What can be done? I have seen very little on this subject. Guaranteed basic income is probably a step in the right direction. At least such a system offers a real opportunity to drop what you are doing currently and sincerely try for a new career.
A life boat is only so big.
I know that you've got a somewhat similar background story as me... you/your family left Bangladesh for a better life. You were lucky in that you were privileged enough to have the means to get out of that place -- you know that a good half of the country did not. So, what about the people still there... surely you care a non-zero amount for their welfare. Right? We live in an interconnected world. Our actions, business decisions, political decisions have an effect on the entire world -- sometimes it's good, sometimes it isn't. An argument could be made that there are people out there in the world who are not doing well because of something that our country did. Right now you have Obama on a tour trying to drum up support for a war. His main reasoning is that America is the police of the world... 400 children were supposedly gassed, and so we have to step in to stop this injustice. There are injustices of different kinds being perpetrated in other countries... what makes them so different from Syria, that they don't deserve our help?
I can understand prioritizing ... first comes the welfare of our own American citizens, and then the rest of the world... but completely ignoring the other world seems like a cruel and selfish thing to do. How is this not obvious?
There is nothing empowering about the concept of "global citizenship." The marginalization of nation-states just means that there is truly nothing to stand up to the trans-national corporations and global capital owners. There is nothing to stop everything from becoming one big race to the bottom.
I think there is, I think it's a beautiful thought. It seems to me that the big challenges for the centuries ahead include problems with the planet... like global warming, pollution, ecosystems not working out right. Solving these problems will require intimate coordination among many big nations. If we start acting with greater cohesion, if we understand that global warming is as much of a concern (or should be) to a guy living in Arkansas as it is to a guy living in China, we can probably solve these problems more effectively. Mind you I'm not advocating erasing all country-lines right now, I just think there's probably a good balance between the two extremes. We probably weren't ready for the transition to happen a few decades ago, but now we are a little bit. I think/hope this continues.
> The marginalization of nation-states just means that there is truly nothing to stand up to the trans-national corporations and global capital owners.
As if that's not the reality right now...
- Education for all: To increase your productivity / fulfillment
- Healthcare for all: To keep you productive / happy for as long as possible
- Basic Income for all: To remove the risk that you can't earn your "living credits", thereby allowing greater risk taking and social beneficial / poorly compensated work to be paid (like volunteering, etc.)
I'm not even arguing that these projects are good ideas, just that they're fundamentally from an entirely different political and economic philosophy than the actual system that existed in the Soviet Union.
The goal of basic income (the basic part is very important; giving everyone the median income would be a disaster of the kind that you're thinking of) is to PRESERVE the ability for supply and demand to function correctly. Currently, the success of an idea is a function not only of its quality, but of its quality and the wealth of the parents of the person who thought of it (the US has some of the worst economic mobility in the developed world).
I honestly have no idea at all where you thought I was making this point. The entire premise behind my comment was the preservation of the ability of the market and the profit motive to direct capital (i.e. capitalism), and I drew an explicit contrast to Soviet-style central direction of capital. "The whole point of free-market capitalism is that.... there is no such thing as efficient capitalism"? What?
Efficient capitalism is capitalism in which the flow of capital (by free markets) to where it will create the most wealth is unimpeded. Every time this flow is blocked or diverted by some external factor, that's a loss of efficiency. If some factor that was irrelevant to wealth creation determined that people born in the month of March (or people of a certain race) were not allowed to go to good schools (even if their parents can afford it), that would be a (somewhat silly) loss of efficiency in capital. "Deciding" that people born to middle class or lower parents don't deserve the kind of education that's increasingly critical to survive in the modern economy is basically the same thing in terms of its effect on wealth creation (though of course it's more palatable ethically).
All too often, people conflate capitalism with "government that's as small as possible", when it's blindingly obvious that this couldn't be farther from the truth. For an obvious example, contract enforcement is an essential for markets to function. Responsible regulation is another case (A company dumping toxic waste into a town's river and causing cancer among its citizens is a case of the company's capital direction decision-making process not being exposed to all the costs to the economy; the company could theoretically destroy more wealth than it creates for society).
