Universal Basic Income vs Negative Income Tax

[LongTomH]

There are, of course, various permutations of both possible systems. Eventually, it will be necessary to implement one or the other.

[wasupaloopa]

1. I don't understand the reasoning behind it.

Today universal basic income is zero.

Say cost of living is X. Base line is zero

Add a universal basic income of $5,000

New base line becomes $5,000

New cost of living becomes X+$5,000

Since everyone has $5,000 to spend demand increases and producers raise prices. In other words. Prices become inflated or inflation happens.

Basically things remain the same but at a higher level.


The basic income theory assumes prices will remain the same as before the basic income was paid. Or price controls

That goes against simple economic theory

[LongTomH]

2. I'll let someone with more of an understanding of basic economics reply.

For myself, I don't see that a rise in inflation necessarily follows from a rise in basic income.

As more and more goods and services come from robotic or artificial intelligence systems, costs of those goods and services should drop as the cost of labor is removed from the equation.

[wasupaloopa]

3. The other basic economic theory is

the money has to come from somewhere.

If there is no labor but there is robotics who has capital to build robotics?

Who earns money so they can be taxed to provide the basic income?

I think basic income proponents do not see The whole picture.

Why would someone want to expend capital to provide goods that result in income that is taxed to provide income to those purchasing the goods. They would be better off doing nothing.

The goods get consumed and need to be replaced.

At some point the capital will run out since the return is taxed which becomes the income to purchase the goods. More and more capital is needed but it isn't an infinite supply.

Eventually the system will grind to a hault

[DBoon]

4. You are right, basic income is a massive transfer from capital to labor

specifically including the underemployed and unemployed who are so essential to keeping wages down and profits up

The owners of capital are the beneficiaries of automation, automation is the replacement of live workers with capital good.

[wasupaloopa]

5. The problem is only the producers are contributing.

Those with basic income are only consumers. They pay no taxes thus they contribute nothing to the the pot the basic income comes from.

Since goods are consumed and need to be replaced the amount of capital needed to replace them eventually runs out.

It is not like a perpetual motion machine.

[yallerdawg]

7. Wrong.

Everything we buy (consume) is taxed. The less we buy, the less taxes as well as the less products produced.

Universal basic income is from surplus profit, not from the cost of goods consumed.

A robot or computerization produces "goods" without the old standard of "labor cost" but does not buy or consume the "goods."

Who will buy the goods if there is no one to consume them?

[wasupaloopa]

9. I am not wrong, you just leave out the inconvenient factors.

There is more to production than labor costs.

You even leave out the cost of the robotics as if it were non existent. Just to point out one item

[yallerdawg]

10. The capitalists are pocketing labor cost savings and more efficient productivity increase as profit.

If it were cheaper to use us, we would still be working!

It has never been better to be filthy rich!

Unless human beings are considered more than "surplus" with no value other than as a means of productivity, we will need some kind of basic income or there will be no need for human beings!

[wasupaloopa]

12. Here is the thing. Unskilled labor and many skilled jobs are gone never

to return. Available labor is outstripping available demand. Many new jobs do not pay a living wage.

So we know we need a new model. Guaranteed income seems to be an easy fix.

People latch on to it and develop a rational argument in its support.

My thinking is the universal income is vastly more complicated than its supports understand.

I would rather we have expert input than the idealist vs pragmatist arguments we have.

Same goes for single payer and free tuition.

[yallerdawg]

14. It's coming.

Just a polite way for the 'have-nots' to take back from the 'haves.'

[Bernardo de La Paz]

16. Yes. It is a fundamental way to reduce the society-busting levels of income & wealth inequalty.

There will be violent revolution if it gets much worse than it is now. I don't know how much worse it would have to get first. But it needs to be fixed and will be peacefully or violently. It is a choice a democratic society must make (peacefully) or the alternative is a mess for everybody.

[Bernardo de La Paz]

15. Wrong.

You are making so many errors in your assumptions that it is no wonder you are confused.

Basic income goes to everyone. It goes to producers and consumers.

Basic income goes to everyone whether they pay taxes or not.

It's negative income that goes essentially to people who pay no taxes (on a sliding scale).

Not all goods consumed need to be replaced.

Capital is produced. Capital does not run out. Capital increases as the total value of existing goods is increased.

It is not a perpetual motion machine. That is because there is input of labor and innovation and discovery (of resources) all the time; analogous to energy being put into a machine.

[Bernardo de La Paz]

13. You're confused about basic economic theory.

Money comes from the government. They can create it anytime they want. Like "Quantitative Easing" for example.

What you are saying "has to come from somewhere" is value.

Further, capital already exists. It is not as if there is zero capital in the world or the country right now. Lots of people have the capital to build robotics now.

Why would someone want to expend capital to provide goods that result in income that is taxed to provide income to those purchasing the goods. They would be better off doing nothing.

