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Comment by uoaei | Hacker News Reader

If the rhetoric is solely around "government spending" then the perspective will always be that UBI is "too expensive".

But the money doesn't just vanish when it enters people's bank accounts. All of a sudden, banks have a lot more collateral against which to borrow and invest, by virtue of the fact that the bank accounts which store the UBI have money in them. People spend that money and it enters and moves through the economy. The government taxes it back out via sales taxes, income taxes, capital gains taxes, etc.

I think, in general, it's worth having an economy that keeps moving. If you let too few people have too much proportion of available wealth, the consumers won't have any to work with and your economy will be entirely dependent on luxury goods for a tiny proportion of the population.

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A higher velocity of capital ~= larger economy, which is good.

However, a higher velocity of capital without commensurate economic value being created ~= massive inflation.

This is a potential risk for UBI, and one that small-scale studies do not cover. Ideally, the additional economic value would be greater than the face value of the capital transferred every year, but there is no guarantee that is correct (nor is there any reason they should even be on the same order of magnitude).

Implementing UBI on a national scale would be a grand experiment. Most grand experiments tend to fail with massive upheaval. I think for UBI to be adopted, you would need a plausible incremental strategy with a lot of safety checks.

Yes, taking things ad absurdum in either direction will lead to catastrophe.

The perspective of MMT is that government can and should tax out money at a rate that keeps the economy from inflating beyond the scope of our control, and inject it at a rate that sustains the velocity of capital. Making this perspective the dominant one in discourse, however, would require a lot more public trust in government before people got comfortable with the idea of governments taxing us for our benefit.

Well, in this case "ad absurdum" is pretty close to a reasonable UBI. A reasonable UBI (say $1000/mo) is going to be ~15% of the entire US economy "printed" every year.

The NPV of that dilution would be enormous, unless the economic value being created is very close to $1000/mo (or higher).

Consider all the government spending that currently goes to companies (tax credits, subsidies, etc.) and how that money further goes into people's pockets as (at $1000/mo, close to minimum) wage. I don't have hard numbers but this is probably not much different from the overall cost of UBI. All UBI does is cut out the middleman. Especially post-recession, many companies only survive because they run at a loss for a while and soak up investments to stay afloat. If we are to believe capitalists, we should structure the economy to discourage corporate grifters. UBI would do exactly that and replace costs that currently support the grifting behavior.

I'm perplexed by how often people assume that spending will only increase with the introduction of UBI, when there are many existing pathways for capital to travel that will become obsolete when UBI is enacted, and can be diverted to funding UBI instead.

> However, a higher velocity of capital without commensurate economic value being created ~= massive inflation.

This is a good point. Money maps to stuff and services. But there is ample surplus production (and unused capacity) in our economy.

Every year 40bn+ pounds of food is wasted at the retail level (on top of all the waste that happens before retail in production), while ~11% of the American population is food insecure.

Nearly every clothing company — H&M, Nike, Burberry, Eddie Bauer, and so on — destroys billions of dollars of unsold clothing every year in order to preserve their brand.

We have material abundance thanks to highly optimised mechanisation and more recently automation in agriculture and manufacturing. UBI can allow the poorest parts of society access the surplus that we would otherwise destroy.

That argument doesn't really hold water.

Having an income (via UBI or some other mechanism) would help the poor, that is true (minus the caveat above about economic upheaval). Assuming that said income will reduce economic waste is not at all evident.

A functioning economy is not built on pieces of paper. It's built on people working and producing value.

That's literally untrue. It's built on people spending money. If there is no trade, there is no economy.

This fetishism with "work" as a proxy for the value of the human life which performs the work is a very American concept with corollaries in only a couple other countries. This is not the norm and certainly not a healthy way to look at labor and the economy.

> It's built on people spending money

Money is a recent invention, and economies have flourished without it. Money facilitates trade, increases liquidity, and reduces friction in transactions.

> This fetishism with "work" as a proxy for the value of the human life which performs the work

It is not a proxy for the value of a human life. It is a representation of the value of the labor of that human.

Americans are very generous in voluntarily giving to charities.

Compensation is a representation of bargaining power. If anything, compensation for labor has an inverse relationship with actual value. Teachers get paid little despite educating future generations, sanitation workers contribute more to the public health than doctors but make peanuts, and stay-at-home parents nurture children and are paid nothing at all. Bargaining power is not value of labor.

We are paid what can demand and not a penny more irrespective of our labor's actual value.

> compensation for labor has an inverse relationship with actual value.

Value is what people are willing to freely pay for it. Any other definition of it is subjective and fairly useless.

You’re talking about price. Price is not value.

The value of something is price where the supply & demand curves cost.

> It is a representation of the value of the labor of that human.

By withholding economic power until someone provides "labor" as defined by the state, and leaving them embedded in an economy which requires money to survive, you are directly tying the value of the human life to the value of their labor.

> giving to charities

Interesting, probably has a lot to do with the low taxes and high amount of disposable income.

> probably has a lot to do with the low taxes and high amount of disposable income.

A young lady I used to know was the kindest person I ever met. She didn't have much, but would donate a few dollars to every charity that called. They had her number, and called her all the time.

She was the real deal, not one of those people who are only generous with someone else's money.

> you are directly tying the value of the human life to the value of their labor.

Oh baloney. Plenty of people will voluntarily give food to a hungry person.

If "plenty of people" can be organized to consent to giving up money, maybe we can organize some kind of centralized method to collect funds and distribute resources to those in need. We can probably set up something through the government for this. Come to think of it, shipping food around is a lot harder than just giving money to them to go buy their own. Why don't we make it so the government hands out money to everyone who needs it, so that we can coordinate the good deeds of many to serve the needs of many more?

I hope you see where I'm going with this.

It's called the Red Cross, Doctors Without Borders, United Way, Wounded Warriors, Shriner's Hospital, etc., etc. No government needed.

"Plenty of people will voluntarily give food to a hungry person."

Not enough, with the amount of hunger that's present in the richest country in the world.

I encourage you to give generously to your local food bank. You'll be doing the right thing.

Charity has never adequately addressed social problems in America.

signed, a surfer

I'm not aware of any social problem that has been adequately resolved by any organization, government or private. There's always someone who thinks it's not good enough.

Certainly UBI isn't going to do it, either.

There are 12 US cities that have achieved "functional zero" homelessness -- no chronic homelessness and no homeless vets.

The country of Finland has done the same, with a plan to reach absolute zero (nobody staying temporarily with friends or relatives) by 2022. Right now, over there, with 5.5 million people, 500 people don't have permanent housing of their own.

Does that count?

> 500 people don't have permanent housing of their own.

I.e. it's inadequate.

You said: "I'm not aware of any social problem that has been adequately resolved by any organization, government or private. There's always someone who thinks it's not good enough."

If you think that 500 people out of 5.5 million -- who aren't sleeping on the street, but have access to shelter and only lack their own permanent housing, with a plan to house them in the next two years -- is "inadequate," that's a you problem, not a "no social problem has adequately been resolved by any organization" problem.

Try surfing, man. It might relax you.

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