To get to my point, a big part of America's historical economic dynamism (aside from the fact that we've got probably the richest geography in the entire world) was the fact that we didn't have class systems as entrenched as Europe did. Whether your idea was successful was (more) dependent on whether it was _good_ and would create wealth, as opposed to how you knew or how you were born. Arbitrarily closing off the class of potential entrepreneurs to people who are "high-born" obviously reduces the potential for new sources of innovation (and thus wealth generated for society). Being able to afford a private school or being able to afford to live in a district with a good public school (where you pay your "tuition" in the price of your house) is the modern equivalent of being "high-born" (it's certainly much more flexible than strict class systems, but it has much the same effect).
As far as healthcare and basic income, this should be particularly familiar to anyone reading HN. The idea that your healthcare should be tied to your employer is insanely stupid. This system very clearly incentivizes being an employee over being an entrepreneur which, again, is not the way to have a healthy, innovative economy*. Every time a person is prevented from building a startup solely out of fear that their kid might get sick and they won't have good healthcare, that's a loss of efficiency.
A similar argument trivially applies to basic income. The US (in contrast to our formerly deserved reputation of the probability of rags-to-riches stories) has worse economic mobility than most of the developed world. It's absolutely pathetic that we've gotten to this state given that this was a big source of our historical economic dominance.
TL;DR: Efficiency in capitalism is the unimpeded flow of capital to where it is most needed. This is best achieved by a meritocracy of ideas. Anything that affects that flow negatively is an inefficiency. Healthcare, education, and a basic income have nothing to do with the government directing the economy's capital but rather with the government ensuring that capital can flow correctly.
Who decides what is 'most needed'? What about 'wants' versus 'needs'? Are they chopped liver in capitalism? Where do you draw the line between a want, and a lesser need, and a most need?
>Anything that affects that flow negatively is an inefficiency.
What constitutes "negative" versus "positive" "flow"? Are you talking about net capital flows? Just the total amount of dollars that are being moved? Is this the same or not as actual value created? How do you measure such a thing?
>Healthcare, education, and a basic income have nothing to do with the government directing the economy's capital but rather with the government ensuring that capital can flow correctly.
Again, what is "correct" flow? Who decides?
Rolling back a few paragraphs:
> Every time this flow is blocked or diverted by some external factor, that's a loss of efficiency.
What is an 'external factor'? Last I checked, the economy is everything.
Lest these seem nit-picky comments, I'm trying to isolate some questions I have about your fundamental understanding of economics vis a vis mine. It's possible I'm missing something, since I have very little formal econ training.
I almost feel like you're deliberately misunderstanding me. The only places you're disagreeing with me are _the places that I agree with you_. I am saying that capitalism is the best way to allocate resources, not centralized distribution as in Communism. Instead of trying to figure out where you're misunderstanding me, I'll start from extremely basic economics. I'm sure you know some (all?) of this, but just bear with me as we're clearly talking past each other here.
The goal of economics is generally to maximize utility. [What is utility?]
Utility is best (and simplistically) described as "what people want". This is the end-all and be-all of what economics strives for. I'll be using "wealth" and "utility" interchangeably here. Note that 'wants vs needs' is irrelevant, since a person's "wants" are generally considered to be a superset of their needs (barring a few exceptions, like children or severe cases of mental disability).
[Who decides what is 'most needed/wanted'?]
Each person decides for themselves. The person who knows what I want is me. I express this preference by buying shit. It's as simple as that. No one needs to "draw lines" for every want and need, because (again), I'm not talking about fucking Communism (in which, theoretically, all resources are explicitly and centrally allocated).
[How does one "create wealth"? Isn't one person's gain necessarily another's loss?]
No. In order for a consensual transaction to take place, both sides (by definition) must be willing participants. Barring asymmetric information, etc, this means that both people are better off. If both people are better off, a net gain in society's wealth has just occurred. This is how the poorest person in today's society is better off than the average person 500 years ago: the accumulation of half a millennium of wealth creation across society.
[What constitutes a "negative" vs a "positive" flow of capital?]
