The $10,000 would increase demand by $10,000. What mechanism would then increase supply? How much would that mechanism increase supply?
I fail to see any such supply-increasing mechanism. If I'm right about that, then that $10,000 would be eaten by inflation literally instantly.
Money is a store of productivity. It cannot be a universal policy of an economy to give out money for no productivity exchange without consequences.
Robotics. In my lifetime, most basic productivity will be fully automated. Robotic factories will make self-driving tractors that cultivate fields of genetically engineered crops.
Labor is already obsolete. The majority of Americans of traditional working age (13+) already live on handouts. This trend will accelerate in the next 20 years. It is a huge question of how to handle the below average people who are both unnecessary and not well suited to the life of ibtellectual pursuits.
In Peter F. Hamilton's sci-fi novels, he posits that each person will receive an EMA, an energy-mass allocation to use or trade as they see fit. With the boundless resources of the universe brought to your doorstep, we need a better method of resource allocation than the minimum wage.
indeed
I don't think we can dismiss that out of hand. It seems like a pretty bog-standard social welfare program.
Say there's 250m people in the US over 21, give each of them $10k and you're talking $2.5 trillion/year. Say, the economy as a whole is about $15 trillion/year (it's a bit higher, but I'm approximating), so at most you'd be looking at inflation of 16.6%. You're assuming that the first $10,000 of goods and services would be inflated by 100%, but this isn't true, nor is the first $10k of goods and services the same for everyone.
Obviously I'm giving you a very abridged answer, but I encourage you to look into Milton Friedman's writings on the concept of Basic Income - not a person you could accuse of economic illiteracy, even if you didn't agree with all or many of his views.
Sources:
[1] http://www.dominionpaper.ca/articles/4100
[2] http://www.cbc.ca/news/canada/manitoba/story/2010/03/25/mb-p...
Everyone qualifies, forever.
[1] http://www.crikey.com.au/2013/01/16/dole-around-the-world-ho...
The most significant difference is that in the US unemployment benefits are generally limited to a maximum of 26 weeks, while in Australia you can collect benefits for decades.
The "greater benefits" available in some states (e.g., Massachusetts) are only available to people who have been recently working in a high-income job. Your unemployment benefit in MA = 50% of the bi-weekly pay rate you had when you were working, up to a certain maximum. And, again, you can only draw unemployment for a maximum of 26 weeks.
I don't know how the Australian laws have changed, but you can't just collect unemployment benefits forever without doing anything, but it is pretty close. I'd guess that the amount of crap the Australian system puts you through in a lifetime is probably about with the US puts you through in a year.
I know a lot of people who just wouldn't work if they could draw benefits like that. Hell, I might retire myself.
I know of houses full of 20 somethings who intentionally fill out applications left handed with spelling mistakes so they never get a job and can surf all day.
The amount of money is enough to live on, but you won't be really doing any leisure activities, so it gets old pretty fast for anyone that's motivated. For the unmotivated, it keeps them fed, clothed and sheltered, and stops them resorting to crime, so I think it's a good thing.
The training is a covered cost, so its not out-of-pocket for the unemployed. I think it is a good method of helping reduce structural unemployment, as most of the cyclical unemployed are likely to find work before the training requirement kicks in anyway.
It would also help government budgets - for example, BART trains could be cleaned by some unemployed individual making $10k/year rather than some unionized worker making $75k + benefits (or whatever the exact numbers are).
With a guaranteed income, $11k would likely be insufficient - why work for $11k when you can enjoy a life of leisure for $10k?
Otherwise you end up with 100% marginal tax rates, like in traditional benefit regimes.
This is the same category of lunacy as the "the homeless are just too lazy to work" argument. Anyone who has even seen the reality on the ground for people in these situations would know not to make them.
http://www.bls.gov/cps/cpswp2011.pdf
(Note: I'm defining a "life of leisure" as one in which you choose not to work, and instead enjoy leisure time. This describes most of the poor in the US. Of course, if you define "life of leisure" as having a butler and a solid gold toilet, you get different results.)
No one is enjoying life in this country at $10K/year. The life of someone at that level is a constant barrage of worries, of harassment, of choosing between having one basic necessity of life over another.
No one chooses to be there, and certainly no one would stay if they had the opportunity to exceed it.
> "but available data on people below the official US poverty line certainly agrees with this general picture."
You're going to have to cite specifics from that document, because all I see are labor force participation rates and income levels - there is nothing in there about people choosing not to work in favor of "enjoying leisure time".
> "This describes most of the poor in the US."
Really? You think the day laborer standing outside Lowe's hoping for a job has chosen to be below the poverty line, and instead has chosen a life of leisure?
I'm going to state this in the most civil way I know how: you are sorely lacking in perspective - and this is after reading all of your posts in this thread so far - and for your own sake, and the sake of people you share this society with, go volunteer at a poverty or homelessness-related organization for a month. You have beliefs that are in no way grounded in reality, and the numbers you continue to cite to make your argument are between nonsensical and specious. Please find some way to experience the issues from within.
