The top 1% getting 1000x richer is a problem, because trickle down economics is bullshit. Money that exists as part of a pile of gold in a dragon's den does not move the economy.
The price level is driven by what the central bank does with the money printer. UBI wouldn't raise prices, if the central bank does their job even halfway competently. (Even the mediocre real world performance of the Fed or ECB would suffice to _not_ have prices raise by 10x in eg a year of UBI.)
> And that's not how UBI works, no one is some multiplier richer because it exists.
I was not meaning to imply that UBI would make people richer on average. My comment was purely about inequality being a bad measure.
UBI plus the taxes that finance it are a redistribution scheme. It doesn't make people richer on average. At best you can hope that the tax is very efficient and has low or no deadweight losses (like land value taxes), so that on average UBI doesn't make your society worse off.
> The top 1% getting 1000x richer is a problem, because trickle down economics is bullshit. Money that exists as part of a pile of gold in a dragon's den does not move the economy.
Huh? If what you said were true, the top 1% getting 1000x richer would merely not do anything, but it wouldn't be a problem per se.
Btw, it's not a problem if someone just hoard some money: the central bank will notice that inflation is below target, and print more. (Later, when you spend from your hoard, the central bank will notice that, and correspondingly shrink the money supply.) Sticking money in a hoard is equivalent to giving an interest free loan to the central bank, because they can temporarily emit more money, while yours is out of circulation.
However, rich people don't tend to keep cash in a vault. Most of them own companies or land etc.
exactly. Which is the problem. You seem to actually have all the ingredients to be able to understand why this is a problem, but some kind of sympathy for the rich (lol) seems to prevent you from actually using logic to see the problem.
Nobody is arguing that people shouldn't own stocks. People are arguing that asset concentration taken to extremes is like smoking too many cigs: so enough and you force bad outcomes on society and the economic system.
Is that a bad thing? It would obviously have some negative effects. We'd immediately see damage to luxury brands and yacht sales. The art markets would crash. Stock markets would feel some pain.
The upside though? My hunch is that making most people feel secure enough to risk starting/joining businesses is fuel for a strong and innovative economy. The fact that so few of us are able to take those risks is a constraint on growth.
How do you make these confident predictions?
I think it would depend a lot on how the UBI is, and exactly how you design the taxes to finance it (and how high those taxes are going to be).
Given that, it's pretty safe to assume markets that cater exclusively to the ultra-wealthy will be harmed by reduced demand as their customer base shrinks. Higher tax rates will also exert downward pressure ob stock values as companies make less profit and investors tighten their belts. (Especially if there's a wealth tax.)
Yes. That is desirable.
> However, rich people don't tend to keep cash in a vault. Most of them own companies or land etc.
And those too should be taxed. If it is wealth, it should be taxed.
How about taxing Brad Pitt for his good looks?
That wealth should also be taxed.
What makes stock ownership somehow holy that should be protected from taxation?
We should stop conflating what a company generates as a consequence of their activity with the glorified gambling of the stock market.
> We should stop conflating what a company generates as a consequence of their activity with the glorified gambling of the stock market.
Well, that might be a valid point for some people, but it's pointless for Zuckerberg or Bezos or Bill Gates or even Musk: those guys have been mostly holding their companies' stocks for ages. They don't buy and sell all the time. No 'glorified gambling the stock market' there.
In any case, I brought up stock ownership as a concrete example of wealth that doesn't just site 'idle' in a vault somewhere. It's a claim on a productive enterprise that is only worth something because it serves customers and employs people etc.
This company only exists because wealth is concentrated enough to support a market for it.
That company consumes about 4 million skilled-labor-hours a year to provide this service.
This means that skilled-labor-hours are more scarce/expensive for _everyone_, because the on any given year, there are only so many skilled-labor hours that exist. These labor hours require about three decades of investment from society to produce (public education/childcare/etc).
Bezos may not buy a super-yacht every year, but as a class, the super rich consume an insane labor hours.
Money isn't stuff. Yes, those craftsmen get paid, but when one of them has something he needs done, some service provided, or some physical resource, he ends up paying more for the labor, because he is competing in the same labor market as everyone else.
Don't you think spending the working time of 4 million labor hours a year, building megayachts, is perhaps not the most productive/ROI generating activity for society at large? You could for example, with ~4 million skilled labor hours a year, build a lot of housing. You could build factories that provide for the needs the people. Hell, you could just give people time-off to, y'know, live and enjoy life (and perhaps, uh, have _children_, which the current system seems to be very efficient at disincentivizing).
You'll have to explain that more. Ship builders aren't competing with plumbers.
>Don't you think spending the working time of 4 million labor hours a year, building megayachts, is perhaps not the most productive/ROI generating activity for society at large
Well, that's a drop in the bucket. But you could apply this reasoning to any form of luxury goods. Where do you draw the line? Nice clothes? Fancy watches? Sports cars? Five-star restaurants? Are any of these "the most productive/ROI generating activity for society at large?" Who decides what goods and services are worthy?
> and perhaps, uh, have _children_
You think people are having fewer children because luxury yachts are being built?
Sure, on any given year. But the current economic organization of society wasn't born yesterday. On a longer timescale? Absolutely are.
> Well, that's a drop in the bucket. But you could apply this reasoning to any form of luxury goods.
Yes.
> Where do you draw the line? Nice clothes? Fancy watches? Sports cars? Five-star restaurants? Are any of these "the most productive/ROI generating activity for society at large?" Who decides what goods and services are worthy?
The neat thing about market economies is that you don't actually have to draw a line anywhere. You can just reduce income & wealth inequality via taxes and markets will sort it out. If you had taxed capital gains such that Bezos would have had to liquidate 10x - 100x in Amazon stock to buy his yacht, he likely would have settled for a smaller, but still perfectly acceptable yacht, and so on down the wealth ladder.
> You think people are having fewer children because luxury yachts are being built?
Yes I think income/wealth inequality + the amount of labor hours demanded from people to just stay in place is why people are having fewer children.