Using the above definition of wealth creation, capital should flow to the places where it creates wealth (remember, this means more people will get what they want). A negative flow of capital is to a place that either creates wealth extremely inefficiently, or destroys wealth.
[How can wealth be destroyed or created inefficiently? Didn't you just say that every transaction creates wealth for both sides?]
In a simple transaction, this is always true, since a participant would not willingly participate if he were not going to be better off. In more complex transactions (basically everything in the modern world), this isn't the case. If you dump toxic waste into a town's river to save on disposal costs, and you cause a spate of cancer cases across the town, the cost that is being borne by the townspeople is not reflected in the transaction. Neither you (the seller) nor your buyer knows (and cares) what happens to the townspeople, and thus that cost is not reflected in the supply/demand graph that leads you to complete the transaction. This is known as an externality. The people bearing the costs are not the people whose incentives matter to the completion of the transaction (the townspeople have no direct control over your manufacture or the price the buyer pays you). This kind of trade destroys wealth when the costs borne by the newly stricken cancer patients are higher than the savings from avoiding proper waste disposal. In that scenario, the "wants" of the patients have been violated to a greater degree than the "wants" of the buyer/seller in the transaction.
[What is an 'external factor'? Last I checked, the economy is everything]
I don't blame you for not getting this one; Externality is a commonly used term in economics but probably not one you'd hear without formal econ education. With that association in mind, I thought it was clear that I meant "external to the parties whose incentives determine the parameters of the transaction". For example, see the above paragraph's description of the consumer and the toxic waste-dumping producer.
TL;DR: No matter how many times you keep trying to twist my comments into advocating central planning and Communism, the fact remains that every single thing I've said is in support of capitalism in its purest form. Preventing market failures is one of the things that's necessary for capitalism to work. Defining free markets as "free from regulation" is as stupid an economic policy as Communism is. Free markets means that capital is free to flow where the most wealth will be created, and wealth creation is a universal goal (There are disagreements on the degree to which it should be sacrificed for humans rights concerns, but that's another subject entirely).
Market failures are cases where purely free markets fail to deliver the best outcomes (as defined by wealth creation). http://en.wikipedia.org/wiki/Market_failure
The advantage is that capitalism pits companies against one another, and the best ones win.
I suppose Nations too, compete against one another.
how much healthcare? Which healthcare 'makes you happy'? Let's say a clever biologist comes up with a machine that keeps you alive indefinitely, no matter what, but the cost is that it burns 100 liters of oil an hour (and it has to be oil, because of the carbon in oil). Do you have a right to this healthcare? Who decides?
That being said, early reports have been extremely positive: Variously, crime rates have plummeted, education has risen sharply, child malnutrition has dropped, new startups have skyrocketed, community income has risen by a substantial amount more than the grant amount, etc.
Given that anyone with a rudimentary knowledge of economics understands that a basic income is at least _theoretically_ sound, the (few and flawed) data points that we have so far are slightly encouraging.
EDIT for source link: http://en.wikipedia.org/wiki/Basic_income#Examples_of_implem...
This is a genuine question, I'm a poor student of history.
I like to look at the very real possibility of self driving cars and trucks. How many truck drivers are employed today? They will be made obsolete very quickly once self driving trucks hit the market.
Where are they going to turn for work? Are they going to suddenly become a programmer, writer, graphic designer, etc? I don't think so. Manual labor jobs were much more interchangeable than labors of the mind.
The survirvours inherited a more productive society.
It certainly was a tough period (hardly alone in that respect!), but the romanticised images of starving children chained by ankles in sweltering mines, whereas they had happily capered about their sunny villages all day long prior to the revolution, are way off [0].
[0] http://www.bloomberg.com/news/2013-03-19/why-workers-welcome...
What this means is that people need to move to whatever is next, and those who don't, or more importantly can't, will be left behind. But what's next? During the industrial revolution, people moved to cities to go work in factories. But what's the way forward today? Arguably the key difference between today and back then is that the industrial revolution caused a change in where labor was demanded, while the automation revolution reduces the need for labor across almost all sectors of the economy. Yes, some people need to program the machines, but not that many. After all, during the industrial revolution it wasn't mechanical engineering that offered job opportunities for the masses.