That is the situation now. For example, agribusiness spends capital making food goods and the income (profit) from that is taxed to provide income to people on food stamps. You are assuming that the only source of income is basic income.

When you are confused, check your assumptions and your chain of reasoning. Look for holes and leaks, too.

[Bernardo de La Paz]

11. Your steps go off the rails with "cost of living X + $5000". That violates the definition.

Giving or returning money does not increase the cost of living.

Besides, you haven't defined "base line". Baseline for what?

Straighten those issues out and we can help you.

[wasupaloopa]

17. You are putting money into circulation that wasn't there. You are creating more demand.

You have more dollars chasing few or the same amount of goods. Prices rise thus the cost of living rises.

The base is where income and savings are equal. It could be zero or higher. Since with basic income makes income go up but savings does not go up at the same level the base rises equal to the new income. ( we are assuming that those needing basic income do not save it but spend it.)

[Bernardo de La Paz]

18. You're still not clear. If you want to argue from your initial set of steps you have to clarify them

[Stonepounder]

6. It seems to me that you start with the premise that everyone deserves a certain, basic

income. Whether they are washing dishes at the local greasy spoon, frying burgers at McDonalds or not working at all. If they want to raise their standard of living they can look for other opportunities to earn more money.

Mrs. Stonepounder and I live fairly comfortably on our Social Security. We don't live in a McMansion, we drive a 10 year old car, but we have the income to keep our dogs and ourselves healthy and well fed, we have a roof over our head, and enough money left over for Mrs. Stonepounder's quilting and for me to buy a new computer game now and then. There are enough 'Now Hiring' signs around that if either of us wanted to have more disposable income we could certainly find a job.

When I was RIFFed at age 60 I could have kept on working, making a tidy income consulting, as I was well-known in my field. Instead we decided to live on my unemployment until I was old enough for Social Security.

So, you allow people who want more than 'basic income' to earn more and the ones who don't not have to. As has been mentioned above, robots are replacing more and more workers. I would speculate that Amazon will be cutting its warehouse staff drastically in the next 10 years as robotic picker/packers replace humans. Same with the trucking industry as driverless vehicles come into their own. They are already experimenting with employee-less fast food restaurants. Look at assembly lines in Detroit and how they have become automated.

So, basic income could work. Of course there will still be a need for regulations and limitations. I still have never figured out why the Waltons feel the need to have billions of dollars. What good does it do you to have more money than you could possibly spend in several lifetimes? The Walton family is worth an estimated $145 billion. If you just took that, stuck it in the bank at 2% interest, it would return almost $3 billion a year. How in the world do you spend $3 billion a year? The money becomes meaningless other than a way of keeping score. It has no more value in daily life than Monopoly money. So, tax the hell out of it, take the taxes and fund the basic income.

[wasupaloopa]

8. They will not produce if you are going to take it away.

The Waltons with all their money cannot supply all of us with a basic income.

The cost of goods would have to be high enough to supply profit, taxes and income to those who do not protuce or add value.

[Stonepounder]

19. You do realize that during the Eisenhower years, the top marginal tax bracket was 92%

and the economy was booming, right?

I wasn't suggesting that the Waltons supply everyone with a basic income, I just said that having $150 billion was more than any family couple possibly spend, even in several generations.

[tclambert]

20. Basic economic theories based on capitalism fail when you no longer need human workers.

Pretty soon now, machines, computers, robots will be able to do everything human workers can do, including hard stuff like medical diagnosis. (A computer beat the human chess champion and a different computer beat the best Jeopardy players in the world.)

So why should the owners of the robots have their robots produce anything for former working class people who no longer have any work of value to trade for food and fidget spinners? They might as well have the robots harvest just enough raw materials to make the stuff the robot-owning population wants, and let all the worthless non-robot owners starve.

That seems inhumane.

Or we can set up a game where every turn, the dealer hands out a certain amount of game dollars to every player. The players who don't own robots can spend their money buying things from the robot owners. The robot owners will amass a great deal of game dollars that they can spend on necessities and luxuries, maintenance of their robots, and newer, better robots, all of which they purchase with game dollars from other robot owners. Every turn, the dealer distributes more game dollars that comes from . . . thin air. It's not backed up by gold or units of work or anything. It's just for keeping score.

Some top robot owners, perhaps the owners of robots that make other robots, will collect huge amounts of game dollars, far more than they can spend. Chances are, they will still play the game, and collect as many surplus game dollars as they can just because it makes them feel like they are winning.

Maybe every trillion surplus dollars can be traded for a special medallion that conveys a certain level of status. At the end of the game, the one with the most medallions wins. (Hint: the game may never end.)

This suggested game to replace traditional capitalism took about ten minutes to invent. I'm sure game theory mathematicians could come up with a more rigorous game if they thought about it for say, eleven minutes.