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This article is internally contradictory. First, the article claims consumption will go up: No longer will poor Americans have to choose between heating oil an

This article is internally contradictory. First, the article claims consumption will go up: No longer will poor Americans have to choose between heating oil and food, between medicine and shoes for their children. Then it claims investment will go up: Also, demand increases — giving firms reason to expand production and hire new workers. Firms may have reason to expand production, but the resources needed to expand production are instead being consumed. Rather than building a factory, workers are making shoes for poor children. (At least the ones who didn't tell their boss to "take this job and shove it" - a direct quote from the article. That's just a deadweight loss the article ignores for no apparent reason.) I really wish someone would write an article about BI that was more than just clueless pop Keynesianism - "Demand Good, Investment Bad, Free Lunch for All."

kaonashi 11y ago
You're assuming the economy is running at full capacity.
- tcbawo 11y ago
  It would be interesting if basic income were tied to some combination of the Gini index and inflation rate. It would serve as a nice automatic offset to deflation, then fade away as the economy took off and wages increased.
  - ItsDeathball 11y ago
    What I'd like to see - and never see suggested in these discussions - is starting with a revenue-neutral carbon tax to fund a BIG. Since the tax would internalize the externalities of pollution and climate change, the government could cut subsidies and tax breaks for energy production and efficiency, and throw those savings into BIG as well. Anyone willing to be a below-average greenhouse gas emitter comes out on top, while anyone who owns a private jet is doing well enough not to care.
    - cmacpher 11y ago
      totally on board with something like this. I never understand why people say market forces will solve global warming, pollution and the future of energy. Pollution is THE textbook case for an externality. By definition it cant be fixed by the free market.
    - cam_l 11y ago
      a revenue-neutral carbon tax to fund a welfare state.. Love the idea, but we had one of these for a couple of years, and at $23/t there was at least an order of magnitude less money in it than needed for a GBI. And per capita, we are among the highest carbon emitters on earth.
  - dllthomas 11y ago
    Tying BI to observed inflation seems dangerous. Targeted inflation seems advisable. The former because a BI set higher than conditions can support seems likely to cause inflation, which would reduce (real) BI.
- yummyfajitas 11y ago
  It's not so much an assumption, it's more just looking at our 5.5% unemployment rate (aka "the natural rate") and 3.5-4% NGDP growth. Even if we aren't, this article provides no mechanism by which a BI would get us to full capacity or increase output at all. All it provides is a mechanism which would take us away from full capacity (If your boss is an unreasonable jerk, you can tell him to “take this job and shove it”...).
  - WalterSear 11y ago
    https://www.google.com/search?q=real+unemployment+rate+us+2015 https://www.google.com/search?q=real+unemployment+rate+us+20...
  - cam_l 11y ago
    I find it interesting that most people coming down against GBI do so under the assumption that coercion is the strongest incentive to work. I think it much more probable to look at GBI as separating the monopolistic part of the work market (if I don't work I will starve) from the competitive portion. Surely more competition in the employment market is a good thing? Even then, I still think it is the third order effects of GBI (the ones we don't know about, or are to complex to model) that are most likely to cause massive societal upheaval. But then, maybe massive societal upheaval is what proponents of GBI are most excited about.
    - yummyfajitas 11y ago
      ...monopolistic part of the work market (if I don't work I will starve)... That's not what "monopolistic" means. "Monopolistic" means one supplier. Is the argument for BI really "we have no idea what will happen but it'll sure be massive and we believe without evidence that it will be good?"
      - cam_l 11y ago
        Missed the forest for the pedantries. In an employment market, I am the supplier, my boss is the consumer. I hold a monopoly over my supply. All of my competitors offer my employer a slightly different product. The market is a monopolistic competitive market. On the other hand, my boss holds a temporary monopoly on my income, whether I eat or not. With a GBI, these monopolistic parts of the market may be removed. My boss does not have to choose between me and another employee offering slightly different products, we can both be hired for the distinct bits of work we are can provide, and for an agreed price we value the work at, not an amount we need to satisfy our need to live. ie.it opens the employment market up to purer competition. Is the argument for BI really... Let me be clear, I don't think this is a good thing, but that is the sense I get from pro-GBI advocates. The scary thing is it most probably would be massive, in time, and there is little good evidence on the knock-on effects. I get why anti-GBI advocates are scared, they stand to lose money, but pro-GBI advocates should be scared too. So I guess what surprises me is they both should be arguing for trials, surely?
