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#capitalism is not...
* ... large corporations
* ... greed
* ... the rich taking advantage of the poor
* ...unfair labor wages
capitalism is...
*... fair market prices determined by value
*... markets that are not and can not be manipulated
*... fair wages for fair work based on the value contributed
*... poor people having equal chance as rich to market their skills
*.... a free market, a fair market.
I'd add to that list:
*... value determined by the market participants
Also, "free" as in "freedom", (or free beer, too, if that brings in more customers).
(clarification - no need to respond)
I just had a brewery favorite my "free beer" toot and thought others might have misunderstood the metaphor also.
"Free beer" in the economics context means something like UBI or other similar transfer to the general population so wealth is more evenly distributed and more people can participate in markets so the markets function better ("more customers").
Kind of like "Build Back Butter", something like that.
@Pat UBI sounds like a wonderful idea. My proposal for an UBI implementation is where we take 75% of the money from every worker's pay check and give it with no conditions asked backed to their employer. That way the employer has more money to pay wages with and naturally will give everyone a raise!
The idea is to provide a mechanism whereby the effects of concentrated wealth, as we discussed elsewhere in this thread, could be mitigated, so that there will be more participants and then the markets and price discovery would function better.
Your proposal (facetious, I assume) would do the opposite, making fewer participants.
Just a few basis points on all gross income, no deductions, no exemptions, would be enough to fund such a thing. If the tax is a flat tax, no loopholes, and the UBI is distributed in a similar manner with no favoritism, and so as to increase market participation, that's a good thing. And the government can't muck things up. It's automatic. Everybody pays a tiny fraction of income.
It's better than "Build Back Better" where all the polititians and government cronies decide who gets the money in a corrupt fashion.
@Pat yea my example was facetious.
As I said earlier concentration of wealth is not an issue as it doesnt reduce the participants as you suggest. Wealth is counter intuitive because the second you start thinking of it as a fixed value that can be redistributed at all is when you fail (IMO) to understand it.
When you distribute the wealth artificially the wealth effectively evapoates because you have pushed the wealth from investment vehicles (what the wealthy mostly do with it) to non-interest bearing assets, largely things which have little or no resale value, at least in part. You effectively move the wealth out of investments designed to generate wealth and into designer shoes, or new video games and other things which have little or no value. The companies make some profit off of it, so the wealth doesnt disappear entierly. But ultimately it does far more harm than good.
People buying lots of junk is not a healthy economy. People investing in companies and using a small portion of wealth generated to buy some luxury things is fine however. Thats why when the wealthy have a lot of money, at least in a healthy society, it generates the most wealth and indirectly creates the most prosperity for the people (who tend to share in the profit from these ventures via their 401K or even as an employee by it producing more jobs).
People buying "junk" is bad for the economy but people buying "luxury things" is fine? It's a free market, so none of it is "junk", it all has the value the the market participates have placed on it. It's all worth exactly what the market says it's worth. But that value, that price discovery, happens best when there are more buyers and more sellers. Not all of the UBI recipients will spend the money. Many will use it to get an education, start a small business, etc. The ones who make the right decisions will do better. That's how markets work.
@Pat No people buying luxury things is junk as well. But thats just it, wealthy people do buy luxury things but generally its a VERY small percentage of what they buy. The vast majority of rich people got there not by wasting money but by investing and using a small portion of that to buy luxury things. It just looks like a lot because they have so much, but in terms of percentage of their income its quite small usually. If a rich person was wastefully spending on luxury in terms of being the majority of their income they would have never gotten rich.
Keep in mind rich people who got rich through luck or means other than investment, like some musicians can be the exception rather than the rule.
However poor people generally spend much much higher percentage of their income on "junk" relative to the percentage they invest. In fact most poor or middle class people are wasting their money on cars, fancy shoes, or expensive phones and leave little if any for investment. So their ratio of waste is quite high usually.
As for it all being worth exactly what the market says its worth... worth is not the same as wealth. If I buy brand new shoes for 200$, yes it is worth that... new. The moment I put them on my feet it now drops to being worth what, 50$. That is 150$ that literally goes up in smoke in an instant. So buying those overpriced shoes means you are destroying wealth, not creating it. Buy a stock for 200$ though and while your buying something of the exact same worth it is very unlikely to drop 75% in a day. Yes you might loose money but that is balanced by the fact that you might gain money as well. So it is where the wealth generation lies ultimately.
As for using it to start a business or get an education... well putting aside UBI isnt nearly enough to pay for those things, yes some will. But they will be a small minority. Instead of giving people millions or billions in cash and seeing 0.1% of them use it to tip the scales to go off to college you'd be better served to just use taxes to make college free for everyone. Then you know 100% of that money is going to actually improve someones skills and therefore long term generate real wealth from that money.
