32 ms·

Free Money for Everyone

119 points by ritchiea 13y ago

noahl 13y ago
This is interesting because, in contrast to the (many) other discussions of basic income, the author's proposal is to make it run by the Fed, not Congress, and to distribute money on a whenever-the-Fed-wants-to basis, rather than every year. This wouldn't really address the concerns about poverty that make many people interested in a basic income, because it wouldn't happen regularly and there's no guarantee that the money would be enough to make a difference in peoples' lives. But it could still have a good effect on the economy as a whole, which seems to be what he is aiming for.
- r00fus 13y ago
  Exactly. Basic income as implemented by the native american tribe (i.e., casino profit sharing) mainly won by reducing anxiety and being a regular dependable payment. Without regularity, it's just random windfalls, nothing you can bank against.
  - Zigurd 13y ago
    So use the windfalls to buy an annuity and it becomes regular. Surely either the Fed or the government could do that internally at a lower cost.
  - TimJYoung 13y ago
    Yes, but that (basic income) is not the point of this proposal. The idea is that you have a lot of people that are un-employed or under-employed, but shouldn't be, which is where we are today. This is a tool to a) get them a job and b) (by driving down un-employment) increase their wages. If this tool does it's job, then they won't need a basic income anymore - they'll be earning it at their new job.
- dragonwriter 13y ago
  There's no reason you can't have both. "Fiscal UBI" (what would come from Congress and be regular) addresses things like progressive automation and the need for a long-term trend away from employment-based survival in a world with progressive automation, "Monetary UBI" (what would be run by the Fed) is about providing monetary stimulus, where needed, in a manner that avoids being an upward redistribution of wealth (and, also, because it goes to people with a higher propensity to spend and thus has an initially higher velocity, also produces a greater stimulative effect per dollar.)
Eliezer 13y ago
I'm amazed that anything this obviously correct is entering the Overton Window. Next we'll hear someone advocating land value taxes.
- Antiquarian 13y ago
  Be still my heart.
- toomuchtodo 13y ago
  > land value taxes What is the value of a land value tax? (ELI5)
  - 3825 13y ago
    In the most basic sense, land value tax would mean that the tax would be the same whether your land was just sitting there empty or you had a hundred-story skyscraper on it. I don't know what that effects it would have. I assume the first and most direct effect would be budget shortfalls in local governments which would probably try to create more fines[0] and sin taxes (assuming they are still legal). [0] LA has an almost $200 fine for jaywalking. I'd argue that fines and confiscated money from drugs should never go into general treasury much less directly used to fund the department collecting such fines and confiscations. Our government should run on taxes alone and not on fines and fees. http://www.nytimes.com/2013/12/26/us/in-a-car-culture-clash-its-los-angeles-police-vs-pedestrians.html?pagewanted=all http://www.nytimes.com/2013/12/26/us/in-a-car-culture-clash-...
    - toomuchtodo 13y ago
      Thank you!
    - dllthomas 13y ago
      "I don't know what that effects it would have. I assume the first and most direct effect would be budget shortfalls in local governments which would probably try to create more fines[0] and sin taxes (assuming they are still legal)." In principle you could have a revenue neutral transition to a land-value tax. In practice, it might very well lead to crazy numbers.
whatevsbro 13y ago
Wow. I think they're not kidding! Yeah, let's all just sit back and receive fiat currency from the skies! I'm sure it will work out just fine, because um.. aggregate demand magic! Why not just print and hand out 100 trillion dollars to everyone? -Somehow that sounds like a bad idea, huh? But there's nothing wrong with sprinkling say, 3000 times 330 000 000 dollars into the masses' hands?
- betenoire 13y ago
  Is this the argument you are gonna go with?
- deleted 13y ago
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  - deleted 13y ago
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- SimpleXYZ 13y ago
  Of course they are not kidding. We already have examples of this at different scales. SS Disability payments, SS survivor benefits, etc. Plus, as the author mentioned, the Bush/Congress direct stimulus, WWII government demand, etc. I agree printing money and dumping on the people is a bad idea as well, but there is middle ground. More progressive taxation, ending all corporate welfare, etc. You can disagree with something without being dismissive.
- tedsanders 13y ago
  To give a serious reply to your hopefully not serious comment: Of course hyperinflation would be a concern at the $100 trillion level. The idea behind this policy would not be to inject additional money into the world. Rather, the idea is to switch channels from open-market operations to money giveaways. Because the amount of newly created money would be the same, inflation should be about the same too.
  - whatevsbro 13y ago
rayiner 13y ago
> While depression economics has many strange features, the most important one to remember is this: with slack in the economy, it’s possible to have an economic free lunch. If our economy were running at capacity, new government spending, for example, would tend to create inflation because the capacity (workers, raw materials, and equipment) would have to be bid away from someone else, thereby raising prices. But during a depression that doesn’t happen. Instead, new spending brings idle capacity into production. I think this paragraph is really important to think about until you get it. It's easy to get wrapped up in thinking of money as a thing of value when at the end of the day it's just a proxy for goods and services in the real economy. If you don't get that... you'll go off and buy Bitcoin, I guess.
- belovedeagle 13y ago
  So explain to someone who's extremely skeptical of economics mumbo-jumbo why the value of money doesn't naturally increase ("deflate", to use what seems to me to be the better-is-worse terminology) to take up that slack. In other words, shouldn't a slice of the money pie be worth a slice of the economy pie, even when the size of the economy pie, and therefore the slice, changes? How do we determine when 10% of the money supply equals 10% of the economy? It seems like what you, and the article, are saying is that a certain number of dollars always equals the same amount of, say, gold, or labor, and we just don't have enough dollars to represent all the gold and labor that's floating around. That just doesn't seem right at all; that's exactly the system we moved /away/ from according to the advice of these same economists (or their predecessors).
  - Eliezer 13y ago
    Conventional macroecon says that all effects on aggregate demand are due to sticky wages and prices, which 'stickiness' has also been experimentally verified. That's why the blog of Scott Sumner, from the article, is called "The Money Illusion".
  - tedsanders 13y ago
    Human beings don't like to lower wages and prices. Also known as 'sticky wages': https://en.wikipedia.org/wiki/Nominal_rigidity https://en.wikipedia.org/wiki/Nominal_rigidity There is plenty of debate over how much this matters, under what conditions it is true, and how the mechanism works. Nonetheless, there is consensus that human bias against lowering prices prevents price deflation and helps cause recessions. This is one reason why some economists think that steady inflation or NGDP growth is good. If prices always rise, then instead of lowering them (which is psychologically hard), you can just hold them flat for the same effect.
higherpurpose 13y ago
If this happens, then it needs to become a Constitutional amendment and guarantee everyone the money, on time, no matter what. You can't have abuses like we do for the no-fly list in this case. What does someone do when there's no work and everyone receives free money, but he's excluded from the program because he pissed off the government in some way? The only solution is probably to leave the country at that point (unless he's also included in the no-fly list).
