2 ms·

I'm not an expert in this area. It seems like an interesting thought experiment for a transitional period to UBI+automation would be to have government pay for

I'm not an expert in this area. It seems like an interesting thought experiment for a transitional period to UBI+automation would be to have government pay for higher minimum wage. For example, current minimum wage is $7.25. We up this to $10 paid by employer and $5 paid by government. For each 2c above that the employer pays, the government kicks in 1c less up until $20. Exact numbers are just examples. The issue with only higher minimum wage is that it accelerates the economic move towards automation. That may be seen as a good thing in this crowd, but too high of a pace of change could cause suffering.

anchpop 5y ago
It's not a bad idea, but it leads to weird situations where a job generates $11/hour for the employer, the employer pays $10, the government pays $5, and the end result is that society is paying this person $15/hour to do work that only generates $11/hour. So the social cost of this program is $4/hour. (I'm going to round that up to $5/hour for simplicity.) My question is: if we're okay with doing this, why not just give them $5/hour whether they have a job or not? (For people who have jobs, the phase-out can be made to be the same as what you described using an income tax.) That program would have the same social cost, the person could still get a job that pays $10/hour and generates $11/hour, they'd take home the same amount of money, except now the subsidy isn't tied to a job that isn't worth as much to society as what the person is making. (This is essentially a UBI)
- gregable 5y ago
  Perhaps the difference is that UBI doesn't pay you for working. In your counter-example, for the UBI to result in the same thing requires that the worker work exactly the same number of hours. UBI is usually per-person, not per hour worked. If you tie UBI to per-person, for better or for worse, you distort the market to increase the price of labor. Each person has to work fewer hours to have the same income as before, thus you'd likely see less labor supply and thus higher price. By tying UBI partly to labor, for better or for worse, you distort the market to decrease the price of labor at least in comparison to per-person UBI. I'd imagine vs. the status quo it's an price increase, but stacked against per-person UBI it should generate more labor supply and thus a price decrease. If made independent from livable wages, it isn't clear that increasing the price of labor is optimal at the moment. It would seem to accelerate the pace of automation which would increase the pace of inequality. It would also slow overall economic output - the $11/hour generating job may cease to exist.

anchpop 5y ago

It's not a bad idea, but it leads to weird situations where a job generates $11/hour for the employer, the employer pays $10, the government pays $5, and the end result is that society is paying this person $15/hour to do work that only generates $11/hour. So the social cost of this program is $4/hour. (I'm going to round that up to $5/hour for simplicity.) My question is: if we're okay with doing this, why not just give them $5/hour whether they have a job or not? (For people who have jobs, the phase-out can be made to be the same as what you described using an income tax.) That program would have the same social cost, the person could still get a job that pays $10/hour and generates $11/hour, they'd take home the same amount of money, except now the subsidy isn't tied to a job that isn't worth as much to society as what the person is making. (This is essentially a UBI)

gregable 5y ago
Perhaps the difference is that UBI doesn't pay you for working. In your counter-example, for the UBI to result in the same thing requires that the worker work exactly the same number of hours. UBI is usually per-person, not per hour worked. If you tie UBI to per-person, for better or for worse, you distort the market to increase the price of labor. Each person has to work fewer hours to have the same income as before, thus you'd likely see less labor supply and thus higher price. By tying UBI partly to labor, for better or for worse, you distort the market to decrease the price of labor at least in comparison to per-person UBI. I'd imagine vs. the status quo it's an price increase, but stacked against per-person UBI it should generate more labor supply and thus a price decrease. If made independent from livable wages, it isn't clear that increasing the price of labor is optimal at the moment. It would seem to accelerate the pace of automation which would increase the pace of inequality. It would also slow overall economic output - the $11/hour generating job may cease to exist.