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This kinda looks like a vicious / virtuous cycle: * Interest rates are kept low primarily because of the unemployment crisis. (Right?) * But then that encoura

• Domenic_S 12y ago
  > stop worrying about unemployment and just start paying everyone a basic income? What I've never understood about BI is how it works for the middle class. Consider: a cohabiting couple each work entry-level tech jobs and bring in a combined $100k. They buy a condo together, maybe a couple of halfway decent cars. They're being responsible. Then, economy tanks/tech bubble bursts/etc and they have to live off their BI which if I understand correctly should fall somewhere in the $15k/year range each, so $30k total. How do they pay their bills? In other words, what good is $15k/year when you've been living on $15k/month? Or $7k or $5k/month? It's better than a poke in the butt with a sharp stick, but it's just delaying the inevitable, isn't it? If then BI is instead mainly for the low-income portion of society, well, we already have that -- it's called welfare/social security/disability. I'm missing something.
  • stonemetal 12y ago
    > but it's just delaying the inevitable What do you see as the inevitable? It wouldn't prevent them from losing something, but it would be the difference between the bottom being living under a bridge completely destitute and living in a shabby apartment until they got back on their feet.
  • nostrademons 12y ago
    Then they adjust. I think the point of BI is to keep you from starving. The idea is that no matter who you are or what your station is in society, you should be able to afford food, a roof over your head, and basic medical care. It's not to maintain your social standing in life - someone who has a job will rightfully have a higher standard of living than someone who doesn't. And you shouldn't expect it to be a comfortable middle class existence, you should expect it to involve living like the working poor today - a cramped apartment, not much in luxuries, public transportation or long commutes. But it takes the stress out of simply existing. The idea is that it's set at a level where you're not going to die, you're not going to end up homeless, you're just not going to be very comfortable. As for how it's different from welfare/social security/disability - I usually see it pitched as a way of unifying all of those (and the EITC), so that people don't fall through the cracks because they don't know how to sign up or what they're entitled to. It'd save on administration costs as well.
    • raldi 12y ago
      Critically, excellent education has to be included in that as well. It's not enough to just take care of bodily needs -- you have to provide a way up, too.
    • ph0rque 12y ago
      If BI happens, there will be an entire art form developed on how to live happily on $15k/adult/year. This is already taking place (e.g. Mr. Money Mustache lives a comfortable middle-class livestyle with his wife and son on $27k/year). I consider this a good thing.
    • jaredhansen 12y ago
      The other main benefit of BI over the current patchwork of welfare programs is that it removes the disincentive to work on the margin. Today, many unskilled people stand to lose money by getting a job, because the value of their labor is so low that the loss of benefits they'd trigger by becoming employed would actually be more significant than the amount of money they'd make from any job for which they can actually qualify. This is a stupid state of affairs, because: (1) it wastes the potential labor of such people (which is, after all, generally worth something); (2) it robs them of the psychological benefits of being gainfully employed; and (3) it disincentivizes them from gaining the practice in work and thereby developing the skills that would allow them to get better jobs in the future. BI fixes these problems by making sure that everyone, even at the bottom, sees positive economic return for their labor. From a social dynamics standpoint, I suspect that over the long run, this feature is probably even more valuable than the "keep you from starving" features of BI.
  • ryanpardieck 12y ago
    > In other words, what good is $15k/year when you've been living on $15k/month? Or $7k or $5k/month? Not much I guess, but if they're suddenly faced with the prospect of existing on $0/year, I imagine it'd look pretty nice. Quite a lot of people live on 15K per person in the family, so I don't think they'd be hopeless. I think BI is supposed to hit a sweet spot akin to the "better than a sharp stick" thing you mention. You could live off it if you really wanted to, but it'd kind of suck, and your life overall would be more enjoyable with a job. I think a lot of the appeal of BI comes from two ideas. One: automation technology possibly introducing a "new normal" in terms of unemployment levels, in which case BI might help a society not eat itself. Two: it may, possibly, be much more efficient than the various welfare programs you mention. I don't think that's been proven, but it's a tantalizing idea. I'm not really an expert on the idea though, so, two cents. edit - I'm also not sure that automation tech introducing sweeping society-damning joblessness is something that will ever actually happen.
  • Yen 12y ago
    A few thoughts 1) even if a basic income disproportionately helps the otherwise low-income part of society, it seems more "fair". Instead of calling it welfare or charity, with the implication that those who receive it are living off the backs of others, and are themselves lazy, it's just something everyone receives. 2) If the hypothetical couple's total expenses are $15k/month, and they can't gear down their lifestyle to $5k/month before running out of savings, I'd propose they weren't really living responsibly. $5k/month is enough to subsist, albiet not luxuriously, in pretty much any part of the U.S. The alternative is going from $15k/mo. to $0/mo. That extra $5k could either keep a family solvent. 3) even if it merely delays the inevitable, that might be good enough. If expenses are absolutely fixed, but if a basic income allows a person 12 months to find/create a new job in a rough economy, instead of 6, or 3 or none, that's likely to be a success.
