Basic income vs. Capitalism
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It's conclusions were broadly:
* To be cost neutral, it would require a significant increase in taxation rates (to a flat tax of ~45% - 50%).
* Although the Gini coefficient is improved, those who currently receive government support would likely receive less under a GMI scheme, which may have the effect of distributing more money away from those most in need.
A brief discussion of the "broad ranging" effects on efficiency and economic growth is also included.
[1] http://igps.victoria.ac.nz/WelfareWorkingGroup/Downloads/Wor...
Even Friedman argued for the NIT, noting it was less paternalistic than food stamps or other benefits to simply let the poor allocate their money however they see fit (and simple transfers would likely lead to lower administrative costs).
But this implicit line that there's a secret cabal of "capitalists" all persuaded by some idea that they never publicly proselytize, but all coordinate action in order to pursue... it sounds a bit conspiratorial. Cribbing lines from marxist economic theory, it's going to alienate half your audience or more, and immediately make the argument deeply partisan, when it needn't be.
I mean, believe that line or not, but I think the argument is stronger without falling down the rabbit hole of pretending to know what "the capitalists" are up to.
The way the Marxist argument for class interest works, is that there does not need to be a secret cabal. To discuss this in the context of basic income (BI): Some capitalists, that is some owners of capital, depend on cheap unskilled labor. Each of them concludes independently, that a BI is against his own interests, since it would reduce the incentive to take unpleasant jobs and force them to pay their workers more.
Or more generally, some people have similar interests, not because they conspire, but because they are in a similar socio-economic situation. And this socio-economic situation generates class interests. ( Marx then goes on to argue, that the capitalist class can more easily leverage its interests, and therefore the workers need class conscious to counter this leverage.)
And anyone who disagrees with Marx on hearing his ideas is suffering from False Consciousness and needs to be Re-Educated, perhaps in a Camp somewhere.
Do you have any objective arguments against this statement?
Class lines are not well-defined. A CEO may share certain interests with shareholders but their interests are not all identical. By using the frame of class you create a situation in which those without power pit themselves against those with power, and encourage those with power to reciprocate. That is a horrifically bad position for those without power to be in because you're de facto creating two teams where one of them has an insurmountable initial advantage.
The better strategy is to break the "classes" apart so that you can pit the different powerful interests against each other rather than uniting them against you. There is a subset of the wealthy who benefit from a basic income. The masses would do better to ally with that subset and combine their money with your votes to achieve the common goal, than to keep painting them as the enemy for long enough that they start fighting you too.
And while thinking about Marx one needs to keep in mind, that Marx did analyse the mid 19th century economy. Your example of a CEO is actually a quite good one, since a CEO is controlling capital which he does not own, a arrangement that essentially did not exist in the middle of the 19th century. And I think that this split between capital control and ownership of capital is one of the most important theoretical difficulties in applying Marxist analysis to 21st century finance capitalism. The other problem is, that in the 19th century Labor movement the workers had a nuclear option: If the workers just refuse to work, they will be as broke and unemployed as the capitalist they refuse to work for.
You do not need to be a marxist to agree one some of the basic principles put forward.
Marx was not 100% wrong, he was just wrong some very specific and important places.
The Gulag Archipelago.
> Marx was not 100% wrong, he was just wrong some very specific and important places.
Of course he wasn't 100% wrong. All modern developed countries have adopted some of his ideas, such as public schools and laws against child labor.
His notions of an Apocalyptic struggle between Labor and Management, his totalizing philosophy which seeks to explain all social conditions through one dialectic, and his refusal to admit that capitalist countries could adopt some of his ideas and stay capitalist, however, lead to some of the worst regimes in history, and we can't forget that.
Yeah, because without his ideas, Russia would have turned into a well functioning capitalist democracy. The past 20 years have been pure bliss now that the burden of communism has been cast off- since there is now no way for power hungry leaders to control the nation.
The past 20 years were directly preceded by 70 years of the USSR. If modern race relations in the US can be blamed on slavery and Jim Crow, both of which have been dead for longer than the USSR has, then Russia's modern problems can be blamed on Marxism and Leninism.
Well yeah, you can blame it. Doesn't make it true. Of course a country can't magically be divorced from what happened 20 years ago, but the point behind my sarcasm was it is exceptionally naive to assume Russia's problems were caused solely because it was nominally communist.
Not just nominally. It went down the list of the Communist Manifesto and implemented things, and it wound up with Stalin.
Could I prove to you, even in theory, that Communism has bad outcomes? What kind of evidence would I need?
Marx analysed quite correctly the era he lived in and the problem with capitalism. He was just wrong to think that this would never change.
For instance today may of us are the owners of our own means of production. You don't need your employer to buy you a machine and they can't just replace you without having lost the knowledge that you represent.
Marx didn't live in such a world and thus his premise wasn't universal enough.
Of course not. Marx was directly responsible for Communism because he laid the blueprints, and the USSR implemented them. Therefore, Marx is responsible for the USSR.
You can go down the list of things the Communist Manifesto proposed and see that the USSR did all of them: http://www.stardestroyer.net/Empire/Essays/Marxism.html
I think you need to read up on history my friend. And perhaps read the actual work of Marx before being so cock sure about what you are claiming.
