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[McTraveller]

Yes, I'm sure I want to keep using this same topic. Has it really been more than 4 months!?

Heading back towards the topic a recent Australian survey shows that the covid epidemic has increased support for the idea of a Universial Basic Income (to 58% up from about 50-51%, if memory serves).

https://www.abc.net.au/news/2020-12-11/survey-says-most-australians-welcome-universal-basic-income/12970924

In a bit of an overstatement the article opens with:

Nearly two-thirds of Australians say they would support the introduction of a universal basic income (UBI), according to a new poll.

Personally I think the political class has missed a huge opportunity to more to a UBI during the coronavirus epidemic, since the economy is already disrupted the opportunity cost of the transition is much much lower.

It should be noted that those groups that are most strongly opposed to UBI include (or are basically) the politicians, journalists and business people which is why despite decent popular support it is consistently trashed as an idea.

Why is it notable that people who oppose UBI are the ones that have to pay for it (politicians and business people)? I guess maybe it's notable that "journalists" are opposed, unless this meant "the media companies."

The more I think about UBI, the more I think it won't do anything unless we have a simultaneous change to other structural elements of the economy that weaken rent-seeking and other wealth-concentrating activities.  I also think that if you had those protections in place, we wouldn't need UBI in the first place.

So my "vote" would be to work to fix those systems, not try and cover over it by shuffling around dollars.  The main new thought that triggered this is the other thread talking about two-earner households, and why households still struggle with all the adults working.  That right there is a big piece of the evidence that supports the idea that you can't just give (at least the middle class) more money and have it not get eaten up by "inflation."

The only way to increase buying power is to have supply of goods and services increase faster than demand.  (Similarly, the only way to have a "basic income" is to guarantee that the supply of goods and services remains at least constant with respect to population growth.) 

This hints at a solution: instead of just throwing money around, we need incentives for people to invest in new production, not in rent-seeking.  Essentially something that charges capital holders who are not using their capital to increase productivity or at least buffer against shocks. What you don't want is a system that penalizes capital holders from being productive.

So put teeth back in the trust-busting legislation and enforcement, reduce copyright and other intellectual property duration, tax gains from "buying low and selling high" heavily. Levy fines or something if you increase rent but refuse to build new properties. Stuff like that.

[feelotraveller]

Why is it notable that people who oppose UBI are the ones that have to pay for it (politicians and business people)? I guess maybe it's notable that "journalists" are opposed, unless this meant "the media companies."

It is notable because the impression that UBI is unpopular comes from the voices that dominate public discourse rather than what the majority of the public want/thinks.  The notion that somehow politicians are going to take a pay-cut so that UBI happens is laughable (not suggesting that this is quite what you meant... but what did you mean?) and it does not make sense to me that business people would lose either.  Their lives will improve (statistically at least) along with everyone else.  Business itself would transition, not sure how to quantify it in business terms but in social terms it would be a very much better thing.

The problem is conceiving of the economy as driven by production.  It's not.  Rather consumption drives modern economies.  This is why advertising is such a fact of life - it produces nothing but a desire to consume.  UBI entails a massive increase in spending power since it raises a whole cohort above the poverty line, and also allows many others to divest from costly endeavours that effectively keep them in poverty (the working poor).  It also entails a shift in 'what' is consumed, closer to what aligns to peoples real desires, since if basic needs are covered people get to choose what it is they want to focus on.  Giving money to the poor drives consumption because they spend it and it flows around: conversely giving money to the rich stifles the economy since they do not spend it.

It also entails very real, and quite massive, savings in the administrative overhead given to running unemployment benefits, income support and other community welfare schemes.  All of which achieve nothing except a manipulative intrusion into peoples lives.  (If it costs anything it's the inputs into the war machine of the authoritarian state, and I for one am happy to pay that cost since I only plan to get nuked once anyway.  )

Rent-seeking only works where a group have the exclusive control of the capital to seek rent on in the first place.  That capital is accumulated by forcing people to work for the rent-seekers.  Sure UBI alone will not solve that problem but it does emmancipate a large section of the population from working on the chain gang and continually making things worse.  It opens the door for a viable sea-change in behaviour such that 'more' is not always better - in the above survey about 30% of people said that they would pursue creative endeavours, take up exercise, spend more time with family or volunteer in the community if a UBI was introduced.  They all sound like healthy activities, both for individuals and for social whole, to me. 

[Loud Whispers]

This begs the question then; why are our current crop of political leaders so averse to UBI and so dogmatic in their love for free market darwinism?

[McTraveller]

Sorry I thought it was obvious my question about "why is it notable..." was rhetorical.

I just don't believe that UBI can bring people above the poverty line; I posit UBI will shift the poverty line instead, consuming as much of UBI as it can.  Until you put in place enforced laws that prevent capital holders from just rent-seeking all the UBI, it's going to be second verse same as the first.  Also the claims of "but UBI is cheaper to administer than welfare" are spurious - the general public is not going to benefit from those savings; the tax funds are just going to be sent somewhere else.

Yes I'm that cynical

[thompson]

Personally, I’d be in favour of a tax surcharge on capital gains. So, if you’re tax rate is 25%, you pay 25+5% on capital gains. Could be extended to all passive income. It would be easier to implement than a wealth tax as you already give all this information to the tax office and don’t need to worry about estimating value of privately held assets, they just need to change the equation slightly.