To me, the obvious "what's next" is this: those whose jobs are obsoleted by automation personally service those whose jobs aren't. It's possible that the future of America is 2/3 of the population acting as nannies, personal assistants, etc, to the 1/3 whose jobs haven't been automated. I bet there are a ton of people even now who would cook/clean/etc for $5/hour + board. You'd already see this in the U.S. if it wasn't for the minimum wage/welfare. What happens when automation drives the price of unskilled labor down to $2-3/hour? The U.S. becomes Bangladesh is what happens. I think it's a social disaster in the making, but I struggle to think of alternatives.
I agree that it's a social disaster in the making, but I suspect it's a real possibility.
You can make a very respectable income today in the U.S. at any of those jobs if you're sufficiently skilled. Certainly there are many more people doing those jobs today than there were a hundred years ago. And frankly, many of them would probably much rather be doing such a "personal service" job over their career options of decades ago.
And that's not counting plumbers, electricians, carpenters... Many of whom find it much easier to develop recurring revenue streams than your typical YC startup!
Automation is great. It helps most of those people. Just think about how much your local yoga studio or coffee shop relies on modern PoS systems for payment processing and customer tracking, the web and social media for marketing, Amazon-class logistics for supplies...
I just don't see things in such negative terms. I also don't think that today's rates of unemployment were somehow inevitable. We automated like mad in the '90's too (arguably even more dramatically than we are doing so today), and yet unemployment dropped, incomes rose and labor markets were tight from top to bottom. What's different today?
There are no vast failed commie economies left to piggyback on their recovery and imminent growth. Right before the Warsaw Pact collapse and China's conversion to capitalism, America and its allies were not doing particularly well, in economic terms.
A sudden mutation makes it so that each elephant can now only carry 30 monkeys, but also doubles the number of elephants in the herd.
This is terrible news for two-fifths of the monkeys currently riding. Some may never be able to climb back up an elephant and a few unfortunates may find themselves trampled underfoot.
On the other hand, the monkey-carrying capacity of the herd is now 20% greater than it was before. Assuming we can sort out the logistics properly, there is enough room for all current monkeys and their offspring, plus maybe a few monkeys from outside who hadn't had a chance to ride yet.
KEY: Fewer monkeys per elephant = displaced jobs due to automation. More elephants in the herd = economic growth due to automation. Monkeys = workers. Elephants = "the economy" or "the means of production".
People who tell you that automation is going to lead to long-term net job losses from are betting on something that has a very drastic job-displacement effect (WAY fewer monkeys per elephant) while having a very small effect on economic growth (few if any additional elephants). That doesn't make sense to me. The implausibly perfect technologies they tend to talk about would create a massive amount of new value in the economy, i.e. a great deal more elephants for us monkeys to ride on, even if only four abreast.
It's much easier to predict the jobs that will be displaced than the new jobs that will be created, so it's cognitively simpler to take the pessimist's side.
The displacement effect is the fact that the skill and education bar keeps getting ratcheted higher, making it ever more difficult for people to crawl onto a new monkey.
The growth-limiting effect is both intrinsic and extrinsic. Intrinsic, because with depressed labor wages there is no internal demand for more growth, and extrinsic as you run up against natural resource and energy limits.[1]
[1] I think the fact that oil is 4x more expensive than it was a decade ago is a dramatically under-appreciated reason for the tepid economic growth we have faced in that time.
That's the "very drastic job-displacement effect". We're moving into a future where elephants just don't need monkeys anymore.
Or it could cause the value of labour to drop dramatically. But whichever happens I think basic income is worth exploring, because it offers other, immediate benefits:
1) It replaces the existing needs-based social assistance with something that's less intrusive and paternal, and that doesn't leave welfare traps: working more always means you take home more and do not risk what you currently have.
2) It adds financial security for the unemployed and students, which means that more people may pursue higher education and job training. That would help people adjust to a changing labour market.
