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If the rhetoric is solely around "government spending" then the perspective will always be that UBI is "too expensive". But the money doesn't just vanish when

by uoaei 6y ago

If the rhetoric is solely around "government spending" then the perspective will always be that UBI is "too expensive". But the money doesn't just vanish when it enters people's bank accounts. All of a sudden, banks have a lot more collateral against which to borrow and invest, by virtue of the fact that the bank accounts which store the UBI have money in them. People spend that money and it enters and moves through the economy. The government taxes it back out via sales taxes, income taxes, capital gains taxes, etc. I think, in general, it's worth having an economy that keeps moving. If you let too few people have too much proportion of available wealth, the consumers won't have any to work with and your economy will be entirely dependent on luxury goods for a tiny proportion of the population.

chris_va 6y ago
A higher velocity of capital ~= larger economy, which is good. However, a higher velocity of capital without commensurate economic value being created ~= massive inflation. This is a potential risk for UBI, and one that small-scale studies do not cover. Ideally, the additional economic value would be greater than the face value of the capital transferred every year, but there is no guarantee that is correct (nor is there any reason they should even be on the same order of magnitude). Implementing UBI on a national scale would be a grand experiment. Most grand experiments tend to fail with massive upheaval. I think for UBI to be adopted, you would need a plausible incremental strategy with a lot of safety checks.
- uoaei 6y ago
  Yes, taking things ad absurdum in either direction will lead to catastrophe. The perspective of MMT is that government can and should tax out money at a rate that keeps the economy from inflating beyond the scope of our control, and inject it at a rate that sustains the velocity of capital. Making this perspective the dominant one in discourse, however, would require a lot more public trust in government before people got comfortable with the idea of governments taxing us for our benefit.
  - chris_va 6y ago
    Well, in this case "ad absurdum" is pretty close to a reasonable UBI. A reasonable UBI (say $1000/mo) is going to be ~15% of the entire US economy "printed" every year. The NPV of that dilution would be enormous, unless the economic value being created is very close to $1000/mo (or higher).
    - uoaei 6y ago
      Consider all the government spending that currently goes to companies (tax credits, subsidies, etc.) and how that money further goes into people's pockets as (at $1000/mo, close to minimum) wage. I don't have hard numbers but this is probably not much different from the overall cost of UBI. All UBI does is cut out the middleman. Especially post-recession, many companies only survive because they run at a loss for a while and soak up investments to stay afloat. If we are to believe capitalists, we should structure the economy to discourage corporate grifters. UBI would do exactly that and replace costs that currently support the grifting behavior. I'm perplexed by how often people assume that spending will only increase with the introduction of UBI, when there are many existing pathways for capital to travel that will become obsolete when UBI is enacted, and can be diverted to funding UBI instead.
- chrisin2d 6y ago
  > However, a higher velocity of capital without commensurate economic value being created ~= massive inflation. This is a good point. Money maps to stuff and services. But there is ample surplus production (and unused capacity) in our economy. Every year 40bn+ pounds of food is wasted at the retail level (on top of all the waste that happens before retail in production), while ~11% of the American population is food insecure. Nearly every clothing company — H&M, Nike, Burberry, Eddie Bauer, and so on — destroys billions of dollars of unsold clothing every year in order to preserve their brand. We have material abundance thanks to highly optimised mechanisation and more recently automation in agriculture and manufacturing. UBI can allow the poorest parts of society access the surplus that we would otherwise destroy.
  - chris_va 6y ago
    That argument doesn't really hold water. Having an income (via UBI or some other mechanism) would help the poor, that is true (minus the caveat above about economic upheaval). Assuming that said income will reduce economic waste is not at all evident.
WalterBright 6y ago
A functioning economy is not built on pieces of paper. It's built on people working and producing value.
- uoaei 6y ago
  That's literally untrue. It's built on people spending money. If there is no trade, there is no economy. This fetishism with "work" as a proxy for the value of the human life which performs the work is a very American concept with corollaries in only a couple other countries. This is not the norm and certainly not a healthy way to look at labor and the economy.
  - WalterBright 6y ago
    > It's built on people spending money Money is a recent invention, and economies have flourished without it. Money facilitates trade, increases liquidity, and reduces friction in transactions. > This fetishism with "work" as a proxy for the value of the human life which performs the work It is not a proxy for the value of a human life. It is a representation of the value of the labor of that human. Americans are very generous in voluntarily giving to charities.
    - uoaei 6y ago
      > It is a representation of the value of the labor of that human. By withholding economic power until someone provides "labor" as defined by the state, and leaving them embedded in an economy which requires money to survive, you are directly tying the value of the human life to the value of their labor. > giving to charities Interesting, probably has a lot to do with the low taxes and high amount of disposable income.
      - WalterBright 6y ago
        > probably has a lot to do with the low taxes and high amount of disposable income. A young lady I used to know was the kindest person I ever met. She didn't have much, but would donate a few dollars to every charity that called. They had her number, and called her all the time. She was the real deal, not one of those people who are only generous with someone else's money. > you are directly tying the value of the human life to the value of their labor. Oh baloney. Plenty of people will voluntarily give food to a hungry person.

