Author Topic: Why did anyone ever think UBI would work?  (Read 11270 times)

Boofinator

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Re: Why did anyone ever think UBI would work?
« Reply #250 on: May 16, 2019, 01:56:47 PM »
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.

@maizeman, I have to ask, why do you get personally insulted and feel that others are acting in 'bad faith' just because you disagree with their worldviews? You seem to think that your logic is impenetrable, your conclusions inescapable, and everyone who disagrees and perhaps writes something you don't comprehend at first glance is personally insulting you. Listen, I completely disagree with your conclusions in this thread, but never once have I felt personally insulted by your position; I mean, that's the whole point of the forum, to learn from each other, and at the very least I feel I have learned a lot about the reasons some people feel UBI would be a good social program.

On the other hand, I have felt personally insulted when you have said my postings were 'in bad faith' on two separate occasions. I now see you reaching for the same tactics against another poster who has throughout this thread posted respectfully. Listen, I respect your objective comments (you've clearly put a lot of thought and effort into this topic), but I really wish you would respect those of others even if they disagree with you (and even if they sometimes include exaggeration or hyperbole). Sometimes you have to trust that people can use the same set of facts to come to different conclusions, and hopefully the smart people of the MMM forums can flesh out the best ideas.

My mama always said, "If you don't have anything nice to say, don't say anything at all." That's why I stopped responding to you on the other thread and had until this point chosen not to engage with you here. However, I couldn't stand by mute when I see it isn't just a personality clash between you and me.

Boofinator

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Re: Why did anyone ever think UBI would work?
« Reply #251 on: May 16, 2019, 02:17:31 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?

As mentioned by Adam Smith and many others, the free market is free because people willingly exchange things of value (through the medium of currency). Now, no market is or has ever been truly "free", and there is nothing inherently wrong with any and all deviations. The question is, would this deviation (UBI) support our values better than the free market (or other) alternative, or not?

Some are of the camp that UBI would be a good social program, and I used to count myself among that number (primarily when I was having a hard time getting a job out of college). I no longer currently think UBI is a good idea, because I feel that the struggle to get going in life might not altogether be a bad thing, and that UBI might counterintuitively hurt the people it is supposed to help the most (in the long run).

I think a comment from my grandmother might be illustrative of my moral outlook. She expressed pride to me on several occasions that her family never took welfare, even though she grew up during the depths of the depression and ate certain meals so much that she couldn't eat them to this day (I think salmon was on that list). I didn't understand her reasoning then, but now I think I do: she was never given money, but rather earned it, by providing value to other human beings. The psychological value of that distinction, in my opinion, is immeasurable (though I'm sure somebody has studied it somewhere?). My grandparents eventually grew quite wealthy (thank you stock market), and then donated their wealth to the Catholic Church upon their deaths.

So to wander back to your question, it isn't the deviation from a free market that concerns me, it is the alignment of social programs with our values, as well as the associated economic consequences (which I admit are hard to predict without a long-term UBI experiment).

maizeman

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Re: Why did anyone ever think UBI would work?
« Reply #252 on: May 16, 2019, 03:43:28 PM »
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.

@maizeman, I have to ask, why do you get personally insulted and feel that others are acting in 'bad faith' just because you disagree with their worldviews?

I'm quite alright with people disagreeing with my worldview. The comment you have quoted is a specific reference to two false statements Bloop Bloop made claiming I said things which I did not.

Surely you can agree that having a person attribute statements to you that you did not make is going to provoke a negative reaction?

Quote
You seem to think that your logic is impenetrable, your conclusions inescapable, and everyone who disagrees and perhaps writes something you don't comprehend at first glance is personally insulting you. ...  I really wish you would respect those of others even if they disagree with you (and even if they sometimes include exaggeration or hyperbole).

I would say that you're lumping two things together, one of which is true, and one one which is false. Yes I tend to react poorly when people make false or misleading statements of fact and then refuse to own up to that fact. Everyone makes mistakes, I certainly make my own fair share.

However, you seem to be confounding that reaction of mine, which I certainly acknowledge, to wrong or misleading statements of fact, with finding anyone who comes to different conclusions than me personally offensive. As you say, people will have different values and motivations, and it is quite possible for them to look at the same facts and come to different conclusions. The trick is being able to distinguish what is opinion (everyone is entitled to their own) and what is fact (no folks aren't entitled to their own facts).

If I really was personally offended by everyone who had a different opinion than mine one, surely I'd be arguing vociferously with a lot more folks on this forum, or even on this particular thread*... no?

*I only went back a short way and I count at least half a dozen people who are opposed to the UBI for one reason or another. Certainly many more if we counted all of the pages.
« Last Edit: May 16, 2019, 04:26:59 PM by maizeman »

shenlong55

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Re: Why did anyone ever think UBI would work?
« Reply #253 on: May 16, 2019, 03:56:04 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.

Right, that's not the money that I'm considering a gift.  It's the money that they loan out based on that 10% that is created.  For example if I were to open a savings account and deposit $1,000 dollars right now then that bank can now loan out $900 while still keeping my $1000 on the books because of fractional reserve banking .  There is now $1900 in circulation in the economy.  Actually, the bank could even lend that money to another bank who could then loan out $810 making a total of $2,710 now in the economy.  The extra $1,710 floating around the economy now was created by the bank and they decided who was worthy enough to get access to it.  That's the money that's a gift to the banks and the money that I think we could easily use at least some portion of to pay for a UBI.  I'm not saying we want to have a 100% reserve ratio, but I think it could likely be higher than 10% without triggering so many negative effects that it would outweigh the good that a UBI would do.

https://courses.lumenlearning.com/boundless-economics/chapter/creating-money/

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.

Well, my understanding is that it would also decrease the money supply and inflation and raise the cost of credit but I could be wrong.  If I'm right though, I'm not sure that less access to credit is such a bad thing, especially considering there very well may be less demand for credit with a UBI in place.  I'm also not sure that more money sitting in reserve is necessarily a bad thing either, can you explain why you think it is?
« Last Edit: May 16, 2019, 04:17:56 PM by shenlong55 »

Bloop Bloop

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Re: Why did anyone ever think UBI would work?
« Reply #254 on: May 16, 2019, 05:30:53 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?

Right now we don't have a true free market because the minimum wage laws prevent that - they give a market floor to those people whose skills don't command it. But, in the name of not letting people starve, I think that's a "healthy" market. Any further deviation, in which workers gain bargaining power by being handed out free money, would be unhealthy in my view. Of course, there is a fundamental value question. Some people believe in redistribution for charitable reasons. Some people like me believe in trying to ensure each person gets what he or she is able to command.

Boofinator

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Re: Why did anyone ever think UBI would work?
« Reply #255 on: May 16, 2019, 06:58:36 PM »
I would say that you're lumping two things together, one of which is true, and one one which is false. Yes I tend to react poorly when people make false or misleading statements of fact and then refuse to own up to that fact. Everyone makes mistakes, I certainly make my own fair share.

However, you seem to be confounding that reaction of mine, which I certainly acknowledge, to wrong or misleading statements of fact, with finding anyone who comes to different conclusions than me personally offensive. As you say, people will have different values and motivations, and it is quite possible for them to look at the same facts and come to different conclusions. The trick is being able to distinguish what is opinion (everyone is entitled to their own) and what is fact (no folks aren't entitled to their own facts).

The problem is, that the things you appear to be criticizing are either facts that aren't disprovable or clear exaggerations. There are examples in this thread from Bloop Bloop's statements, but let's use the other UBI thread.

You have repeatedly statements of "fact" and then, only when challenged on the things you are stating as facts are inconsistent with all the evidence we have to date, argued they were actually opinions. Do you disagree with this assessment? If so, I'd be happy to go back through recent pages of the thread to cite specific examples.

I regret to say that I do not see that type of behavior as consistent with having a good faith discussion on this or any topic. Regretfully, I feel some level of obligation to continue to point out when the confounding of facts and opinions occurs, as fruitless as this discussion has clearly become for both of us.

The part I bolded is what is complete bullshit on your part. I identified when I was using exaggeration or hyperbole after you apparently missed the connotation, but in other instances I was not, and therefore did not retract. But somehow you felt my facts didn't jive with your beliefs, so I must be acting in bad faith.

To use one example, I stated, essentially, that fundamental economics states jobs will be available, as long as people aren't infirm (so that their economic value is essentially negative), government doesn't have perverse incentives, there is enough food and basic needs available in the system*, and accepting that there will be some disruptive spells of unemployment in a capitalist society. Presumably it was this statement (among others) that indicated I was acting in bad faith. But this is pretty much the definition of how an economy works. If this were not true, then the contrapositive must be true: people can provide positive value to other people but cannot get a job. If that were the case, businesses would offer less money than the positive value being offered, and would therefore profit on this imbalance, and ergo the employment imbalance is eliminated. And to state that any significant portion of the population cannot provide positive value to society is against all of recorded history and a pessimistic outlook on the value of humans.

*The major downside is that if the basic necessities aren't being met (say, through famine), this system breaks down. But unfortunately, UBI would not correct this problem, it would probably exacerbate it (especially if UBI was tied to inflation).

Now, I know you're going to disagree with everything I just said, because it does not jive with your belief system. That's fine. But to accuse me of bad faith is to pretend to know what is inside my head, and is verifiably false and therefore a post in bad faith in and of itself.

ETA: To clarify, the positive value to society wouldn't have to be strictly positive, it'd have to be positive beyond the fractional (usually subsidized) costs of the labor required of the various persons growing their food and providing other necessities. For example, the positive value might need only be 1/20 that of a farmer and 1/10 that of a construction worker (using extremely simplified values here).
« Last Edit: May 16, 2019, 07:36:11 PM by Boofinator »

Bloop Bloop

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Re: Why did anyone ever think UBI would work?
« Reply #256 on: May 16, 2019, 07:30:25 PM »
Maizeman, you accuse me of bad faith when in actuality, the misunderstandings between us were to simple semantic matters. For example, you said that you dispute that a UBI would increase bargaining power and distort the market (or something to that effect). I took that to mean that you dispute that a UBI would increase bargaining power. In actuality, you agreed with that part of the equation, and disagreed that the increased bargaining power would distort the market. This has now been clarified. It does not mean that either of us was corresponding in bad faith.

