Negative. Those with money will fight like hell to keep from giving it up. However if by some chance/miracle a guaranteed income is ever instituted, it will become a political football, as politicians and advocacy groups seek to continuously push it higher and higher. Instead of a money handout, I would rather support money in exchange for public works and service. I don't believe handouts without some kind of exchange will ever really work.
It's not just those with money that will fight it like hell, a lot of people without much money see working for access to resources as a fairness issue.
By politically I'm imagining a politician campaigning on the promise to increase the basic minimum income. Vote for me and I'll get your basic income increased. Don't vote for my opponent because they just want to cut your basic income! It's the tax issue all over again.
Exactly, and just as likely to be gummed up by complexity. After all, how can you be against teachers and firefighters receiving just a little more BI for their essential, thankless jobs?
You forget the US is run by the rich, which is why this does not happen with Social Security. It's all about not having the benefit cut instead of increasing benefits or lowering retirement age.
I don't believe it will replace all/most welfare programs. I think it will replace some and then politicians will be elected to top it up for select groups. "Fairness" will come into play, "I am disadvantaged compared to this other person, I should get more, it's only Fair". Plus regional top ups, cost of living in different places is higher than others, I expect there will be a demand for a top up based on cost of living on top of basic BI, again that'll need to be enforced and administered.
I agree on the points of exchange for public good. Even poor people are loath to see others getting by on "freebies". But a progressive system where BI depends on need (age, for example) and commensurate effort (volunteering, helping take care of elderly, studying, training, etc.) I think is doable and will need to be worked out as more jobs get automated and people are left out of the economy either due to mismatch of skills or other handicap.
A large part of the Basic Income's appeal is that its simplicity would dramatically reduce government overhead.
Existing entitlement programs are complicated as hell, and it takes a lot of work to enforce and refine eligibility rules.
The systems we have today are the compromise results of such a "progressive system" where system income depends on need (age [Social Security, Medicare], circumstance [Unemployment, Social Security Disability, SNAP, Welfare], etc) and based on "commensurate effort" (previous wages, complicated forms, layers and layers of proofs, ...).
Have you had to file for Unemployment "Insurance" yet, in your lifetime? It's a complicated circus to get back money that you "paid in". You have to prove, and then re-prove, your past earnings and tax amounts that had paid into the programs (plural if working across state boundaries); you have to "be actively seeking work" and prove, every single week, that fact with somewhat embarrassing forms to fill out to get the money that you already set aside for this already embarrassing situation...
These systems treat you as "guilty-by-default" and we've let the worry of possible fraud, however unlikely, turn these systems into giant theaters of "fraud reduction" and complicated terror on the individuals dealing with the system.
Basic Income, by expecting to be unqualified and guaranteed to all regardless of need or effort, is intentionally about simplicity and about avoiding the giant red tape spaghetti that is our current "entitlement" systems. If everyone gets it, equally, then you don't need to worry about "fraud" and you don't need to worry about "proof".
I see room for a compromise in order to make it more sellable.
Base it on simple things, age, legal status, and positive community involvement. We still need to make people feel useful rather than resentful and entitled. It's an entitlement but some minimum effort should be shown that one is at least trying to contribute to their society.
«I see room for a compromise in order to make it more sellable.»
What we have is the compromise. The point of (Universal) Basic Income is that the compromise isn't good enough and we can do better, by going simpler, removing the human moral judgments and encompassing everybody equally.
This is definitely a case where compromise destroys the integrity of the concept. It should be "sellable" enough on its own merits to avoid breaking it.
«We still need to make people feel useful rather than resentful and entitled.»
There are so many assumptions here to unpack. People will feel resentful to get "free" money from their government? People "need" to feel useful? Plus there is obvious so much hate overloaded in people's usage of the words "entitled" and "entitlement" that there's probably a half-dozen PhD theses we could point to.
Do you have moral complaints about Basic Income? Basic Income isn't about policing what people do with it. That's part of the simplicity that makes Basic Income more interesting than the compromises and the other alternatives. Does it concern you what other people would do with their money if they had just a little bit more? Basic Income intentionally doesn't make judgments, that's a part of its beauty. It's a sort of freedom: here's money, do what you will with it.
Yes, there are probably simple things that would still make sense to do, but mostly it should just be "Are you a US Citizen? Do you pay US income taxes?" Curtailing it further than that starts to conflate money and morality in weird ways.
Personally, no, other than citizenship and age (a one year old does not need the same subsidy/income as an adult). The rest, I think would make it more acceptable to the rest of working people who put in more than they take out in BI.
A Basic Income based on need is called a welfare system, and requires gatekeepers to determine neediness. We have various such systems in the US.
Any time you here someone say "basic income", they mean a guaranteed, zero qualifications beyond citizenship and possibly adulthood, income. It is meant as a replacement for many aspects of the welfare system.
It is true, since humans are bad at making many financial/health/welfare decisions, that not all public welfare costs are a good fit for replacement with a BI. But things like food stamps, disability income and section 8 housing all do appear to be good fits.
>stituted, it will become a political football, as politicians and advocacy groups seek to continuously push it higher and higher.
This is pretty much Chicago in a nutshell. You have all these handouts to public sector unions in return for union votes and union support. You have further entitlements given to the poor on the south and west sides for votes. You have all these ugly deals done in exchange for staying in power, and no one cares about actually balancing the books. When push comes to shove, you just raise taxes over and over. In other words it won't just go "higher and higher" it'll just be higher for special interest groups who can deliver votes. If you can't deliver mass votes and aren't part of one of these groups, your income will be low or non-existant as you'll be stuck in the 'worker' group and not in the 'leisure' group.
GMI needs an implementation that works. I suspect there really is none that doesn't quickly just become corrupt patronage. GMI and democracy/elections may not be compatible. It may only work under a totalitarian system and sounds pretty close to the USSR's system at that point. The best case scenario here seems to be automation making the cost of living so low that existing welfare systems will just be more than enough to take care of people. If we can vastly lower the cost of everything, then modest payouts will be enough and we'll be able to retain a capitalist and democratic system.
SS is different in that presumably you have previously contributed to the funds which get disbursed at retirement. Recipients of BI may never have contributed monetarily to the burse.
Because those are money paid for (saved up) by the same people while they were young and employed...
Where would this basic income for everyone magically come from? It maybe would be possible if the rich (millionaires and especially billionaires) and corporations would pay for it with higher taxes, but since they run the world, I'm guessing that's not gonna happen.
Seriously, the current welfare systems are quite ok (pay only those who don't have enough and/or don't have a job), just streamline it and tax the rich a bit more for more money to go into it. Europe seems to do it best so far. But of course that's socialism, etc. (and somehow basic income isn't)...
I also don't believe it can't work long term unless attitudes change dramatically. People who work for a low income will complain that there are people who get almost the same without doing any work. The same wealthy people who lobby for more tax cuts will also not want to pay for people who don't do anything.
There will be a lot of people who will use the freedom granted by basic income for productive means but there will also be a lot of people who won't do anything productive and just live off their basic income.
That will give opponents a lot of material for campaigning against basic income. So my prediction is that this won't work long term. That is, unless our society changes in radical ways.
The people working for only slightly more than the UBI will get more than twice the income of someone not working at all. Universal basic income means everyone gets the income.
I think we should just call it what it is a dividend. We have crossed a point where handing off 10% of everyone's income allows for a reasonable minimum standard of living. But, because progress is always going to cost some people more than others we need to align incentives.
Sorry, I know your a world class doctor, but Auto Scan (TM) just does a better job.
The important thing to remember is that % for a given standard is dropping over time. If 1% is enough to reach the current US standard then it's going to be really hard to say no.
PS: I don't think we will take this global any time soon. But, we could. World GDP is 106 dollars per person per day. 10% of that is 10.06$ per person per day. 80% of humanity lives on less than 10$ per day.
Because if you're still in business, you might still make more money in the U.S. due to other superior resources available here. For example, there might be greater creative output from well-paid workers who receive basic income and profit sharing, and this could lead to better overall returns for business owners. Obviously not all types of businesses would do well, but hopefully the ones that would thrive would be businesses we're more interested in seeing thrive.
Because there's no "simply" about it. Go ahead, mentally walk yourself through how that plays out for the rich person. Please account for all assets and potential tax liabilities. Factor in the means of production for the rich person to stay rich, and what happens when that person is no longer a U. S. citizen. All done? Oh, forgot to tell you, there's a dozen other things you didn't even know about, but the country of your previously-held citizenship will be along shortly to helpfully remind you.
That, and where else are you going to go that is more "business-focused"? Suppose you find such a place; what trade-offs are made to live there?
At some point the poor are better off starting a revolution than being stuck at the bottom. We are heading to a future where most people are going to be poor because an average person with an average education is going to be unable to find a job.
Agitation comes when there is light at the end of the tunnel, it does not happen when there is complete darkness. That's to say the poor need the hope that change (revolution) will result in better things. They also need buy in from the better off (who would have the resources to stave off any revolution). People don't revolt for the sake of revolting there has to be an expected (positive) result at the end.
A 10% income tax increase redistributed to all US households would be ~$11,000 per household, which is right about what the poverty line is for 1 person. If your household makes less than $110k you get a tax cut, above $110k you will be paying more to prevent social unrest.
I think suggestions reduce low income tax breaks and other social welfare programs while introducing a BI. ~11k per year could be close to net tax neutral.
EX: A flat tax at the highest rate would adds ~2,745$ to everyone above of the first tax bracket $9,275/yr, next tax bracket is hands out 6,980$, together that's a 9,725$ benefit for everyone making over $37,650/yr already being baked into the tax code.
On top of that you get things like HUD, education grants etc. Not to mention the 60+ million people getting Social Security.
PS: Not that I think the odds are good in the US any time soon. But, we are facing a lot of systemic issues which could promote a huge range of reforms.
It is important to consider this as more and more white-collar jobs may become redundant due to automation [e.g. 1].
Moreover, it would be interesting to see what becomes of today's jobs if there were an basic income. E.g. what percentage of jobs would disappear and not be missed? How many people would continue to work at their current job?
Why? We have had "automation" in some form or another for many millennia and we have not needed a "basic income".
Every technological advancement from the invention of hand tools, to creating complex machines can be loosely classified as "automation" and in every case the standard of living has increased and resources were then allocated to some more productive means.
The general argument (made e.g,. in the Alec Ross book) is that there will not be enough paid work left as more and more jobs are automated. So paying a basic income would become necessary to ensure people's survival (or prevent social unrest).
