Showing posts with label UBI. Show all posts
Showing posts with label UBI. Show all posts

Thursday, March 9, 2017

UBI and Economic Systems


 UBI might be a way to save Capitalism from worker exploitation, one of its major failings.  Capitalism is based on using resources effectively to maximize return on investment of capital.  One important resource is labor.  There are few incentives in Capitalism to provide adequate compensation to laborers.  For most jobs in a free labor market recruiting and training costs are minimal making employee turnover a non-issue compared to pay scales driving pay and working conditions to minimum legal standards.  Even in higher skilled jobs where recruiting and training costs are significant immigrant labor can drive average compensation down if visas are easily acquired by the Capitalist. 


 With a UBI recruiting and training costs become significant even for entry level jobs, as enterprises must entice employees to accept time constraints and cooperative work in competition with unlimited free time and independence with subsistence living costs covered.  Wages, working conditions and benefits would be an important part of the exchange.   


 Enterprises must also compete on quality of products especially in service industries, as entry level entrepreneurship is essentially risk free.  Employed workers with a bit of extra disposable income might choose to become capitalists by backing an entrepreneur with capital rather than labor.  E.g. Leasing a taco truck for a latino family with traditional food preparation skills.  A risk free transactionon both sides. The capitalist still has his job and if the truck doesn't pay a competitive wage for the entrepreneurs plus a return on the lease, at the end of the lease everybody goes back to the status quo. 


At higher skill (and pay) levels working conditions, hours and time off, benefits and other intangibles, will be a competitive necessity to retain high skilled employees that can easily save enough FYM to become a competitor.  Employee spin-offs will be an important source of competition in most industries even ones with extremely high entry costs.  See Lucid Motors as a recent new entry in the automotive industry.  


 An alternative economic system to Capitalism (never before tried) that might work is based on a UBI with a slight surplus over subsistence (UBI+) where people buy goods and services direct from the producers via apps like Amazon or Lyft with the producers funding their means of production via loans from the local thrift institutions that float the UBI, surplus and accumulated savings for speculative productivity aids.  Neither the thrift institutions nor the government would invest in or subsidize productive facilities.  Government spending on infrastructure would be treated as a consumer good.  Government itself would be as usual a slush fund for politicians. 

 The money supply would be managed by the Government by regulating the amount of the surplus to balance supply and demand in the economy.  

The government providing the UBI+ would collect taxes using a progressive income tax on producers, or a VAST progressive VAT on consumption.  Links to both are below the fold.

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A thorough analysis of the tax effects of UBI based on income taxes.  
Hat tip to @miniver
https://www.weforum.org/agenda/2017/01/why-we-should-all-have-a-basic-income/ 

Wednesday, March 1, 2017

Collection Post for Basic Income and Living Wages

This post is a working collection of blue road thinking on UBI and LW.  It is subject to additions, editing and other annoyances.  A more readable version an be found at http://jcarlinbl.blogspot.com/2016/11/universal-basic-income.html which is also a work in progress but updated as comments and careful thinking refine the blue road thinking here.

Once again a guest post to start things off.  
 

July 19, 2015 at 4:43am

The biggest reason I support UBI (Universal Basic Income) has nothing to do with our possible automated future, as labor becomes less essential, or at least as we need much less of it, though that's a great reason to support it. It's not even about eliminating poverty or making the unemployment rate a non-issue, though those are very good reasons too.

The reason I want a UBI is to make work at least -technically- optional. I want this because so long as work is not optional, so long as it is mandatory, it is coercive. I want UBI so that every low wage worker whose boss screws them on hours, who reprimands them for taking sick days, who asks them to work too fast in unsafe conditions (see the current fast-food lawsuit), every young employee whose boss secretly grabs their ass while no one is looking, who's constantly making lewd comments, or racist comments, or any other sort of hateful bullshit... So that every employee who finds themselves trapped in the fiefdom of some petty little tyrant of a boss, which is actually The Majority Of Low End Workers, so that they can say:

"TAKE THIS JOB AND SHOVE IT"

So that they can really, truly, meaningfully walk the fuck away. And not have it mean they end up on the streets or their kids starve or they find themselves turning tricks to keep the water running and the lights on. Or for that matter just ending up in yet another job with a slightly different petty tyrant. And they can do this, deal with this, without having to deal with lawyers or Union Reps, who though are better than -not- having them it'd be nicer to just be able to do it ourselves. Because if -enough- of them (us) say 'NO' to this petty fucking bullshit, then firms will be forced to stop letting the petty bullshit happen (those who fail to will simply not get workers), and work in general will end up less awful for everyone.

Because the ability to say 'NO' to someone who's actively abusing you... that should be pretty high on the list of 'Liberties' worth defending. In my mind.