You then completely mischaracterise what I said (about a $1-$2 raise versus a $6.50 raise) and then instead of accepting that you got it wrong, you attribute it to a 'subtlety' of my argument (when it wasn't - I actually expressly conceded one of the things you said I wasn't accepting). But I don't get all snarky about that, because I get that debate can be fluid. It's no biggie.

And then you continually harp on things which I said which any reasonable observer would see is tongue in cheek - e.g. about dragging machines that clean machines though streets.  And you say it's due to me not being clear. Actually, I would suggest that it's due to you not quite understanding the nuances of social discussion. A hypothetical about indigent people dragging machines through streets and greasing their bearings and putting tab A into tab B can only ever be seen as a playful example. I am surprised you haven't sprung on the accuracy of my Jurassic Park quote to argue that I don't know what I'm saying.

End of day, this is meant to be a pleasant discussion about something (low skilled work) that will never affect any of us and that is entirely academic in nature.

J Boogie

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Re: Why did anyone ever think UBI would work?
« Reply #257 on: May 17, 2019, 08:32:05 AM »
For example if I were to open a savings account and deposit $1,000 dollars right now then that bank can now loan out $900 while still keeping my $1000 on the books because of fractional reserve banking .  There is now $1900 in circulation in the economy.  Actually, the bank could even lend that money to another bank who could then loan out $810 making a total of $2,710 now in the economy.

This is not an accurate interpretation of fractional reserve banking.

Banks can use the $900 to seek greater returns - The last thing they're going to do is put it in a checking or savings account at another bank which will will be able to put the 810 in an account at another bank and so on. Even if they did do that, they're just getting your initial $1000 slowly down to 1, rather than fluffing it up to $2,710 and beyond.

The point is that the $900 gets put into investment vehicles, not checking accounts that allow for fractional reserve banking.



J Boogie

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Re: Why did anyone ever think UBI would work?
« Reply #258 on: May 17, 2019, 09:08:57 AM »

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.

Well, my understanding is that it would also decrease the money supply and inflation and raise the cost of credit but I could be wrong.  If I'm right though, I'm not sure that less access to credit is such a bad thing, especially considering there very well may be less demand for credit with a UBI in place.  I'm also not sure that more money sitting in reserve is necessarily a bad thing either, can you explain why you think it is?

I don't think UBI would affect credit demand. $1,000 a month still means you'd have to save a long time to buy the things people typically borrow for, and it wouldn't have any effect on small business and corporate borrowing which are probably the most economically significant.

Money sitting in reserve is a bad thing because it is unproductive. The value of capital is that it can be used to generate return. Gold is unproductive but is regarded as a "store of value" because it cannot be eaten away by inflation. But if tons of money is sitting in reserve it gets eaten away by inflation and, more importantly, equates to a massive opportunity cost.

It's the same as if you were to keep 40% of your assets in cash. Your FIRE date would get pushed out decades and decades.

shenlong55

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Re: Why did anyone ever think UBI would work?
« Reply #259 on: May 17, 2019, 10:04:56 AM »
For example if I were to open a savings account and deposit $1,000 dollars right now then that bank can now loan out $900 while still keeping my $1000 on the books because of fractional reserve banking .  There is now $1900 in circulation in the economy.  Actually, the bank could even lend that money to another bank who could then loan out $810 making a total of $2,710 now in the economy.

This is not an accurate interpretation of fractional reserve banking.

Banks can use the $900 to seek greater returns - The last thing they're going to do is put it in a checking or savings account at another bank which will will be able to put the 810 in an account at another bank and so on. Even if they did do that, they're just getting your initial $1000 slowly down to 1, rather than fluffing it up to $2,710 and beyond.

The point is that the $900 gets put into investment vehicles, not checking accounts that allow for fractional reserve banking.

Regardless of where it gets put it's a new $900 that didn't previously exists isn't it?  And whoever got that $900 and/or anyone that they end up giving it to can then put that $900 into another bank account right?  And then, that second bank can issue out loans worth $810 more than it could previously lend out, starting the whole process again right?  I understand there is likely some leakage so the amounts may not always be the full amount at each step but that doesn't mean that it doesn't happen at all.

Just to provide another outside reference in case I'm just not explaining this very well, here's what I'm talking about from Wikipedia...

Fractional reserve theory of money creation
Quote
The process of money creation can be illustrated with the following example: Person A deposits $1000 in a bank. The bank keeps $100 as reserves in the central bank. To make a profit, the bank loans the remaining $900 to a customer B. B spends the $900 by buying something from C. C deposits the $900 with their bank. C's bank keeps $90 as reserves in the central bank, and then lends the remaining $810 to another customer D. If this chain continues indefinitely then, in the end, an amount approximating $10,000 has gone into circulation and has therefore become part of the total money supply.
« Last Edit: May 17, 2019, 11:51:16 AM by shenlong55 »

shenlong55

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Re: Why did anyone ever think UBI would work?
« Reply #260 on: May 17, 2019, 10:23:50 AM »

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.

Well, my understanding is that it would also decrease the money supply and inflation and raise the cost of credit but I could be wrong.  If I'm right though, I'm not sure that less access to credit is such a bad thing, especially considering there very well may be less demand for credit with a UBI in place.  I'm also not sure that more money sitting in reserve is necessarily a bad thing either, can you explain why you think it is?

I don't think UBI would affect credit demand. $1,000 a month still means you'd have to save a long time to buy the things people typically borrow for, and it wouldn't have any effect on small business and corporate borrowing which are probably the most economically significant.

Unless your using credit to pay for things like groceries, rent or healthcare...

Money sitting in reserve is a bad thing because it is unproductive. The value of capital is that it can be used to generate return. Gold is unproductive but is regarded as a "store of value" because it cannot be eaten away by inflation. But if tons of money is sitting in reserve it gets eaten away by inflation and, more importantly, equates to a massive opportunity cost.

It's the same as if you were to keep 40% of your assets in cash. Your FIRE date would get pushed out decades and decades.

Let me start with the fact that I agree that it would be a bad idea for me to keep 40% of my assets in cash.  But what is good for me is not necessarily good for the US economy.  There are a lot of very large differences between my personal finances and the finances of an entire nation, so parallels are very hard to draw in this area.

But if I'm understanding you correctly, what your saying is basically that money sitting in reserve is a bad thing because it's losing value when it could be gaining value?  But why do you think that a larger portion of banks assets losing value is a bad thing?  What is the negative economic consequence of some larger amount of banks assets losing value?  What do you think the opportunity costs that you mention would be?  Would the benefits that a UBI would provide to society be greater than the negative effects of those opportunity costs?
« Last Edit: May 17, 2019, 10:26:02 AM by shenlong55 »

Cassie

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Re: Why did anyone ever think UBI would work?
« Reply #261 on: May 17, 2019, 10:46:39 AM »
There are many programs for poor people that cost money such as free or reduced daycare, Headstart,  respite care for disabled children, food stamps, Medicaid, social security disability, etc. If we got rid of all of these people would be worse off. Giving 10k/year to people that donít need the money makes no sense to me.  If we truly get to a time with more people then jobs then consider it only for people that canít find work. As a former social worker I think the truly needy will be worse off.

J Boogie

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Re: Why did anyone ever think UBI would work?
« Reply #262 on: May 17, 2019, 12:53:02 PM »
For example if I were to open a savings account and deposit $1,000 dollars right now then that bank can now loan out $900 while still keeping my $1000 on the books because of fractional reserve banking .  There is now $1900 in circulation in the economy.  Actually, the bank could even lend that money to another bank who could then loan out $810 making a total of $2,710 now in the economy.

This is not an accurate interpretation of fractional reserve banking.

Banks can use the $900 to seek greater returns - The last thing they're going to do is put it in a checking or savings account at another bank which will will be able to put the 810 in an account at another bank and so on. Even if they did do that, they're just getting your initial $1000 slowly down to 1, rather than fluffing it up to $2,710 and beyond.

The point is that the $900 gets put into investment vehicles, not checking accounts that allow for fractional reserve banking.

Regardless of where it gets put it's a new $900 that didn't previously exists isn't it?  And whoever got that $900 and/or anyone that they end up giving it to can then put that $900 into another bank account right?  And then, that second bank can issue out loans worth $810 more than it could previously lend out, starting the whole process again right?  I understand there is likely some leakage so the amounts may not always be the full amount at each step but that doesn't mean that it doesn't happen at all.

Just to provide another outside reference in case I'm just not explaining this very well, here's what I'm talking about from Wikipedia...

Fractional reserve theory of money creation
Quote
The process of money creation can be illustrated with the following example: Person A deposits $1000 in a bank. The bank keeps $100 as reserves in the central bank. To make a profit, the bank loans the remaining $900 to a customer B. B spends the $900 by buying something from C. C deposits the $900 with their bank. C's bank keeps $90 as reserves in the central bank, and then lends the remaining $810 to another customer D. If this chain continues indefinitely then, in the end, an amount approximating $10,000 has gone into circulation and has therefore become part of the total money supply.

I see what you mean. Gotta think and read more on this but first must work for wages. BRB.

maizeman

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Re: Why did anyone ever think UBI would work?
« Reply #263 on: May 17, 2019, 07:07:25 PM »
To use one example, I stated, essentially, that fundamental economics states jobs will be available, as long as people aren't infirm (so that their economic value is essentially negative), government doesn't have perverse incentives, there is enough food and basic needs available in the system*, and accepting that there will be some disruptive spells of unemployment in a capitalist society.

