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Thread: Universal Basic Income: The Dumbest Idea Ever?

  1. #1
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    Universal Basic Income: The Dumbest Idea Ever?

    These articles are long, so just a brief excerpt to give you a sense of what's there. Worth reading all of them, just to see the arguments being made.

    A simple idea for eliminating poverty is garnering greater attention in recent weeks: automatically have the government give every adult a basic income.The Atlantic's Matt Bruenig and Elizabeth Stoker brought up the idea a few weeks ago when they contemplated cutting poverty in half and Annie Lowrey revisited it today in the New York Times.


    Read more: http://www.businessinsider.com/givin...#ixzz2kdiYWiKt
    and

    The upside of giving everybody about $3,000 is that itís a very easy policy to run and a surefire way to cut poverty in half. But it's a large program: it would require about $907 billion in 2012, or 5.6 percent of the nationís GDP. (In a real implementation, we might exclude the more than 45 million Americans receiving OASI Social Security benefits from a basic income, bringing the cost down substantially.)
    Could we afford it? Sure. For starters, we could raises taxes, first on the rich, who would pay more in new taxes than they would receive in basic income, and then on lower-middle class and poor families, who would come out ahead. There is also plenty of room to cut tax expenditures on homeowners, personal retirement accounts, capital gains exclusions at death, and exclusions on annuity investment returns. This submerged welfare state for the affluent costs hundreds of billions of dollars each year. There is also the matter of the $700 billion military budget, which could take some trimming.

    http://www.theatlantic.com/business/...s-easy/280971/

    I don't think there's a facepalm picture expressive enough to convey how terrible an idea this is.

    Let's start with the fact that these people don't understand economics. Right now, everyone has a "basic income" of zero, and an actual income of what they get paid (or receive in welfare). Based on the laws of supply and demand, the market takes that into account in setting price points that balance maximal profit with maximal salability (efficient pricing means charging the highest amount you can without cutting your profits; if I can sell 100 dryers at $100 each, or 90 at $110, then I price at $100. If I can sell 91 at 110, I price it at 110). If you start everyone off with a "basic income" of $3,000, all that does is drive prices up, since enough people will be able to afford to pay more.

    Or, to put it another way, randomly injecting more money into the economy by dictat tends to trigger this fairly obscure economic concept called "inflation".

    Which means that this idea won't do much to move the poverty line - because as prices move, so does the poverty line.

    For another thing, the idea of raising taxes to distribute "free" money rises to the level of farce. You're going to "mail a check" to everyone, then "raise taxes" to pay for it? The rich will be "taxed more than the benefit" - well, then why bother mailing people above that threshhold the check in the first place? Just raise their taxes and cut down on your administrative costs (which means you can actually raise taxes less than you would need to if you weren't wasting money on ink, paper, and postal delivery of those useless checks). And for people who will actually see a "net benefit" because their taxes will be raised by less than the amount of the check, again, why go through the farce of giving them $3,000 a month then demanding they hand over an extra, say, $1,000 a month? Just cut a check for 2K and be done with it!

    BTW, this whole thought process is hysterical because the argument for sending everyone a check (instead of traditional tied-to-income welfare) is that if it's not tied to income levels, there's no disincentive to work. Except that if the level of your benefit effectively depends on your income level (because if you cross a particular threshold you will lose more of your "free money" in taxes), the disincentive is exactly the same as if you were giving out cash based on income level in the first instance.

    Oh, and why stop at $3,000? Just write everyone a monthly check for $1,000,000! You'll have done more than just eradicated poverty - we'll all be multi-millionaires, enjoying our mansions, yachts, and champagne! It's brilliant!

    There are honestly so many problems with this deeply stupid idea that it's hard to conceive that it was put forward as anything but satire. Unbelievable.

  2. #2
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    Quote Originally Posted by doggin94it View Post
    These articles are long, so just a brief excerpt to give you a sense of what's there. Worth reading all of them, just to see the arguments being made.



    and




    I don't think there's a facepalm picture expressive enough to convey how terrible an idea this is.

    Let's start with the fact that these people don't understand economics. Right now, everyone has a "basic income" of zero, and an actual income of what they get paid (or receive in welfare). Based on the laws of supply and demand, the market takes that into account in setting price points that balance maximal profit with maximal salability (efficient pricing means charging the highest amount you can without cutting your profits; if I can sell 100 dryers at $100 each, or 90 at $110, then I price at $100. If I can sell 91 at 110, I price it at 110). If you start everyone off with a "basic income" of $3,000, all that does is drive prices up, since enough people will be able to afford to pay more.

    Or, to put it another way, randomly injecting more money into the economy by dictat tends to trigger this fairly obscure economic concept called "inflation".

    Which means that this idea won't do much to move the poverty line - because as prices move, so does the poverty line.

    For another thing, the idea of raising taxes to distribute "free" money rises to the level of farce. You're going to "mail a check" to everyone, then "raise taxes" to pay for it? The rich will be "taxed more than the benefit" - well, then why bother mailing people above that threshhold the check in the first place? Just raise their taxes and cut down on your administrative costs (which means you can actually raise taxes less than you would need to if you weren't wasting money on ink, paper, and postal delivery of those useless checks). And for people who will actually see a "net benefit" because their taxes will be raised by less than the amount of the check, again, why go through the farce of giving them $3,000 a month then demanding they hand over an extra, say, $1,000 a month? Just cut a check for 2K and be done with it!

    BTW, this whole thought process is hysterical because the argument for sending everyone a check (instead of traditional tied-to-income welfare) is that if it's not tied to income levels, there's no disincentive to work. Except that if the level of your benefit effectively depends on your income level (because if you cross a particular threshold you will lose more of your "free money" in taxes), the disincentive is exactly the same as if you were giving out cash based on income level in the first instance.

    Oh, and why stop at $3,000? Just write everyone a monthly check for $1,000,000! You'll have done more than just eradicated poverty - we'll all be multi-millionaires, enjoying our mansions, yachts, and champagne! It's brilliant!

    There are honestly so many problems with this deeply stupid idea that it's hard to conceive that it was put forward as anything but satire. Unbelievable.
    I think you pretty much said it all. It is like raising the minimum wage. If that were the answer raise the minimum wage to $50/hr and poverty is gone right? No because inflation would sky rocket and the poverty line would now be $60/hr.

  3. #3
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    I think this is great, it should have a unifying effect on the board.


  4. #4
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    You're absolutely correct on all points.

    But tell me, do you have any doubt that this will garner interest/buzz? Are the effects you put out there any different than say raising the minimum wage (which NJ just easily did and Obama is now pushing to go to $10 nationally)? Or even Obamacare?

    Logical assessment of economy reality is not of interest or concern to many. People are far more interested in fantasy of things like "ending poverty" and demonizing those who seek to dispute these sort of absurdities.

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