Just around my home I could easily hire a few people to do various jobs at any given time, but it is not cheap enough for me to justify doing that. Automation comes at a cost, and often humans laborers can do the job cheaper. The thing that will be pushing people out of a job is minimum wage, not the automation which often results in reaction to minimum wage.
Great! Then you should be strongly in favor of a basic income, because part of the logical construction of BI is the abolition of minimum wage.
Minimum wage is a collective agreement to avoid people working below subsistence wages. Once subsistence is guaranteed covered by BI, there will be much less need for low end wage distortions.
Admittedly, many wealthy people seem to prefer having subsistence not guaranteed, it makes negotiating for low wage low skill servants much easier. I suspect once we have BI, it will be much more expensive to pay someone to come clean your house.
>Great! Then you should be strongly in favor of a basic income, because part of the logical construction of BI is the abolition of minimum wage.
Nope.
>Minimum wage is a collective agreement to avoid people working below subsistence wages. Once subsistence is guaranteed covered by BI, there will be much less need for low end wage distortions.
No, minimum wage is a political stunt which results unemployment. That is why you now see the same union lobbyists who pushed for the $15 minimum wage now lobbying for exemptions for their unions.
>Admittedly, many wealthy people seem to prefer having subsistence not guaranteed, it makes negotiating for low wage low skill servants much easier.
Are you suggesting that wealthy people are ok if all of their workers died? Seems pretty ridiculous. If I am opposed to someone stealing my wallet, does that mean I am in favor of their kids starving to death?
You seem to be unaware that there is a minimum income required to survive. If one cannot get that income from their job(s), then they must get it from charity, welfare, theft, or some other means, or they must move to someplace where the minimum survival income is lower, or they must die.
Why wouldn't all standard of living benefits of basic income get eliminated immediately by all relevant costs rising to soak it up?
This happens every single time the poor get any sort of money. In poor neighborhoods the rents cost as much as people are able to pay, no more, no less.
Do you know when most rental deposits are collected? Around the tax return season.
If suddenly the poor had some money to spare - the rents will simply go up. The water bill will go up. Electricity, gas. Etc.. until there's no extra income left. And then the poor will be in exactly the same situation as they are now.
Source: long time resident (and landlord btw) of poor neighborhoods of Philly.
P.S: Government is willing to help poor with mortgages? House prices balloon. Government is helping with education grants - colleges raise tuition. Borderline-broke municipalities with enormous unfunded liabilities are looking for any opportunity to collect back taxes and make up new ones. I can go on.
Why would this be any different? As the history shows it will provide a benefit for only a short amount of time until costs catch up.
P.P.S: I am not an opponent of helping poor, quite the opposite. I just don't know how to go about it in real world.
According to your view, you cannot change anything ever. Take a look at microcredits. Give women in Africa $50 or $100 to start up their own business. They know exactly what to do, and it really helps. Isn't this something similar?
I recall a recent article about that. I really can't recall much of the detail - but it was about how after an immediate success from the monetary infusion, most of the bushiness folded shortly after because owners fell victims to corruption, extortion and crime. So yes, it is similar, but not in a good way. :)
Yes, but i don't know whether what i observer is your standard "typical economic inflation" or some very particular phenomenon targeting the poor.
A disabled relative of mine is considering signing with Uber to lease their car (did you know Uber leases?) to make some money. After paying for gas and insurance - he is literally working slave wage. I thought this is relevant somehow.
If the prices of goods and services rise, and their quality does not change, then yes that's inflation. But the quality of goods/services delivered should go up. (That's the point.)
If all rents rise jointly that primarily indicates that housing is not competing on price, so remedying that anti-competitive environment is a separate and more important issue IMO.
rayiner mentions mobility in a cousin comment. In a healthy housing market, rents should roughly match the price of new construction (plus some profit) rather than being set just by the existing supply.
Rents in cheaper markets need to be less than the difference in cost of living plus the cost of moving (amortized somehow.) Sadly, improved transportation infrastructure and technology seems only to concentrate people even more in dense, expensive cities. These cities have a lot of opportunity and connections that keep people there, often rationally, but people who struggle stay as well.
Rents have nothing to do with the price of construction.
Prices are set by available credit for purchase and by wages less other essentials for rent.
I'm afraid this isn't simply supply and demand fudge factor after construction costs at all.
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Reply to child post as HN hates rentier slayers and throttles.
They function in that prices are set. But they are set by credit. And supply is inelastic. Banks use land to gain unearned income through their monopoly on money creation as debt.
You might be right. But it's not just about the income level. The important bit is that it's guaranteed. This theoretically will give the poor more leverage in negotiating the salaries etc., and they'll be able to get higher quality jobs.
The key difference is mobility. Basic income means people don't have to live in Philly near their job. They can move to Iowa and dramatically raise their standard of living.
Can you explain a bit more about how these people can raise their standard of living by moving?
Money is just an abstraction for real goods and services produced by the economy. Presumably we need people to live in Philly since that's where our industry is. If people moved away to some remote place, wouldn't our economy take a hit? Not to mention the transportation costs of servicing a more remote, less dense area.
If Philly is where our industry is, then we only need as many people to live in Philly as the labor market demands. However, if unemployment is high or wages are too low (relative to the cost of living) in an area, then that suggests we have an oversupply of labor there, not a shortage. Basic goods (food, clothing, materials for housing) are grown/produced in many areas (even rural ones), not just in dense cities, so no, transportation costs don't really increase the cost of living in rural areas. To the contrary, in most cases it's far, far cheaper to live outside of dense cities.
Exactly - thank you. It's somewhat depressing to see the number of people who either don't understand this concept, or think that somehow it doesn't apply in this case.
It reminds me of Tobias Fünke in Arrested Development, when asked if open relationships ever work, saying "No, it never does. I mean, these people somehow delude themselves into thinking it might, but ... But it might work for us."
> In poor neighborhoods the rents cost as much as people are able to pay, no more, no less.
This is a bit of a tautology.
Low-rent housing is usually pretty bad, so when people can afford to pay more they just move to a nicer place.
As far as I know, the first-time home buyer credit made a tiny ripple in the low-end housing market - where did prices "balloon"?
College education is quite different because the "market" has a massive barrier to entry (in terms of creating a new university).
I am speaking of subprime mortgages. There was this period of time when you could get a mortgage while on disability (which is truly your "basic income" in poor neighborhoods, btw. Everyone has it. There are even specialized law firms that exist around that consumer demand.). The magic price of the house was about 40K - because that's that a person on SSI can get a mortgage for.
It sounds like you have a point, but sometimes intuition and/or anecdotal evidence can be wrong. It would be nice to see some economic models that (dis)prove this.
> If suddenly the poor had some money to spare - the rents will simply go up. The water bill will go up. Electricity, gas. Etc.. until there's no extra income left. And then the poor will be in exactly the same situation as they are now.
Remember that these "costs" are seen as revenue to providers of goods and services. What follows can be thought of as the opposite of trickle-down economics.
Even if nothing changed, it would have been worth it for the simple fact that it simplifies the bureaucracy of it all. That's basic income's most important feature
I fail to see by what mechanism what you describes occurs. Do you constantly query your occupant of pay raises? Why would every raise be siphoned by rent? Poor people have problem making ends meet for clothes, food, etc. Sure, more money put inflationary pressure, but it's not a magic direct correlation and instant feedback. If the government is serious and declares that it will adjust basic income to match the market price for basic goods and regulate their prices, including building low-rent lodging, then the inflationary pressure will have to subsides into only unregulated items.
I certainly don't "constantly query", but somehow there's always a feedback of what is a successful economic model.
I have so many examples of this. For instance due to terrible public schools - private schools cost roughly what it would cost you to move to a good neighborhood with good public school.
Day care - costs around what the government contributes as day care assistance.
Housing is, to a certain extent, a positional good. People want to live in safe, friendly neighborhoods, surrounded by well educated, middle to upper class people. Even if everyone got more money, it's not easy for more people to live in desirable neighborhoods (at least without changing the character of those neighborhoods).
Why would rent go up? Some homeless people would rent apartments, sure, but they're a very small percentage of the population, and a good portion of homeless people have other issues that makes that unlikely. In other words, demand would not increase substantially. And supply wouldn't change. If neither supply nor demand changes, why would prices?
There would be some movement. The prices of the worst shit-holes would probably go down because people would gain the ability to move into a nicer place. That might cause a little increase in the price of low end apartments.
And any city that is currently supply-constrained would probably see upward movement on prices. But most cities that aren't San Francisco have vacancy rates around 3%, they aren't supply constrained. If one landlord raises prices, people can and will move to an cheaper apartment elsewhere. And if prices do rise, people will build more apartments, driving prices down. (again, assuming not San Francisco).
Because even though anybody relying on Basic Income may not be starving, they'll still be really poor, and really cost sensitive. If BI is $10,000 a year, a $100/month price increase is a huge chunk of their income, and worth the huge hassle of a move to avoid.
The orthodox theory says that, in a competitive marketplace, producers should not be able to "capture" gains in the wealth of consumers. If prices of a good rise, it's because consumers are purchasing more of the good, and the good has increasing marginal cost to produce. (I ignore some 2nd-order effects related to wages as a production cost).
That's the orthodox theory. You shouldn't buy it wholesale.
On the other hand, it would be a very heterodox environment indeed if producers were able to steal all the increases in wealth from consumers. That could only happen in an environment of no competition, not imperfect competition. Or an environment with 100% occupancy and no ability to build more units of housing.
Also, there would need to be no substitutes for the good. For instance, that people couldn't move between cities.
Surely the game is, to some extent, rigged. But can it be rigged so badly that it is possible to believe that transferring wealth from richer to poorer will not lead to an increase in the purchasing power of poorer people?
I don't have a decided opinion on guaranteed minimum income, but to deny that it would have a marked effect on purchasing power of the recipients of the wealth requires one to posit a truly exceptional economic theory. To attack minimum income on its efficacy of all things: that is either an ill-considered or truly radical view.
If minimum income can't help, what possibly could? The only option left would be the confiscation and redistribution of capital.
It depends on the elasticity of the commodity. Going to one of those contrived economics examples:
let's say you have 5 people who have the following amount available to spend on TVs:
$100
$80
$50
$30
$10
And you have 5 TVs to sell. What price do you sell them for?
If you price them at $100, you sell 1x$100 and make $100
If you price them at $80, you sell 2x$80 and make $160
If you price them at $50, you sell 3x$50 and make $150
At this point you see a trend - you should price your TVs at $80 and just eat the loss on the three TVs you don't sell.
So now we have a society in with 40% of people have a TV and 60% don't. As a government, you want 100% of people to have a TV, so you intervene to try to fix it.
First, you double everyone's income.
