The question is: would a UBI encourage people to be nonproductive?
Earlier in this thread I addressed this question (with links). Rather than going back, I'll just say that the evidence is mixed. As I recall, the highest level of actual "loss" of incentive was around 5%, while another study showed it actually increased productivity (for the reasons that
Ezekiel posited). It was also noted that the decrease in work was primarily attributable to social factors outside of employment (e.g., pursuing education, birth of children). Those may be actual social goods that improve the nation rather than employment detriments.
My opinion is the same as
Zeke's - I believe that the social stability will
increase productivity, just as Social Security did, and as Worker's and Unemployment Compensation have.
BTW, the same is true for taxation: the economic friction that occurs is primarily the result of volatility in the tax structure, not the actual tax rate.
There is very little evidence that increasing taxes actually decreases productivity (and the opposite may be true). It's a canard of anti-government economists (without empirical support) that as taxes increase, people invest less. In actual fact, when taxes are sufficient to cover government expenses (i.e., not increasing deficits) the economy improves. (
Tax Cuts Don't Lead to Economic Growth, a New 65-Year Study Finds) The opposite can be directly shown:
Four of the five states that enacted the largest personal income tax cuts in the last few years have had slower job growth since enacting their cuts than the nation as a whole.
Four of the six states that cut personal income taxes significantly in the 2000s have seen their share of national employment decline since enacting the cuts. The exceptions ― New Mexico and Oklahoma ― grew mostly because of a sharp run-up in oil prices in the mid-2000s.
States with the biggest tax cuts in the 1990s grew jobs during the next economic cycle at an average rate only one-third as large as more cautious states.
. The reality is that
tax cuts cause deficits.
Congressional Budget Office data show that the tax cuts have been the single largest contributor to the reemergence of substantial budget deficits in recent years. Legislation enacted since 2001 added about $3.0 trillion to deficits between 2001 and 2007, with nearly half of this deterioration in the budget due to the tax cuts (about a third was due to increases in security spending, and about a sixth to increases in domestic spending).
(I'm trying to re-find literature on it, but there is evidence that
every modern recession has been preceded by a tax cut.)
So, what does all this have to do with UBI? The point is that
nothing stimulates an economy more than consumption.
A Tale of Two Tax Cuts. When economic benefits go to the lowest end of the economic spectrum that results in increased consumption and increased Aggregate Demand (stimulus). When they don't, it does not. The UBI, like tax "credits" (not deductions), would also increase aggregate demand, and thus improve the overall economy. (Some caveats, here. In the
short term, a UBI would increase government
debt. Unlike tax cuts, however, this debt would be offset - with a lag time - by
increased revenues from taxation associated with increased aggregate demand. Tax cuts, on the other hand, reduce government revenue, but do
not increase demand (supply-side economics). So, the deficit
increases, but there is no offsetting increase in
revenues to tax.)
