" at all.

[dismalist]

It's important to get the arithmetic irrelevancy out of the way:

Create an NIT such that the total money spent on welfare remains the same, and just for the sake of illustration, is given only to those people already on welfare....

So not universal at all, then. Perhaps existing welfare programs could be made more efficient by consolidating them in some ways, yes, but that has nothing to do with UBI. Regarding "arithmetic" it doesn't escape my notice that it's only me here, not any of the proponents of UBI, who is crunching any numbers whatsoever (the fear of all sums? - the proponents don't come up with even a ballpark amount, perhaps because any amount would either be completely unrealistically expensive or would be a lot less than Americans on welfare are getting), rather confirming that it's an innumerate idea. The proponents of UBI are, on the other hand, moving the goalposts - first it was to be paid by existing welfare spending (althoug nobody clarified which welfare programs would disappear - would Medicaid? Head Start?), then by taxing all income, abolishing personal allowances, and now it's not "universal" at all.

No, no, the restriction is imposed in the mind just to get the arithmetic and the incentives separate and straight. It's a Gedankenexperiment.

The result is that at the present level of aid, no one is made worse off and some are made better off, as I said above.

If any one wishes to change the level of aid, get a law passed. Personally, I'm on the somewhat generous side, but I know that not everybody is.

And yes, which programs disappear matters. I'm guessing Medicaid and Social Security should stay, but all the rest should go.

Universal? That's just a felicitous name. For comparison start with the Negative Income Tax. People would get their transfer, but start paying taxes on the first dollar of earned income. [That's what I've been describing, with welfare payment held constant.] The UBI could be the same, but some people seem to have something less taxable in mind. People would only pay taxes on earnings above some value. Well, that requires an overall tax increase!

[mamselle]

Ok, I'm still confused, though, about how those issues relate to schools in dire straits.

Do places using such programs see them affecting enrollment, or adjunct availability or something?

Someone new trying to get direct information about a college they're considering working at (or leaving) might want to know how this dangling econ discussion ties to the thread topic they expected to find helpful.

M.

[dismalist]

Ok, I'm still confused, though, about how those issues relate to schools in dire straits.

Do places using such programs see them affecting enrollment, or adjunct availability or something?

Someone new trying to get direct information about a college they're considering working at (or leaving) might want to know how this dangling econ discussion ties to the thread topic they expected to find helpful.

M.

No, nothing, Mamselle. Not one penny. :-)

This discussion is important but has nothing to do with the title of this thread.

I've been wanting to start a new thread, but I can't seem to get posts over to a new thread in a felicitous manner.

Let me try it in an infelicitous manner!