5 ms·

Disclaimer: I don't know anything about anything. Some parents can put 850k in a account for their child when it's born that gets invested, say in the American

Disclaimer: I don't know anything about anything. Some parents can put 850k in a account for their child when it's born that gets invested, say in the American economy (grows by say 7% over an average, long time period), which compounds until later in life, and when they grow up, they can access it. With good financial responsibility, this child won't have to work a day in their lives and can live off the returns. Why can't we as a society do this for everyone, but you can never touch the account, only the returns? That is, wealth and a foot in the returns of humanity as a right. You're born, you get $1mil put in an account that gets invested. When you turn 18, you start getting a monthly check, the return on that investment. You can never touch the account, only get its returns. Someone tell me why this is a bad idea, worse than guaranteed basic income.

wskinner 11y ago
What makes you think the American economy would continue growing at 7% forever? And why do you believe prices wouldn't rise to meet the new common standard of living afforded by this grant?
- dota_fanatic 11y ago
  Because humans will never stop climbing. It's built into us. Even most people in poverty want to climb, they just have little to no options, so they find ways to cope nevertheless. As for rising prices, surely they can't rise everywhere? People will be able to afford to abandon the obscenely wealthy playpens (SF, NY, Tokyo, etc) and move somewhere that's affordable. Cost of living varies depending on location, doesn't it? Surely this would result in more competition, not less?
mistermann 11y ago
Why only one million, why not five million?
ryandvm 11y ago
Good luck growing the economy at 7% when your population has a 100% incidence rate of affluenza...
WorldMaker 11y ago
Honestly, it just sounds like you've restated one of the simple versions of how basic income actually would work (and why it should be economically "easy"), and its basically the way people think Social Security works (it's subtly different, but that's a tangential discussion). MMT (Modern Monetary Theory) isn't really that far from "pretend the government had an investment account for every person and then handed them a check for the interest returns on that account", just with a lot more subtlety in what constitutes that account (because money is something the government creates in how it taxes money) and where that interest return "comes from" (because it's already there in tax credits and 0% loans to big corporations and government debt bonding and even the nature of inflation itself and weirder things). Of course, I'm oversimplifying as well, but the point is you have found the rabbit hole. Which is to say, spot on, you've hit near the right track and aren't too far from what a lot of guaranteed basic income discussions generally start from and are basically about.
beachstartup 11y ago
you're describing a sovereign wealth fund. the only thing that requires is 1. 300 million million dollars and 2. buy-in from the electorate. out of those two ludicrous requirements, i'm not sure which one is more of a challenge.
arebop 11y ago
This requires amassing the capital to get started. Does it seem harder to get all that capital than to get half of it? Really you only need to get 7% of it this year to pay the over-18s. What investments should be used in the account exactly? What do you do about the temptation of the administrators to "borrow" from the reserves, direct the investments to benefit themselves, hoard extra resources or underfund the plan by estimating the future revenues or expenses a bit too high or low? Your idea isn't bad exactly, just complicated by these extra provisions such as "the basic income shall be derived from investment proceeds from individual accounts."
evunveot 11y ago
There are about 4 million births in the US ever year, so that program would inject $4 trillion per year into the economy (assuming everyone currently living is left out). It would be impossible to pull in that much through taxation (today) so it would have to be pure money creation. $4 trillion is about 25% of GDP, so if the economy isn't growing by at least that amount every year, the value of the dollar will inevitably fall to compensate, most likely to a level where the return on the $1 million investment isn't anywhere close to a livable income. Come to think of it, I'm not even considering the money multiplier. When that $4 trillion is spent or invested, eventually it ends up in someone's bank account, and because we have fractional reserve banking, it adds to the banks' deposits, allowing them to loan more money out. The banks' reserve requirement is 10%, so in the worst case (if the banks loan out as much as they possibly can), that $4 trillion becomes $40 trillion. (Each bank loans out 90% of their deposits, the loans becomes deposits at other banks, who loan 90% of that [81% of the original], and so on and so on.) That's 250% of GDP, so you'd probably see inflation severe enough to threaten social order in general. If we imagine that the program has been running for several generations already and the whole population already has their $1 million trust fund, you can at least destroy about $2.4 trillion per year as people die, but the bigger issue would be that "$1 million" means a very different thing in a world where there's $300 trillion in citizen trust funds compared to today when the total of all physical currency and liquid bank accounts is about $10 trillion. There's also the problem of who gets to decide how to invest the money, which would be a magnet for corruption.

