Author Topic: Why did anyone ever think UBI would work?  (Read 15683 times)

shenlong55

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Re: Why did anyone ever think UBI would work?
« Reply #200 on: May 15, 2019, 08:46:22 AM »
Can anyone explain to me why printing money and giving it to average people is always seen as a scary inflationary nightmare that would ruin the country but printing money and giving it to banks is seen as perfectly rational and necessary means of increasing the monetary supply?

Because it's rich people saying so.

Let's not be misleading though, because someone with less banking knowledge here might read this and assume that the Fed GIVES banks money. It doesn't. Banks transact with the Fed but the Fed doesn't just give random banks billions for nothing. It's lending, borrowing, buying treasury bills, mortgage backed securities, etc. It's not gifting.

Regarding inflation, the Fed closely monitors inflation and tweaks their policy to aim for a healthy inflation rate.

I'm open to UBI, but I really do think it would drive up our already dangerously high housing costs - just as low interest rates correlate to higher home prices. Most people want to live in the best accommodations they can afford.

Not sure about the others, but at least as far as lending I think that's a distinction without a difference.  The money is in fact given to the banks, they just have to pay interest at a lower rate than anyone else does after the fact.
« Last Edit: May 15, 2019, 08:56:52 AM by shenlong55 »

shenlong55

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Re: Why did anyone ever think UBI would work?
« Reply #201 on: May 15, 2019, 08:56:27 AM »
If you give money to poor people they spend it. This both stimulates the economy and increases tax revenue, and yes, can also create inflation if you create the money out of nothing.

If you give money to people who are already absurdly rich they don't have anything to spend it on, so it neither stimulates the economy nor increases tax revenue, but it also doesn't produce inflation (except maybe among investible assets, as is being debated in the "everything bubble" thread).

Unless the rich people are actually hoarding the money, isn't that money still going to be spent eventually somewhere downstream creating at least some level of inflation?  And if they're just hoarding the money then isn't that defeating the purpose of giving them the money in the first place since it never actually enters the economy?
« Last Edit: May 15, 2019, 08:58:17 AM by shenlong55 »

maizeman

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Re: Why did anyone ever think UBI would work?
« Reply #202 on: May 15, 2019, 09:03:21 AM »
And if they're just hoarding the money then isn't that defeating the purpose of giving them the money in the first place since it never actually enters the economy?

Exactly.

In a nutshell you've summarized why increased spending on food stamps, dollar for dollar, has many multiples of the economic stimulus effect of the same number of dollars spent on tax cuts.

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Re: Why did anyone ever think UBI would work?
« Reply #203 on: May 15, 2019, 09:33:51 AM »
Can anyone explain to me why printing money and giving it to average people is always seen as a scary inflationary nightmare that would ruin the country but printing money and giving it to banks is seen as perfectly rational and necessary means of increasing the monetary supply?

Because it's rich people saying so.

Let's not be misleading though, because someone with less banking knowledge here might read this and assume that the Fed GIVES banks money. It doesn't. Banks transact with the Fed but the Fed doesn't just give random banks billions for nothing. It's lending, borrowing, buying treasury bills, mortgage backed securities, etc. It's not gifting.

Regarding inflation, the Fed closely monitors inflation and tweaks their policy to aim for a healthy inflation rate.

I'm open to UBI, but I really do think it would drive up our already dangerously high housing costs - just as low interest rates correlate to higher home prices. Most people want to live in the best accommodations they can afford.

Not sure about the others, but at least as far as lending I think that's a distinction without a difference.  The money is in fact given to the banks, they just have to pay interest at a lower rate than anyone else does after the fact.

No, it's a big difference. You don't have to pay a gift back. It's not a potato potahto situation, it's what makes a gift a gift and a loan a loan. Again, I'm not opposed to UBI, I'm opposed to confidently delivered untruths from a forum filled with otherwise smarter-than-average folks.

Regarding banks borrowing directly from the Fed, banks have to pay .5% MORE in interest to borrow funds from the Fed than they would from each other, and they have to post collateral. Banks don't want to have to borrow from the Fed.

People view the relationship between banks and the Fed as corrupt, and given that many bankers got $$ instead of the jailtime they deserved it's an understandable misconception, but it's important to understand just what you're criticizing when you take issue with certain aspects of central banking, US or otherwise.


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Re: Why did anyone ever think UBI would work?
« Reply #204 on: May 15, 2019, 09:35:43 AM »
If productivity goes up more (it will with automation), that means we need to consume more and more to maintain "full employment". We already consume more than we need; more consumption will just be consumption for consumption's sake. Whether the environment can handle it is one question, but why we would even want that life is another.

I think productivity will go up in many areas where automation is feasible (which is a good thing), but will go down in areas where automation is less feasible and thus quality would suffer from automation. There are many examples of this. Organic food. Craft beer. School class size. Etc.

Also, let's not forget that enhancements in productivity have led to this exploding volcano of luxury, and not throw out the baby (luxury) with the bathwater (wastefulness and environmental degradation).

Finally, to back up a bit, I'm not suggesting people work their whole lives to produce and consume. I'm only encouraging another tenet of Mustachianism, https://www.mrmoneymustache.com/2012/02/27/get-rich-with-good-old-fashioned-hard-work/ or https://www.mrmoneymustache.com/2013/03/28/the-incomparable-advantage-of-having-to-work-for-what-you-get/.

Boofinator

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Re: Why did anyone ever think UBI would work?
« Reply #205 on: May 15, 2019, 09:48:37 AM »
"Aha" you say "these people can also become artists and musicians.  How many Picassos and Beethovens were trapped in the FC until they were able to find their calling?"  They answer is very close to zero.  You can't make a living as an artist unless you are popular, so by definition there is a very limited number of artists who can make a living being an artist.

I think I have to disagree with your artist example. There are probably a hundred times more professional artists today (per capita) than there were 500 years ago (noting that the term "artist" is very broad). They certainly make a living, though many have to spend at Mustachian levels to do so.

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Re: Why did anyone ever think UBI would work?
« Reply #206 on: May 15, 2019, 10:00:42 AM »
"Aha" you say "these people can also become artists and musicians.  How many Picassos and Beethovens were trapped in the FC until they were able to find their calling?"  They answer is very close to zero.  You can't make a living as an artist unless you are popular, so by definition there is a very limited number of artists who can make a living being an artist.

I think I have to disagree with your artist example. There are probably a hundred times more professional artists today (per capita) than there were 500 years ago (noting that the term "artist" is very broad). They certainly make a living, though many have to spend at Mustachian levels to do so.
Ah, but how do we define "professional" and "artist" and "successful"?  Further, how can we estimate how many artists a society needs, and how many potentially successful artists there would be had they been allowed to create rather than work in unfulfilling job they were never particualrly suited for?

I suspect the alleged increase in artists over hte last 500 years is tightly correlated with the dramatic increase in discressionary spending as well as with huge gains in productivity.  We have a larger percentage of people who are middle class, and who can afford to support their daughter or son through art school, and/or support a significant other artist.  Likewise, the time most people have to dedicate towards daily chores like washing clothes and growing food has shrunk dramatically.

Watchmaker

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Re: Why did anyone ever think UBI would work?
« Reply #207 on: May 15, 2019, 10:40:26 AM »
I think productivity will go up in many areas where automation is feasible (which is a good thing), but will go down in areas where automation is less feasible and thus quality would suffer from automation. There are many examples of this. Organic food. Craft beer. School class size. Etc.

I don't think any of those three things are good examples of what you describe. First, because organic farmers, craft brewers, and teachers all utilize all sorts of automation to improve their productivity, and will likely do so even more in the future (which is a good thing to me, I like efficiency). Second, because organic food and craft beer are not per se better than the alternatives, they are just things we've convinced ourselves to value more, partially to feed the beast of productivity.

Also, let's not forget that enhancements in productivity have led to this exploding volcano of luxury, and not throw out the baby (luxury) with the bathwater (wastefulness and environmental degradation).

And I think much of that luxury is bad for us; variously in a physical, mental, environmental, and/or spiritual sense. Continuing to maintain "full employment" while increasing productivity necessitates an increase in unnecessary consumption, and so is bad in my view.

Finally, to back up a bit, I'm not suggesting people work their whole lives to produce and consume. I'm only encouraging another tenet of Mustachianism, https://www.mrmoneymustache.com/2012/02/27/get-rich-with-good-old-fashioned-hard-work/ or https://www.mrmoneymustache.com/2013/03/28/the-incomparable-advantage-of-having-to-work-for-what-you-get/.

Why do you think people wouldn't work hard just because they had UBI? Given the chance to spend their time on what interested them, I suspect many people would work harder than they ever did in their paid roles. And those who would choose to do nothing were probably not the largest contributors to production to begin with.

