One capitalist hybrid which does not distort the market is a free market with a basic income [1], i.e. an unconditional income as a right of being a citizen. At what level - survival, comfort, or luxury - the income is set is an open question to each society. Too high and scarcity erupts in the form of inflation, too low and inequality and populism corrode the society.
Post-scarcity economics is more the study of localised phenomena. As alluded to in the post, some things will likely always be in short supply somewhere.
One capitalist hybrid which does not distort the market is a free market with a basic income
Yes, it does distort. Why work on a manufacturing line producing required and high-demand materials and equipment when instead you can be creating arts and crafts that very few people would want and adds little to the productive capacity of the economy?
People need to realize that prices are not just a pain in the butt, but they are useful pieces of economic information.
The key point to basic income, in my opinion, is that it seems like it would increase social welfare while minimally distorting prices and being cheap to administer.
So let's take this to its logical conclusion, that lots of people don't work/do "useless" jobs, but still want to buy high-demand goods. Demand gets higher, and prices for those goods go up. Does this break the economic signalling mechanism? I'd argue that it doesn't, price signals are still firmly in place. Producers of high-demand goods can afford to raise salaries and attract more workers. There is still an incentive to work.
On top of that, necessary goods with a satiation point (e.g. food and shelter) would be more resistant to these effects. You don't need more food than you can eat or more houses than you can live in. If you aren't working, you still have to mind your money and budget accordingly; it's not like everything is free.
You are missing one important factor in your analysis (which took me a long time to figure out). People with lower income spend more on consumption goods, than the higher income individuals, who spend more on investments. This is important, because the rich are investing much of their wealth in growth, whereas the poor are spending on necessities and happiness. Transferring money from the rich to the poor also transfers money from investment to consumption, which has important effects on long term economic growth.
One must remember that the US grew only 0.5% faster than the UK through the 20th century, and this led to a large difference in outcome.
There's one important question you've forgotten to ask: what exactly are the wealthy investing in the growth of? The answer, of course, is the production and sale of consumption goods, either directly or indirectly - all of their investment returns have to come from there eventually. Take that away and you'd just be left with a bunch of investors trying to make money from selling other investors ways to make money from yet more investors, in a mass of ponzis and swindles producing no real economic output.
I think there's a serious misunderstanding here. Any basic income that is high enough to be useful will also be high enough to be distortive. Any basic income which is low enough not to distort will also be low enough not to be useful.
Consider a few thought experiments. Set a basic income to $100 per month. Time 300 million americans that's only $3b per month or $36 billion per year. That's a small enough portion of the economy that it's totally doable, but not useful.
Now instead let's set it to $10k per month. That's definitely enough to pay a mortgage, cars, etc. Times 300 million folks we end up at $3 trillion a month or $36 trillion a year. GDP in 2013 was about 17 trillion so we've definitely distorted prices by a huge margin. The price of everything probably triples.
OK, you say, let's dial it back just a tad and calibrate it to the size of the economy. Let's set our target at 30% of total GDP which we would argue we can totally do since the government historically gets about 19% of GDP so growing that by 50% should be doable. Of course this means that the federal government provides no services or does nothing except for basic income; no military, no NSF, no dept of education, none of that stuff. Ignore it for now. 17 trillion time 0.3 = 5.1 trillion a year, or 425 billion a month. Divide that by 300 million people and you get $1416 per month.
That's not a TERRIBLE number, if you live in a rural area you could pay a mortgage, car payment and even buy some food for that. If you lived in a big city that might cover your rent, but probably not.
But wait, you say, there aren't 300 million adults in the US? OK let's assume it's only 200 million. That number goes up to $2125 per month and you don't get a check until you turn 18. Yeah that's better, for sure, you might even make rent in a big city. In a rural area you're doing fairly nicely.
But how do we raise this money? There's a difference between income and wealth, if you took every penny from all the Forbes 400 list you'd have $2 trillion. But actually you wouldn't because you're assuming that you can sell their assets for cash at exactly the price they're valued at right now. If you did that you might recoup 80% because it'd be a giant sell-off. But let's ignore that for a minute. Let's also say that you by the time you get down to every person whose net worth is over a million (remember, only the rich) that you've raised another 2 trillion (pie in the sky, the distribution of wealth isn't anywhere near equal remember?). http://en.wikipedia.org/wiki/List_of_members_of_the_Forbes_4... At that point you've got enough cash to make this whole thing run for about 10 months.