wskinner 11y ago

What makes you think the American economy would continue growing at 7% forever? And why do you believe prices wouldn't rise to meet the new common standard of living afforded by this grant?

dota_fanatic 11y ago
Because humans will never stop climbing. It's built into us. Even most people in poverty want to climb, they just have little to no options, so they find ways to cope nevertheless. As for rising prices, surely they can't rise everywhere? People will be able to afford to abandon the obscenely wealthy playpens (SF, NY, Tokyo, etc) and move somewhere that's affordable. Cost of living varies depending on location, doesn't it? Surely this would result in more competition, not less?

mistermann 11y ago

Why only one million, why not five million?

ryandvm 11y ago

Good luck growing the economy at 7% when your population has a 100% incidence rate of affluenza...

WorldMaker 11y ago

Honestly, it just sounds like you've restated one of the simple versions of how basic income actually would work (and why it should be economically "easy"), and its basically the way people think Social Security works (it's subtly different, but that's a tangential discussion). MMT (Modern Monetary Theory) isn't really that far from "pretend the government had an investment account for every person and then handed them a check for the interest returns on that account", just with a lot more subtlety in what constitutes that account (because money is something the government creates in how it taxes money) and where that interest return "comes from" (because it's already there in tax credits and 0% loans to big corporations and government debt bonding and even the nature of inflation itself and weirder things). Of course, I'm oversimplifying as well, but the point is you have found the rabbit hole. Which is to say, spot on, you've hit near the right track and aren't too far from what a lot of guaranteed basic income discussions generally start from and are basically about.

beachstartup 11y ago

you're describing a sovereign wealth fund. the only thing that requires is 1. 300 million million dollars and 2. buy-in from the electorate. out of those two ludicrous requirements, i'm not sure which one is more of a challenge.

arebop 11y ago

This requires amassing the capital to get started. Does it seem harder to get all that capital than to get half of it? Really you only need to get 7% of it this year to pay the over-18s. What investments should be used in the account exactly? What do you do about the temptation of the administrators to "borrow" from the reserves, direct the investments to benefit themselves, hoard extra resources or underfund the plan by estimating the future revenues or expenses a bit too high or low? Your idea isn't bad exactly, just complicated by these extra provisions such as "the basic income shall be derived from investment proceeds from individual accounts."

evunveot 11y ago

There are about 4 million births in the US ever year, so that program would inject $4 trillion per year into the economy (assuming everyone currently living is left out). It would be impossible to pull in that much through taxation (today) so it would have to be pure money creation. $4 trillion is about 25% of GDP, so if the economy isn't growing by at least that amount every year, the value of the dollar will inevitably fall to compensate, most likely to a level where the return on the $1 million investment isn't anywhere close to a livable income. Come to think of it, I'm not even considering the money multiplier. When that $4 trillion is spent or invested, eventually it ends up in someone's bank account, and because we have fractional reserve banking, it adds to the banks' deposits, allowing them to loan more money out. The banks' reserve requirement is 10%, so in the worst case (if the banks loan out as much as they possibly can), that $4 trillion becomes $40 trillion. (Each bank loans out 90% of their deposits, the loans becomes deposits at other banks, who loan 90% of that [81% of the original], and so on and so on.) That's 250% of GDP, so you'd probably see inflation severe enough to threaten social order in general. If we imagine that the program has been running for several generations already and the whole population already has their $1 million trust fund, you can at least destroy about $2.4 trillion per year as people die, but the bigger issue would be that "$1 million" means a very different thing in a world where there's $300 trillion in citizen trust funds compared to today when the total of all physical currency and liquid bank accounts is about $10 trillion. There's also the problem of who gets to decide how to invest the money, which would be a magnet for corruption.