This poses the question: instead of paying out a monthly UBI, why not give every citizen the equivalent lump sum up front? They can then decide how to invest that money themselves.
For what period? A year? A lifetime? If the period is too long, you'll just get ridiculous inflation, and also the money has to come from somewhere (if the state doesn't want to borrow it all up front). I think the idea of UBI is to be sustainable, steady-state, so monthly seems a good interval.
Depending on how you wish to behave on a moral level a yearly payment might limit the expenditure of the program. For example a friend of mine applied for and eventually was accepted into the SSDI program. He was disabled due to the fact that he was addicted to xanax and heroin. You have to wait a decent period of time (6 months?) before the benefits kick in, at the end of that period you receive a lump sum for the period of time that you waited. Well my friend took his new found riches, ran to his dealer, and promptly overdosed.
I'd argue the cost savings are a net negative in that case but something to consider.
A lifetime. The idea is that they will invest the money, and the interest / gains will provide the income. Using a safe withdrawal rate of 4%, this would be the equivalent of 25 years of UBI.
Our economy functions on the basic idea that everyone can contribute their labour. In a world where labour is no longer needed, but capital is, this gives every person a starting sum of capital that they can contribute as they wish.
So people who are well versed in financial affairs can do well and those who aren't should lose everything? That's exactly the opposite of what the UBI is supposed to achieve.
No, a UBI is supposed to give people a way to live in a world where the basic assumption that labour (something everyone can contribute) is no longer necessary.
What would remain necessary is capital, and a lump sum would give everyone a meaningful amount of capital that they can contribute (invest) as they see fit.
Capital is not abstract, capital is a production input (not sure the correct English name for this), the same as iron, concrete, flour, etc. You don't find any problems in paying for flour, do you? Then why is it a problem to pay for capital?
Another thing. State "capital" has been done, it's called communism (or heavy socialism), it doesn't work. Why not? Because the people making decisions on State "capital" do not get any of the downsides. You burn 50% of State owned capital? Who cares, it's not yours anyway.
And final one - managing capital is work! Knowing where to put your cash is work and it has a huge impact. Think how much of an impact can have somebody investing billions in space exploration (Musk?), or aging, or cancer. There are plenty of big trends worth investing that will give humanity as whole immense benefits (just look at the past 100 years).
Capitalism is not perfect, post-scarcity is a real threat, but the author is making the wrong arguments. The real problem is what people will do once we reach post-scarcity? What religions will they believe? What philosophies? How will they spend their time? Can they bear a life with 0 problems (I am not so sure I could)?
> And final one - managing capital is work! Knowing where to put your cash is work and it has a huge impact. Think how much of an impact can have somebody investing billions in space exploration (Musk?), or aging, or cancer. There are plenty of big trends worth investing that will give humanity as whole immense benefits (just look at the past 100 years).
Musky investing a billion dollars into a company the produces things isn't the issue. Musk would be taking a risk to build something that can reasonably fail. The issue is that (with our largely service based economy) many large capital holders simply charge rent and rent seeker have negligible risk compared to the owners of physical capital.
You can't charge rent if you don't invest into something. If you know how to get rent with 0 investments and risks, please tell me, I'll pay you for some consulting.
I think one of the most ingenious political ploys in American history was when the wealthy convinced the working class that capital gains should be taxed at a lower rate than income taxes.
I'll never forget having lunch with my co-workers, all of whom were paying 30-35% in income taxes, lecturing me that a 20% capital gains tax was unfair because the investor, "already paid taxes" on that money when it was first income, so taxing the gains amounted to double-taxation.
I've never understood the argument that raising the capital gains tax would slow economic growth either. Why would people give up free money just because they have to give a little more back to the government that makes the marketplace possible?
Well an argument you could make is taxing investments makes people less likely to save. Our GDP is basically all comprised of consumption so if a person substituted a consumption good over an investment good could cause a decrease in growth, or cause them to invest in something outside of traditionally taxed investments. No such thing as a perfect way to tax people. Not really for or against more capital gains taxes.