...

ETA: To clarify, the positive value to society wouldn't have to be strictly positive, it'd have to be positive beyond the fractional (usually subsidized) costs of the labor required of the various persons growing their food and providing other necessities.

Boofinator, no, I agree this is a reasonable statement as you have made it hear.

I think it is silly to drag a disagreement from one thread into another thread. But for this specific example, I do recall that you made the statement without the qualifying point you included at  the bottom of this post. I pointed out that in fact it is not true that any positive contribution would be enough, it was necessary to be a large enough to cover their contributions (as you acknowledge in this post). You agreed.

...And then you went back to arguing that as long as the value of human labor didn't fall absolutely to zero there would also always be jobs and a UBI would not be needed. So we have a disagreement about a fact. We discussed it and agreed the position you originally stated was incorrect. And then you went back to saying the same false and misleading thing. <-- The value of human labor going to zero is rightly an extremely unlikely sounding event. The value of human labor declining on the other hand is quite plausible sounding, and we know it happens all the time in different job markets as the supply of and demand for labor changes.

I place a lot of value in getting the facts right, because once we settled on those it is actually fascinating to see how different people will take those facts and use different reasoning and logic (or different values and goals) to come to end points. As you have several times brought up that you think exaggeration and hyperbole in support of ones own views is understandable and expected.

Unfortunately an absence of motivation to at least try to get the facts right and correct when they are wrong or worse yet a willingness to either intentionally lie and mislead, leads to far less interesting conversations that either go nowhere at all (I say "the sky is green" you say "no you're wrong it's purple" and we each go our separate ways), or descend into shouting matches.

maizeman

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Re: Why did anyone ever think UBI would work?
« Reply #264 on: May 17, 2019, 07:11:44 PM »
Maizeman, you accuse me of bad faith when in actuality, the misunderstandings between us were to simple semantic matters.

Bloop Bloop, I accused you of placing words in my mouth that I never used and then not acknowledging the error when it was pointed out (which I do find to be both rude and once you refused to address it when it was pointed out multiple times offensive).

An even here you are doing it again, as I have not accused you of acting in bad faith in this thread or any other.

Bloop Bloop

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Re: Why did anyone ever think UBI would work?
« Reply #265 on: May 17, 2019, 07:19:16 PM »
You have a keen ability to draw needlessly fine distinctions, harp on those and then ignore all the rest of the points others are making in actual good faith.

E.g.; you acknowledge accusing me of placing words in your mouth that you never used and then not acknowledging the error, which you find to be rude and offensive (verbatim taken from your phrasing); and yet you then say that me characterising that overall phrasing as "acting in bad faith" is an incorrect summary of your general accusation!

I find it ridiculous, and pedantic.

sol

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Re: Why did anyone ever think UBI would work?
« Reply #266 on: May 17, 2019, 07:29:42 PM »
ridiculous, and pedantic.

That's kind of how we roll around these parts.  Welcome to the MMM forums!

FIREstache

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Re: Why did anyone ever think UBI would work?
« Reply #267 on: May 18, 2019, 07:24:08 AM »
You have a keen ability to draw needlessly fine distinctions, harp on those and then ignore all the rest of the points others are making in actual good faith.

Exactly.  It was happening earlier in this thread as well.

But using sol's words in the post above, that's how many roll around these parts.

You can't argue with people who will say anything to rationalize getting free money, no matter how bad of an idea it is.
« Last Edit: May 18, 2019, 07:28:21 AM by FIREstache »

Bloop Bloop

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Re: Why did anyone ever think UBI would work?
« Reply #268 on: May 18, 2019, 07:29:53 AM »
All I can say is that I'm extremely elated by the election results in Australia, in which the country has rejected a high-taxing, socialist type of governance in favour of the status quo.

Hopefully UBI and some of these more radical ideals never come to fruition. There's a big gulf between a safety net and a UBI. Even if we had the money to fund UBI, I'd prefer it be distributed mostly according to market principles.

maizeman

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Re: Why did anyone ever think UBI would work?
« Reply #269 on: May 18, 2019, 07:53:29 AM »
you acknowledge accusing me of placing words in your mouth that you never used and then not acknowledging the error, which you find to be rude and offensive (verbatim taken from your phrasing); and yet you then say that me characterising that overall phrasing as "acting in bad faith" is an incorrect summary of your general accusation!

People can be rude and offensive for all sorts of reasons, from ignorance, to carelessness, to intentionally. Bad faith requires intent.

Intent makes a big difference.

Based on our interactions to date, I'm not comfortable concluding what is going on inside of your head, hence I have not accused you of acting in bad faith.

You have a keen ability to draw needlessly fine distinctions, harp on those and then ignore all the rest of the points others are making in actual good faith.

It doesn't take a large proportion of unresolved false statements mixed in with the true ones to ruin the chances of having an interesting discussion (as opposed to the "the sky is green" "no it's purple" kind).

Hence, my order of operations is to first resolve the obviously false statements, and if successful, then discuss the interesting differences in reasoning/logic/values/predictions.

For example, you've raised an interesting point about how we define distortions in the labor market (is it relative to an ideal free market, or relative to the present status quo), which really is a matter of opinion and I'd be fascinated to find out why you came to the conclusion you did, which is different from my own.

However, right now that position is wrapping up in your prediction that if people receive an effective raise of greater than $6.50/hour they start working fewer hours. In contrast to the above, this is really a matter of fact, and not only a matter of fact,  but facts we have the data to determine: we have data of millions of people who receive significant pay raises all over the world. In addition, as nereo pointed out, we have decades of data in which household income grew dramatically in countries around the world without seeing a decline in hours worked.

We can also examine the other corollaries of this theory. For example, if people receiving a raise of >$6.50/hour means they will work fewer hours, to me that would imply that if people receive an effective pay cut of at least $6.50/hour they would work more hours. This would mean that large tax increases would produce large increases in GDP growth as workers were forced to increase their hours worked because their after-tax wages dropped.

If I understand you correctly, you think the truth or falsity of the prediction that if people receive an effective raise of greater than $6.50/hour they will start working fewer hours is a needlessly fine distinction, and it is ridiculous and pedantic that I'm not willing to carry on with the rest of the discussion when we don't agree on this fundamental statement about how humans behave?

Bloop Bloop

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Re: Why did anyone ever think UBI would work?
« Reply #270 on: May 18, 2019, 08:48:51 AM »
I said firstly that if min wage people receive an effective raise of greater than $6.50/hour they are likely to start working fewer hours in aggregate. I think it's important to note that this is in the context of min wage being about $7.25 or something like that. Obviously if I received a wage boost of $6.50 an hour I wouldn't even blink. But yes, I maintain that overall, giving workers an 85% wage increase is going to see them reduce hours. For example, read the books "The Working Poor" or "Nickel and Dimed" and you will see a lot of min wage workers actually have multiple jobs, etc. I have no doubt that if you raised their wage floor by 80% that they would consolidate work or just not work at 'worse' job. In fact I think you have said the same thing, that you wouldn't see as many fruit pickers.

So, I see two distortions:
1. Aggregate fewer hours.
2. and/or Change in job habits, i.e., a shift away from certain types of employment.

Either/both would be a market distortion.

"we have data of millions of people who receive significant pay raises all over the world. In addition, as nereo pointed out, we have decades of data in which household income grew dramatically in countries around the world without seeing a decline in hours worked."

Natural wage growth over time is not the same as a huge boost in wages. For several reasons. Firstly, natural wage growth occurs in the context of rising costs of other things. Secondly and I think more importantly, natural wage growth occurs in the context of other people's wage growth. So if everyone gets a 3% raise each year you will probably keep working the same because you're no better or worse off in relative terms as you were last year. But if a subset of the population gets a huge (proportional) wage boost then that screws with the figures.

Finally, there is evidence of declining work hours, e.g.:
https://www.theguardian.com/business/grogonomics/2017/apr/25/full-time-becoming-a-fantasy-as-australians-work-fewer-hours-than-ever-before

So, I'm not sure I even agree with the premise that in the last 50 years working hours haven't declined. But I think the overall trend is not applicable to the UBI situation.

Boofinator

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Re: Why did anyone ever think UBI would work?
« Reply #271 on: May 18, 2019, 01:29:30 PM »
People can be rude and offensive for all sorts of reasons, from ignorance, to carelessness, to intentionally. Bad faith requires intent.

Intent makes a big difference.

Based on our interactions to date, I'm not comfortable concluding what is going on inside of your head, hence I have not accused you of acting in bad faith.

Not to dig too deep here, but how did you conclude I acted in bad faith when I said there would always be jobs? To me this is a fairly self-evident fact to any intelligent person who would take a moment and think through the implications. Assuming we produced enough food and other necessities to cover everyone's needs, let's consider two societies: one with partial employment (say 70%), and one with essentially full employment. Assuming the government ensured one way or the other that the former society was fully fed, which would result in a stronger economy? Given that money is created to cover the costs of essentially all positive exchanges of value in an economy, it's not like there'd be a shortage of money or anything. (This of course assumes that those jobs are providing positive value. But positive value becomes very nebulous as an economy becomes advanced, to use some of the examples I provided up-thread.*)

*Take the craft brewery scene. Does making a fancy expensive beer provide more value than a cheap lager? To a large segment of the wealthy population in this country, the answer is clearly yes, even though from an efficiency standpoint it is a large step backwards from the mass-produced lagers. (And of course beer itself is a luxury.)
« Last Edit: May 18, 2019, 01:31:23 PM by Boofinator »

maizeman

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Re: Why did anyone ever think UBI would work?
« Reply #272 on: May 18, 2019, 06:48:39 PM »
Firstly, natural wage growth occurs in the context of rising costs of other things.