Then we can have an adult discussion about the many issues with communism.
And in his Lectures on Jurisprudence: "Till there be property there can be no government, the very end of which is to secure wealth, and to defend the rich from the poor."
It's not a secret cabal of capitalists. It's capitalists acting as they're incentivized (or perhaps fail and be replaced by those who will). Wouldn't we naturally observe institutional forces in feudalism, the former USSR, chattel slavery, etc; and be astonished by people living in those societies not seeing the obvious?
I really love him and Hume though, what amazing thinkers and especially ahead of their times!
Capitalists do lots of things that go against what Friedman et all defended. Lobbying for governmental privileges and self-serving regulation is a common example.
As an anarcho-capitalist libertarian I don't advocate a guaranteed minimum income however I think it would be preferable, given whatever amount of government intervention in the economy, to have one since it would somewhat insulate the poor from the rest of the intervention.
This is hardly a new or leftist idea; it's actually an obvious result of the incentives at play, and it's a fact that anarcho-capitalists have used as an argument for the elimination of the state (in order to eliminate lobbying).
Isn't there something fundamentally different which is also called capitalism? Without any reference to who owns the means of production, where mutually voluntaristic exchange occurs in an unhampered market scenario we call this process capitalism as well.
Saying "the capitalists" is a lot like the us vs. them tactic of left vs. right or republicans vs. democrats. What is "an established capitalist"? Is that somehow different than a run of the mill capitalist? If you buy into the outmoded doctrine of profit seeking automatons as "capitalists", then your argument works. Competing theories of the firm have discovered the tendency toward revenue-maximization versus pure, blind monetary profit maximization.
Just because you recognize that utilizing a state's ability to assign perks to business is properly called corporatism as well doesn't mean that you aren't conflating this process of exploitation with genuine free-market capitalism.
No, that conclusion is not what I'm claiming. I'm not saying that capitalism is the same as corporatism; I'm saying that capitalists (people who control the capital, not supporters of capitalism) have an incentive to change a capitalist system to a corporatist system.
Isn't there something fundamentally different which is also called capitalism? Without any reference to who owns the means of production, where mutually voluntaristic exchange occurs in an unhampered market scenario we call this process capitalism as well.
Capitalism necessarily entails ownership of capital; this is not to say that it's the same as corporatism.
There are people who defend markets without defending capitalism: these are usually called mutualists, and they're usually connoted with the left, though unlike state socialists, they defend a stateless society.
I've been reading this on the subject, but I'm still very early on: http://www.amazon.com/Markets-Not-Capitalism-Individualist-I...
Saying "the capitalists" is a lot like the us vs. them tactic of left vs. right or republicans vs. democrats.
That depends on the intention, no? I wasn't judging them, I was stating a fact about the incentives that people who own capital are subject to. This doesn't mean that all capitalists are necessarily promoting corporatism; just that it's in their self-interest to do so.
And again, this is hardly a leftist position, it's (as I said) shared by people like Friedman, and it's one of the arguments in favor of anarcho-capitalism.
What is "an established capitalist"? Is that somehow different than a run of the mill capitalist?
It's what it says. There are established companies and startups, and there are established capitalists and young entrepreneurs trying to compete with them.
If you buy into the outmoded doctrine of profit seeking automatons as "capitalists", then your argument works. Competing theories of the firm have discovered the tendency toward revenue-maximization versus pure, blind monetary profit maximization.
Having state protection against competition helps with both. But again, this is not a judgment of individual capitalists, it's statement about the incentives they have. It doesn't mean they're all bound to lobby, they just have a incentive to do so.
Just because you recognize that utilizing a state's ability to assign perks to business is properly called corporatism as well doesn't mean that you aren't conflating this process of exploitation with genuine free-market capitalism.
My point is that economic systems are not immutable; a free market capitalists system can be replaced by a corporatist system, much like feudalism was replaced by the current system.
Markets only work if you have ownership. The problem with mutalism is really that the either have to let inequality happen, the diffrent entitys (some people think this will be firms, or villages or some other non-single human entity with a common intrest) who trade will end up unequal.
The question then is what mutalism really solves, if you dont want the inequality you would have to ridistribute again and with that destroy the insentive to act in the market.
In general I agree with your post, you are quite correct.
Just to show the meaning has changed, which people are sometimes loath to admit. My point is that equating 'Fascist corporatism' to what you define 'corporatism' to be is deeply dishonest, not that I'm accusing you of doing it.
Also note that Friedman wanted the NIT as a transition system and then throw it away.
there's secret cabal of "capitalists" all persuaded by some idea that they never publicly proselytize, but all coordinate action in order to pursue... it is not conspiratorial, but it is implicit.
Indeed, this is a code, similarly to how you don't have to tell your best friend not to hit on your ex, yet. You know it, s/he knows it. Just because it isn't said, does not mean, it is not well understood.
Its interesting to notice that those who promote a basic income here in Germany are hardcore liberals/libertarians, while conservatives, socialists, unions, communists here still follow the puritanic thinking that "Arbeit macht Frei".
If your code was slower and more expensive than someone doing the work manually, you would doing another job.