You are on an early retirement forum, so I presume you aspire to early retirement or have already retired. Is your plan to cease being a useful member of society after you retire? If it isn't, why do you suspect it would be for others?

Boofinator

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Re: Why did anyone ever think UBI would work?
« Reply #208 on: May 15, 2019, 10:50:03 AM »
Can anyone explain to me why printing money and giving it to average people is always seen as a scary inflationary nightmare that would ruin the country but printing money and giving it to banks is seen as a perfectly rational and necessary means of increasing the monetary supply?

If you give money to poor people they spend it. This both stimulates the economy and increases tax revenue, and yes, can also create inflation if you create the money out of nothing.

If you give money to people who are already absurdly rich they don't have anything to spend it on, so it neither stimulates the economy nor increases tax revenue, but it also doesn't produce inflation (except maybe among investible assets, as is being debated in the "everything bubble" thread).

I don't disagree that poor people would spend this gift, but it does not "stimulate the economy", it does the exact opposite, if it provides a disincentive for people to work. As for rich people, they are generally investing the money in one form or another, which provides capital for businesses to pay for labor (hence employing people and stimulating the economy through "trickle-down" economics). Now, there is clearly an optimal ratio of capital to labor; what that ratio is, however, is not clear (I personally think right now the table is tilted toward capital). But nonetheless there is certainly a point where increasing labor wages does not stimulate the economy.

Quote
This is incorrect. Transfer payments funded by tax revenue (or borrowing, ugh) are generally noninflationary in either case. Payments made using money produced out of thin air are generally going to be inflationary in either case.

You're leaving out the full picture. There are other ways for inflation to occur other than the printing of money. To include an increased cost of labor due to a larger subset of the population not joining the working force; increased costs of doing business due to higher taxes on capital; decreased productivity; increased demand; etc.

shenlong55

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Re: Why did anyone ever think UBI would work?
« Reply #209 on: May 15, 2019, 11:02:54 AM »
Not sure about the others, but at least as far as lending I think that's a distinction without a difference.  The money is in fact given to the banks, they just have to pay interest at a lower rate than anyone else does after the fact.

No, it's a big difference. You don't have to pay a gift back. It's not a potato potahto situation, it's what makes a gift a gift and a loan a loan. Again, I'm not opposed to UBI, I'm opposed to confidently delivered untruths from a forum filled with otherwise smarter-than-average folks.

Good point, that difference did slip my mind.  To be fair though, they don't ever have to pay back the money that they lend out based on those extra reserves nor the interest they make on it.  And if they're not doing those things then they're once again just hoarding money and not actually increasing the monetary supply, right?  If that's true, then I have to again ask why this is the method we choose to go about increasing the monetary supply?

Regarding banks borrowing directly from the Fed, banks have to pay .5% MORE in interest to borrow funds from the Fed than they would from each other, and they have to post collateral. Banks don't want to have to borrow from the Fed.

The bold portion contradicts my understand of how the fed sets rates, but I'm far from an expert on this.  Regardless though, isn't it still a lower rate than any average person could get?

People view the relationship between banks and the Fed as corrupt, and given that many bankers got $$ instead of the jailtime they deserved it's an understandable misconception, but it's important to understand just what you're criticizing when you take issue with certain aspects of central banking, US or otherwise.

Can't say I disagree with any of this and I would welcome a good explanation of these things because my initial question was entirely serious and I often find myself wondering about it when thinking about UBI.

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Re: Why did anyone ever think UBI would work?
« Reply #210 on: May 15, 2019, 11:17:40 AM »
And if they're just hoarding the money then isn't that defeating the purpose of giving them the money in the first place since it never actually enters the economy?

Exactly.

In a nutshell you've summarized why increased spending on food stamps, dollar for dollar, has many multiples of the economic stimulus effect of the same number of dollars spent on tax cuts.

I do not know the velocity of money that is received  and spent by the poor.

I do know that they have a propensity to spend most of  it as soon as they receive it.

Consequently, whatever that money's velocity may be it commences almost immediately, which, is another way of saying its stimulative effect is practically immediate.

Is the total stimulative effect of money received and spent by the poor "many multiples of the economic stimulus effect of the same number of dollars spent on tax cuts"?

I don't know.

I don't think it's "many multiples."

A few years ago I tried to find a comparison.

I didn't find it.




« Last Edit: May 15, 2019, 11:20:01 AM by John Galt incarnate! »

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Re: Why did anyone ever think UBI would work?
« Reply #211 on: May 15, 2019, 11:20:33 AM »
"Aha" you say "these people can also become artists and musicians.  How many Picassos and Beethovens were trapped in the FC until they were able to find their calling?"  They answer is very close to zero.  You can't make a living as an artist unless you are popular, so by definition there is a very limited number of artists who can make a living being an artist.

I think I have to disagree with your artist example. There are probably a hundred times more professional artists today (per capita) than there were 500 years ago (noting that the term "artist" is very broad). They certainly make a living, though many have to spend at Mustachian levels to do so.

I'm talking about the future though.  One thing I sometimes hear is that even if knowledge jobs are automated away, people would then be free pursue creative activities, which presumably only humans can do.   But I don't think that will be the case.   We won't need 30% more photographers or painters.   Symphony orchestras won't grow in size.   If twice as many people are trying to make a living as authors, it doesn't follow that twice as many books will purchased and read. 

Cool Friend

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Re: Why did anyone ever think UBI would work?
« Reply #212 on: May 15, 2019, 11:33:08 AM »
Plus, some believe that machine learning algorithms that replicate creative processes will eventually be as good as human efforts.  It'll be hard if not impossible to compete with cheaper algorithms as an artist if the public doesn't notice or care. 

Watchmaker

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Re: Why did anyone ever think UBI would work?
« Reply #213 on: May 15, 2019, 11:38:45 AM »
Plus, some believe that machine learning algorithms that replicate creative processes will eventually be as good as human efforts.  It'll be hard if not impossible to compete with cheaper algorithms as an artist if the public doesn't notice or care.

https://www.usatoday.com/story/news/nation-now/2018/10/25/painting-created-ai-going-auction-block-christies/1759967002/

https://medium.com/syncedreview/ais-growing-role-in-musical-composition-ec105417899

And AI doesn't have to replace an artist to displace possible artist jobs-- it just has to make one artist more productive.

maizeman

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Re: Why did anyone ever think UBI would work?
« Reply #214 on: May 15, 2019, 11:56:12 AM »
Plus, some believe that machine learning algorithms that replicate creative processes will eventually be as good as human efforts.  It'll be hard if not impossible to compete with cheaper algorithms as an artist if the public doesn't notice or care.

https://www.usatoday.com/story/news/nation-now/2018/10/25/painting-created-ai-going-auction-block-christies/1759967002/

https://medium.com/syncedreview/ais-growing-role-in-musical-composition-ec105417899

And AI doesn't have to replace an artist to displace possible artist jobs-- it just has to make one artist more productive.

And if you look at Japan, you're already seeing holograms of "vocaloids" perform live in concerts and draw huge crowds. Anime really isn't my thing at all, but I've got a friend from college (now in his 30s) who lives in Hawaii these days who few back to the mainland to catch a Hatsune Miku concert when "she" was touring the west coast of the USA.

https://youtu.be/8Kb_WBChA5U?t=94

From a music industry perspective, as soon as an algorithm can come anywhere close to drawing similar crowds/selling similar numbers of songs to a human singer in the same genre, you're going to pick the algorithm to promote over the human. The algorithm isn't going to ever demand more money, will never switch to another record label, nor is it ever destroy its popularity by saying racist/sexist things on twitter (or getting a weird haircut).

Boofinator

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Re: Why did anyone ever think UBI would work?
« Reply #215 on: May 15, 2019, 11:57:42 AM »
Second, because organic food and craft beer are not per se better than the alternatives, they are just things we've convinced ourselves to value more, partially to feed the beast of productivity.

...

Why do you think people wouldn't work hard just because they had UBI? Given the chance to spend their time on what interested them, I suspect many people would work harder than they ever did in their paid roles. And those who would choose to do nothing were probably not the largest contributors to production to begin with.

To respond to your first point, values are fluid. I think most people, at a basic level, value food. Once people's basic food needs are met (perhaps by purchasing the cheapest foods available), they then can begin to value healthy food. After this, they might also begin valuing environmentally friendly food (which is where organic generally comes in). Perhaps they might also value animal-friendly (cage-free, free range, etc.) food. This is similar to how Mustachians value environmentalism, even if it isn't the cheapest option at times (note MMM's recent article on Tesla).

