Switzerland and "Star Trek" economics: $2,800 a month for everyone?

While I don't doubt that there would be a lot of side effects, the widget making thing doesn't quite work, since I'm assuming it would still be illegal for a business to not pay its employees. (A nonprofit can legally have volunteers; a business, not so much.)

Weren't we assuming only a moment ago that realtively few people will still work if the UBI takes care of their basic needs? I'm pretty sure that many still will, but less than now. This alone should make it clear that competition for employees will increase -- less people willing to take a job. But in addition, the competition for paid employees will now be restricted to those jobs that are done only for the financial benefits they offer. It is those jobs that wil pay highest, because they have to.

Well, if you're going to insist on that as an axiom, we don't have to discuss that point any further. You understand, however, that by that definition, evaluation of goods is no longer an advantage of a free market system?

It fails either way. If the UBI doesn't change demand, there's little motivation to work because all basic needs are satisfied. But if the UBI drives up demand (much more likely IMHO), then people will be motivated to work just as they are now, the difference being prices have increased. The UBI quickly becomes insufficient because prices adjust to match supply and demand.

Perhaps so, but that clearance all happens at the lower end. If your labor is worth less than the UBI, then there's not really any incentive to work. Salaries would have to be considerably higher than the UBI, otherwise the incremental benefit for spending 160 hours a month at a job would be very little.

Jobs at the low end become nonviable, and workers on the high end become more expensive. This means a lot of goods and services simply disappear and society is essentially divided into those who collect the UBI and those who earn much more than it.

Well, if you're going to insist on that as an axiom, we don't have to discuss that point any further.[/quote]
Well, how do you think value of work should be determined?

Of course it is, and that's one it's strongest advantages. Because it isn't evaluation by one entity. Buyers and sellers have to agree, and their terms have to be consistent with supply and demand.

Let's do some arithmetic (sorry, Muad, wherever you are)...

Let's ASSUME the UBI doesn't change demand. It's a silly assumption, but the results are undoubtedly worse if we don't have it, so that assumption favors the pro-UBI side of the argument.

Let's say the UBI is $2800/month; that's about $34,000/year. I looked up income distribution in the U.S. and about 40% of the nation's 114 million households are at or below this income level. So, let's make two more assumptions (both of which, I believe, favor the pro-UBI side): first, that EVERYONE who makes even $1/month more than the UBI will work; second, that households are workers (there are actually slightly more workers).

So, I maintain that no one currently below the UBI level of income will work and that everyone currently above it will. I figure however much I'm wrong on one side is balanced by the other.

So, 40% of workers is 0.4 * 114 million = 45,600,000

These people will not work. They will not pay taxes. They will each receive $34,000/year. That's 45,600,000 workers * $34,000/worker/year = $1.6 trillion (rounding up).

Of course, those who earn above the UBI don't gain from it. They may receive the $2800, but since they're above the UBI level anyway, they see no net gain. However, on taxes it's a different story.

Currently, the federal government takes in approximately $1.6 trillion/year (that was the 2008 number) in individual income taxes, corporate taxes, excise taxes, etc. So, to fund this, taxation would have to DOUBLE. And because there would be fewer people paying (remember, 40% pays NOTHING), it would MORE than double. The political party that tried to institute that level of taxation would never be heard from again in history.

And in reality, of course, economic output would decline, demand would shoot through the roof, and things would get very ugly, very fast.

1) Look at the ridiculous shit people do now as "interns" for little to no pay just to get their foot into the door of a field

2) Boothby, the gardener at SFA would disagree.

3) You've completely avoided the notion that bussing tables is simply part of the waiter's chore list.

4) Depends on the work. I had a part time gig as a barback once that was good for nearly $200 a night just to keep the beer fridge filled.

Maybe part of the problem is the devaluation of people willing/capable of doing the dirty work?

I don't know what happens when a UBI is introduced, and I don't think anyone does. But your prediction doesn't convince me. The UBI can't fail in two contradictory ways at once. It can't fail because no-one will work anyomore and fail because everyone will still work. It seems much more likely that the result will be cut down the middle, with some people quitting work, some people changing their work, and some people pretty much doing the same work as before.

There are different UBI proposals around. You seem to be dealing with a UBI that falls away when you earn wages. That's not the model I was talking about; I'm thinking of a flat UBI for everyone. The first $ you earn brings you to $ 1,001 if the UBi is $1,000.

Again, I think the opposite will be true.

I think things have different values for different contexts, but the monetary value should be what buyer and seller can both agree upon. I get the feeling you have already forgotten that you have just argued this is not true in a free market.

Impossible. If "real value"="value assigned by a free market", then

"The free market assigns goods their real value."

becomes

"The free market assigns goods their value as assigned by the free market."

, which is a tautology and says nothing positive about the free market; it's a parallel to

"A Communist planned economy assigns things their value as assigned by that planned economy."