I understand what you are saying about investment vs. spending. But the amount that is diverted from investments and luxury goods is a small amount, percentage wise -- a few basis points, while the amount received by recipients is a much higher percentage. It makes a huge difference to the lives of those people while having little effect on everyone who pays the tax. This would also help with things like crime and mental health, as we discussed earlier. Money problems for poor people is a huge stressor, whereas a few basis points off of income is not even felt.
As to the government making specific decisions about how people can improve their lives, like free education -- I think people are better at making their own decisions.
@Pat Except that in reality it isnt helping anyone, thats the problem. Money distribution never does. It only gives the illusion of it. The act of redistributing wealth dissolves the wealth, in other words, when you take it out of investments and into people who are not historically responsible spenders its the same as burning money, prices go up, and ultimately long term doesnt just negate the UBI but puts people in a worse position than when it started.
In fact you can see that off recent data from america where checks were given out to everyone as a sort of UBI for COVID.. almost to the date the checks were sent out prices on the items people were buying with those checks skyrocketed and it wasnt until that money was all spent that prices normalized again.
UBI is the best way to ensure the collective wealth is destroyed and everyone is left worse off than before. Like i said it only works when you forget the fact that wealth is in constant flux and 1$ isnt the same one day to the next.
A tax, by definition, is a redistribution of wealth. It's just a matter of who pays and who receives. A UBI collects the money fairly and distributes it fairly. The way it's done now is completely unfair. It's collected mostly from those who don't understand the loopholes or who are unable to take advantage of them, and then it's redistributed to politicians, and their cronies.
It's a matter of fairness.
Also, UBI helps prevent revolutions. Eventually, all the politicians and billionaires will end up wearing orange jumpsuits in a Tennessee re-education camp, and everybody loses their freedom. That's no good, but that's what will happen if they continue the way they are doing now.
UBI acts as a prophylactic to socialist/communist revolutions.
@Pat "A tax, by definition, is a redistribution of wealth. It's just a matter of who pays and who receives."
Not at all, only progressive taxes are. A flat tax where everyone of any income pays the same percentage is not a redistribution.
Second its not just the fact that wealth that is being redistributed that makes UBI so harmful, but rather the nature of it. Taking from rich people and using that money to pay for "free" education for poor people is a redistribution of wealth that isnt harmful but beneficial. The reason is you are making people into better wealth generators. However taking money from good wealth generators (the rich) and dropping it in the lap of people who have historically been poor wealth generators, who in fact even tend to destroy wealth (the poor) with their habits is harmful.
While I agree "fairness" is important UBI doesnt represent fairness. Fairness is giving opportunity to the poor to achieve what the rich have if they invest in their own skills and abilities. Fairness is free education, fairness isnt stealing one persons hard earned income and giving it to another person simply because that other person wasted all their money and never learned how to make wealth... you teach people how to fish, you dont give them fish.
>"In fact most poor or middle class people are wasting their money on cars, fancy shoes, or expensive phones..."
I assure you, poor people are not buying cars and expensive items. They spend their money on food, rent, and maybe if they have some money at the end of the week, they go to the thrift store to buy used clothing.
>"A flat tax where everyone of any income pays the same percentage is not a redistribution."
A flat tax is what I was proposing. About .1% to .3% of income for everybody. And yes, it is a redistribution because it isn't transferred to recipients based on a percentage, it goes to the lowest income or lowest wealth people, so it works out to be a redistribution. It's just more fair than the way taxes redistribute the wealth today.
Regarding free education, that distorts the market. The main reason why education is so expensive today is because of government subsidies for education. That extra demand drives up the price of education. It's better for the market to decide what to spend it on, what type of education, how to finance it, etc.
Also, there are a lot of reasons why people are poor. A lot of well-educated people are poor because they have huge student loans, or because they got a degree in a field that has no demand for their skill set right now.
UBI helps people to pull themselves out of whatever they are in. It gives them a chance to just have time to think about what they should do, to not have to rob a store to get food or pay rent, to have a decent car that doesn't breakdown all the time so they're late for work and lose their job. This is the reality. This is what poor people face. They don't even have the luxury to even think about how to manage their money. The money is gone on essentials before the week is up.
> I assure you, poor people are not buying cars and expensive items. They spend their money on food, rent, and maybe if they have some money at the end of the week, they go to the thrift store to buy used clothing.