I think.
Its true, that not every coder is freeing people from work.
But in average we destroy stupid jobs, and replace them with smart machines. Those jobs will never come back. The only kind of work that will be left are social work, that is currently badly payed.
The result is that there will less demand for work, the wages will sink to the botton, nobody would be able to buy things, and capitalism will destroy itself.
The only way to avoid a communist slave state is an universal income.
It's in each person's best interests to vote for more wealth redistribution if they're below the average, and there will always be more people below the average than above.
Further, it's in each politician's interest to both promise and deliver such a thing, as it helps them win first and following elections.
Those leeches are the least of our worries.
How about long turn demographics? There are racial and religious minorities, that have 12+ children in an average family. A basic income may help them grow even faster, leading to inevitable huge changes in the society.
Also, I'm under the assumption that "leeches" basically just means poor people. I supposed if we had to be more specific, in America that means Hispanics. They are not exactly religious zealots, but are definitely making relatively larger families. That's just going to be the demographic reality in America.
In this thought experiment, I believe it becomes evident that the laws of economics, as we understand them, are NOT timeless. Modern economics has gone on a tangent, creating a system of analysis and theory that only works for this microcosm in our existence. It is only as our economy approaches the scenario described above that the true laws of human economics can become evident.
I think the frailty of the human ego is more likely to manufacture scarcity than anything else.
Welfare programs of any type are only viable when the ratio of payers to payee's is high. They're desirable at this level. However, entitling every citizen to money which for he does not have to work for exposes the government to UNLIMITED liability as humans are free to create more humans at any time they choose. We cannot expand the GDP any time we would like, in fact paying people not to work removes the excess value of their labor from the GDP (assuming there was a job for them).
When you total up Social Security, Medicare and Medicaid debts the United States is completely broke. Something on the order of 100 trillion dollars of future liabilities. We can't even afford our modest socialism we have now.
TLDR? The numbers don't work.
Since non-economists should not be critiquing economic policy according to you, may I ask what your credentials are in this field?
I would advocate adjusting the payout on a regular basis. Ensure that the program neither massively hoards assets or runs more than minor deficits.
But completely meaningless unless you give a timeframe for the future liabilities. How long do you expect the United States to last for? Twenty years? 100 years? 1,000 years?
http://online.wsj.com/article/SB1000142412788732335320457812...
The key to basic income is to make the amount paid enough to live, but not to live well. The more basic the income becomes, the less incentive it creates not to work. In addition we have more people who want jobs than there are jobs available in our current economy. We can tweak the numbers without wrecking the whole system.
If your choices are "30 years from now, I'll have to support myself" or "30 years from now, I'll have to support myself and 2 unemployed kids living with me", what do you pick?
I think the problem might solve itself anyway. What old people will need in the future (as they do now) are goods, services and care (they'll need food, shelter and medical care). Traditionally, kids provided these to their parents in their old age; who grows their own food anymore? With all the increase in automation we're seeing, old people need their kids less and less, if someone else gives them food and care anyway.
tell us about your credentials as an economist
"we're broke" thinking is what causes the http://www.lostoutputclock.com/ to keep on turning, and that lost output is the health and welfare of our citizens.
Austerity mindset has had catastrophic results in Europe, and it starts with the assertion that "we're broke" or "we can't afford it", both of which are completely untrue as far as the U.S. is concerned.
Let's use 150,000,000 instead and pay them a basic income of $20,800 per yr ($400 per wk, $10 per hr). That's $3.120T with a "T", just south of scheduled 2013 U.S. federal expenditures of $3.803T -- with a $900B deficit.
A BI would double federal expenditures. Honestly, how likely is it for a guaranteed basic income to pass both houses of Congress and be signed by the POTUS in the next 5, 10, or 25 years?
In addition, "higher taxes for those with above-middle-class incomes" to balance out the expenditure is an almost universally quoted corollary of BI. Citing the cost of BI without the obviously necessary offsets isn't constructive.
Nevertheless, as you point out, it would necessarily represent a massive expansion in federal spending: on the order of 50% or more.
That is not a lot but hardly qualifies as slave labor.
If only you could create machines that put all of those people out of a job the world would be a much better place....
http://work.chron.com/national-average-income-garbageman-664...
Many people do not have the same kind of options.
But aside from that issue, I think a basic income is the only truly fair way to operate a fiat currency. We know a few things for sure, and one of them seems to be that a small amount of inflation is good for an economy.
One way to inflate is to print money, and the way we do distribute "new money" in the form of debt is essentially a regressive tax. Much fairer would be to give everyone the same amount in cash form.
This system would be so simple it would prevent a lot of the abuses and favoritism of the current system. Imagine if the inflation rate were fixed; say a 2-3% increase in money supply each year, guaranteed, distributed equally among all citizens. It's really hard to game a system like that.
And that's probably also why it's not being seriously discussed in political circles. What's the advantage to politicians?
Forget "capitalists," this kind of thing is the worst nightmare for everyone who is currently a winner in the current system. If I were to propose to devalue EVERYONE's wealth by 2-3% a year so that I can distribute an equal amount to everyone, I could expect a huge fight from anyone with any accumulated wealth.