That doesn't change anything. The new price for TVs is $160 and two people get TVs.
So instead, you give everyone $50.
If you price them at $150, you sell 1x$150 and make $150
If you price them at $130, you sell 2x$130 and make $260
If you price them at $100, you sell 3x$100 and make $300
If you price them at $80, you sell 4x$80 and make $320
If you price them at $60, you sell 5x$60 and make $300
So now 80% of society gets a TV. Better! Sure, you haven't eliminated inequality, but you've reduced it.
But let's say it isn't TVs, it's houses. And you have three of them, not five.
Everyone needs a house. So you'll bid as much money as you have to to beat the next guy trying to get one.
So the first house will go for $80 to the person with $100.
The next house will go for $50 to the person with $80
The final house will go for $30 to the person with $50.
If you double everyone's income? Nothing changes. We've already seen that doubling people's income does nothing.
If you give everyone an extra $50? The distribution ends up the same, except everyone pays an extra $50 for each house.
TL;DR: inelastic goods like real estate will just go up in price. Elastic goods like electronics will, but less than the amount of the wealth transfer. The most important thing is to change the wealth ratio rather than the gross amount.
If I had basic income that pays for everyday expenses, I'd be free to learn something (robotics/automation/mechanical engineering) and find a job in that industry...
But not everyone would. I really love my work. Fewer people in the marketplace would be good for me because it would drive up my wages, which means I could afford to do things that the average UBI recipient could not.
Also, it's not like UBI would solve all social problems. Many people who like to work in nonprofits today would continue to do so. Probably even more people would because they would have more of a safety net underneath them while they save the world.
That said, I'm skeptical of a UBI. Too many unknown consequences.
Money is just an abstraction for actual goods and services produced by the economy. If your wages go up, presumably so does the wages of those whose services you consume.
If less people worked, the economy would produce less and we would be worse off.
Have you spend significant time unemployed or not in school? It's really depressing after a while. Sure playing video games and watching movies all day is great for a week or two during vacation but if that's all you do you will quickly find something else to supplement your free time.
Precisely. The article cites one economist who opposes BI for this very reason:
ROBERT GORDON: As far as a guaranteed minimum income, I’m not in favor of that. I’m in favor of a modest increase in the minimum wage, and a substantial increase in the earned-income tax credit, which encourages low-income people to work.
DUBNER: Why would you not be in favor of the minimum guaranteed income?
GORDON: There’s too much of an incentive, if you guarantee income, to replace work. And if you provide a guaranteed minimum income to everybody, then those with low skills will drop out of the labor force and will no longer work. So I think it’s a matter of incentives. A guaranteed minimum income would put a very high implicit marginal tax rate on going to work, for those with relatively low skills.
Why is this a moral problem? [1] Isn't this a market problem that the market can solve? Basic Income would add actual liquidity in the labor market. If workers actually have the option not to work, then the market has to finally figure out how to make the worker want to work.
Maybe that competition would lead to better companies and better work.
[1] Other than the lasting impact of the Puritans on American society, of course...
Some parents can put 850k in a account for their child when it's born that gets invested, say in the American economy (grows by say 7% over an average, long time period), which compounds until later in life, and when they grow up, they can access it. With good financial responsibility, this child won't have to work a day in their lives and can live off the returns.
Why can't we as a society do this for everyone, but you can never touch the account, only the returns? That is, wealth and a foot in the returns of humanity as a right.
You're born, you get $1mil put in an account that gets invested. When you turn 18, you start getting a monthly check, the return on that investment. You can never touch the account, only get its returns.
Someone tell me why this is a bad idea, worse than guaranteed basic income.
Because humans will never stop climbing. It's built into us. Even most people in poverty want to climb, they just have little to no options, so they find ways to cope nevertheless.
As for rising prices, surely they can't rise everywhere? People will be able to afford to abandon the obscenely wealthy playpens (SF, NY, Tokyo, etc) and move somewhere that's affordable. Cost of living varies depending on location, doesn't it? Surely this would result in more competition, not less?
Honestly, it just sounds like you've restated one of the simple versions of how basic income actually would work (and why it should be economically "easy"), and its basically the way people think Social Security works (it's subtly different, but that's a tangential discussion). MMT (Modern Monetary Theory) isn't really that far from "pretend the government had an investment account for every person and then handed them a check for the interest returns on that account", just with a lot more subtlety in what constitutes that account (because money is something the government creates in how it taxes money) and where that interest return "comes from" (because it's already there in tax credits and 0% loans to big corporations and government debt bonding and even the nature of inflation itself and weirder things). Of course, I'm oversimplifying as well, but the point is you have found the rabbit hole.
Which is to say, spot on, you've hit near the right track and aren't too far from what a lot of guaranteed basic income discussions generally start from and are basically about.
This requires amassing the capital to get started. Does it seem harder to get all that capital than to get half of it? Really you only need to get 7% of it this year to pay the over-18s.
What investments should be used in the account exactly?
What do you do about the temptation of the administrators to "borrow" from the reserves, direct the investments to benefit themselves, hoard extra resources or underfund the plan by estimating the future revenues or expenses a bit too high or low?
Your idea isn't bad exactly, just complicated by these extra provisions such as "the basic income shall be derived from investment proceeds from individual accounts."
There are about 4 million births in the US ever year, so that program would inject $4 trillion per year into the economy (assuming everyone currently living is left out). It would be impossible to pull in that much through taxation (today) so it would have to be pure money creation. $4 trillion is about 25% of GDP, so if the economy isn't growing by at least that amount every year, the value of the dollar will inevitably fall to compensate, most likely to a level where the return on the $1 million investment isn't anywhere close to a livable income.
Come to think of it, I'm not even considering the money multiplier. When that $4 trillion is spent or invested, eventually it ends up in someone's bank account, and because we have fractional reserve banking, it adds to the banks' deposits, allowing them to loan more money out. The banks' reserve requirement is 10%, so in the worst case (if the banks loan out as much as they possibly can), that $4 trillion becomes $40 trillion. (Each bank loans out 90% of their deposits, the loans becomes deposits at other banks, who loan 90% of that [81% of the original], and so on and so on.) That's 250% of GDP, so you'd probably see inflation severe enough to threaten social order in general.
If we imagine that the program has been running for several generations already and the whole population already has their $1 million trust fund, you can at least destroy about $2.4 trillion per year as people die, but the bigger issue would be that "$1 million" means a very different thing in a world where there's $300 trillion in citizen trust funds compared to today when the total of all physical currency and liquid bank accounts is about $10 trillion.
There's also the problem of who gets to decide how to invest the money, which would be a magnet for corruption.
It seems to me that the question of how to finance a UBI is probably the largest stumbling block.
Of course it could be done through taxes but a lot of people have legitimate concerns about government taxation. For taxation to work you need a coercive government and many of us are very aware of the downsides of such an entity. Of course taxation isn't the only reason we have a coercive government there's also the war on drugs and other policies which seem to ultimately derive from the need of a significant fraction of the population to dictate the choices of their fellow citizens. This tendency is of course inevitably amplified among those who self-select for government or political careers. There is also to some degree a legitimate need for self-defense which also inevitably leads to some degree of coercive government. But even if these problems could be solved, say for example through more rational and better focused defense policies and through evolution of ethical views to give greater weight to the desires of individuals to lead their lives as they see fit, if we are going to provide a safety net for everyone we will always need some form of government and if that government is financed through taxation a level of coercive and invasive policies is likely inevitable.
Could we find a better way to finance government and a UBI ? Some countries and regions with extensive natural resources have been able to leverage them to help finance their governments and provide assistance to citizens (examples I believe include Norway and Alaska). However most economies are not so strongly dependent on the exploitation of natural resources so this type of solution cannot be generalized. What if a nation's government became an investor in that nation's economy ? I'm not talking about nationalization of industry but allowing the government to acquire minority ownership of public corporations as a means not of exerting control but of generating income. Could we imagine government evolving to the point of relying for its financing on a financial portfolio much like some universities receive substantial income from their endowments ? I'm not an economist but I've never encountered this idea in the press. It would be interesting to know what the experts think of it.
Can you explain how land value tax relates to current UK council tax? Is CT just a really poorly implemented LVT and could LVT be implemented by modifying the existing CT system?
I advocate for LVT in the abstract but get stuck on explaining implementation in a relatable way.
p.s. really appreciate your persistent posting on this :)
One potential source of revenue-neutral money for it is reducing other social and welfare programs. The theory goes that a UBI program would have less administrative overhead, so the savings can go to "the people". And arguably this is the hardest way to do it, politically, because it would reduce the number of bureaucratic jobs available.
In the past century we have countless examples of socialism failing, yet its proponents devise some new scheme, some new brand and try to sell it as if something will be different this time. Socialism will always fail because it is contradictory to human nature.
We have countless examples of capitalism failing too. But the argument that socialism is against human nature is obviously wrong, as humans are social animals. However, as any animal, if you corner them and put them in survival mode, things can get ugly.
The purpose of modern states is exactly to provide security in multiple ways, one of them being shared financial security, to remove the need of constant struggle for survival and allow the social side of humanity to flurish.
As an example on a smaller scale: There were enough articles recently for instance about Amazon, as an extreme example of hiper competitive anti-social environment that encourages people to backstab each other and play politics to advance. Pure survival mode. Compare that for instance with companies like Google, that spoil everyone and even give you 20% time for free. So far they haven't collapsed. Now you can argue that companies are not countries, but I don't see how such learning don't apply. That exactly is the human behaviour argument.
Sorry in advance for the ad-hominem, but that supposedly intelligent people even here on Hacker News keep reiterating old tropes about socialism and human nature unreflected, while any research in that regard or simple observations as illustrated above are contradictory to it, is baffling.
>But the argument that socialism is against human nature is obviously wrong, as humans are social animals.
Socialism is anti-social (or were you confused by it having the word "social" in it?). Socialism says two people do not have the right to come to an agreement on the exchange of property and labor. What is social about that? How is that in harmony with human nature?
>There were enough articles recently for instance about Amazon, as an extreme example of hiper competitive anti-social environment that encourages people to backstab each other and play politics to advance.
And yet people work for Amazon. Willingly. What's wrong with that? Just because the work environment does not meet your standards of what you expect from a job, why would you want to deprive others of their jobs? That's very anti-social.
>Now you can argue that companies are not countries, but I don't see how such learning don't apply.
Not only are they not countries but trying to extrapolate such scenarios which happen between free acting, cooperating, social individuals to a generic edict enforced through threat of violence is foolhardy.