The total US income for all people in 2013 was $13 trillion. https://bber.unm.edu/econ/us-tpi.htm Take all that money and divide it up between 200 million adults and you've got $65k per person per year once you turn 18. BUT that's it. Janitor? $65k. Doctor? $65k. Lawyer? $65k. Startup founder? $65k. CEO? $65k. VC? $65k. Nobody, anywhere, ever could make more than $65k or else you don't have somewhere to take the money from. And at that point I think it might be hard to convince people to work harder, take more risks with their personal wealth, study longer, etc if NO MATTER WHAT they can't make more than $65k.
If you want to allow people to make more, that's OK. But for every person that makes $75k under this scheme you've got to find someone to only give $55k and to convince them that it's right, or dial the basic income back to $55k and start giving only select bonuses.
Of course, remember that all this ignores the idea that we still have to provide all those federal functions that we're currently providing.
You misunderstand Basic income as providing equal wealth to everyone... That is not the goal. The point is to provide the bare minimum amount of money required for someone to survive. You would base the amount of money each person gets on the cost of living where they live, just like how wages very from place to place today. The amount of Basic income wouldn't be the same everywhere.
Basic Income isn't socialism, people would still work, they just wouldn't work as much. Since the Basic income only takes care of your basic needs if you want to buy a new tech toy you will have to go to work and get the money to pay for it. Since your basic needs are already taken care of, businesses won't have to provide a "living wage", there would either be a very low minimum wage or no minimum wage at all so a much smaller percentage of a businesses's revenue would go towards paying employees meaning more profit. Hopefully along with basic income we would also adopt universal healthcare that would further take finical burden off of businesses.
> You misunderstand Basic income as providing equal wealth to everyone...
I can see how you might think that, but I disagree. What I am trying to do is show that the idea that a basic income can provide without distorting prices isn't grounded in reality.
What is the bare minimum amount of money required for someone to survive? And who defines what "surviving" is? If you're married with six kids (four currently of the right age for private school) your "bare minimum" might be $25k/mo. No that's not legit? What is? Does the "bare minimum" require that you get only a small 1 bedroom to yourself? Or an efficiency? Or maybe you should be required to live with roommates to bring your rent cost down? Do you get more money if you have kids, or less? What happens if you get married or divorced?
If you live somewhere where the cost of living is high you get more money; how do you ensure people actually live where they say they do? What would prevent me and 100 of my closest friends from all saying we live in a shithole in NYC while we use that money to buy all kinds of good lives for ourselves in more rural areas? The cost of living differential is probably at least 2x and maybe higher, so there's a lot of incentive to abuse the system.
So the businesses have more profits, but higher taxes right? The money for a basic income doesn't just magically appear does it? Where does the money come from to pay it?
The point of the article was that this applies to a nearly post scarcity society. For example, suppose we lived in an Asimov style world where autonomous robots could produce enough food, clothing and housing to sustain everyone on Earth even if Every Single Person decided to never work again. In such a society, the basic income can be determined by what the robots can produce. I think it's interesting to think about what could be possible in a future society, as opposed to just the fact that this probably won't work today.
Yeah that's cool too, but where does the $100 trillion to build all the robots come from? Robots ain't cheap and it's not like it's all software license fees either, you need to actually pay people (or robots) to dig ore out of the ground and to use energy to transform it into metal and then form those ingots into usable shapes and then transform those usable shapes into robot frames and then attach electrical or hydraulic actuators and pumps and put controlling circuitry in there and then you still have to have the control system. So far all that stuff is owned privately and I don't foresee the people who've spent millions or billions of dollars of private capital to make all that exist suddenly say "hey it's cool, we're giving all this stuff away for the greater good!"
Well, if the robots can produce ten times more then the amount needed to sustain everyone, then the government can tax the robots productivity at 10% to achieve the same thing.
You're going to say that that's theft at gunpoint probably, and I'm going to say I don't have any moral problem with that. Taxes have existed since human beings first banded together to form large groups and they aren't going away anytime soon.
So is this just going to turn into another stupid libertarian argument about how all taxes are evil? Because I'm pretty sure that debate has been settled in every single successful civilization since the dawn of time.. Taxes won.
Lastly, I think your viewpoint is pretty evil honestly. So there is a robotic surplus sufficient to feed the world multiple times over in this scenario and people still starve because fuck you I own the robots and I'm only going to help myself? If that's the world there will be a revolution and I'll be on the side of the dirty hippies.
>You're going to say that that's theft at gunpoint probably, and I'm going to say I don't have any moral problem with that.
No I'm not going to argue that it's theft at gunpoint, actually. But thanks for trying to paint me into a corner.
