
Why a bunch of Silicon Valley investors are suddenly interested in basic income - dankohn1
http://www.vox.com/2016/1/28/10860830/y-combinator-basic-income
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tomcam
Money comes from taxpayers. What if a majority of taxpayers decide they'd
rather not work?

~~~
dragonwriter
> Money comes from taxpayers.

Money comes from the government that issues it, actually. _Government
operating funds_ come from a variety of sources, but largely, it is true, tax
payments.

> What if a majority of taxpayers decide they'd rather not work?

If you mean "decide not to take actions that create taxable income" (UBI --
and government in general as increasing automation eats traditional employment
-- only works with ending preferential tax treatment of capital income, so
that "work" and "create taxable income" become even less the same than they
are currently), then either:

(1) If UBI is variable in quantity based on distributing proceeds of a
dedicated tax stream among the qualified recipients (i.e., the citizenry at
large), then the UBI amount drops, and that decision because less attractive,
leading to more of those able to earn taxable income in addition to the UBI
choosing to do so; this is a self-limiting negative feedback loop.

(2) If UBI is _not_ variable, and is fixed in nominal value, the reduction in
_production_ relative to the supply of money in consumer hands caused by that
decision leads to increased inflation, reducing the _real value_ of UBI,
leading to the same results as in #1. Again, a self-limiting negative feedback
loop.

(3) If UBI is inflation-indexed, then you have a positive feedback loop that
blows up the system. So, don't do that.

~~~
gavazzy
This is a tragedy of the commons problem. If there are 100 individuals, then
if one individual stops working, average UBI payout would only decrease 1%.
So, a rational actor would stop working.

Similarly, if 95 out of 100 stop working, then the other 5 have little
incentive to work, because their income is basically funding everyone else.

This is the opposite of a negative feedback loop.

~~~
dllthomas
I'm not sure which of the two cases you're addressing; I'll respond with one
comment assuming each.

If you are talking about case 2 (fixed UBI, fixed tax rate, making up the
difference - when there is one - by printing money or borrowing), then when
one individual stops working the UBI payment does not decrease. If
productivity falls when that worker stops working (presumably the case for
most workers), then we would expect to eventually see some inflation. It may
work out to 1%, with the proper assumptions; I'm not certain.

Still I don't see why it follows that _" a rational actor would stop working"_
\- some may, but only if they decide the small decrease in UBI _and large
decrease in earned income_ is worth it.

At sufficiently high UBI level relative to earned income, that's pretty likely
to be the case. At sufficiently low UBI level ($1?) that's pretty unlikely to
be the case.

> Similarly, if 95 out of 100 stop working, then the other 5 have little
> incentive to work, because their income is basically funding everyone else.

The same chunk of their income as ever is going directly to fund everyone
else. A bigger portion of their income is being diluted by the money printed
to make up the rest of the UBI. But as the currency devalues, presuming they
are doing things people want, they are able to demand more money for their
production. The UBI is diluted toward meaningless. At some point, other
workers decide to get back in the game, because the (nominally constant but
really much lower) UBI will not fund the lifestyle they want, slowing the
inflating.

This is a negative feedback loop.

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sharemywin
Now I have some context so it makes a little more sense. Is society as a whole
fund-able?

~~~
tomcam
I can't see how. The government has no money if its own. It depends on taxes.
Currently about 47% of working citizens pay no federal income tax at all. I
like the idea of basic income, but I cannot fathom where the money comes from.

~~~
gozur88
I think it will work fine for about two generations. People who've developed a
career will probably still work, since much of the hard work is done. And
there's a cultural push toward work.

But culture follows the facts on the ground. Over time the concept of a work
ethic will erode away. I suspect once it becomes acceptable to not work a
whole lot of people will be perfectly happy smoking pot and playing video
games. It won't take _that_ many to break the system.

~~~
dragonwriter
> I suspect once it becomes acceptable to not work a whole lot of people will
> be perfectly happy smoking pot and playing video games. It won't take that
> many to break the system.

If the system is constructed so that increasing defections from taxable-
income-generating activity (which isn't just work -- capital income, after
all, is taxed as well) decrease the real value of UBI (and, thus, the
attractiveness of forgoing such activity in favor of other pursuits), then
this tendency will be controlled and constrained within the ability of the
productivity of the active economy to support.

As discussed in other subthreads of this thread, this kind of negative
feedback is actually quite easy to build into a UBI system.

~~~
gozur88
>As discussed in other subthreads of this thread, this kind of negative
feedback is actually quite easy to build into a UBI system.

So you might end up with a situation where people who've never held a job and
have no marketable skills find, in their late twenties or thirties, that UBI
is no longer enough to make ends meet.

That sounds like a recipe for revolution.

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dankohn1
Vox does an excellent job on their explainers.