Yes, but we can control for the increase in the cost of other things (inflation), and we still see that real wages have been growing since world war 2, even though they've stagnated  for periods of time during that interval.


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Secondly and I think more importantly, natural wage growth occurs in the context of other people's wage growth. So if everyone gets a 3% raise each year you will probably keep working the same because you're no better or worse off in relative terms as you were last year. But if a subset of the population gets a huge (proportional) wage boost then that screws with the figures.

So if I understand you correctly, your prediction is that people keep working the same number of hours even as their hourly wages go up, because they want to keep up with the consumption habits of their peers (stay no better or worse of relative to those peers), but if we give everyone the same transfer payment, it will cause many people with low salaries to choose to work less (even though doing so would mean they'd be worse off relative to their peers to continued to work the same amount while receiving the same transfer payment)? Please do let me know if I'm misunderstanding or misinterpreting you.

[quote
Finally, there is evidence of declining work hours, e.g.:
https://www.theguardian.com/business/grogonomics/2017/apr/25/full-time-becoming-a-fantasy-as-australians-work-fewer-hours-than-ever-before

So, I'm not sure I even agree with the premise that in the last 50 years working hours haven't declined.
[/quote]

For those who don't want to click through, it is important to know that this article states: "Mostly the declining average hours worked since the 1990s is due to women entering the workforce in greater numbers than before and women are much more likely to work part-time."

It is also important to keep in mind that an additional increase in part time work beyond what is explained by more women entering the australian labor market can result from either people who are choosing not to work full time, or people who want to work full time but are only able to find part time work. In the USA the latter category accounts for fair percentage of the labor force at any given time (https://news.gallup.com/poll/127538/workforce-weekly.aspx)

maizeman

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Re: Why did anyone ever think UBI would work?
« Reply #273 on: May 18, 2019, 07:20:21 PM »
Not to dig too deep here, but how did you conclude I acted in bad faith when I said there would always be jobs?

I should really go back and re-read the thread if you want to dig too far back into this. But I believe there were multiple examples like the one above. You said the rules of economics guarantee there will always be jobs so we don't need a UBI, I pointed out that it's not enough for there to be jobs, they need to be jobs that provide enough value to the economy so that the workers can be paid enough to cover the cost of food/shelter/etc, otherwise we're on the road to social unrest and revolution, you agreed, and then later in the same thread went back to saying that economics guaranteed that there would always be jobs, because the value of human labor wouldn't go all the way to zero, and hence we didn't need a UBI.

Look, boofinator, you're clearly an intelligent man or woman. You just appear to not always place a lot of value on making sure the facts are right when you've come up with a powerful bit of rhetoric.*

Having to re-argue the same points over and over, that you and I ultimately agreed on, only to have you start using the same powerful but misleading rhetoric again, was what lead me to the conclusion you weren't actually interesting to comparing both facts and reasoning to both find out where our thinking diverged and potentially allow either of us to catch errors in our thinking and reasoning. You were just interested in arguing for the sake of arguing, even if it mean going around in the same circles again and again. Hence, bad faith.

*And I'll admit, setting things up so that people arguing in favor of a UBI look like they are arguing the value of human labor is going to go all the way to zero and/or arguing against fundamental rules of economics is a very effective bit of rhetorical judo. And it's probably one that never would have occurred to me.

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(This of course assumes that those jobs are providing positive value. But positive value becomes very nebulous as an economy becomes advanced, to use some of the examples I provided up-thread.*)

*Take the craft brewery scene. Does making a fancy expensive beer provide more value than a cheap lager? To a large segment of the wealthy population in this country, the answer is clearly yes, even though from an efficiency standpoint it is a large step backwards from the mass-produced lagers. (And of course beer itself is a luxury.)

I'll certainly give you that if people are willing to pay enough to make craft breweries/taprooms financially viable, we can just assume the "positive value/positive utility" is there relative to drinking a six pack of natty lite in your basement, even if it's hard to define or measure the utility.

But craft breweries aren't immune to labor saving technologies. Apparently very little of the $12/six pack price you might pay for craft beer (vs say $6/six pack for budweiser) is explained by extra labor. Some of it is from using more ingredients (and most expensive ones) as well as not being able to negotiate as favorable of deals with distributors, retailers, and suppliers of bottles/packaging.



(Here's the article that graphic is from that goes more into the reasoning behind each class of cost: https://www.huffpost.com/entry/craft-beer-expensive-cost_n_5670015).

Anyway yes, one potential outcome is that people just find ways to keep consuming more things/more labor intensive things faster than automation can reduce the amount of human labor required to provide the things they are consuming. I don't think that is likely, but I certainly am not arguing it's impossible.

Bloop Bloop

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Re: Why did anyone ever think UBI would work?
« Reply #274 on: May 18, 2019, 08:23:36 PM »
"So if I understand you correctly, your prediction is that people keep working the same number of hours even as their hourly wages go up, because they want to keep up with the consumption habits of their peers (stay no better or worse of relative to those peers), but if we give everyone the same transfer payment, it will cause many people with low salaries to choose to work less (even though doing so would mean they'd be worse off relative to their peers to continued to work the same amount while receiving the same transfer payment)? Please do let me know if I'm misunderstanding or misinterpreting you. "

Yep. Right now here's the status quo:
Person A earns $8/hour. 3% raise = $8.24.
Person B earns $18/hour. 3% raise = $18.54
Person C earns $100/hour. 3% raise = $103
Same proportions.

Now with a UBI:
Person A earns $8/hour. $6.25 raise = $14.25
Person B. $6.25 raise = $24.25
Person C. $6.25 raise = $106.25

The proportions have been all screwed with. Now person A earns 60% what person B does, instead of 40% as earlier. Person A has less incentive to work a crappy job or a second job or overtime in his first job because his purchasing power relative to everyone else (other than everyone else earning the same as him previously) has just increased. I think any time someone's purchasing power arbitrarily increases, that creates a market distortion.

The same effect holds true for person B, albeit much more minor. Now person B earns 23% what person C does, instead of 18%.

In effect, what a UBI does is it just redistributes the weighting of income.

maizeman

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Re: Why did anyone ever think UBI would work?
« Reply #275 on: May 19, 2019, 08:11:40 AM »
"So if I understand you correctly, your prediction is that people keep working the same number of hours even as their hourly wages go up, because they want to keep up with the consumption habits of their peers (stay no better or worse of relative to those peers), but if we give everyone the same transfer payment, it will cause many people with low salaries to choose to work less (even though doing so would mean they'd be worse off relative to their peers to continued to work the same amount while receiving the same transfer payment)? Please do let me know if I'm misunderstanding or misinterpreting you. "

Yep. Right now here's the status quo:
Person A earns $8/hour. 3% raise = $8.24.
Person B earns $18/hour. 3% raise = $18.54
Person C earns $100/hour. 3% raise = $103
Same proportions.

Now with a UBI:
Person A earns $8/hour. $6.25 raise = $14.25
Person B. $6.25 raise = $24.25
Person C. $6.25 raise = $106.25

The proportions have been all screwed with. Now person A earns 60% what person B does, instead of 40% as earlier.

I don't understand why you are breaking UBI down into an hourly rate since you get the same payment from UBI regardless of whether you work 80 hours a week or 10. If you do that, I agree with the math. But person A is getting paid an extra $8 hour for each hour they work before the UBI. And after the UBI person A is still receiving an extra $8/hour for each hour they work.

Consider two people A1 and A2 who each earn $8/hour. A1 works a single part time job (25 hours a week) and person A2 works two separate jobs adding up to 75 hours per week, but less than 40 hours at each job, so no overtime pay. If the UBI is $250/week (which is what it'd need to be if dividing it over 40/hours a week is going to produce $6.25), then using the same math you apply above, you believe that person A1 would receive a larger increase in hourly income (250/25) = $10, so $8 + $10 = $18/hour (125% increase), while person A2 would receive a smaller increase in hourly income (250/75) = 3.33, so 8 + 3.33 = $11.33 (41% increase).

This would seem to indicate that your model would have people working extremely long hours to survive would be less likely to cut back their hours after a UBI is implemented, while those working part time jobs would be more likely to cut back their hours. Is that in fact what you would predict? (To me, if anything I'd predict the opposite outcome, but by this point is should be clear that you and I have very different views of how humans make decisions.)

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Person A has less incentive to work a crappy job or a second job or overtime in his first job because his purchasing power relative to everyone else (other than everyone else earning the same as him previously) has just increased.

Okay, this would appear to be the crux of the disagreement.

If I am understanding you correctly, you are now saying that believe that people's incentive to work isn't dictated by their absolute income, their hourly rate, or their absolute income relative to their peers or their hourly rate relative to their beers, but the percentage size of the gap between their income and the income of people who make substantially more than them?

If so, does that mean that you would predict if everything stayed the same, except we gave a $50/hour raise to Person C, Person A and Person B would now start working many more hours (as the difference between their income's and person C's income would have substantially increased in percentage terms)?

Bloop Bloop

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Re: Why did anyone ever think UBI would work?
« Reply #276 on: May 19, 2019, 08:18:43 AM »
No, I'm not saying that there is only one factor dictating people's incentive to work. Many factors do. However, I am saying that screwing with the market quid pro quo, by giving lower income earners a huge lift relative to their existing income, changes their incentive.

To use a very simplistic example, a starving man will do anything for a loaf of bread. A hungry man will do pretty crappy work for a loaf of bread. A comfortable man may or may not care about a loaf of bread. A billionaire probably wouldn't even bother, though he might.

So what I am saying, though the above is an exaggeration, is that giving some people, in effect, a free wage subsidy will change their incentives to work. It may not change them absolutely. But it will alter their mindset. And that distorts the market.

You said it yourself. You said some crappy jobs will go away. Well, that is a distortion.