>Sorry in advance for the ad-hominem, but that supposedly intelligent people even here on Hacker News keep reiterating old tropes about socialism and human nature unreflected, while any research in that regard or simple observations as illustrated above are contradictory to it, is baffling.
Again, your examples tell us nothing of socialism and are not even applicable.
>Socialism says two people do not have the right to come to an agreement on the exchange of property and labor. What is social about that? How is that in harmony with human nature?
No, socialism says focusing on group cooperation optimizes aggregate wealth. Socialism says that somewhere between a completely shared economy and a completely private economy is a sweet spot where you get the best of both worlds.
You're very focused on this "socialism is anti-social" stance, but not only does it not make any intuitive sense, it is not backed up by any data. Show me a modern, prosperous state that absolutely abstains from social programs or promoting collective interest.
The very idea of a state is a threat to (completely) free exchange of property and labor. Most people are willing to buy security from the state in the form of regulations and taxes. We think our food should be safe to eat, so we make rules and add a cost to ensure a baseline. We want advertisements to accurately represent products. As individuals, we have little recourse against an industry which has decided to curtail consumer health in favor of increased profits. The state is simply a mechanism to ensure our collective will is met, not as entities in a capitalist network but as the weird little thinking, walking primates that we are.
>No, socialism says focusing on group cooperation optimizes aggregate wealth. Socialism says that somewhere between a completely shared economy and a completely private economy is a sweet spot where you get the best of both worlds.
Socialism may claim that but the results are very anti-social as demonstrated in my previous comment. You say "no" in response to my comment concerning socialism preventing two people from entering an agreement--then why can't I hire someone for $4 an hour, if that's what they and I agree upon? That's just one of dozens of possible scenarios I could mention which socialism prohibits.
>You're very focused on this "socialism is anti-social" stance
Yes, as that was the idea I was refuting from the parent comment.
>but not only does it not make any intuitive sense, it is not backed up by any data. Show me a modern, prosperous state that absolutely abstains from social programs or promoting collective interest.
Does the absence of a modern state which meets this criteria prove the point? Hardly. It does not follow. We need not compare state to state, as socialist programs are typically applied to individual sectors of an economy. Take any sector of the modern economy which is heavily affected by socialist programs and you will find a sector which is scraping by. You will find corruption and you will find greater public outrage. Healthcare being a prime example. Ironically progressives blame the short comings in these sectors on capitalism.
>The very idea of a state is a threat to (completely) free exchange of property and labor.
I agree. I would like to see more thought, more experiment and more results to see how little of a state might be accomplished.
>You say "no" in response to my comment concerning socialism preventing two people from entering an agreement--then why can't I hire someone for $4 an hour, if that's what they and I agree upon?
Socialism itself doesn't prevent you from hiring someone for $4 an hour. Current laws (which may be based on socialist principles) do that. You could argue that, in a future with a universal basic income, we wouldn't need a minimum wage, as people could survive on even no wage. Would this be more or less socialist than things as they are today?
>Does the absence of a modern state which meets this criteria prove the point? Hardly. It does not follow.
Prove beyond a shadow of a doubt? Of course not. Prove within reasonable heuristics? Depends on your definition of "reasonable". Our definitions are clearly different.
>Take any sector of the modern economy which is heavily affected by socialist programs and you will find a sector which is scraping by.
A failing but necessary industry is one ripe for being regulated by a socialist government. Perhaps it is not the socialist regulation that caused the failure, but the failure of the industry to meet public need which drives regulation. You may find this reversal (or un-reversal) of cause and effect ironic, but it really comes down to the classic correlation vs causation question. Without better research, we really cannot know.
For now, I am comfortable with the concept of a government advocating on my behalf for the purposes of improving aggregate outcomes. Certainly, governments may fail or do poorly, but I do not think it is a pointless effort. It sounds like you disagree.
>A failing but necessary industry is one ripe for being regulated by a socialist government.
I would love to hear the historical case you have in mind. In my study of history the case which government lays out for their new intervention is based on twisted truths, exaggerations and most likely downright lies. This has been the case in anti-trust, social security, medicaid and many more instances.
The idea that an entire industry is failing to meet consumer demands is economically absurd. Why would competition not arise to match consumer demands?
>For now, I am comfortable with the concept of a government advocating on my behalf for the purposes of improving aggregate outcomes.
Are you one of the lucky 20% (perhaps less) of the population which your candidate of choice won the election? Did that candidate match all of your ideas, or was he or she the least-rotten of the bunch? Is that candidate really "advocating on [your] behalf" when they get into power? What of the other 80% of the population who were unhappy with the outcome of an election? How do you measure these "aggregate outcomes"? Is the $4 trillion (on the books) spending of the US government all necessary to accomplish these improved aggregates?
>Certainly, governments may fail or do poorly, but I do not think it is a pointless effort. It sounds like you disagree.
I'm not sure I would say "pointless". I may not agree with what is going on, but certainly some people are getting rich with the trillions of dollars being squandered. Some people are benefiting by regulations which strangle out their competition. Some people feel good about having their morals forced upon others. Some people like having positions of dominion and power which they exercise violence over others. Some people make a pretty penny from blowing up people in far off lands. I may think there's a better way, but I wouldn't say its pointless.
>In my study of history the case which government lays out for their new intervention is based on twisted truths, exaggerations and most likely downright lies. This has been the case in anti-trust, social security, medicaid and many more instances.
Well, you are certainly entitled to your opinions. I guess we fundamentally disagree on how historical events should be interpreted.
>The idea that an entire industry is failing to meet consumer demands is economically absurd. Why would competition not arise to match consumer demands?
Industries don't exist to meet demands, they exist to create profit. Meeting an external demand can create profit, but so can unlawful or immoral business practices. This is the very reason why people seek an organized entity (like a government) to negotiate on their behalf. Pristine economic theories work nicely in a bubble, but we don't live in one.
>Are you one of the lucky 20% (perhaps less) of the population which your candidate of choice won the election? Did that candidate match all of your ideas, or was he or she the least-rotten of the bunch? Is that candidate really "advocating on [your] behalf" when they get into power? What of the other 80% of the population who were unhappy with the outcome of an election? How do you measure these "aggregate outcomes"? Is the $4 trillion (on the books) spending of the US government all necessary to accomplish these improved aggregates?
Do I agree with everything that the US government does? No. Would I rather be a US citizen than one of any other country? Yes. Do I think this country has the potential to move itself in the right direction? Yes.
>I'm not sure I would say "pointless". I may not agree with what is going on, but certainly some people are getting rich with the trillions of dollars being squandered. Some people are benefiting by regulations which strangle out their competition. Some people feel good about having their morals forced upon others. Some people like having positions of dominion and power which they exercise violence over others. Some people make a pretty penny from blowing up people in far off lands. I may think there's a better way, but I wouldn't say its pointless.
In what world is it good socialist policy to squander trillions of dollars? Obviously things could be improved. Yes, some regulation is bad, just look at the anti-competitive practices Comcast has lobbied for over the years (and make no mistake, those policies are only in place because of Comcast's lobbying). Regulation is not the same thing as socialism. Socialism can impose regulation to promote certain principles, sure, but that doesn't mean all regulation is created to further social goals.
>Well, you are certainly entitled to your opinions. I guess we fundamentally disagree on how historical events should be interpreted.
As I said previously, I would love to hear the historical case you have in mind. Let's examine the facts and discuss further. Saying we disagree in the interpretation of historical events without even discussing any is a cop out and intellectually disingenuous.
>Industries don't exist to meet demands, they exist to create profit. Meeting an external demand can create profit, but so can unlawful or immoral business practices.
In a free (and freeish) market, businesses cannot survive without meeting customers' demands. It's possible a business owner could have a myriad of motivations, but the fact remains they must at least be meeting customer demands. But this goes back to the comment above. Please provide an example of an industry that was at least relatively laissez faire and failed to meet customer demands.
>This is the very reason why people seek an organized entity (like a government) to negotiate on their behalf.
I know very few people who view the government as an organization which negotiates on their behalf. In fact I can safely say I have never before heard anyone describe government in such a manner.
>Pristine economic theories work nicely in a bubble, but we don't live in one.
Unfortunately socialism doesn't even work in the bubble (it has been debunked thoroughly by economists such as F. A. Hayek, Ludwig von Mises, and Murray Rothbard among others), let alone the real world. Thankfully capitalism has an excellent track record and we know empirically of its efficacy to improve the standard of living and increase human cooperation.
>In what world is it good socialist policy to squander trillions of dollars?
I have no idea what "good socialist policy" is as it seems like an oxymoron to me, but I think it's only fair that those who had their money forcefully taken from them determine whether the money is being squandered.
>As I said previously, I would love to hear the historical case you have in mind. Let's examine the facts and discuss further. Saying we disagree in the interpretation of historical events without even discussing any is a cop out and intellectually disingenuous.
We would only be discussing our subjective interpretations of facts. I don't think that's intellectually disingenuous. For example, how could you argue with a Holocaust-denier who believes that all records were forged? You could be pointing to the exact same things but interpreting them differently. I don't think we share a common ground, and there nothing I could say to you or you could say to me to change the way we emphasize or de-emphasize historical facts and their relation to one another.
>In a free (and freeish) market, businesses cannot survive without meeting customers' demands. It's possible a business owner could have a myriad of motivations, but the fact remains they must at least be meeting customer demands. But this goes back to the comment above. Please provide an example of an industry that was at least relatively laissez faire and failed to meet customer demands.
What is a "free" market? I think this is the important question. My core belief is that actors in an economy will act according to game theory. Is a free market one with no rules? If so, what is to stop someone from lying, cheating, or stealing? Is a free market a system with a few basic principles? If so, who serves as judge to determine if rules were broken? How do you ensure this judge acts in the best interest of the market rather than their own best interest? What is the punishment for breaking rules? In my view, businesses do have a drive to create value. However, businesses also have a drive to make a cheap buck where they can at someone else's expense. I think having a government act on behalf of consumers is necessary to keep rent-seeking motives in check and let value-creation stay at the forefront. I simply do not believe that large, powerful, independent businesses will act with my best interests at heart.
>I know very few people who view the government as an organization which negotiates on their behalf. In fact I can safely say I have never before heard anyone describe government in such a manner.
Ideally, I do think that is what a government should be. I'm very happy that my government has orchestrated clean water, built power lines, roads, and bridges, and ensured basic standards for food quality. In essence, the government is a sort of corporation of which I received a single share upon birth. The ultimate morality of being forced into purchasing that share is debatable, but pragmatically, at least for now, I'm happy with it.
