Comment by erichocean | Hacker News Reader

Comment by erichocean | Hacker News Reader

Eliminating taxation and implementing a basic income payed for by new money created out of thin air, pegged to the GDP for the year, is how the world will deal with machines creating more wealth than we know what to do with, without people.

It's a direct form of wealth transfer that requires zero force, no "putting people in cages because they can't/don't pay" nonsense.

For social spending, you do the same: print new money that's a percentage of GDP, and let citizens allocate their share to various social causes (police, fire, education, natural disaster relief, etc.).

As a concrete example, if the USA produces 15 trillion in GDP for the year, you could print 3.75 trillion for basic income, and 3.75 trillion for social income. The 3.75 trillion for basic income would be split evenly among the 330 million people, amounting to $11,364 annually per person. Each person would also have $11,364 to allocate ("appropriate") for various social causes.

Taxation is eliminated. Everyone is fed and sheltered. Growth in wealth is shared equally. Anarchists still get to keep all of the money they earn (remember: no taxation). IRS is gone. All of the tax-funded welfare programs are gone, but we've got plenty of money annually to dedicate to social welfare programs. People don't have to give money to the police if they care more about education. There's no need for a minimum wage, or tracking people's incomes. There's no downside (in terms of extra taxation and lost benefits) to working more. And on and on.

This is entirely doable today, at a purely technical/administrative level. Once robots are doing the work of the labor class, and 40% of the country literally has no jobs, and won't, ever—then it'll become a social necessity.

That's why the problems in this article don't keep me up at night: not only is the solution easy, it's far preferable and way more democratic and fair than what we have today.

For extra humanity, create a global currency, peg new money creation to the world's annual GDP, and do a basic and social income for everyone in the world equally, full stop.

Your idea is an interesting one. It's a radical change, and I don't have a clear sense of the unintended consequences.

This is entirely doable today, at a purely technical/administrative level.

Perhaps. But from a political standpoint, it's utopian and most unlikely in the near term.

> Perhaps. But from a political standpoint, it's utopian and most unlikely in the near term.

What's stopping us?

People excusing their lack of altruistic effort by calling any and all proposals for a better world "utopian" or "impossible".

In this scenario, the government would need to use physical force to ensure transactions are conducted through the inflating currency rather than barter or gold or bitcoin or foreign currency, etc.

That's possible, sure, but I think it's very unlikely for purely structural reasons (the best kind IMO).

Because everyone will have this currency by default, natural market forces will causes businesses to want to sell things in that currency (people have it, and want to spend it).

The currency itself is stable (tied to GPD growth, not politician's whims).

Once some businesses decide to take it (and they will, see above), then those businesses getting that income will also spend it at other businesses who accept that income, making those businesses even more successful, causing other business to also accept the currency, and so on.

And remember: everyone has some of this currency. Who is going to have it, and not spend it? I'd venture to say the percent of people flushing their basic income down the toilet is in the low single digits at best.

It's a virtuous cycle, and no force should be needed to keep it going. Think about it: who in their right mind would move to another currency that wiped out their entire existing and future wealth? As another commenter pointed out, $11K a year is like having $500K in wealth paying out an annuity. Who would voluntarily give that up for some alternate currency that makes them poor?

Even today, look at how hard it is to modify a social welfare scheme. It's not because the government has guns and the desire to use them, it's because people really, really rely on social stability.

But yes, you're right of course: like all fiat money schemes, it only works because people want it to work. IMO people will want this to work, and furthermore: it's in each individual person's self-interest that it works.

But yes, you're right of course: like all fiat money schemes, it only works because people want it to work. IMO people will want this to work, and furthermore: it's in each individual person's self-interest that it works.

Without taxation, what leverage does the government have over demand for the currency? Fiat money works because it can be used to pay taxes at the very least. With taxes out of the way, the government-issued currency would be no better off than a so-called altcoin.

There are other approaches. For example, the government could declare that certain commodities could only be purchased with the currency. Oil, for instance (and there's precedent there, too).

Personally, I think the government declaring that basic incomes will be paid in the currency is enough, but I see no reason to disallow other methods.

Another example is to do what the dollar says: this [currency] shall be legal tender for all debts, public and private.

Another one would be that banks could only accept that currency, and make loans in that currency.

There's a lot of options, but you're right: we'd need to get creative about it. As CS people, that's basically our job description and it's a good challenge, and I think, a solvable one.

Thanks for your comments, I do appreciate it. I certainly don't have all the answers.

There is no such thing as a free lunch. The taxes just become hidden in inflation instead of visible income taxes, and it becomes impossible to adjust taxes to different levels on different individuals (all dollars pay the same tax in lost value regardless who holds them or how much income they made that year.)

Since M0 is about 3.7 trillion, printing 7.5 trillion in cash would cause inflation of about 200% per year.

This would have obviously bad effects, causing people to great lengths to avoid holding cash. I think income or sales tax is the only way to distribute large amounts of money from the rich to the poor.

It could still work possibly if there was a cap on basic food costs, rent controls in place. Also stockpiling or speculation on basic necessities might need to be very restricted. A lot more regulations would need to be in place alongside the basic income to keep the economy sane i imagine.

that sounds terrible. Why not just use taxes?