[McTraveller]

I think "in principle" I agree with "add extra tax for passive income" but defining that is really difficult in a way that punishes abusers but still lets "the little guy" do things that would benefit them.

For example, I would tax any gains from "buy low and sell high" - especially in cases like where people buy up a supply of an in-demand item simply to sell it above "retail" price.  I think I might perhaps define this as "if you sell something for more than you paid for it, in excess of inflation" then that is subject to the tax.  So if you buy a house and 10 years later sell it for 30% more, you don't get taxed on the gain, but if you sell it 5 years later for twice what you paid, you get taxed a ton (this is vastly different than today's common housing laws which give you something crazy like $500k in appreciation tax-free, regardless of time period).

I would not want to add the surcharge to "traditional" dividends though - if you are getting a portion of profits from a productive enterprise, you don't want to tax that because it is taxing productivity.  You've got to be careful though, because you don't want people to hide gains from "buy low sell high" as a type of profit that is distributed as dividends.

There are many other "tricky" situations though - which is why the tax code is so complex...

[thompson]

I know what you mean, but I think it’s impossible to separate productive from non-productive gains. I’m hoping we can at least agree wages are going to be more productive than passive income. Reform to capital gains tax is definitely a winner in my books too. I guess I’d also like to see income taxes lowered for all but the highest tax brackets with the lions share of taxation going on passive gains. The system needs more reform than that, but I feel it’s workable and mostly agreeable.

[feelotraveller]

This begs the question then; why are our current crop of political leaders so averse to UBI and so dogmatic in their love for free market darwinism?

I am demonstrably bad at detecting rhetorical questions - this is one one, isn't it?  Anyways just in case - a large proportion of the funding for political (re)election campaigns comes directly form corporate coffers.  Politicians also come almost exclusively from a privileged strata which benefits from the exploitation of cheap labour. There are also deeper reasons involving marriage to the 'growth at all costs' paradigm: the pyramid must grow! - but I'm not gonna write a treatise here.

I just don't believe that UBI can bring people above the poverty line; I posit UBI will shift the poverty line instead, consuming as much of UBI as it can.  Until you put in place enforced laws that prevent capital holders from just rent-seeking all the UBI, it's going to be second verse same as the first.  Also the claims of "but UBI is cheaper to administer than welfare" are spurious - the general public is not going to benefit from those savings; the tax funds are just going to be sent somewhere else.

Hence there is no point in any tax reform/income redistribution at all since on one hand the rent-seekers will just gobble up any increase in personal income* and on the other from the overall tax pie the 'correct' amount will always be 'sent elsewhere' (at least until the point where there is bugger all tax pie left).  That's using a ballistic missile to squash a fly if I've ever seen it.    (=Says nothing about UBI at all...)

As for the 'rent-seeking' stuff how the hell are traditional dividends not a classic example of it? 

More deeply I don't know how one can distiguish profit-seeking from rent-seeking in any rigorous way in the real world - the wage relation itself is a form of rent-seeking since the printers are deprived of part of their labouring efforts by the owner of the printing press; the waitress by the cafe owner; and the cafe owner by the mega-corp franchise.

Beyond any economic (read narrowly as monetary) relation one thing a UBI does is to free up the time investment otherwise demanded by wage labour.


* I blame Karen.  She is always the one saying, "We bought a hummer this year, what did you buy?" in pointed tones.

[McTraveller]

Resurrecting this thread due to recent pontification.

I had a random thought this weekend while mowing my lawn: should economic activity that doesn't involve direct trade be counted toward GDP and standard of living metrics?

If I pay someone to mow my lawn, that technically gets counted as GDP.  But if I just do it myself - how does that factor in?  I'm doing "valuable work" but there's no trade.

Does this mean that GDP of many nations is undercounted - specifically those nations where most people just do their own subsistence work, without trading?

[martinuzz]

How about people who cook their own food every day instead of ordering pizza or going to a restaurant?

[McTraveller]

Exactly.  Stay-at-home childcare / elder care is also a huge one.

[voliol]

The question is how to correctly measure that, how much worth is the labor of cutting one’s grass, or making a meal, if no one is getting payed for it, thereby cementing a kind of measurable value, the ”market value”? Actually, what’s to say market value is a good way of calculating GDP? A school cafeteria and people cooking lunch boxes both provide the service of getting people lunch, but if you count the market value the private lunch boxes are much more expensive because the cafeteria can buy ingredients in bulk. So lunch boxes have a higher market value despite providing the same service. If taken at face value, that would mean inefficency ups the GDP.

...Or is market value used for calculating GDP? I was taught the kind of lazy ”it’s the sum of the economy” in high school, and never thought about it much further than that. It seems like an nearly impossible task to calculate.

[NAV]

Hours of work × minimum wage could set a reasonable baseline estimate for the stay-at-home GDP. Most of the jobs that are being DIYed are low paying jobs at or near minimum wage.

[Vector]

There's a feminist who suggests that a monetary value be placed on housework + childcare so that more women could participate in a regulated labor market and enjoy workplace protections/make use of existing labor law

[martinuzz]

I foresee troubles with workplace safety inspectors. "No children on the workfloor!"