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I skimmed your post, but nothing in there convinced me that basic income would worsen stability. I agree that basic income will not eliminate the gap between th

by smaddox 10y ago

I skimmed your post, but nothing in there convinced me that basic income would worsen stability. I agree that basic income will not eliminate the gap between the rich and the poor, but that's not the point. Nothing can permanently eliminate the gap between the rich and the poor; the gap is a consequence of the time-value of money. However, by reducing the lower class's reliance on debt, basic income could raise the quality of life of the lower class. The point of basic income is similar to the point of minimum wage. Individual businesses cannot choose to raise their workers wages or they will be priced out of the market by their competitors. In contrast, if every company agrees to raise their minimum wage (or is forced to by the state), then the worker's share of wages improves. Of course this is not a permanent solution, since inflation reduces the utility of the minimum wage over time. Thus, basic income, like minimum wage, would need to be adjusted over time. I also agree that money is not wealth, and I agree that the distinction is extremely important, particularly for understanding macroeconomics and ecological economics. Indeed, unsustainable divergence of money from wealth (through credit expansion of the money supply) is the prime cause of economic crises. However, under a properly controlled basic income system, such divergence could be minimized and even eliminated, thereby eliminating depressions. So, while I agree that basic income cannot solve all our economic woes, I do believe it is a step in the right direction.

Mz 10y ago
Let me put it this way: I live in California, in one of the more affordable cities here. I am homeless. My monthly income is more than $1000/month. If I could find a place for around $200-$300/month, I could be off the street. Such a place does not exist. There is no upper limit to how expensive housing can get. Giving me $500 a month in Basic Income in no way guarantees that I still won't be able to afford housing. The problem as I see it is that Bad Income is a lazy answer: oh, let's just cut poor people a check. You skimmed what I wrote and dismissed it. You have said not one word about addressing the issue of the tremendous shortage of affordable housing, which has been steadily deepening. So your reply in no way alleviates my fear that if we get Basic Income, the well off people involved in creating new housing stock will just have one more excuse to not care about solving the much thornier issue of affordable housing. If there were affordable housing available, I could get off the street right now. Without it, I have no reason to believe Basic Income solves my problems and every reason to believe it deepens them. Given the trends that go back decades, the affordable housing shortfall is the issue I would like to see tackled. And it is not happening.
- smaddox 10y ago
  I apologize for not directly addressing the issue of affordable housing. The reason I did not directly address it is that I see it as one piece of the puzzle, though certainly an important one. Housing prices in California are high primarily for two reasons: a) California's population has quadrupled since 1950, and b) the US household debt to GDP ratio is ~twice what it was in 1950 [1], and higher household debt means higher housing prices [2]. By reducing the lower and middle classes' dependence on debt, basic income could actually reduce housing prices, or at least slow the rate of increase. Of course it's certainly feasible that basic income could take the form of housing subsidies. However, such an approach would add complexity to an otherwise very simple system, and the simplicity of the basic income system is one of it's biggest selling points. All that being said, basic income does not address the issues of population growth, resource scarcity, and climate change. So, while I do think it would raise the average quality of life, I don't think it's sufficient to ensure our species success. [1] http://www.financialsense.com/contributors/lance-roberts/consumer-debt-still-a-long-way-to-go http://www.financialsense.com/contributors/lance-roberts/con... [2] http://www.debunkingeconomics.com/us-flow-of-funds-update/ http://www.debunkingeconomics.com/us-flow-of-funds-update/
  - Mz 10y ago
    I appreciate you taking the time to reply, but perhaps you should go back and read what I wrote instead of skimming it. TLDR: New construction is about twice the size now as it was in the 1950s, with more amenities, while housing fewer people. This goes a long way towards accounting for the higher housing prices alongside rising homelessness. You don't need fancy economic explanations. Houses that are nearly 2500 sq. ft. instead of 1200 and loaded up with vastly more amenities straight up cost more. Period. And as long as new housing averages nearly 2500 sq. ft., no amount of basic income stabilizes the bottom third of the population because the housing they need simply does not exist. Period. No amount of money gets you well if the cure you need simply does not exist. Ask anyone with an incurable medical condition.
    - smaddox 10y ago
      I went back and read your post beginning to end. I have no nitpicks---only disagreements. Fist, I must say that upon reading your data points on average new housing size, my default mental response was "averages can be misleading". However, after looking up the data myself, it appears that the median house size has similarly nearly doubled in so much time. That is quite a remarkable figure, and I certainly agree that it has almost certinaly greatly raised the cost of living for those who wish to have their own space. That being said, I strongly disagree that government-backed mortgages are the answer (not that you explicitly called for government-backed mortgages, but I think they are the consequence of your train of thought). Quite to the contrary, I would argue that the government-backed G.I. Bill mortgages, and similar programs in more recent years, are the root cause of the rising housing costs. As I described in my previous post, rising mortgage debt significantly increases housing prices by inflating housing asset prices. I think that, while not the be-all-end-all solution, basic income would be far more effective at countering homelessness than government-backed mortgages would be. On a separate note, based on your descriptions of how basic income would affect the class dynamic, I think we have a different understanding of what a basic income would mean. Perhaps I should be more explicit in my wording. When I say basic income, I mean universal basic income, i.e. every citizen (and perhaps even non-citizens) would receive the same monthly dividend (or weekly, or biweekly). I fail to see how universal basic income would create a rift between the rich and the poor, since everyone would receive the same income. It is true that the poor would receive more utility from that income, but in my mind that disparity in utility is the main merit of the concept. That disparity in utility is what could transform our country from a land of Haves and Have Nots to a land of Haves and Have Mores. On the topic of financial education, I complete agree with you. Universal basic income will not solve the problem of people with adequate income living month to month (or week to week). I don't think that's an argument against universal basic income, though. It's an argument for education reform. And by reform, I mean true reform, not charter school vouchers, and book purchase programs. We need to move from an education system designed to train factory workers to an education system designed to train service providers. The most important skills, skills that are, if anything, discouraged in our existing education system, are interpersonal communication and critical thinking. And financial education is right up there with those two.

