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Kuros
Joined: 27 Apr 2004
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 Posted: Sat Oct 12, 2013 5:39 am Post subject: |
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Switzerland considers “Star Trek” economics
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Q: What is a universal basic income, and why are we hearing more about it now?
A: The proposals that are floating around the world vary a lot. But the basic idea is, no matter what you do, if you’re a resident — or in some cases, a citizen — you get a certain amount of money each month. And it’s completely unconditional: If you’re rich you get it, if you’re poor you get. If you’re a good person you get it, if you’re a bad person you get it. And it does not depend on you doing anything other than making whatever effort is involved to collect the money. It’s been a topic of discussion for several decades. Why is it happening right now? I think it’s obvious that it’s a reaction to the high level of economic inequality that we’ve seen. Most European countries haven’t had big increases in inequality at the same scale that we [in the U.S.] have, [but] some of them have had much more than they’re used to. |
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Q: You’ve written about left critique of basic income before. How concerned are you? How do you think that potential tension will play out?
A: My fear is that it’s possible for a coalition of completely well-intentioned and idealistic — with no negative connotation to that — people on the left to support what would be a very generous basic guaranteed income, in a coalition with significant elements on the right, including the libertarian right, that has basically the motivation that this will undermine existing social welfare institutions, potentially undermine public-sector unions. Because a lot of the services — health, education, housing — might become much more marketized and privatized.
You can imagine that if this proposal in Switzerland passes and everyone gets $2,800, that the right can say, “Well, why should we provide healthcare — why don’t we let people use the money that we’re giving them? Why should we provide public schools — we should let people use the money that we’re giving them to buy education for their kids in the marketplace.”
I mean, it would in principle be possible to provide both a guaranteed basic income and maintain the level of the social welfare system that exists in this country. But politically, that’s an extremely heavy lift. Protecting an existing welfare system which is under attack, while implementing an astonishingly new comprehensive, generous addition to that, without any negative effects on the existing system – I just find that very hard. |
Yes, that's the idea. No more statism, with the exception of a large, meaningful cash transfer.
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Q: So what are the merits of universal basic income?
A: We have a system that has high unemployment, high underemployment. This would allow people to survive and to live, with dignity, assuming that other systems stay in place. It puts a floor under wages — people could say, “I don’t have to do that job if you’re not going to pay well.” People could pursue a lot of activities that are not particularly well paid but that have a lot of social use or personal satisfaction: art, creative work, volunteer work, working with people who have disabilities.
So if we were a very rich world, which I think we are to a certain degree, it would be a remarkable way to make sure that people could maximize their ability to express themselves but also maximize their ability to participate in the communities that they live in in a full way. Stay home and take care of kids if that’s what you want to do. Take care of your parents when they’re old and sick.
People sometimes refer to this as a kind of “Star Trek” economy — you just said, “Replicator, make me a ham sandwich.” There wasn’t any social conflict around production and consumption. And that, I think, is that kind of ideal in which this kind of a thing could play out. We are probably there in terms of the economics. We are very, very wealthy — we could afford to do this. But we are not there in terms of the politics. |
I abhor how the rich in the United States squeeze the lower classes through high unemployment, forcing us to accept lower wages. Thus, universal income raises wages through placing prospective employees in a better bargaining position. |
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Titus
Joined: 19 May 2012
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| Posted: Sat Oct 12, 2013 7:49 am Post subject: |
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| Ya-ta Boy wrote: |
A not entirely unrelated comment:
Yesterday I spoke with a friend who has kept in contact with one of our former high school students.
Among the many John Birch Society scions we taught, BS was the most dedicated. BS became the father of 8 children. His eldest, a daughter, is now the mother of 7. So far. (Perhaps liberals need to re-evaluate their stand on abortion, etc. out of self-preservation.)
[Another former student has become a Sovereign Citizen, but that's completely and totally unrelated to the thread.] |
This is a completely unrelated comment. |
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Titus
Joined: 19 May 2012
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| Posted: Sat Oct 12, 2013 7:52 am Post subject: |
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| Kuros wrote: |
I abhor how the rich in the United States squeeze the lower classes through high unemployment, forcing us to accept lower wages. Thus, universal income raises wages through placing prospective employees in a better bargaining position. |
In a closed system, yes. The elite in the USA will simply import more workers though. A universal income can't work when you have open borders and tens of millions of low iq idiots flowing into the country. |
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Kuros
Joined: 27 Apr 2004
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| Posted: Tue Oct 22, 2013 7:35 pm Post subject: |
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| Titus wrote: |
| Kuros wrote: |
I abhor how the rich in the United States squeeze the lower classes through high unemployment, forcing us to accept lower wages. Thus, universal income raises wages through placing prospective employees in a better bargaining position. |
In a closed system, yes. The elite in the USA will simply import more workers though. A universal income can't work when you have open borders and tens of millions of low iq idiots flowing into the country. |
Yes, that must be unfortunate to be a continental European country which cannot attract and select the most promising immigrants.
