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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.
> 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.
I think not having the stress of worrying about how they're going to pay the rent would improve the situation. Addicts get their fix anyway they can, even if they have to steal to get the money. UBI would reduce crime.
>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.
Agree. I usually just give them food. But UBI is much different. It's continuous as long as they need it. It keeps them from having to beg for food or money, and it provides certainty in their lives.
>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.
We have similar backgrounds then, in that regard.
> think not having the stress of worrying about how they’re going to pay the rent would improve the situation.
Sure, but you havent done that. By enacting a UBI you have increased their rent and other expenses by the same degree as the UBI. The end result is you have done nothing to help reduce the stress of rent but have now given them a source of money to feed that alcohol addiction should they have one.
> Agree. I usually just give them food. But UBI is much different. It’s continuous as long as they need it. It keeps them from having to beg for food or money, and it provides certainty in their lives.
Not sure it being continuous is helping, in fact that would make it worse. If I told an alcoholic "hey here is 200$ and ill give it to you every month" that wont in any way prevent them from getting drunk. It just means now they are getting drunk continuously rather than just once.
@Pat by the way now that i realize we are talking about something more akin to welfare than UBI we may be closer to agreeing.
While I wouldnt give money to the poor without any condition of any kind I do agree that so long as they are looking for work or to improve their lot in life they should get food stamps for food, free education and other skill-building services, and even a small amount of money for extras.
My issue is more with a UBI where money is distributed to everyone in society without condition and where the poor do not need to show they are trying to get out of poverty to get the money. With the right conditionals I do support a welfare system for the poor.
>While I wouldnt give money to the poor without any condition of any kind I do agree that so long as they are looking for work or to improve their lot in life they should get food stamps for food, free education and other skill-building services, and even a small amount of money for extras.
A big problem with having conditions, is that it requires a whole bureaucracy to verify that folks are meeting the conditions, and bureaucracies are a super-wealth destroyer. Plus they take away freedom and make government more powerful (see "The girl with dragon tattoo" for an example). It also takes a lot of time for the recipients for compliance -- filling out forms, tracking down proof documents, bank statements, etc. -- another big wealth/productivity destroyer.
>My issue is more with a UBI where money is distributed to everyone in society without condition and where the poor do not need to show they are trying to get out of poverty to get the money. With the right conditionals I do support a welfare system for the poor.
I just don't like huge government bureaucracies, which is why I think just a plain UBI-type system targeted to the poor would work better than the current welfare system.
>There really doesnt even need to be huge government bureaucracies at all. It can be relatively cheap and require very little bureaucracy if the process and rules are simple.
Simple is what I'm aiming for. How about just sending it to only those who don't have enough money for the basics, and when you send the money, also send a video which has a lesson about good money management and they have to watch the video to find out how to apply for the next tranche.
@Pat That would be an improvement over a UBI. But I dont think it will solve the problem. Throwing money at problems blinding almost never solve problems.
I'm usually all for minimal government and simple is usually the way to go. But I've seen sooooo many in poverty waste money in some of the worst ways that I just cant support sending them a blank check. I just dont think money is what people in poverty need to get out of poverty nearly as much as education, skill training, and access to mental health. None of which do people in poverty tend to spend their money on except for a small percentage.
@Pat
> A big problem with having conditions, is that it requires a whole bureaucracy to verify that folks are meeting the conditions, and bureaucracies are a super-wealth destroyer.
Not a super wealth destroyer at all, they are a wealth generator. These beuracrecies, while costing money, ultimately ensure that the money spent goes to the people who are using it wisely to gain skills and become wealth generators themselves. So while their existance costs money ultimately that money is generating wealth rather than destroying it.
Giving a person $400 dollars to everyone with no beuracracy where 98% of them will spend it on wasteful things at a cost of 10% to the tax payer destroys economies. On the flip side giving $2,000 dollars but only to people who are using it for skill-building, while adding a beuracracy on top of that may look like it costs more but since that $2,000$ is going to a small fraction of the population rather than everyone AND ensured that it is spent only on the right things (like education) ensures that it is causes wealth to be more plentiful in the long run, and doesnt destroy wealth like the UBI option does.
> I just don’t like huge government bureaucracies, which is why I think just a plain UBI-type system targeted to the poor would work better than the current welfare system.
There really doesnt even need to be huge government bureaucracies at all. It can be relatively cheap and require very little bureaucracy if the process and rules are simple.