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Capitalism Has Gone Off the Rails

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Re: Capitalism Has Gone Off the Rails

#301

Post by unprepare »

msandford wrote: post #278
unprepare wrote: post #252

Earlier quoted context omitted.

lets think about it. Basic income is implemented tomorrow. First, only the people making up to the amount of the basic income would be willing to quit their jobs - anyone making more than needed to survive would certainly continue wanting to maximize their earnings. We would then have a vacuum of a large number of poorly payed jobs that are now in demand - would this not immediately raise the wages for these jobs? Wo…

> First, only the people making up to the amount of the basic income would be willing to quit their jobs- anyone making more than needed to survive would certainly continue wanting to maximize their earnings You've made two assumptions here: 1. People are ENTIRELY rational (they're not) 2. No black market exists If you could guarantee that those conditions could be met, I would be much more willing to engage in the r…

>In order to be useful the basic income has to be a substantial fraction of the median income

Woah thats a pretty crazy assumption - basic income only needs to provide enough income for basic needs to be useful - are you trying to say that the median salary in the US is the bare minimum to meet necessities? Median income is the amount which divides the income distribution into two equal groups, half having income above that amount[1] currently the median household income is estimated to be $51,371 - if you think that this is the MINIMUM amount of basic income for the program to be useful then its clear you have a core misunderstanding of basic income at its core.

>What I mean is that say $2000 for 0 hours worked in a month is very nice, and $2020 for 1 hour worked is at least in percentages, infinitely less desirable.

You say that people are not entirely rational at the beginning of your comment, yet you are now assuming they are - many people enjoy work, do you think PG only does ycombinator purely for the money? warren buffet? does tom cruise still act only for the paychecks?

Also, you are missing another key point of my last comment, and that is that the price of labor will rise. I agree that working for 20 extra dollars isnt going to seem as worth it when you already have enough to serve your needs - that is the whole point. wages will rise, people will be choosier about what work they are willing to do, and the less desirable jobs will have to pay more - that is how simple supply and demand work

>EDIT: I forgot to touch on the black market. If a person wants to accumulate income it might be better to do so on the black market. That allows a person to avoid high taxes (basic income has to come from somewhere, that somewhere is always proposed to be higher taxes). That makes the black market (or working "under the table") attractive. The shadow economy of Europe is already by one estimate 17% of the total economy. Basic income would further encourage such things:

First, you are somehow overlooking that the incentive to work under the table is already there, yet the vast majority of workers do not get paid cash under the table - it is in both the employer and employees interest to subvert the tax system for wages already yet this isnt happening - what makes you believe that this would so dramatically change that MOST of the labor market chooses this option?

This is to ignore that fact that there are regulatory bodies that actually enforce this, and will go to job centers to make sure employees are being payed legally - this happens all the time and is a common method is trying to find illegal aliens (I have years of experience cooking in restaurants where i have seen this first hand many times)

I appreciate the discussion thanks

[1]http://web.archive.org/web/20060922200944/http://www.busines... [2]http://www.census.gov/prod/2013pubs/acsbr12-02.pdf

Re: Capitalism Has Gone Off the Rails

#302

Post by msandford »

unprepare wrote: post #301
msandford wrote: post #278

Earlier quoted context omitted.

> First, only the people making up to the amount of the basic income would be willing to quit their jobs- anyone making more than needed to survive would certainly continue wanting to maximize their earnings You've made two assumptions here: 1. People are ENTIRELY rational (they're not) 2. No black market exists If you could guarantee that those conditions could be met, I would be much more willing to engage in the r…

>In order to be useful the basic income has to be a substantial fraction of the median income Woah thats a pretty crazy assumption - basic income only needs to provide enough income for basic needs to be useful - are you trying to say that the median salary in the US is the bare minimum to meet necessities? Median income is the amount which divides the income distribution into two equal groups, half having income abo…

Thanks for being civil about this.

When I stated "substantial fraction" I guess what I mean is that it's at least 20% or 40% or something. A basic income of 5% of median personal or household income is going to be little more than a sick joke. Note I didn't say "exactly the same as" but rather "a substantial fraction"

To compare people who make millions of dollars a year to people who are eking out subsistence wages is a mistake I think. These people tend to be highly motivated and thus for them it's often not strictly about the money anyhow, but the money sure is nice as it affords them the ability to work on the thing they're passionate about. When you're making $9/hr at mcdonalds I suspect that passion has less to do with it and a need to eat and have shelter is a bigger factor.

