4 ms·
Because the real world isn't Econ 101. Not all goods are perfectly elastic. Take a look at the research surrounding the minimum wage. If we were to increase t
by quinnchr 13y ago
Because the real world isn't Econ 101.
Not all goods are perfectly elastic. Take a look at the research surrounding the minimum wage.
If we were to increase the minimum wage by $0.50 (~6.7%) we'd only have about a 1% increase in food prices (http://www.ers.usda.gov/media/306735/aib74703_1_.pdf http://www.ers.usda.gov/media/306735/aib74703_1_.pdf). Also take a look at the study regarding fast food prices by Card and Krueger.
Increasing the minimum wage in general does not cause a net rise in unemployment (http://www.deakin.edu.au/buslaw/aef/workingpapers/papers/2008_14eco.pdf http://www.deakin.edu.au/buslaw/aef/workingpapers/papers/200...).
The people who would receive the BI are the in the lowest income brackets. The bottom three income quintiles on average spend more in a year than they earn. This mean redistributing money to the lower income quintiles effectively results in more money being put back into the economy.
You can see this by studying the economic effect of various subsidies. Food stamps have the highest return on the dollar, with $1.73 in economic activity generated for every dollar spent on food stamps. And subsidies to the higher tax brackets like the Bush tax cuts have a negative return. http://frac.org/initiatives/american-recovery-and-reinvestment-act/snapfood-stamps-provide-real-stimulus/ http://frac.org/initiatives/american-recovery-and-reinvestme...
- cheald 13y agoThank you! Lots of things for me to chew on and mull over here. One thing stuck out to me, though: > The people who would receive the BI are the in the lowest income brackets. As I understand BI, this is not true. BI is a payment made to every citizen and/or resident of a country, irrespective of any other consideration (including income, wealth, etc). What you seem to be describing is Guaranteed Minimum Income, which is an entirely different ball of wax. I'm now wondering how much of the discussion is people talking past each other because of conflation of these two terms. See http://en.wikipedia.org/wiki/Basic_income http://en.wikipedia.org/wiki/Basic_income and http://en.wikipedia.org/wiki/Minimum_income http://en.wikipedia.org/wiki/Minimum_income
- Retric 13y agoAll formes of BI are paid for with a tax, if your making say ~50k the money that tax equals the amount you receive from BI. But if your making 200k you end up receiving far less from BI than you pay in taxes even if there depositing money into your account every month. PS: Of note BI is assumed to replace social security so someone making 50-80k may effectively pay significantly less in taxes prior to retirement but receive far fewer benefits in retirement.
- e40 13y agoOf note BI is assumed to replace social security so someone making 50-80k may effectively pay significantly less in taxes prior to retirement but receive far fewer benefits in retirement. This is why I think BI doesn't have a very good chance in the US. The AARP is a very powerful lobby and their members wouldn't go for a reduction in benefits after retirement.
- prawn 13y agoDo you have voluntary contribution schemes for retirement in the US? e.g., That $80k retiree could've been pumping money into investments designed to top up their BI once they retire?
- sstrudeau 13y agoYes, there are a number of voluntary, tax-privileged retirement savings options, some of which may only be provided by employers, but not all employers provide (e.g. 401k/403b).
- Kiro 13y ago>The people who would receive the BI are the in the lowest income brackets. Everyone would receive it. Otherwise it's not BI.
- ihateloggingin 13y agoEven with BI guaranteed to all, not everyone would receive it because of income tax withholdings.