"If so, does that mean that you would predict if everything stayed the same, except we gave a $50/hour raise to Person C, Person A and Person B would now start working many more hours (as the difference between their income's and person C's income would have substantially increased in percentage terms)?"
I think Person A and Person B would want to work more, because they are falling behind in relative terms. The question is whether they have the physical energy or ability to work more. They may already be working at capacity. In which case it would be a moot question. Now, if we do the reverse of what you said (raise person A and person B's income relative to person C's), person A may or may not decrease hours, but the key is that he now has a choice - he has the ability to have all necessities without working at all - so it is likely that at last some people in person A's situation will make that choice.

(So, to clarify, I do believe that in the example you suggested, person A and person B would want to work more. But I suspect most people in their situation are working about as much as they feel able to, so they can't exercise that choice. However, in the reverse situation, the choice becomes a practical, feasible one.)
« Last Edit: May 19, 2019, 08:20:39 AM by Bloop Bloop »

maizeman

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Re: Why did anyone ever think UBI would work?
« Reply #277 on: May 19, 2019, 08:59:08 AM »
Well that was fast! Do you get e-mail notifications about this thread? I responded here, went to check on and reply to my other "new replies to your posts" and before I was don't this popped back up.

No, I'm not saying that there is only one factor dictating people's incentive to work. Many factors do. However, I am saying that screwing with the market quid pro quo, by giving lower income earners a huge lift relative to their existing income, changes their incentive.
Do you mean status quo or quid pro quo?

If your argument is simply that changing peoples household incomes changes their incentive structure, I don't disagree with that. What those those changes in incentive structure are, how (if at all) they lead to different choices, and whether those difference choices (if any) are good or bad, is where we diverge.

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To use a very simplistic example, a starving man will do anything for a loaf of bread. A hungry man will do pretty crappy work for a loaf of bread. A comfortable man may or may not care about a loaf of bread. A billionaire probably wouldn't even bother, though he might.

Yup. I agree with this. But in this simplistic example you are back to using the threat of starvation to force people to do things they otherwise would not. I agree it is possible to force people to do things they otherwise wouldn't (from sex work to fighting and dying in wars) if they are choosing between that and starvation for themselves and/or their children.

As discussed below, this is a different and non-overlapping argument from the one that people are motivated by the percentage gap in their income relative to people who make very different incomes from them.

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So what I am saying, though the above is an exaggeration, is that giving some people, in effect, a free wage subsidy will change their incentives to work. It may not change them absolutely. But it will alter their mindset.

Yes, I agree that people's mindset will change when they are not confronted with the fear of starvation or homelessness if they lose their jobs.I just disagree with you that those changes are bad ones. I think they are good ones which will help both the economy as a whole and the specific people in question.

We know a lot about scarcity mindsets and how it leads to people making poor long term decisions.* And that's the first order effect. Longer term, we know that growing up in food insecure and/or housing insecure households does a lot of things to children's brain development which are not good for producing a future productive workforce.**

So arguing that changing people's economic situation will change their mindset in of itself isn't enough. You'd need to argue that it will change people's mindset in a negative way.

*Here is a popular language podcast from Hidden Brain or if you'd prefer here's a primary research article from Science on how poverty impairs people's cognitive function particularly for long term planning tasks.

**Specifically, children who from an early age have to worry about food and shelter, and are being raised by parents who spend most of their own cognitive capacity on worrying about food and shelter, are more likely end up with poor executive function and difficulty self regulating both their own attention and emotions. This leads to poor educational outcomes and less desirability was workers both directly (you don't want to hire someone who won't stay on task and regularly blows up at his or her co-workers) and indirectly (we have a shortage of people for many jobs that require lots of specialized education and training). Source.

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You said it yourself. You said some crappy jobs will go away. Well, that is a distortion.

Yup. Now some of those jobs didn't need to be done in the first place. Others need to be done, but the work of humans can be replaced by computers and automation if the humans ask be paid more. A few may really need to be done by humans, but those humans would receive more money for their willingness to suffer on behave of the rest of us. I consider all three outcomes positive changes.

I will completely agree with you that this would represent a change (or distortion if you prefer) from our current status quo. What I disagree with you on is your (apparent) assumption that our present status quo is a perfect free market, and therefore any change from the status quo must move us farther away from a perfect free market.

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"If so, does that mean that you would predict if everything stayed the same, except we gave a $50/hour raise to Person C, Person A and Person B would now start working many more hours (as the difference between their income's and person C's income would have substantially increased in percentage terms)?"
I think Person A and Person B would want to work more, because they are falling behind in relative terms. The question is whether they have the physical energy or ability to work more. They may already be working at capacity. In which case it would be a moot question. Now, if we do the reverse of what you said (raise person A and person B's income relative to person C's), person A may or may not decrease hours, but the key is that he now has a choice - he has the ability to have all necessities without working at all - so it is likely that at last some people in person A's situation will make that choice.

(So, to clarify, I do believe that in the example you suggested, person A and person B would want to work more. But I suspect most people in their situation are working about as much as they feel able to, so they can't exercise that choice. However, in the reverse situation, the choice becomes a practical, feasible one.)

I think right now there are two ideas tangled together. The first is that people will do almost anything if the alternative is starvation (I agree with you, I just don't see that as a desirable approach to use to motivate people to work).

The second is that people's motivation to work is driven by their income relative to people very far away from their on the income spectrum but not relative to their peers (I disagree with you).

These two ideas have basically no overlap with each other, yet they're getting tangled up in your examples. How about this one:

Do you believe that if we double the hourly wages for person A and person B, will that motivation person C to work a lot more hours? After all, person C previously had the majority of these three people's combined income, so, based on the model you proposed above, likely wasn't working anywhere near their maximum feasible number of hours previously. And their income as a percentage of the three people's combined income has now decreased substantially, so if that plays a significant role in determining how many hours people work, C should now chose to work many more hours/week, correct?

Boofinator

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Re: Why did anyone ever think UBI would work?
« Reply #278 on: May 19, 2019, 05:13:18 PM »
I should really go back and re-read the thread if you want to dig too far back into this. But I believe there were multiple examples like the one above. You said the rules of economics guarantee there will always be jobs so we don't need a UBI, I pointed out that it's not enough for there to be jobs, they need to be jobs that provide enough value to the economy so that the workers can be paid enough to cover the cost of food/shelter/etc, otherwise we're on the road to social unrest and revolution, you agreed, and then later in the same thread went back to saying that economics guaranteed that there would always be jobs, because the value of human labor wouldn't go all the way to zero, and hence we didn't need a UBI.

I certainly agreed that if there isn't enough money to cover necessities, there will be social unrest. However, I disagreed that this premise supported the conclusion that jobs wouldn't be available. Specifically, I believe the government sets minimum wage to allow for people to cover the necessities (i.e., a 'living wage'), so by definition, if you have a full-time job, you're receiving enough pay to cover the necessities (at least in theory). Secondly, I noted at some point in the thread that it is the government's responsibility to provide jobs in economic situations with large levels of unemployment. A perfect example of this was the CCC of the Great Depression.

And to support the concept that human value wouldn't go to zero: If today, I had Sim City powers of economic command, I can think of hundreds of tasks that could be done around my neighborhood alone that would provide me, personally, with value. Now, there's no way I would personally pay people to perform these tasks. But federal government, which has a vested interest in low social unrest and an ability to print money, should ensure people have the means to support themselves. Whether or not they should choose to employ UBI or a federal employment program to achieve this goal is the debate.

ETA: It should be somewhat clear that a private-sector job would require added value that exceeds the cost of living essentials (as represented by minimum wage plus assorted benefits like employer's social security contribution). Government jobs, on the other hand, are not restricted in this regard, and technically a worker's production could have zero or even negative value, though that would be silly when there will never be any shortage of tasks that provide useful value (even with the advent of mass automation).
« Last Edit: May 21, 2019, 07:55:07 AM by Boofinator »

Bloop Bloop

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Re: Why did anyone ever think UBI would work?
« Reply #279 on: May 19, 2019, 08:41:22 PM »
"Do you mean status quo or quid pro quo?"
I meant quid pro quo. I.e., the 'this for that' which is inherent in bargaining theory. Previously you were giving someone $10 to mow your lawn. Now that someone has $10 guaranteed. He may or may not wish to mow your lawn any more. Therefore the quid pro quo in a holistic sense has changed.

"If your argument is simply that changing peoples household incomes changes their incentive structure, I don't disagree with that. What those those changes in incentive structure are, how (if at all) they lead to different choices, and whether those difference choices (if any) are good or bad, is where we diverge."

Where we diverge is that you have said that you don't believe there is a market distortion. However, you acknowledge there is a "change to the incentive structure". I would argue that any change to incentives is a distortion of itself, even if it doesn't always result in a concrete change in work habits. I don't understand how you can say there is a change to incentives, sufficient to (at least) cause some unpalatable jobs to go away, and then argue that it still doesn't consist of a market distortion. At most, it seems to me that you're arguing that the distortion to the market is wholly beneficial, or that it has a net benefit, or something along those lines. But that's not the position you took initially; you were denying any distortion at all.

"I just disagree with you that those changes are bad ones. I think they are good ones which will help both the economy as a whole and the specific people in question."
I've never disputed that a UBI would help the people in question. Of course it would. And it would alleviate some of their scarcity thinking. But I've never been arguing from the point of view of the people in question.

Whether it helps the economy as a whole is very hard to predict.

"So arguing that changing people's economic situation will change their mindset in of itself isn't enough. You'd need to argue that it will change people's mindset in a negative way."

To me, this is you wholly changing the goalposts. You're saying, "It's fine if it distorts the market. The question is whether it unjustifiably distorts the market." I made no claims as to the latter, only the former.

