This Post About Universal Basic Income May Shock You!

in ubi •  7 years ago  (edited)

The chances are that you haven't heard anyone say what I'm about to say. In fact, I imagine that you've heard the polar opposite quite a few times.

I'm not against UBI. If you want it, you can have it. But I want you to understand the most important reason why it will accelerate inequality growth.

A Bit of History

In 1909, a chap named Winston Churchill gave a speech in the Parliament of the UK in which he told the following story...

Some years ago in London there was a toll bar on a bridge across the Thames, and all the working people who lived on the south side of the river had to pay a daily toll of one penny for going and returning from their work.

Okay, people had to pay a toll to someone who owned a bridge. Nothing unusual there.

The spectacle of these poor people thus mulcted of so large a proportion of their earnings offended the public con-science, and agitation was set on foot, municipal authorities were roused, and at the cost of the taxpayers, the bridge was freed and the toll removed.

Sixpence was a lot of money back then! The toll was removed and people suddenly had more money in their pockets. Hurray! Winston knew how to tell a feel-good story.

All those people who used the bridge were saved sixpence a week, but within a very short time rents on the south side of the river were found to have risen about sixpence a week, or the amount of the toll which had been remitted!

THIS! Landlords saw that everyone had more money and thought to themselves "I'm going to have that, thank you!" Because they had control over the land on which people lived, they were able to raise the rents. When the toll was cancelled, all of those sixpences went to people who controlled residential land instead of whomever controlled the bridge, so only the rich were better off - not the public!

Why Inequality Growth Matters

Maybe you work hard for a living and maybe you really deserve that money you earned. Inequality growth is a symptom of that money being transferred to people who did nothing to earn it - they just have some kind of economic privilege, such as owning land.

Wealth goes from the hands of the many to the hands of the few, and the few don't even have to do any work to get it. It's been happening for a very, very long time.

You might think of it as a kind of pay-to-play tax that the rich levy on everyone else. The official name for it is economic rent*.

Can We Ever Have A UBI?

Sure. You have two options.

  1. Ruin Society
    or
  2. Instead of taxing incomes that people earn, tax the ones they didn't earn

All taxes are unfair, but I don't see society reaching a stage of enlightenment where we won't have money or government any time soon, so let's try to straighten out our stepping stones. It's less unfair to tax people on income that they've swiped from someone else for no other reason than because we can than it is to tax people for doing work.

If you allow inequality growth to continue, then you end up with an oligarchy controlling you. Sound familiar?

The Solution

The only way to make UBI work is to go for option 2. This can be achieved by reducing income/corporate/sales taxes and replacing them with a land value tax (LVT).

  • The majority of people would end up paying less tax
  • Corporations and the rich wouldn't be able to evade the tax (because they can't send land to the Cayman Islands)
  • Inefficiencies and economic distortions would be removed
  • Inequality growth would greatly diminish

There are probably more reasons, but I think that most people only remember three at a time, so I've already given too many.

Please Join Us

I had a good discussion with @ekklesiagora on one of his posts and we agreed to write a series of posts and counter-posts relating to Universal Basic Income and MMT's Job Guarantee program. I've created the tag ubivsjg for this series, so please feel free to join in.

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Keep working, stop paying.
On any given tuesday,....

That would end Government, for sure.

And wars, human trafficking, poverty, homelessness, and insurance.

Human trafficking requires force, fraud and/or coercion. Governments may be guilty of those things, but will they stop in the absence of government? My feeling is that the will to power will be too strong some bad people to resist.

This revolution is in our own minds, and daily lives.
Either you accept that it is ok for some folks to force other folks to do things, or you dont.
Consistency is suppressed by the system's training routines.
Without it, those that rule by occult knowledge have a much easier task.
As more information is accessed, and people come back from the darkside, we will know freedom again.

What you’ve written there is a really good summary. I think that a lot more people would buy into what you’re saying when you put it to them like that.

Im pretty grumpy, 30 years of trying to wake people up becomes a grind, im looking for someone to pick up the banner,...

You could not fund a UBI with a land value tax. The total value of land in the US is 23 trillion. A UBI of $12,000 a year would cost 3 trillion dollars. That means it would take a 13% LVT to pay for it. A $200,000 house would now cost $26,086! That's over twice as much as the UBI itself! This would just hurt homeowners. Millionaires would just move into a smaller house. Not all millionaires want a mansion. Warren Buffet still lives in a $50,000 home!