lotsofmangos 13y ago
I always thought that given the UK was being run a bit like UK-PLC these days, that they might as well just declare the population as shareholders and start paying dividends.
- pbhjpbhj 13y ago
  >declare the population as shareholders and start paying dividends // Who gets the prefernce shares!? Also, they may be issuing a profit warning rather than any dividends ...
oscilloscope 13y ago
In the cryptocurrency world, there's an interesting free money experiment being launched in Iceland this month: Auroracoin. http://www.auroracoin.org/ http://www.auroracoin.org/ Auroracoin's goals are not quite as relevant for the US, since we don't have a public national ID database and our dollar is incredibly strong. But the distribution of a pre-mined cryptocoin could be one type of universal income. It's also a way to experiment with relatively few consequences to the existing economy.
- sp332 13y ago
  I hope they get this cleared up, because it looks very suspicious! https://bitcointalk.org/index.php?topic=497736.0 https://bitcointalk.org/index.php?topic=497736.0
brational 13y ago
Just like QE and the bush tax cuts, this would merely be a band-aid. They even covered the major problem earlier in the article... and then completely ignored it when offering solutions. >Starting in the ’80s, productivity gains were no longer shared with workers. Therefore, the wage share of the economy began to decrease. As a percentage of total output, wages have fallen from a high of almost 52 percent around 1970 to less than 43 percent today (see Graph 1). Meanwhile, inequality within wages also increased. The upshot? The rich began capturing nearly all the results of economic growth—the top 1 percent’s share of national income increased from about 8 percent in the mid-’70s to about 23 percent today....they “save” by buying financial assets—which means that most of the fruits of economic growth have been channeled into asset price increases, rather than consumer price inflation. If you just give everyone more money to increase AD via QE, tax cuts, free income or whatever else... it all gets spent and where do the increased sales and profits go? You just stay in the same cycle and have to continue sending more fed checks. It's the same reason minimum wages don't work. Setting a lower bound does nothing when an upper bound doesn't exist.
- bronbron 13y ago
  > Starting in the ’80s, productivity gains were no longer shared with workers. Has anyone really looked into why this is? It's easy to say 'lol greed' and be done with it, but it seems silly to presume that people were any less greedy in the 60's and 70's. 'Globalization' might make a little bit of sense as to why individual companies might pay relatively less taxes to the US government, but I'd need more context than that before I'd be willing to accept globalization as the answer to why production gains aren't really being shared with workers anymore. If the answer is that collective bargaining has been getting less and less effective over time, why is that?
  - lsiebert 13y ago
    The decrease in manufacturing jobs and union power was a part of it. The failure to raise a minimum wage another part.
  - munificent 13y ago
    > If the answer is that collective bargaining has been getting less and less effective over time, why is that? I know virtually nothing about this area, but I'd guess that the country transitioning from a manufacturing economy with a strong union presence to a service economy where unions are not strong has something to do with it. Increases job mobility probably doesn't help either. My impression is that my parent's generation felt they would work at the same company for decades. When you have that mindset, your coworkers are an important community for you and things like unions are worth the effort. When everyone switches jobs every couple of years, if you aren't happy, instead of collectively organizing and fixing the problem, you just leave for greener pastures. Of course, it's an illusion because the end result is that those pastures are usually the same, but I think that's part of how we got here.
tedsanders 13y ago
The current way that the Fed distributes money is by auction. They buy assets (usually treasury bills) at the market price. Because these assets are bought publicly at fair prices, this process is supposed to favor no one, in theory. It is a neutral policy. The free money for everyone proposal is NOT neutral. It would transfer wealth to the poor. That is not a bad thing, but it seems odd to couple monetary policy with redistributive policy.
- nugget 13y ago
  It would transfer wealth to the poor for about 2 seconds. Most of the recipients would quickly spend the money, which would transfer it back to the upper classes. The poor don't need helicopter drops of cash, they need a societal framework which supports and allows them to pursue real opportunities for social mobility.
  - paulbaumgart 13y ago
    Right, and part of that is being able to spend less time worrying about how the pay the bills every month, therefore being able to assume a basic level of stability in their lives as a foundation for planning for the future.
  - tedsanders 13y ago
    Could you please elaborate? Just because the poor spend the money in 2 seconds does not mean that the wealth evaporates after 2 seconds. They now have whatever goods they purchased with the money. And even if those goods are consumables, it's offset the spending/debt they would have otherwise needed. I find it rather offensive to accuse the poor of wasting all the money they receive (which is how I interpret your comment). If that's not what you meant, could you please re-explain? Thank you.
    - gloverkcn 13y ago
      I don't think the judgement was that the money was wasted, but that the money would be spent immediately by the poor, and the rich wouldn't do much with it. If you have $5 Million in the bank and I give you $2K. The money I've given you won't change your spending habits. There is no purchase you have put off due to lack of money. If you have $100K in the bank it's more likely you'll spend it, but not a guarantee. If you are living paycheck to paycheck like roughly 3/4 of the country (http://money.cnn.com/2013/06/24/pf/emergency-savings/ http://money.cnn.com/2013/06/24/pf/emergency-savings/) then that $2k will most likely get spent. Just because it's spent doesn't mean it's wasteful. That spending will reflect things they are living without because they can't afford it. A more reliable car. A second car so their SO has a better opportunity to work. A computer. In the case of some low end works it could mean equipment and/or space to open their own business. Better/More food. An evening at the movies. Painting the house. These are all things they can't/won't take on debt for, but could do with a windfall.
carsongross 13y ago
I'm a hard money guy (I know, I know) but, dealing with a fiat currency proposal on it's own terms, with Lenin you have to ask: who, whom? The Fed, ??? Hmmm.
zacinbusiness 13y ago
I think this is an interesting policy. In fact, I think both this type of policy and the version where cash is simply distributed to everyone each month or so is also interesting, and I wonder how it would work for the mentally disabled which, unfortunately, make up a large part of our homeless population in the U.S. Then there are people like my dad who is what you might call a "crazy redneck" in that he doesn't have a bank account (never has, as far as I know) and who is extremely distrustful of the government (he basically lives in a compound out in the forest with his wife and her family..) he's sort of the black sheep of my family. How would we ensure that people who refuse to get a bank account, or who are simply unable to do so, would receive their monies?
- Double_Cast 13y ago
  I'm believe mailboxes are under federal jurisdiction.
  - zacinbusiness 13y ago
    Right. But one must use a bank or check cashing service to use a check.
- mason240 13y ago
  Then they just wouldn't get any.
- dllthomas 13y ago
  Mental illness is much easier to deal with when you don't have severe financial issues along with it.
joshuaheard 13y ago
I saved the economy with this one weird trick: giving everybody a free $2,000 check. But why stop at $2,000? Why not give everyone a million dollars then everyone will be rich, nobody will have to work, and we can all live like kings!
