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Comment by jimmywanger | Hacker News Reader

Before I pass judgement, I would want to see what happened to the CPI price after basic income.

The article says that one recipient was able to buy more milk and send his kid to school. Fine, how much does milk cost now and which kid is now unable to go to school because his son is sitting in the seat?

You can have as much money as the government wants, but goods are a limited resource (in the short term). Just printing money to give people more money is not a solution.

Venezuela just hiked minimum wage up to 797,510 BSF a month. That's 79,751 dollars at the official exchange rate (which is 10 to 1). On the black market it's about 6.50. And nothing is available on shelves.

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By printing money for BI you effectively redistribute from the top half to the bottom half. This would suck for most people here, including myself. However, I don't think that redistribution from the bottom 99% to the top 1%, as I believe quantitative easing turned out, is much better.

Or, you just tax the top earners to pay for BI. Much more transparent.

How exactly do you propose to do that? One of Facebook's founders renounced US citizenship because of tax rates.

Again, it's only the rich who can afford to find tax havens and expensive accountants. The middle class is stuck paying taxes.

By renouncing citizenship he probably did the US a favor. http://www.philosophersbeard.org/2012/04/what-to-do-about-ri... Let them decide: give some of your wealth to finance BI or else renounce citizenship.

You'd have to ban them owning property or businesses in the country too. Otherwise they'd just stay but without citizenship or taxes.

> You'd have to ban them owning property or businesses in the country too. Otherwise they'd just stay but without citizenship or taxes.

This is why we need the estate tax (Paris Hilton tax or death tax as opponents like to say) to stay and probably increase in rate.

> For 2017, the estate and gift tax exemption is $5.49 million per individual, up from $5.45 million in 2016. That means an individual can leave $5.49 million to heirs and pay no federal estate or gift tax.

This is plenty generous. We should tax any estate beyond that at a minimum of fifty percent and close all loopholes.

I am not a big fan of income tax on businesses but I can see why we need it.

> This is why we need the estate tax (Paris Hilton tax or death tax as opponents like to say) to stay and probably increase in rate.

How is it relevant to giving up citizenship and owning property or company? There's no death involved. If their children are not citizen either, they are not hit by inheritance tax too.

> I am not a big fan of income tax on businesses but I can see why we need it.

VAT is sort of like income tax for businesses. Except it's not taxed on B2B transactions. Which makes sense. Otherwise everybody would bring in whole production chain in-house and we'd be left with huge conglomerates and no SMBs.

thats insane thats about 10X more than we have in Europe

My proposal is only 50% for inheritance above the limit (and likely 0%) under the limit. So if you want to leave $6M, and the limit is $5.95M then taxes are due only $0.05M. that's just $25k in taxes on a $6M wealth transfer.

When you renounce your citizenship, you don't get a green card - you become a foreigner, with no right to live and work in the country. Depending on your new citizenship, you may have the right to visit visa-free, but that's it.

That turns out to be a fairly rare and extreme step, taken either for ideological reasons (like Depardieu) or because they're actually foreigners who have minimal ties to the country otherwise (like Saverin, who you mentioned - he was born in Brazil, and was living in Singapore for years before renouncing his US citizenship). Generally people with that much money won't give up their homeland to save on their tax bill.

Unfortunately, the top earners are the ones with lobbyists, influence and power. They're very good and not getting themselves taxed. Everyone else could make it happen if they could focus and pay attention, but they're too easily influenced by sports, pop-stars, social media and fake news.

That's not what the OP is getting at. BI may work well given certain preconditions, and subpopulations. But what use is the money if resource supply and the productive capacity of the economy is limited?

I suspect it is simply not true for most basic necessities.

> That's not what the OP is getting at. BI may work well given certain preconditions, and subpopulations. But what use is the money if resource supply and the productive capacity of the economy is limited?

I'd go further and say this is not true for most consumables within reasonable limits. Does this sound like a circular logic? I think my reasoning is flawed (I hope it is not) so pardon my thinking out loud. I mean if I define luxuries as superior goods[wiki] which we consume more of as we have more disposable income, then I imagine we might see prices increase on those things at some point but we don't mind because they are luxuries. But can we dismiss all superior goods as luxuries? If we can prove this connection, then I think we can put down this fear of inflation once and for all.

Thoughts?

[wiki] https://en.wikipedia.org/wiki/Superior_good Superior goods make up a larger proportion of consumption as income rises, and therefore are a type of normal goods in consumer theory. Such a good must possess two economic characteristics: it must be scarce, and, along with that, it must have a high price. The scarcity of the good can be natural or artificial; however, the general population (i.e., consumers) must recognize the good as distinguishably better. Possession of such a good usually signifies "superiority" in resources, and usually is accompanied by prestige.

There might be enough milk and cereal to go around. I don't think there is enough housing, medical service and transportation (in the US). So those things will all go up in price. However, everyone should be able to afford those necessities so I'm not sure what the solution is. Limited resources is a very tough problem to solve.