At any rate, I did the math. If we were to set a U.S. minimum income at half of Switzerland's, or at $14,400 per year ($1,200/month), we would need to devote $4.32 trillion to this project. This amount exceeds the gross Federal tax revenue of the United States.
To be sure, a lot of this revenue is lost to soft minimum income tax expenditures, such as the EITC and the child tax credit. But even if these programs were eliminated in favor of a universal minimum income, that would absorb nearly 100% of tax revenues. There's no way to make this feasible without raising taxes on the middle-class. |
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Fox
Joined: 04 Mar 2009
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| Posted: Tue Oct 22, 2013 8:04 pm Post subject: |
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| Kuros wrote: |
At any rate, I did the math. If we were to set a U.S. minimum income at half of Switzerland's, or at $14,400 per year ($1,200/month), we would need to devote $4.32 trillion to this project. This amount exceeds the gross Federal tax revenue of the United States.
...
There's no way to make this feasible without raising taxes on the middle-class. |
So raise taxes on the middle class. |
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Titus
Joined: 19 May 2012
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| Posted: Wed Oct 23, 2013 2:06 pm Post subject: |
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| Kuros wrote: |
At any rate, I did the math. If we were to set a U.S. minimum income at half of Switzerland's, or at $14,400 per year ($1,200/month), we would need to devote $4.32 trillion to this project. This amount exceeds the gross Federal tax revenue of the United States. |
So issue the cash as new cash and smooth the business cycle (credit cycle). Had a national min income been in place there would have been no Great Depression 1 or 2.
All monies are currently created through the process of lending. A min income of freshly issued cash would really be useful. |
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Titus
Joined: 19 May 2012
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| Posted: Wed Oct 23, 2013 2:10 pm Post subject: |
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| Fox wrote: |
| Kuros wrote: |
At any rate, I did the math. If we were to set a U.S. minimum income at half of Switzerland's, or at $14,400 per year ($1,200/month), we would need to devote $4.32 trillion to this project. This amount exceeds the gross Federal tax revenue of the United States.
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There's no way to make this feasible without raising taxes on the middle-class. |
So raise taxes on the middle class. |
Why? |
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Fox
Joined: 04 Mar 2009
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| Posted: Wed Oct 23, 2013 3:55 pm Post subject: |
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| Titus wrote: |
| Fox wrote: |
| Kuros wrote: |
At any rate, I did the math. If we were to set a U.S. minimum income at half of Switzerland's, or at $14,400 per year ($1,200/month), we would need to devote $4.32 trillion to this project. This amount exceeds the gross Federal tax revenue of the United States.
...
There's no way to make this feasible without raising taxes on the middle-class. |
So raise taxes on the middle class. |
Why? |
Firstly, because consumption for consumption's sake is vapid, and the American middle classes are already pushing into that territory, which leaves me feeling zero concern about raising taxes on them (and even more sharply on the upper classes). Secondly, because although a basic income will reduce certain governmental expenditures and allow for savings, it won't eliminate all other governmental expenditures; if the current tax revenues aren't even enough to fund a $14,400 a year basic income in itself, what about the rest of the budget? Social Security can be dispensed with, but Medicare? Probably not, though maybe we could push prices down. We can seriously cut military expenditures and end adventurism, but we can't just abolish our army, so that's going to remain a non-trivial expense. If we want any sort of diplomatic presence that's going to cost something, the judicial system is going to continue to cost, and so on and so on. We can cut back on a lot, but there's still going to be other expenses.
Issuing new money at a reasonable rate is fine, but the ultimate difference between money printing and taxation is who it affects and to what degree. Money printing affects the poor more strongly, while progressive taxation affects the middle and upper classes more strongly. The middle and upper classes are better positioned to take the blow. Better to print enough to grow the money supply at a reasonable rate and make up the rest in taxes. |
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Leon
Joined: 31 May 2010
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| Posted: Wed Oct 23, 2013 4:01 pm Post subject: |
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| Fox wrote: |
Issuing new money at a reasonable rate is fine, but the ultimate difference between money printing and taxation is who it affects and to what degree. Money printing affects the poor more strongly, while progressive taxation affects the middle and upper classes more strongly. The middle and upper classes are better positioned to take the blow. |
And better positioned to influence legislation so that they will never take the blow, unfortunately. Cutting food assistance is considered politically viable, I mean if we aren't willing to fund that, I could only imagine how hysterical the reaction would be if anyone seriously proposed this for America. |
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Titus
Joined: 19 May 2012
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| Posted: Wed Oct 23, 2013 4:22 pm Post subject: |
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| Money printing affects the poor more strongly |
You refer to inflation. In our current system money is created through the process of lending and it is something called the reserve ratio/multiplier that explodes the monetary base.