    • Domenic_S 12y ago
      BI would be roughly $1k, not 5.
  • crpatino 12y ago
    Not an American, but from what I understand from hearing this argument here multiple times... 1. It is cheaper to just hand over USD$1K per month to anyone that bothers to show up at the BI office than to support an army of social workers and bureaucrats to sort out who's worthy of welfare and who's just lazy. 2. It is more fair to just hand over USD$1K of BI to anyone who asks because bureaucrats are not quite good at sorting out who's worthy anyways. Under current system people with genuine dire needs fall through the cracks while the benefits of welfare goes to those who take the time to learn and game the system. 3. BI is in the long term more productive for the whole economy because it can be used to complement/subsidize low income for unskilled workers, while welfare eligibility rules prevent receivers from bootstrapping out of poverty if they cannot find entry level jobs that pay at least as much as what multiple welfare programs already provide.
    • prostoalex 12y ago
      > It is cheaper to just hand over USD$1K per month to anyone that bothers to show up at the BI office than to support an army of social workers and bureaucrats Your worst case scenario under this program is 300,000,000 Americans showing up during a downturn in the economy. That's $300 billion a month, $3.6 trillion a year, or roughly 100% of current US budget expenditure (with entitlement, defense, discretionary, etc.) http://en.wikipedia.org/wiki/United_States_federal_budget#Major_expenditure_categories http://en.wikipedia.org/wiki/United_States_federal_budget#Ma... So it's definitely not cheaper, even when you account for the cost of maintaining the bureaucracy.
      • hollerith 12y ago
        >That's $300 billion a month, $36 trillion a year Math error here.
        • prostoalex 12y ago
          Thanks, corrected.
      • jacobgreenleaf 12y ago
  • lilsunnybee 12y ago
    As far as the low-income side of things, the safety nets you mention definitely help many people, but in the US at least there are still many other people who do not qualify for existing programs, but are still very much in need: - Long-term unemployment - unemployment pay, even with the recent extensions, is limited in duration. A portion of such people might qualify just fine for disability (SSDI, SSI), but many long-term unemployed do not. To qualify a person can't just prove they haven't been able to find any available jobs they're capable of doing, but prove that there isn't any possible job at all they could do, regardless of openings or likelihood of being hired. There is disability fraud that goes on (cases that don't meet the legal definition, but are misrepresented and approved), especially for areas with very high unemployment, but this is illegal and not supposed to happen, and efforts are constantly underway to crack down, often to the detriment of many unequivocally legitimate (by legal definition) disability recipients. - For food assistance, the Supplemental Nutrition Assistance Program (SNAP), provides usually $100-$300 per person in monthly supplemental assistance for purchasing groceries. But for those people without additional income to put towards food, it is often not enough and seeking out additional non-governmental help is necessary to not go hungry. In many states long-term unemployed people, regardless of need, do not even qualify (assistance is time-limited). - Except in the case of low-income parents, cash assistance is very rare or nonexistent most places in the US. - Health care - the Affordable Care Act (ACA) improved the situation for a large portion of uninsured Americans, mostly by providing variable subsidies for a wide range of incomes, and disallowing insurance companies from denying or cancelling coverage for medical reasons. Even now though, in some states many low income-people still cannot obtain insurance; some State governments (like Texas, Florida and others) chose not to expand their Medicaid programs to cover all adults below the poverty level, as was expected. In those states non-disabled adults below the poverty level do not qualify for Medicaid, or even for the same subsidies provided to those in higher income brackets. ----- A basic income would ease a lot of pains for low-income individuals who do not qualify for current aid programs, or qualify but do not receive benefits for various other reasons: like not knowing it's available, daunting paperwork and proof of identity/need requirements, stigma, etc. The bureaucratic overhead of processing applications and managing current cases for a range of programs would be greatly reduced too.
• peterjancelis 12y ago
  A lowering of the real rate of interest, either by a voluntary decrease in spending and a corresponding increase in savings, or by an artificial rate set by central bank policy, will indeed lead to more investment into earlier stage production areas such as farming, mining and startups. Taxes discourage investment, however, so they can change time preference again towards less savings and more later stage consumption. Then again, also here we see a political preference for the early stage production areas, e.g. farming subsidies.
• steveklabnik 12y ago
  You should check out some Karl Marx sometime. This isn't exactly what he says, but it is a part of it. The concepts you refer to in your post are called "fixed capital" and "variable capital" and their ratios, as well as the "reserve army of labor," amongst other things.
