7 ms·

Where's the money for the UBI experiment coming from? There's no free lunch, folks...

by moralsupply 6y ago

phaemon 6y ago
Where do you think money comes from? Seriously, how do you think it's created?
- vixen99 6y ago
  It comes from taxes, borrowing and printing. Only one of those relates to the added value otherwise known as wealth creation. The other two ultimately make everyone poorer. The question is: for a given country, what proportion of the population can theoretically be supported by the efforts of those who pay those taxes. This isn't a moral judgement on the basic income idea; it's just required prior basic arithmetic for those planning to introduce BI. Will BI actually work in the long run? I don't know.
  - lm28469 6y ago
    > The question is: for a given country, what proportion of the population can theoretically be supported by the efforts of those who pay those taxes. idk, you tell me: https://www.theguardian.com/business/2017/nov/08/bill-gates-jeff-bezos-warren-buffett-wealthier-than-poorest-half-of-us https://www.theguardian.com/business/2017/nov/08/bill-gates-...
    - alexilliamson 6y ago
      My summary is that if we somehow captured the entire wealth of the wealthiest three individuals, we could double the wealth of everyone in the bottom 50%.
    - NovemberWhiskey 6y ago
      Wealth != income. Gates, Buffett and Bezos are worth a combined $250bn. There are about 210mm Americans over 18. So you can wipe out the entire accumulated wealth of those three and give everyone ... $1,200, one time only. Not life changing, is it?
  - phaemon 6y ago
    > It comes from taxes No, taxes don't create money. Taxpayers don't print up their own notes and send them in to the government. > borrowing That's a bit vague. What kind of borrowing do you mean? > printing. Well, at least that one is right :) > Only one of those relates to the added value otherwise known as wealth creation. The other two ultimately make everyone poorer. I don't know what you mean by that. None of those relates directly to wealth creation, and they all relate to it indirectly. What did you mean by that specifically?
- qwe098cube 6y ago
  money is debt.
- moralsupply 6y ago
  Money is created through 2 processes: 1. Governments operate in debt-spending mode. So governments issue bonds (glorified IOUs) to banks, which give governments money. Banks then "sell" their bonds to the FED, at which point money is created. Banks use that money to buy more bonds, and the cycle repeats. BTW, to pay for the interest on the bonds, the government uses your taxes -- that's right, your taxes are not used to pay for pretty much anything the government does, it only pays for the debt the previous governments accumulated while debt-spending. 2. Banks receive money deposits, and lend money using those deposits, but not in a 1:1 rate. The rate varies, but, for instance, for every dollar a bank gets in deposits it can lend 10, which means that effectively banks create money. Also consider that this money created out of nowhere is redeposited, repeating the cycle, so in the end a dollar ends up making a thousand. For the record, currently the rate is 1:infinity in the US
neilwilson 6y ago
It comes from spending the money. If you don't understand that, then time to get the book and learn how the money system works https://www.amazon.com/dp/B07YM2K8F3 https://www.amazon.com/dp/B07YM2K8F3
- luckylion 6y ago
  > It comes from spending the money. No, it comes from taxing people outside the experiment.
  - neilwilson 6y ago
    Not in financial terms. The money comes from the circulation. It's all just a money illusion. It passes tax points as it is spent and re-earned. The real goods and services comes from outside the experiment. Scratch any UBI scheme and you'll find (i) a tax credit system in disguise because the amount isn't enough to live on (ii) a currency lock with an area that doesn't receive the payment and who fill the goods and services deficit, or (iii) a set of people who don't receive the payment (usually due to a qualifying period), and who fill the goods and services deficit.
- notahacker 6y ago
  Even Wray and Mitchell aren't radical enough to argue that money printing without work incentives is sustainable...
  - neilwilson 6y ago
    Nice straw man. Where did I mention that? The money comes from spending the money. And you can do that right up to the point where you run out of unemployment. In the vernacular where government spending becomes ineffective.
    - notahacker 6y ago
      I'd have thought the point as pertains to UBI - an expensive permanent universal subsidy rather than a payout to the unemployed or job guarantee which fluctuates cyclically according to unemployment levels - was pretty obvious. In conventional economics the government funds its spending by borrowing or taxation. In Randall/Wray economics a unified govt/central bank spends the money into existence and has huge scope for fiscal stimulus in economic downturns with bond issue being unnecessary, but money still derives its value from the taxes the government levies. Under either economic model, the extra cost of funding voluntary economic inactivity under UBI implies net tax rises.
nabla9 6y ago
It's not free lunch, it's wealth distribution system. Everyone gets UBI, then it's gradually taxed away as income increases. If some part of UBI is taken from corporate taxation, it can be thought as subsidy from companies that employ few people to companies that employ more people.
- notahacker 6y ago
  > If some part of UBI is taken from corporate taxation, it can be thought as subsidy from companies that employ few people to companies that employ more people. Or a subsidy from companies which pay people properly to companies who pay people below subsistence levels, or a subsidy from companies that produce stuff to people who choose not to even look for opportunities to produce anything...
  - nabla9 6y ago
    Yes. It's subsidy for low income job creators and workers. It should also increase bargaining power for low income workers.
raziel2p 6y ago
Are you asking how it happened in Finland, or how it would happen in a theoretical future world? Start my taxing the rich. Also consider the money saved from reduced bureaucracy around unemployment benefits. The money spent on corporate bailouts the past few months would probably be enough to provide UBI for quite a long time.
- NovemberWhiskey 6y ago
  > Start my [sic] taxing the rich. I don't think it's clear that this is anywhere near enough. Say you want to pay $1,200 per month to all Americans over 18. There're about 210mm of them. That's just over $3tn per year. In 2017, the latest year with detailed data, Americans paid about $1.6tn in Federal income taxes. So the scale of the spending we're talking about is "imagine income taxes increased to about 300% of the current amount". Of course, it's more nuanced than that, because the theory is you make some savings on other programs and fund from sources other than just income tax - but it still gives a sense of the scale.