As to your second point (and I've expressed this in another UBI thread): I'm not dead-set against UBI as a societal experiment, but here's my concern (or, perhaps, fear): the people who UBI is designed to help the most, those who are having a hard time getting a job or haven't gotten a job, would decide that they do not need a job because UBI is sufficient (two people living together on UBI would be making $24k per year). In this case, UBI would be counterproductive as society loses these people's contributions for what could potentially be a lifetime. Meanwhile, without ever having learned to work (this is where UBI would differ from early retirement), these people would probably not even begin to understand what hard work is (so they wouldn't 'work harder' than they otherwise would at a job, and they probably wouldn't be providing much value to society).

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Re: Why did anyone ever think UBI would work?
« Reply #216 on: May 15, 2019, 12:04:29 PM »
Plus, some believe that machine learning algorithms that replicate creative processes will eventually be as good as human efforts.  It'll be hard if not impossible to compete with cheaper algorithms as an artist if the public doesn't notice or care.

https://www.usatoday.com/story/news/nation-now/2018/10/25/painting-created-ai-going-auction-block-christies/1759967002/

https://medium.com/syncedreview/ais-growing-role-in-musical-composition-ec105417899

And AI doesn't have to replace an artist to displace possible artist jobs-- it just has to make one artist more productive.

And if you look at Japan, you're already seeing holograms of "vocaloids" perform live in concerts and draw huge crowds. Anime really isn't my thing at all, but I've got a friend from college (now in his 30s) who lives in Hawaii these days who few back to the mainland to catch a Hatsune Miku concert when "she" was touring the west coast of the USA.

https://youtu.be/8Kb_WBChA5U?t=94

From a music industry perspective, as soon as an algorithm can come anywhere close to drawing similar crowds/selling similar numbers of songs to a human singer in the same genre, you're going to pick the algorithm to promote over the human. The algorithm isn't going to ever demand more money, will never switch to another record label, nor is it ever destroy its popularity by saying racist/sexist things on twitter (or getting a weird haircut).

And there are any number of things like computer games or documentary films that need soundtracks.   Instead of hiring a slow, and expensive human to compose and record the music, simply have cheap and fast computer do it.   

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Re: Why did anyone ever think UBI would work?
« Reply #217 on: May 15, 2019, 12:17:16 PM »
Plus, some believe that machine learning algorithms that replicate creative processes will eventually be as good as human efforts.  It'll be hard if not impossible to compete with cheaper algorithms as an artist if the public doesn't notice or care.

https://www.usatoday.com/story/news/nation-now/2018/10/25/painting-created-ai-going-auction-block-christies/1759967002/

https://medium.com/syncedreview/ais-growing-role-in-musical-composition-ec105417899

And AI doesn't have to replace an artist to displace possible artist jobs-- it just has to make one artist more productive.

And if you look at Japan, you're already seeing holograms of "vocaloids" perform live in concerts and draw huge crowds. Anime really isn't my thing at all, but I've got a friend from college (now in his 30s) who lives in Hawaii these days who few back to the mainland to catch a Hatsune Miku concert when "she" was touring the west coast of the USA.

https://youtu.be/8Kb_WBChA5U?t=94

From a music industry perspective, as soon as an algorithm can come anywhere close to drawing similar crowds/selling similar numbers of songs to a human singer in the same genre, you're going to pick the algorithm to promote over the human. The algorithm isn't going to ever demand more money, will never switch to another record label, nor is it ever destroy its popularity by saying racist/sexist things on twitter (or getting a weird haircut).

And there are any number of things like computer games or documentary films that need soundtracks.   Instead of hiring a slow, and expensive human to compose and record the music, simply have cheap and fast computer do it.

Yup to all three of you!

maizeman

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Re: Why did anyone ever think UBI would work?
« Reply #218 on: May 15, 2019, 12:18:53 PM »
And there are any number of things like computer games or documentary films that need soundtracks.   Instead of hiring a slow, and expensive human to compose and record the music, simply have cheap and fast computer do it.

Good point! When I'm coding I'll often listen to mixes of music pulled from video game soundtracks. It's enough to drown out the background and intentionally designed to not be so distracting you cannot focus on something else while it is playing. Given that computers can already write "classical" music that in some cases will pass a musical Turing Test, it would seem like the days of having that kind of music composed by a human are extremely numbered.

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Re: Why did anyone ever think UBI would work?
« Reply #219 on: May 15, 2019, 12:21:37 PM »
I'm talking about the future though.  One thing I sometimes hear is that even if knowledge jobs are automated away, people would then be free pursue creative activities, which presumably only humans can do.   But I don't think that will be the case.   We won't need 30% more photographers or painters.   Symphony orchestras won't grow in size.   If twice as many people are trying to make a living as authors, it doesn't follow that twice as many books will purchased and read.

I'm also talking about the future (as well as the past and present). People don't "need" jobs, they need food and shelter. They also desire companionship, experiences, and other generators of happiness. My guess is that no more than 25% of the general working population of the United States work in "need"- based jobs (where the majority of their work supports needs). The other 75% work in "desire"-based jobs. And these latter jobs will never be in short supply, because the desires of humans are limitless (take, for example, MMM's charitable contributions, which some might argue support "need"-based jobs (not incorrectly), but they also satisfy his desires to help the less fortunate as well as satisfying the desire for a healthier general population). The key, as mentioned up-thread, is to ensure that the jobs and related consumption don't contradict our morals.

sol

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Re: Why did anyone ever think UBI would work?
« Reply #220 on: May 15, 2019, 12:46:56 PM »
And if you look at Japan, you're already seeing holograms of "vocaloids" perform live in concerts and draw huge crowds. Anime really isn't my thing at all, but I've got a friend from college (now in his 30s) who lives in Hawaii these days who few back to the mainland to catch a Hatsune Miku concert when "she" was touring the west coast of the USA.

https://youtu.be/8Kb_WBChA5U?t=94

From a music industry perspective, as soon as an algorithm can come anywhere close to drawing similar crowds/selling similar numbers of songs to a human singer in the same genre, you're going to pick the algorithm to promote over the human. The algorithm isn't going to ever demand more money, will never switch to another record label, nor is it ever destroy its popularity by saying racist/sexist things on twitter (or getting a weird haircut).

I think this is a particularly bad example, though.  Hatsune Miku is a show.  It's a touring production.  It literally has exactly one fewer employees than a typical touring production; the performer.  It still has arrangers and booking agents and stage crews.  It still has a physical driver that moves the equipment around the country, and it still has an administrative back office that decides what the look and the sound should be like.  It arguably has just as many jobs behind it as does any other touring production, because instead of one person doing all of the singing and dancing it has a team of people making a computer sing and dance.

But it's a good example of how technology creates jobs.  I agree that there is one 16 year old Japanese girl who does NOT have a job because of Hatsune Miku, but then there are probably a hundred other people who DO have jobs because of Hatsune Miku, and many of those people would not be working for a human version of her show.

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Re: Why did anyone ever think UBI would work?
« Reply #221 on: May 15, 2019, 12:50:59 PM »
Not sure about the others, but at least as far as lending I think that's a distinction without a difference.  The money is in fact given to the banks, they just have to pay interest at a lower rate than anyone else does after the fact.

No, it's a big difference. You don't have to pay a gift back. It's not a potato potahto situation, it's what makes a gift a gift and a loan a loan. Again, I'm not opposed to UBI, I'm opposed to confidently delivered untruths from a forum filled with otherwise smarter-than-average folks.

Good point, that difference did slip my mind.  To be fair though, they don't ever have to pay back the money that they lend out based on those extra reserves nor the interest they make on it.  And if they're not doing those things then they're once again just hoarding money and not actually increasing the monetary supply, right?  If that's true, then I have to again ask why this is the method we choose to go about increasing the monetary supply?

Regarding banks borrowing directly from the Fed, banks have to pay .5% MORE in interest to borrow funds from the Fed than they would from each other, and they have to post collateral. Banks don't want to have to borrow from the Fed.

The bold portion contradicts my understand of how the fed sets rates, but I'm far from an expert on this.  Regardless though, isn't it still a lower rate than any average person could get?

People view the relationship between banks and the Fed as corrupt, and given that many bankers got $$ instead of the jailtime they deserved it's an understandable misconception, but it's important to understand just what you're criticizing when you take issue with certain aspects of central banking, US or otherwise.

Can't say I disagree with any of this and I would welcome a good explanation of these things because my initial question was entirely serious and I often find myself wondering about it when thinking about UBI.

