
The Universal Right to Capital Income - shinryuu
https://www.project-syndicate.org/commentary/basic-income-funded-by-capital-income-by-yanis-varoufakis-2016-10
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otini
I think Varoufakis is profoundly misled in thinking that basic income can be a
left-wing policy.

It is a well-known fact that there are two versions of basic income out there:
the right-wing version, where welfare is removed and replaced with a single
allocation that isn't high enough to live of it; and a left-wing version,
where the distributed amount is sufficient to live a decent life and thus
gives "real freedom" to people.

Here is why I think the left-wing version is a fantasy: I start from the
assumption that capitalistic economies like ours mainly relies on coercion. In
other words, critical parts of production depend on people who would rather do
something else, if it wasn't their only way to eat. Under that assumption, any
policy that gives people a real choice between being employed in a factory and
doing the things they really want to do removes in fact the coercion — making
the economy collapse.

The form collapsing would take could for example be the following: low-paid,
exhausting and low-considered jobs are not taken anymore, and yet society
depends on them. The only way to make the workers come back is to pay them
much better. But this can only lead to a combination of dramatic price rises
and cuts in shareholder profit (and I am not an advocate of capital income,
but sadly it is currently one of the main incentives for investment).

For these reasons, I am convinced that any attempt to implement a left-wing
basic income will inevitably result in the right-wing version taking over,
meaning less rights for the workers and a destroyed welfare.

~~~
MacsHeadroom
That's clearly a faulty assumption. If production depends on a job and supply
is short, then the value and pay will rise until supply meets demand.

The assumption also ignores advances in automation. Factories of the future
may not need a single human, except the capitalist to sign papers.

~~~
otini
> That's clearly a faulty assumption. If production depends on a job and
> supply is short, then the value and pay will rise until supply meets demand.

I don't disagree with your statement about supply and demand. But as a matter
of fact, the supply is never short, because structures of society force a
large fraction of the population into jobs they cannot let go, whether they
like it or not.

It is common knowledge that people of low social status are given a choice
between shitty jobs and starvation. Saying "if the job is not good enough,
supply will fall and wages will have to rise" does not take into account the
highly competitive character of the job market, especially for those with low
educational capital.

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curun1r
Why do all discussions of basic income omit the best argument in favor of it?

I would think, especially on a site like HN, that people would realize just
how valuable BI would be to entrepreneurs. Many people don't pursue business
ideas for fear that they'll burn through savings or have problems paying for
the necessities of life. With BI, that concern goes away. You may have to
scale your lifestyle back a bit, but you basically start at ramen
profitability.

And yet all discussions of BI tend to frame it as an extension of welfare
given to people who can't earn enough to support themselves. I'm not against
taking care of the poor, but when you frame the argument like that, you miss
the benefits to society from all that extra entrepreneurship.

~~~
twoodfin
You have to counter-balance that benefit by the fraction of adults who
otherwise would be working productive jobs but instead decide to spend their
hours and BI rock climbing, playing video games, or writing bad poetry.

Would extra entrepreneurship make up for their loss of production? Maybe, but
I don't think entrepreneurship and employment levels in nations where welfare
provides everyone with guaranteed "ramen profitability" are encouraging on
that front.

~~~
MacsHeadroom
Sounds like there may be entrepreneurial opportunities for rock climbing gear,
video game design, and poetry sharing.

~~~
twoodfin
Sure, but ultimately the money to pay for those things has to come from
production. There's no free lunch.

~~~
sooheon
Increasingly, machines can and will be handing out "free lunches" of
production. Under traditional assumptions, these free lunches belong solely to
the factory/AI owners, and those made thusly obsolete can fuck off and starve
or lobby their representative forms of government for crumbs of the pie. Or we
can start recognizing that now more than ever the fruits of capital and the
means of production must be redistributed.

Think of it another way, we're getting the above mentioned losses of human
production _anyways_ , because vast swathes of human mass will be made
completely obsolete. Except without redistribution they won't be playing video
games, writing bad poetry, or going rock climbing, they'll simply be starving.
The question is do we let them hang, while those lucky enough to inherit
server clusters running AI and fleets of self driving cars sit back and solely
claim unprecedented concentration of capital?

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pliny
>The idea that you work hard and pay your income taxes, while I live off your
enforced kindness, doing nothing by choice, is untenable. If a universal basic
income is to be legitimate, it cannot be financed by taxing Jill to pay Jack.
That is why it should be funded not from taxation, but from returns on
capital.

Capital is savings is unconsumed income.

"Universal dividend" is another name for tax on investment which is another
name for tax on income. Whether confiscating income to pay for leisure is
"untenable" shouldn't depend on the name you give the act of confiscating
income.