Where's the money for the UBI experiment coming from? There's no free lunch, folks...

phaemon 6y ago

Where do you think money comes from? Seriously, how do you think it's created?

vixen99 6y ago
It comes from taxes, borrowing and printing. Only one of those relates to the added value otherwise known as wealth creation. The other two ultimately make everyone poorer. The question is: for a given country, what proportion of the population can theoretically be supported by the efforts of those who pay those taxes. This isn't a moral judgement on the basic income idea; it's just required prior basic arithmetic for those planning to introduce BI. Will BI actually work in the long run? I don't know.
- lm28469 6y ago
  > The question is: for a given country, what proportion of the population can theoretically be supported by the efforts of those who pay those taxes. idk, you tell me: https://www.theguardian.com/business/2017/nov/08/bill-gates-jeff-bezos-warren-buffett-wealthier-than-poorest-half-of-us https://www.theguardian.com/business/2017/nov/08/bill-gates-...
  - alexilliamson 6y ago
    My summary is that if we somehow captured the entire wealth of the wealthiest three individuals, we could double the wealth of everyone in the bottom 50%.
  - NovemberWhiskey 6y ago
    Wealth != income. Gates, Buffett and Bezos are worth a combined $250bn. There are about 210mm Americans over 18. So you can wipe out the entire accumulated wealth of those three and give everyone ... $1,200, one time only. Not life changing, is it?
- phaemon 6y ago
  > It comes from taxes No, taxes don't create money. Taxpayers don't print up their own notes and send them in to the government. > borrowing That's a bit vague. What kind of borrowing do you mean? > printing. Well, at least that one is right :) > Only one of those relates to the added value otherwise known as wealth creation. The other two ultimately make everyone poorer. I don't know what you mean by that. None of those relates directly to wealth creation, and they all relate to it indirectly. What did you mean by that specifically?
qwe098cube 6y ago
money is debt.
moralsupply 6y ago
Money is created through 2 processes: 1. Governments operate in debt-spending mode. So governments issue bonds (glorified IOUs) to banks, which give governments money. Banks then "sell" their bonds to the FED, at which point money is created. Banks use that money to buy more bonds, and the cycle repeats. BTW, to pay for the interest on the bonds, the government uses your taxes -- that's right, your taxes are not used to pay for pretty much anything the government does, it only pays for the debt the previous governments accumulated while debt-spending. 2. Banks receive money deposits, and lend money using those deposits, but not in a 1:1 rate. The rate varies, but, for instance, for every dollar a bank gets in deposits it can lend 10, which means that effectively banks create money. Also consider that this money created out of nowhere is redeposited, repeating the cycle, so in the end a dollar ends up making a thousand. For the record, currently the rate is 1:infinity in the US