I'd be happy to share some info, in fact arguing on the internet is often the best way for me to learn personally :)

To zoom out a bit, the Fed sets a target interest rate at which banks may borrow to each other to meet reserve requirements at the end of the day. You are probably familiar with the fact that banks only need to have 10% of account holder funds available. If banks don't have that 10%, they can borrow it from each other at the Fed fund rate - which is not enforced by the Fed, but pursued through the Fed's monetary policy. If they can't find a bank to borrow it from, they can borrow it from the Fed at .5% higher than the Fed fund rate. They don't want to do this - it's expensive and it signals trouble. It's not some sweetheart deal scenario, it's a pressure relief valve.

When I say Fed sets the rate not through enforcement but monetary policy, I mean the Fed buys securities (Treasuries and mortgage-backed securities, in the US) from its member banks to add liquidity to capital markets. This has the same effect as increasing the money supply. In return, the central bank issues credit to the banks' reserves to buy the securities.

So the idea that the Fed is constantly lending money to banks at low interest rates is kind of backwards. It's most relevant activity is actually buying from banks on credit.

Linea_Norway

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Re: Why did anyone ever think UBI would work?
« Reply #222 on: May 15, 2019, 12:58:07 PM »
Today I saw a documentary about it. They called it Unconditional Basic Income, instead of Universal B I.

The documentary said that people with UIB would mostly work and that many would start their own company.
I think many would indeed do something that they feel is usefull. But I am not sure if all jobs would have been done volutarily. No one would like to continue in a job for a bad employer.

J Boogie

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Re: Why did anyone ever think UBI would work?
« Reply #223 on: May 15, 2019, 01:02:00 PM »
Regardless though, isn't it still a lower rate than any average person could get?

I think the important piece of info here is that the Fed doesn't set/enforce rates through decree, they create target rates through their asset buying programs and once the target rate has been achieved they stop buying.

The point being, the Fed isn't making it so your interest rate is higher than an institutional rate, capital markets are. Yes, the Fed buys assets to achieve a certain market rate, but then it's up to the loan-seeker to make themselves attractive either in terms of credit worthiness, terms, proposed loan size, etc to the lender if they would like to borrow at a certain rate. If you were a large bank you might offer a lower interest rate to another large bank than an individual for any number of reasons.

maizeman

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Re: Why did anyone ever think UBI would work?
« Reply #224 on: May 15, 2019, 01:33:22 PM »
And if you look at Japan, you're already seeing holograms of "vocaloids" perform live in concerts and draw huge crowds. Anime really isn't my thing at all, but I've got a friend from college (now in his 30s) who lives in Hawaii these days who few back to the mainland to catch a Hatsune Miku concert when "she" was touring the west coast of the USA.

https://youtu.be/8Kb_WBChA5U?t=94

From a music industry perspective, as soon as an algorithm can come anywhere close to drawing similar crowds/selling similar numbers of songs to a human singer in the same genre, you're going to pick the algorithm to promote over the human. The algorithm isn't going to ever demand more money, will never switch to another record label, nor is it ever destroy its popularity by saying racist/sexist things on twitter (or getting a weird haircut).

I think this is a particularly bad example, though.

Sol, I think you often seem to take very different points away from my posts than I intend to convey. I do my best to chose my words carefully, but apologies if the confusion is the result of something on my end.

My point in bringing Hatsune Miku isn't that having a holographic performer automatically eliminates all of the jobs in the music industry. It is that, while we've discussed how many other classes of jobs are at risk of being reduced in number by automation (including things like drivers and booking agents and show promoters, but I'd imagine not stage crews as each show is probably different enough from each other it'd be hard to come up with general rules for how to automate those roles), entertainers and creatives are generally some of the categories of job that we think of as immune to automation.

As watchmaker posted up thread, there is already evidence that algorithms can do a good job of composing different kinds of music. In bringing up Hatsune Miku I am pointing out that the same is true of algorithms performing certain kinds of music (at least for certain audiences).

Yes, right now entertainment like Hatsune Miku is usually performing music written by humans, and music written by computers is sold or streamed over the internet, but generally not performed to a live audience by computers. Given that automating both parts of the job in isolation are already making people a fair bit of money, to me it does not seem to be a logical leap to predict that in the future computers will be competitive singer/songwriters.

John Galt incarnate!

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Re: Why did anyone ever think UBI would work?
« Reply #225 on: May 15, 2019, 03:37:32 PM »
Can anyone explain to me why printing money and giving it to average people is always seen as a scary inflationary nightmare that would ruin the country but printing money and giving it to banks is seen as a perfectly rational and necessary means of increasing the monetary supply?

If you give money to poor people they spend it. This both stimulates the economy and increases tax revenue, and yes, can also create inflation if you create the money out of nothing.

If you give money to people who are already absurdly rich they don't have anything to spend it on, so it neither stimulates the economy nor increases tax revenue, but it also doesn't produce inflation (except maybe among investible assets, as is being debated in the "everything bubble" thread).

I don't disagree that poor people would spend this gift, but it does not "stimulate the economy", it does the exact opposite, if it provides a disincentive for people to work.

If a UBI is the only money available to the poor to spend each period won't they routinely spend it mostly on the same things such as food/drink,  staples, personal-care items, and rent?

If so, is their routine spending  "new spending" that is stimulative in the sense that it increases economic growth?

Or is it  spending that merely maintains economic growth?

I think it's the latter.

Telecaster

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Re: Why did anyone ever think UBI would work?
« Reply #226 on: May 15, 2019, 03:43:06 PM »
I'm also talking about the future (as well as the past and present). People don't "need" jobs, they need food and shelter. They also desire companionship, experiences, and other generators of happiness. My guess is that no more than 25% of the general working population of the United States work in "need"- based jobs (where the majority of their work supports needs). The other 75% work in "desire"-based jobs. And these latter jobs will never be in short supply, because the desires of humans are limitless (take, for example, MMM's charitable contributions, which some might argue support "need"-based jobs (not incorrectly), but they also satisfy his desires to help the less fortunate as well as satisfying the desire for a healthier general population). The key, as mentioned up-thread, is to ensure that the jobs and related consumption don't contradict our morals.

I fully understand the point and agree with most of it.  Here's where we diverge:  The desires of humans are limitless, but the ability to fill those desires is limited by money.   As we've gotten wealthier as a society, we can afford more luxuries (which most art is).  But now we are at the point, and really have been at the point for a while, where most of society is not getting wealthier anymore.     Most of society is stagnant, wage-wise.  So that part of society isn't going to be buying more luxuries.  They won't be being more fine art photographs or artisan whiskeys.

If the Amazon FC worker becomes an Uber driver, she will be buying less "desire" stuff.   The people who own the bots will be, but they won't be reading 1,000 times more books, buying 1,000 times more paintings, or drinking 1,000 times more craft beer.   Which is the minimum of what they'd have to do to keep the  "desire" economy expanding.

We've seen a preview of how this could turn out back around the turn of the 20th century.   Workers prevailed, but it entailed mass riots and armed, bloody confrontation in cities all across this country, and actually overthrowing governments in other countries.    I don't think we want to go there. 




shenlong55

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Re: Why did anyone ever think UBI would work?
« Reply #227 on: May 15, 2019, 04:13:32 PM »
I'd be happy to share some info, in fact arguing on the internet is often the best way for me to learn personally :)

To zoom out a bit, the Fed sets a target interest rate at which banks may borrow to each other to meet reserve requirements at the end of the day. You are probably familiar with the fact that banks only need to have 10% of account holder funds available. If banks don't have that 10%, they can borrow it from each other at the Fed fund rate - which is not enforced by the Fed, but pursued through the Fed's monetary policy. If they can't find a bank to borrow it from, they can borrow it from the Fed at .5% higher than the Fed fund rate. They don't want to do this - it's expensive and it signals trouble. It's not some sweetheart deal scenario, it's a pressure relief valve.

When I say Fed sets the rate not through enforcement but monetary policy, I mean the Fed buys securities (Treasuries and mortgage-backed securities, in the US) from its member banks to add liquidity to capital markets. This has the same effect as increasing the money supply. In return, the central bank issues credit to the banks' reserves to buy the securities.

So the idea that the Fed is constantly lending money to banks at low interest rates is kind of backwards. It's most relevant activity is actually buying from banks on credit.