Issue a minimum income in new dollars, paid monthly, and do the following 1) structure the new notes so that they can not be lent/borrowed (ie they can only be redeemed for goods by the person they were issued to) and 2) put an expiry date on them (2-3 months or so). Can not save, can not lend, can only spend.
The outcome will be a steady, predictable supply of non-inflation created or creating demand that will ensure the full end to absolute poverty and strongly diminished business cycles (which are actually credit cycles) that at the same time appreciates wages as it removes to ultimate bargaining power of capitalists (work or die).
Then, line up all the usurers and execute them. |
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Fox
Joined: 04 Mar 2009
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| Posted: Wed Oct 23, 2013 4:35 pm Post subject: |
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| Titus wrote: |
Issue a minimum income in new dollars, paid monthly, and do the following 1) structure the new notes so that they can not be lent/borrowed (ie they can only be redeemed for goods by the person they were issued to) and 2) put an expiry date on them (2-3 months or so). Can not save, can not lend, can only spend. |
So I go to the store, buy a can of soup with a dollar, and two months later that dollar simply ceases to be legal tender? How would a grocer even stay in business under such circumstances, with all their revenue expiring out of existence? Because people will spend their "new dollars" first and save their "non-expiring dollars," meaning the former will be strongly over-represented in payments. By contrast, if you allow the grocer to take the spent "new dollars" and redeem them for enduring money, you are back to inflation, since every "new dollar" will transition into an actual dollar after it is spent.
I am not an economics expert, maybe I am missing something here. |
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Titus
Joined: 19 May 2012
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| Posted: Wed Oct 23, 2013 4:55 pm Post subject: |
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The grocer would redeem the social credit dollars for normal currency after the point of sale. The whole program can be automatized similar to EBT cards.
In the end the dollars could be hoarded after they've been spend on goods. I could do your taxes and you provide social credits and at point of sale they're converted into normal currency that I may do as I please with.
The benefit of this is to strongly diminish poverty and smooth the credit cycle. |
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geldedgoat
Joined: 05 Mar 2009
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| Posted: Thu Oct 24, 2013 8:44 am Post subject: |
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| Titus wrote: |
| The grocer would redeem the social credit dollars for normal currency after the point of sale. |
From where does this redeemed currency originate? It wouldn't have existed without the addition of the temporary currency, correct? How is this not just kicking the inflation can one step down the line? |
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Titus
Joined: 19 May 2012
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| Posted: Thu Oct 24, 2013 11:51 am Post subject: |
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It would be best if currency were spend into the economy as equity rather than lent into the economy as debt. I'm half-ass describing so-cred under the guise of a min income.
Inflation is not a result of money printing (as our governments do not print money into existence) but money lending. If we decided to control the quantity of money and at the same time use a citizens dividend and keep the private banks all that is necessary to ensure the dividend doesn't cause inflation is to lower the reserve ratio. This limits how much banks can lend (meaning how much new money they create). |
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Kuros
Joined: 27 Apr 2004
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| Posted: Sun Nov 03, 2013 2:57 pm Post subject: |
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I saw a universal income proposal in theAtlantic, and instantly I knew that Titus would want to read it.
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How hard would it be, for instance, to cut official poverty in half?
Using the dataset from the latest Census poverty report, I determined that if we cut a $2,920 check to every single American—adults, children, and retirees—we could cut official poverty in half. Economists consider this sort of across-the-board payment a “universal basic income.” You can think of it as Social Security for all, not just the elderly.
The upside of giving everybody about $3,000 is that it’s a very easy policy to run and a surefire way to cut poverty in half. But it's a large program: it would require about $907 billion in 2012, or 5.6 percent of the nation’s GDP. (In a real implementation, we might exclude the more than 45 million Americans receiving OASI Social Security benefits from a basic income, bringing the cost down substantially.) |
$3,000/year seems comparatively modest in light of Switzerland's proposal.
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Could we afford it? Sure. For starters, we could raises taxes, first on the rich, who would pay more in new taxes than they would receive in basic income, and then on lower-middle class and poor families, who would come out ahead. There is also plenty of room to cut tax expenditures on homeowners, personal retirement accounts, capital gains exclusions at death, and exclusions on annuity investment returns. This submerged welfare state for the affluent costs hundreds of billions of dollars each year. There is also the matter of the $700 billion military budget, which could take some trimming.
The point is: this could be done. |
I do not agree with this part. Military cuts and taxes on the rich will not be sufficient to get us there. There will need to be cuts to social programs, although this is already happening under the dreadful sequester policy. Importantly, I think the Federal Reserve could just invent $1,000/year 300 million times and give it to every American citizen, in addition to taxing and spending to the other $2,000/year.
I also disagree that the universal basic income should be limited in any way, it should particularly be extended to those who already receive social security. Everyone should be a beneficiary, even the rich. We might, as Fox has suggested, attach some citizenship requirements to it, such as demanding that everyone register to vote. |
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