Not all inflationary pressure is equal (i.e. it's not true that printing X dollars leads to Y% inflation—the kind of dollars X represents matters a great deal). In part, my scheme wouldn't cause hyperinflation for much the same reasons that fractional-reserve lending doesn't cause hyperinflation, even though it also increases the money supply (drastically, too).

It matters a great deal how the money is put to use, and why, and what limits are set on the increase in the money supply. For example, it's obvious that fractional-reserve lending would not work if the fraction was 0/100 (i.e. no reserve). Similarly, large-scale money printing doesn't work when it's arbitrary and up to political whim.

Also, a nitpick: M2, not M0, is traditionally what is used to forecast inflation.

I chose M0 because you are talking about creating hard money, which is what M0 measures. When you create 7.5 Trillion in hard money, you increase M0 by 200%. My very rough estimate is that this will create 200% inflation, because M0 is the base through which all other kinds of currency derive their value (hence the name "monetary base").

Reserve banking doesn't cause inflation in itself as long as the reserve ratio is fixed, because a given percentage increase in M0 will result in a similar percentage increase in bank reserves (M1). So it is really down to M0, which is also the quantity that the reserve bank manipulates through its open market operations in order to execute monetary policy.

>I'll also point out that M2, not M0, is traditionally what is used to forecast inflation.

That is not relevant. Forecasting inflation under the current policy regime is a completely different matter from forecasting the inflation that your proposal would cause.

My proposal would not be run under the current policy regime, and you're absolutely right: trying to forecast inflation from (part of) my proposal using M0 from the current policy regime isn't relevant. I'm not even clear why we're discussing it at all.

The theoretical and empirical relationship between changes in the money base (M0) and inflation are well established, and based on very simple intuition: changing the amount of hard money by a factor of 3, results in a change in the value of money by a factor of 1/3. I can't educate you on macroeconomics in this thread, please refer to any macro textbook.

err.. your left wing viewpoints are showing..

have a look at what happens to indigenous groups that are given handouts.. massive alcoholism.. obesity.. huge problems.

people will have to work and improve themselves. the struggle in life is important along with risk taking.

but, the dynamics of pay may change to compensate for the amount of leverage we can get today in society

> people will have to work and improve themselves. the struggle in life is important along with risk taking.

Completely agree. I think the dynamics of getting a basic income when everyone gets the basic income are different than when a subset of people are living off of the work of another subset of people, who don't benefit (in fact, are penalized).

In the scheme I proposed, no one is penalized for success, and no one is penalized for not wanting to participate in capitalism. Society is not penalized because capitalists are out there making additional wealth for themselves.

I really do think the non-initiation of force, the lack of penalties, and the universal equality changes the dynamics of social welfare programs for the better. It's very much like The Incredibles: when everyone is special, no one is.

I firmly believe that a universal basic income won't reduce the struggle in life, it just shifts it from the bottom of Maslow's chart up a level or two or three. I think we can all agree that's a good thing, no matter your political persuasion.

Canadians seemed to handle it just fine.

http://en.wikipedia.org/wiki/Mincome

Mincome was an experimental Canadian basic income project that was held in Dauphin, Manitoba during the 1970s. The project, funded jointly by the Manitoba provincial government and the Canadian federal government, began with a news release on February 22, 1974, and was closed down in 1979.

The purpose of this experiment was to determine whether a guaranteed, unconditional annual income caused disincentive to work for the recipients, and how great such a disincentive would be.

It allowed every family unit to receive a minimum cash benefit. The results showed a modest impact on labor markets, with working hours dropping one percent for men, three percent for wives, and five percent for unmarried women.[1] However, some have argued these drops may be artificially low because participants knew the guaranteed income was temporary.[2] These decreases in hours worked may be seen as offset by the opportunity cost of more time for family and education. Mothers spent more time rearing newborns, and the educational impacts are regarded as a success. Students in these families showed higher test scores and lower dropout rates. There was also an increase in adults continuing education.[3][4] A final report was never issued, but Dr. Evelyn Forget (/fɔrˈʒeɪ/) conducted an analysis of the program in 2009 which was published in 2011.[4][5] She found that only new mothers and teenagers worked substantially less. Mothers with newborns stopped working because they wanted to stay at home longer with their babies, and teenagers worked less because they weren't under as much pressure to support their families, which resulted in more teenagers graduating. In addition, those who continued to work were given more opportunities to choose what type of work they did. Forget found that in the period that Mincome was administered, hospital visits dropped 8.5 percent, with fewer incidences of work-related injuries, and fewer emergency room visits from car accidents and domestic abuse.[6] Additionally, the period saw a reduction in rates of psychiatric hospitalization, and in the number of mental illness-related consultations with health professionals.[7][8]

have a look at what happens to indigenous groups that are given handouts.. massive alcoholism.. obesity.. huge problems.

Those problems are far more complex than you're making them out to be. Besides that, your claim of handouts is simply false. The social assistance given to Status Indians comes with a great deal of stipulations, some of which are extremely harsh such as restrictions on who you can marry. Further complicating the issue are the problems of reservation living conditions, cultural alienation and simple boredom.

Universal Basic Income sidesteps these issues because it doesn't come with any crippling lifestyle restrictions. It's simply a form of income security that benefits all people by raising them out of poverty and reducing the fear and hopelessness associated with unemployment.

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