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All economic growth comes from money moving somewhere. It just seems absurd to me to think "may not result in any growth at all". Money in the hands of the poo

by beat 8y ago

All economic growth comes from money moving somewhere. It just seems absurd to me to think "may not result in any growth at all". Money in the hands of the poor and middle class moves faster than money in the hands of the rich, and thus creates more actual business. This is a well-understood economic fact.

AnimalMuppet 8y ago
But it wasn't going to be taken out of the hands of the rich to pay for this. It was going to come from a VAT, and from existing welfare. But existing welfare is taking it from the poor, and the VAT is taking it from businesses and people who buy stuff. It's largely not coming from the rich. So even by your second paragraph, it's unclear that this is going to cause actual growth.
- beat 8y ago
  Think about the math. Is a VAT actually going to take a third of the income of the average wage earner? No, no it will not.
  - AnimalMuppet 8y ago
    Where did "a third" come from? Why that number? Why do you think that number is relevant? And why do you think it answers anything I have said?
    - beat 8y ago
      I'm round-numbering. Median individual income in the US is a bit over $30k, adding $12k to that is roughly a third. And your claim, which is nonsense, is that the VAT will eat 100% of that $12k.
      - AnimalMuppet 8y ago
        That is not at all my claim. My claim is that doing this may not grow the economy as a whole. Someone making median income or (especially) less may well benefit; I do not claim that they won't.
AnimalMuppet 8y ago
Too late to edit my previous reply, so I'm adding this parallel one. > All economic growth comes from money moving somewhere. No. No it doesn't. All real economic growth comes from more things that people want being produced. It results in money moving somewhere, but the money moving isn't the real growth, nor is it the cause. It's the result. To adapt an explanation from Thomas Sowell, take beach houses. There's more demand for beach houses than there is supply, so they tend to be very expensive. I can't afford one - I can only rent. But if we gave everybody a bunch of money, there still wouldn't be any more beach houses. All that would happen is that beach houses would rise in price, because now there would be more money chasing the same beach houses. This misunderstanding - thinking about money instead of about producing things - leads to the idea that you can cause growth by moving money around. Sometimes you can - when the demand is actually there, and the economy has the capacity to produce more. Well, in this situation (UBI), the demand is definitely there. The poor genuinely need stuff, lots of it. But even so, adding more money won't cause the economy to produce more unless it has the spare capacity. All it might do is redistribute the things that are already being produced. (And that may be fine. If we want to say that the poor shouldn't starve just because they're poor, and that the rich are going to have to make do with less so that the poor don't starve, there's a case to be made for that. But that's not the same as growth.) So the question might be, how much spare capacity do you think there is in the economy, and why do you think that?
- beat 8y ago
  Without money to move, there is no economic growth. There are supply-side problems, and demand-side problems. Sowell's example is woefully incomplete. He's talking only of limited, unique physical goods. He's not talking about things where production can increase in response to demand. He's not talking about services. And bluntly, UBI isn't there to help people buy beach houses, and won't cause enough inflationary pressure on beach houses to make a damn bit of difference on their price. It's there to help people afford a car, or child care, or medical bills, or any of the countless things that plague the poor rabble in this country. Spare productive capacity is why UBI is feasible in the first place. The economy is producing more than people can afford to buy, and the machinery that makes it so productive is displacing jobs they need to afford anything at all. If you're reading Sowell, you should read Yang's book. He addresses this stuff. He's not just treating UBI as a golden hammer. It's a straightforward, workable way to cope with a lot of problems that keep us from coping with other problems. If technological advances wipe out 10% or more of existing jobs in the next couple of decades with no replacements in sight, what do we do? Blame them for being lazy? Retrain those truck drivers as computer programmers so they can get those hot programming jobs in their population 800 midwestern town? And move those local startups into the strip mall that closed because retail got wiped out by Amazon? If we don't do something about it, there will be blood in the streets, sooner or later. That's a much bigger problem than taxes.

by beat 8y ago

AnimalMuppet 8y ago

But it wasn't going to be taken out of the hands of the rich to pay for this. It was going to come from a VAT, and from existing welfare. But existing welfare is taking it from the poor, and the VAT is taking it from businesses and people who buy stuff. It's largely not coming from the rich. So even by your second paragraph, it's unclear that this is going to cause actual growth.

beat 8y ago
Think about the math. Is a VAT actually going to take a third of the income of the average wage earner? No, no it will not.
- AnimalMuppet 8y ago
  Where did "a third" come from? Why that number? Why do you think that number is relevant? And why do you think it answers anything I have said?
  - beat 8y ago
    I'm round-numbering. Median individual income in the US is a bit over $30k, adding $12k to that is roughly a third. And your claim, which is nonsense, is that the VAT will eat 100% of that $12k.
    - AnimalMuppet 8y ago
      That is not at all my claim. My claim is that doing this may not grow the economy as a whole. Someone making median income or (especially) less may well benefit; I do not claim that they won't.

AnimalMuppet 8y ago

Too late to edit my previous reply, so I'm adding this parallel one. > All economic growth comes from money moving somewhere. No. No it doesn't. All real economic growth comes from more things that people want being produced. It results in money moving somewhere, but the money moving isn't the real growth, nor is it the cause. It's the result. To adapt an explanation from Thomas Sowell, take beach houses. There's more demand for beach houses than there is supply, so they tend to be very expensive. I can't afford one - I can only rent. But if we gave everybody a bunch of money, there still wouldn't be any more beach houses. All that would happen is that beach houses would rise in price, because now there would be more money chasing the same beach houses. This misunderstanding - thinking about money instead of about producing things - leads to the idea that you can cause growth by moving money around. Sometimes you can - when the demand is actually there, and the economy has the capacity to produce more. Well, in this situation (UBI), the demand is definitely there. The poor genuinely need stuff, lots of it. But even so, adding more money won't cause the economy to produce more unless it has the spare capacity. All it might do is redistribute the things that are already being produced. (And that may be fine. If we want to say that the poor shouldn't starve just because they're poor, and that the rich are going to have to make do with less so that the poor don't starve, there's a case to be made for that. But that's not the same as growth.) So the question might be, how much spare capacity do you think there is in the economy, and why do you think that?

beat 8y ago
Without money to move, there is no economic growth. There are supply-side problems, and demand-side problems. Sowell's example is woefully incomplete. He's talking only of limited, unique physical goods. He's not talking about things where production can increase in response to demand. He's not talking about services. And bluntly, UBI isn't there to help people buy beach houses, and won't cause enough inflationary pressure on beach houses to make a damn bit of difference on their price. It's there to help people afford a car, or child care, or medical bills, or any of the countless things that plague the poor rabble in this country. Spare productive capacity is why UBI is feasible in the first place. The economy is producing more than people can afford to buy, and the machinery that makes it so productive is displacing jobs they need to afford anything at all. If you're reading Sowell, you should read Yang's book. He addresses this stuff. He's not just treating UBI as a golden hammer. It's a straightforward, workable way to cope with a lot of problems that keep us from coping with other problems. If technological advances wipe out 10% or more of existing jobs in the next couple of decades with no replacements in sight, what do we do? Blame them for being lazy? Retrain those truck drivers as computer programmers so they can get those hot programming jobs in their population 800 midwestern town? And move those local startups into the strip mall that closed because retail got wiped out by Amazon? If we don't do something about it, there will be blood in the streets, sooner or later. That's a much bigger problem than taxes.