One of the first problems I see with something like this being implemented in the US is that there will be a disparity. In rural Alabama, a family of four can live quite comfortably off of $67,200 per year ($2,800 x 2 x 12). Not so much in a large urban area. I see the people, and the legislators, in Atlanta demanding that they get more than the people in, say, Mayberry. Suddenly, a "universal minimum income" isn't quite so "universal." Another case of the government picking the winners before the game has even started?

in a situation where labor doesn't have to be bought, why would labor be considered a potential wealth-resource?

I mean even if you say that specialized skills, for which one has paid the price to obtain (an engineer for instance) THEN has value, for which a wealth-value can be assigned...the sort of manual labor which takes no special skills and which, in your example, can be obtained for free shouldn't be a part of the "wealth in the economy" calculation, should it?

Seems to me it would be rather like having some mechanical process which requires air-flow. the air is freely available, thus a calculation of the expense of doing business would not factor in a line item for the value of the air.

on the other hand, if the process required pure oxygen, then that's a specialized form of gas which cost something to produce, and thus something to obtain, and has a specific value in the profit equation.

that's a very good point.

Although, in such a radically different economy, it's not impossible that the cost of living differential might be quite different. A lot of people live in the city because they HAVE to to earn the sort of lifestyle they want. How bad would the housing crunch, for instance, in a city be if people could move out to - say - Tupelo and live as well for the same money? I think it would be exceedingly difficult to project whether or not that basic income would end up being much more effective in Mayberry than in Atlanta.

It depends on whether or not you intend to replace other social safety net spending with this income.

My monthly income right now, which has just gone up since my status changed to "full time" - works out to about $1300

If I had to pay my own market-rate rent, and buy all my own groceries for a family of four, along with paying my utilities, then that money is not only gone but likely most months won't be enough. That's before buying gas, insurance, health care, clothing, and so forth.

I know that rent in, say, New York, is wildly more than it is here but if you rent a VERY modest place, you are looking at $400. $5 a day in food for a family of 4 is $600 on the month. Basic utilities, along with the luxury of cable and internet access, is going to go to the neighborhood of $300. i don't even need to get into what various sort of insurance add up to nowdays but i don't think I'm being generous if I suggest $300 at least per month. One gallon of gas a day (assuming you have a quite short commute) is easily $100 a month. Suggest $50 a week for living expenses such a soap, bath tissue, toothpaste, and such like...another $200...we're closing in on $2k and that's for a pretty damned modest existence.

I'd suggest that's a minimum level if you assume that things like food stamps and rent support are replaced. - and obviously that level is inadequate where the cost of living is much higher.

Now I am speaking of household income here. So if you take the $2800 literally as per person and not per household, then that's different so maybe you figure it something like $1,000 (or ($1,200) per adult person in the home and half that per minor child. That would work out to something like $3k for a family of 4, or $36k on the year. That would provide a decent modest existence but nothing extravagant or crazy.

Notwithstanding whether or not it would be much of an income once the market adjusted.

In point of fact though, now that i mention it - let's explore this further.

These figures are probably not universal but just going by my local rural setting.

A low-income family of four - one who makes enough to minimally qualify for aid but not too much...between rent support, food stamps, medicaid on the kids, and in the case of single mothers probably direct cash welfare in addition, is already getting the equivalent of $1,000-$1,200 if not more in public funds.

So if you set this system up ($1k per adult member of the household, half that per minor child) you are not, in fact, inflating the market from the bottom end by $3k a month but something more like half that. what you are really doing is introducing a level of fairness to the system in that other citizens also get the same level of assistance as the "welfare mom" or whoever is derided as a leech on the system now.

For the family that already has $3k a month in income, doubling that would SEEM at first blush to be more likely to inflate the cost of marginal purchase choices, rather than the whole market. That is, a loaf of bread might go up from a buck-fifty to $2, but a good steak might double in price.

Eh?

and THAT is an understated point so far, the natural human lust for "keeping up with (exceeding) the Jonses" won't go away. And for many that's the value of working for even more income than the minimum provided by the state.

By the way, if we are acknowledging that a certain proportion of the population won't work if they don't have to to survive, doesn't the question follow - how valuable is their labor in the first place? If you are employing a work for that drags themselves to work and does the bare minimum they can do in order to not get fired, you probably are not getting full value for your labor-dollar anyway.

Huh? Labor is used to PRODUCE something. PRODUCTION of something MORE valuable from things that LESS valuable is how wealth is created. Someone makes cement out of limestone, wealth created. Someone uses the cement to build a wall, wealth created. Someone builds wall to put up a building, wealth created.

Assigned BY WHOM?

The labor was worth $2800 in the market system. Because it's being done for "free" doesn't mean it doesn't count anymore. Because that same labor COULD be used for more productive purposes. All else being equal, which better serves society: a man working 160 hours and producing $100 of wealth, or the same man working 160 hours and producing $10,000 of wealth?