by uoaei 6y ago

chris_va 6y ago

A higher velocity of capital ~= larger economy, which is good. However, a higher velocity of capital without commensurate economic value being created ~= massive inflation. This is a potential risk for UBI, and one that small-scale studies do not cover. Ideally, the additional economic value would be greater than the face value of the capital transferred every year, but there is no guarantee that is correct (nor is there any reason they should even be on the same order of magnitude). Implementing UBI on a national scale would be a grand experiment. Most grand experiments tend to fail with massive upheaval. I think for UBI to be adopted, you would need a plausible incremental strategy with a lot of safety checks.

uoaei 6y ago
Yes, taking things ad absurdum in either direction will lead to catastrophe. The perspective of MMT is that government can and should tax out money at a rate that keeps the economy from inflating beyond the scope of our control, and inject it at a rate that sustains the velocity of capital. Making this perspective the dominant one in discourse, however, would require a lot more public trust in government before people got comfortable with the idea of governments taxing us for our benefit.
- chris_va 6y ago
  Well, in this case "ad absurdum" is pretty close to a reasonable UBI. A reasonable UBI (say $1000/mo) is going to be ~15% of the entire US economy "printed" every year. The NPV of that dilution would be enormous, unless the economic value being created is very close to $1000/mo (or higher).
  - uoaei 6y ago
    Consider all the government spending that currently goes to companies (tax credits, subsidies, etc.) and how that money further goes into people's pockets as (at $1000/mo, close to minimum) wage. I don't have hard numbers but this is probably not much different from the overall cost of UBI. All UBI does is cut out the middleman. Especially post-recession, many companies only survive because they run at a loss for a while and soak up investments to stay afloat. If we are to believe capitalists, we should structure the economy to discourage corporate grifters. UBI would do exactly that and replace costs that currently support the grifting behavior. I'm perplexed by how often people assume that spending will only increase with the introduction of UBI, when there are many existing pathways for capital to travel that will become obsolete when UBI is enacted, and can be diverted to funding UBI instead.
chrisin2d 6y ago
> However, a higher velocity of capital without commensurate economic value being created ~= massive inflation. This is a good point. Money maps to stuff and services. But there is ample surplus production (and unused capacity) in our economy. Every year 40bn+ pounds of food is wasted at the retail level (on top of all the waste that happens before retail in production), while ~11% of the American population is food insecure. Nearly every clothing company — H&M, Nike, Burberry, Eddie Bauer, and so on — destroys billions of dollars of unsold clothing every year in order to preserve their brand. We have material abundance thanks to highly optimised mechanisation and more recently automation in agriculture and manufacturing. UBI can allow the poorest parts of society access the surplus that we would otherwise destroy.
- chris_va 6y ago
  That argument doesn't really hold water. Having an income (via UBI or some other mechanism) would help the poor, that is true (minus the caveat above about economic upheaval). Assuming that said income will reduce economic waste is not at all evident.

WalterBright 6y ago

A functioning economy is not built on pieces of paper. It's built on people working and producing value.

uoaei 6y ago
That's literally untrue. It's built on people spending money. If there is no trade, there is no economy. This fetishism with "work" as a proxy for the value of the human life which performs the work is a very American concept with corollaries in only a couple other countries. This is not the norm and certainly not a healthy way to look at labor and the economy.
- WalterBright 6y ago
  > It's built on people spending money Money is a recent invention, and economies have flourished without it. Money facilitates trade, increases liquidity, and reduces friction in transactions. > This fetishism with "work" as a proxy for the value of the human life which performs the work It is not a proxy for the value of a human life. It is a representation of the value of the labor of that human. Americans are very generous in voluntarily giving to charities.
  - uoaei 6y ago
    > It is a representation of the value of the labor of that human. By withholding economic power until someone provides "labor" as defined by the state, and leaving them embedded in an economy which requires money to survive, you are directly tying the value of the human life to the value of their labor. > giving to charities Interesting, probably has a lot to do with the low taxes and high amount of disposable income.
    - WalterBright 6y ago
      > probably has a lot to do with the low taxes and high amount of disposable income. A young lady I used to know was the kindest person I ever met. She didn't have much, but would donate a few dollars to every charity that called. They had her number, and called her all the time. She was the real deal, not one of those people who are only generous with someone else's money. > you are directly tying the value of the human life to the value of their labor. Oh baloney. Plenty of people will voluntarily give food to a hungry person.