Not in the USA. When i go to poor inner city locations I see people with extremely expensive shoes and customized cars meanwhile they cant afford child support and their house is falling apart. Even personally I cant tell you how many of my poor friends when the COVID checks came in started posting how they were going to buy a playstation or some other item they didnt need.
> A flat tax is what I was proposing. About .1% to .3% of income for everybody. And yes, it is a redistribution because it isn't transferred to recipients based on a percentage, it goes to the lowest income or lowest wealth people, so it works out to be a redistribution. It's just more fair than the way taxes redistribute the wealth today.
That still isnt wealth redistribution. Consider the following. There is a rich person who has retired. They have millions of dollars but at this point just live off it, their income is 0. Such a person with a flat tax would pay 0 in taxes yet still get the UBI. Despite being wealthy his wealth wasnt redistributed.
flat taxes where the UBI is given to everyone equally isnt really a redistribution of wealth, at least not int he traditional sense of the word. That said, this is semantics so we can avoid it, now that you explained what you meant that is good enough. The issue still remains that anything that just dumps a load of cash taken from others in the laps of the middle class or poor is generally going to cause more harm than good.
> Regarding free education, that distorts the market. The main reason why education is so expensive today is because of government subsidies for education. That extra demand drives up the price of education. It's better for the market to decide what to spend it on, what type of education, how to finance it, etc.
Yes it would distort the market, just like a UBI too distorts the market in a similar though more generalized way. But the assumption here is the free education needs to be provided by just paying peoples way to private schools. It can just as easily be provided by using the taxes to build public schools that are free to use. In this way it wouldnt drive the price up but in fact through competition drive the prices down.
> Also, there are a lot of reasons why people are poor. A lot of well-educated people are poor because they have huge student loans, or because they got a degree in a field that has no demand for their skill set right now.
Yes I agree not everyone who is poor is poor due to bad skills with money. But the overwhelming majority of poor people have bad financial education and this is often passed down generationally.
> UBI helps people to pull themselves out of whatever they are in. It gives them a chance to just have time to think about what they should do, to not have to rob a store to get food or pay rent, to have a decent car that doesn't breakdown all the time so they're late for work and lose their job. This is the reality. This is what poor people face. They don't even have the luxury to even think about how to manage their money. The money is gone on essentials before the week is up.
Except it doesnt because it devastates the market, drives prices up, and in fact makes it **harder** for poor people to pull themselves up, not better. Free unconditional money is never going to work because for every 10 people 1 might pull themselves up while the other 9 just burn the cash and drive up the prices for everyone else. In the end even that 1 person who wants to life themselves up will fail to do so as a result of the fallout of the UBI on the economy.
@Pat In fact such a huge portion of the poor have drug and alcohol problems by giving them money would be a death sentence for a large portion of them. Not only do you make the economy so much worse that the good ones cant use the money to do much good, but now you've just helped a whole slew of alcoholics drink themselves to death too.
For the same reason if you see a homeless person never give them money, to do so you will likely harm them immeasurably. Instead feed them, give them clothes, point them to rehab and help centers.
For the record my opinion comes from the fact that I grew up in extreme poverty. I grew up on welfare and the neighboorhood I was in was extremely poor. I speak as someone who live a life around and as a poor person and who has seen it first hand, and eventually lifted myself out of it.
@freemo
>I see people with extremely expensive shoes and customized cars meanwhile they cant afford child support and their house is falling apart. Even personally I cant tell you how many of my poor friends when the COVID checks came in started posting how they were going to buy a playstation or some other item they didnt need.
If someone can afford to buy a custom car or a playstation or they own a house (usually), then they are doing better than most people who are truly poor.
>Consider the following. There is a rich person who has retired. They have millions of dollars...
That person wouldn't get UBI. It only goes to people who need it for food, clothing, rent, education, etc.; not to wealthy people.
>The issue still remains that anything that just dumps a load of cash taken from others in the laps of the middle class or poor is generally going to cause more harm than good.
Even when that cash comes from wealth generation? If the economy is hot, with full employment and lots of wealth generation, that causes inflation as much or more so than a few dollars given to poor people. (The UBI wouldn't go to the middle class who have enough to eat, and pay rent, etc.)
> It can just as easily be provided by using the taxes to build public schools that are free to use. In this way it wouldnt drive the price up but in fact through competition drive the prices down.
Do you mean government-run universities? They typically don't provide as good of an education as privately run schools.
>But the overwhelming majority of poor people have bad financial education and this is often passed down generationally.
Agree.