• stonemetal 12y ago
  >And then those companies invent things that make more jobs obsolete, causing unemployment to remain high. I would say this one is incorrect. It isn't so simple as that. Inventing new tech often creates new jobs. As an example look at the different medical imaging technologies created over the years: x-ray, ultrasound, CAT scan, MRI, etc. Each added to the number of medical imaging jobs it didn't obsolete anyone.
• nostrademons 12y ago
  Partially correct. Technology companies fall into three main categories: 1.) Companies that let their customers do what they were already doing, but more efficiently, such that they need less manpower. Eg. self-checkout machines, manufacturing robotics, enterprise IT, backend logistics, data warehousing. 2.) Companies that let previously unskilled groups perform the jobs of skilled workers. Eg. EBay (disrupts auction-houses and collectibles), blogging (disrupts the publishing industry), AirBnB (disrupts hotels & hostels), Uber (disrupts taxicabs), StackOverflow (disrupts IT consultants). 3.) Companies that let people perform entirely new things that they couldn't do before. Eg. Google (researching topics that would've been prohibitively expensive to learn about), Kickstarter (funding creative projects), PayPal/Square (accepting payment as a small independent vendor). The uses of a transformative technology tend to progress from 1 to 2 to 3, because that is the rough order of obviousness and risk to the entrepreneur. When a new technology comes out, all you need is familiarity with the technology and with existing processes to understand where a manual process could be automated outright. This is the domain of enterprise startups founded by people with deep knowledge of an industry and a keen interest in new technology. Once those opportunities have been picked clean, entrepreneurs look for cases where they could use technology to let a disenfranchised group do the work of an enfranchised group. They take the people who have been rendered out of work in stage 1, and then give them the tools to put higher-skilled workers out of work in stage 2. Doing this requires a strong understanding of both the processes of the industry that will be cannibalized, and an understanding of the capabilities of the workers that will take their job, and an understanding of the technology that lets you bridge the former and the latter. So entrepreneurs here need to do a lot of synthesis and need a bit of "in the right place at the right time" as well. Once those opportunities are picked clean, then entrepreneurs start looking for things that people want to do but currently can't because they lack the means. This is where the great consumer companies of the next age are formed. It's very risky business for the entrepreneur, though, because there is essentially zero data available on what things people would like to do if they could but can't currently. Usually entrepreneurs that succeed here do so via vision, creativity, and a good sense of what they themselves want to do. We're currently just starting stage 2 in the Internet/mobile/cloud revolution, so I would expect more job destruction and more short-term social pain in the near term. But it stops when all the easy opportunities of stage 1 and stage 2 have been picked clean, and people are forced to hunt for consumer business models that employ all the people put out of work by the earlier stages. Stage 1 and 2 destroy jobs, but stage 3 creates them. BTW, for the last major economic transition (the Gilded Age and Industrial Revolution), the stages looked like this: 1. Sailors => Steamboats. Weavers => power looms. Blacksmiths => Steelmaking. Coachmen => Railroads. Miners => bulldozers, excavators, and heavy equipment. Domestic servants => home appliances. 2. Railroads => Automobiles. Whalers => Oil. Coal miners => Oil. Messengers => telegraphs. Farmers => Meatpacking/agribusiness. 3. Electricity. Home appliances (part of this industry replaced domestic servants, but part let consumers do genuinely new things, like microwaves and blenders). Penicillin. Air conditioning. Airliners. Elevators. Refrigerators. Computers (kicking off the next revolution). Note that there's a large overlap between the stages. The last stage 1 business, replacing domestic servants with vacuum cleaners and washing machines, didn't happen until after WW2, while the first stage 3 business, electricity, happened in the late 19th century. I think we've seen the same thing with the Internet age, where Google and PayPal were among the first Stage 3 businesses, but Stage 2 hadn't even happened yet. The general pattern is based on who're the substitutes for each industry. Stage 1 substitutes machines for labor. Stage 2 substitutes labor for labor with the help of machines to do things more efficiently. Stage 3 uses machines (built by labor) to solve unfulfilled human desires.
• YokoZar 12y ago
  What breaks the cycle is that eventually someone uses all this capital to found a business making use of all these unemployed people. They're an untapped resource. You're basically describing technological progress, but there's no reason to assume that tech will always replace expensive laborers with relatively smaller amounts of automation. All that productivity created by new technology represents increased demand, and having workers go idle is just as much an inefficiency as using an older process. An inefficiency that can be (profitably) corrected with the right business model. Tech can, for instance,replace expensive components with cheaper labor (think usability inventions), or help scale up existing production to meet greater demand (think bigger factories). Both of these require more workers in the aggregate, not less.
• prostoalex 12y ago
  > Are my assumptions correct? What breaks the cycle? Long-term people * invent some other occupations that were not possible a generation ago (social media consultant, AWS architect) * have fewer children