Re:If You Think Free Money Kills Work Ethic, Your Definition...
by dragonwriter on Wednesday May 04, 2016 @05:49PM
(#11632187)
> is there actually that much in the system without requiring massively raising taxes? [...] And I don't mean in the early implementation but 20 years in when it's humming along as envisioned.
A UBI moving from a low level to a mature, robust level able to provide a living wage -- as a matter of basic economic necessity -- requires advances in productivity. There's not productivity in the economy now to support a robust UBI.
> > these increases [in the prices of goods and services] will generally be less, proportionally, than the increase in income.
> How can that be when everyone would be making more money because UBI is added to their income as well.
To start with, everyone will not be making more (after tax and public benefits) money. The money for a UBI (under most actual proposals) will come from reducing existing means- and behavior-tested public benefits (and associated administration) and/or increased taxes on some people. Either of these will reduce the effective income of some portion of the population -- and necessarily decrease at least some people's income by an amount greater than the UBI. Before considering the effects the redistribution has on promoting or inhibiting economic growth (e.g., by increasing domestic velocity because of where money is distributed and how and what the people receiving spend it on vs. those losing it), the average net impact on incomes should be approximately $0.
> All labor costs would rise for everything.
No, they won't, and those that do rise won't rise equally. And, in any case, labor costs aren't the only costs of production, so even if labor costs in the domestic market rose as a result of UBI, prices of completed goods and services would rise by less (proportionally) than the increase in labor costs. (In the long term, for goods provided in a competitive markets, where prices are driven by competition down to the cost of production.)
A UBI moving from a low level to a mature, robust level able to provide a living wage -- as a matter of basic economic necessity -- requires advances in productivity. There's not productivity in the economy now to support a robust UBI.
> > these increases [in the prices of goods and services] will generally be less, proportionally, than the increase in income.
> How can that be when everyone would be making more money because UBI is added to their income as well.
To start with, everyone will not be making more (after tax and public benefits) money. The money for a UBI (under most actual proposals) will come from reducing existing means- and behavior-tested public benefits (and associated administration) and/or increased taxes on some people. Either of these will reduce the effective income of some portion of the population -- and necessarily decrease at least some people's income by an amount greater than the UBI. Before considering the effects the redistribution has on promoting or inhibiting economic growth (e.g., by increasing domestic velocity because of where money is distributed and how and what the people receiving spend it on vs. those losing it), the average net impact on incomes should be approximately $0.
> All labor costs would rise for everything.
No, they won't, and those that do rise won't rise equally. And, in any case, labor costs aren't the only costs of production, so even if labor costs in the domestic market rose as a result of UBI, prices of completed goods and services would rise by less (proportionally) than the increase in labor costs. (In the long term, for goods provided in a competitive markets, where prices are driven by competition down to the cost of production.)