Thanks for that explanation, I see now the mistake I was making.  I did a little reading to refresh my knowledge on the issue and I think the point I was trying to articulate is that when the fed does loan money to banks (or I guess technically when anybody does) they are effectively giving the banks free money due to the low reserve requirements.  If the fed lends a bank $1 million dollars they're actually giving the bank the ability to loan out $10 million dollars and the bank only ever has to pay back the original $1 million plus a fairly low interest rate.  My question then is how is this method of increasing the monetary supply better than just giving every citizen a UBI?  It seems to me like the only difference between the two is that in the current system the banks get to act as gatekeepers to that newly created money by deciding who they are or are not willing to lend it to.  If we did decide to implement a UBI couldn't the fed address the inflationary effects by simply increasing the reserve ratio?
« Last Edit: May 15, 2019, 05:15:15 PM by shenlong55 »

Bloop Bloop

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Re: Why did anyone ever think UBI would work?
« Reply #228 on: May 15, 2019, 05:19:16 PM »
What you said about the difference between tax revenue and thin-air money may be true. But I posit that there is a further, independent factor. Encouraging low-income earners to keep having to work low income jobs (i.e., continuing the market force status quo) will keep the minimum wage low and will prevent wage inflation pressure going up the chain. Doing what you propose (giving everyone a UBI, thus effectively boosting the national minimum wage by the UBI/52/38) will lead to extreme wage inflation at the low end, which will then flow up the chain, thus spoiling the nice market equilibrium we currently have.

No that does not follow. Remember that, unlike in your plan, people who work would still receive a UBI.

Hence, if I'm paying someone $7.25/hour to work today, and tomorrow a $12,000 UBI comes into effect, that person can still come into work and I'm still just paying them the same $7.25/hour and and they're still receiving the same $7.25/hour. The value proposition for both me and my employee stays the same.

The only people who would drop out of the job market voluntarily are those who feel like $12,000 is all they need. We can estimate how common losing interest in earning more money once you have a bare subsistence level met is by looking at minimum wage workers today. How many minimum wage workers, when you give them a $1/hour or $2/hour raise, use that to cut back the number of hours they are working while maintaining the same income? In my experience, the answer almost none of them do so.

There's a difference between your example of hiking a minimum wage by $1/hour or $2/hour (agree - little disincentive to work, especially given marginal rates of tax/welfare withdrawal at that amount) versus hiking a minimum wage by about $6.50 per hour which will be the effect of the UBI. Suddenly, that will mean much less incentive to either work the same number of hours, or to work that particular low-paid job at all. Even if only a portion of the former workers resign (or reduce their hours), the effect will be to withdraw the supply of labour, distorting the supply-demand curve, and leading to other businesses most likely having to raise their wages - hence, inflationary pressure on wages and prices.

Because, with the UBI in effect, the minimum "hourly rate" available to someone who actually does work, would be:
- Full-time: $15,000 (call this their previous wage) + $12,000 (UBI) = $27,000; overall hourly wage about $14
- Part-time (say 20 hours a week): $7,500 + $12,000 = $19,500; overall hourly wage about $18.75 per week

So the effective hourly rate for any work goes way up at the bottom end, since there's a huge cushion, meaning that the supply equation is sharply distorted.

maizeman

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Re: Why did anyone ever think UBI would work?
« Reply #229 on: May 15, 2019, 06:22:17 PM »
Because, with the UBI in effect, the minimum "hourly rate" available to someone who actually does work, would be:
- Full-time: $15,000 (call this their previous wage) + $12,000 (UBI) = $27,000; overall hourly wage about $14
- Part-time (say 20 hours a week): $7,500 + $12,000 = $19,500; overall hourly wage about $18.75 per week

Yes a person making minimum wage has more money once a UBI is adopted than before. However I, as an employer am still only paying (in your example) $15,000. Which means the prices I need to charge my customers to turn a profit are still based on employing workers who I only need to pay $7.25/hour.

The fact that my employees have more money which I'm not paying them doesn't mean I need to change my prices, no more than I'd need to raise my prices if one of my employees got a second job and way making twice as much by working 80 hours a week, but only 40 of those hours were for me.

Bloop Bloop

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Re: Why did anyone ever think UBI would work?
« Reply #230 on: May 15, 2019, 09:57:31 PM »
You're forgetting the part where a person having more money means that person also has more bargaining power and/or less need to work, and thus is more likely to say no to work they don't like, meaning on a larger level that there are distortions in supply and demand. It's not about you initially changing your prices; it's about you perhaps having to boost your wage. The situation would be more akin to one of your employees getting a second job that pays twice as much as what you're currently paying, and then saying, hey, unless you raise my wage I'll stop working for your outfit because I have an equally good alternative option.

maizeman

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Re: Why did anyone ever think UBI would work?
« Reply #231 on: May 15, 2019, 10:35:55 PM »
You're forgetting the part where a person having more money means that person also has more bargaining power and/or less need to work, and thus is more likely to say no to work they don't like, meaning on a larger level that there are distortions in supply and demand.

One, workers having more bargaining power isn't a distortion of supply and demand.
Two, yes, people would probably be less likely to take actively unpleasant and low paying jobs if they aren't afraid of starving. That doesn't mean you can just add together the present minimum wage and a proposed UBI and say that's the new minimum wage.
Three, the opposite would happen as well. For actively desirable jobs, wages would likely fall as people could afford to accept less money to pursue work they found rewarding or meaningful.

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The situation would be more akin to one of your employees getting a second job that pays twice as much as what you're currently paying, and then saying, hey, unless you raise my wage I'll stop working for your outfit because I have an equally good alternative option.

Unfortunately, that is a false and misleading analogy. If one my my employees gets a job that pays twice as much, obviously they'd rather log more hours at their other job and fewer (or no) hours working for me. Because if they're earning $X/hour working for me, and $X+$Y/hour working for something else, each hour they're working for me they are losing $Y of potential income.

If one of my employees is receiving a UBI check for $1,000/month, that doesn't change their income potential per hour at all, so they are not forgoing higher income alternatives if they chose to work for me. The only situation where a UBI is going to make them stop working for me is if the work I have them doing is so miserable and distasteful that they were literally only doing it out of fear of starvation and/or homelessness.

So for example, my guess is that in a world with a UBI we'd see fewer strippers and call girls. And that's a price I'm more than happy to pay. (And before you can jump in, yes we've established you're unwilling to give up the idea of a bunch of folks motivated by fear of starvation competing to do menial jobs for you. Fortunately I don't think you're in the majority when it comes to that particular position.)

sol

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Re: Why did anyone ever think UBI would work?
« Reply #232 on: May 15, 2019, 11:04:12 PM »
a person having more money means that person also has more bargaining power and/or less need to work, and thus is more likely to say no to work they don't like, meaning on a larger level that there are distortions in supply and demand.

I think the current situation, in which people are motivated to do truly horrific and degrading jobs because they have no alternative other than starvation, is a much larger distortion of supply and demand.  In a healthy free market, every buyer AND every seller has options, and can choose what maximizes their own personal utility.  A distorted system is one in which people are forced into specific decisions because they have no options.

Sorry Bloop Bloop, I think you've got this one backwards.

Bloop Bloop

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Re: Why did anyone ever think UBI would work?
« Reply #233 on: May 15, 2019, 11:14:46 PM »
Workers having more bargaining power due to being given, literally, free money is a distortion of supply and demand. It's a meddling with the market. While I have said we should meddle insofar as providing subsistence rations to all, I don't believe in a general meddling above and beyond that point.

I also disagree with 'actively desirable jobs' having their wage fall. That is, if it happened, I think it would be a sad and undesirable thing. I believe in the market system.

"If one of my employees is receiving a UBI check for $1,000/month, that doesn't change their income potential per hour at all, so they are not forgoing higher income alternatives if they chose to work for me."
See above. Suddenly their bargaining power has increased because their overall utility per unit of time has increased.

"So for example, my guess is that in a world with a UBI we'd see fewer strippers and call girls. And that's a price I'm more than happy to pay."
I suspect you'd see fewer McDonald's workers, fewer Uber drivers, fewer fruit pickers and fewer picker and packers, too.

As for Sol - whether I am backwards or not is going to be foretold by how the political winds blow.

Keep in mind I have only been discussing whether it is appropriate to give people free money. We haven't even started talking about how we drum up the (a) UBI money of itself; (b) the increased wage cost which will have to be borne by employers and their shareholders to implement this needlessly charitable scheme.

maizeman

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Re: Why did anyone ever think UBI would work?
« Reply #234 on: May 15, 2019, 11:34:52 PM »
Workers having more bargaining power due to being given, literally, free money is a distortion of supply and demand.

As has already been explained repeatedly above, no it isn't. Saying the same thing over and over again doesn't make it true.

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"If one of my employees is receiving a UBI check for $1,000/month, that doesn't change their income potential per hour at all, so they are not forgoing higher income alternatives if they chose to work for me."
See above. Suddenly their bargaining power has increased because their overall utility per unit of time has increased.

You really are hung up on the idea that the only reason people work is out of fear of starvation, aren't you, Bloop Bleep? If you were right, then any time people's hourly wages went up (whether from a raise, an increase in the minimum wage, over time pay, etc), we would see people chose to work fewer hours, since they wouldn't need to work as much to earn the same standard of living.

However, in the real world we see the opposite. Maying people more generally makes them either work the same amount, or work even more than they did before. That's why I really cannot understand how you've convinced yourself that the opposite is the case.

