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Discussion (22 Comments)Read Original on HackerNews
Except this change isn't anti growth and is a lot simpler to fix than climate change. It can be bi-partisan, if framed right, we have to at least try.
That's the reward the revolution can conquer. Hurray!
Even if you have a magic fairy wand, and make this happen, UBI can never exceed worldwide average income. What does that mean? The global PPP average income is 2000 dollars BEFORE tax, so let's say 1200 after tax. Oh and that's PPP, not USD. So that's adjusting so rent is the same as now. Food costs the same as now. Restaurants charge the same as they do now.
Why would any American at all be in favor of that?
Probably what happened is America was in an increasing returns to scale part of its production function. Now it's in the diminishing returns to scale portion. If I had to guess why, it would be due to growth boundaries of cities and lack of new cities. There's no new Manhattans. Instead Manhattan has just gotten more and more expensive to live in.
Anyway, if F(Population) is the production function, then wages should be F'(Population) and total wages should be Population.F'(Population).
F(Population)-Population.F'(Population) is total production minus total wages and is known as economic rent.
The right thing to do would be to tax economic rent. Use a tax on land value and natural resources to fund UBI.
But do you agree with the theoretical framing? People not being able to not work forces them to find something. It's like an iron ore deposit being forced to be mined rather than being mined when it's needed?
The difference is that we are asking the economy to create jobs even when it doesn't "want" to. It still will, the lump of labor fallacy is indeed a fallacy, but that doesn't mean this isn't causing a lot of harm.
We aren't draining the earth's oceans (yet) because its supply is more than the earth needs right now. One day we might, but how much we draw is decided by the economy.
But for labor supply is forced, capital flows there when it shouldn't, politics chases it. The economy, ever adaptable, provides jobs where it can.
[1] https://news.ycombinator.com/item?id=48434114
It's the only reasonable way to avoid the main flaws of our economy/society. Billionaires would be way worse off, as they won't freely reap the fruit of the labor of the workers that power their ideas, and the workers will be way better off, as their productivity is no longer decoupled with their pay.
In fact if you look at the economics of this policy over the long term it leaks capital through rents, so it doesn't actually work forever.
A sovereign wealth fund can solve this (essentially an expansion of the "buffer" I wrote about). That functions as almost exactly what you want, giving a stake in every company to every worker (except broader, to every citizen).
If you buy the framing that labor is currently a distortion, you wouldn't want to only give stakes in companies to workers of those companies, if you do that the distortion will continue.
> This is a little harder but not too hard: Because it’s the mirror of UBI. The UBI will fund consumption, VAT taxes consumption.
This is dumb; there's literally no other way to put it!
VAT is a tax exemption on the rich; that's all it is.
Plus rich people all have companies pay for a lot of their stuff. Need a new laptop? Buy it through your company. Internet and cellular plan? Company. New cell phone? Company. Many even have their cars paid by an compaby. All those purchases through your company are VAT exempt. Poor people buy their own laptops and their own cell phones and have their own Internet subscription and cell plan and car. They pay the VAT.
I'm in Norway, where the standard VAT rate is at 25%. I don't understand how such a vast regressive tax is so uncontroversial here. Get rid of it and replace it with a larger wealth and capital gains tax.
This problem is hard because it's hard to spot, but the fix is actually surprisingly easy (at least in the short term).
The scale is on the order of climate change. If the academic base of economists were to unify behind this theory, change could happen. Only a few countries need to adopt this to show merit to the idea (although, that will take like a decade to truly show). Unlike climate change though this isn't fighting growth, it can recover it, and it's much, much easier to implement. That's why I think it can be truly bipartisan.
Plus a type of tax that forces the ultra-rich to pay, if needed, a wealth tax that some countries are enabling.