"Yup. Now some of those jobs didn't need to be done in the first place. Others need to be done, but the work of humans can be replaced by computers and automation if the humans ask be paid more. A few may really need to be done by humans, but those humans would receive more money for their willingness to suffer on behave of the rest of us. I consider all three outcomes positive changes. "
Again, I only questioned whether there are changes, not whether they are morally positive. I think questions of morality are impossible to resolve and I don't recall arguing based on morality in this thread, only economic efficiency.

"What I disagree with you on is your (apparent) assumption that our present status quo is a perfect free market, and therefore any change from the status quo must move us farther away from a perfect free market. "
I don't think I ever used the term 'perfect free market'. A free market can't be perfect if it has imperfect actors. But again, I'm not advocating for a perfect market - only that I think the market is fine as it is, and we shouldn't allow what I'd call "conventional redistributive wisdom" to be the principal criterion in market design.
« Last Edit: May 19, 2019, 08:43:26 PM by Bloop Bloop »

shenlong55

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Re: Why did anyone ever think UBI would work?
« Reply #280 on: May 24, 2019, 07:22:24 PM »
For example if I were to open a savings account and deposit $1,000 dollars right now then that bank can now loan out $900 while still keeping my $1000 on the books because of fractional reserve banking .  There is now $1900 in circulation in the economy.  Actually, the bank could even lend that money to another bank who could then loan out $810 making a total of $2,710 now in the economy.

This is not an accurate interpretation of fractional reserve banking.

Banks can use the $900 to seek greater returns - The last thing they're going to do is put it in a checking or savings account at another bank which will will be able to put the 810 in an account at another bank and so on. Even if they did do that, they're just getting your initial $1000 slowly down to 1, rather than fluffing it up to $2,710 and beyond.

The point is that the $900 gets put into investment vehicles, not checking accounts that allow for fractional reserve banking.

Regardless of where it gets put it's a new $900 that didn't previously exists isn't it?  And whoever got that $900 and/or anyone that they end up giving it to can then put that $900 into another bank account right?  And then, that second bank can issue out loans worth $810 more than it could previously lend out, starting the whole process again right?  I understand there is likely some leakage so the amounts may not always be the full amount at each step but that doesn't mean that it doesn't happen at all.

Just to provide another outside reference in case I'm just not explaining this very well, here's what I'm talking about from Wikipedia...

Fractional reserve theory of money creation
Quote
The process of money creation can be illustrated with the following example: Person A deposits $1000 in a bank. The bank keeps $100 as reserves in the central bank. To make a profit, the bank loans the remaining $900 to a customer B. B spends the $900 by buying something from C. C deposits the $900 with their bank. C's bank keeps $90 as reserves in the central bank, and then lends the remaining $810 to another customer D. If this chain continues indefinitely then, in the end, an amount approximating $10,000 has gone into circulation and has therefore become part of the total money supply.

I see what you mean. Gotta think and read more on this but first must work for wages. BRB.

@J Boogie  Just curious, do you have any further thoughts on our discussion?

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Re: Why did anyone ever think UBI would work?
« Reply #281 on: May 25, 2019, 06:31:23 PM »
All I can say is that I'm extremely elated by the election results in Australia, in which the country has rejected a high-taxing, socialist type of governance in favour of the status quo.

Hopefully UBI and some of these more radical ideals never come to fruition. There's a big gulf between a safety net and a UBI. Even if we had the money to fund UBI, I'd prefer it be distributed mostly according to market principles.

ďThe welfare of the people in particular has always been the alibi of tyrants, and it provides the further advantage of giving the servants of tyranny a good conscience.Ē  Albert Camus

Kyle Schuant

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Re: Why did anyone ever think UBI would work?
« Reply #282 on: May 25, 2019, 06:45:42 PM »
I am always amused that a forum inhabited by people dedicated to finding ways to get money without the trouble of working become so indignant at the idea of everyone getting money without the trouble of working.


"Comfortable idleness is for me, not those other people." :)


The Right say: poor people need the incentive of their poverty to make them work, and rich people need the incentive of their wealth to make them work.


The Left say: poor people are too silly and stupid to know what's good for them, so we must tell them how to spend their money, and rich people are evil, except us on the Left who are minimising our taxes out of sheer charity.


It could perhaps be that both are self-serving.

FIREstache

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Re: Why did anyone ever think UBI would work?
« Reply #283 on: May 25, 2019, 07:17:17 PM »
I am always amused that a forum inhabited by people dedicated to finding ways to get money without the trouble of working become so indignant at the idea of everyone getting money without the trouble of working.

Apples and oranges.  This forum discusses making your own success, investing, and then living off the fruits of your investments.

UBI is just a handout paid for by even higher taxes, and it's not even given to everyone equally or fairly.  The proposed plan mentioned in this thread would require some people to make a choice between their earned benefit (social security) and UBI, while current workers, non-workers who aren't receiving SS, and government pension recipients wouldn't have to give up anything and would receive the UBI handout, so workers and pension recipients would receive the UBI handout on top of their existing income.  SS recipients (which average about $1400/mo) would not receive UBI like everyone else, but their taxes and living expenses would go up despite not getting the handout that everyone else gets.  It's a terrible idea all the way around, especially as proposed.  Any assistance should only go to the truly needy, such as the mentally and physically handicapped and the poor elderly.
« Last Edit: May 25, 2019, 07:19:22 PM by FIREstache »

shenlong55

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Re: Why did anyone ever think UBI would work?
« Reply #284 on: May 25, 2019, 07:26:58 PM »
I am always amused that a forum inhabited by people dedicated to finding ways to get money without the trouble of working become so indignant at the idea of everyone getting money without the trouble of working.

Apples and oranges.  This forum discusses making your own success, investing, and then living off the fruits of your investments.

UBI is just a handout paid for by even higher taxes, and it's not even given to everyone equally or fairly.  The proposed plan mentioned in this thread would require some people to make a choice between their earned benefit (social security) and UBI, while current workers, non-workers who aren't receiving SS, and government pension recipients wouldn't have to give up anything and would receive the UBI handout, so workers and pension recipients would receive the UBI handout on top of their existing income.  SS recipients (which average about $1400/mo) would not receive UBI like everyone else, but their taxes and living expenses would go up despite not getting the handout that everyone else gets.  It's a terrible idea all the way around, especially as proposed.  Any assistance should only go to the truly needy, such as the mentally and physically handicapped and the poor elderly.

So, is it safe to assume that you're against allowing banks to create money?

Leisured

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Re: Why did anyone ever think UBI would work?
« Reply #285 on: May 26, 2019, 09:31:46 AM »
We all live in advanced societies. Therefore it is should be a matter of pride that machines become our slaves and provide for is. Is this difficult to understand?

Realistically, people will still work in higher management and political levels, but that is that how it has been since the ancient world.

Why is this is hard to understand?

So we install robots here and there and still have full employment? What are you are smoking?

The trick is to understand that automation is an intelligence test. Since I have been 18, I have understood that Mother Nature is running the world, and we are being given intelligence tests by Her Ladyship. Can we handle the transfer of labor to machines?

The long term goal of economics is to transfer the labor component of the economy to machines is to eliminate the need to work. That is the point!






Kyle Schuant

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Re: Why did anyone ever think UBI would work?
« Reply #286 on: May 26, 2019, 06:42:45 PM »
Apples and oranges.  This forum discusses making your own success, investing, and then living off the fruits of your investments.
Ultimately, unless you are drawing on your own savings, the money you get is drawing from someone else's income. Whether you are drawing on someone else's income from rent, from dividends, or from unemployment benefit, you are still drawing from someone else's income.

Nor has anyone on this forum been subjected to moral judgement for earning money one way rather than another. It is assumed that if someone gets $100k from doing one job for one year and someone else gets $100k in five years, that is right and proper, and the bigger earner deserves it, and the lesser earner does not, it's all their own fault. "But they earned it!" And someone asking about how to invest their $500k inheritance from their old grandma earned it? Why praise someone who seeks to inherit unearned wealth from family, and rebuke someone who seeks to inherit unearned wealth from their community?

Is everyone truly compensated according to the value they create in society? What about the people doing bullshit jobs? What about the people ticking boxes, the people following political leaders and CEOs around and writing down their blatherings, the Intimacy Set Co-ordinators and heads of Political Action Committees? If the money received is a measure of the person's contributions to society, why do we not praise bank robbers and drug lords? Could it be that remuneration does not correspond 1:1 with value generated?

And even when genuine value is created and remunerated well, how much does the person owe to their own efforts, and how much to the people who helped them along the way, and all the social and physical infrastructure which supported them?

None of this about "earning" money is objectively true, it's simply the values of our society. It reminds me of a sarcastic post I kept from someone else about the Little Aussie Battler (earning $100+k).

"I was oppressed and down as I didn't have the bare necessities to survive. All I had was clean water to drink, electricity at the flick of a switch, free education, accessible and mostly free health care, a working government, public transport, clean air, social security and shops full of a massive range of food and no gunfire on the streets.

"But I pulled myself out of the shit and made something of myself. Now I wear shoes and clothes made by 12 year old vietnamese children, I have a phone made from rare metals mined by 10 year olds in the Congo and drive a car built by a company that made weapons for the Nazis. So I guess I'm a survivor."


Nobody is wealthy without help from others, and from society generally. Much of this is wealth which the person inherited, either directly from their parents or spouse, or indirectly from society having built up power stations, roads and so on. It is extraordinarily hard to say that X% of our wealth came entirely from our own efforts, and the rest from others who were quite possibly never properly compensated for it.

If we cannot say how much of our wealth was truly generated by us, then we cannot really rebuke the idea of social security generally, or a UBI. If my children do not "deserve" wealth from the state, then they do not "deserve" to inherit wealth from me, either, nor even to get basic housing and education. Obviously I would be a bad parent if I behaved that way, so can we not say society is bad if it refuses a share of wealth to people? As a few states and countries have done, you can have the idea that the resources the land has are in some sense the common wealth of the country to be shared equally.