- tedsanders 13y ago
  One reason to stop at $2,000 is so that inflation is limited. 2% inflation is quite manageable, historically. 2000% inflation is not.
  - dllthomas 13y ago
    Is there particular motivation for $2000, or just using the article's number? It seems that there's clearly some optimal number, and I suspect it's >0, but I'm not sure how it should be determined.
    - tedsanders 13y ago
      I was just using the given number. If this scheme were implemented, I'm guessing the number would be picked by economists at the Fed who target a particular money supply. And then that number would be criticized by people who think that the Fed is choosing to stiff the poor. For that reason, I think it would be a huge mistake to tie together monetary policy and income redistribution. :)
- mecameron 13y ago
  I find it interesting when people take a proposal with a specific number then try to discredit it by talking about changing it drastically in one direction. When does any natural or human made system have a single parameter that we can make better by some adjustment in one direction, respond 10x better when we change the parameter 10x more? Almost every parameter has some optimal range, above and below which are sub-optimal. Vitamin C in the body, water/sunlight for plants, semiconductor voltage, radiation level in chemotherapy, etc. Simply taking a proposal to to distribute X as being good, and showing that 100X must be better, but it obviously is absurd and would lead to bad things, does nothing to discredit the original proposal.
verdi327 13y ago
How did this dribble make it this high up HN? Money is a medium of exchange. It represents real value. If we just spin up new batches and dish it out, where is its value? More money will be sloshing around in the system sending incorrect economic signals which will artificially inflate certain industries. The house of cards will collapse on itself when ppl stop believing the dollar can maintain a stable value. The currency will be dumped and hyper[inflation]/[deflation] will destroy the economy until a new reliable money is surfaced.
- paulbaumgart 13y ago
  It's obviously not creating more wealth, rather it's redistributing that wealth into an arguably more efficient distribution.
  - dllthomas 13y ago
    It's obviously not creating more wealth first order. If that money frees up demand that wouldn't have otherwise been expressed, and people providing for that demand would otherwise have been out of work, it can create more wealth. The degree to which that would happen is an open question, so far as I'm aware.
    - paulbaumgart 13y ago
      You're exactly right, I was sloppy in my phrasing. Greater efficiency creates opportunities for wealth creation.
DanielBMarkham 13y ago
I think we may be seeing the end of demand-side economics, or at least it's dying gasps. If there's a gap between production and demand, you can look at it two ways: either people don't have enough money to meet the demand, or we're making the wrong things. Supply side economics said we should always stimulate supply -- demand would follow. Give breaks and incentives to keep making things, dammit! Of course, the problem here is that simply "making things" doesn't take the economy anywhere. It doesn't trickle down. Demand siders are similarly stuck in one spot, claiming that if only people had enough money, the economy would be fine. Give the people money and the rest will work itself out. It'll trickle up. I think that both supply and demand are moving targets, and by focusing on them we're missing the larger point: is the money doing anything new? Because economies exist to grow and adapt, not stagnate. If you're dumping money on factories to produce things nobody wants, it's not growing. Likewise, if you're giving money to people to do the same thing they've always done with it, it's also not growing. We're going to need a more sophisticated way at looking at this. I welcome the idea of giving money away. Anything that will move the conversation forward from these two simplistic and entrenched positions is most welcome. Let's test it.
volune 13y ago
When milk is $800 a gallon we might see the flaw of this approach.
- tedsanders 13y ago
  I think the proposal is not inject additional money, but to inject the same amount of money through a different channel - giveaways instead of open-market operations.
- TimJYoung 13y ago
  No, the Fed would turn off the "money pump" long before then. It would manage things according to its target inflation rate, just like it does now.
xg15 13y ago
"John Maynard Keynes used the idea in his 1936 book, The General Theory of Employment, Interest and Money, to lampoon the inherent silliness of gold mining, suggesting that old coal mines could be filled up with bottles full of banknotes, buried over with trash, then left “to private enterprise on well-tried principles of laissez-faire to dig the notes up again.”" And it only took 51 years until we got Bitcoin...
jawns 13y ago
From the end of the article: "The helicopter money policy ... distributes resources directly to citizens, with no limits on how they can spend it" If the purpose is to jump-start spending, then perhaps there should be one modest restriction on how you spend a stimulus check: an expiration date. Instead of issuing checks, the government could issue prepaid debit cards with a relatively short expiration date. (I believe some of the 2008 stimulus money was distributed via debit card, but the bulk was direct-deposited.) For the vast majority of people, a debit card with a short expiration date would lead to their spending the money within that span; a small minority might go through the trouble of converting the debit card amount to cash and saving it, but probably not nearly as high a percentage as if it came as a check or a direct deposit.
- toomuchtodo 13y ago
  Perhaps its just personality, but if I were to receive a stimulus debit card, I would use it to pay for one of my existing monthly expenses (T-mobile, gas, etc) and take my own funds I would've spent and save it.
  - deleted 13y ago
    [deleted]
  - dredmorbius 13y ago
    Look up Steve Keen. His suggestion for a debt jubilee / universal money distribution scheme more-or-less follows on this basis, though he puts the first cut at debt. The point is: if you spend the money, whether on retiring debt, on recurring expenses, or on new purchases, what you've received is a net increase in income. For people who are living hand to mouth (they have no surplus income, or worse, negative surplus), the money will be spent. If you're able to squirrel some away, that's a consideration, but it's 1) built into the model and 2) it's a relatively small fraction of the total distribution (likely less than 20%).
- kybernetikos 13y ago
  Household debt in the UK averages around 8k excluding mortgages. The UK government has purchased £375 billion of assets as part of its Quantative Easing (sometimes known as 'printing') scheme, which is around 14k per household. I have a lot of confidence that QE would have been much more effective in the UK if it had started by allowing every adult the ability to claim say 5k against existing debts (e.g. credit card, bank loan, mortgage). If the claiming individual had no debt or less debt than the amount offered, the remainder could be claimed as income. This would make a massive difference to indebted people, and by allowing people who weren't in debt to claim it as income, it avoids the moral hazard of people saying 'well I should have borrowed money'. This is of course a separate matter to basic income, but I just find it interesting how comparable those numbers are - the personal debt and the amount created by quantitative easing and poured into assets mainly held by wealthy people.
kenrikm 13y ago
Here's an idea! Step 1) Take away all money from everyone make big pile 'o cash. Step 2) Give everyone an equal distribution of the big pile 'o cash. Step 3) Wait one year. Step 4) Scratch head over how some are now poor and other are super wealthy even after the great leveling. Hmm no, maybe not such a great idea. There is a finite amount of tangible goods that can be produced, money chases goods, markets react, prices rise. If everyone has a million dollars do you think someone will sell you his Ferrari for $200k ? No, because the value of the Ferrari does not reside within the dollar, it's only a medium of exchange used for easily trading goods and services.