You think the day laborer standing outside Lowe's hoping for a job has chosen to be below the poverty line, and instead has chosen a life of leisure?
No, I think the 80% of the poor who chose not to participate in the labor force are the ones who have chosen a life of leisure. The day laborer you mention is one of the 20% or so who made a different choice.
Not working for someone else is not the same thing as enjoying leisure, at all - you've built a castle of logic on a deeply flawed assumption.
Look, if you only have $10k a year you can not buy a lot of stuff. That's just about enough to supply yourself with an adequate amount of food, clothing, and similar basic necessities if you are in some low-rent area - in short, for a single person to keep body and soul together. It's not enough to go out to restaurants or purchase more than necessities unless you enjoy some sort of additional subsidy from parents, spouse or wherever. You'll be cooking your own meals, carting your groceries around on foot, doing the same with your laundry (or washing it in the bathtub) because you can't afford a washing machine, and so on and so forth. You won't starve, but you'll have to work at things that other people pay to have done for them. This is, believe it or not, time-consuming, and effort-consuming too. It's not too bad for a single individual who's educated enough to have a meaningful inner life, but for a lot of people it means both boredom and a significant exclusion from social activity, and for an awful lot of other people (the sort you think chose to have vaginal sex instead of giving you a blowjob), it can mean dealing with children, which is extremely time-consuming.
I think you mean well Chris, but you seem almost comically ignorant about the difficulties faced by other people who didn't have the good fortune to be you.
ftp://ftp.bls.gov/pub/special.requests/ce/standard/2009/income.txt
As for cooking, carrying groceries and doing laundry, I do all those thing sfor myself.
Incidentally, your mental picture of the poor is a bit off.
As for owning things like washing machines, the gap is far smaller than you think. 65% of poor households have one, compared to 80% of the US (see table 2-4, pg 52).
http://www.census.gov/prod/2008pubs/h150-07.pdf
I think terminology is confusing you. You hear words like "poverty" and assume a certain lifestyle. But the word "poverty" doesn't correspond very well to the lifestyle you are visualizing.
[1] It's been pointed out to me that at least some people in poverty are business owners who took a loss. I don't know to what extent this is the case, but it messes up all the numbers if it's a big factor.
I invite you to try the SNAP challenge (http://site.foodshare.org/site/PageServer?pagename=programs_...) and see how long you can go on a $4/day allowance. I was lucky to get sufficient education about nutrition and cooking in school to be able to eat healthily on a budget like this when I've had to, sometimes for a few months at a time. But if you screw up and spoil a meal or some of the food goes bad, then tough luck, you don't get to eat anything.
Not to mention, why should people have to do worthless government-assigned work to get that money? Yes, of course, there will naturally be some people that would take the 10k and live on it - as best as can be managed - but I think it would free up a great many other people to pursue work they're actually interested in, especially in the arts.
In past times, the majority of human work was growing food. Today, less than 2% of the population can feed everyone else. As a result a great many people had to find other work; and they did. But now it seems that software and automation will reduce the number of people needed to do all other kinds of required work to a minimum, as happened to agriculture.
Coincidentally, artistic work by and large pays less than ever today due to the ease of piracy (you can trace the profits of RIAA over the last 3 decades for a good example of this) even as more people than ever are able to do artistic work (better tools) and reach an audience at no cost (better communications). Art and entertainment will be the last bastions of human "work" when current trends start to max out.
So - why not have a society where people are free to pursue the work they're interested in, whether it pays or not; where art and entertainment are possible to freely create or consume, unconstrained by the bounds of the market; and where the necessary work for human survival is compressed to a minimum of needed people that are interested in those matters and/or the money that comes with them?
That's the thing. If $10,000 is the new $0, then it will be worth $0.
The benefit of a basic income is that any paid work would simply add to your take-home cash. At the moment, means-tested benefits can cause people entering into the workforce to have benefits removed - so that their implicit marginal tax rate can exceed 100% (i.e. they are worse off working). Even if this perverse situation isn't directly manifested, the very poor suffer some of the highest implicit tax rates due to benefits being removed. Which is a crazy situation.
I have taken to saying "Everybody should have the right to a job as 'Verwaltungsfachangestellter'" (something like an office clerk). But I tend to say that in jest...
This isn't actually that wild an idea - this is what FDR did with the NRA during the great depression.
Another thing I have realized: proponents of government spending are always right. Of course there is an optimal way to spend money, and in theory government could just decree that money should be spent in that way and things would run in an optimal fashion. The problem is that advocates of government spending tend to skimp over the aspect on how to actually determine optimal spending.
This sounds like a great way to create and maintain an underclass of laborers who make less than minimum wage.
No person should be forced to work just to eat or have shelter.