Comment by Suncho

Part 2 of my feedback:

> The joint-stock company was one of the most important inventions in human history. It allowed us to align a lot of people in pursuit of a common goal and accomplish things no individual could. Obviously, the US is not a company, but I think a similar model can work for the US as well as it does for companies.

If the joint-stock company actually depended on their shareholders in order to be successful, then you'd have the same problem with the tragedy of the commons. But it doesn't. The shareholders and the workers at the company are different but overlapping sets of people.

What the joint-stock company really did was it allowed you to bet on the success of the company. And it allowed you speculate by betting on the price of the stock, which wasn't always the same thing. Unless you have a really high stake in the company, if you think the stock price is going to drop, the incentive isn't to improve the company. It's to sell the stock.

Your plan feels like it's trying to achieve something different.

> A proposal like this obviously requires a lot of new funding [1] to do at large scale

Depends what you mean by "new funding." There's no reason (except politcal) why we can't fund people's incomes by running higher government deficits.

> [1] It’s time to update our tax system for the way wealth works in the modern world--for example, taxing capital and labor at the same rates.

I'm not sure how useful it is to think of taxation as a way to fund spending. The amount of money the government should spend for optimal benefit to the economy has very little to do with the amount of money they take in through taxes. If you can deficit spend without causing inflation, then you should do it. Taxation just makes things more complicated.

Taxation is useful if you actively need to remove money from the economy to combat inflationary pressure or to conserve resources. But as far as inflationary pressure goes, the Fed still has a ton of room to raise interest rates and shrink the private financial sector, which is where most of our money flow comes from these days anyway.

The private debt that we rely on is also very unstable. It consists of a brittle web of interconnected debt obligations that grows more fragile with time as it builds up. So a deficit-funded basic income can help stabilize the economy and prevent 2008 from happening again. You're replacing unstable money backed by private debt with stable money backed by government debt. The decision to deficit spend is not a choice between debt or no debt. It's a choice between public debt or private debt.

And if you're distributing the new money to everyone evenly, instead of people with money getting more money to spend on stuff they already buy, people without money are getting more money tospend on new stuff. This creates an incentive for producers to produce more rather than to raise prices. Because of this effect, a deficit-funded basic income might not cause very much inflationary pressure in the first place.

> And we should consider eventually replacing some of our current aid programs, which distort incentives and are needlessly complicated and inefficient, with something like this.

Sure. But I think you can introduce the basic income first. Then, we might eventually realize that some of these other programs have become entirely pointless.

> Of course this won’t solve all our problems--we still need serious reform in areas such as housing, education, and healthcare. Without policies that address the cost of living crisis, any sort of redistribution will be far less effective than it otherwise could be.

I'm not so sure about that. A basic income would allow people to live in cheaper places because they don't need to be as close to jobs. That, in itself, can take pressure off housing prices. But it's because housing prices in currently-expensive areas won't really matter as much anymore. It will become far more okay not to live there.

The biggest problem with education is that it's too tied to the labor market. If people don't have to worry about educating themselves in a very specific and restricted way just in order to survive, then that takes the pressure off tuition prices. If people are free to eductate themselves by exploring on their own, following their natural curiosity, and making use of free online resources (which are only getting better and better), then that takes demand away from colleges.

As far as healthcare goes... hmm. Yeah. Healtchare is a problem. I have a lot to say about healtchare, but I won't say it here because this post is already way too long.

> but I think we could start very small--a few hundred dollars per citizen per year--and ramp it up to a long-term target of 10-20% of GDP per year when the GDP per capita doubles.

I like the idea of gradually ramping up a basic income. You'd just keep ramping it up until the additional increases stop providing additional benefit to society. And, of course, as technology improves, the optimal amount of the basic income would increase.

However, we really need to let go of tying it to GDP. Even if we had a more sane metric of economic output than GDP, the basic income necessarily changes the level of economic output. As people get more money, we will produce more stuff for them to buy.

> I have no delusions about the challenges of such a program. There would be difficult consequences for things like immigration policy that will need a lot of discussion.

Immigration is really interesting, at least with respect to a basic income. Because if we opened up immigration and provided all the immigrants with basic income, that would provide a huge boost in demand. Plus we'd have more human minds living right here in America. And the human mind is, of course, the most valuable resource. Basic income plus open immigration is a very powerful combination.

> We’d also need to figure out rules about transferability and borrowing against this equity.

Yeah... This equity thing doesn't really make that much sense. Straight up cash would be a lot simpler.

> And we’d need to set it up in a way that does not exacerbate short-term thinking or favor unsustainable growth.

Yup. This brings us back to resource conservation again. We can achieve resource conservation by taxing the use of those resources we want to conserve.

> However, as the economy grows, we could imagine a world in which every American would have their basic needs guaranteed. Absolute poverty would be eliminated, and we would no longer motivate people through the fear of not being able to eat.

Yes.

> In addition to being the obviously right thing to do, eliminating poverty will increase productivity.

Yes. It would increase productivity primarily by giving people more money to spend, which would induce more production. It might also reduce the total amount of labor we employ. More production and less labor means more labor productivity. But I don't think that labor productivity should be a goal in itself. Higher productivity is merely a consequence of achieving production while also using less labor.

> American Equity would create a society that I believe would work much better than what we have today. It would free Americans to work on what they really care about, improve social cohesion,

Replace "American Equity" with deficit-funded basic income and I'm sold.

> and incentivize everyone to think about ways to grow the whole pie.

Nope. Not this part (for reasons stated above).

So there's your feedback. I hope this was helpful.

Cheers!