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"Supranational corporations have neatly sidestepped taxes, so UBI is unaffordable" That's not necessarily true and depends of your conception of money. States

"Supranational corporations have neatly sidestepped taxes, so UBI is unaffordable" That's not necessarily true and depends of your conception of money. States with their own currency are not the consumers of money but the source of money. I know that it's a strange idea but it's how it really works. The reason we don't heard a lot about that, it's because then, the things that you are describing become possible and people could start asking for them. http://www.economonitor.com/lrwray/2014/06/24/modern-money-theory-the-basics/ http://www.economonitor.com/lrwray/2014/06/24/modern-money-t...

poof131 10y ago
States being the source of money and not a neutral arbiter of it’s value is the major problem in my opinion, not the solution. With a set amount of money (or a slow fixed increase) markets are stable and operate efficiently (assuming minimal other burdens) in the allocation of resources and goods. But when governments ‘make’ money, the markets don’t allocate it, a small set of people do. This micromanagement of the economy leads to declining productivity and stagnation as money flows to the politically connected. The former USSR being a good example in the extreme. So money becomes politics. We’ve seen that those with money have used this to make even more: regressive taxes, bailouts, corporate inversions, etc. But the spread between rich and poor is becoming worse, so now the talk about UBI. The affect of this money distributed by bureaucratic fiat is that the middle class dies. The rich get richer with access to the new money, the poor get poorer and live off handouts, and those surviving in the middle get pushed to the poor side or figure out how to get to the rich side. A fairly standard state of affairs throughout history (lords and serfs), but not the future I’d like to see.
- RobertoG 10y ago
  Money is always politic. It seems to me that it's the people that more benefit of the current politics who more insist that this is not the case. "With a set amount of money (or a slow fixed increase) markets are stable and operate efficiently " A set amount of money was the gold standard or the Bretton Woods agreement later. The reason those disappeared is not because some governmental conspiracy, but because those kind of systems generate very fast unbalanced situations. A modern example of that, with small differences, is the Euro. A big economy where states have almost nothing to say in the quantity or the use of money.
AnimalMuppet 10y ago
In addition to what poof131 said, the reason we don't hear a lot about it is because it has a horrible tendency to result in out-of-control inflation. That means that any money you manage to save is rapidly heading toward worthless. That tends to have really destructive effects on an economy.
- RobertoG 10y ago
  The scary general accelerated inflation of legend, can't happen if there is unused resources in the economy. Inflation comes because there is excessive demand against the capacity of the economy or against imports. Anyway, after watching the Fed, the CEB, and the Japanese Central Bank the last years, is clear where the burden of proof is.
  - AnimalMuppet 10y ago
    First, it's not legend. The course you are suggesting is causing severe inflation, right now, in Venezuela. Second, "it can't happen" - until it does. That is, you adopt this course, and there's not inflation because there's excess capacity. But the new money lets people start buying more things, and eats into the excess capacity. That's good, you say? Yes, so far. But what happens when we run out of capacity? Do we stop UBI? That's going to be politically impossible. Do we raise taxes to cover it? "We'd kill the recovery!" people scream. So it keeps being funded by new money - and now that money turns into inflation, because there's not excess capacity any longer.
    - RobertoG 10y ago
      First, you can't choose Venezuela because is convenient for you. You have to explain Japan and, even, nowadays the States. In fact, the fed and the CEB are trying to rise inflation without exit. Venezuela is very easy to explain: their economy have almost nothing except oil that they export to get foreign currency for buying all the rest. If the oil price suffer Venezuela suffers. Second, you say "But what happens when we run out of capacity?" but I could say the opposite, what happens when we have excess capacity? Leaving it alone is good if you are rich, who cares about public spending and unemployment? And who wants even a little of inflation if that means owning less of the pie? If you accept that inflation can be managed balancing spending and capacity, you are accepting that inflation can be managed. Why are you not willing to accept the risk of inflation but you are willing to risk unused excess capacity, what means slow grow and poor living conditions for a lot of people, and unemployment? It seems to me because an emotional aversion to everything that sounds as government expending.
Bartweiss 10y ago
With all politeness, this is questionable at best. First, anyone suggesting that the Keynesians "don't understand where money comes from" or are "wedded to [ideas they] got from an Econ 101 textbook" has an awful lot of explaining to do. Heterodoxy is fine, assuming that the orthodoxy is idiotic (rather than, say, ideologically blinded) is not. If you're going to brand Krugman (and by extension Stiglitz, and Solow, and a dozen other Nobel winners) as grossly wrong on basic monetary policy, you probably need a better reason than "he never thought about it". But more importantly, Modern Monetary Theory doesn't free anyone from the rule that rapid currency creation produces rapid inflation. Wray is absolutely right that "banks don't operate like households", but there isn't a Keynesian that would disagree. He's also right that money can be created separately from bond sales, but again, no one sensible would disagree. Governments can (and at times should) create money, which a household can't do. But that's utterly different than saying that they can create money to cover arbitrary costs without consequence. "Unaffordable" isn't literally, immediately true - any government with its own currency can print enough money to pay off any debt valued in that currency. But there are real consequences in terms of inflation, which is why rapid money creation is generally reserved for moments when more inflation is desired. Servicing large, perpetual expenses with new money is the canonical example of bad monetary policy; funding a UBI on deficit spending violates the basic standards of even the most strident monetarists. If MMT wants to break out of the conventional currency-inflation curves, it needs to define new ones. Otherwise, it will cover a $1,000,000/year UBI just as well as a $10,000/year income, and we've got a reduction to the absurd.
- RobertoG 10y ago
  Well, the true is that most economic textbooks are wrong about, for instance, how banks and money creation works. This is a fact. If you don't believe me, go to your favourite orthodox textbook and read the relevant chapters and then read this from the Bank of England (that is what MMT have always said): http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q1prereleasemoneycreation.pdf http://www.bankofengland.co.uk/publications/Documents/quarte... Nobody is saying that inflation is not real, what MMT is saying is that public deficits are arbitrary. In fact, in a way, what MMT says, precisely, is that inflation is the only limit. The funny thing is that you are not, I think, disagreeing with me, because your answer is about inflation, not about public debt. We hear politicians and economists talking about the big problem of public debt and the policies they want to implement to solve it, and it doesn't make sense. I hope you keep them to the same standard that you keep the MMT people.