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"So for example, my guess is that in a world with a UBI we'd see fewer strippers and call girls. And that's a price I'm more than happy to pay."
I suspect you'd see fewer McDonald's workers, fewer Uber drivers, fewer fruit pickers and fewer picker and packers, too.

Yup. You may well be right that some of those jobs are also unpleasant enough people would need to be paid more to work them if not motivated by the fear of starvation.

However, keep in mind that since fast food workers, uber drivers, and fruit pickers are all jobs that are under high threat from automation in the next few years anyway, you're making the case for one of the desirable benefits of a UBI.

Bloop Bloop

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Re: Why did anyone ever think UBI would work?
« Reply #235 on: May 15, 2019, 11:44:56 PM »
I don't understand how you can agree that certain work, e.g. fruit picking, is likely to diminish after a UBI, and yet deny that that represents a change in bargaining power. Am I missing something? No one wants to do that work, but currently low-skill workers lack the market power to do anything better. If we gave them a chance to not have to do it, they wouldn't do it, which is the exact definition of a change in bargaining power.

Anything that gives someone something for nothing changes their bargaining position.

As for automation, as I said, I'm not convinced that there won't be other jobs that crop up that fill the void. Think Airtasker, but on a bigger scale. Think running errands and whatnot. Or just maintaining the machines that maintain the machines.

maizeman

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Re: Why did anyone ever think UBI would work?
« Reply #236 on: May 16, 2019, 12:05:54 AM »
I don't understand how you can agree that certain work, e.g. fruit picking, is likely to diminish after a UBI, and yet deny that that represents a change in bargaining power.

It seems like you're reading the words that I'm not writing. It's rather concerning actually.

Could you please point to where I disagreed that a UBI would increase the bargaining power of workers? Ideally with either a link or a specific quote?

In fact I've agreed that a UBI would indeed mean workers more bargaining power, which would leaf to a freer market for labor, because it would be a market where parties enter into contracts and trades voluntarily rather than being forced to do so by threat of starvation.

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As for automation, as I said, I'm not convinced that there won't be other jobs that crop up that fill the void. ... Or just maintaining the machines that maintain the machines.

Yes, I know that you personally are not convinced. It is difficult to get a person to understand something, when something they want to be true about the world depends on them not understanding it.

The fact that you're arguing that people who lose jobs driving for uber or picking apples in an orchard would somehow magically be qualified get new jobs repairing robots complex enough to be able to repair other robots indicates to me that you have not been paying attention to most of the discussion in this thread.

Bloop Bloop

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Re: Why did anyone ever think UBI would work?
« Reply #237 on: May 16, 2019, 12:17:56 AM »
I didn't say they would repair robots like engineers. In fact I didn't use the word 'repair' at all - it's you who puts words in my mouth. I said they maintain the machines that maintain the machines.

Maybe they just grease them. Maybe they just pull them along the streets. Maybe they dust them and insert tab A into slot B. I don't know. It's their problem not mine. You accuse me of selective quoting yet you don't take up my other handy suggestions, like Airtasker or similar gig economy jobs. Maybe people will be paid to smile on street corners.

As for your other argument, it seems you're saying that giving workers free money to increase their bargaining power somehow represents something other than market distortion. I guess we will have to agree to disagree there. I mean, giving labour free money and then arguing that that makes the bargaining quid pro quo 'freer' seems somewhat like doublespeak to me. I suppose if your goal is to free people from the inequities of different work ethics, skill sets and genetic endowments, then yes, in that sense, people will get freer. To me, that goal would be nothing but a tyranny of the mediocre and moribund.

And again, it's disingenuous to say that people have to work under threat of starvation. How many people starve in America, or Australia? It's more like, they have to work under threat of having to revert to a basic, shanty-like subsistence level of welfare (one that my proposal would improve, anyhow). They're very different things.

maizeman

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Re: Why did anyone ever think UBI would work?
« Reply #238 on: May 16, 2019, 01:09:49 AM »
I didn't say they would repair robots like engineers. In fact I didn't use the word 'repair' at all - it's you who puts words in my mouth. I said they maintain the machines that maintain the machines.

Maybe they just grease them. Maybe they just pull them along the streets. Maybe they dust them and insert tab A into slot B. I don't know. It's their problem not mine.

So to review:

1) You don't think automation will ever be a problem for labor markets.
2) If even automation does replace people's jobs you don't care because you believe it's the problem of the people who are left without means to support themselves.
3) You have some very weird and incorrect ideas about the way labor markets work.
4) Also you think a robot that is sophisticated enough to repair other robots might need to be dragged from place to place through the streets by humans.

I see I've been trying to argue with you about #3 which it really doesn't matter given our much deeper and more fundamental disagreement about #2.

And given #4, I think you've completely destroyed your credibility to argue for your views on point #1.

You accuse me of selective quoting

When did I accuse you of that? Please provide either a link to the specific post or you could just copy and paste the words I used.

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As for your other argument, it seems you're saying that giving workers free money to increase their bargaining power somehow represents something other than market distortion.

Yes, that is in fact exactly what I am saying. Whether or not people have other sorts of income does not distort labor markets. That's what we discussed all evening. I'm glad we can at least finally agree on the specific content of one thing that I have said today.


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I suppose if your goal is to free people from the inequities of different work ethics, skill sets and genetic endowments, then yes, in that sense, people will get freer.

Nope, not my goal at all. That's why I want a free labor market which, as we've established would happen under a UBI, would continued to reward both those with greater work ethics or more valuable skill sets with higher wages, and provide no disincentive for people to pursue gainful employment.

BeepBoop, you have twice made specific statements about me saying things: Firstly you stated the I was saying a UBI wouldn't increase the bargaining power of workers bargaining when I was, in fact, saying that it would indeed increase the bargaining power of workers. And secondly that I have accused you of selectively quoting me. Which I haven't.

I would ask you to kindly either back up either of those assertions with specific references/quotations, or cease to claim I hold positions I do not and cease to claim I have made statements which I have not.

Bloop Bloop

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Re: Why did anyone ever think UBI would work?
« Reply #239 on: May 16, 2019, 04:35:46 AM »
Taking on your parts, without getting snarky or worked up:

"1) You don't think automation will ever be a problem for labor markets."
Depends on your version of "a problem". Is it detrimental to low-skilled labour, yes. But I think that is the beauty of the free market at work. As long as no one is starving, I don't see it as a problem. Something can be detrimental without being problematic. 

"2) If even automation does replace people's jobs you don't care because you believe it's the problem of the people who are left without means to support themselves."
As I said, it's society's job to make sure they don't starve, but it's also their job to take on whatever work they are capable of, first. Not everything is "Either A, or B." It can be both.

"Yes, that is in fact exactly what I am saying. Whether or not people have other sorts of income does not distort labor markets. That's what we discussed all evening. I'm glad we can at least finally agree on the specific content of one thing that I have said today."
This is the main point of difference. You say that giving workers more bargaining power does not distort a market. I say that it does.

Let me illustrate my position. What if I gave employers more bargaining power - say, by agreeing to remove minimum wage regulations, or by making Unions illegal? Would you still say that doesn't distort a market?

See, you are only looking at it from the worker's perspective. From the employer's perspective, you are replacing the quid pro quo, with free money. Say e.g. a worker agrees to get $1 for doing a food delivery. The worker agrees to it. There's a quid pro quo. The market in action. Now you are interposing yourself and delivering that worker the $1 for doing nothing. Suddenly the quid pro quo we had previously agreed to is distorted. The worker says he would rather do something else, something more enjoyable, for the $1. Suddenly the quid pro quo is dissolved.

I say that's a distortion of an existing agreement. I would be interested to hear your rebuttal.

You also say that a UBI would "provide no disincentive for people to pursue gainful employment." It's not about whether they pursue gainful employment (replacement employment). It's about whether they pursue the existing employment which their skills can buy on the open market. If you replace "job A" with "slightly less menial job B" you are distorting the market, even if the pay at the end is the same.

FIREstache

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Re: Why did anyone ever think UBI would work?
« Reply #240 on: May 16, 2019, 04:49:16 AM »
Workers having more bargaining power due to being given, literally, free money is a distortion of supply and demand. It's a meddling with the market.

Exactly. 

Quote
While I have said we should meddle insofar as providing subsistence rations to all, I don't believe in a general meddling above and beyond that point.

I also disagree with 'actively desirable jobs' having their wage fall. That is, if it happened, I think it would be a sad and undesirable thing. I believe in the market system.

"If one of my employees is receiving a UBI check for $1,000/month, that doesn't change their income potential per hour at all, so they are not forgoing higher income alternatives if they chose to work for me."
See above. Suddenly their bargaining power has increased because their overall utility per unit of time has increased.