In the US as of a few years ago, vacant homes outnumbered the homeless around 5:1. https://www.truthdig.com/articles/vacant-houses-outnumber-ho...

I think ~1 car per adult is enough transportation for everybody. http://www.latimes.com/business/autos/la-fi-hy-ihs-automotiv...

Half of produce in the US is thrown away. https://www.theguardian.com/environment/2016/jul/13/us-food-...

Healthcare is certainly lacking in the US but other countries with far lower GDP per capita have somehow managed to give everyone healthcare.

I think the vast majority of necessities are not really particularly scarce in the US and there is easily enough at the very minimum for i.e. absolutely zero homeless and starvation.

Just for info, I live in Europe and health care is almost free for everyone, but most of the time the quality is terrible - if long waiting lists (sometimes longer than your expected lifetime), lack of most medication and having 2 patients in a single bed is what you think "somehow managed" means, then you are right. There is no free meal, but somehow people tend to ignore that.

Calling the Superior Good as "[that] which we consume more of as we have more disposable income" is not quite that of the wiki article. Note that the key word is proportion. Your definition is the basic demand relationship.

But even still, I think you're better off considering that as a necessary condition, not a definition. Giffen goods[0] follow the same pattern, and they are almost always under "basic necessities".

I return to the basic question: can the PPF curve for the economy under which BI is instituted be reshaped to supply what its recipients would buy? That's the key question.

I appreciate your open-mindedness to "think out loud."

[0]https://www.investopedia.com/terms/g/giffen-good.asp

Inflation happens due to supply limits, for example if more milk can't be produced or more teachers can't be hired. Generally speaking, we assume producers can do these things, if given enough advance notice. More demand is good.

To say that these things can't be done at all and that more demand is bad is a defeatist attitude.

Venezuela is a special case where the government is attacking production. It's not what happens in a healthy economy.

Price inflation is caused by - increased money supply - decreased demand for money - increased demand for the good - decreased good supply

The 11 million percent price inflation rate in Zimbabwe was not caused by a 11 million percent reduction in goods supply.

If your currency is suffering from hyperinflation, your currency is worthless on international markets.

Why would they take money in a rapidly depreciating asset instead of just demanding hard currency that holds value decently well?

That starts mattering when you have nothing really to export and still require supplies (parts and food) from foreign countries.

It's shocking how connected and interdependent industries are now. I can't think of a single thing produced that doesn't need foreign inputs for production. Even apples need ladders for harvest, when one breaks, pesticides and fertilizer.

That assumes that he BI sum will stay unadjusted across years, a very dumb way to do it if true.

As for Venezuela, and similar situations, look towards the exchange rate.

Policies like this always lag economic indicators, whereas exchange rates and prices adjust fairly quickly.

From [0], "However, Zimbabwe's peak month of inflation is estimated at 79.6 billion percent in mid-November 2008."

Even a private charitable organization cannot deal with that level of inflation by tweaking the minimum wage. Plus, you start running out of money (the physical paper kind) really quickly because you can't afford it anymore.

Or you can go further down the rabbit hole and enforce price controls. Which leads to shortages of goods and lack of supply because of zero incentive to work and produce. Seeing your children cold and hungry and fair prices is a huge incentive to be productive.

[0] https://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe

Now you are mixing two very different situations.

BI as a concept do not, and will never, fix exchange rate problems.

BI is for when on paper the nation has a functioning domestic economy, but one that exclude large parts of the population from taking part in said economy via jobs.

Weimar Germany was left with a non-functioning industry after WW1, and saddled with reparations denominated in foreign currency. Even Keynes warned that it would be a mess.

Zimbabwe similar ended up with a broken domestic industry, but in this instance it was the leadership that tried to keep up appearance via imports that ran things into the ground.

For Venezuela i would say that judge is still out, but the slide started with the bet on oil exports to shore up imports, only or for the oil price to take a dip. but in this instance i can't eliminate the potential for foreign meddling as the leadership had incensed certain world powers...

> For Venezuela i would say that judge is still out, but the slide started with the bet on oil exports to shore up imports, only or for the oil price to take a dip. but in this instance i can't eliminate the potential for foreign meddling as the leadership had incensed certain world powers...

The only thing world powers would have to do is let Maduro continue his economic policies.

There doesn't need to be an external plot, just stupidity in economic powers.

With such high inflation, nobody wants to take the BSF, so they insist on hard currency. Thus, prices increases. Even when you make bread, you need hard currency to buy yeast and machine parts (baking and mixing machines) as most of them are imported.

With prices spiking, the government gets the bright idea to slap on price controls, at an artificially low bring to "ensure the common man" has access to goods. The price controls don't allow breakeven considering the cost of production and imports, especially when the price rises faster than price controls allow. So they don't make anything that is price controlled.

Also, the price control board is controlled by the government. Every year during Christmas and before elections, the government goes in and slashes prices. Sure, you get a big screen TV for cheap, but they never get imported any more. Same thing with airlines. They're not allowed to repatriate profits at anything close to a realistic exchange rate, so they just stop flying there.

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