poof131 10y ago

States being the source of money and not a neutral arbiter of it’s value is the major problem in my opinion, not the solution. With a set amount of money (or a slow fixed increase) markets are stable and operate efficiently (assuming minimal other burdens) in the allocation of resources and goods. But when governments ‘make’ money, the markets don’t allocate it, a small set of people do. This micromanagement of the economy leads to declining productivity and stagnation as money flows to the politically connected. The former USSR being a good example in the extreme. So money becomes politics. We’ve seen that those with money have used this to make even more: regressive taxes, bailouts, corporate inversions, etc. But the spread between rich and poor is becoming worse, so now the talk about UBI. The affect of this money distributed by bureaucratic fiat is that the middle class dies. The rich get richer with access to the new money, the poor get poorer and live off handouts, and those surviving in the middle get pushed to the poor side or figure out how to get to the rich side. A fairly standard state of affairs throughout history (lords and serfs), but not the future I’d like to see.

RobertoG 10y ago
Money is always politic. It seems to me that it's the people that more benefit of the current politics who more insist that this is not the case. "With a set amount of money (or a slow fixed increase) markets are stable and operate efficiently " A set amount of money was the gold standard or the Bretton Woods agreement later. The reason those disappeared is not because some governmental conspiracy, but because those kind of systems generate very fast unbalanced situations. A modern example of that, with small differences, is the Euro. A big economy where states have almost nothing to say in the quantity or the use of money.

AnimalMuppet 10y ago

In addition to what poof131 said, the reason we don't hear a lot about it is because it has a horrible tendency to result in out-of-control inflation. That means that any money you manage to save is rapidly heading toward worthless. That tends to have really destructive effects on an economy.