The question is whether that just applies to oil dividends or to other goods and services, too. Quite obviously, we cannot simply pay everyone the same wage regardless of their work or lack of it, as nobody would have an incentive to produce more or better goods and services. But we also have many examples of what happens when society fails to look after each-other, and none of them are pleasant. Put another way: UBI is essentially a communist idea. Capitalism is good at creating wealth but poor at distributing it, and communism is good at distributing wealth but poor at creating it. Which is why most civilised countries have something in between.

bacchi

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Re: Why did anyone ever think UBI would work?
« Reply #287 on: May 26, 2019, 06:47:38 PM »
Great post, Kyle.

Bloop Bloop

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Re: Why did anyone ever think UBI would work?
« Reply #288 on: May 26, 2019, 10:48:51 PM »
It's disingenuous to say that those who got wealthy owe a bigger debt to society than those who failed financially.

If a child gets a musical or academic scholarship through merit then she just takes advantage of an opportunity that's there for everyone.

If an athlete becomes an Australian Olympian then he just is better at doing something (like putting a ball in a hoop) than others who have tried out. Everyone has the basic opportunity.

So, whilst I would support measures to give everyone the same set of opportunities (e.g. - more funding for smaller class sizes; money for tuition for children from poor families; early reading programs; early gifted & talented testing to allow poor children to be streamed appropriately without their parents having to pay), I don't support measures to equalise the actual score, presuming there is some semblance of equal opportunity.

You can't say that the successful football team owes a bigger debt than the unsuccessful football team. The stadium's there.

You can say that some people can't afford football gear. I get that. But let's not conflate equality of opportunity with equality of outcome.

The best result, I think, would be a meritocracy where we tax inheritances heavily in order to create an equal starting point for children, but then tax income lightly, so that those with more merit can enjoy the fruits of their labour.

Kyle Schuant

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Re: Why did anyone ever think UBI would work?
« Reply #289 on: May 27, 2019, 12:10:52 AM »
If an athlete becomes an Australian Olympian then he just is better at doing something (like putting a ball in a hoop) than others who have tried out. Everyone has the basic opportunity.
The Australian Institute of Sport has a budget of $500,000 per athlete annually. Unlike university education, the athlete need never pay this back directly regardless of their success or earnings later on.

Most athletes are trained in their early years by volunteer coaches, who work for many years early mornings and late nights.

You chose an example of which you are ignorant. You should stop doing that.

sol

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Re: Why did anyone ever think UBI would work?
« Reply #290 on: May 27, 2019, 12:55:54 AM »
You chose an example of which you are ignorant. You should stop doing that.

I understand what you're trying to say, and I even agree with you on the larger point.  But your delivery often makes you sound like a jerk, Kyle.  You could have made that same point in a nicer way, and you'd be much more likely to be heard.  Because right now, even I want to argue with you.

Bloop Bloop

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Re: Why did anyone ever think UBI would work?
« Reply #291 on: May 27, 2019, 01:20:26 AM »
If an athlete becomes an Australian Olympian then he just is better at doing something (like putting a ball in a hoop) than others who have tried out. Everyone has the basic opportunity.
The Australian Institute of Sport has a budget of $500,000 per athlete annually. Unlike university education, the athlete need never pay this back directly regardless of their success or earnings later on.

Most athletes are trained in their early years by volunteer coaches, who work for many years early mornings and late nights.

You chose an example of which you are ignorant. You should stop doing that.

None of that goes against my point, which is that we need to look at maximising opportunity, not outcomes. If your point about the AIS is that for some reason, poor athletes are less able to demonstrate their sporting talent, then it's valid. Otherwise, as long as everyone has an opportunity to be elite, then that suffices.

For example, look at the NBA. Most of their stars come from disadvantaged backgrounds. Yet they still get in the big leagues. Clearly, the NBA provides equality of opportunity, but not equality of outcomes (a handful of superstars, some role players and a lot of people who never get a look in). It's a meritocracy.

Society should be a meritocracy.

And as Sol said, perhaps you can engage with the larger point, which is whether the proposals sounded out in this thread (about UBI) go to equality of opportunity, or equality of outcome. I agree with the former, but not the latter.

GuitarStv

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Re: Why did anyone ever think UBI would work?
« Reply #292 on: May 27, 2019, 12:11:38 PM »
None of that goes against my point, which is that we need to look at maximising opportunity, not outcomes. If your point about the AIS is that for some reason, poor athletes are less able to demonstrate their sporting talent, then it's valid. Otherwise, as long as everyone has an opportunity to be elite, then that suffices.

For example, look at the NBA. Most of their stars come from disadvantaged backgrounds. Yet they still get in the big leagues. Clearly, the NBA provides equality of opportunity, but not equality of outcomes (a handful of superstars, some role players and a lot of people who never get a look in). It's a meritocracy.

Society should be a meritocracy.

And as Sol said, perhaps you can engage with the larger point, which is whether the proposals sounded out in this thread (about UBI) go to equality of opportunity, or equality of outcome. I agree with the former, but not the latter.

As a fan of meritocracy, what do you think about someone who leaves money for his/her children?  Given that this is the antithesis of a meritocracy I assume that you are vehemently against it.

sol

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Re: Why did anyone ever think UBI would work?
« Reply #293 on: May 27, 2019, 12:25:05 PM »
As a fan of meritocracy, what do you think about someone who leaves money for his/her children?  Given that this is the antithesis of a meritocracy I assume that you are vehemently against it.

Unless you believe in the merit of families, rather than just individuals.  From that perspective, passing on intergenerational wealth is just a material reflection of passing on intergenerational values, and superior families will thrive because they are superior people.

At least, that's what I imagine the Kennedys and Bushes of the world believe. 

And then, in a whole separate argument, the popular press is currently inundated with arguments against meritocracy.  The old-school WASP aristocracy, for all of its faults, at least instilled a certain sense of civic obligation in its leaders, and allowed immigrants and minorities to join the ranks of elite institutions like finance and academia over time.  The current crop of meritocracy proponents, by contrast, tend to overlook some of it's most glaring flaws.  For example, it instills a win-at-any-cost mentality that leads to corruption and gives us families like the Trumps, who seem to believe that they are deserving of whatever they can take because they "won" an election and nothing else really matters.  See also Elizabeth Holmes, Mark Zuckerburg, etc.
 And then some current news stories like the college-admissions scandal suggest that the meritocracy is not so meritocratic as we would like to believe, if you can still buy your way in.

I still like the idea of meritocracy, but our current implementation is far from perfect, and the only obvious ways to correct some of those problems look distressingly like a return to aristocratic values.

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Re: Why did anyone ever think UBI would work?
« Reply #294 on: May 27, 2019, 02:38:43 PM »
None of that goes against my point, which is that we need to look at maximising opportunity, not outcomes. If your point about the AIS is that for some reason, poor athletes are less able to demonstrate their sporting talent, then it's valid. Otherwise, as long as everyone has an opportunity to be elite, then that suffices.

For example, look at the NBA. Most of their stars come from disadvantaged backgrounds. Yet they still get in the big leagues. Clearly, the NBA provides equality of opportunity, but not equality of outcomes (a handful of superstars, some role players and a lot of people who never get a look in). It's a meritocracy.

Society should be a meritocracy.

And as Sol said, perhaps you can engage with the larger point, which is whether the proposals sounded out in this thread (about UBI) go to equality of opportunity, or equality of outcome. I agree with the former, but not the latter.

As a fan of meritocracy, what do you think about someone who leaves money for his/her children?  Given that this is the antithesis of a meritocracy I assume that you are vehemently against it.

I'm not a big fan of it. I would suggest something like a 50% tax on inheritances over $500k and a 90% tax on inheritances over $2 mil. Use the money to drastically cut income tax to a near-flat rate.

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Re: Why did anyone ever think UBI would work?
« Reply #295 on: May 27, 2019, 02:50:17 PM »

Put another way: UBI is essentially a communist idea. Capitalism is good at creating wealth but poor at distributing it, and communism is good at distributing wealth but poor at creating it. Which is why most civilised countries have something in between.

I am not dead set against UBI no matter what political economy of the future may be.

 I am leery of  UBI for the reason that it evokes Marx and his maxim.

« Last Edit: May 27, 2019, 03:24:13 PM by John Galt incarnate! »

John Galt incarnate!

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Re: Why did anyone ever think UBI would work?
« Reply #296 on: May 27, 2019, 02:57:59 PM »

I don't support measures to equalise the actual score, presuming there is some semblance of equal opportunity.Society should be a meritocracy.

^

This is from another of Bloop Bloop's posts.


And as Sol said, perhaps you can engage with the larger point, which is whether the proposals sounded out in this thread (about UBI) go to equality of opportunity, or equality of outcome.



Meritocracy promotes the rational allocation of public resources (expenditure of public monies).

Contrived equality of outcome nullifies equality of opportunity.
« Last Edit: May 27, 2019, 03:50:15 PM by John Galt incarnate! »

Kyle Schuant

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Re: Why did anyone ever think UBI would work?
« Reply #297 on: May 27, 2019, 07:44:53 PM »
Sol, sometimes a rebuke is necessary to make a person improve their practice, in this case to either be silent or research things before speaking about them. It appears to have been effective. The real vitriol comes not because of how you say things, but what you say. You Sol are polite most of the time and it doesn't stop people hoeing into you. You commit the worst sin of all: challenging their assumptions.

MMM talks a lot about the benefits of being well-off is that you're now free to spend your time and money giving to others, but being able to give charity is not something which typically attracts people to FIRE, they tend to have other motivations. Thus, in having a social conscience you stand out.