What I am saying is that the world is complicated and just because the robots can make enough stuff or grow enough food in a theoretical sense doesn't mean that utopia is suddenly achieved.
>Lastly, I think your viewpoint is pretty evil honestly. So there is a robotic surplus sufficient to feed the world multiple times over in this scenario and people still starve because fuck you I own the robots and I'm only going to help myself? If that's the world there will be a revolution and I'll be on the side of the dirty hippies.
You don't even know what my viewpoint is so I don't see how you can characterize it as evil! I can't believe how quickly this turned into "you must be a dirty libertarian so fuck you!"
I don't particularly LIKE taxes and a world where taxes magically didn't have to exist but I still got to use roads and schools and fire departments and police and stuff, I'd be OK with that. But since none of those people work for free, I accept taxes as necessary even if not my favorite.
> then the government can tax the robots productivity at 10% to achieve the same thing.
OK what you just said there is that the government is going to take all the useful output of the robots and leave the owners with no useful output. If the robots can produce 10x whats needed and the government takes the first 1x then what the owners of the robots do with the other 9x? Nobody needs the other 9x, so by definition they couldn't sell it.
Disagree with me? OK great, I want to sell you a million liters of air at 1ATM for $0.001 per liter. Wait, you already have more than enough air? And everyone else does too? Fuck who is going to buy this air so that I can make good on my investment?!?!
If the robots were going to be taxed at 10% of productivity you'd basically see the total robot workforce get reduced by 90%. If you spend a billion dollars on a factory you need to get your money back and if you can't sell the excess capacity then you're going broke.
The best scenario I can think of is that the robots become so cheap that eventually everyone becomes largely self-sufficient. But even then you'll still have problems because of land ownership; if you can make everything you need just so long as you have access to land then the price of land will go way, way up.
Maybe once you get to space everyone can have as much of whatever that they need and we can achieve rough approximations of utopia but maybe not. Maybe once we get to space everyone wants their own 500 ft luxury spaceliner and there's not enough raw materials to go around.
I think part of the problem is that human desires are basically unlimited. Maybe not everyone has infinite ability to consume, but the human race, collectively, could consume nearly infinite amounts of anything. So any attempt to imagine "well what happens in the future when we can easily satisfy everyone's current desires" accidentally ignores the idea that in the future people will probably have desires that are bigger than they are today.
There was a time when many people shared a large single room house in Europe in the middle ages. Then someone invented the fireplace and the nobility gave themselves their own rooms. Eventually it became common for everyone to have their own room. Then, everyone has their own house/condo/apartment though sometimes shared between several generations. Now in the US it's quite common for a single person of 25 to have their own 1BD apartment or even a whole house. 500 years ago you'd have to have been filthy rich to have that. Today it's possible for someone with a high school diploma and knowledge of a skilled trade to afford it.
500 years from today I agree that meeting everyone's current demands will probably be a joke and the robots will be able to do it all. But what new desires will human beings have that we can't even imagine right now? I'm not saying that a Star Trek economy could never exist, but that I don't foresee it happening do to the fact that human nature will probably be the same.
I apologize for characterizing you a certain way. The viewpoint I was "painting you into a corner" on is unfortunately imo super common on HN.
I think you have a contradiction in your viewpoint though. On one hand you say that human desires are unlimited, and on the other hand you say that if you tax robot productivity by 10% that means that the owners can't sell the other 90%. How is it possible that nobody needs the other 90% if human wants are unlimited?
What I'm saying is that basic human needs are NOT unlimited. A human being is an animal that needs a certain amount of food, clothing, and shelter to stay alive. And furthermore, in the world we live in today, not every human being gets all the food, clothing and shelter necessary to survive. That's an empirical physical fact of reality. What I'm proposing is that the 10% surplus would be sufficient to provide for these needs, NOT for everything that anyone's heart could desire. Now it's possible that in a Star Trek future, the robots could even produce 100x what every human being needs to stay alive. In that case, you could give every human being 10x what they need and still have a 90% surplus. And because as you pointed out, human wants are unlimited, the owners of the robots will still be able to sell the 90% surplus.
BTW, I don't actually believe this is practical to implement today. So I wouldn't advocate this level of massive redistribution. However, in a hypothetical super productive future society, I might.
P.S. If you want to hear my reason why this society ISNT as good as it sounds (which has nothing to do with taxes or the morality of redistribution) see my post here:
Thanks for arguing like an adult. It's greatly appreciated.
I do agree that I have a contradiction in my argument; you're spot on. I'm going to chalk that up to not fully explaining things.