>Except it doesnt because it devastates the market, drives prices up, and in fact makes it harder for poor people to pull themselves up, not better. Free unconditional money is never going to work because for every 10 people 1 might pull themselves up while the other 9 just burn the cash and drive up the prices for everyone else. In the end even that 1 person who wants to life themselves up will fail to do so as a result of the fallout of the UBI on the economy.
As I said, full employment and greater wealth creation drives inflation too, so either way, when folks have more money -- regardless of the source -- it's going to drive inflation.
All ten of those people will be lifted up. Some more than others. Those who do nothing but just use the money to buy food, clothing, housing, are going to be better off, too. And the one (if indeed it's just 10%) will no longer need the UBI.
> If someone can afford to buy a custom car or a playstation or they own a house (usually), then they are doing better than most people who are truly poor.
Thats just it, they cant "afford" it. Their home is usually section 8 (rented and paid for by the government) and the money they spent on shoes or the car was what little they had and it meant they couldnt afford to feed their child or themselves. The whole point is they bought it despite not being able to afford it by not paying their essentials.
> That person wouldn’t get UBI. It only goes to people who need it for food, clothing, rent, education, etc.; not to wealthy people.
Then you arent talking about UBI at all. UBI by definition is an amount of money distributed to everyone in the exact same amount (thats why the U stands for Universal). If you are only giving it to the poor then it is welfare it isnt UBI.
For clarity here is the definition of UBI from wikipedia: "Universal basic income (UBI), also called unconditional basic income, citizen's basic income, basic income guarantee, basic living stipend, guaranteed annual income, universal income security program or universal demogrant, is a sociopolitical financial transfer concept in which all citizens of a given population regularly receive a legally stipulated and equal financial grant paid by the government without a means test."
> Even when that cash comes from wealth generation? If the economy is hot, with full employment and lots of wealth generation, that causes inflation as much or more so than a few dollars given to poor people. (The UBI wouldn’t go to the middle class who have enough to eat, and pay rent, etc.)
Yes in fact **especially** when it comes from wealth generation. The rich when they generate wealth put most of that wealth back into investment (increasing the pool used to generate wealth). so when it is siphoned off the top of that it is preventing the money from going back into investments and therefore reducing the wealth generation.
> Do you mean government-run universities? They typically don’t provide as good of an education as privately run schools.
Yes I am talking government run universities. While I agree they arent as good an education as the more highly priced private education that is ok. The education from government run universities is still extremely valuable and increases a persons skills. It also means that the person can earn enough money so that if they want to come back and go to a private university later for additional degrees they can. Either way it helps give people a start.
> As I said, full employment and greater wealth creation drives inflation too, so either way, when folks have more money – regardless of the source – it’s going to drive inflation.
While there is some truth to this it isnt just about inflation. Inflation when it is slow and moderate over a long time isnt a bad thing per se. inflation is only bad when it exceeds the rate of wealth generation. With a UBI you decrease wealth generation and increase inflation, this is devastating. Without a UBI and with good wealth generation then while some inflation occurs the wealth generation will generally significantly outpace it.
>Thats just it, they cant “afford” it. Their home is usually section 8 (rented and paid for by the government) and the money they spent on shoes or the car was what little they had and it meant they couldnt afford to feed their child or themselves. The whole point is they bought it despite not being able to afford it by not paying their essentials.
Well, that's a much bigger problem than poverty, if someone is buying expensive shit like that instead of food. That means that they can't take care of themselves even with financial support and probably should be institutionalized or provided with some other kind of support, or basic living skills, or something.
>Then you arent talking about UBI at all. UBI by definition is an amount of money distributed to everyone in the exact same amount (thats why the U stands for Universal). If you are only giving it to the poor then it is welfare it isnt UBI.
I've heard various definitions. Maybe this is something else. I used the term UBI because that's what people are familiar with. But I see now that that actually caused more confusion.
>Yes in fact especially when it comes from wealth generation. The rich when they generate wealth put most of that wealth back into investment (increasing the pool used to generate wealth). so when it is siphoned off the top of that it is preventing the money from going back into investments and therefore reducing the wealth generation.
Yeah, I understand that, I just don't think that a few tens of a percent are going to cause such devastation.
Re university, I agree education is key, but I just prefer a more market-based approach.
>While there is some truth to this it isnt just about inflation. Inflation when it is slow and moderate over a long time isnt a bad thing per se. inflation is only bad when it exceeds the rate of wealth generation. With a UBI you decrease wealth generation and increase inflation, this is devastating. Without a UBI and with good wealth generation then while some inflation occurs the wealth generation will generally significantly outpace it.
I think that UBI (or whatever) would have so many benefits by reducing crime (which is a direct wealth destroyer), reducing mental health issues, reduce malnutrition, increase health, increase education, and generally increase goodwill among people, I think it's worth it. And it will lift many people up to help their economic situations so they no longer need UBI.