>Unfortunately socialism doesn't even work in the bubble (it has been debunked thoroughly by economists such as F. A. Hayek, Ludwig von Mises, and Murray Rothbard among others), let alone the real world. Thankfully capitalism has an excellent track record and we know empirically of its efficacy to improve the standard of living and increase human cooperation.
I think you carry a lot of baggage when you use the term socialism. I'm not talking full-scale USSR planned economies. The US has been dabbling in socialist policies since the Great Depression. That track record you attribute to capitalism I attribute to socialism (or I guess social capitalism). I'm not advocating for full government control of the economy. I do think the government can be an actor in an economy for net benefit, and I think certain powers should be ensured.
>I have no idea what "good socialist policy" is as it seems like an oxymoron to me, but I think it's only fair that those who had their money forcefully taken from them determine whether the money is being squandered.
Let's call it social capitalism, then. You seem to have a problem with the word socialism itself.
>What is a "free" market? I think this is the important question. My core belief is that actors in an economy will act according to game theory. Is a free market one with no rules? If so, what is to stop someone from lying, cheating, or stealing? Is a free market a system with a few basic principles?
While clearly defining a free market is an important discussion, I think it out of the scope of this discussion. The direction for the thread was to explore your claim that government regulation in a market is initially introduced to mend a "failing industry". The only way to verify such a claim would be to explore some historical case. As you refuse to identify such a case, defining the term "free market" is a diversion.
>In essence, the government is a sort of corporation of which I received a single share upon birth.
>I simply do not believe that large, powerful, independent businesses will act with my best interests at heart.
Seems contradictory, don't you think? I find it ironic that you believe private businesses would do you personal harm, but you have no similar concerns for government. It is government not businesses who are responsible for hundreds of millions of deaths in the past century alone. It is government not businesses which hold a monopoly on violence and perform their every act, even the ones you deem noble, through the threat of violence.
>It is government not businesses who are responsible for hundreds of millions of deaths in the past century alone.
This is simply untrue. You cannot blame the concept of government for what people in governments do. I can be against what a private industry does without being against the concept of industries altogether.
>I find it ironic that you believe private businesses would do you personal harm, but you have no similar concerns for government.
I said no such thing. I said that I have more of a say in what happens in my government than in a private business.
>The socialists governments in Western Europe haven't failed yet.
"Yet" is the operative word there.
Often socialism is applied, at least at first, in a very limited fashion, but then expand as the natural consequences come to fruition. For example, examine the minimum wage law. The natural consequence of the minimum wage law is the least productive individuals lose their jobs. Most often those individuals are youth and minorities, with the affect especially evident among young minorities. Reacting to this natural consequence, legislatures then want to enact social programs to provide for those who are unemployed. These social programs are funded through higher taxes, typically upon the most wealthy. The wealthy are incentivized to be free from the higher taxes and get around them through a myriad of creative ways. A cycle develops where social programs continue to expand, taxes continue to rise and the wealthy flee. This is very evident in France, currently. When the wealthy flee, the taxes fall onto the middle class. There is incentive for immigrants to come into the country. And so on and so forth.
The failures of socialism are most evident where the interventions are taking place. Healthcare is a sector where a lot of the interventions are taking place and the affects are glaring. You can see this in Western Europe with sub-prime healthcare. The problems in the socialist governments in Western Europe will be exasperated by the refugee crisis.
A socialist government and a planned economy are only different by a few degrees. Bad laws beget more bad laws and the problems will grow. How long until the parasite overpowers the host? Who knows.
It was interesting that they used dogs as an example of a population that had its work taken away by technological progress, yet did not provide the obvious counter example (horses).
An earlier Freakonomics episode [1] discusses whether early retirement is bad for the health. According to the show it actually might be: "one additional year of early retirement causes an increase in the risk of premature death of 2.4 percentage points"
Guaranteed Basic Income sounds like an early retirement option for most people, so where it's probably a fantastic opportunity for self-starters, it might be lethal for everyone else. GBI's side effect can be weeding out non-entrepreneurs.
Well, the real question is, are you ready to pay for the Guaranteed Basic Income? Generously assuming that it's not indexed to inflation, probably what would happen is that costs would rise to account for the newfound money. Then, of course, there would have to be services that remain in place, because if people spend their income stupidly, we can't have them starving in the streets. Then you have the collection problem, that suddenly taxes would have to go up (and they would, of course, regardless of how many services you think you can cut).
The people who pay? In general, as with any tax increase, it's the middle class. It's the couple that went to college, saved their money, worked hard, bought a house and started a family. Regardless of how much you think you can raise tax rates on "the rich", the only way to pay for something like this is by getting to the middle class, which is where the tax revenue is.
I've wondered if a "guaranteed basic goods" systems might make sense, either as an alternative to a basic income system, or as a way to slowly transition to one.
The idea would be that as we figure out how to automate things, we make those things essentially public goods. We end up with a mixed economy, where we have one class of goods that are produced in publicly owned automated factories and do not cost the consumer money, and another class of goods that work like they do now where private parties produce them and sell them for money which the buyers earn through paid employment.
For instance, consider vegetables. We're close to being able to make almost fully automated farms for many crops, and we're close to fully automating most of the shipping from farm to market. The idea would be that as we achieve this, the government buys up these farms (or starts its own farms), and everyone gets a daily allotment of the produce from these farms. Some meat production is also highly automated, and so we should be able to at some point in the not too distant future add meat to this.
At that point everyone who has a place to cook has their basic food requirements taken care of.
How about transportation? Automobile manufacture is very automated. At some point that too will be almost completely automated. Combine that with self-driving cars, and we should be able to have a publicly owned nationwide fleet of self-driving taxis. Ideally these would be electric cars, powered by publicly owned solar, wind, hydroelectric, or nuclear systems.
As automation gets more and more advanced, more and more goods can be added to the "made by publicly owned automated factories" list and made available to all.
When enough stuff is automated and turned into public goods to allow someone to survive reasonably without a job as long as they have housing, we can start making publicly owned housing in places where land and construction costs are cheap. That will be away from the big cities, but for people who decide to not work that would be fine, as it would for people who can work remotely. So we should be able to reach a point where everyone can have a basic apartment or small house and the necessities to survive reasonably there, without an income.
Will we ever be able to automate everything except creative intellectual work? I don't think so, at least not for a long time. I think that would require the development of something like the robots from Asimov's stories--robots that have human form factors (so that they can work anywhere that a human can work) and human level intelligence, and I don't think we'll be there anytime in the next 100 years.
A nice thing about this approach is that it can be done with minimal disruption. With basic income you have to give everyone enough to reasonably survive right from the start. With basic goods, you go item by item, industry by industry.
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[ 3.4 ms ] story [ 192 ms ] threadPractically I suspect it will need to be quite low to avoid all sorts of distortions.
The existing programs are very distorting already, often giving poor people 100%+ marginal taxes.
Sure, Basic Income would be distorting, but far less than that. It should also save a lot of money since it requires almost no people to administer.
This is also the biggest problem with instituting it, since the people holding those jobs will fight to the death to keep them.
Have you had to file for Unemployment "Insurance" yet, in your lifetime? It's a complicated circus to get back money that you "paid in". You have to prove, and then re-prove, your past earnings and tax amounts that had paid into the programs (plural if working across state boundaries); you have to "be actively seeking work" and prove, every single week, that fact with somewhat embarrassing forms to fill out to get the money that you already set aside for this already embarrassing situation...
These systems treat you as "guilty-by-default" and we've let the worry of possible fraud, however unlikely, turn these systems into giant theaters of "fraud reduction" and complicated terror on the individuals dealing with the system.
Basic Income, by expecting to be unqualified and guaranteed to all regardless of need or effort, is intentionally about simplicity and about avoiding the giant red tape spaghetti that is our current "entitlement" systems. If everyone gets it, equally, then you don't need to worry about "fraud" and you don't need to worry about "proof".
Base it on simple things, age, legal status, and positive community involvement. We still need to make people feel useful rather than resentful and entitled. It's an entitlement but some minimum effort should be shown that one is at least trying to contribute to their society.
What we have is the compromise. The point of (Universal) Basic Income is that the compromise isn't good enough and we can do better, by going simpler, removing the human moral judgments and encompassing everybody equally.
This is definitely a case where compromise destroys the integrity of the concept. It should be "sellable" enough on its own merits to avoid breaking it.
«We still need to make people feel useful rather than resentful and entitled.»
There are so many assumptions here to unpack. People will feel resentful to get "free" money from their government? People "need" to feel useful? Plus there is obvious so much hate overloaded in people's usage of the words "entitled" and "entitlement" that there's probably a half-dozen PhD theses we could point to.
Do you have moral complaints about Basic Income? Basic Income isn't about policing what people do with it. That's part of the simplicity that makes Basic Income more interesting than the compromises and the other alternatives. Does it concern you what other people would do with their money if they had just a little bit more? Basic Income intentionally doesn't make judgments, that's a part of its beauty. It's a sort of freedom: here's money, do what you will with it.
Yes, there are probably simple things that would still make sense to do, but mostly it should just be "Are you a US Citizen? Do you pay US income taxes?" Curtailing it further than that starts to conflate money and morality in weird ways.
Any time you here someone say "basic income", they mean a guaranteed, zero qualifications beyond citizenship and possibly adulthood, income. It is meant as a replacement for many aspects of the welfare system.
It is true, since humans are bad at making many financial/health/welfare decisions, that not all public welfare costs are a good fit for replacement with a BI. But things like food stamps, disability income and section 8 housing all do appear to be good fits.
This is pretty much Chicago in a nutshell. You have all these handouts to public sector unions in return for union votes and union support. You have further entitlements given to the poor on the south and west sides for votes. You have all these ugly deals done in exchange for staying in power, and no one cares about actually balancing the books. When push comes to shove, you just raise taxes over and over. In other words it won't just go "higher and higher" it'll just be higher for special interest groups who can deliver votes. If you can't deliver mass votes and aren't part of one of these groups, your income will be low or non-existant as you'll be stuck in the 'worker' group and not in the 'leisure' group.
GMI needs an implementation that works. I suspect there really is none that doesn't quickly just become corrupt patronage. GMI and democracy/elections may not be compatible. It may only work under a totalitarian system and sounds pretty close to the USSR's system at that point. The best case scenario here seems to be automation making the cost of living so low that existing welfare systems will just be more than enough to take care of people. If we can vastly lower the cost of everything, then modest payouts will be enough and we'll be able to retain a capitalist and democratic system.
It is a football like you say but no one has dramatically increased it for decades.
Besides the looming shortfall it seems to be run fairly responsibly.
Where would this basic income for everyone magically come from? It maybe would be possible if the rich (millionaires and especially billionaires) and corporations would pay for it with higher taxes, but since they run the world, I'm guessing that's not gonna happen.