But as for me, I can't think of a more fair and humane way to operate a system of money.
> But aside from that issue, I think a basic income is the only truly fair way to operate a fiat currency. We know a few things for sure, and one of them seems to be that a small amount of inflation is good for an economy.
It is not clear that a small amount of inflation is good for the economy. Also alternative montary transiation mechanism are not really unfair in any meaningful way. Also inflation is driven by expected montary growth, if the central bank has a credible target the would have to do very little or nothing to reach that goal.
You can not fiance any goverment programm by montary expention. Exept when you increase the speed of expantion but thats a bad idea.
Also giving money directly to people as a montary mechanism has a huge flaw, if you overshoot your targed you can not go back easly. The Central Bank buys and sells bonds/stocks instead of dropping money from airplanes because the must have a way to get money out of the system again. You could of course do that by equally taking from everybody bank account but that is not something goverment should have the power to do.
Also having 2/3% inflation does absolutly not mean that everybodys wealth is now 2/3% less.
I would really, really suggest to to first understand some montary theory befor you come up with your own montary system, its harder then you might think.
The current method of injection of money into the economy via debt is broken, benefits mostly banks, and requires that a percentage of people continually go bankrupt due to lack of available cash in the future.
Basic income is an alternative means of monetary expansion that would fix this.
Not that you have to inflate with basic income, you could simply redistribute wealth. But that requires people decide who takes how much from whom, and is ripe for favoritism. Inflating via basic income is the most egalitarian method I can think of.
Sorry where did you come up with this? The CB can buy any asset with newly created money, this includes bonds. How does this in any way require a percentage of people going bankrupt?
If you really belive that the amount of cash in the economy is bound to goverment dept and that leads to a lack of cash I would strongly suggest you pick up a book on montary theory because that makes absolutly no sence.
> Basic income is an alternative means of monetary expansion that would fix this.
Have you even read what I wrote?
> Not that you have to inflate with basic income, you could simply redistribute wealth. But that requires people decide who takes how much from whom, and is ripe for favoritism. Inflating via basic income is the most egalitarian method I can think of.
Again. Have you actually read why montary transmission is not done in a direct the people way? Its not like you came up with something new, the idea was around but its simply not workable because its a one way transmission. Its like you are saying that if a ship has to turn to the left its okay to have steering wheel that can never steer to the right. What happens if you steere to the left to much for a time, what if you have strong current from the right (witch in this analogy would mean for example a change in money demand).
If you really want BI, and to it in a natural way. Make one basic tax, flat or prgressiv does not really matter as long as it is one clear function and stop any exeption people can take (alternative is a consumtion tax that applies equally to everything), and set a number of BI you want to pay out.
Montary policy should just be conducted in the usual way to hit its target, your big error is to assume that if the central bank has a 2% inflation target it has to print money, look at australia they have relativly high inflation but the montary base is very low. The market ajusts to your target and if you have a credible target you dont actually have to print any money.
Ex-cons in particular will be in a much better situation as far as we're concerned. There's no constant stress of being expected to find a job in a society that doesn't want to hire them. More importantly, there's less incentive to steal from one of us if criminals have an easy backup plan. People won't have to fake disability or become welfare mothers either, saving society a lot of money.
There are always unintended consequences, but 100% of them aren't bad. A BI will save a lot of money just by eliminating some of the perverse incentives of the current system. It won't necessarily destroy the work incentive either. As the OP pointed out, we'd get a situation where the only people who apply for a job are people who really want them. A government income doesn't destroy natural talent, interest or ability. We could end up putting ourselves into a situation where jobs are things people enjoy moreso than we do today.
There is probably some level of income at which it would be true. If Germans got €5,000/mo, labor-force participation might be lower. But that is not what people are advocating.
Now, that would put a bit of hurt into the reserve army of labor, as the article mentions...
That said, there will be a growing unemployed class, and many are are already perpetually on government subsidized programs such as housing, etc. The question of whether this is worse than a negative tax is unclear.
What IS clear is that capitalists will want people to remain consumers, even as they automate everything. So redistributing money to them by taxing the machines is inevitable. The real question for me is, what will happen to all the restless, disaffected people whose services are no longer required, and whose blogs are rarely read? Especially men.
He does not actually make a good arguments about BI, he has some basic wellfair principly and talkes about them, without actually going into the exact idea of a BI.
He makes some general statments about wellfair and a particular implmentation of wellfair. Also he makes a typical error that he makes all the time, he compares to some optimal system and not to the current system.
I really dislike that Rothbard is the Anarcho Capitalist that is best known.
But the hole point of BI (as I understand the concept) that it does not matter how much you work, or how much you earn. You just get BI and from there on just let people work, its not BI or work, probebly both.
And let's see what we have: "A BI breaks with a fundamental principle of the welfare state. This, wrote Beveridge in 1942, is "to make and keep men fit for service.*" One function of the welfare state is to ensure that capital gets a big supply of labour, by making eligibity for unemployment benefit conditional upon seeking work. BI, however, breaks this principle.In its pure form, it allows folk to laze on the beach all day."
