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> Doesn't UBI reduce the economic productivity by both driving up the cost of labor through increased taxation No. First of all, there's no reason that basic
by Suncho 9y ago
> Doesn't UBI reduce the economic productivity by both driving up the cost of labor through increased taxation
No. First of all, there's no reason that basic income has to have any taxes associated with it. A common mistake people (including the government) make is to assume that government spending must be funded by taxation. It doesn't have to be.
If the government spends and the economy responds productively to that spending, then you're fine. Taxing is a separate issue. You should only really tax when you want to remove money from a specific part of the economy.
To put it succinctly, increasing taxes does not increase the amount of money the government can usefully spend unless you directly taxed the use of some resource and the spending is going to put that particular resource to use in a more desirable way.
> and lowering the supply?
Labor is a resource that goes into production just like any other resource. Depending on the context, labor can be substituted for various other resources (including foreign labor, automation, etc.).
So it's possible that some forms of labor could become more expensive under basic income. But it could just as easily go the other way. There are plenty of jobs people would love to do if only they could afford the low pay. These desirable potentially socially beneficial jobs might get cheaper.
It's hard to say exactly what the effect of basic income will be on the labor market. But, in aggregate, we do know that the economy is capable of producing at levels higher than current output levels. If we give more people the ability to spend money, we'll produce more stuff to meet the demand.
> I don't see how 1 Apple can offset 1 million unemployed, and really skeptical such a company could grow to that size/profitability under the necessary labor/tax system to support UBI.
I can understand why you're skeptical. Just keep in mind that we're currently introducing many inefficiencies into the system just as an excuse to provide people incomes through the labor market. And even then, we're still not maxing out the productive capacity of the economy.
I would encourage you to ponder what you think might happen if the government stopped trying to balance its budget and just spent as much money as the economy could absorb without causing inflation?
What amount should that be? How does the distribution of the spending affect the amount they can spend? Surely if they spent it by tossing it down a hole, there would be no limit. But there is a limit. Where does that limit come from? How do taxes factor in?
- AnimalMuppet 9y ago> If the government spends and the economy responds productively to that spending, then you're fine. Taxing is a separate issue. You should only really tax when you want to remove money from a specific part of the economy. Or when you don't want your government to run a deficit. Or when you don't want to finance your government by printing money. That always ends badly, no matter how clever the mechanism is this time, or how many people say "it's different this time". > To put it succinctly, increasing taxes does not increase the amount of money the government can usefully spend unless you directly taxed the use of some resource and the spending is going to put that particular resource to use in a more desirable way. I don't think the economy works the way you think it works...
- akvadrako 9y ago> Or when you don't want to finance your government by printing money. The point is you can finance your government by just printing money. If the value of your expenditure raises the wealth of the nation by the same amount, there will be no inflation. Though I would say it's just a hidden wealth tax.
- AnimalMuppet 9y agoYes, that's true - for the part of the government budget that raises the wealth of the nation. That's not the whole budget, though.
- Suncho 9y ago> > If the government spends and the economy responds productively to that spending, then you're fine. Taxing is a separate issue. You should only really tax when you want to remove money from a specific part of the economy. > Or when you don't want your government to run a deficit. Why wouldn't you want to run a deficit? What do you feel is the downside? Are there times when it's appropriate to run a deficit and times when it's not? Which times are which and how do you tell the difference? I have my own answers to these questions. But I'm asking for your opinion. > Or when you don't want to finance your government by printing money. What do you feel the difference is between deficit spending and printing money? > That always ends badly, no matter how clever the mechanism is this time, or how many people say "it's different this time". Does it? Why do you suppose it is that many developed nations are running budget deficits? Do you feel that this is a mistake? What do you think would happen if all governments balanced their budgets? Again, I have my own answers to these questions and I'm looking for your opinion. > I don't think the economy works the way you think it works... How do you think it works?