Since the capital gains tax isn't indexed to inflation (in the US), you are effectively paying a tax on inflation. Having the rate be lower at least makes thing a bit more fair.
Inflation isn't deductible, which means that bonds can pay extremely high (real) capital gains rates. If the bond pays 2.5% nominal per year, and inflation is 2% per year, and you pay a 20% capital gains rate, then you make 0.5% in real returns and owe 0.5% in capital gains taxes. Which is a 100% effective tax rate.
Stocks are more forgiving, at 2% inflation, plus 8% nominal returns (6% real), and a 20% tax, you would pay 26.7% effective taxes. At 6% inflation, it would be a 40% tax rate.
So this all made more sense when taxes were reformed under Reagan, which had a high inflation environment as a backdrop. Realistically, it would probably make more sense to have inflation deductible and progressive, but equal rates for cap gains and labor income. (edit: for full equivalency, you might also need a rebate for capital losses).
First, income from rent (say, for real estate) isn't divorced from work. The landlord has to make some arrangements for the upkeep of the property. The renter, by virtue of being a renter, can't be responsible for everything. If nothing else, the landlord must make and maintain a business relationship with a property management firm.
Second, critics of universal basic income have not neglected to note the destructive effects of the lack of useful labor among the upper classes. The decadent aristocracy has been a trope in fiction, history, and priestly sermons for ages.
Anti-Enlightenment scholars and traditionalist Catholics have pointed out that the nobles in the Vendee worked the fields much like the peasants. The nobles had more land and better land, but not extravagantly more. The Vendee and Brittany launched the counter-revolt that nearly ended the French Revolution. It was the provinces whose nobility were busy buggering mistresses in Versailles and Paris that fell most easily to the Jacobins.
How will people feed their families if there is no longer paid work? This is the question UBI tries to answer. Would it be better if the government required people to shovel sand from one heap to the other before giving them handouts?
Rent is said to be divorced from work for the wealthy people who did nothing and inherited their large dowry, buildings and land owned. The wealthy inherited person receives income without doing any "work". Sure, it's difficult getting up, taking showers and eating breakfast, figuring out what charitable function to go to that weekend, but some people don't call such folks with inherited wealth "working". Yes, having a place to rent and live in NYC is certainly useful for society. But the people with inherited wealth who own such buildings and receive income for doing nothing more than paying some firm to take care of their building aren't really achieving much. You could make a similar argument about say my investments in mutual funds in my 401k. I will (hopefully) make money off those investments. If I became very wealthy and say my grandchildren inherited them, I'd be happy my children had assets to help take care of them, but my offspring would be part of the rentier class.
Why is it a trope that some wealthy people don't do any work? It's no doubt true. Look at some of Trump's kids. Of course some wealthy people do lots of work.
Interesting to hear about 'the Vendee'. It's certainly true that the vast majority of nobles were not like that.
Putting aside the author's soak the rich rhetoric, the recommendation, which is basically to develop a sovereign wealth fund and pay UBI from that, has seen success. Norway, the UAE and Saudi Arabia have been able to give back to their citizens through shrewd financial planning and resisting the populist urge of deficit spending.
In America, however, we've gone the other way, with gdp of ~$18 trillion, and federal debt also at ~$18 trillion, we've got a $63 trillion hole to dig ourselves out of before we can pay a net 10% of GDP out to support the poor assuming 6% real returns on the fund. Unfortunately, it's very unlikely we would ever see the political will for a such a huge austerity project.
Before you go saying we should just 'snag society’s capital income' as the author recommends, do note that large scale nationalizations as we've seen during Mao Zedong's Great Leap Forward in China and more recently Venezuela's actions under Chavez and Maduro have produced truly devastating economic and humanitarian results.