My own view is that a social conscience is actually not necessary to support various social welfare programmes. Objectively, however well-off I am in it is just unpleasant to have dirty streets with homeless drug addicts and mentally ill wandering about, and the threat of crime is not nice, either, still less the guerilla warfare and revolution that arise in the worst societies. And ultimately those things all cost money, since even if you have totally inhumane prisons you have to pay the guards well or you get lots of violence and drugs and prison riots spilling out into nice neighbourhoods, so keeping someone in prison will always be more expensive than just giving him a handout, even if all he does with his handout is sit around watching tv and smoking bongs.

A social welfare net leads to more pleasant outcomes even for those who never use it, and is quite simply cheaper than imprisoning everyone. The question is how that should be best provided.

I suppose you could go all Duterte and just have the police run around murdering everyone, but I am sure that has many indirect costs to society such as the bribes and blackmail and extortion and disruption of normal commerce and trade by police protection rackets and so on. Note that during the rule of Duterte there has not been a rush of applications to migrate to his country. Rule of law and social welfare just lead to more pleasant societies.



Society should be a meritocracy.

And as Sol said, perhaps you can engage with the larger point, which is whether the proposals sounded out in this thread (about UBI) go to equality of opportunity, or equality of outcome. I agree with the former, but not the latter.
"It is easy to confuse what is with what ought to be especially when what is has worked in your favour."
- Tyrion Lannister

Those who argue for a pure meritocracy are typically those who are successful, and who like to imagine that all their success is due to their own merit, with "merit" being another way to say "hard work" - ignoring the factors of luck, family connections and so on. They also ignore that what society values is not necessarily that which has objective value (if it were, then prices and wages would change much more slowly than they do) making "merit" less actual merit and more about connections, ritual and virtue signalling.

I am not too concerned about whether society is or should be a meritocracy. I am concerned about grinding poverty and misery, and the crime, mass murder and revolution which follow from it sooner or later. To this end, some sort of social safety net is required. I take the economically and socially conservative position on the UBI, which is that it's a simpler and ultimately cheaper way to deliver a social safety net than all the paperwork of a dozen different kinds of pension and a hundred different kinds of tax break and subsidy. In its effects, this happens to overlap with the socially liberal position that we should not judge people in a difficult situation, that we should not try to split people into the deserving and undeserving poor.


A UBI does not undermine a system of meritocracy any more than a system of roads and running water which everyone can use undermines it. There is a certain base level of goods and services which should be accessible to every person in a civilised society, and this should be in proportion to the wealth of the society. Western societies are already spending copious amounts of money on welfare, the only question is the exact way it should be delivered.


The Commonwealth government expects to spend $191.8 billion on social welfare programmes in the 2019-20 period. Let us ignore state social welfare spending for now (eg on public housing), though it is significant. That's $7,800 for each Australian resident, or $11,800 for each of the 16.4 million registered voters (a number which we may take as a slight underestimate of the number of adult citizens, since most proposals for UBI do not include non-citizens, and are vague on whether children are included). So, we have already decided we can afford almost $8k per person or $12k per adult citizen, the question is how we should distribute it.


By comparison, the unemployment benefit is $13,000 annually. Disability, single parent and old age pensions are higher, however if we have decided that an unemployed person of 64 years and 11 months and 29 days can live on $13k, it is not clear why the next day he needs another $9k.


Obviously someone already receiving $250k in salary does not need a $12k handout. But we could deal with this simply by adding $12k to every tax bracket (eg tax-free threshold goes from $18 to $30k) and we'd end up with much less social welfare spending than we have now. So the unemployed person is not penalised for getting work as they currently are (first their part-time work income is taxed, then they lose some of their benefit), and the well-off person receives no net benefit compared to now.


Plainly, a disabled person has greater needs, but these are essentially medical needs which is, in Australia, what we have Medicare for. Just as they get a prescription for some medicine, they can get a prescription for a small ramp into their house, or whatever.


A single parent also has greater needs, but we could toss some extra money their way from the savings mentioned above. Perhaps UBI could be in proportion to age, much as the minimum wage is, for example a 15yo currently gets 36.8% the adult minimum wage. The exact percentages could be fiddled with, but an infant or small child doesn't need $12,000 annually for its share of utilities, for food and clothing. In any case I don't believe that having a child should be without costs.


Despite being among them, I am not too interested in the needs of the well-off middle class parent and childcare, I would abolish that entirely in favour of the UBI; long day care runs at $70-$185 a day, from family daycare in some rural area to urban care with organic free range tofu and yoga classes, most is about $120 a day, giving a single parent who devoted that UBI to it 100 days a year care and a couple 200 days. I am aware that this contradicts my earlier suggestion of raising tax brackets, but again I am not too concerned - if it's all too pricey, one of you can stay at home, as I do. More men should stay at home with their children.


Again I mention that our family on an above-median household income is currently entitled to some $13k in handouts, for which we need only fill out a form online once a year, and if we're overpaid we're asked nicely to pay it back; by comparison, an unemployed person to get $13k must attend many appointments, do paperwork fortnightly, do work for the dole and endless pointless courses, and if a computer system believes they have received more than they should, cuts off their payments entirely and/or removes it from their bank accounts without telling them first.


$13k in each case. Notably, if my small business were to close, because of my wife's income I would not entitled to any unemployment benefits - though I'd still be entitled to some childcare benefits. "We will give you $13k to not look after your children, but we won't give you $13k to put food on your table."


So it is not about cost, it's about moral judgements. Now, moral judgements are fun, but when applied to government processes they require a large and expensive system of administration, all those people collecting and stamping forms, having adversarial interviews with some poor unemployed or disabled guy, fixing broken software systems, hiring private investigators to follow them to see if they really have back problems, physiotherapists and psychologists to assess their official level of disability, and so on and so forth. Given the billions of dollars involved I'd rather suspend my moral judgements, it's cheaper.


Again: the question is not whether we can afford it, we have already decided we can afford all that social welfare spending. The question is how we'll distribute it. I am in favour of the method which leads to less administration, moral judgement, and is cheaper. Of course some people prefer more administration, more moral judgement, and greater expense, but unless they are one of those employed to collect and stamp papers I can't really see why.


Using the athlete analogy: I don't care if you get an Olympic medal or not, I'd just like you to be able to walk around without severe back pain. I don't care how many Aboriginal PhDs we have, I'd just like them all to have access to clean drinking water and eradicate trachoma and chronic kidney disease, and have them all finish high school. The purpose of a social welfare system is that the bottom should not be too low.


So it's about neither equality of opportunity nor equality of outcome. It's about having a peaceful and pleasant society while minimising the welfare bill. A UBI satisfies that better than our current system with its huge mess of benefits and subsidies and paperwork.

Bloop Bloop

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Re: Why did anyone ever think UBI would work?
« Reply #298 on: May 29, 2019, 02:27:57 AM »
Kyle, if your idea of a UBI is to take our current welfare spending and administration costs and just divvy that up equally to the adult population, I have no issue with that - the problem is, I think you'll find that a lot of welfare recipients (e.g. single mothers; the on the DSP) draw a lot more each year in welfare than whatever that average figure is. So you've got to figure out a way to account for that. Your suggestions regarding this point are vague. A bit of the extra savings - from administration? But then you still need a way to distribute the extra, and it won't be universal, or I suspect basic, any more.

You also neglect to note that the Australian welfare system is already one of the best at redistributing in the OECD. When you look at benefits in kind and cash welfare, we're the most redistributive country in the OECD. So our current model is close to yours as it is. Should it be tweaked? Possibly. Should we decrease childcare subsidies and maybe increase newstart? Yep, I'm in full agreement. But that's all just tinkering around the edges.

The figures you quote (very low five figures) are not the traditional definition of UBI, anyway. They're in no sense equivalent to a Harvester UBI.

"Objectively, however well-off I am in it is just unpleasant to have dirty streets with homeless drug addicts and mentally ill wandering about, and the threat of crime is not nice, either, still less the guerilla warfare and revolution that arise in the worst societies."

I agree with that - but we in Australia are nowhere close to that, so it's not really an argument against the status quo.
« Last Edit: May 29, 2019, 04:12:17 AM by Bloop Bloop »

Boofinator

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Re: Why did anyone ever think UBI would work?
« Reply #299 on: May 29, 2019, 11:38:49 AM »
Sol, sometimes a rebuke is necessary to make a person improve their practice, in this case to either be silent or research things before speaking about them. It appears to have been effective. The real vitriol comes not because of how you say things, but what you say. You Sol are polite most of the time and it doesn't stop people hoeing into you. You commit the worst sin of all: challenging their assumptions.

How, exactly, do you gather that a rebuke has been effective over the internet? If anything, I thought it was nitpicky and completely undermined your point, insofar as what could have been a teaching moment turned into a lecturing moment. Or was the effectiveness of this rebuke simply an assumption on your end?

Another assumption you appear to make is that UBI would reduce crime. How do you come to this conclusion? If UBI were to lead to an increase in unemployment, might it actually increase crime? https://www.sciencedirect.com/science/article/pii/S0049089X12000026

And yet another assumption you make is that UBI would be no more expensive than the current welfare model. I agree this would be the case if all other factors were equal, but there's simply little evidence to show that would be the case. Again, an increase in unemployment (http://jsspi.com/journals/jsspi/Vol_2_No_2_June_2014/11.pdf) might result in an increase in cost-of-living and inequality (https://stanfordreview.org/universal-basic-income-its-that-simple/).

No, I am not an expert (I wasn't aware that that was a stipulation to post on the MMM forums), so feel free to lecture, scold, and rebuke me on the nuances I most certainly have missed. However, one thing I am expert on is knowing what I don't know, and knowing that anybody who claims otherwise on UBI is blowing a lot of smoke due to the complete lack of evidence to support any conclusions one way or the other. And hence we come back to moral judgments; and for me, despite zero evidence pointing in either direction, I sure as hell don't give my kids any allowance unless they get shit done around the house.