The higher taxes go, the more incentive there is to work under the table. I don't know if the black market in the US is bigger than in Europe, but I can tell you that in the US taxes are lower and so there's less incentive. I agree that policing can do a fair amount, but what if you push people into entirely invisible jobs? It doesn't have to change MOST of the labor market, but if right now the black market is 10% of GDP and the taxes rise enough to push it to 15% or 20% then you're growing crime. I don't think that's a good outcome.

Now a great question to ask is which is worse? Would it be worse to raise crime and have a basic income? I don't know. Trying to think about the unintended consequences of policies is really hard, so few do it. I think that's part of the reason our laws tend to be so full of obvious loopholes.

Re: Capitalism Has Gone Off the Rails

#303

Post by JoeAltmaier »

msandford wrote: post #292
JoeAltmaier wrote: post #289

Earlier quoted context omitted.

Not about purchasing power. About the value of money. That's not gonna change by fooling with 1% of the availability. The reason so many are unemployed, after all, is that it takes fewer people to sustain a given 'standard of living', right? So now, with our free market, those unemployed drop into poverty since their bank account of imaginary points goes to zero. Put points back into those bank accounts, and what hap…

> Not about purchasing power. About the value of money. The value of money is directly derived from its purchasing power. If you can't buy anything with money, it's worthless. The point is that the vast majority of the money in the US is in flow, not tied up in the rich 1% bank accounts. So if 95% of people suddenly have 2x cashflow (on average, let's say) then prices should roughly double within a fairly short perio…

That's all classical economics, but it assumes people spending money is the whole economy. These days, it isn't. We're a pimple on the spreadsheet of America.

Re: Capitalism Has Gone Off the Rails

#304

Post by mattmcknight »

psychometry wrote: post #33
mattmcknight wrote: post #27

Earlier quoted context omitted.

This is not an important article, it is a rant against people with "tacky mansions", a turn of phrase that is more indicative of the author's point of view than the other conventional points about not understanding creative destruction. I think it is this overly nationalist view of economics that needs to die, not "capitalism". There is not less productive work to go around, it's just not being done in the US. We are…

A third of the population in the richest nation on earth lives in poverty. According to you, that's not a problem because even poorer people in Bangladesh are slightly less poor than they would be if American companies had never employed them. What kind of callous person could look around at all the suffering and think this system's working great? Or do you not look around at all, holed up in a tacky mansion of your…

>A third of the population in the richest nation on earth lives in poverty.

It's not 1/3, and poverty is a relative term, but really the fraction doesn't matter.

"The Census Bureau today released data indicating that the overall poverty rate in 2013 was 14.5 percent – a decrease from 15.0 percent in 2012. This change was the first decrease since 2006." http://aspe.hhs.gov/hsp/14/PovertyAndIncomeEst/ib_poverty201...

The US poverty rate does not include the price of non-cash government benefits. The average cost per Medicaid enrollee, which all people at the poverty line qualify for by income, in all states, is $5,563. It doesn't include food assistance. It doesn't include housing subsidies. These vary, but are widely received.

>What kind of callous person could look around at all the suffering and think this system's working great?

What kind of callous person could think helping a person with more money in a country that provides them numerous benefits is better than helping a person with less money?

"Or do you not look around at all, holed up in a tacky mansion of your own?" I have traveled the world many times over the past 20 years. The positive change I have seen world-wide is perhaps invisible to you because you choose to focus on actions which cause others to consider you to be helpful, instead of actions which are actually helpful.

My house may be slightly tacky.

Re: Capitalism Has Gone Off the Rails

#305

Post by JoeAltmaier »

DanBC wrote: post #283
JoeAltmaier wrote: post #202

Earlier quoted context omitted.

Move. Get a job, any job. Don't spend any (much) money. Work to get a better job. And what's with the debt-but-no-education? How was that supposed to work? One or the other.

I'd be interested to see how quickly you could get a minimum wage job. I'm not sure there's an ethical way to set up the experiment where you apply for a bunch of minimum wage jobs to see which ones you can get; and I doubt there's a way you can spend the time to do it. But I'd be really interested to know if you could get a minimum wage job within a fortnight.

Yeah everybody is all about 'job creation' etc. I've never had a job that existed before I had it. You find a problem to be solved, you can start solving it for money.

I live in a small community. Most of the families are self-employed. Who created their job? They did. Didn't wait for some company to decide they were worth paying.

So I have a problem with folks that wait for somebody to make a place for them. That's no way to run your life.