- nawitus 13y ago
  Basic income can be cost neutral.
Mz 13y ago
OH, god, this is incredibly stupid. This is not the way to fix the economy. The primary real value of money is that it reduces friction in trade so you don't have to jump through multiple complicated hoops to trade, say, your coding skills for a steak dinner. You trade your coding skills for money and then take money to the restaurant instead of going to the steak dinner maker and asking what he wants and then finding someone who will give you that in exchange for coding. Money symbolizes value. Other than lubricating trade, which has real value, in itself, it doesn't really "do" anything. You can't eat it. You can't build a house out of it. If burning it to keep warm makes some kind of economic sense, then the economy is seriously fubarred. This kind of financial manipulation does not fix any of the underlying issues that lead to financial problems. Financial problems grow out of real problems. I can testify to that first hand: I am deeply in debt and homeless due to medical problems, in essence. I am fixing my medical problems. As my medical problems resolve, my expenses come down and my productivity goes up. My debts are slowly being paid down. We need to fix real problems, underlying root cause problems. This kind of superficial manipulation is not a fix. Oh, god, no. I can't believe I am seeing this stupidity being taken seriously.
- dllthomas 13y ago
  Economies are made up of individuals; they aren't themselves individuals. Unless you think that there was a rash of major medical issues in 2009, I'm not sure how your experience is relevant or why you think it generalizes.
  - Mz 13y ago
    My experience here does not have to "generalize" and isn't really meant to. More like an attempt to give a concrete example on a small scale that perhaps people can relate to more readily. When Europe sent people to "The New World" and tons of silver was shipped back to Europe, the result was ridiculous inflation. Historically, when you inject more money into an economy but not more goods and services, not more intelligence, not more real value, the result is inflation. Prices go up because there is more money but not more stuff to buy with it. I don't know how help you understand how ridiculous this idea is if you think dismissing my personal experience somehow proves my point wrong. It doesn't. The point can be made other ways. I just happen frequently speak from firsthand personal experience in part because it was part of the culture of a very respected list I once belonged to where the standard was 1) speak from firsthand experience or 2) cite your sources.
ctdonath 13y ago
with slack in the economy, it’s possible to have an economic free lunch. TANSTAAFL[1]. [1] http://en.wiktionary.org/wiki/TANSTAAFL http://en.wiktionary.org/wiki/TANSTAAFL
- dllthomas 13y ago
  That is certainly the reference they were making. Contrary to popular belief, however, Heinlein was not a prophet whose aphorisms strongly apply to every scenario.
lukifer 13y ago
I believe that basic income would unlock a lot of hidden wealth: 1. Many more people would try their hand at entrepreneurship, and/or re-enter education, if they are freed from the obligation to work to survive. 2. There would be little need for minimum wage laws; unskilled labor can become primarily for earning a little more spending money, or about social roles within a group or community. The incentive for high-end labor would remain. 3. Much more non-profit activity, such as political engagement and volunteer labor, would become feasible (including the immeasurable wealth of more time spent raising children). 4. Let's face it: there are a lot of quasi-useless laborers out there, who are a drag co-efficient on productivity. The people who do the bare minimum to survive contribute more to the economy by staying home. There are deep macroeconomic and budgetary challenges to such a policy, and the socioeconomic effects are hard to predict. It certainly wouldn't be revenue-neutral, though it could be offset by other reductions in the welfare state (not to mention the prison-industrial complex). One way or another, the value and negotiating leverage of human labor is declining. As globalization spreads, domain-specific AI improves, and software continues to "eat the world", this trend will only progress. If we don't want to revert to a world of lords and serfs, basic income is the best way to preserve Adam Smith's humanistic vision of capitalism. And in the Western world, we are damn sure rich enough to afford it.
- ctdonath 13y ago
  This "I believe in GBI" line rarely is backed up by objective reasoning, and grossly underestimates the percentage who would, if freed from the obligation to work to survive, indulge in whatever non-productive luxuries they can acquire. While certainly many would improve productivity & economy & education should they have the financial liberty to do so, my experience in helping many up tells me most are down for a reason which only they, internally, can change - and won't.
  - lukifer 13y ago
    Many businesses make a tidy profit despite a large number of users being non-profitable "free riders" (Dropbox would be the canonical example). My claim is not that every human would be immediately elevated to self-actualization. Obviously, a great many would stay home, drink beer and watch TV. My claim is that civilization as a whole would profit; paying people who contribute nothing is merely a "cost of doing business". (And don't forget: there's still an incentive to work for those who want better beer and bigger TVs.)
Datsundere 13y ago
How did april 1st come so quickly?
scotty79 13y ago
The only problem with basic income is that rents would just rise to consume it and poor people would still be poor. BI won't work as good as it should without simultaneously shifting balance between renting and owning, for example, with progressive real estate tax to discourage investing in large amount of real estate (selling 10th house below market rate would be more cost-effective than keeping it) and to make it easier to purchase one house for yourself (because of increased supply and reduced prices).
- stanleydrew 13y ago
  If you read closely the article isn't talking about basic income in the usual sense. It's not suggesting paying everybody $2000 per month forever. It's suggesting a new option for the Fed to stimulate the economy on an "as-needed" basis. So I doubt any rents would go up substantially just because once in awhile (like every couple of years) a $2000 check came in the mail.
- erikpukinskis 13y ago
  I see this idea trotted out every time people bring up basic income. It doesn't make sense. You're saying if there was $1000 basic income that rat infested studios in Detroit would go for $1200? Who is going to live in them? And that nowhere in the entire U.S. would you be able to rent an apartment for less than $1000? What you're failing to consider is that property values more or less range from priceless to free. If landlords collude to drive up prices, there is some piece of crap land somewhere that a developer can buy up, throw some condos on it, pay a municipality to put in a bus line, and undercut the market. And as long as that is true, rental prices will be governed by two things: the amortized cost of construction at the bottom, and sexy supply constrained neighborhoods at the top . Giving people more money might have small local effects but to say rents will just universally go up by thousands of dollars makes no sense.
solson 13y ago
300 million Americans x $2,000 per month x 12 Months = 7.2 Trillion annual printing of new money. Total M2 Money Supply is currently 10.5 Trillion and the entire US GDP is only 15.6 Trillion. So adding approx 70% to the money supply every year or adding 50% of GDP as new cash to the economy every year will only result in 2% more inflation??? If you believe that, I've got a dot com to sell you...
- stanleydrew 13y ago
  The proposal was not to give everybody $2000 per month forever. It was to add another lever to the Fed's monetary policy adjustment machine, to be used on an "as-needed" basis.