"So for example, my guess is that in a world with a UBI we'd see fewer strippers and call girls. And that's a price I'm more than happy to pay."
I suspect you'd see fewer McDonald's workers, fewer Uber drivers, fewer fruit pickers and fewer picker and packers, too.

As for Sol - whether I am backwards or not is going to be foretold by how the political winds blow.

Keep in mind I have only been discussing whether it is appropriate to give people free money. We haven't even started talking about how we drum up the (a) UBI money of itself; (b) the increased wage cost which will have to be borne by employers and their shareholders to implement this needlessly charitable scheme.

Bloop Bloop, I think you're one of the few people that really gets it.  When I talk to people IRL, they are against the handout and taxes as well.  It's easier to get a job today than it has been in decades.  It's ridiculous that this crazy UBI idea is even being proposed.  But what better way to get democrat votes than by offering "free" money?  Only the people that need and deserve help should get some sort of tax-payer funded assistance.

UBI is literally among the WORST ideas I've ever heard.


The more I read about it, and the more discussion there is about it, the more my resolve to oppose it.  More and much higher taxes, ramping up inflation, more burden for SS recipients, distortions to the job market, "free" money to many people that don't need.  What could possibly go wrong?  /sarcasm    LOL.

maizeman

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Re: Why did anyone ever think UBI would work?
« Reply #241 on: May 16, 2019, 05:28:01 AM »
I would be interested to hear your rebuttal.

I would be happy to provide a rebuttal. However, you have made multiple statements about me saying specific things which I had not said. I have pointed these statements out both times. You are apparently unwilling either back your statements about me up with evidence (the great thing about discussions on an online forum is we have a record of every single word said) or admit that you were in error about easily verifiable facts and retract the statements.

Listen, you're entitled to your opinion. You're entitled to state that opinion. People reading this thread are entitled to understand that your opinion on the UBI is coming from a person who simply thinks that mass unemployment would be "their problem not mine", your opinion on the effect of a UBI on the labor market is informed by a worldview that predicts each time a person working for minimum wage gets a raise (edit: at your request I am amending this to specify that you specifically believe that people will cut their hours only if they receive a raise of $6.50 an hour or more), they'll turn around a cut the number of hours they work,* and your opinion on the likelihood of mass unemployment resulting from automation is informed by the view that humans could pay their bills by finding work physically dragging robots sophisticated enough to repair other robots through the streets.

We've now established all three.

Good luck to you.

*Readers can judge for themselves how frequently this is actually what results from workers receiving a raise in the real world.
« Last Edit: May 16, 2019, 06:47:25 AM by maizeman »

Bloop Bloop

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Re: Why did anyone ever think UBI would work?
« Reply #242 on: May 16, 2019, 06:23:42 AM »
I'm not going to match your ill manners and snarkiness. You seem to want to take personally a discussion which is entirely abstract. No one is actually out there starving to death because he or she cannot find a robot bearing to grease. It's all just academic. If you want to turn it into a Cosmic Battle of Rights and Wrongs, I'm not going to follow, because to me, it's just an interesting discussion, nothing more.

And whereas you say:
"Your opinion on the effect of a UBI on the labor market is informed by a worldview that predicts each time a person working for minimum wage gets a raise, they'll turn around a cut the number of hours they work"

What I actually said was:
"There's a difference between your example of hiking a minimum wage by $1/hour or $2/hour (agree - little disincentive to work, especially given marginal rates of tax/welfare withdrawal at that amount) versus hiking a minimum wage by about $6.50 per hour which will be the effect of the UBI. Suddenly, that will mean much less incentive to either work the same number of hours"

Note the misquotation.

You also say:
"Your opinion on the likelihood of mass unemployment resulting from automation is informed by the view that humans could pay their bills by finding work physically dragging robots sophisticated enough to repair other robots through the streets."

An objective reader might intuit that my statement was made tongue in cheek - but even if it were made literally, the fact is that humans will go to great lengths to find a way to survive. "Nature, uh, finds a way." (Jurassic Park - Jeff Goldblum.)

nereo

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Re: Why did anyone ever think UBI would work?
« Reply #243 on: May 16, 2019, 06:36:25 AM »

*Readers can judge for themselves how frequently this is actually what results from workers receiving a raise in the real world.

Well thankfully readers don't have to make a judgement on whether low-wage workers will cut their hours in response to increased benefits, because we have more than a century of data on this very topic.  Remember it was  John Maynard Keynes who predicted that increases in productivity would usher in an era of leisure where people no longer needed to more than a few hours per week.  Obviously that hasn't happened.  Since then, the US established a federal minimum wage and the 'modern' 40 hour work week in 1938. Since then the federal minimum wage has been increased something like 8 times, and other assistance programs like SS, medicaid (1965), unemployment  and SNAP programs. Throughout these decades we've had unprecedented decadal increases in productivity.  Yet since the 40hr work week became standard in the US the total number of hours worked per employee has gone from ~1.95k/year to around 1.8k/year, and it's been basically flat since the mid 1970s.  Most of the decrease in hours worked can be attributed to more women entering the workforce, and the rise of dual-income households (which often had one spouse working part-time), which you can see in the corresponding increase in the labor force during the 1970s, when we went from about 58% to 67% of the adult population.

What's interesting is we don't see a significant decrease in hours worked anytime minimum wage has been raised or assistance programs have been enacted, as we would expect if people were cutting their hours in response to more compensation and assistance.
« Last Edit: May 16, 2019, 06:47:07 AM by nereo »

maizeman

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Re: Why did anyone ever think UBI would work?
« Reply #244 on: May 16, 2019, 06:44:36 AM »
I'm not going to match your ill manners and snarkiness. You seem to want to take personally a discussion which is entirely abstract.

Yes, I do take people attributing specific statements to me which I did not make and refusing to acknowledge that they are in error to both rude and personally offensive.

And since you have pointed out a subtlety of your worldview which I did not previously follow, that you specifically think that people do not cut their hours if they receive small raises, but would but their hours if they received a raise of $6.50 an hour or more, I have edited my previous post so that it now reflects my newly clarified view of your position on how labor markets work.

You also say:
"Your opinion on the likelihood of mass unemployment resulting from automation is informed by the view that humans could pay their bills by finding work physically dragging robots sophisticated enough to repair other robots through the streets."

An objective reader might intuit that my statement was made tongue in cheek - but even if it were made literally, the fact is that humans will go to great lengths to find a way to survive.

This is the second time you've complained because you apparently you feel the obligation is on the rest of the world to know which things you say you mean, and which things you say you don't mean or actually meant to mean something else. Here's the first.
« Last Edit: May 16, 2019, 06:53:42 AM by maizeman »

J Boogie

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Re: Why did anyone ever think UBI would work?
« Reply #245 on: May 16, 2019, 09:45:17 AM »
I'd be happy to share some info, in fact arguing on the internet is often the best way for me to learn personally :)

To zoom out a bit, the Fed sets a target interest rate at which banks may borrow to each other to meet reserve requirements at the end of the day. You are probably familiar with the fact that banks only need to have 10% of account holder funds available. If banks don't have that 10%, they can borrow it from each other at the Fed fund rate - which is not enforced by the Fed, but pursued through the Fed's monetary policy. If they can't find a bank to borrow it from, they can borrow it from the Fed at .5% higher than the Fed fund rate. They don't want to do this - it's expensive and it signals trouble. It's not some sweetheart deal scenario, it's a pressure relief valve.

When I say Fed sets the rate not through enforcement but monetary policy, I mean the Fed buys securities (Treasuries and mortgage-backed securities, in the US) from its member banks to add liquidity to capital markets. This has the same effect as increasing the money supply. In return, the central bank issues credit to the banks' reserves to buy the securities.

So the idea that the Fed is constantly lending money to banks at low interest rates is kind of backwards. It's most relevant activity is actually buying from banks on credit.

Thanks for that explanation, I see now the mistake I was making.  I did a little reading to refresh my knowledge on the issue and I think the point I was trying to articulate is that when the fed does loan money to banks (or I guess technically when anybody does) they are effectively giving the banks free money due to the low reserve requirements.  If the fed lends a bank $1 million dollars they're actually giving the bank the ability to loan out $10 million dollars and the bank only ever has to pay back the original $1 million plus a fairly low interest rate.  My question then is how is this method of increasing the monetary supply better than just giving every citizen a UBI?  It seems to me like the only difference between the two is that in the current system the banks get to act as gatekeepers to that newly created money by deciding who they are or are not willing to lend it to.  If we did decide to implement a UBI couldn't the fed address the inflationary effects by simply increasing the reserve ratio?

