The Five Rules for UBI (debt, borrowing, property, costs)

[verybadgnome]

Originally Posted by Therblig

Not necessarily. You are making the pervasive error of trying to poke this one change into our current economic structure, which is why I have patiently maintained for years that any discussion of just dropping UBI onto what we have is somewhere between disastrous and nonsense.

In the shortest possible phrasing, such tax on production would replace the human-employment costs that are being continually reduced and may be all but inconsequential for many products in the near term. That's the whole point.

If Musk can build Teslas with a minimum of human employees, the production costs would be reduced by a vast margin. Two things can happen then: Musk's profits go through the roof, or Tesla MSRPs drop considerably. I don't need two Harvard MBAs, a supercomputer and all the GAOs data to guess which one will prevail.

So if workers are no longer needed, we tax the production itself, be it by any means anywhere. Elon's bizarrely named kid will never want for anything as a result.

But... part of the larger goal and plan is that the role of the consumer will change a great deal anyway.


(Fixed your quoting for you. It's a lot easier if you use the standard method...)

If the efficiencies in production that lead to reduction in labor are made up on the other end by taxes there may not be any net increase to the prices of the goods/services produced. That is correct within a vacuum, but the problem is that other countries without a VAT will out compete our domestic industries since they will be taking advantage of technological advancements and thus put our industry on the march towards oblivion. That leads to a loss of jobs and erosion of the tax base. I guess your counter would be that we would then tax the hell out of imports, but that would only lead to the Thailand/Costa Rica example I cited earlier. How would you like it as a middle class person (an assumption of course) to have to pay $90k to drive a new Toyota Camry? Since low income people don't buy new cars and are dependent on middle/upper income people for used vehicles this will negatively affect them too. Sorry no dice, at least not yet.

Tesla's profits will not ever "go through the roof" as technological progress happens incrementally and other manufacturers are simultaneously working on their own technologies to drive costs down. A supplier who comes up with a new battery technology will sell it to as many auto manufacturers as possible, thus spreading the wealth. Auto makers have to use the most efficient processes available in order to have products at the right price; with the desired content; and that meet all gov't regulations. If they don't they'll become a relic like AMC, Rover, or Lancia.

Getting away from automotive industry I have to ask what about the agricultural field?.....In 1850 64% of the U.S. workforce labored on a farm and today it is 1.3%. Would you tax away at all of the reduced labor costs brought about by the green revolution of the 20th century? Wouldn't that have just hampered development in that sector and resulted in more people working on farms at the expense of more cutting edge industries? I think that is exactly something that would bring us more in line with the developing world economies who can only dream of their own Silicon Valleys.

[Buckeye77]

Their is absolutely no need for UBI. Bill Gates, et al, have already figured out that we just need to reduce the world population, and start with the folks not sharp enough to contribute. We have the technology, all we need is the will power.

[Danbo1957]

Bread and circuses. Thanks to China for killing the USofA, without firing a shot.

[tnff]

Originally Posted by Therblig

No, I don't have all the answers. I never claimed to. But here's a secret: neither does anyone else.

There are simply too many steps and too many changes in between now and actual implementation to have even approximate answers; one of the ways these discussions go completely down Useless Road is angrily defending, say, $1200 vs. $1500 on the basis of current tax and welfare structures. Utterly pointless. Like squabbling over HOA rules for a Mars Colony.

I maintain that the cost is more or less irrelevant (certainly to this phase of the discussion) because no matter what it is, it's a lot less than having 40-50% of the country destitute. And that's what we're facing, and that's what UBI is all about... not some vague lib'ral idea to make everyone's life easy.

As to where it comes from, I was quite specific: taxes and tariffs on production, something that is basically not done now and is becoming increasingly dissociated from corporate income and tax structures. I'll make it very simple if you promise not to take the example off a cliff: If Elon Musk can pump out cars with five people, two of them being his batty partner and their bizarrely-named child, then Tesla owes the US for the equivalent displacement in meaningful employment. Multiply by all the industries producing more and more with fewer and fewer at ever-increasing profit. That's not "innovation" and "ingenuity"; it's national economic pillage.
…..