The first gallon of water per day I REALLY NEED to drink. The next I'd really, really like to have to brush my teeth and wash a bit. The next 5 gallons I still really want for washing and cooking. The next 20 are for bathing and laundry. The next hundred don't do me anywhere near as much good and eventually the utility I get from an additional gallon of water goes below the $0.01 per gallon that I pay my utility, so I don't use more.
This kind of decreasing marginal value happens everywhere in the economy. For a lot of things (like energy) the demand is nearly flat but for large portions of the economy the demand is highly nonlinear. In other words, doubling the price might reduce consumption by 80% or more.
In those situations if you take the first marginally very valuable portion of the production away from the factory owners they have to raise prices on the rest to recoup their losses. But the increased prices bring volume down, which could potentially increase prices again.
I am sure that there are some situations where the 10% surplus really would be enough to provide for everyone's basic needs (however the hell you define that) and not totally fuck over the factory/robot owners. But there will also be large swaths of the economy where you can't.
I do think taxes are fundamentally immoral because I can't get past the theft-like nature of "pay the taxes or you'll go to jail" but I'm pragmatic and understand that taxes are better than a completely uneducated populace. And honestly I'd be much happier with a world where taxes were only 10% in total rather than the 20%-40% that they are now. I just don't think you can feed, clothe, shelter, etc the whole world on 10% of total production. It would be great and I'd love to live in that world but I really feel like there's something that would prevent it; I can't put my finger on it but I'm pretty sure it's there.
Well we're debating a totally hypothetical situation. The premise to begin with is that we're talking about a far future post scarcity society. If you want to say that's implausible, sure, I might agree with you, but that's not the issue.
As far as the theft like nature of taxes, we'll just have to agree to disagree. The concept of theft in and of itself only exists in the context of a society where laws exist and are enforced. That society can only exist with taxes. In the jungle, there's only what you can carry and what you can protect, and what stronger people want to take from you. But I can't say more without understanding where you get your morality from. If you get your understanding of morality from religion for example, most major religions justify allowing the government or head of state to use force to sustain that government.
P.S. As far as the marginal value of goods; yes I think you are right in that if you took 10% of each good (like fresh water) and distributed it that way it would probably cause huge economic problems. My guess is that any workable way of implementing this tax would be more complex and progressive, much like our current tax system doesn't tax everything equally. For example, luxuries would probably be taxed more, and basic necessities such as water would probably be taxed less. I have no idea what the details of such a system would be, it would probably take a lot of thought to work out what would make sense.
Part of my hesitance to be persuaded that a Star Trek economy could possibly work is that in some senses it already has. In the 1850s 90% of the people in the US were farmers. Around 1900 that number shrank to 30% and today it now stands at about 3% so farmers can now grow 30x as much food as they used to be able to. But even given a 3000% increase in productivity there are still people starving in the world.
Why is that? Well part of it is that making a single farmer 30x as productive involves a LOT more capital. You need tractors, plows, planters, sprayers, combines, and somewhere to store it all. You also need a lot of fuel to make everything go and maintenance to keep it all working. Worse, most of these items can't be co-oped between farmers because they'll all need them at the same time. It's not uncommon for a farmers to have several hundred thousand to several million dollars worth of equipment.
In response to the complexities you've mentioned I think that's the whole of the problem; implementation. The technology exists to feed the whole world at least twice over and probably a lot more. It's not being done in part because of logistics (getting the food there isn't trivial), but primarily because of the political and economic issues. How do we decide who pays for it? I can't see human nature changing, you know?
I guess maybe I have a hard time accepting the premise that somehow the world will get to a place where you can work for a couple of days and live on that for a year.
> Why work on a manufacturing line producing required and high-demand materials and equipment
We're rapidly reaching the point where 'manufacturing' will be what farming is today.
Farming employes (iirc) 3% of the US population. Yet they feed _everyone_. No one _has_ to be a farmer: people _choose_ farming.
Automation allows fewer people to make more stuff. People will choose to labor in a factory for the same reason they choose farm work: it's challenging, fun, and an interesting way to make a living.
The problem is that for certain goods, the demand becomes completely inelastic for individuals: water, food, shelter, security. The starving are not, and cannot be, rational economic actors. Slightly redenominating prices would be a small price to pay for millions of new, actually rational economic actors.
Post-scarcity economics is more the study of localised phenomena. As alluded to in the post, some things will likely always be in short supply somewhere.
[1] http://en.m.wikipedia.org/wiki/Basic_income