Okey dokey now. The welfare state is a product of the voters, not the result of one particular report in the 1940s in the United Kingdom. I can quite assure you that the voters were not interested in "providing labour to capital". They were interested in being compassionate to their fellow man, just as they were in the States. The welfare state is a lot bigger than wartime England. If anything, the modern welfare nation has its roots in the late Victorian period, as large groups of people realized that they were being significantly mistreated by the system.
This is an important point, because if you miss it you miss the rest of it. The social safety net, as most voters understand it, is to provide a lift up to those in need, and some sort of permanent assistance to those who are incapable of leaving their present circumstances. This means that any welfare state has as its primary mission the determination of the difference between those who are temporarily downtrodden and those who will not work, either because of physical or attitudinal reasons. Voters feel differently about these different groups of people. Therefore the policies towards them are different.
"capitalists, who want a large labour supply" -- no, capitalists want to trade stuff. Sometimes, like in the 1800s, this required a large labour supply busy as beavers in the sweat shop making widgets. Sometimes nowadays it might involve really expensive robots and 5 laborers. Or 3 web programmers and some space on AWS. These old ideas of capital and labor are dead. Please let them rest in peace without digging them up so often.
Minimum wages and basic income policies all do the same thing -- raise the floor at which most folks can enter into productive trade with others. This raises prices and increases unemployment. These kinds of ideas sound great. Who wouldn't want $25 per hour wages and guaranteed income for all? But all you'd end up with is $15 hamburgers and $34 gasoline. You don't do anything but raise the table stakes for people, like certain homeless, just don't want to participate in society. It increases poverty and suffering. Counter-intuitively, it does not make things better.
People need to pay special attention to those ideas which produce an emotional gut-feeling of "hell yeah! Why haven't we done that?" There's usually a really good reason that does not involve economic theories from the 1890s.
I've read Chris Dillow's blog for a long time. If you scratch away the Marxist sheen, which some people will find toxic at first glance, he has a few basic themes which are pretty hard to argue with:
Modern capitalism has failed to keep everyone employed. It may have helped countries out of poverty but there remains a persistent and growing underclass.
Most subsidies to the poor end up directly in the pockets of the rich. i.e. rent accounts for 50% of the income of people on welfare.
The poor are statistically less happy i.e. Frank Gallagher maybe pissed up all the time and maybe happy, but most people are not.
The stability of corporate entities is overestimated. Most companies have the life expectation of a forty year old man.
Managerialism is a failure, and an unhealthy obsession of the modern left.
Whether you agree with the Marxism bits or not he is generally an interesting read.
I try to be very careful about bashing things on HN -- it's too easy, and everybody does it. If I implied the author was somehow generally incompetent, I apologize.
He's just smoking crack here. Whatever his merits as a columnist and journalist, in my opinion he's out of his depth on this topic. I also appreciate your providing his credentials. Since my comment was on this essay and not on him, it doesn't make sense to respond to that information in one way or another. The last thing I want is to start some kind of discussion on Dillow the person. My remarks were entirely about the concepts and structure of his argument in this one essay (along with an observation about the use of the word "capitalism" in general) I found the material off-handedly shallow, ill-conceived, and not very well thought-out.
Im not sure how you would know that. Depends on your defintion of "modern capitalism". If it is how current western states work then sure not everybody is employed. I would however argue that in a system without minimum wage, wellfair, unemployment insurance, retraining programmes ... unvoluntary unemployment would be very, very low.
Now note, Im not making a value jugment here.
> Most subsidies to the poor end up directly in the pockets of the rich. i.e. rent accounts for 50% of the income of people on welfare.
Well, of course it does. Do you imagen a underground economy of poor people or something. Most money is spend on things owned by large cooperations, walmarkt, mcdonalds and simular.
> The poor are statistically less happy i.e. Frank Gallagher maybe pissed up all the time and maybe happy, but most people are not.
It depends on who you ask. There is quite a bit of research but it all has the fundmental problem of measuring happyness. Asking people if they are happy does not really make sence when you think about culture or signaling. So yes there is research that suggests there is a general positive corrulation with wealth and happyness but there is also research that suggest that after some level of wealth you stop getting happier. Some research suggest its only importend how rich people you interactive with are.
> The stability of corporate entities is overestimated. Most companies have the life expectation of a forty year old man.
Yes.
> Managerialism is a failure, and an unhealthy obsession of the modern left.
Agree. There are much more fundamental problems in the economy then wages of managers for example.
Though I agree that there are people who can work but won't work, I think this is overestimated. This is a point of principle hardly worth arguing.
I'll take you up on your response to the expenditure of the poor ends up in the pockets of the rich.
The point is that the poor get "blamed" for needing this money. The market will allow the price of a piece of land with some bricks on it to increase due to demand. But clearly the market can't magically create land.
I think that people who feel that way generally overlook the role of housewives in society. I don't know if it's still current, but I recall a few years ago seeing estimates that ~10% of all women in America were unemployed, by choice, for reasons of home-making, or whatever the most politically correct alternative of 'housewifery' is (not trying to be inflammatory, I genuinely don't know).
As America has a slight gender bias towards females, that means that ~5% of the population is willfully unemployed. Unemployment is, what, 7% right now?
