Comment by nine_k
6 months ago
This has been tried, very honestly, and it mostly sucked, then crashed. The calculation argument [1] kills it. The optimization problem which the market solves in a chaotic and decentralized way through price discovery and trading is intractable otherwise, not with all the computing power of the planet. It also requires prediction of people's needs (ignoring desires), and it's a problem more ill-posed than prediction of weather.
The market of course needs regulation, or, rather, stewardship: from protection of property rights all the way to limiting monopolies, dumping, etc. The market must remain free and varied in order to do its economic work for the benefit of the society. No better mechanism has been invented for last few millennia.
Redistribution to provide a safety net to those in trouble is usually a good thing to have, but it does not require to dismantle the market. It mostly requires an agreement in the society.
[1]: https://en.m.wikipedia.org/wiki/Economic_calculation_problem
That’s the advantage to UBI.
A revenue neutral UBI check at some subsistence level and killing all other government assistance including lower tax brackets would in the short term significantly lower the standard of living for many low income Americans and boost others. However people would try and maximize their lifestyle and for most people that would be through working. Others would opt out and try and make being really poor work for them.
Essentially you remove central planning around poverty and as the government stops requiring rent stabilized apartments etc. Which in the short term pushes a lot of poor people out of major cities but simultaneously puts upward pressure on wages to retain those workers and pushes down rents via those suddenly available apartments. It doesn’t actually create or destroy wealth directly, you just get a more efficient allocation of resources.
There's a catch. If enough people opt for not working, the level of UBI may go below the level of survival for some time. This will push those who can work and don't want to tolerate it to go find work. But those who cannot work much, or at all, like disabled people, would be facing hunger, and would be unable to afford the special stuff they need to survive (like medicine or home aid). They might just die from that.
This returns us back to the problem of some guaranteed payments to those we don't want to let die, and maybe want to live not entirely miserably, and the administration thereof.
Another danger is the contraction of the economy: businesses close, unable to find workers, the level of UBI goes down, people's income (UBI + salary) also goes down, and they can afford fewer goods, more businesses close, etc. When people try to find work because UBI is not enough, there may be not enough vacancies, until the economy spins up again sufficiently. It's not unlike a business cycle, but the incentive for a contraction may be stronger.
As long as a fixed percentage of the economy is going to UBI there’s natural feedback loops. Fewer people work, UBI goes down and incentives to work increase. However, long term efficiency gains keep pushing up the standard of living for people on UBI which then makes not working more appealing. The specific numbers only matter in the short term if in 500 years 1% of the economy went to UBI people would likely be very well off by modern standards, but still be tempted to work for even more.
There’s a long way between uncomfortable and death here, entitlement spending is already over 10k/person/year and that’s excluding the impact of progressive taxation. Revenue neutral flat tax and a 20+k UBI isn’t unrealistic. A reasonable argument can be made for universal healthcare being part of UBI, but that’s a separate and quite nuanced discussion.
Not that I think there’s any chance of a UBI in the US, but it’s an interesting intellectual exercise.
We should still keep the progressive income tax. UBI can even be implemented as NIT
Adding a land tax too, now that would be, that would really, that would fix some things
Land tax would cause people to sell land. We need a wealth tax. Income tax is too easy to game.
> and it mostly sucked
Citation needed. If you're referring to the USSR, please pick an economic measure that you think would have been better, and show why the calculation problem was the cause of its deficiency. USSR was incredibly successful economically, whether it was GDP growth, technological advancement, labor productivity, raw output, etc. Keep in mind all of this occurred under extremely adverse conditions of war and political strife, and starting with an uneducated agrarian population and basically no capital stock or industry.
The Austrian economist Hans-Hermann Hoppe writes of Hayek's calculation problem:
> [T]his is surely an absurd thesis. First, if the centralized use of knowledge is the problem, then it is difficult to explain why there are families, clubs, and firms, or why they do not face the very same problems as socialism. Families and firms also involve central planning. The family head and the owner of the firm also make plans which bind the use other people can make of their private knowledge […] Every human organization, composed as it is of distinct individuals, constantly and unavoidably makes use of decentralized knowledge. In socialism, decentralized knowledge is utilized no less than in private firms or households. As in a firm, a central plan exists under socialism; and within the constraints of this plan, the socialist workers and the firm’s employees utilize their own decentralized knowledge of circumstances of time and place to implement and execute the plan […] within Hayek’s analytical framework, no difference between socialism and a private corporation exists. Hence, there can also be no more wrong with the former than with the latter.
A family is small enough to allow for reasonable planning. (Imperfect still, as you know if you ever tried to run a family.)
Indeed, a private company usually operates in a way a centralized monarchy / oligarchy would operate: the bosses determine a plan, the subordinates work on implementing it, with some wiggle room but with limited autonomy.
Larger companies do suffer from inefficiencies of centralization, they do suffer waste, slowdowns, bureaucracy, and skewed incentives. This is well-documented, and happens right now, as we facepalm seeing a huge corp doing a terrible, wasteful move after wasteful move, according to some directives from the top. This is why some efficient corporations are internally split into semi-independent units that effectively trade with each other, and even have an internal market of sorts. (See the whole idea of keiretsu.)
But even the most giant centralized corporations, like Google, Apple, or the AT&T of 1950s, exist in a much, much larger economy, still driven mostly by market forces, so the whole economy does not go haywire under universal central planning, as did the economy of the late USSR, or the economy of China under Mao, to take a couple of really large-scale examples.