RobertoG 10y ago
The scary general accelerated inflation of legend, can't happen if there is unused resources in the economy. Inflation comes because there is excessive demand against the capacity of the economy or against imports. Anyway, after watching the Fed, the CEB, and the Japanese Central Bank the last years, is clear where the burden of proof is.
- AnimalMuppet 10y ago
  First, it's not legend. The course you are suggesting is causing severe inflation, right now, in Venezuela. Second, "it can't happen" - until it does. That is, you adopt this course, and there's not inflation because there's excess capacity. But the new money lets people start buying more things, and eats into the excess capacity. That's good, you say? Yes, so far. But what happens when we run out of capacity? Do we stop UBI? That's going to be politically impossible. Do we raise taxes to cover it? "We'd kill the recovery!" people scream. So it keeps being funded by new money - and now that money turns into inflation, because there's not excess capacity any longer.
  - RobertoG 10y ago
    First, you can't choose Venezuela because is convenient for you. You have to explain Japan and, even, nowadays the States. In fact, the fed and the CEB are trying to rise inflation without exit. Venezuela is very easy to explain: their economy have almost nothing except oil that they export to get foreign currency for buying all the rest. If the oil price suffer Venezuela suffers. Second, you say "But what happens when we run out of capacity?" but I could say the opposite, what happens when we have excess capacity? Leaving it alone is good if you are rich, who cares about public spending and unemployment? And who wants even a little of inflation if that means owning less of the pie? If you accept that inflation can be managed balancing spending and capacity, you are accepting that inflation can be managed. Why are you not willing to accept the risk of inflation but you are willing to risk unused excess capacity, what means slow grow and poor living conditions for a lot of people, and unemployment? It seems to me because an emotional aversion to everything that sounds as government expending.

Bartweiss 10y ago

With all politeness, this is questionable at best. First, anyone suggesting that the Keynesians "don't understand where money comes from" or are "wedded to [ideas they] got from an Econ 101 textbook" has an awful lot of explaining to do. Heterodoxy is fine, assuming that the orthodoxy is idiotic (rather than, say, ideologically blinded) is not. If you're going to brand Krugman (and by extension Stiglitz, and Solow, and a dozen other Nobel winners) as grossly wrong on basic monetary policy, you probably need a better reason than "he never thought about it". But more importantly, Modern Monetary Theory doesn't free anyone from the rule that rapid currency creation produces rapid inflation. Wray is absolutely right that "banks don't operate like households", but there isn't a Keynesian that would disagree. He's also right that money can be created separately from bond sales, but again, no one sensible would disagree. Governments can (and at times should) create money, which a household can't do. But that's utterly different than saying that they can create money to cover arbitrary costs without consequence. "Unaffordable" isn't literally, immediately true - any government with its own currency can print enough money to pay off any debt valued in that currency. But there are real consequences in terms of inflation, which is why rapid money creation is generally reserved for moments when more inflation is desired. Servicing large, perpetual expenses with new money is the canonical example of bad monetary policy; funding a UBI on deficit spending violates the basic standards of even the most strident monetarists. If MMT wants to break out of the conventional currency-inflation curves, it needs to define new ones. Otherwise, it will cover a $1,000,000/year UBI just as well as a $10,000/year income, and we've got a reduction to the absurd.

RobertoG 10y ago
Well, the true is that most economic textbooks are wrong about, for instance, how banks and money creation works. This is a fact. If you don't believe me, go to your favourite orthodox textbook and read the relevant chapters and then read this from the Bank of England (that is what MMT have always said): http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q1prereleasemoneycreation.pdf http://www.bankofengland.co.uk/publications/Documents/quarte... Nobody is saying that inflation is not real, what MMT is saying is that public deficits are arbitrary. In fact, in a way, what MMT says, precisely, is that inflation is the only limit. The funny thing is that you are not, I think, disagreeing with me, because your answer is about inflation, not about public debt. We hear politicians and economists talking about the big problem of public debt and the policies they want to implement to solve it, and it doesn't make sense. I hope you keep them to the same standard that you keep the MMT people.