Also, yes, I'm well aware that employed does not negate underemployed, which is where I really feel that America is suffering right now, but we're just talking about employment figures.
The problem is people that can work, but dont because the gain of working is not big enouth to overcome the lost of safty net payments.
Well Cowen is quite on his own with this possition and even he is arguing that it will pick up again. Read the last chapter of the great stagnation.
Also just having a economy that doesn't grow doens't really have anything to do with jobs. You can have full employment in a economy that is shrinking. The question is about laber market equillibrium, if wages ajust downwards eventually you will have full employment.
> The point is that the poor get "blamed" for needing this money. The market will allow the price of a piece of land with some bricks on it to increase due to demand. But clearly the market can't magically create land.
Well the market can creat land, but the market can creat any natural resource but that does not mean every resource becomes more expensive all the time.
If rents get bigger somebody will have the idea to nock down a small building and build a bigger one. Also the notion that there is a lack of land is strang, specially in america, there if tons of land that is very cheap its just not where most people would want to live.
The market can not creat land but it can creat living space.
I'm pretty sure China's GDP disagrees with this premise. A lot of stuff needs to be manufactured, constructed, etc - i.e. manual labor.
Please stop pretending software is the only industry in existence.
Can you elaborate on this? Because it looks to me (only minimally educated in economics) that minimum wage and basic income work in completely opposite directions here.
With a minimum wage, a person may be willing to do some work for $X, and another person may be willing to hire him to do that work for $X, but the law prevents them from entering into an agreement to actually do it. Thus, anyone not able to produce at least as much value as the minimum wage simply does not work at all.
With a basic income, you no longer need a minimum wage. If a person is willing to work for a penny an hour, let him. The floor drops, not rises, because people can engage in very poorly-paid work if need be, and still be able to survive. A person whose labor is only worth $2/hour won't have a job today, but could very well have a job in a system with a basic income.
Did I miss something?
This sounds like a huge win for mankind in general. It seems like it would be extremely difficult to get there from here, but if software and robots do indeed have the capacity edge out traditional scarcity, it looks like we should start planning the trip.
If I'm selling apples, I'm selling them at whatever the market can bear. Beats me what that is. I label the price 1-for-a-dollar, and they sell out. So tomorrow I charge $2. And so on. There is no certain "price" -- price is something that's determined by the reaction of the buyers to the offers the sellers make.
That's the way it is with everything: food, rent, insurance, car repairs, drugs, services, and so forth. Everything is negotiable, and it's all dynamically determined. So if everybody in town now has an extra 10K -- or even if the poor people now have a lot more free cash, then my apple pricing experiment will yield a higher result. So I'll charge more. I'm not trying to screw over anybody, that's just the way pricing works.
The only thing you get with giving everybody a new floor for the amount of cash they have is a new floor for how much the cheapest items cost.
This is tricky to see at 5-10K, because our minds don't take into account the thousands of tiny transactions each person makes in a year and the very small amount of difference it would make with each one. So just pretend that it's 100K, or 500K. What would happen?
And that's just pricing pressure for purchasing. The same pressure would exist for employment, dramatically increasing unemployment.
It just doesn't do anything, except cause economic chaos, make all the dollar figures higher for everything, and increase unemployment. And punish those folks who don't want to participate in society. That's not a lot to be proud of.
No, stop pretending that labor supply is adjustable outside some narrow range. Wage earners at the bottom don't withdraw from the labor force in order to help those left in it earn a higher wage. They work for less, until a floor is reached. Then they work another job, driving wages down further, unless there are none, in which case they eat less. And when there are fewer jobs still, they subsist in other ways (charity, crime), or fail to subsist. Almost no one is moral enough to starve.
Did people like Milton Friedman and Friedrich Hayek, who were proponents of a basic income, overlook this basic point, or is it in fact you who "doesn't understand capitalism" and is "smoking crack" (your words).
(I don't mean to be hostile, but your tone really doesn't help your argument.)
More demand can raise prices, that is fair. But implementing a BI does not necessarily mean that we are getting rid of capitalism, a system that tends to keep the costs of goods close to the cost of production. Also, it's worth noting that BI would most likely replace current welfare systems, so the 'net' amount of money that is put back into the system would be smaller than you are probably expecting.
To continue with your apple market example, you could try to charge $2 or more per apple, but pretty soon other people will realise that they can employ their own staff to run an orchard and deliver apples to the same market at a marginal cost far less than that, and competition will drive the market price back down.
With a basic income, people's basic needs would be met and any additional income earned would be a supplement. If they agree to work for $1 an hour picking apples, then that is the price the market will bear for that particular skill and the price for a single apple will be reflective of this.
A minimum wage on the other hand works in the opposite direction. If it is set to $50 an hour, then sure, the costs of apples, along with most other things, will skyrocket, but there will also be a huge amount of deadweight loss as people simply choose to forgo employing others for many skills in the first place.
Unless I reinvent the market and brainwash you that my Apple is like no other and it's worth selling your kidney for it. This way I'll grow my Apple company to record high stock prices and I'll sue any other kind of vegetable sellers. You'll think you'll figure out a way to beat us in the end, but the truth is that pretty much everything (even the Jobs) will be ours eventually and everything you ever dreamed to afford will be ours to give.