by smaddox 10y ago

Mz 10y ago

Let me put it this way: I live in California, in one of the more affordable cities here. I am homeless. My monthly income is more than $1000/month. If I could find a place for around $200-$300/month, I could be off the street. Such a place does not exist. There is no upper limit to how expensive housing can get. Giving me $500 a month in Basic Income in no way guarantees that I still won't be able to afford housing. The problem as I see it is that Bad Income is a lazy answer: oh, let's just cut poor people a check. You skimmed what I wrote and dismissed it. You have said not one word about addressing the issue of the tremendous shortage of affordable housing, which has been steadily deepening. So your reply in no way alleviates my fear that if we get Basic Income, the well off people involved in creating new housing stock will just have one more excuse to not care about solving the much thornier issue of affordable housing. If there were affordable housing available, I could get off the street right now. Without it, I have no reason to believe Basic Income solves my problems and every reason to believe it deepens them. Given the trends that go back decades, the affordable housing shortfall is the issue I would like to see tackled. And it is not happening.

smaddox 10y ago
I apologize for not directly addressing the issue of affordable housing. The reason I did not directly address it is that I see it as one piece of the puzzle, though certainly an important one. Housing prices in California are high primarily for two reasons: a) California's population has quadrupled since 1950, and b) the US household debt to GDP ratio is ~twice what it was in 1950 [1], and higher household debt means higher housing prices [2]. By reducing the lower and middle classes' dependence on debt, basic income could actually reduce housing prices, or at least slow the rate of increase. Of course it's certainly feasible that basic income could take the form of housing subsidies. However, such an approach would add complexity to an otherwise very simple system, and the simplicity of the basic income system is one of it's biggest selling points. All that being said, basic income does not address the issues of population growth, resource scarcity, and climate change. So, while I do think it would raise the average quality of life, I don't think it's sufficient to ensure our species success. [1] http://www.financialsense.com/contributors/lance-roberts/consumer-debt-still-a-long-way-to-go http://www.financialsense.com/contributors/lance-roberts/con... [2] http://www.debunkingeconomics.com/us-flow-of-funds-update/ http://www.debunkingeconomics.com/us-flow-of-funds-update/
- Mz 10y ago
  I appreciate you taking the time to reply, but perhaps you should go back and read what I wrote instead of skimming it. TLDR: New construction is about twice the size now as it was in the 1950s, with more amenities, while housing fewer people. This goes a long way towards accounting for the higher housing prices alongside rising homelessness. You don't need fancy economic explanations. Houses that are nearly 2500 sq. ft. instead of 1200 and loaded up with vastly more amenities straight up cost more. Period. And as long as new housing averages nearly 2500 sq. ft., no amount of basic income stabilizes the bottom third of the population because the housing they need simply does not exist. Period. No amount of money gets you well if the cure you need simply does not exist. Ask anyone with an incurable medical condition.
  - smaddox 10y ago
    I went back and read your post beginning to end. I have no nitpicks---only disagreements. Fist, I must say that upon reading your data points on average new housing size, my default mental response was "averages can be misleading". However, after looking up the data myself, it appears that the median house size has similarly nearly doubled in so much time. That is quite a remarkable figure, and I certainly agree that it has almost certinaly greatly raised the cost of living for those who wish to have their own space. That being said, I strongly disagree that government-backed mortgages are the answer (not that you explicitly called for government-backed mortgages, but I think they are the consequence of your train of thought). Quite to the contrary, I would argue that the government-backed G.I. Bill mortgages, and similar programs in more recent years, are the root cause of the rising housing costs. As I described in my previous post, rising mortgage debt significantly increases housing prices by inflating housing asset prices. I think that, while not the be-all-end-all solution, basic income would be far more effective at countering homelessness than government-backed mortgages would be. On a separate note, based on your descriptions of how basic income would affect the class dynamic, I think we have a different understanding of what a basic income would mean. Perhaps I should be more explicit in my wording. When I say basic income, I mean universal basic income, i.e. every citizen (and perhaps even non-citizens) would receive the same monthly dividend (or weekly, or biweekly). I fail to see how universal basic income would create a rift between the rich and the poor, since everyone would receive the same income. It is true that the poor would receive more utility from that income, but in my mind that disparity in utility is the main merit of the concept. That disparity in utility is what could transform our country from a land of Haves and Have Nots to a land of Haves and Have Mores. On the topic of financial education, I complete agree with you. Universal basic income will not solve the problem of people with adequate income living month to month (or week to week). I don't think that's an argument against universal basic income, though. It's an argument for education reform. And by reform, I mean true reform, not charter school vouchers, and book purchase programs. We need to move from an education system designed to train factory workers to an education system designed to train service providers. The most important skills, skills that are, if anything, discouraged in our existing education system, are interpersonal communication and critical thinking. And financial education is right up there with those two.