That's the problem I pinpointed: the widget business actually consumes more wealth than it produces. It is a NET DRAG on the economy. If every business (or even most) tried to operate in that mode, the entire economy would collapse as it would amount to constantly spending $1 to obtain $0.50 of value. Market systems won't allow that situation to occur (at least not for very long), but a system involving subsidized labor HIDES the fact that the business actually loses money. In the hypothetical I gave, the owner actually makes a PROFIT, even though he's done nothing but take $78,000 worth of resources and produce $60,000 worth of stuff with it. I can do that by finding something of value and destroying it. It's the same thing.

And the money for the subsidy comes from others who ARE productive. The system penalizes the productive by transferring their wealth to the unproductive. I mean, can't you see how horrendously bad such a system would be?

That's where you'll go wrong. It's like believing you get "free stuff" from the government. You don't. It may be free TO YOU, but someone, somewhere is paying the bill for it.

Let me make the example more extreme.

I open a factory to produce widgets. I sell $10,000 worth of them a month and I use $100,000 of resources to create them. The government subsidizes me $100,000, so I make a $10,000 profit. So, pop quiz:

1. Where does the $100,000 for the subsidy come from?
2. Does producing $10,000 worth of goods from $100,000 worth of resources sound like a good idea?
3. Do you see how subsidies can HIDE gross inefficiencies and prevent bad ideas from being terminated?

I'm not saying it can fail BOTH ways. I'm saying it can fail EITHER way.

If your assumptions are right, it fails. If your assumptions are wrong, it fails.

How do you figure? Do you think it's a crapshoot how it will turn out? Or will people decide rationally?

The concept is fatally flawed either way.

If you get UBI *PLUS* whatever your labor is worth, you wind up back in the same situation as before the UBI, only with a higher floor. If everyone gets their stipend, then everyone has more money to bid on scarce goods and services. The prices on everything will automatically rise. This is unavoidable unless you either (1) institute price controls or (2) provide a mechanism wherein supply greatly increases. But, to pay for this scheme, you're taking resources (via taxation) away from the most productive members of society, the people who create the most value, so it's difficult to see how (2) could POSSIBLY occur.

If you get your salary - UBI, then anyone whose labor is valued below the UBI value has no incentive to work. If your work is worth $1600/month and the UBI is $2800, you will work a month and get NO additional benefit for it. So why would you? You can either (a) get $2800 for doing nothing or (b) get the same $2800 for doing a month of work. Explain why a significant number of people would choose (b).

I'm not saying BOTH of these will happen. I'm saying ONE of them MUST.

I think you're imagining a world not populated by people AS THEY ARE, but how you WANT THEM TO BE.

No, I said that was EXACTLY the case in a free market. And, since we're talking about economies, OTHER types of values don't figure in unless they are part of the monetary value. That nice little pub down the street may have tremendous sentimental value for you, but, unless you're the pub's owner, that plays no role in the economic transaction that will result in its becoming a parking lot.

I said the REAL value (or, to use another term, proper value) of something is that value assigned by the free market. There is no tautology.

A thing could have many different valuations, but the only one I accept is that agreed upon freely by buyer and seller. Any other valuation must, of necessity, skew the balance in favor of either the buyer or the seller (or possibly against both, as the price could become high or low enough to make the transaction impossible).

In any event, you don't seem to challenge the idea that the market value is the proper value.

It will never happen, my people will vote against it. And I am thankful for it. Society is not ripe for experiments like this. The idea is not bad at all, but... Let's try this in 50 years or so... We are not ready, as simple as that. It would destroy our economy. And I say this as a left-leaning social democrat.

yes, I mentioned that. My remarks where built around household income, not individual.

How sustainable would this kind of pipe dream even be?

Yes, they sacrifice now in hopes of bigger future rewards. What's your point?

Oh, I'm sure there are people who EXCEL at gardening and who would love to be the gardener at a prestigious institution with world-class gardens to oversee and maintain, and would even do it for free out of simple love for the vocation. But how many would aspire to be the guy who mows the lawns there? Or the guy who trims the hedges?

Could be. But at all the restaurants I go to, it's not the waiter who cleans up the tables between guests.

Good money. Would you spend your free time doing it for no pay?

It isn't the people that are de-valued. It's the work. There's no question that many people do dirty work, or who work jobs that offer little fulfillment on any level. The question is: would any significant numbers of people CHOOSE to do that kind of work if it wasn't necessary to maintain their livelihood?

What do you think would have to change for it to work?

Human nature.

Of course we've got to figure on how to keep them from killing us.

Scooter, I think you're forgetting that by the time it happens @Ancalagon will have us all forcefully relocated to magical gentrified urban areas where all we do is ride around in trains and go to city council meetings all day.

Not forcibly. I'm simply content with dismantling the subsidy regime that finances the suburbs and exurbs and the zoning codes inhibiting in city growth.

Like I didn't hear that enough during the last ownership meeting. That you made Tex put it in the minutes was just...

That'll be the day...

Yes if Anc gets his way all humans on the planet will be relocated by force to one city with the density of New York City. http://persquaremile.com/2011/01/18/if-the-worlds-population-lived-in-one-city/

That city will be roughly the size of Texas. All 7 billion people in one spot.

It shall be called Texas City .

I've already applied to be a judge.