If you count all income, no deductions, no exemptions, top line of all income statements, every purchase and sale, every loan proceed and payment, every dollar that changes hands, the total is much more than that. It's over a quadrillion. Just a fraction of a percent is more than enough for a targeted UBI of much more than $400/mo.
@Pat except that isnt how we tax money. The number I gave is all taxable income. So no the number is exactly the correct one. It would require 10% of taxable income to support a $400 UBI. So the statement that to support it we would need to raise income tax by 10% is a correct one.
Even if you get the money from something else like sales tax the point is the amount of tax you'd need to increase by any measure is absolute huge to support UBI.
So no the idea that you only need a fraction of a percent is absolute false. The number is 10% increase in income tax for a $400 UBI.
>except that isnt how we tax money....
Yeah, I know. The current way isn't fair because it has all kinds of exemptions and deductions and loopholes. I'm proposing a fair system that doesn't have all that -- it taxes all sources without deductions. If we do that, then it's more fair and the rates are much lower, less than 1%.
Also, a UBI-type of system would be in place of the current welfare system, so it would save all that, too.
@Pat Let me put this another way. The entier discretionary budget of the USA in 2015 was 1.11 trillion. The cost not including administrative cost for $400 UBI is 1.7 trillion. Significantly more than the entire discretionary budget of the USA.
I'm not sure you realize just how **massive** an expense UBI is... You would nearly have to double **all** taxes collected int he USA. On average people pay about 13% tax across all forms of tax in the usa.. a 10% increase is nearly doubling that.
UBI is far from "a few percentage points"... it is an absolutely phenomenal expense.
@Pat by the way to be clear discretionary budget is not the complete spending of the USA. I used it because its usually what people talk about.
If we talk about full spending of the USA government then its around 6.5 trillion a year. So a $400 UBI at a cost of 1.7 trillion plus whatever the administration costs would be be at a cost equivelant to 1/4or 25% of **all** spending of the us government in a year.. again this is absolutely insantely expensive.
>Let me put this another way. The entier discretionary budget of the USA in 2015 was 1.11 trillion. The cost not including administrative cost for $400 UBI is 1.7 trillion. Significantly more than the entire discretionary budget of the USA.
We're not just talking about the discretionary budget. A targeted-UBI would replace all entitlements, SS, food stamps, section-8, welfare, lots of other subsidies.
>I’m not sure you realize just how massive an expense UBI is…
Yes, I do.
>You would nearly have to double all taxes collected int he USA. On average people pay about 13% tax across all forms of tax in the usa.. a 10% increase is nearly doubling that.
UBI is far from “a few percentage points”… it is an absolutely phenomenal expense.
A $1000/mo payment targeted to the lower 20% would be less than $1T. If it were widened to 30% it would be $1.5T. That's very close to SS and all the other entitlements.
Because the tax is on all sources of income, no exemptions it's only a fraction of a percent.
A .3% tax on $1000T ($1000T is less than the flow of all dollars in the US) is $3T. More than enough.
@Pat
> Well, that’s a much bigger problem than poverty, if someone is buying expensive shit like that instead of food. That means that they can’t take care of themselves even with financial support and probably should be institutionalized or provided with some other kind of support, or basic living skills, or something.
This is exactly my point, your right they cant really take care of themselves. The vast majority of people in the USA who are in poverty cant take care of themselves and even with money cant fgix their lot in life. Their problem is much bigger
> Yeah, I understand that, I just don’t think that a few tens of a percent are going to cause such devastation.
It isnt just the few tens of a percent that is the problem. If you wanted to give a UBI of $400 a month in the USA that would cost tax payers 1.6 **trillion** a year. We are not talking a few percentage points. The total income int he USA is 17.6 trillion per year. So to support a UBI of $400 you would have to increase taxes by about 10%.. that is huge.
> I think that UBI (or whatever) would have so many benefits by reducing crime (which is a direct wealth destroyer), reducing mental health issues, reduce malnutrition, increase health, increase education, and generally increase goodwill among people, I think it’s worth it. And it will lift many people up to help their economic situations so they no longer need UBI.
Dropping a wad of cash on people wont reduce crime, or mental health or even malnutrition. With the huge increase in taxes it takes to support combined with the fact that it would cause huge price hikes to occur overnight you'd find not only would it erode the economy over time but no one would feel even an speck of relief from it. Problems dont get solved with wads of cash given to people who dont know how to responsibly save or spend cash, especially when all it causes the cost of goods to rise at the same time.