Re: Capitalism Has Gone Off the Rails

#306

Post by seanflyon »

msandford wrote: post #296
seanflyon wrote: post #295

Earlier quoted context omitted.

According to some quick Googling "wealthiest 1 percent of Americans control 35.6 percent of the total wealth of the country" "the top 1 percent of income earners took home 17.67 percent of the total income" http://money.howstuffworks.com/one-percent-control-third-of-...

Okay, but what is the overlap between those two groups? Are the top 1% of income earners exactly the same people as the wealthiest top 1%?

I think it's safe to assume there's a high degree of overlap, but I don't see the relevance of that question.

Re: Capitalism Has Gone Off the Rails

#308

Post by stephenbez »

ap22213 wrote: post #200
JoeAltmaier wrote: post #198

Earlier quoted context omitted.

And yet, I can't shake the feeling that if you took away all my money and property, I would be employed and back in an apartment in a month. What's a guy to think, when folks complain about how its too hard to move, to get an education, to save money, when I know I can do it? Its hard to empathize with people with an outlook so different, that they can't imagine working their way out of poverty. Because I can.

Well, we could always do an experiment to see if you're right. Let's assume that you aren't able to use any existing education or connections, you start off with significant debt, and you are located in an area with high unemployment. If you are able to be back in your apartment in a month, I'll eat this computer. Edit: If we threw the idea up on kickstarter, I'm sure that there would be more than enough support to p…

Someone did this experiment and wrote a book about it:

Scratch Beginnings: Me, $25, and the Search for the American Dream

http://www.amazon.com/Scratch-Beginnings-Search-American-Dre...

Re: Capitalism Has Gone Off the Rails

#309

Post by lispm »

jvm wrote: post #264
lispm wrote: post #175

Earlier quoted context omitted.

While adding 20+ million people from a collapsed economy and rebuilding much of that.

That happened 25 years ago. I was only meaning to reference growth since 2008. it's not clear why recent growth should be impacted by an ancient supply shock. The same country's economy grew at double digit rates while recovering from their entire country being leveled to the ground. [1] It's not clear that supply shocks [necessarily] suppress growth at all. [1] http://en.wikipedia.org/wiki/Wirtschaftswunder

25 years is a very short time to rebuild a collapsed economy. We still pay for the East. Unemployment in the East is still high. We pay for pensions. There is payment between the German states, called 'Länderfinanzausgleich'. Not one eastern state in Germany ever has paid any money into it. There is some improvement in their financial situation, but it is far from self-sufficient.

Re: Capitalism Has Gone Off the Rails

#310

Post by dllthomas »

msandford wrote: post #199
zanny wrote: post #77

Earlier quoted context omitted.

> We have no successful model for dealing with this. Canada seems to have had pretty good success with that basic income town. And no major western democracy has really attempted it yet. I like it because it lets you have a completely deregulated economy, because both employer and employee would be participating in voluntary negotiation without a huge bias towards the employer - when one side is starving and need she…

In theory that sounds great, but what happens if everyone says "fuck it!" and just starts taking the basic income? I think it's fairly obvious that with nobody paying taxes there is not enough government revenue to pay and thus the system falls apart. Let's call this 0% workforce participation. On the other hand, if everyone works really hard and is super productive and starts businesses and etc then at some point th…

If people are able (in terms of practicality, affordability, possibly legality) to live entirely on imported goods and services, then as you say when everyone stops working, everything breaks hard.

If people only buy domestic (including the case of a global BI) then when "everyone stops working" then we see supply of most things shrink dramatically. This raises prices, which means that the BI people are receiving doesn't go as far. This motivates people to get back to work. Note that it does so before the purchasing power of the BI is negligible - it does so as soon as it falls below "what you can live on with the comfort we want", which itself will have variation. I would expect such a dynamic to be self-stabilizing, not self-destructive, though it certainly depends on the constants involved.

In reality, some things are purchased from abroad for cheap, some things at a premium over domestic goods, and some things can only be provided domestically. Your point is most strongly an argument against too high a BI in too small an area.

The flip side, 100% participation, doesn't seem like something liable to be caused by the basic income, and it if is it should be self limiting for exactly the reason you note - we quickly find ourselves in a situation where the basic income is approximately zero in real terms.

As an aside, out of fears over feedback loops I have said before that a BI should not be pegged to actual inflation, but to targeted inflation. I think that would help it generally track the real value that we are best capable of providing.

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