neilwilson 6y ago

It comes from spending the money. If you don't understand that, then time to get the book and learn how the money system works https://www.amazon.com/dp/B07YM2K8F3 https://www.amazon.com/dp/B07YM2K8F3

luckylion 6y ago
> It comes from spending the money. No, it comes from taxing people outside the experiment.
- neilwilson 6y ago
  Not in financial terms. The money comes from the circulation. It's all just a money illusion. It passes tax points as it is spent and re-earned. The real goods and services comes from outside the experiment. Scratch any UBI scheme and you'll find (i) a tax credit system in disguise because the amount isn't enough to live on (ii) a currency lock with an area that doesn't receive the payment and who fill the goods and services deficit, or (iii) a set of people who don't receive the payment (usually due to a qualifying period), and who fill the goods and services deficit.
notahacker 6y ago
Even Wray and Mitchell aren't radical enough to argue that money printing without work incentives is sustainable...
- neilwilson 6y ago
  Nice straw man. Where did I mention that? The money comes from spending the money. And you can do that right up to the point where you run out of unemployment. In the vernacular where government spending becomes ineffective.
  - notahacker 6y ago
    I'd have thought the point as pertains to UBI - an expensive permanent universal subsidy rather than a payout to the unemployed or job guarantee which fluctuates cyclically according to unemployment levels - was pretty obvious. In conventional economics the government funds its spending by borrowing or taxation. In Randall/Wray economics a unified govt/central bank spends the money into existence and has huge scope for fiscal stimulus in economic downturns with bond issue being unnecessary, but money still derives its value from the taxes the government levies. Under either economic model, the extra cost of funding voluntary economic inactivity under UBI implies net tax rises.

nabla9 6y ago

It's not free lunch, it's wealth distribution system. Everyone gets UBI, then it's gradually taxed away as income increases. If some part of UBI is taken from corporate taxation, it can be thought as subsidy from companies that employ few people to companies that employ more people.

notahacker 6y ago
> If some part of UBI is taken from corporate taxation, it can be thought as subsidy from companies that employ few people to companies that employ more people. Or a subsidy from companies which pay people properly to companies who pay people below subsistence levels, or a subsidy from companies that produce stuff to people who choose not to even look for opportunities to produce anything...
- nabla9 6y ago
  Yes. It's subsidy for low income job creators and workers. It should also increase bargaining power for low income workers.

raziel2p 6y ago

Are you asking how it happened in Finland, or how it would happen in a theoretical future world? Start my taxing the rich. Also consider the money saved from reduced bureaucracy around unemployment benefits. The money spent on corporate bailouts the past few months would probably be enough to provide UBI for quite a long time.

NovemberWhiskey 6y ago
> Start my [sic] taxing the rich. I don't think it's clear that this is anywhere near enough. Say you want to pay $1,200 per month to all Americans over 18. There're about 210mm of them. That's just over $3tn per year. In 2017, the latest year with detailed data, Americans paid about $1.6tn in Federal income taxes. So the scale of the spending we're talking about is "imagine income taxes increased to about 300% of the current amount". Of course, it's more nuanced than that, because the theory is you make some savings on other programs and fund from sources other than just income tax - but it still gives a sense of the scale.