4 ms·

It's an important question. A lot of the discussion around basic income takes place in the context of Modern Monetary Theory. I mean, it kind of has too, beca

It's an important question. A lot of the discussion around basic income takes place in the context of Modern Monetary Theory. I mean, it kind of has too, because otherwise basic income is pretty unaffordable. I've done the math, it is possible but really hard. To significantly oversimplify one stream of thought in Modern Monetary Theory, the idea is that you grow the money supply through government programs and shrink it through taxation and that's how you keep inflation in check. (That's also why you don't have to worry about the cost of government programs. The government can print and spend as much money as it wants, because doing so is just growing the money supply. And if inflation starts to go up, you just raise taxes in response.) If you look at what's happening with inflation right now, some of it is wage growth pressure. You could argue that some of it was growth in the money supply - although I would give serious side eye to that argument because not very much was given out in those stimulus checks. But if you really look at what's driving price increases, you have to look at what's happening internally to companies. Wages are growing, yes, but prices are growing faster than wages. Why? Because corporate profits are growing even faster. So one of the primary factors driving inflation isn't the increase in the money supply, or workers wage increases - it's companies taking advantage of the inflation to raise their prices even more. If you look at the numbers, if worker wage increases would require a 5% increase in prices, companies are taking that and then raises their prices 10% and taking the difference as profits. Corporate profits were already at all time highs, so they absolutely do not have to do that. It's effectively price gouging. So if we look at a basic income, if we implement it in isolation, it's reasonable to believe the same thing will happen. Companies will simply raise their prices so that the top 10% (who own the majority of the stock), walk away with all that new money added to the supply. If we really want basic income to have the impact we all hope it will have, we have to implement it alongside income and wealth caps. Basically, if you actually want a more equitable (and healthier for everyone) distribution of wealth, then you have to put hard limits on hoarding. And that's how you manage the money supply to manage inflation. You implement basic income alongside 100% wealth and income taxes above a certain level.

pharke 5y ago
Where would new money even go in a system with both fiat currency and wealth caps? Do you have to constantly increase the wealth caps with inflation? How do you perfectly manage that rate? As we can see governments are not capable of doing that now. Do you cap the profits of businesses as well and if so why do they continue to innovate or expand once they've reached the same level as all of their competitors? You're really just proposing a centrally planned economy where all wages and prices will be set by the government, that never works and never will work since no small group of people will ever be able to plan the lives of a much larger group without producing a lot of misery. Not to mention all the usual human failings and corruption that creep into every system over time.
- dbingham 5y ago
  All of those questions have pretty straight forward answers. But your first question has really just floored me. Really? If money can't go into the pockets of the very wealthy it has nowhere else to go? The money would spread out through out the rest of the economy. We don't have a scarcity problem right now, we have a distribution problem. We have plenty of resources to go around, but we have a problem where a very few people are hoarding the vast majority of those resources. So a wealth and income cap is designed to stop that hoarding and force a wider distribution of those resources. As for the rest of your questions. > Do you have to constantly increase the wealth caps with inflation? Yep. Just as we really should be (but aren't) linking minimum wage to inflation currently. And linking our progressive income tax brackets to inflation. And linking our property taxes to inflation. > How do you perfectly manage that rate? You don't have to. We don't manage it it now in all of our existing taxation systems (both wealth based and income based). We only have to do good enough to keep inflation broadly in check. > Do you cap the profits of businesses as well and if so why do they continue to innovate or expand once they've reached the same level as all of their competitors? No. These are individual income and wealth caps. Business profits are business profits. The idea is that if individuals are limited in how much they can take out of the business, the businesses profits will be more widely distributed among those who contributed to the business. And the business will have less incentive to price gouge. > You're really just proposing a centrally planned economy where all wages and prices will be set by the government No I am not. I'm not proposing anything much different than we have now. We have a minimum wage, we're adding a UBI to put a floor under people. We already have a wealth tax for the 90% of people who's wealth is entirely in their real property (their houses), we just leave the 10% of people who's wealth is primarily stocks, commodities or other assets out of it. We already have a progressive income tax, and we've had a progressive income tax that got very close to 100% above a certain level in the past (in the 50s in the US it was ~90% above ~$4 million). The only thing new I'm proposing is putting a hard cap on overall wealth.

pharke 5y ago

Where would new money even go in a system with both fiat currency and wealth caps? Do you have to constantly increase the wealth caps with inflation? How do you perfectly manage that rate? As we can see governments are not capable of doing that now. Do you cap the profits of businesses as well and if so why do they continue to innovate or expand once they've reached the same level as all of their competitors? You're really just proposing a centrally planned economy where all wages and prices will be set by the government, that never works and never will work since no small group of people will ever be able to plan the lives of a much larger group without producing a lot of misery. Not to mention all the usual human failings and corruption that creep into every system over time.

dbingham 5y ago
All of those questions have pretty straight forward answers. But your first question has really just floored me. Really? If money can't go into the pockets of the very wealthy it has nowhere else to go? The money would spread out through out the rest of the economy. We don't have a scarcity problem right now, we have a distribution problem. We have plenty of resources to go around, but we have a problem where a very few people are hoarding the vast majority of those resources. So a wealth and income cap is designed to stop that hoarding and force a wider distribution of those resources. As for the rest of your questions. > Do you have to constantly increase the wealth caps with inflation? Yep. Just as we really should be (but aren't) linking minimum wage to inflation currently. And linking our progressive income tax brackets to inflation. And linking our property taxes to inflation. > How do you perfectly manage that rate? You don't have to. We don't manage it it now in all of our existing taxation systems (both wealth based and income based). We only have to do good enough to keep inflation broadly in check. > Do you cap the profits of businesses as well and if so why do they continue to innovate or expand once they've reached the same level as all of their competitors? No. These are individual income and wealth caps. Business profits are business profits. The idea is that if individuals are limited in how much they can take out of the business, the businesses profits will be more widely distributed among those who contributed to the business. And the business will have less incentive to price gouge. > You're really just proposing a centrally planned economy where all wages and prices will be set by the government No I am not. I'm not proposing anything much different than we have now. We have a minimum wage, we're adding a UBI to put a floor under people. We already have a wealth tax for the 90% of people who's wealth is entirely in their real property (their houses), we just leave the 10% of people who's wealth is primarily stocks, commodities or other assets out of it. We already have a progressive income tax, and we've had a progressive income tax that got very close to 100% above a certain level in the past (in the 50s in the US it was ~90% above ~$4 million). The only thing new I'm proposing is putting a hard cap on overall wealth.