djrobstep 11y ago
A basic income doesn't necessitate increased consumption, only shifted consumption from the rich to the poor. If you think a basic income is going to have an adverse effect on savings/investment rates, there are plenty of ways to bump this up (sovereign wealth funds for example). But your comment is pretty clearly motivated by an ideological commitment to the rich having more and the poor having less, rather than some genuine concern with insufficient investment. Why not just be honest about it instead of hiding behind this ideological wordplay? Labelling the freedom of choice of a low income worker to leave a job they hate and/or work a bit less as "deadweight loss" is reveals a lot. I suppose you think the lack of ten year old children working in coal mines is deadweight loss too.
- yummyfajitas 11y ago
  A basic income doesn't necessitate increased consumption, only shifted consumption from the rich to the poor. Did you read the article? "A rich person, presented with a tax refund, will not necessarily increase his or her consumption. Instead he or she might well save the money...When the poor and lower middle class get cash in their pockets, they generally spend it straight away..." If you think a basic income is going to have an adverse effect on savings/investment rates, there are plenty of ways to bump this up (sovereign wealth funds for example). Please explain the mechanism by which this would work. Specifically, consumption of shoes and the number of people producing shoes goes up correspondingly. Some people quit working because their boss is a jerk. Where do the people building the new shoe factories come from?
  - djrobstep 11y ago
    > Did you read the article? Did you read my comment? There are ways around this. Worth noting also, that if poor and middle class folks have a higher and more reliable income, they are more likely to save. > Please explain the mechanism by which this would work. It's called supply and demand. Rich people will have less, so demand will drop for things like jewellery and superyachts, and labor will shift from these industries into stuff producing things like shoes.
    - 11y ago
cma 11y ago
Marginal utility of money. If rich americans use oil heating up their 50 unused vacation homes and they have to slow down a bit, the statement can be true. I.e. it's not "rather than building a factory, workers are making shoes for poor children," it's "rather than spend man hours making hundreds of shoes for a single rich person, make more shoes for the poor, less throw away shoes, and still end up freeing up time to make factories." If that shoe example is too contrived for you, just do a google image search for "shoe closet": http://1.bp.blogspot.com/-nOKYKVt_gf4/TZllEf3kD2I/AAAAAAAADcU/Ir35o6zXc6E/s1600/107.png http://1.bp.blogspot.com/-nOKYKVt_gf4/TZllEf3kD2I/AAAAAAAADc... http://www.theshoegirlblog.com/2012/02/celebrity-shoe-closets/ http://www.theshoegirlblog.com/2012/02/celebrity-shoe-closet...
- yummyfajitas 11y ago
  If rich americans use oil heating up their 50 unused vacation homes and they have to slow down a bit, the statement can be true. Did you read the article? "A rich person, presented with a tax refund, will not necessarily increase his or her consumption. Instead he or she might well save the money ...When the poor and lower middle class get cash in their pockets, they generally spend it straight away..." Or perhaps this comment from 27 minutes ago where I pointed out the exact same thing to another person who didn't read the article: https://news.ycombinator.com/item?id=10397010 https://news.ycombinator.com/item?id=10397010
  - cma 11y ago
    I didn't read things right. That argument would make sense as a short term thing if fighting a contracting economy during a recession, especially if there is an ongoing flight to safety and if banks are worried about reserves and not making loans so the extra savings aren't getting spent (e.g. 2008). But I do see some of the contradiction you are talking about.
dragonwriter 11y ago
The suggestion that a change could increase both consumption and investment is not inconsistent. Economics isn't zero-sum, and if there policy accelerated aggregate expansion it could do both of those things. OTOH, you complaining initially that the article sells increased investment as a benefit of the policy, and then at the end of your post characterizing the article as "Demand Good, Investment Bad" is a fairly direct contradiction.