Taking your apple-seller analogy, if you map that onto the labor market, then the apples are job-seekers, and when an apple is purchased, that's somebody getting a job. Unemployment is left-over apples that you don't sell.
I understand that with a bunch more money floating around, the price of your apples will increase. That's basic inflation. But what you're saying is that not only will the price increase, but it will increase so much that you will end up with a lot of leftover apples you can't sell.
But why? The price isn't set by magic, it's set by you. You'll make the most money if you can sell more or less all of your apples, so you'll set a price that results in people buying them all. That price will likely be higher than it would be in the world without a basic income, but you're still going to sell all of your apples. If you don't, you'll lower your price until you do.
I don't see why labor would be any different. Yes, prices (wages) probably get pushed up there. But where's the pressure to push prices up to the extent that a large number of people can't find jobs? Just like the apple-seller, people make more money when they set a price where they actually find work. If a lot of people are out of work at $X/hour, then those people will generally accept wages at $(X-1)/hour, or less, until they all manage to find jobs. The minimum wage puts a floor on this, but I don't see how the basic income does.
I can see an increase in voluntary joblessness, where people's labor can only produce a small amount of value, and they don't see the point in working for that small amount of value when they can stay at home and watch TV and survive on their basic income. But I don't see how there would be an increase in involuntary joblessness a.k.a. unemployment if you created a basic income and simultaneously did away with minimum wage.
Basically you end up with a lot of people unemployable because they don't have the necessary skills needed and thus are not worth the salary for even entry level jobs.
As society requires more and more skilled people the bar is raised and the number of people who are unable to land a job because of inadequate skills are rising.
Add to that that automation is an even bigger competitor than China and you have all the ingredients for an explosive cocktail of demise.
These ideas of "helping everyone and feeling good" fail to understand human behavior. Basic income would reek havoc on the real estate market as people (of the trashy uncivilized variety) would try to move into nice neighborhoods with their new funds that they didn't work for and earn and "fuck up the neighborhood" basically.(This already occurs with section 8 housing) Another consequence is that rent and housing would rise substantially.
The price of a home isn't just determined by the value of the home itself but by the highest price the local market can afford to pay. People who are not in real estate don't understand this.
The flawed assumption to this plan is that all or most poor people are poor because they just haven't been given enough chances or nice things. This emotional ideology usually belongs to young collage students who have never worked with the public and seen the real asshole-ery and primitive baboon-ism of humanity and believe everyone is a nice person. Or adults who grew up in their parent's nice neighborhood miles away from reality. I know you're going to think I'm the biggest most evil asshole in the world but after working with the public (everyone in my family does) NOT a cool startup in a collage town I have to tell you the truth: Quite a few poor people (not all of course) are poor for a reason. Sitting down and talking with them will usually give away these reasons immediately. They don't bring value, they can't hold jobs because they have poor impulse control, they're short term decision makers, they don't want to educate or better themselves, they're hyper-sexual, were born with a lower IQ, they can't commit to jobs they do have, they smoke pot like crazy. Basically they don't have nice things for a reason. And every time you try to give them nice things they ruin them and don't appreciate them.
I used to be one of those "help everyone and make the world happy and good feelings and gosh I just wish we could all hold hands". I have completely left that ideology as it's a fantasy. A lie. These smart intellectual folks with ideas on how to help the poor completely forget to include the above mentioned human problems. All they see is numbers and an equation and they want to balance it all out on the table. But it never works like that in real life.
I know during this recession a lot of people who deserve nice things have had them taken away, but any attempts to correct this through government, welfare, and basic income is just going to go in the wrong hands.
There are devastating repercussions for paying people to do nothing or giving people something they haven't earned. Let's stop chasing pipe-dreams because they "sound nice".
It won't make anyone rich but it will go great lengths to give some security to the most vulnerable of people.
We're hardwired to have a produce/consume balance.
-The safety net is already established. Giving someone something from birth ingrains in them that "this is just the way it is" -- giving them nothing and then turning the switch on results in disaster (see: professional athletes, lotto winners, etc). A catch-22 situation. Perhaps not insurmountable over a long enough period.
-Very low corruption, which in my experience is a function of organizational size. When people think the cards are stacked against them, right or wrong, they tend to opt out. An org the size of the US will never be low-corruption, imo. The reward is too high, and the risk continues to be too low.
-(off topic to my original point) Spending+military. The Nordic model has an obscenely high tax burden (40-50%) which is straight-up untenable with a military spend like the US's. We also have, because of our vast geographic size, a number of infrastructure we have to dump tax money into.
edit to add: also, tax-paid ("free") education, so the barrier to producing is much lower. Think about it, you're born into a society that says "we're going to make sure you have enough to live, always. Go out and do your best", then nature is usually going to take over and you'll do your best at something useful/productive. Do the same in the US and 1/4 of those folks will be using their stipend to pay medical bills, 1/2 will be tapped out from education, and 1/4 will straight up opt-out. It could work, but it'd require reworking education, healthcare & the military. Never going to happen.