These questions aren't minor details to be worked out in a law we have to pass to know what's in it. They are major, fundamental drivers that cannot be simply swept away with a wave of your hands. No you were not specific in where the money comes from. Generic "taxes" on someone's production is not an answer; it's a deflection. How much taxes? On who's production? Who pays when those taxes get passed through? Ultimately VAT taxes get passed along to the consumer as higher price paid. Plus you wind up paying taxes on the taxes already paid at previous steps in the process.

There is no magic money tree in the backyard. If you want UBI, then you have to be able to answer these fundamental questions and justify that answer to those who are paying the bill for your free money.

Originally Posted by Therblig

….
And no, because UBI will not be enough to make most recipients content. Some, absolutely. Too many, maybe. But someone on a basic stipend with anything like normal human motivation (much less our vaunted American exceptionalist drive to conquer and rule) is not going to sit around on it like a fat bear in the sunshine. And that's more of Phase II.

Do you not realize that if you take away the result of someone's labor, through higher taxes, they have no incentive to do that labor? You expect them to work for free to produce more taxes for your scheme?

[riffle]

Originally Posted by Therblig

Not necessarily. You are making the pervasive error of trying to poke this one change into our current economic structure, which is why I have patiently maintained for years that any discussion of just dropping UBI onto what we have is somewhere between disastrous and nonsense.

In the shortest possible phrasing, such tax on production would replace the human-employment costs that are being continually reduced and may be all but inconsequential for many products in the near term. That's the whole point.

I'm not convinced this is how things will go, but it's a scenario. How would you propose to implement this from a timing perspective? Like, how do you incrementally ramp up your UBI funded by VAT as the demand for labor supposedly drops, without overshooting?

[oregonwoodsmoke]

Originally Posted by Therblig

4. UBI cannot be funded from income tax on any tax bracket.
5. UBI must be funded from tax revenue generated by production.........

What do you think income tax is? It's a tax on production; a tax on the market value of goods minus the production costs.


The income tax for individuals is also a tax on production: how much the worker produced, minus the costs of most of ( but not all) the workers production expenses. Also minus all the government tax credits for workers.


VAT isn't really a production tax, it is a sales tax and it can double the final cost of goods to to the consumer. Although to be fair, it is only charged to the people with money to spend.

[Therblig]

Originally Posted by verybadgnome

If the efficiencies in production that lead to reduction in labor are made up on the other end by taxes there may not be any net increase to the prices of the goods/services produced.

Your points are not necessarily wrong, but tied to exactly the way things work now. That's the sort of pointless loop most discussions get stuck in, the moreso participants drill down to specific points and rates and amounts.

What I've emphasized repeatedly is that UBI must be part of a completely revised economic model. It can't just be sprung on us or fitted into the existing structure. Until we have some idea of that model's structure — e.g. a production tax scheme that does not draw from existing revenue streams and the changes needed to accommodate that — it's probably not useful to get into market segments and import ratios and income tax rates and so forth.

We're also not implementing this next week; insisting there has to be some kind of a complete plan to even discuss the subject is, well, for presidential candidates. Which is why Yang's contributions are suspect: he's trying too hard to solve the whole problem in one pass. Can't be done.

And remember, this is not about implementing UBI because it's a good idea or it's 'progressive' or will buy votes or will keep the sheep under control... it's because we very likely have no other choice. The job crisis has been rumbling under our feet for forty years, largely ignored; this crisis kind of generated a front-row preview of what we're facing; we have two choices, one less lousy than the other.

And as far as that "revised model" it's a further mistake to assume that too many things will remain the same. UBI is only a component of a macroeconomic change we need on an even greater level.

[Therblig]

Originally Posted by Buckeye77

Their is absolutely no need for UBI. Bill Gates, et al, have already figured out that we just need to reduce the world population, and start with the folks not sharp enough to contribute. We have the technology, all we need is the will power.

The will power for what? 1 in... 5 suicide? After you, Gaston.

It is both conceded and already stated that global/national population is pretty much the root of most of our economic problems. It's also hard to see any solution, of any kind at all, that meaningfully addresses it in less than 60 (two generations) to 100 or more years.

So maybe working on solutions for the interim is more productive than simply pushing all the problems off to something unsolvable in your lifetime.

Which, if you really want to help, could be very short.

[Therblig]

Originally Posted by oregonwoodsmoke

What do you think income tax is? It's a tax on production; a tax on the market value of goods minus the production costs.