119 points by ritchiea 13y ago

noahl 13y ago

This is interesting because, in contrast to the (many) other discussions of basic income, the author's proposal is to make it run by the Fed, not Congress, and to distribute money on a whenever-the-Fed-wants-to basis, rather than every year. This wouldn't really address the concerns about poverty that make many people interested in a basic income, because it wouldn't happen regularly and there's no guarantee that the money would be enough to make a difference in peoples' lives. But it could still have a good effect on the economy as a whole, which seems to be what he is aiming for.

r00fus 13y ago
Exactly. Basic income as implemented by the native american tribe (i.e., casino profit sharing) mainly won by reducing anxiety and being a regular dependable payment. Without regularity, it's just random windfalls, nothing you can bank against.
- Zigurd 13y ago
  So use the windfalls to buy an annuity and it becomes regular. Surely either the Fed or the government could do that internally at a lower cost.
- TimJYoung 13y ago
  Yes, but that (basic income) is not the point of this proposal. The idea is that you have a lot of people that are un-employed or under-employed, but shouldn't be, which is where we are today. This is a tool to a) get them a job and b) (by driving down un-employment) increase their wages. If this tool does it's job, then they won't need a basic income anymore - they'll be earning it at their new job.
dragonwriter 13y ago
There's no reason you can't have both. "Fiscal UBI" (what would come from Congress and be regular) addresses things like progressive automation and the need for a long-term trend away from employment-based survival in a world with progressive automation, "Monetary UBI" (what would be run by the Fed) is about providing monetary stimulus, where needed, in a manner that avoids being an upward redistribution of wealth (and, also, because it goes to people with a higher propensity to spend and thus has an initially higher velocity, also produces a greater stimulative effect per dollar.)

Eliezer 13y ago

I'm amazed that anything this obviously correct is entering the Overton Window. Next we'll hear someone advocating land value taxes.

Antiquarian 13y ago
Be still my heart.
toomuchtodo 13y ago
> land value taxes What is the value of a land value tax? (ELI5)
- 3825 13y ago
  In the most basic sense, land value tax would mean that the tax would be the same whether your land was just sitting there empty or you had a hundred-story skyscraper on it. I don't know what that effects it would have. I assume the first and most direct effect would be budget shortfalls in local governments which would probably try to create more fines[0] and sin taxes (assuming they are still legal). [0] LA has an almost $200 fine for jaywalking. I'd argue that fines and confiscated money from drugs should never go into general treasury much less directly used to fund the department collecting such fines and confiscations. Our government should run on taxes alone and not on fines and fees. http://www.nytimes.com/2013/12/26/us/in-a-car-culture-clash-its-los-angeles-police-vs-pedestrians.html?pagewanted=all http://www.nytimes.com/2013/12/26/us/in-a-car-culture-clash-...
  - toomuchtodo 13y ago
    Thank you!
  - dllthomas 13y ago
    "I don't know what that effects it would have. I assume the first and most direct effect would be budget shortfalls in local governments which would probably try to create more fines[0] and sin taxes (assuming they are still legal)." In principle you could have a revenue neutral transition to a land-value tax. In practice, it might very well lead to crazy numbers.

whatevsbro 13y ago

Wow. I think they're not kidding! Yeah, let's all just sit back and receive fiat currency from the skies! I'm sure it will work out just fine, because um.. aggregate demand magic! Why not just print and hand out 100 trillion dollars to everyone? -Somehow that sounds like a bad idea, huh? But there's nothing wrong with sprinkling say, 3000 times 330 000 000 dollars into the masses' hands?

betenoire 13y ago
Is this the argument you are gonna go with?
deleted 13y ago
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- deleted 13y ago
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SimpleXYZ 13y ago
Of course they are not kidding. We already have examples of this at different scales. SS Disability payments, SS survivor benefits, etc. Plus, as the author mentioned, the Bush/Congress direct stimulus, WWII government demand, etc. I agree printing money and dumping on the people is a bad idea as well, but there is middle ground. More progressive taxation, ending all corporate welfare, etc. You can disagree with something without being dismissive.
tedsanders 13y ago
To give a serious reply to your hopefully not serious comment: Of course hyperinflation would be a concern at the $100 trillion level. The idea behind this policy would not be to inject additional money into the world. Rather, the idea is to switch channels from open-market operations to money giveaways. Because the amount of newly created money would be the same, inflation should be about the same too.
- whatevsbro 13y ago

rayiner 13y ago

> While depression economics has many strange features, the most important one to remember is this: with slack in the economy, it’s possible to have an economic free lunch. If our economy were running at capacity, new government spending, for example, would tend to create inflation because the capacity (workers, raw materials, and equipment) would have to be bid away from someone else, thereby raising prices. But during a depression that doesn’t happen. Instead, new spending brings idle capacity into production. I think this paragraph is really important to think about until you get it. It's easy to get wrapped up in thinking of money as a thing of value when at the end of the day it's just a proxy for goods and services in the real economy. If you don't get that... you'll go off and buy Bitcoin, I guess.

belovedeagle 13y ago
So explain to someone who's extremely skeptical of economics mumbo-jumbo why the value of money doesn't naturally increase ("deflate", to use what seems to me to be the better-is-worse terminology) to take up that slack. In other words, shouldn't a slice of the money pie be worth a slice of the economy pie, even when the size of the economy pie, and therefore the slice, changes? How do we determine when 10% of the money supply equals 10% of the economy? It seems like what you, and the article, are saying is that a certain number of dollars always equals the same amount of, say, gold, or labor, and we just don't have enough dollars to represent all the gold and labor that's floating around. That just doesn't seem right at all; that's exactly the system we moved /away/ from according to the advice of these same economists (or their predecessors).
- Eliezer 13y ago
  Conventional macroecon says that all effects on aggregate demand are due to sticky wages and prices, which 'stickiness' has also been experimentally verified. That's why the blog of Scott Sumner, from the article, is called "The Money Illusion".
- tedsanders 13y ago
  Human beings don't like to lower wages and prices. Also known as 'sticky wages': https://en.wikipedia.org/wiki/Nominal_rigidity https://en.wikipedia.org/wiki/Nominal_rigidity There is plenty of debate over how much this matters, under what conditions it is true, and how the mechanism works. Nonetheless, there is consensus that human bias against lowering prices prevents price deflation and helps cause recessions. This is one reason why some economists think that steady inflation or NGDP growth is good. If prices always rise, then instead of lowering them (which is psychologically hard), you can just hold them flat for the same effect.