You live there, it works for you, but you don't see the differences in our locations which is why you keep pushing it. See- https://news.ycombinator.com/item?id=6005734 Hey I'm glad it works and you can enjoy the benefits but what works in your country does not always transfer over to others. You haven't seen how welfare programs have affected the US and the types of people (and children) they've created.
But, I'm living in an area the US would call a project. Most of my neighbors are unemployed. Not because they are lazy bums, but because there are no jobs for those who are over 50, or are uneducated, or are single moms, or ... And there are no jobs that would pay a living wage. So its easier/better for them to stay unemployed, and earn unemployment money.
The people you describe are only a small fraction of the unemployed masses.
When another human being drops out of FREE high school and sleeps around and gets pregnant you want me to reward them for that? When you subsidize people's bad decisions you will get more bad decisions. When you give a safety net for purposely being stupid you will get more of it.
You want me to pay for someone else to do nothing with their life. Think about that for a moment.
Moralizing sermons have never solved problems and never will; only actual reform work can do that. Why are you so opposed to getting your hands dirty with reforming our system?
I know we here at Hacker News are entrepreneurs and are dead set on trying 100 new crazy ideas of which 99 will fail and cost investors hundreds of millions and 1 will succeed and exit, ipo, or fizzle out in 5 years. We're so crazy we even try ideas that have already failed 12 times over thinking we're going to do something different this time. Humanity doesn't change as much as you think. You can't take the human out of the human. And this plan for giving away money or housing or food (which has already been tried numerous times) is dead on delivery.
No, but treating humans like humans gets us to behave like good humans. Even in our own country we've seen murder rates go down year by year, with few anomalies, as we've cleaned up things like child abuse and spousal abuse and so on.
Primitive human behavior used to include bear-baiting and beating children bloody for not being able to recite a Latin passage correctly. Is it any wonder that reducing that has lead to fewer people who have no real compassion?
> You can't take the human out of the human. And this plan for giving away money or housing or food (which has already been tried numerous times) is dead on delivery.
Except in all the countries where it's worked for decades, right? Is the Nordic Model a fantasy, then?
The people of a country determine the majority of its success. Not just it's laws. People from different countries, people from different backgrounds have different levels of civility. It may be cultural (which can be changed) or it may be genetic (which cannot be changed unless weeded out genetically). This is why I'm saying what works in one country won't automatically work in another.
I have absolutely no time for racism. BTW, I'm American, born and raised.
I live in Romania and here we always have had all kinds of immigrants from all around us. Maybe there were inter-ethnic tensions but the environment was always civilized, and the minorities integrated themselves (mostly) as a part of society. ...well, with one notable exception - the gypsies. The rest of the Europe are blaming us for not putting enough efforts on their education and integration but they do not seem to have an idea who the gypsies are and that is especially irritating. There are all kind of... let's say "peculiar" people in this world with whom it is difficult to accomplish things, but many of us are not willing or prepared to acknowledge this.
If the US funded planned parenthood more, legalized abortion in all 50 states (which women already want, see below), turn off welfare for pregnant women who cannot provide for their children but got pregnant anyway, and subsidized contraception to make it affordable beyond excuse, the kids of which you speak would not exist.
I know I sound like a cold android and YES you may call me an asshole but that's life, that's nature.
Every human has a right to reproduce but is responsible for taking care of their offspring. I am not responsible for funding YOUR children's existence. Civilized people already live this way:
"The biggest reasons why women have abortions are: that having a child would interfere with a woman’s education, work or ability to care for dependents (74%); that she could not afford a baby now (73%); and that she did not want to be a single mother or was having relationship problems (48%)." - http://www.guttmacher.org/pubs/journals/3711005.pdf
Currently students earn grades A-F. From now on we should have a 'basic grade', all students will be given a 'D' - a basic passing grade. You get your 'D' even if you don't even go to class. and since don't go to school well we might as well just give them the diplomas too...
I would like to see the idealistic college students and professors apply this concept to their real world and see how it works out...
The idiocy of this becomes obvious in this context.
If students with higher grades got better food, chair and transport (that's what happens in basic income), you would probably see some students trying their best.
On-topic: If you make "D" the default, when the reality sets in, the new valuable scale becomes A-C (nobody will care or consider one's graded studies if those were "completed" on D "pass" grades). The same is with free money - the amount of pension money will shortly become meaningless because of inflation.
http://www.bignam.org/BIG_pilot.html
Key findings:
contributed to a significant reduction of crime.
reduced the dependency of women on men for their survival.
The criticism that the BIG is leading to increasing alcoholism is not supported by empirical evidence.
... Note that I am not suggesting that a basic income is guaranteed to work, just that it is worth looking into. Further experiments will reveal the truth, not prejudices about the poor.
Put in other words, what we need is policy based on evidence, not opinion.
We, right now, have a permanent parasite class at the top of society and that's worse. They can treat labor like shit because labor has no other option, and this surplus generated by desperation makes those at the top extraordinarily rich.
BI is the only solution I can come up with that makes sure labor is respected.
However, any BI program should be tied to per capita GDP. Thus, if it actually does have a negative effect on society (which I doubt it will) the payments drop and reverse that effect.