In the end, a corporation is a machine that takes investment now and
distributes dividends later, and the reason why the investment occurs is the
promise of dividends. A corporation has to distribute $100 in dividends to get
$75 into the hands of its investors (given a tax on capital gains of 25%), or
it has to distribute $100 in dividends to get $75 dollars into the hands of
its investors and $25 for the government because the government confiscated
25% of the IPO... what's the difference? I guess in Varoufakis' model people
can still buy, like, gold as an investment and enjoy preferential taxation.

~~~
sooheon
Not posting to disagree, necessarily, just to state my somewhat muddled
thoughts and ask for your critique.

> Capital is savings is unconsumed income.

If you think of it that way you can pretty much equivocate capital and income
tax. The way that they differ in reality is that subsistence laborers
generally have no reason to pay capital tax. For the rich, capital tax is a
huge proportion of their tax burden. Picture an heiress who does not earn a
salary a day in her life. Modern trends of decreasing capital tax leads to
effectively a regressive total tax structure. I think the author is
essentially arguing for a more progressive tax, in a way that feels more
"fair".

~~~
pliny
>If you think of it that way you can pretty much equivocate capital and income
tax

They are equivalent. Income is only good for consumption and investment (which
is just deferred consumption), so if you tax income and you also tax
everything that income is used for, you have taxed the same income twice. In
fact income used to buy equity is taxed three times, first when it is earned,
second every time the company reports a profit and then third every time the
company issues a dividend. But all of these are collected on the "same" money.

If you want the rich to have a greater part of the tax burden, that's fine,
but Varoufakis pretends he can argue against income tax in one paragraph, and
argue for a functionally identical revenue scheme in the next.

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usrusr
The fixation on IPOs seems more than fishy to me. Corporations that already
exist would get to pay 100% tax free dividends, whereas corporations that IPO
after the watershed moment give the unnamed percentage of dividends to the
"Commons Capital Depository"? What about private companies? This would just
create uncalculatable incentives. Corporations are already going far too much
for war-chest over dividends as it is.

So why not at least tie it to estate taxation? It seems so obvious to me that
Varoufakis not mentioning the possibility looks like him being all too careful
to avoid stepping on certain feet.

Seize that percentage when they are passed on from someone who (maybe) earned
the capital to someone who by definition did not. Convert shares to special
"dividends taxed for CCD" shares if you don't want to repeat for each
generation and/or you don't want to mess up voting. It would certainly create
an imbalance between public corporations and privately held ones, but
according to the usual anti-estate-tax arguments that is exactly what you
want: don't split up the family farm. But share portfolios are inherently
splittable. If the next AT&T or Standard Oil turns out to be a private company
due to abuse of this imbalance, forced IPO beyond a certain size might be an
emergency hatch option. But that is one of the few problems where i think it
is perfectly reasonable to not put too much thought into before they happen.

I do however like the idea of something UBI-like that is not defined by needs
(with all their inherent negotiability and the destructive bickering that
comes with it) but directly by the capability of the underlying economy.

(edit: removed concrete numbers which i somehow thought were inside the
original article, but which i only accidentally picked up from a peer comment)

~~~
twoodfin
_I do however like the idea of something UBI-like that is not defined by needs
(with all their inherent negotiability and the destructive bickering that
comes with it) but directly by the capability of the underlying economy._

If you squint at the right angle, this is essentially the argument for
"privatizing" Social Security. Even in that limited form it's a huge political
loser (for a mix of good and bad reasons, IMO).

~~~
usrusr
An interesting observation. The way i squint at it, i see a separation of
concerns between need-based welfare (e.g. disability support) and purely
redistributive aspects intended to avoid collapse by the combined forces of
capital concentration and shrinking demand for labor.

Defined rules instead of making up decisions as you go. That is always a tough
sell, because it considerably reduces the scope of activity for politicians.
Less for them to decide or promise. But that does not mean that we should not
try. Imagine the opposite: a state that engages generously in welfare, but
only ever in one-time handouts. It would be a perpetual repetition of those in
power feeding of all critical mouths.

I think that this is exactly how the Roman Empire dealt with the "automation
problem" of their time (a massive increase of forced labor imports -slavery-
completely wrecking the domestic labor market). Now where again did fascism's
namesake originate? Not really the point, I am convinced that everybody would
agree that one-off welfare is a power politicians should not have (even
politicians, as long as they are not in power).

No matter where you stand on the question of more or less welfare, I think you
should always fight for it being more regulated. Which in the case of welfare,
means "de-politicising" it as far as possible.

~~~
twoodfin
I've always thought it would be interesting (albeit massively undemocratic) to
give the Fed a lever on fiscal policy.

I am not an expert on central banks and macroeconomics, but I don't see why
the Fed couldn't wiggle payroll tax rates around, keeping it revenue neutral
by making up any shortfall with the printing presses.

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empath75
The only problem with this is that it would concentrate ownership of all
industries in the hands of the government, eventually.