higherpurpose 13y ago

If this happens, then it needs to become a Constitutional amendment and guarantee everyone the money, on time, no matter what. You can't have abuses like we do for the no-fly list in this case. What does someone do when there's no work and everyone receives free money, but he's excluded from the program because he pissed off the government in some way? The only solution is probably to leave the country at that point (unless he's also included in the no-fly list).

lotsofmangos 13y ago

I always thought that given the UK was being run a bit like UK-PLC these days, that they might as well just declare the population as shareholders and start paying dividends.

pbhjpbhj 13y ago
>declare the population as shareholders and start paying dividends // Who gets the prefernce shares!? Also, they may be issuing a profit warning rather than any dividends ...

oscilloscope 13y ago

In the cryptocurrency world, there's an interesting free money experiment being launched in Iceland this month: Auroracoin. http://www.auroracoin.org/ http://www.auroracoin.org/ Auroracoin's goals are not quite as relevant for the US, since we don't have a public national ID database and our dollar is incredibly strong. But the distribution of a pre-mined cryptocoin could be one type of universal income. It's also a way to experiment with relatively few consequences to the existing economy.

sp332 13y ago
I hope they get this cleared up, because it looks very suspicious! https://bitcointalk.org/index.php?topic=497736.0 https://bitcointalk.org/index.php?topic=497736.0

brational 13y ago

Just like QE and the bush tax cuts, this would merely be a band-aid. They even covered the major problem earlier in the article... and then completely ignored it when offering solutions. >Starting in the ’80s, productivity gains were no longer shared with workers. Therefore, the wage share of the economy began to decrease. As a percentage of total output, wages have fallen from a high of almost 52 percent around 1970 to less than 43 percent today (see Graph 1). Meanwhile, inequality within wages also increased. The upshot? The rich began capturing nearly all the results of economic growth—the top 1 percent’s share of national income increased from about 8 percent in the mid-’70s to about 23 percent today....they “save” by buying financial assets—which means that most of the fruits of economic growth have been channeled into asset price increases, rather than consumer price inflation. If you just give everyone more money to increase AD via QE, tax cuts, free income or whatever else... it all gets spent and where do the increased sales and profits go? You just stay in the same cycle and have to continue sending more fed checks. It's the same reason minimum wages don't work. Setting a lower bound does nothing when an upper bound doesn't exist.

bronbron 13y ago
> Starting in the ’80s, productivity gains were no longer shared with workers. Has anyone really looked into why this is? It's easy to say 'lol greed' and be done with it, but it seems silly to presume that people were any less greedy in the 60's and 70's. 'Globalization' might make a little bit of sense as to why individual companies might pay relatively less taxes to the US government, but I'd need more context than that before I'd be willing to accept globalization as the answer to why production gains aren't really being shared with workers anymore. If the answer is that collective bargaining has been getting less and less effective over time, why is that?
- lsiebert 13y ago
  The decrease in manufacturing jobs and union power was a part of it. The failure to raise a minimum wage another part.
- munificent 13y ago
  > If the answer is that collective bargaining has been getting less and less effective over time, why is that? I know virtually nothing about this area, but I'd guess that the country transitioning from a manufacturing economy with a strong union presence to a service economy where unions are not strong has something to do with it. Increases job mobility probably doesn't help either. My impression is that my parent's generation felt they would work at the same company for decades. When you have that mindset, your coworkers are an important community for you and things like unions are worth the effort. When everyone switches jobs every couple of years, if you aren't happy, instead of collectively organizing and fixing the problem, you just leave for greener pastures. Of course, it's an illusion because the end result is that those pastures are usually the same, but I think that's part of how we got here.

tedsanders 13y ago

The current way that the Fed distributes money is by auction. They buy assets (usually treasury bills) at the market price. Because these assets are bought publicly at fair prices, this process is supposed to favor no one, in theory. It is a neutral policy. The free money for everyone proposal is NOT neutral. It would transfer wealth to the poor. That is not a bad thing, but it seems odd to couple monetary policy with redistributive policy.

nugget 13y ago
It would transfer wealth to the poor for about 2 seconds. Most of the recipients would quickly spend the money, which would transfer it back to the upper classes. The poor don't need helicopter drops of cash, they need a societal framework which supports and allows them to pursue real opportunities for social mobility.
- paulbaumgart 13y ago
  Right, and part of that is being able to spend less time worrying about how the pay the bills every month, therefore being able to assume a basic level of stability in their lives as a foundation for planning for the future.
- tedsanders 13y ago
  Could you please elaborate? Just because the poor spend the money in 2 seconds does not mean that the wealth evaporates after 2 seconds. They now have whatever goods they purchased with the money. And even if those goods are consumables, it's offset the spending/debt they would have otherwise needed. I find it rather offensive to accuse the poor of wasting all the money they receive (which is how I interpret your comment). If that's not what you meant, could you please re-explain? Thank you.
  - gloverkcn 13y ago
    I don't think the judgement was that the money was wasted, but that the money would be spent immediately by the poor, and the rich wouldn't do much with it. If you have $5 Million in the bank and I give you $2K. The money I've given you won't change your spending habits. There is no purchase you have put off due to lack of money. If you have $100K in the bank it's more likely you'll spend it, but not a guarantee. If you are living paycheck to paycheck like roughly 3/4 of the country (http://money.cnn.com/2013/06/24/pf/emergency-savings/ http://money.cnn.com/2013/06/24/pf/emergency-savings/) then that $2k will most likely get spent. Just because it's spent doesn't mean it's wasteful. That spending will reflect things they are living without because they can't afford it. A more reliable car. A second car so their SO has a better opportunity to work. A computer. In the case of some low end works it could mean equipment and/or space to open their own business. Better/More food. An evening at the movies. Painting the house. These are all things they can't/won't take on debt for, but could do with a windfall.

carsongross 13y ago

I'm a hard money guy (I know, I know) but, dealing with a fiat currency proposal on it's own terms, with Lenin you have to ask: who, whom? The Fed, ??? Hmmm.

zacinbusiness 13y ago

I think this is an interesting policy. In fact, I think both this type of policy and the version where cash is simply distributed to everyone each month or so is also interesting, and I wonder how it would work for the mentally disabled which, unfortunately, make up a large part of our homeless population in the U.S. Then there are people like my dad who is what you might call a "crazy redneck" in that he doesn't have a bank account (never has, as far as I know) and who is extremely distrustful of the government (he basically lives in a compound out in the forest with his wife and her family..) he's sort of the black sheep of my family. How would we ensure that people who refuse to get a bank account, or who are simply unable to do so, would receive their monies?

