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Communism dismisses markets as an economic resource allocation mechanism. Capitalism is based on markets. Markets provide for economic efficiency. But this can
by rsrsrs86 9y ago
Communism dismisses markets as an economic resource allocation mechanism. Capitalism is based on markets.
Markets provide for economic efficiency. But this can be separated from equity. This is called the first economic welfare theorem or something like that.
Lump sum basic income is more efficient than income taxes in that it does not affect marginal decisions on income.
Milton Friedman (an ardent defendant of capitalism) defended this. I'm surprised he was not mentioned in the article.
- hndamien 9y agoI basically just moves the bottom rung above poverty, so these people can now spend and help the money velocity increase. Plus, they are no longer in poverty (hooray!)
- rsrsrs86 9y agoYes. It works as a fiscal policy instrument. But the important thing is that it doesn't affect prices. Messing with prices typically causes dead weight. Value added tax can redistribute wealth but has a clear overall economic cost. Lump sum income policies (negative income tax!) has no dead weight.