Increasingly my thought is that UBI or a minimum living wage (enforced perhaps through an employer of last resort who sets an effective wage floor) must be balanced by a tax on economic rents, else the gains simply flow to rentiers. This is a "land tax", but writ large and applying across all (or most) rent-seeking goods, including especially productive (as distinguished from strictly financial) asset classes. In the…
The latest experiment in basic income will be coming to Stockton, California
101–110 of 120 posts
Re: The latest experiment in basic income will be coming to Stockton, California
#102Earlier quoted context omitted.
If I am understanding your argument, it is a sort of 'thermodynamics' argument against UBI. It argues that there exists a fixed supply of capital and that transfer payments funded by taxes are always counter balanced by an increases in prices to keep capital supplies in balance. If that isn't a correct interpretation of your argument, then the rest of this won't make a lot of sense. The reason this sort of thermodyna…
Alt-Bob will still be on min wage and still anxious and fearful due to inflation. And why do you think Govts will do better job at identifying/investing in potential productivity than rest of the market ?
Things like rent and certain utilities I can understand this might happen to but a mass devaluing of a currency just because the flow of money is routed a little different doesn't smell right to me.
Re: The latest experiment in basic income will be coming to Stockton, California
#103Earlier quoted context omitted.
> Charity is not a legitimate role for government. Charity is the raison d'être of government. A government is there to run your society. That means doing things for people, even if it's just printing passports and employing a police department.
> printing passports and employing a police department. You’re just making up an alternate definition for charity - that isn’t a valid argument.
I am playing a little fast and loose with the definition of charity, yes, but so is the OP. "Charity" isn't "free money for you to play with" (that's "philanthropy"), it's "giving help to those who need help". Governments in the developed world have significant welfare costs, so it is just plain wrong that charity isn't the role of government.
Re: The latest experiment in basic income will be coming to Stockton, California
#104Earlier quoted context omitted.
That's why UBI (or other mechanisms for assuring minimum living wages) will almost certainly have to be accompanied by land tax and other taxes on rent-generating assets.
Wait, so not only does everyone have more money to spend on rent but it now costs more to maintain rental property? You’re just guaranteeing that rents will rise dramatically.
Economics rents (not strictly the same as the money paid in rent. It is the return above costs that accrue to the supplier rather than renter of the property. The net problem is the combination of the two phenomena David Ricardo noted:
1. The iron law of wages: wages tend toward subsistence level. https://en.m.wikipedia.org/wiki/Iron_law_of_wages
2. The law of rent: the rent of a land site is equal to the economic advantage obtained by using the site in its most productive use. https://en.m.wikipedia.org/wiki/Law_of_rent
Given the latter, rent is determined by economic benefit, not by the cost of provision. A land tax, set to the difference between the value of utilisation and the cost of using the land, secures that surplus value to the state. (You'd want to leave "normal economic profits" to the landlord.)
The effect of this is to introduce a carrying cost, to the landlord, on the value of the land. The price of the rent itself is bound by the beneficial use (say, 30% of prevailing wages). If someone cannot afford to pay that amount, they will seek alternative accommodations, or move out of the area. Any landlord charging more than that amount will have no takers (rational actors, long term), if the number of units on a property isn't sufficient for the landlord, the alternative is to increase density (build higher, smaller, or occupy more of the land space).
Meantime, the tax revenues go to fund urban services.
In much the same way, raising wages does not increase prices, but rather secures more of the manufacturing profit to labour rather than owners, as prices are established by the overall market (net of imports from elsewhere).
That's the principle of Georgism.
https://en.m.wikipedia.org/wiki/Georgism
More generally: if you go back to the classical economists (Smith, Marx, Ricardo, Malthus, Mill), you find a number of distinct classes of goods being transacted. Generally (and adding a few):
1. Commodities.
2. Labour.
3. Capital.
4. Rents (monopolies).
5. Interest (and risk).
6. Investment assets.
8. Natural resources.
8. Public goods.
(Subject to possible consolidation / reordering, though that's the gist of it.)
Quite significantly, each of these has specific behaviours in terms of pricing, most specifically as to the relationships of the true economic cost of production (cost), the true economic value (value, for which I don't follow Bentham's Utility theory), and exchange price (price).
The ideal, as Smith notes, is for price to approach the long-term true economic cost, but in the case of the goods classes listed, that's frequently not the case (also noted by Smith). Marginal analysis describes this in terms of market function, though that misses critical elements, including market failures and distortions.
Re: The latest experiment in basic income will be coming to Stockton, California
#105Increasingly my thought is that UBI or a minimum living wage (enforced perhaps through an employer of last resort who sets an effective wage floor) must be balanced by a tax on economic rents, else the gains simply flow to rentiers. This is a "land tax", but writ large and applying across all (or most) rent-seeking goods, including especially productive (as distinguished from strictly financial) asset classes. In the…
Such a tax would only increase rent - most landlords don’t run on huge margins, and those that do aren’t going to just give them up.
That understanding is incorrect.
Most particularly, landlords themselves are paying rent in the form of interest. Property values would tend to fall.
Re: The latest experiment in basic income will be coming to Stockton, California
#106Earlier quoted context omitted.
If I am understanding your argument, it is a sort of 'thermodynamics' argument against UBI. It argues that there exists a fixed supply of capital and that transfer payments funded by taxes are always counter balanced by an increases in prices to keep capital supplies in balance. If that isn't a correct interpretation of your argument, then the rest of this won't make a lot of sense. The reason this sort of thermodyna…
No, it's an inflation argument against UBI. If everyone has more money, everyone becomes less sensitive to increases in prices, and therefore prices rise into the new equilibrium. (Increase in demand without a corresponding increase in supply leads to an increase in the price level, in intro microeconomics-ese). Now, the price level may not rise to the exact level where it cancels out the entire UBI, but that's based…
Re: The latest experiment in basic income will be coming to Stockton, California
#107The problem with UBI is that it doesn't promote social behavior. In fact it promotes anti-social behavior, since a UBI recipient need not provide any value to his community as a condition of this benefit. Charity is not a legitimate role for government.
[1] (German source) https://de.statista.com/themen/71/ehrenamt/
Re: The latest experiment in basic income will be coming to Stockton, California
#108One of the things about UBI is that these pilot programs aren't UBI, because they aren't universal. Giving a segment of the population free money is going to benefit that segment, no question. Welfare and Quantitative Easing are both examples of that. But when you make it universal, my economics intuition says that the effect will be washed out by a commensurate rise in prices. Or put another way, you can subsidize t…
Re: The latest experiment in basic income will be coming to Stockton, California
#109Increasingly my thought is that UBI or a minimum living wage (enforced perhaps through an employer of last resort who sets an effective wage floor) must be balanced by a tax on economic rents, else the gains simply flow to rentiers. This is a "land tax", but writ large and applying across all (or most) rent-seeking goods, including especially productive (as distinguished from strictly financial) asset classes. In the…
Such a tax would only increase rent - most landlords don’t run on huge margins, and those that do aren’t going to just give them up.
Re: The latest experiment in basic income will be coming to Stockton, California
#110Earlier quoted context omitted.
Jesus Christ this is a really thought provoking image of capitalism at the limit.
i think it's basically why the black death raised wages for its survivors
That is, bad news (famine, war, plauge, natural disaster) ultimately reduces populations and increases living standards. Good news (peace, prosperity, plenty) increases populations and pushes them up against carrying capacity.
Cf, Gregory Clark, A Farewell to Alms, though I believe it's pretty common.