Well, this probably goes without saying, but our modern economy and monetary policy is pretty complex.

I don't think UBI can be regarded as analogous or an alternative to quantitative easing. I think the feature they have in common is that critics fear inflation will result.

I'll entertain the question though, because it's a good one, and I think I have a good answer to it.

I think one reason QE hasn't resulted in terrible inflation is precisely because of how the capital was used. Specifically, businesses took advantage of low interest rates to invest in ways to drive their costs down. So most of the things we buy stayed cheap, due to low labor costs (food) and automation (mfg). But housing, healthcare, and education are the big 3 that have inflated massively for various reasons, mostly dumb ones unrelated to QE (like price obscurity/lack of choice in healthcare, onerous nimby zoning + dumb foreign money for housing, and keeping up with ivies facilities spending for higher ed).

Basically, I think inflation has managed to be low because wage growth has been low. Businesses can offer low prices because their payrolls are low, and consumers with low wages haven't been bidding up the prices of consumer goods.

Giving everyone $1,000/mo could very well change the latter half of that dynamic. However, it's only going to affect goods and services that are more finite than your average mass-producible widget.

shenlong55

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Re: Why did anyone ever think UBI would work?
« Reply #246 on: May 16, 2019, 11:47:06 AM »

Thanks for that explanation, I see now the mistake I was making.  I did a little reading to refresh my knowledge on the issue and I think the point I was trying to articulate is that when the fed does loan money to banks (or I guess technically when anybody does) they are effectively giving the banks free money due to the low reserve requirements.  If the fed lends a bank $1 million dollars they're actually giving the bank the ability to loan out $10 million dollars and the bank only ever has to pay back the original $1 million plus a fairly low interest rate.  My question then is how is this method of increasing the monetary supply better than just giving every citizen a UBI?  It seems to me like the only difference between the two is that in the current system the banks get to act as gatekeepers to that newly created money by deciding who they are or are not willing to lend it to.  If we did decide to implement a UBI couldn't the fed address the inflationary effects by simply increasing the reserve ratio?

Well, this probably goes without saying, but our modern economy and monetary policy is pretty complex.

I don't think UBI can be regarded as analogous or an alternative to quantitative easing. I think the feature they have in common is that critics fear inflation will result.

I'll entertain the question though, because it's a good one, and I think I have a good answer to it.

I think one reason QE hasn't resulted in terrible inflation is precisely because of how the capital was used. Specifically, businesses took advantage of low interest rates to invest in ways to drive their costs down. So most of the things we buy stayed cheap, due to low labor costs (food) and automation (mfg). But housing, healthcare, and education are the big 3 that have inflated massively for various reasons, mostly dumb ones unrelated to QE (like price obscurity/lack of choice in healthcare, onerous nimby zoning + dumb foreign money for housing, and keeping up with ivies facilities spending for higher ed).

Basically, I think inflation has managed to be low because wage growth has been low. Businesses can offer low prices because their payrolls are low, and consumers with low wages haven't been bidding up the prices of consumer goods.

Giving everyone $1,000/mo could very well change the latter half of that dynamic. However, it's only going to affect goods and services that are more finite than your average mass-producible widget.

My problem is really with the reserve ratio, not QE.  The reserve ratio is what allows banks to create new money by lending, QE just buys securities to give banks more cash on hand.  So you were right before that QE and loans and such are not a gift, but the reserve ratio is.  Allowing banks to control the creation of new money like that just allows them to decide who is worthy of getting that money.  I don't think they should have that power.  Instead I think we should take back some of that power to create new money and use it to give every citizen a UBI.

The reserve ratio is currently only 10%.  How much would it reduce inflation to increase it to 20%? 40%? 60%?   Would it be enough to offset the inflation caused by a UBI?  Would there be negative consequences to increasing it that much other than a reduction of banks capacity to issue loans?

J Boogie

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Re: Why did anyone ever think UBI would work?
« Reply #247 on: May 16, 2019, 12:52:56 PM »

Thanks for that explanation, I see now the mistake I was making.  I did a little reading to refresh my knowledge on the issue and I think the point I was trying to articulate is that when the fed does loan money to banks (or I guess technically when anybody does) they are effectively giving the banks free money due to the low reserve requirements.  If the fed lends a bank $1 million dollars they're actually giving the bank the ability to loan out $10 million dollars and the bank only ever has to pay back the original $1 million plus a fairly low interest rate.  My question then is how is this method of increasing the monetary supply better than just giving every citizen a UBI?  It seems to me like the only difference between the two is that in the current system the banks get to act as gatekeepers to that newly created money by deciding who they are or are not willing to lend it to.  If we did decide to implement a UBI couldn't the fed address the inflationary effects by simply increasing the reserve ratio?

Well, this probably goes without saying, but our modern economy and monetary policy is pretty complex.

I don't think UBI can be regarded as analogous or an alternative to quantitative easing. I think the feature they have in common is that critics fear inflation will result.

I'll entertain the question though, because it's a good one, and I think I have a good answer to it.

I think one reason QE hasn't resulted in terrible inflation is precisely because of how the capital was used. Specifically, businesses took advantage of low interest rates to invest in ways to drive their costs down. So most of the things we buy stayed cheap, due to low labor costs (food) and automation (mfg). But housing, healthcare, and education are the big 3 that have inflated massively for various reasons, mostly dumb ones unrelated to QE (like price obscurity/lack of choice in healthcare, onerous nimby zoning + dumb foreign money for housing, and keeping up with ivies facilities spending for higher ed).

Basically, I think inflation has managed to be low because wage growth has been low. Businesses can offer low prices because their payrolls are low, and consumers with low wages haven't been bidding up the prices of consumer goods.

Giving everyone $1,000/mo could very well change the latter half of that dynamic. However, it's only going to affect goods and services that are more finite than your average mass-producible widget.

My problem is really with the reserve ratio, not QE.  The reserve ratio is what allows banks to create new money by lending, QE just buys securities to give banks more cash on hand.  So you were right before that QE and loans and such are not a gift, but the reserve ratio is.  Allowing banks to control the creation of new money like that just allows them to decide who is worthy of getting that money.  I don't think they should have that power.  Instead I think we should take back some of that power to create new money and use it to give every citizen a UBI.

The reserve ratio is currently only 10%.  How much would it reduce inflation to increase it to 20%? 40%? 60%?   Would it be enough to offset the inflation caused by a UBI?  Would there be negative consequences to increasing it that much other than a reduction of banks capacity to issue loans?

Ah, I think there might be a few things I could point out that could change or slightly influence your thinking.

The required 10% reserve is of customers deposits, neither this 10 nor the other 90% is truly "owned" or "created" by the bank - it's simply in the bank's custody to earn above and beyond what they pay in someone's savings account. CDs pay better interest because banks don't have to keep 10% reserves on them.

Limiting the % of assets a bank can invest simply ensures there will be bigger piles of money sitting around doing nothing but getting eaten up by inflation. Reminds me of Buffet's take on the martian view of gold. The only reason to increase this % is to provide more stability in a country's financial system, ensuring against the dreaded run on the banks.

Now imagine everyone gets $1,000 a month but all domestic financial activity gets reduced dramatically...sounds like a perfect recipe for massive increases in federal debt as corporate profits plummet while spending skyrockets.

We might not live high on the hog just because the S&P is, but we'll sure as hell be in the poor house if the S&P is.
« Last Edit: May 16, 2019, 01:09:26 PM by J Boogie »

Boofinator

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Re: Why did anyone ever think UBI would work?
« Reply #248 on: May 16, 2019, 01:19:23 PM »
I think the current situation, in which people are motivated to do truly horrific and degrading jobs because they have no alternative other than starvation, is a much larger distortion of supply and demand.  In a healthy free market, every buyer AND every seller has options, and can choose what maximizes their own personal utility.  A distorted system is one in which people are forced into specific decisions because they have no options.

Can you name a couple of examples of legal "truly horrific and degrading jobs"? And no matter how horrific or degrading someone might think these jobs are, modern labor laws have ensured that they are nowhere near as horrific and degrading as starvation, so as the two couldn't even be conceived as an apt comparison. (This question is separate from the question of appropriate wage compensation for these jobs.)

"In a healthy free market", people use currency as a medium to exchange things of value so as to maximize happiness. In a world with UBI, there is no exchange of value for the UBI transactions ('thank you for existing?'), and hence it becomes a distortion of a healthy free market. (Nothing inherently wrong with deviating from a free market approach, as long as one acknowledges the fact and considers the implications.)

nereo

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Re: Why did anyone ever think UBI would work?
« Reply #249 on: May 16, 2019, 01:21:47 PM »
@Boofinator - would you define our current state as a "healthy free market" and if so how far from this do you think a world with UBI would deviate?