Seriously, the current welfare systems are quite ok (pay only those who don't have enough and/or don't have a job), just streamline it and tax the rich a bit more for more money to go into it. Europe seems to do it best so far. But of course that's socialism, etc. (and somehow basic income isn't)...
There will be a lot of people who will use the freedom granted by basic income for productive means but there will also be a lot of people who won't do anything productive and just live off their basic income.
That will give opponents a lot of material for campaigning against basic income. So my prediction is that this won't work long term. That is, unless our society changes in radical ways.
Won't do anything productive like spend money on food, housing, and entertainment? They will just sit inside and stare at the walls all day.
Sorry, I know your a world class doctor, but Auto Scan (TM) just does a better job.
The important thing to remember is that % for a given standard is dropping over time. If 1% is enough to reach the current US standard then it's going to be really hard to say no.
PS: I don't think we will take this global any time soon. But, we could. World GDP is 106 dollars per person per day. 10% of that is 10.06$ per person per day. 80% of humanity lives on less than 10$ per day.
That, and where else are you going to go that is more "business-focused"? Suppose you find such a place; what trade-offs are made to live there?
A 10% income tax increase redistributed to all US households would be ~$11,000 per household, which is right about what the poverty line is for 1 person. If your household makes less than $110k you get a tax cut, above $110k you will be paying more to prevent social unrest.
All numbers in Billions and for 2014
Total earned income $14,700
Total income tax $1,000
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10% = $1,370Total US households .125
basic income per household 1370/.125 = $11,000
EX: A flat tax at the highest rate would adds ~2,745$ to everyone above of the first tax bracket $9,275/yr, next tax bracket is hands out 6,980$, together that's a 9,725$ benefit for everyone making over $37,650/yr already being baked into the tax code.
On top of that you get things like HUD, education grants etc. Not to mention the 60+ million people getting Social Security.
PS: Not that I think the odds are good in the US any time soon. But, we are facing a lot of systemic issues which could promote a huge range of reforms.
Moreover, it would be interesting to see what becomes of today's jobs if there were an basic income. E.g. what percentage of jobs would disappear and not be missed? How many people would continue to work at their current job?
[1] http://books.simonandschuster.com/The-Industries-of-the-Futu...
Every technological advancement from the invention of hand tools, to creating complex machines can be loosely classified as "automation" and in every case the standard of living has increased and resources were then allocated to some more productive means.
Why is today's automation any different?
Minimum wage is a collective agreement to avoid people working below subsistence wages. Once subsistence is guaranteed covered by BI, there will be much less need for low end wage distortions.
Admittedly, many wealthy people seem to prefer having subsistence not guaranteed, it makes negotiating for low wage low skill servants much easier. I suspect once we have BI, it will be much more expensive to pay someone to come clean your house.
Nope.
>Minimum wage is a collective agreement to avoid people working below subsistence wages. Once subsistence is guaranteed covered by BI, there will be much less need for low end wage distortions.
No, minimum wage is a political stunt which results unemployment. That is why you now see the same union lobbyists who pushed for the $15 minimum wage now lobbying for exemptions for their unions.
>Admittedly, many wealthy people seem to prefer having subsistence not guaranteed, it makes negotiating for low wage low skill servants much easier.
Are you suggesting that wealthy people are ok if all of their workers died? Seems pretty ridiculous. If I am opposed to someone stealing my wallet, does that mean I am in favor of their kids starving to death?
This happens every single time the poor get any sort of money. In poor neighborhoods the rents cost as much as people are able to pay, no more, no less.
Do you know when most rental deposits are collected? Around the tax return season.
If suddenly the poor had some money to spare - the rents will simply go up. The water bill will go up. Electricity, gas. Etc.. until there's no extra income left. And then the poor will be in exactly the same situation as they are now.
Source: long time resident (and landlord btw) of poor neighborhoods of Philly.
P.S: Government is willing to help poor with mortgages? House prices balloon. Government is helping with education grants - colleges raise tuition. Borderline-broke municipalities with enormous unfunded liabilities are looking for any opportunity to collect back taxes and make up new ones. I can go on.
Why would this be any different? As the history shows it will provide a benefit for only a short amount of time until costs catch up.
P.P.S: I am not an opponent of helping poor, quite the opposite. I just don't know how to go about it in real world.
People do not understand how prices are set and this is a major barrier to stopping rentier activity.
Rents are set by what the market can bear. I hope we get land value tax and stop the leeches.
I think. I'd welcome any clarification to my attempted summary.
A disabled relative of mine is considering signing with Uber to lease their car (did you know Uber leases?) to make some money. After paying for gas and insurance - he is literally working slave wage. I thought this is relevant somehow.
Prices are set by available credit for purchase and by wages less other essentials for rent.
I'm afraid this isn't simply supply and demand fudge factor after construction costs at all.
-------------
Reply to child post as HN hates rentier slayers and throttles.
They function in that prices are set. But they are set by credit. And supply is inelastic. Banks use land to gain unearned income through their monopoly on money creation as debt.
How will it help them to get higher paying jobs?
I'd say they have less leverage.
If, all of a sudden I don't need your $4 per hour job, I quit. If everyone else also doesn't need it they quit.
Then you as an employer need to pay more to get people to work for you, or use self driving mopeds to deliver the pizzas.
Money is just an abstraction for real goods and services produced by the economy. Presumably we need people to live in Philly since that's where our industry is. If people moved away to some remote place, wouldn't our economy take a hit? Not to mention the transportation costs of servicing a more remote, less dense area.
The creates upward pressure on wages, as businesses need to attract more workers.
Dont see how this is a bad thing, given that wages have been stagnant for decades
It reminds me of Tobias Fünke in Arrested Development, when asked if open relationships ever work, saying "No, it never does. I mean, these people somehow delude themselves into thinking it might, but ... But it might work for us."
This is a bit of a tautology. Low-rent housing is usually pretty bad, so when people can afford to pay more they just move to a nicer place.
As far as I know, the first-time home buyer credit made a tiny ripple in the low-end housing market - where did prices "balloon"? College education is quite different because the "market" has a massive barrier to entry (in terms of creating a new university).
Remember that these "costs" are seen as revenue to providers of goods and services. What follows can be thought of as the opposite of trickle-down economics.
I have so many examples of this. For instance due to terrible public schools - private schools cost roughly what it would cost you to move to a good neighborhood with good public school.
Day care - costs around what the government contributes as day care assistance.
Etc...
There would be some movement. The prices of the worst shit-holes would probably go down because people would gain the ability to move into a nicer place. That might cause a little increase in the price of low end apartments.
And any city that is currently supply-constrained would probably see upward movement on prices. But most cities that aren't San Francisco have vacancy rates around 3%, they aren't supply constrained. If one landlord raises prices, people can and will move to an cheaper apartment elsewhere. And if prices do rise, people will build more apartments, driving prices down. (again, assuming not San Francisco).
Because even though anybody relying on Basic Income may not be starving, they'll still be really poor, and really cost sensitive. If BI is $10,000 a year, a $100/month price increase is a huge chunk of their income, and worth the huge hassle of a move to avoid.
That's the orthodox theory. You shouldn't buy it wholesale.
On the other hand, it would be a very heterodox environment indeed if producers were able to steal all the increases in wealth from consumers. That could only happen in an environment of no competition, not imperfect competition. Or an environment with 100% occupancy and no ability to build more units of housing.
Also, there would need to be no substitutes for the good. For instance, that people couldn't move between cities.
Surely the game is, to some extent, rigged. But can it be rigged so badly that it is possible to believe that transferring wealth from richer to poorer will not lead to an increase in the purchasing power of poorer people?
I don't have a decided opinion on guaranteed minimum income, but to deny that it would have a marked effect on purchasing power of the recipients of the wealth requires one to posit a truly exceptional economic theory. To attack minimum income on its efficacy of all things: that is either an ill-considered or truly radical view.
If minimum income can't help, what possibly could? The only option left would be the confiscation and redistribution of capital.
let's say you have 5 people who have the following amount available to spend on TVs:
$100
$80
$50
$30
$10
And you have 5 TVs to sell. What price do you sell them for? If you price them at $100, you sell 1x$100 and make $100
If you price them at $80, you sell 2x$80 and make $160
If you price them at $50, you sell 3x$50 and make $150
At this point you see a trend - you should price your TVs at $80 and just eat the loss on the three TVs you don't sell.
So now we have a society in with 40% of people have a TV and 60% don't. As a government, you want 100% of people to have a TV, so you intervene to try to fix it.
First, you double everyone's income.
That doesn't change anything. The new price for TVs is $160 and two people get TVs.
So instead, you give everyone $50.
If you price them at $150, you sell 1x$150 and make $150
If you price them at $130, you sell 2x$130 and make $260
If you price them at $100, you sell 3x$100 and make $300
If you price them at $80, you sell 4x$80 and make $320
If you price them at $60, you sell 5x$60 and make $300
So now 80% of society gets a TV. Better! Sure, you haven't eliminated inequality, but you've reduced it.
But let's say it isn't TVs, it's houses. And you have three of them, not five.
Everyone needs a house. So you'll bid as much money as you have to to beat the next guy trying to get one. So the first house will go for $80 to the person with $100. The next house will go for $50 to the person with $80 The final house will go for $30 to the person with $50.
If you double everyone's income? Nothing changes. We've already seen that doubling people's income does nothing.
If you give everyone an extra $50? The distribution ends up the same, except everyone pays an extra $50 for each house.
TL;DR: inelastic goods like real estate will just go up in price. Elastic goods like electronics will, but less than the amount of the wealth transfer. The most important thing is to change the wealth ratio rather than the gross amount.
If I had basic income that pays for everyday expenses, I'd be free to learn something (robotics/automation/mechanical engineering) and find a job in that industry...
I may work as I do now, but only a day or two a week. That would only be if I got very, very bored though.
Also, it's not like UBI would solve all social problems. Many people who like to work in nonprofits today would continue to do so. Probably even more people would because they would have more of a safety net underneath them while they save the world.
That said, I'm skeptical of a UBI. Too many unknown consequences.
If less people worked, the economy would produce less and we would be worse off.
ROBERT GORDON: As far as a guaranteed minimum income, I’m not in favor of that. I’m in favor of a modest increase in the minimum wage, and a substantial increase in the earned-income tax credit, which encourages low-income people to work.
DUBNER: Why would you not be in favor of the minimum guaranteed income?
