this post was submitted on 21 Apr 2024
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Universal Basic Income (UBI)

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Today, I was playing with an immediate annuity calculator. For about $106K (USA Dollar), one can get a 10 year Immediate annuity that pays about $1K per month.

For $1 million, 9 people could be covered for 10 years. For $1 billion, 9,400.

Every American could be covered for the next 10 years for ~$35 trillion. Rolled out over 10 years, it could be $3.5 trillion per year.

I am better able to reason about annuities, than government spending, so this started to put the costs in perspective for me. The costs also stop being as "squishy".

UBI would be life changing for many. Those with lots of income already would be paying about 30% back to the IRS.

There are lots of optimizations. For 60% more, the term could be doubled to 20 years, cutting the annual rollout cost by 20%. I bet costs could be improved when purchasing $1 trillion of anything. Annuity rates are also not great right now, so there a likely better structures.

Thoughts?

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[–] [email protected] 3 points 6 months ago* (last edited 6 months ago)

Disclaimer: I am not an expert on any of this

That amount you pay is essentially the net present value of the principal at some low interest rate - basically you're getting $10k of your purchase price back each year, plus $2k interest (so about 2%). The amount is also fixed, so the purchasing power will reduce over time

Most western economies probably have higher interest rates than that right now, so their governments could get better UBI outcomes (financially) by paying themselves than relying on an annuity market

UBI shouldn't have to rely on financial trickery - even conceptually. There's more than enough to go around, governments should redistribute wealth in a way that achieves social welfare goals using the powers they already have e.g. taxation