kaonashi 11y ago

You're assuming the economy is running at full capacity.

tcbawo 11y ago
It would be interesting if basic income were tied to some combination of the Gini index and inflation rate. It would serve as a nice automatic offset to deflation, then fade away as the economy took off and wages increased.
- ItsDeathball 11y ago
  What I'd like to see - and never see suggested in these discussions - is starting with a revenue-neutral carbon tax to fund a BIG. Since the tax would internalize the externalities of pollution and climate change, the government could cut subsidies and tax breaks for energy production and efficiency, and throw those savings into BIG as well. Anyone willing to be a below-average greenhouse gas emitter comes out on top, while anyone who owns a private jet is doing well enough not to care.
  - cmacpher 11y ago
    totally on board with something like this. I never understand why people say market forces will solve global warming, pollution and the future of energy. Pollution is THE textbook case for an externality. By definition it cant be fixed by the free market.
  - cam_l 11y ago
    a revenue-neutral carbon tax to fund a welfare state.. Love the idea, but we had one of these for a couple of years, and at $23/t there was at least an order of magnitude less money in it than needed for a GBI. And per capita, we are among the highest carbon emitters on earth.
- dllthomas 11y ago
  Tying BI to observed inflation seems dangerous. Targeted inflation seems advisable. The former because a BI set higher than conditions can support seems likely to cause inflation, which would reduce (real) BI.
yummyfajitas 11y ago
It's not so much an assumption, it's more just looking at our 5.5% unemployment rate (aka "the natural rate") and 3.5-4% NGDP growth. Even if we aren't, this article provides no mechanism by which a BI would get us to full capacity or increase output at all. All it provides is a mechanism which would take us away from full capacity (If your boss is an unreasonable jerk, you can tell him to “take this job and shove it”...).
- WalterSear 11y ago
  https://www.google.com/search?q=real+unemployment+rate+us+2015 https://www.google.com/search?q=real+unemployment+rate+us+20...
- cam_l 11y ago
  I find it interesting that most people coming down against GBI do so under the assumption that coercion is the strongest incentive to work. I think it much more probable to look at GBI as separating the monopolistic part of the work market (if I don't work I will starve) from the competitive portion. Surely more competition in the employment market is a good thing? Even then, I still think it is the third order effects of GBI (the ones we don't know about, or are to complex to model) that are most likely to cause massive societal upheaval. But then, maybe massive societal upheaval is what proponents of GBI are most excited about.
  - yummyfajitas 11y ago
    ...monopolistic part of the work market (if I don't work I will starve)... That's not what "monopolistic" means. "Monopolistic" means one supplier. Is the argument for BI really "we have no idea what will happen but it'll sure be massive and we believe without evidence that it will be good?"
    - cam_l 11y ago
      Missed the forest for the pedantries. In an employment market, I am the supplier, my boss is the consumer. I hold a monopoly over my supply. All of my competitors offer my employer a slightly different product. The market is a monopolistic competitive market. On the other hand, my boss holds a temporary monopoly on my income, whether I eat or not. With a GBI, these monopolistic parts of the market may be removed. My boss does not have to choose between me and another employee offering slightly different products, we can both be hired for the distinct bits of work we are can provide, and for an agreed price we value the work at, not an amount we need to satisfy our need to live. ie.it opens the employment market up to purer competition. Is the argument for BI really... Let me be clear, I don't think this is a good thing, but that is the sense I get from pro-GBI advocates. The scary thing is it most probably would be massive, in time, and there is little good evidence on the knock-on effects. I get why anti-GBI advocates are scared, they stand to lose money, but pro-GBI advocates should be scared too. So I guess what surprises me is they both should be arguing for trials, surely?