GORDON: There’s too much of an incentive, if you guarantee income, to replace work. And if you provide a guaranteed minimum income to everybody, then those with low skills will drop out of the labor force and will no longer work. So I think it’s a matter of incentives. A guaranteed minimum income would put a very high implicit marginal tax rate on going to work, for those with relatively low skills.
Maybe that competition would lead to better companies and better work.
[1] Other than the lasting impact of the Puritans on American society, of course...
Some parents can put 850k in a account for their child when it's born that gets invested, say in the American economy (grows by say 7% over an average, long time period), which compounds until later in life, and when they grow up, they can access it. With good financial responsibility, this child won't have to work a day in their lives and can live off the returns.
Why can't we as a society do this for everyone, but you can never touch the account, only the returns? That is, wealth and a foot in the returns of humanity as a right.
You're born, you get $1mil put in an account that gets invested. When you turn 18, you start getting a monthly check, the return on that investment. You can never touch the account, only get its returns.
Someone tell me why this is a bad idea, worse than guaranteed basic income.
And why do you believe prices wouldn't rise to meet the new common standard of living afforded by this grant?
As for rising prices, surely they can't rise everywhere? People will be able to afford to abandon the obscenely wealthy playpens (SF, NY, Tokyo, etc) and move somewhere that's affordable. Cost of living varies depending on location, doesn't it? Surely this would result in more competition, not less?
Which is to say, spot on, you've hit near the right track and aren't too far from what a lot of guaranteed basic income discussions generally start from and are basically about.
out of those two ludicrous requirements, i'm not sure which one is more of a challenge.
What investments should be used in the account exactly?
What do you do about the temptation of the administrators to "borrow" from the reserves, direct the investments to benefit themselves, hoard extra resources or underfund the plan by estimating the future revenues or expenses a bit too high or low?
Your idea isn't bad exactly, just complicated by these extra provisions such as "the basic income shall be derived from investment proceeds from individual accounts."
Come to think of it, I'm not even considering the money multiplier. When that $4 trillion is spent or invested, eventually it ends up in someone's bank account, and because we have fractional reserve banking, it adds to the banks' deposits, allowing them to loan more money out. The banks' reserve requirement is 10%, so in the worst case (if the banks loan out as much as they possibly can), that $4 trillion becomes $40 trillion. (Each bank loans out 90% of their deposits, the loans becomes deposits at other banks, who loan 90% of that [81% of the original], and so on and so on.) That's 250% of GDP, so you'd probably see inflation severe enough to threaten social order in general.
If we imagine that the program has been running for several generations already and the whole population already has their $1 million trust fund, you can at least destroy about $2.4 trillion per year as people die, but the bigger issue would be that "$1 million" means a very different thing in a world where there's $300 trillion in citizen trust funds compared to today when the total of all physical currency and liquid bank accounts is about $10 trillion.
There's also the problem of who gets to decide how to invest the money, which would be a magnet for corruption.
Of course it could be done through taxes but a lot of people have legitimate concerns about government taxation. For taxation to work you need a coercive government and many of us are very aware of the downsides of such an entity. Of course taxation isn't the only reason we have a coercive government there's also the war on drugs and other policies which seem to ultimately derive from the need of a significant fraction of the population to dictate the choices of their fellow citizens. This tendency is of course inevitably amplified among those who self-select for government or political careers. There is also to some degree a legitimate need for self-defense which also inevitably leads to some degree of coercive government. But even if these problems could be solved, say for example through more rational and better focused defense policies and through evolution of ethical views to give greater weight to the desires of individuals to lead their lives as they see fit, if we are going to provide a safety net for everyone we will always need some form of government and if that government is financed through taxation a level of coercive and invasive policies is likely inevitable.
Could we find a better way to finance government and a UBI ? Some countries and regions with extensive natural resources have been able to leverage them to help finance their governments and provide assistance to citizens (examples I believe include Norway and Alaska). However most economies are not so strongly dependent on the exploitation of natural resources so this type of solution cannot be generalized. What if a nation's government became an investor in that nation's economy ? I'm not talking about nationalization of industry but allowing the government to acquire minority ownership of public corporations as a means not of exerting control but of generating income. Could we imagine government evolving to the point of relying for its financing on a financial portfolio much like some universities receive substantial income from their endowments ? I'm not an economist but I've never encountered this idea in the press. It would be interesting to know what the experts think of it.
Get rid of income tax, tax land. We want to stop rentiers, we don't want to stop workers. Right now it's back to front, by design.
I advocate for LVT in the abstract but get stuck on explaining implementation in a relatable way.
p.s. really appreciate your persistent posting on this :)
Read Henry George.
The purpose of modern states is exactly to provide security in multiple ways, one of them being shared financial security, to remove the need of constant struggle for survival and allow the social side of humanity to flurish.
As an example on a smaller scale: There were enough articles recently for instance about Amazon, as an extreme example of hiper competitive anti-social environment that encourages people to backstab each other and play politics to advance. Pure survival mode. Compare that for instance with companies like Google, that spoil everyone and even give you 20% time for free. So far they haven't collapsed. Now you can argue that companies are not countries, but I don't see how such learning don't apply. That exactly is the human behaviour argument.
Sorry in advance for the ad-hominem, but that supposedly intelligent people even here on Hacker News keep reiterating old tropes about socialism and human nature unreflected, while any research in that regard or simple observations as illustrated above are contradictory to it, is baffling.
Socialism is anti-social (or were you confused by it having the word "social" in it?). Socialism says two people do not have the right to come to an agreement on the exchange of property and labor. What is social about that? How is that in harmony with human nature?
>There were enough articles recently for instance about Amazon, as an extreme example of hiper competitive anti-social environment that encourages people to backstab each other and play politics to advance.
And yet people work for Amazon. Willingly. What's wrong with that? Just because the work environment does not meet your standards of what you expect from a job, why would you want to deprive others of their jobs? That's very anti-social.
>Now you can argue that companies are not countries, but I don't see how such learning don't apply.
Not only are they not countries but trying to extrapolate such scenarios which happen between free acting, cooperating, social individuals to a generic edict enforced through threat of violence is foolhardy.
>Sorry in advance for the ad-hominem, but that supposedly intelligent people even here on Hacker News keep reiterating old tropes about socialism and human nature unreflected, while any research in that regard or simple observations as illustrated above are contradictory to it, is baffling.
Again, your examples tell us nothing of socialism and are not even applicable.
No, socialism says focusing on group cooperation optimizes aggregate wealth. Socialism says that somewhere between a completely shared economy and a completely private economy is a sweet spot where you get the best of both worlds.
You're very focused on this "socialism is anti-social" stance, but not only does it not make any intuitive sense, it is not backed up by any data. Show me a modern, prosperous state that absolutely abstains from social programs or promoting collective interest.
The very idea of a state is a threat to (completely) free exchange of property and labor. Most people are willing to buy security from the state in the form of regulations and taxes. We think our food should be safe to eat, so we make rules and add a cost to ensure a baseline. We want advertisements to accurately represent products. As individuals, we have little recourse against an industry which has decided to curtail consumer health in favor of increased profits. The state is simply a mechanism to ensure our collective will is met, not as entities in a capitalist network but as the weird little thinking, walking primates that we are.
Socialism may claim that but the results are very anti-social as demonstrated in my previous comment. You say "no" in response to my comment concerning socialism preventing two people from entering an agreement--then why can't I hire someone for $4 an hour, if that's what they and I agree upon? That's just one of dozens of possible scenarios I could mention which socialism prohibits.
>You're very focused on this "socialism is anti-social" stance
Yes, as that was the idea I was refuting from the parent comment.
>but not only does it not make any intuitive sense, it is not backed up by any data. Show me a modern, prosperous state that absolutely abstains from social programs or promoting collective interest.
Does the absence of a modern state which meets this criteria prove the point? Hardly. It does not follow. We need not compare state to state, as socialist programs are typically applied to individual sectors of an economy. Take any sector of the modern economy which is heavily affected by socialist programs and you will find a sector which is scraping by. You will find corruption and you will find greater public outrage. Healthcare being a prime example. Ironically progressives blame the short comings in these sectors on capitalism.
>The very idea of a state is a threat to (completely) free exchange of property and labor.
I agree. I would like to see more thought, more experiment and more results to see how little of a state might be accomplished.
Socialism itself doesn't prevent you from hiring someone for $4 an hour. Current laws (which may be based on socialist principles) do that. You could argue that, in a future with a universal basic income, we wouldn't need a minimum wage, as people could survive on even no wage. Would this be more or less socialist than things as they are today?
>Does the absence of a modern state which meets this criteria prove the point? Hardly. It does not follow.
Prove beyond a shadow of a doubt? Of course not. Prove within reasonable heuristics? Depends on your definition of "reasonable". Our definitions are clearly different.
>Take any sector of the modern economy which is heavily affected by socialist programs and you will find a sector which is scraping by.
A failing but necessary industry is one ripe for being regulated by a socialist government. Perhaps it is not the socialist regulation that caused the failure, but the failure of the industry to meet public need which drives regulation. You may find this reversal (or un-reversal) of cause and effect ironic, but it really comes down to the classic correlation vs causation question. Without better research, we really cannot know.
For now, I am comfortable with the concept of a government advocating on my behalf for the purposes of improving aggregate outcomes. Certainly, governments may fail or do poorly, but I do not think it is a pointless effort. It sounds like you disagree.
I would love to hear the historical case you have in mind. In my study of history the case which government lays out for their new intervention is based on twisted truths, exaggerations and most likely downright lies. This has been the case in anti-trust, social security, medicaid and many more instances.
The idea that an entire industry is failing to meet consumer demands is economically absurd. Why would competition not arise to match consumer demands?
>For now, I am comfortable with the concept of a government advocating on my behalf for the purposes of improving aggregate outcomes.
Are you one of the lucky 20% (perhaps less) of the population which your candidate of choice won the election? Did that candidate match all of your ideas, or was he or she the least-rotten of the bunch? Is that candidate really "advocating on [your] behalf" when they get into power? What of the other 80% of the population who were unhappy with the outcome of an election? How do you measure these "aggregate outcomes"? Is the $4 trillion (on the books) spending of the US government all necessary to accomplish these improved aggregates?
>Certainly, governments may fail or do poorly, but I do not think it is a pointless effort. It sounds like you disagree.
I'm not sure I would say "pointless". I may not agree with what is going on, but certainly some people are getting rich with the trillions of dollars being squandered. Some people are benefiting by regulations which strangle out their competition. Some people feel good about having their morals forced upon others. Some people like having positions of dominion and power which they exercise violence over others. Some people make a pretty penny from blowing up people in far off lands. I may think there's a better way, but I wouldn't say its pointless.