The income tax for individuals is also a tax on production: how much the worker produced, minus the costs of most of ( but not all) the workers production expenses. Also minus all the government tax credits for workers.

VAT isn't really a production tax, it is a sales tax and it can double the final cost of goods to to the consumer. Although to be fair, it is only charged to the people with money to spend.

No, production tax is not income tax. We basically have no tax on production itself, only its results. That's "the same thing" only to a viewpoint that can't imagine any but tinkering changes to our current system — raise this rate, lower that one, reduce that exemption, etc. This is and must be much more sweeping.

And I try to avoid using VAT because it's a hot button concept on both sides of the pond and simply confuses the issue.

And in the end... this is all about consumers. But that's for a later day.

[Mircea]

Originally Posted by Therblig

My starting position for this, rooted in analytical consumer economics, is simple: we have no choice.

You do have a choice. Don't do it, because it isn't necessary.

You don't destroy people's lives just because something you think is going to happen never will happen.

Your entire UBI fantasy is predicated on the hallucination that automation and AI will kill jobs, when there's no evidence to support. Worse than that, all the evidence shows it will create far more jobs than could ever be lost.

If and when you ever get to work with AI, you might actually understand.

Originally Posted by Therblig

Real jobs, those that pay a living wage,...

Define "living wage" objectively in no uncertain terms.

That should keep you busy for a while since, at a minimum, you'll need to come up with at least 397 different definitions.

If you don't understand why, it might help to take at least one economics class in your life.

Originally Posted by Therblig

The Five Rules of Universal Basic Income (UBI)

1. UBI must be universal.

• Universal is universal, period: UBI must be paid to every adult citizen regardless of age, wealth, economic status or work status.
  • Otherwise it's not "universal" and you are talking about a selective stipend of a wholly different nature.
  • Making it situation- or income-based would require a vast monitoring bureaucracy with all the faults of current "welfare" institutions and costing as much in overhead as might otherwise be saved in benefits. One of the collateral benefits is a vast reduction in 'welfare' administrative overhead (and fraud).
  • Choices need to be made about the age of first eligibility (18?) and whether any allowances are made for marriage, children, etc. (I suggest not; such things are again a perversion of the idea and should be dealt with in other ways.) Opting out may be allowed. Non-citizens will not be eligible.

2. UBI cannot simply be added to any current national economy.

• Dropping UBI onto almost any current national economy, economic system, tax structure, etc. would be a colossal failure.
  • All trivial, small-scale experiments to date notwithstanding, either way.
• UBI is not tied to any political or economic anchor and will work as well under democratic capitalism as any other imaginary combination.

3. UBI cannot be implemented without corresponding changes in all other welfare, social support and entitlements.

• UBI will largely replace most basic forms of welfare. (Again, for a huge net savings in administrative costs.)
• UBI assumes universal health care as a companion program.
• Whether other forms of support are continued (child/infant/unemployment/pension) needs to be evaluated and implemented on a very select and considered basis. States would be free to fund their own programs.

4. UBI cannot be funded from income tax on any tax bracket.

• The idea of paying for UBI from worker salaries is utterly self-contradictory.
• Any notion of making UBI itself taxable is even more so.
• The idea of paying for UBI from employment income is to miss the point of its purpose.

5. UBI must be funded from tax revenue generated by production.

• The tax structure that will pay for UBI largely does not exist and will have a considerably different structure from the current mix.
  • Income tax will apply only to earned income and retained in progressive form with a significantly higher rate on the top brackets (as in the US before the 1970s).
  • Property tax and sales tax will remain the province of local jurisdictions.
  • Corporate profit tax will have to be reconsidered but not abandoned.
• UBI will be supported by tax on all levels of production for all goods and certain services sold in the US.
  • The tax could be something like a VAT, with a progressive structure and minimal impact on smaller businesses.
  • Location of production will be irrelevant. Imported goods will be assessed at import value.

You have unwittingly proven why UBI will fail.

I won't even get into the constitutional amendments you'll need to have to do those things.

Originally Posted by mysticaltyger

In my opinion, the ultimate goal of UBI is to increase power and control over people.

A most excellent point.

There isn't one single welfare program created by the federal government that cannot be more effectively delivered and delivered more efficiently and at less cost than the States.


Not one.


UBI would allow the federal government to lord over every facet of people's lives.

Originally Posted by Therblig

No, I don't have all the answers.

I do.