djrobstep 11y ago

A basic income doesn't necessitate increased consumption, only shifted consumption from the rich to the poor. If you think a basic income is going to have an adverse effect on savings/investment rates, there are plenty of ways to bump this up (sovereign wealth funds for example). But your comment is pretty clearly motivated by an ideological commitment to the rich having more and the poor having less, rather than some genuine concern with insufficient investment. Why not just be honest about it instead of hiding behind this ideological wordplay? Labelling the freedom of choice of a low income worker to leave a job they hate and/or work a bit less as "deadweight loss" is reveals a lot. I suppose you think the lack of ten year old children working in coal mines is deadweight loss too.

yummyfajitas 11y ago
A basic income doesn't necessitate increased consumption, only shifted consumption from the rich to the poor. Did you read the article? "A rich person, presented with a tax refund, will not necessarily increase his or her consumption. Instead he or she might well save the money...When the poor and lower middle class get cash in their pockets, they generally spend it straight away..." If you think a basic income is going to have an adverse effect on savings/investment rates, there are plenty of ways to bump this up (sovereign wealth funds for example). Please explain the mechanism by which this would work. Specifically, consumption of shoes and the number of people producing shoes goes up correspondingly. Some people quit working because their boss is a jerk. Where do the people building the new shoe factories come from?
- djrobstep 11y ago
  > Did you read the article? Did you read my comment? There are ways around this. Worth noting also, that if poor and middle class folks have a higher and more reliable income, they are more likely to save. > Please explain the mechanism by which this would work. It's called supply and demand. Rich people will have less, so demand will drop for things like jewellery and superyachts, and labor will shift from these industries into stuff producing things like shoes.
  - 11y ago

cma 11y ago

Marginal utility of money. If rich americans use oil heating up their 50 unused vacation homes and they have to slow down a bit, the statement can be true. I.e. it's not "rather than building a factory, workers are making shoes for poor children," it's "rather than spend man hours making hundreds of shoes for a single rich person, make more shoes for the poor, less throw away shoes, and still end up freeing up time to make factories." If that shoe example is too contrived for you, just do a google image search for "shoe closet": http://1.bp.blogspot.com/-nOKYKVt_gf4/TZllEf3kD2I/AAAAAAAADcU/Ir35o6zXc6E/s1600/107.png http://1.bp.blogspot.com/-nOKYKVt_gf4/TZllEf3kD2I/AAAAAAAADc... http://www.theshoegirlblog.com/2012/02/celebrity-shoe-closets/ http://www.theshoegirlblog.com/2012/02/celebrity-shoe-closet...

yummyfajitas 11y ago
If rich americans use oil heating up their 50 unused vacation homes and they have to slow down a bit, the statement can be true. Did you read the article? "A rich person, presented with a tax refund, will not necessarily increase his or her consumption. Instead he or she might well save the money ...When the poor and lower middle class get cash in their pockets, they generally spend it straight away..." Or perhaps this comment from 27 minutes ago where I pointed out the exact same thing to another person who didn't read the article: https://news.ycombinator.com/item?id=10397010 https://news.ycombinator.com/item?id=10397010
- cma 11y ago
  I didn't read things right. That argument would make sense as a short term thing if fighting a contracting economy during a recession, especially if there is an ongoing flight to safety and if banks are worried about reserves and not making loans so the extra savings aren't getting spent (e.g. 2008). But I do see some of the contradiction you are talking about.

dragonwriter 11y ago

The suggestion that a change could increase both consumption and investment is not inconsistent. Economics isn't zero-sum, and if there policy accelerated aggregate expansion it could do both of those things. OTOH, you complaining initially that the article sells increased investment as a benefit of the policy, and then at the end of your post characterizing the article as "Demand Good, Investment Bad" is a fairly direct contradiction.