Well, you are certainly entitled to your opinions. I guess we fundamentally disagree on how historical events should be interpreted.
>The idea that an entire industry is failing to meet consumer demands is economically absurd. Why would competition not arise to match consumer demands?
Industries don't exist to meet demands, they exist to create profit. Meeting an external demand can create profit, but so can unlawful or immoral business practices. This is the very reason why people seek an organized entity (like a government) to negotiate on their behalf. Pristine economic theories work nicely in a bubble, but we don't live in one.
>Are you one of the lucky 20% (perhaps less) of the population which your candidate of choice won the election? Did that candidate match all of your ideas, or was he or she the least-rotten of the bunch? Is that candidate really "advocating on [your] behalf" when they get into power? What of the other 80% of the population who were unhappy with the outcome of an election? How do you measure these "aggregate outcomes"? Is the $4 trillion (on the books) spending of the US government all necessary to accomplish these improved aggregates?
Do I agree with everything that the US government does? No. Would I rather be a US citizen than one of any other country? Yes. Do I think this country has the potential to move itself in the right direction? Yes.
>I'm not sure I would say "pointless". I may not agree with what is going on, but certainly some people are getting rich with the trillions of dollars being squandered. Some people are benefiting by regulations which strangle out their competition. Some people feel good about having their morals forced upon others. Some people like having positions of dominion and power which they exercise violence over others. Some people make a pretty penny from blowing up people in far off lands. I may think there's a better way, but I wouldn't say its pointless.
In what world is it good socialist policy to squander trillions of dollars? Obviously things could be improved. Yes, some regulation is bad, just look at the anti-competitive practices Comcast has lobbied for over the years (and make no mistake, those policies are only in place because of Comcast's lobbying). Regulation is not the same thing as socialism. Socialism can impose regulation to promote certain principles, sure, but that doesn't mean all regulation is created to further social goals.
As I said previously, I would love to hear the historical case you have in mind. Let's examine the facts and discuss further. Saying we disagree in the interpretation of historical events without even discussing any is a cop out and intellectually disingenuous.
>Industries don't exist to meet demands, they exist to create profit. Meeting an external demand can create profit, but so can unlawful or immoral business practices.
In a free (and freeish) market, businesses cannot survive without meeting customers' demands. It's possible a business owner could have a myriad of motivations, but the fact remains they must at least be meeting customer demands. But this goes back to the comment above. Please provide an example of an industry that was at least relatively laissez faire and failed to meet customer demands.
>This is the very reason why people seek an organized entity (like a government) to negotiate on their behalf.
I know very few people who view the government as an organization which negotiates on their behalf. In fact I can safely say I have never before heard anyone describe government in such a manner.
>Pristine economic theories work nicely in a bubble, but we don't live in one.
Unfortunately socialism doesn't even work in the bubble (it has been debunked thoroughly by economists such as F. A. Hayek, Ludwig von Mises, and Murray Rothbard among others), let alone the real world. Thankfully capitalism has an excellent track record and we know empirically of its efficacy to improve the standard of living and increase human cooperation.
>In what world is it good socialist policy to squander trillions of dollars?
I have no idea what "good socialist policy" is as it seems like an oxymoron to me, but I think it's only fair that those who had their money forcefully taken from them determine whether the money is being squandered.
We would only be discussing our subjective interpretations of facts. I don't think that's intellectually disingenuous. For example, how could you argue with a Holocaust-denier who believes that all records were forged? You could be pointing to the exact same things but interpreting them differently. I don't think we share a common ground, and there nothing I could say to you or you could say to me to change the way we emphasize or de-emphasize historical facts and their relation to one another.
>In a free (and freeish) market, businesses cannot survive without meeting customers' demands. It's possible a business owner could have a myriad of motivations, but the fact remains they must at least be meeting customer demands. But this goes back to the comment above. Please provide an example of an industry that was at least relatively laissez faire and failed to meet customer demands.
What is a "free" market? I think this is the important question. My core belief is that actors in an economy will act according to game theory. Is a free market one with no rules? If so, what is to stop someone from lying, cheating, or stealing? Is a free market a system with a few basic principles? If so, who serves as judge to determine if rules were broken? How do you ensure this judge acts in the best interest of the market rather than their own best interest? What is the punishment for breaking rules? In my view, businesses do have a drive to create value. However, businesses also have a drive to make a cheap buck where they can at someone else's expense. I think having a government act on behalf of consumers is necessary to keep rent-seeking motives in check and let value-creation stay at the forefront. I simply do not believe that large, powerful, independent businesses will act with my best interests at heart.
>I know very few people who view the government as an organization which negotiates on their behalf. In fact I can safely say I have never before heard anyone describe government in such a manner.
Ideally, I do think that is what a government should be. I'm very happy that my government has orchestrated clean water, built power lines, roads, and bridges, and ensured basic standards for food quality. In essence, the government is a sort of corporation of which I received a single share upon birth. The ultimate morality of being forced into purchasing that share is debatable, but pragmatically, at least for now, I'm happy with it.
>Unfortunately socialism doesn't even work in the bubble (it has been debunked thoroughly by economists such as F. A. Hayek, Ludwig von Mises, and Murray Rothbard among others), let alone the real world. Thankfully capitalism has an excellent track record and we know empirically of its efficacy to improve the standard of living and increase human cooperation.
I think you carry a lot of baggage when you use the term socialism. I'm not talking full-scale USSR planned economies. The US has been dabbling in socialist policies since the Great Depression. That track record you attribute to capitalism I attribute to socialism (or I guess social capitalism). I'm not advocating for full government control of the economy. I do think the government can be an actor in an economy for net benefit, and I think certain powers should be ensured.
>I have no idea what "good socialist policy" is as it seems like an oxymoron to me, but I think it's only fair that those who had their money forcefully taken from them determine whether the money is being squandered.
Let's call it social capitalism, then. You seem to have a problem with the word socialism itself.
While clearly defining a free market is an important discussion, I think it out of the scope of this discussion. The direction for the thread was to explore your claim that government regulation in a market is initially introduced to mend a "failing industry". The only way to verify such a claim would be to explore some historical case. As you refuse to identify such a case, defining the term "free market" is a diversion.
>In essence, the government is a sort of corporation of which I received a single share upon birth.
>I simply do not believe that large, powerful, independent businesses will act with my best interests at heart.
Seems contradictory, don't you think? I find it ironic that you believe private businesses would do you personal harm, but you have no similar concerns for government. It is government not businesses who are responsible for hundreds of millions of deaths in the past century alone. It is government not businesses which hold a monopoly on violence and perform their every act, even the ones you deem noble, through the threat of violence.
This is simply untrue. You cannot blame the concept of government for what people in governments do. I can be against what a private industry does without being against the concept of industries altogether.
>I find it ironic that you believe private businesses would do you personal harm, but you have no similar concerns for government.
I said no such thing. I said that I have more of a say in what happens in my government than in a private business.
(there are even several countries with 3-4 weeks of vacation for everyone and similar annual per person productivity to the US...)
"Yet" is the operative word there.
Often socialism is applied, at least at first, in a very limited fashion, but then expand as the natural consequences come to fruition. For example, examine the minimum wage law. The natural consequence of the minimum wage law is the least productive individuals lose their jobs. Most often those individuals are youth and minorities, with the affect especially evident among young minorities. Reacting to this natural consequence, legislatures then want to enact social programs to provide for those who are unemployed. These social programs are funded through higher taxes, typically upon the most wealthy. The wealthy are incentivized to be free from the higher taxes and get around them through a myriad of creative ways. A cycle develops where social programs continue to expand, taxes continue to rise and the wealthy flee. This is very evident in France, currently. When the wealthy flee, the taxes fall onto the middle class. There is incentive for immigrants to come into the country. And so on and so forth.
The failures of socialism are most evident where the interventions are taking place. Healthcare is a sector where a lot of the interventions are taking place and the affects are glaring. You can see this in Western Europe with sub-prime healthcare. The problems in the socialist governments in Western Europe will be exasperated by the refugee crisis.
A socialist government and a planned economy are only different by a few degrees. Bad laws beget more bad laws and the problems will grow. How long until the parasite overpowers the host? Who knows.
Guaranteed Basic Income sounds like an early retirement option for most people, so where it's probably a fantastic opportunity for self-starters, it might be lethal for everyone else. GBI's side effect can be weeding out non-entrepreneurs.
[1] Early Retirement: Bad For Your Health? http://freakonomics.com/2012/03/29/early-retirement-bad-for-...
The people who pay? In general, as with any tax increase, it's the middle class. It's the couple that went to college, saved their money, worked hard, bought a house and started a family. Regardless of how much you think you can raise tax rates on "the rich", the only way to pay for something like this is by getting to the middle class, which is where the tax revenue is.
The idea would be that as we figure out how to automate things, we make those things essentially public goods. We end up with a mixed economy, where we have one class of goods that are produced in publicly owned automated factories and do not cost the consumer money, and another class of goods that work like they do now where private parties produce them and sell them for money which the buyers earn through paid employment.
For instance, consider vegetables. We're close to being able to make almost fully automated farms for many crops, and we're close to fully automating most of the shipping from farm to market. The idea would be that as we achieve this, the government buys up these farms (or starts its own farms), and everyone gets a daily allotment of the produce from these farms. Some meat production is also highly automated, and so we should be able to at some point in the not too distant future add meat to this.
At that point everyone who has a place to cook has their basic food requirements taken care of.
How about transportation? Automobile manufacture is very automated. At some point that too will be almost completely automated. Combine that with self-driving cars, and we should be able to have a publicly owned nationwide fleet of self-driving taxis. Ideally these would be electric cars, powered by publicly owned solar, wind, hydroelectric, or nuclear systems.
As automation gets more and more advanced, more and more goods can be added to the "made by publicly owned automated factories" list and made available to all.
When enough stuff is automated and turned into public goods to allow someone to survive reasonably without a job as long as they have housing, we can start making publicly owned housing in places where land and construction costs are cheap. That will be away from the big cities, but for people who decide to not work that would be fine, as it would for people who can work remotely. So we should be able to reach a point where everyone can have a basic apartment or small house and the necessities to survive reasonably there, without an income.
Will we ever be able to automate everything except creative intellectual work? I don't think so, at least not for a long time. I think that would require the development of something like the robots from Asimov's stories--robots that have human form factors (so that they can work anywhere that a human can work) and human level intelligence, and I don't think we'll be there anytime in the next 100 years.
A nice thing about this approach is that it can be done with minimal disruption. With basic income you have to give everyone enough to reasonably survive right from the start. With basic goods, you go item by item, industry by industry.