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Comment by awt | Hacker News Reader

While initially in favor of basic income due to the income trap created by the traditional approch, I have come to oppose it due to a better understanding I now have of the nature of money. Consider that basic income works when you think of money in the micro context as a means of exchange for goods and services, but not when you think of it in the macro context as a reflection of the wealth of a society. Simply transferring money from one group to another does not make the second group wealthier.

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Please transfer all your money to me. As you say, it will not make you less wealthy.

In the longer & broader view, it may well not, I think that's the OP's point. This could be due to second-order effects such as the wealthy (= productive) people losing incentive (due to taxation) to work as hard, or inflation.

I am willing to face that danger in OPs stead!

Money is not wealth - it is debt. That's what the fundamental purpose of money is: instead of trading your stuff for other things, you trade it for a certain value of things at an unspecified later time.

With this perspective, there's no distinction between micro and macro contexts for money. It's all a unit of account for how the economic output of a society gets distributed. Transferring money from one group to another is the exact same thing as transferring real goods and services, except that the recipient gets to choose what slice of the economic pie to receive (by paying for it).

So let's say you give 1 bar of gold each to a group of 50 year olds, and 1 gold bar each to a group of 12 year olds. Each group is now equally wealthy and could each produce a cathedral of the same quality?

Yes, they could each hire a cathedral builder for 50 gold bars.

No, because money is not wealth. Owning money is equivalent to being considered to be owed something by society at large. Each group is roughly equally capable of trading that debt for the real goods and services they wish to receive in order to consider society's obligation satisfied. They're going to get different things, of course, but that's a side issue.

In that case, wouldn't you say though that if you receive money without working for it, you aren't really owed anything by society at large? Is it possible to transfer the "having done work" from one person to another? And no, investing does not fall into this category.

> In that case, wouldn't you say though that if you receive money without working for it, you aren't really owed anything by society at large?

One perspective on UBI is that it is compensatory payment to those harmed by factors which enable greater aggregate economic performance at the result of concentrating returns in a narrower group and driving down real wages for the masses.

I'm fine with it as long as it is voluntary.

No? There's no distinction in my mind between having money and being owed the value of that money in real goods and services.

Like, it's not a moral matter, more like an accounting identity. People who have money are owed things, and the debt can be resolved by exchanging said money for the things the money-owners want. This works not because people who own money "deserve" to get things, but because this is how society has decided to keep track of who should get things - that is, by paying for those things.

Basic income isn't designed to make the recipients wealthier directly (OTOH, access to greater goods and services produces more opportunities to become wealthier over time, which is more the point.)

This implies that they're not wealthy because they don't have access, would you agree? Is it possible they're not wealthy because of some other reason?

> This implies that they're not wealthy because they don't have access, would you agree? Is it possible they're not wealthy because of some other reason?

Two things:

(1) opportunity for wealth building is only one, of many, reasons for BI, and (2) It is certain that for some portion of the population, additional income will not be sufficient for notably better wealth building. But its equally certain that some portion of the population that would net benefit from BI is held back solely by short-term resources.

I find it hard to imagine that if you're struggling to attain your own bare necessities you're going to have the energy or wiggle room to generate more wealth (e.g. to start a business)

But why are they struggling so? Is it simply because of a lack of money?

Good point. They're struggling due to having unmet basic needs. Since money provides almost no nutritional value I can't see how it would help them. You've enlightened me; I'm now a social darwinist. /s

Having sufficient passive income so as to not have to work is wealth.

Why doesn't transferring money from you to me make me wealthier? It allows me greater access to goods and services, which seems to me to be almost the definition of greater wealth.

The wealth of a society is a reflection of the quality of the people in the society. 10 million in my hands isn't worth as much as 10 million in the hands of warren buffet.

There's an app for that: https://www.google.com/finance?q=NYSE%3ABRK.A

You're making a good point, and I'm sad that you're being downvoted.

People who win a fortune by the lottery often lose all their money shortly afterwards, even those people who intend to save and invest it. The reality is that some people are better than others at turning capital into gains through investment. There's definitely luck involved too, but Buffet knows how to buy a business, be its steward, and generate growth, not just for his business but for the economy in which it resides too. Simply investment in diversified mutual funds is not the same thing.

If you pick a typical poor person and give them $10m, they probably won't have the education or discipline even (to know how to) live off investment proceeds, much less grow the amount substantially. (See the outcome of most lottery winners)

That being said, basic income is talking about something different entirely, which is giving a lot of people a little bit of money. I think that could have a positive effect, although for all we know it may be transitive and only lasts as long as the money is being supplied. I think the question is whether the money helps people lift themselves out of poverty, and educate themselves or their children so as to enter the middle or upper class.

I think you could have expressed your first post more clearly -- I assume your point is that transferring wealth from one person to another in a particular society does not make that society as a whole better off. On a micro scale this is correct, but it may in fact make society more wealth if it leads to a more productive population in the long term. But it could just as equally lead to a less productive population. We'll have to see.

If you're going to define the wealth of a society to be the sum (or the average) of the wealths of its members, then you're probably correct that, in general, UBI or other redistribution of wealth does not lead to a wealthier society.

But total global wealth is probably not what the aid-givers are trying to maximize here. In fact, I think pretty much nobody is ever trying to maximize that.

Actually it does due to the very fundamental principle of economy: the same goods will have different utilities, and hence different values to each individual human being (and why trading IS creating value).

2000 calories to a starving person helps them alive, which translate to more wealth they can generate later on. 2000 calories to fat people is worth much less, if not harmful. Capital is just an abstraction of goods, and certainly their usage will have vastly different effectiveness depending on situation.

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