Double_Cast 13y ago
I'm believe mailboxes are under federal jurisdiction.
- zacinbusiness 13y ago
  Right. But one must use a bank or check cashing service to use a check.
mason240 13y ago
Then they just wouldn't get any.
dllthomas 13y ago
Mental illness is much easier to deal with when you don't have severe financial issues along with it.

joshuaheard 13y ago

I saved the economy with this one weird trick: giving everybody a free $2,000 check. But why stop at $2,000? Why not give everyone a million dollars then everyone will be rich, nobody will have to work, and we can all live like kings!

tedsanders 13y ago
One reason to stop at $2,000 is so that inflation is limited. 2% inflation is quite manageable, historically. 2000% inflation is not.
- dllthomas 13y ago
  Is there particular motivation for $2000, or just using the article's number? It seems that there's clearly some optimal number, and I suspect it's >0, but I'm not sure how it should be determined.
  - tedsanders 13y ago
    I was just using the given number. If this scheme were implemented, I'm guessing the number would be picked by economists at the Fed who target a particular money supply. And then that number would be criticized by people who think that the Fed is choosing to stiff the poor. For that reason, I think it would be a huge mistake to tie together monetary policy and income redistribution. :)
mecameron 13y ago
I find it interesting when people take a proposal with a specific number then try to discredit it by talking about changing it drastically in one direction. When does any natural or human made system have a single parameter that we can make better by some adjustment in one direction, respond 10x better when we change the parameter 10x more? Almost every parameter has some optimal range, above and below which are sub-optimal. Vitamin C in the body, water/sunlight for plants, semiconductor voltage, radiation level in chemotherapy, etc. Simply taking a proposal to to distribute X as being good, and showing that 100X must be better, but it obviously is absurd and would lead to bad things, does nothing to discredit the original proposal.

verdi327 13y ago

How did this dribble make it this high up HN? Money is a medium of exchange. It represents real value. If we just spin up new batches and dish it out, where is its value? More money will be sloshing around in the system sending incorrect economic signals which will artificially inflate certain industries. The house of cards will collapse on itself when ppl stop believing the dollar can maintain a stable value. The currency will be dumped and hyper[inflation]/[deflation] will destroy the economy until a new reliable money is surfaced.

paulbaumgart 13y ago
It's obviously not creating more wealth, rather it's redistributing that wealth into an arguably more efficient distribution.
- dllthomas 13y ago
  It's obviously not creating more wealth first order. If that money frees up demand that wouldn't have otherwise been expressed, and people providing for that demand would otherwise have been out of work, it can create more wealth. The degree to which that would happen is an open question, so far as I'm aware.
  - paulbaumgart 13y ago
    You're exactly right, I was sloppy in my phrasing. Greater efficiency creates opportunities for wealth creation.

DanielBMarkham 13y ago

I think we may be seeing the end of demand-side economics, or at least it's dying gasps. If there's a gap between production and demand, you can look at it two ways: either people don't have enough money to meet the demand, or we're making the wrong things. Supply side economics said we should always stimulate supply -- demand would follow. Give breaks and incentives to keep making things, dammit! Of course, the problem here is that simply "making things" doesn't take the economy anywhere. It doesn't trickle down. Demand siders are similarly stuck in one spot, claiming that if only people had enough money, the economy would be fine. Give the people money and the rest will work itself out. It'll trickle up. I think that both supply and demand are moving targets, and by focusing on them we're missing the larger point: is the money doing anything new? Because economies exist to grow and adapt, not stagnate. If you're dumping money on factories to produce things nobody wants, it's not growing. Likewise, if you're giving money to people to do the same thing they've always done with it, it's also not growing. We're going to need a more sophisticated way at looking at this. I welcome the idea of giving money away. Anything that will move the conversation forward from these two simplistic and entrenched positions is most welcome. Let's test it.

volune 13y ago

When milk is $800 a gallon we might see the flaw of this approach.

tedsanders 13y ago
I think the proposal is not inject additional money, but to inject the same amount of money through a different channel - giveaways instead of open-market operations.
TimJYoung 13y ago
No, the Fed would turn off the "money pump" long before then. It would manage things according to its target inflation rate, just like it does now.

xg15 13y ago

"John Maynard Keynes used the idea in his 1936 book, The General Theory of Employment, Interest and Money, to lampoon the inherent silliness of gold mining, suggesting that old coal mines could be filled up with bottles full of banknotes, buried over with trash, then left “to private enterprise on well-tried principles of laissez-faire to dig the notes up again.”" And it only took 51 years until we got Bitcoin...

jawns 13y ago

From the end of the article: "The helicopter money policy ... distributes resources directly to citizens, with no limits on how they can spend it" If the purpose is to jump-start spending, then perhaps there should be one modest restriction on how you spend a stimulus check: an expiration date. Instead of issuing checks, the government could issue prepaid debit cards with a relatively short expiration date. (I believe some of the 2008 stimulus money was distributed via debit card, but the bulk was direct-deposited.) For the vast majority of people, a debit card with a short expiration date would lead to their spending the money within that span; a small minority might go through the trouble of converting the debit card amount to cash and saving it, but probably not nearly as high a percentage as if it came as a check or a direct deposit.

toomuchtodo 13y ago
Perhaps its just personality, but if I were to receive a stimulus debit card, I would use it to pay for one of my existing monthly expenses (T-mobile, gas, etc) and take my own funds I would've spent and save it.
- deleted 13y ago
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- dredmorbius 13y ago
  Look up Steve Keen. His suggestion for a debt jubilee / universal money distribution scheme more-or-less follows on this basis, though he puts the first cut at debt. The point is: if you spend the money, whether on retiring debt, on recurring expenses, or on new purchases, what you've received is a net increase in income. For people who are living hand to mouth (they have no surplus income, or worse, negative surplus), the money will be spent. If you're able to squirrel some away, that's a consideration, but it's 1) built into the model and 2) it's a relatively small fraction of the total distribution (likely less than 20%).
kybernetikos 13y ago
Household debt in the UK averages around 8k excluding mortgages. The UK government has purchased £375 billion of assets as part of its Quantative Easing (sometimes known as 'printing') scheme, which is around 14k per household. I have a lot of confidence that QE would have been much more effective in the UK if it had started by allowing every adult the ability to claim say 5k against existing debts (e.g. credit card, bank loan, mortgage). If the claiming individual had no debt or less debt than the amount offered, the remainder could be claimed as income. This would make a massive difference to indebted people, and by allowing people who weren't in debt to claim it as income, it avoids the moral hazard of people saying 'well I should have borrowed money'. This is of course a separate matter to basic income, but I just find it interesting how comparable those numbers are - the personal debt and the amount created by quantitative easing and poured into assets mainly held by wealthy people.

kenrikm 13y ago

Here's an idea! Step 1) Take away all money from everyone make big pile 'o cash. Step 2) Give everyone an equal distribution of the big pile 'o cash. Step 3) Wait one year. Step 4) Scratch head over how some are now poor and other are super wealthy even after the great leveling. Hmm no, maybe not such a great idea. There is a finite amount of tangible goods that can be produced, money chases goods, markets react, prices rise. If everyone has a million dollars do you think someone will sell you his Ferrari for $200k ? No, because the value of the Ferrari does not reside within the dollar, it's only a medium of exchange used for easily trading goods and services.

nawitus 13y ago
Basic income can be cost neutral.