Where did the figure of $12,000 come from? Here in Australia, the government could pay a UBI of $3-3.5K without needing to collect additional taxes, if they wanted to. Anything above that would require additional taxation.

I know that some people have dreams of a UBI of $30-40K, but the taxes required to achieve that would be astronomical. However, creating jobs for anyone who wants a job at that amount could be done without the need for additional taxation. I explained how in a video I posted a couple of days ago.

It's true that land prices get pushed down once LVT crosses a certain threshold. This would create an unfair situation for people who bought their home at an inflated price. The way to address this would be to have a modern debt jubilee (sometimes called QE for the People), which is like a bailout for the public. Everyone would receive a certain amount of money which they must use to pay off their debts first and they get to keep whatever's left over.

What the hell would a 3-3.5k UBI do? A UBI is meant to put people out of poverty. A $12000 a year UBI would be just enough to do that.

$12,000 wouldn't be enough to pull people out of poverty because that money would be gobbled up by higher economic rents (which is what my post was about).

Everyone has a different idea about how much a UBI should be. I've met people who said that it should be $40K because that would be enough for them to be able to quit their jobs. It's pie in the sky, as a quick calculation will show that the taxes would be infeasibly high.

Even if UBI money weren't sucked up by those with economic privileges, $3K is all we could afford.

If ending poverty is your goal, however, you really should look at that video I linked to.

@penston great post. I wish these type of posts were more visible than the hundreds of spam post going around, but I digress.

I agree that giving people a Universal basic income is not going to help society as it currently stands. I often forget that the prices of items is often more what people can afford to pay, than what they "should" pay. As you stated, if we have an increase in wealth, the prices of goods will also increase, as the "owners" that control these businesses see that people can afford, and are willing to pay more, due to an increase in their money supply.

An asset based tax would be a natural extension of the land tax that you are proposing. I think for these types of taxes to work, you really need the entire world to agree to it. Otherwise there is such a high incentive for people to just leave the country or set up tax havens elsewhere.

One possible (and probably unlikely to be successful) option is to have the government own all the major services and providers, and essentially cap the prices that they would charge consumers... But this route has not proven to produce good results in the past....However, automation may change that??

@strongerbeings

I wish these type of posts were more visible than the hundreds of spam post going around, but I digress.

If you are interested in basic income, use chainbb.com. I set up the f/basicincome forum there to capture all posts with basicincome (or UBI etc) as the first tag. It's a great way to see ubi specific posts and also see active threads.

Australia used to have a federal land value tax from (I think) 1909 until 1953 (I'd look it up, but it's 1am now). The ACT still uses it and Turnbull called on the states to implement it earlier this year.

If rent seekers leave the country, then it's no loss. In fact, I'd say we're better off without them.

Productive people and companies won't leave because they're keeping a larger share of what they produce. Do you think that the heightened levels of economic inclusion might attract businesses into the country?

@penston Did not think properly about it until I read your comment , and now that I do I just realized you are right. If we are less with people who are productive and contribute something that would be quite a country

Inclusion is the goal.

I read a quote this morning which said “a goal without a plan is just a wish.” It’s still worth wishing for.

A UBI isn't going to result in consumers having more money than they do now. It will result in mitigating to an extent losses to income and wealth that are going to result from technological unemployment.

Have you read a book called Why Nations Fail? It gives a story about how people were concerned about unemployment from the rise of the machines over 400 years ago, but getting past that (a couple of hundred years later) led to the Industrial Revolution.

I understand your logic, but do you think we're close enough to having the machines take all of the jobs?

  ·  7 years ago (edited)

It's already happening. And reports from MIT state up to 40% of all jobs will be automated within 1 to 2 decades. The reason it is different this time is that the machines increasingly can do everything a human can do, and faster, more accurately, and more efficiently. And by everything, I mean everything (bar creativity, at this point; but that's gone too if true AI is achieved).

Unless the machines are owned by everyone, won’t the benefits of automation accrue to the people who do one them? That’s why people were wrong 100 years ago when they predicted that we’d have so much leisure time.

Whoever owns the machines will own mankind...

  ·  7 years ago (edited)

Yeah absolutely the owners of them will (and already are) reaping the rewards. Bill Gates has suggested we need a "robot tax" to pay for a UBI. By whatever mechanism, we need to increase taxes on the rentier class and the new "productivity rentier class"*, and get that money into the hands of consumers if we want to stop capitalism from collapsing in a screaming heap.

* A term I just invented to describe those automaters who benefit massively from productivity gains through automation, while the wages they pay to their dwindling human workforces barely increase at all.

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