3) It makes the labour market voluntary. In order for price discovery to work properly in a market, transactions must be voluntary for both parties. If the seller (i.e, the worker) cannot exit a market because they or their family will die or become homeless, then the price (i.e, the hourly wage) will be driven to zero.
(Aside: The same logic applies to patient-pays private healthcare systems, except in this case the buyer cannot exit, which means that the price is driven to infinity. This may explain the insane cost of healthcare in the United States.)
4) Relatedly to point #3, basic income would remove the need for minimum wage laws. Currently, they're necessary because the value of unskilled labour may be less than the cost of living.
What if working would provide you with a basic income? Would it then not make sense for people working poor jobs to quit and just get the guaranteed basic income along with all their free time?
I mean, I would. But there still needs to be someone to work those jobs. Also, a lot of times people gain a sense of self-worth from doing work that is appreciated. Whether they are getting it or not, or whether it's right or not, I believe this continues to hold true.
Basic income is something you get regardless of whether you work, so there is still incentive to work - if you want anything other than what basic income (which should cover little more than food + shelter in a relatively inexpensive area) can get you.
Because this gives low-income people more power over their employers than before (they don't need to work), it probably allows you to repeal minimum wage laws, and let the wage fall somewhere reasonable.
With basic income you wouldn't have that many - motivation to work at the lower bracket would suddenly decrease.
In some states, this is evidence this is already happening: http://foxnewsinsider.com/2013/08/10/shocking-fox-news-repor...
Some facts to support your question:
"As of the latest data released on September 6, 2013, the total is 47.76 million, which is more than the entire populations of many large nations." source: http://www.trivisonno.com/food-stamps-charts
Compared to when Clinton was in office: “Caseloads declined by 54 percent. Sixty percent of mothers who left welfare found work, far surpassing predictions of experts,” President Clinton wrote in a 2006 op-ed in the New York Times. “Child poverty dropped to 16.2 percent in 2000, the lowest rate since 1979, and in 2000, the percentage of Americans on welfare reached its lowest level in four decades.” source: http://www.washingtonpost.com/blogs/wonkblog/wp/2013/06/18/w...
What is baffling is how many HNers who are apparently eager to downvote anyone in disagreement with the basic income argument and ask for counter-arguments yet fail to prove it in details (or even links) that the idea will work.
Between the fact that theory supports basic income and preliminary pilot programs provide (on-balance) cause for cautious optimism, it seems that the burden of counter-proof is squarely on the side of those saying "Of course it could never work", particularly since I personally have never seen an HN comment providing anything to back that up beyond "It's just obvious, can't you see". I haven't seen any data OR plausible theoretical explanation provided as a counter to basic income.
[1] http://en.wikipedia.org/wiki/Basic_income#Examples_of_implem...
The ideas of administering this system on a LARGE SCALE in a 'well-developed' country such as the US would probably bring many of the problems Friedrich Hayek theorizes it would.
From Wikipedia:
"It is obvious that for a long time to come it will be wholly impossible to secure an adequate and uniform minimum standard for all human beings everywhere, or at least that the wealthier countries would not be content to secure for their citizens no higher standards than can be secured for all men. But to confine to the citizens of particular countries provisions for a minimum standard higher than that universally applied makes it a privilege and necessitates certain limitations on the free movement of men across frontiers... we must face the fact that we here encounter a limit to the universal application of those liberal principles of policy which the existing facts of the present world make unavoidable."
In other words people would flock from all over the world in DROVES to secure a spot in the unconditional free money system.
On top of that, this is almost irrelevant to the discussion of basic income. This is not a problem with basic income, but simply "differences in expected income across countries". The higher expected income that the US produces ALREADY has the effect of drawing immigrants from poorer countries here, and we already have a system in place to prevent this from happening (too) en masse. This has been happening for over a century. I don't see why providing a basic income would appreciably increase this effect, or why the "flocking in droves" issue would suddenly become insurmountable when we've already been dealing with the same issue (without ruining the economy) for decades.
Note that I'm discussing economic soundness here. It's totally possible that the vagaries of the American political system may prevent a key part of any economic concept from being implemented correctly, in which case all bets are off, of course.