Mz 13y ago

OH, god, this is incredibly stupid. This is not the way to fix the economy. The primary real value of money is that it reduces friction in trade so you don't have to jump through multiple complicated hoops to trade, say, your coding skills for a steak dinner. You trade your coding skills for money and then take money to the restaurant instead of going to the steak dinner maker and asking what he wants and then finding someone who will give you that in exchange for coding. Money symbolizes value. Other than lubricating trade, which has real value, in itself, it doesn't really "do" anything. You can't eat it. You can't build a house out of it. If burning it to keep warm makes some kind of economic sense, then the economy is seriously fubarred. This kind of financial manipulation does not fix any of the underlying issues that lead to financial problems. Financial problems grow out of real problems. I can testify to that first hand: I am deeply in debt and homeless due to medical problems, in essence. I am fixing my medical problems. As my medical problems resolve, my expenses come down and my productivity goes up. My debts are slowly being paid down. We need to fix real problems, underlying root cause problems. This kind of superficial manipulation is not a fix. Oh, god, no. I can't believe I am seeing this stupidity being taken seriously.

dllthomas 13y ago
Economies are made up of individuals; they aren't themselves individuals. Unless you think that there was a rash of major medical issues in 2009, I'm not sure how your experience is relevant or why you think it generalizes.
- Mz 13y ago
  My experience here does not have to "generalize" and isn't really meant to. More like an attempt to give a concrete example on a small scale that perhaps people can relate to more readily. When Europe sent people to "The New World" and tons of silver was shipped back to Europe, the result was ridiculous inflation. Historically, when you inject more money into an economy but not more goods and services, not more intelligence, not more real value, the result is inflation. Prices go up because there is more money but not more stuff to buy with it. I don't know how help you understand how ridiculous this idea is if you think dismissing my personal experience somehow proves my point wrong. It doesn't. The point can be made other ways. I just happen frequently speak from firsthand personal experience in part because it was part of the culture of a very respected list I once belonged to where the standard was 1) speak from firsthand experience or 2) cite your sources.

ctdonath 13y ago

with slack in the economy, it’s possible to have an economic free lunch. TANSTAAFL[1]. [1] http://en.wiktionary.org/wiki/TANSTAAFL http://en.wiktionary.org/wiki/TANSTAAFL

dllthomas 13y ago
That is certainly the reference they were making. Contrary to popular belief, however, Heinlein was not a prophet whose aphorisms strongly apply to every scenario.

lukifer 13y ago

I believe that basic income would unlock a lot of hidden wealth: 1. Many more people would try their hand at entrepreneurship, and/or re-enter education, if they are freed from the obligation to work to survive. 2. There would be little need for minimum wage laws; unskilled labor can become primarily for earning a little more spending money, or about social roles within a group or community. The incentive for high-end labor would remain. 3. Much more non-profit activity, such as political engagement and volunteer labor, would become feasible (including the immeasurable wealth of more time spent raising children). 4. Let's face it: there are a lot of quasi-useless laborers out there, who are a drag co-efficient on productivity. The people who do the bare minimum to survive contribute more to the economy by staying home. There are deep macroeconomic and budgetary challenges to such a policy, and the socioeconomic effects are hard to predict. It certainly wouldn't be revenue-neutral, though it could be offset by other reductions in the welfare state (not to mention the prison-industrial complex). One way or another, the value and negotiating leverage of human labor is declining. As globalization spreads, domain-specific AI improves, and software continues to "eat the world", this trend will only progress. If we don't want to revert to a world of lords and serfs, basic income is the best way to preserve Adam Smith's humanistic vision of capitalism. And in the Western world, we are damn sure rich enough to afford it.

ctdonath 13y ago
This "I believe in GBI" line rarely is backed up by objective reasoning, and grossly underestimates the percentage who would, if freed from the obligation to work to survive, indulge in whatever non-productive luxuries they can acquire. While certainly many would improve productivity & economy & education should they have the financial liberty to do so, my experience in helping many up tells me most are down for a reason which only they, internally, can change - and won't.
- lukifer 13y ago
  Many businesses make a tidy profit despite a large number of users being non-profitable "free riders" (Dropbox would be the canonical example). My claim is not that every human would be immediately elevated to self-actualization. Obviously, a great many would stay home, drink beer and watch TV. My claim is that civilization as a whole would profit; paying people who contribute nothing is merely a "cost of doing business". (And don't forget: there's still an incentive to work for those who want better beer and bigger TVs.)

Datsundere 13y ago

How did april 1st come so quickly?

scotty79 13y ago

The only problem with basic income is that rents would just rise to consume it and poor people would still be poor. BI won't work as good as it should without simultaneously shifting balance between renting and owning, for example, with progressive real estate tax to discourage investing in large amount of real estate (selling 10th house below market rate would be more cost-effective than keeping it) and to make it easier to purchase one house for yourself (because of increased supply and reduced prices).

stanleydrew 13y ago
If you read closely the article isn't talking about basic income in the usual sense. It's not suggesting paying everybody $2000 per month forever. It's suggesting a new option for the Fed to stimulate the economy on an "as-needed" basis. So I doubt any rents would go up substantially just because once in awhile (like every couple of years) a $2000 check came in the mail.
erikpukinskis 13y ago
I see this idea trotted out every time people bring up basic income. It doesn't make sense. You're saying if there was $1000 basic income that rat infested studios in Detroit would go for $1200? Who is going to live in them? And that nowhere in the entire U.S. would you be able to rent an apartment for less than $1000? What you're failing to consider is that property values more or less range from priceless to free. If landlords collude to drive up prices, there is some piece of crap land somewhere that a developer can buy up, throw some condos on it, pay a municipality to put in a bus line, and undercut the market. And as long as that is true, rental prices will be governed by two things: the amortized cost of construction at the bottom, and sexy supply constrained neighborhoods at the top . Giving people more money might have small local effects but to say rents will just universally go up by thousands of dollars makes no sense.

solson 13y ago

300 million Americans x $2,000 per month x 12 Months = 7.2 Trillion annual printing of new money. Total M2 Money Supply is currently 10.5 Trillion and the entire US GDP is only 15.6 Trillion. So adding approx 70% to the money supply every year or adding 50% of GDP as new cash to the economy every year will only result in 2% more inflation??? If you believe that, I've got a dot com to sell you...

stanleydrew 13y ago
The proposal was not to give everybody $2000 per month forever. It was to add another lever to the Fed's monetary policy adjustment machine, to be used on an "as-needed" basis.