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[ 2.5 ms ] story [ 52.9 ms ] threadI'd argue the cost savings are a net negative in that case but something to consider.
Our economy functions on the basic idea that everyone can contribute their labour. In a world where labour is no longer needed, but capital is, this gives every person a starting sum of capital that they can contribute as they wish.
What would remain necessary is capital, and a lump sum would give everyone a meaningful amount of capital that they can contribute (invest) as they see fit.
Another thing. State "capital" has been done, it's called communism (or heavy socialism), it doesn't work. Why not? Because the people making decisions on State "capital" do not get any of the downsides. You burn 50% of State owned capital? Who cares, it's not yours anyway.
And final one - managing capital is work! Knowing where to put your cash is work and it has a huge impact. Think how much of an impact can have somebody investing billions in space exploration (Musk?), or aging, or cancer. There are plenty of big trends worth investing that will give humanity as whole immense benefits (just look at the past 100 years).
Capitalism is not perfect, post-scarcity is a real threat, but the author is making the wrong arguments. The real problem is what people will do once we reach post-scarcity? What religions will they believe? What philosophies? How will they spend their time? Can they bear a life with 0 problems (I am not so sure I could)?
Musky investing a billion dollars into a company the produces things isn't the issue. Musk would be taking a risk to build something that can reasonably fail. The issue is that (with our largely service based economy) many large capital holders simply charge rent and rent seeker have negligible risk compared to the owners of physical capital.
I'll never forget having lunch with my co-workers, all of whom were paying 30-35% in income taxes, lecturing me that a 20% capital gains tax was unfair because the investor, "already paid taxes" on that money when it was first income, so taxing the gains amounted to double-taxation.
I've never understood the argument that raising the capital gains tax would slow economic growth either. Why would people give up free money just because they have to give a little more back to the government that makes the marketplace possible?
Stocks are more forgiving, at 2% inflation, plus 8% nominal returns (6% real), and a 20% tax, you would pay 26.7% effective taxes. At 6% inflation, it would be a 40% tax rate.
So this all made more sense when taxes were reformed under Reagan, which had a high inflation environment as a backdrop. Realistically, it would probably make more sense to have inflation deductible and progressive, but equal rates for cap gains and labor income. (edit: for full equivalency, you might also need a rebate for capital losses).
First, income from rent (say, for real estate) isn't divorced from work. The landlord has to make some arrangements for the upkeep of the property. The renter, by virtue of being a renter, can't be responsible for everything. If nothing else, the landlord must make and maintain a business relationship with a property management firm.
Second, critics of universal basic income have not neglected to note the destructive effects of the lack of useful labor among the upper classes. The decadent aristocracy has been a trope in fiction, history, and priestly sermons for ages.
Anti-Enlightenment scholars and traditionalist Catholics have pointed out that the nobles in the Vendee worked the fields much like the peasants. The nobles had more land and better land, but not extravagantly more. The Vendee and Brittany launched the counter-revolt that nearly ended the French Revolution. It was the provinces whose nobility were busy buggering mistresses in Versailles and Paris that fell most easily to the Jacobins.
Why is it a trope that some wealthy people don't do any work? It's no doubt true. Look at some of Trump's kids. Of course some wealthy people do lots of work.
Interesting to hear about 'the Vendee'. It's certainly true that the vast majority of nobles were not like that.
In America, however, we've gone the other way, with gdp of ~$18 trillion, and federal debt also at ~$18 trillion, we've got a $63 trillion hole to dig ourselves out of before we can pay a net 10% of GDP out to support the poor assuming 6% real returns on the fund. Unfortunately, it's very unlikely we would ever see the political will for a such a huge austerity project.
Before you go saying we should just 'snag society’s capital income' as the author recommends, do note that large scale nationalizations as we've seen during Mao Zedong's Great Leap Forward in China and more recently Venezuela's actions under Chavez and Maduro have produced truly devastating economic and humanitarian results.