GDP is ultimately people buying goods and services from other people. Somebody has to flip those burgers the basic income recipients are buying. 
Since low income people spend locally and buy from people they know (not robots) the income from outside the local economy stays in the local economy and all are better off. The multiplier effect of the basic income or entry wage dollar is nearly 3 times. That is, the burger flipper who is paid somewhat more than the basic income or hesh wouldn't work, spends most of herm income on local goods and services, creating more local demand for those goods and services.   Also some basic income recipients will use their time to pursue a dream of artisan goods production, a local service like a band or restaurant or performance venue.  Some will succeed and generate more local income. 

Eliminating corporate welfare in the form of support for inadequate wages for minimum wage workers would be the first step to a more equitable distribution of the GDP.  Instead of welfare to supplement inadequate earned income each adult citizen or green card holder would be provided with one half the income necessary for housing, medical care, education,  and local transportation for a family if married, less if single.  This assumes that a two parent household is preferred for raising children.  Single mothers would be encouraged to partner up with an interested co-parent of any gender to form a family unit enabling the larger per person payment. 

Eliminating welfare with all its administrative costs would more than pay for the BI for those unable to work or have better things to do with their time than unskilled minimum wage labor. Those with better things to do will probably provide taxes and purchase goods and services which will cover their BI. Everybody wants to start a restaurant, or write a graphic novel, or sing a song. Some of them would actually succeed if they didn't have to worry about feeding the family first.

It wouldn't take much transfer of wealth from the hoarders to have a profound effect on the GDP. If the corporate welfare queens had to compete for unskilled labor with a UBI minimum wage laws would be anachronistic. Market wages and working conditions for unskilled labor in a competitive market for those willing to work at those jobs would move even unskilled laborers into the low middle class.

The economic argument for a UBI is that it is outside money to low income people who spend locally for necessities provided by mainly other low income people. The bodega proprietor, (there would be food trucks on every corner) and other neighborhood business would thrive and economic benefits would trickle UP to landlords, food truck lessors, food truck builders, etc. They might even buy a solar food truck with a Powerwall 2 from Tesla if they are really successful.


Another opportunity for recipients of UBI would be intermittent garage sales of art, crafts, artisnal foods, etc.  Advertising would be social media to regular customers who would avoid the gallery markup and have the same choices.


 About those "worthless idlers" living off the UBI as couch potatoes.

 People work. Even if it is only knitting at a boring meeting, and some of it will rise to saleable art. I am caregiver and supporter for a disabled person who assumes household chores and does them well even though hesh does not need to and does not get paid explicitly for them. Unpaid volunteer workers now could choose to be idle but work anyway. Why would that not become a way of life for those with no saleable skills? Also most people I know in the class of comfortable retired people are still working hard at something paid or otherwise. Only the trust funders are sailing and golfing their lives away.

 
Some work will be more useful economically than other work and it will be paid. Many "unskilled" jobs which need human attention will be filled inexpensively (to the employer) since they will be optional and provide incremental income for a slightly better life style. Those that do it well will necessarily be paid more as the market will be competitive. 

The few couch potatoes living off the stipend are probably just as well off the streets and not making trouble to survive. They still are consumers that drive the economy. They still eat, buy couches, TVs, and pay rent. If we make the "idle" comfortable enough to live a decent, if not easy, life what they do with their life is of no consequence to society.


 A note on what basic income would cover. UBI would be based on the needs of a family of whatever size is considered optimal by the goverment split between 2 adult citizens independent of relationship status or child care choices.   Basic housing, basic food, a local bus pass, HMO premiums and public education costs would be included. Infrastructure, and government costs would be abbsorbed by the government.

 See Maslow needs pyramid. Once physiological and safety needs are met (UBI and Medicare for all) and you find a friend or two, prestige and accomplishment become critical human psychological needs. Or why Grandma Moses learned to paint and why rednecks whittle. https://www.google.com/imgres...


Assuming UBI and Medicare for All, now dead rural suburbs will become vibrant villages of local commerce and art most of which will generate excess funds for local amenities. UBI is an external source of resources for the community which will be subject to the economic multiplier by those providing services to the UBI recipients.  Assuming an income tax the multiplier will be reduced a bit from a pure subsistence economy, but if the tax rate is progressive the reduction in the multiplier should be minimal for in community services as these services will be provided on narrow margins as the providers will be recipients of UBI as well.   
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4 comments:


J'Carlin said...
Why it is worth the daily slog through facebook.
J'Carlin said...
I learned about the TTJASI from a mentor at Pan Am. His advice: As soon as you save up enough "Fuck You Money" you can begin to do your job right. In a sense privilege, and/or another livable income in the family gives the same work freedom as FYM which is after all a relative term, but UBI puts a safety net under all who wish to "do their job right."
J'Carlin said...
Nyah Wynne Yes! Definitely. That's probably my number 2 top reason, in part because it's talked about very little. There are huge numbers of activities that people can engage in that are of real meaningful value to society that don't translate well into market value. Experimenting with art is a major one. Art sometimes pays off, sometimes doesn't, but all too often ends up either compromising itself in order to sell better or having to be fit into someone's spare time while they work some non-career, low end, dead-end job to survive. Other things include many sort of research, as finding grants can be as troublesome as trying to fund art. Care of children and the elderly sometimes pays but only if the ones being cared for can pay. In fact any sort of general service to the community tends to be deeply undervalued. The market values service to people according to their ability to pay, so serving the needs of 100 poor people is worth less than serving the whims of 1 wealthy person. There are all manner of truly valuable activities one can engage in that the market deems worthless.

Tuesday, February 28, 2017

UBI and VAST Stories

Jennifer and Kevin both of whom graduated in the middle of their class at the state college, without looking back quit their minimum wage jobs, all 4 of them, when UBI* was implemented and nostalgically bought the house Jen grew up in in the near suburb Jen's parents moved out of just before the neighborhood was redlined by the mortgage companies.  Her parents could see the transition coming and "took the money and ran" to a more desirable suburb.   Like many similar suburbs the expected influx from the Hispanic and black neighborhood never happened as the necessary infrastructure of clubs, stores, and restaurants was missing in the area and it was too far from the existing enclaves to be a desirable step up.    They had been living with Kevin's parents like most of their friends, but used the first of their UBI payments to move and unboard their new house.  Kevin's parents didn't charge them back room and board, and even loaned them the money for the down payment on the house. They were confident that they had brought the kids up right and they would find ways to supplement their UBI to pay them back. 

Jen and Kevin had chosen their neighborhood carefully: The houses were small but basically sound, an infrequent but reliable bus line ran through the area, and there was a defunct strip mall in walking distance with a large store suitable for a coop grocery/household goods store. There was some damage but Jenifer had some basic carpentry skills.  Her dad even gifted her his workshop tools which he hadn't touched since he moved to the country club suburb to indulge the passion for golf he shared with his family.  Several of their friends were artisans and aspiring restauranteurs.  Their local silo on Facebook had been hot since the UBI was announced.  As none were planning children in the near term the neighborhood school was targeted as a craft center.  

Kevin's subsistence job was a "manager" in a fast food franchise.  His chain like all the others found that the kiosks and robots could sell the loss leader dollar menu just fine, but that the profit making up-sale items were spoiling on the shelves.  Since Kevin was high functioning Down Syndrome his former boss was eager to get him back on the payroll at his former subsistence wage and working conditions but with Jen's social work degree to help with the negotiations, Kevin was able to argue that since the kiosks handled the VAST** calculations his up-sale personal skills were worth substantially more.  Sure enough, with Kevin roving the kiosks, helping as "needed" there were always long lines at his bank of kiosks, up-sales skyrocketed and the store became a notable VAST* contributor in the sea of basic meal stores.

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Ashley was successful among her peers. She had a responsible job with reasonable hours that enabled her to "have it all:" after school care, a home, a paid for adequate car, and family health care from her employer. What her peers didn't know was that those frequent lunches with her boss included a dessert of rape for Mr. Grey. It was part of the job for Ashley. After school care, etc. left her no choice but to "Relax and enjoy it." A few months after making sure that the UBI would cover everything but the after school care, and banking most of her paycheck, she was able to let Mr. Grey know one Friday at quitting time that the rape was over along with her job.  Ashley had used those few months of after school care to get her resume polished, the cover letters and recommendations lined up and in envelopes that went out Saturday to the head hunters in her field.  She wasn't too worried, she had frequently thought about tightening her belt and being a stay at home mom although that wasn't her first preference, and the after school care paid for with her fuck Mr. Grey reserve gave her plenty of time for interviews.

Hat tip to Nyah Wynne Nyah Wynne from Facebook for Ashley's story concept.

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Alexia aka Alex G. in the business world moved into an abandoned school as a rental housemate with a neighbor of Jen and Kevin and with a group of artisan friends lobbied for rights to the school.  She invested her entire savings in code compliance and renovation of the school library/stage.  She had always dreamed of becoming a promoter for her friends' bands, but neither she nor her friends had the time to develop the level of professionalism to support a local venue while working two or three jobs to support their art.  An older couple she knew who were employed at a downtown restaurant heard about her venture and asked if they could run a bistro and bar in her venue using the school kitchen for catering. They had their eye on the cafeteria as a restaurant, but the startup costs of the bistro were more in line with their resources. They had some savings that they could invest and Alex recognized the value of turning her venue into a nightclub to attract established entertainers to her little venue, using her friends as openers.  The city was happy to cooperate as nightclubs were good generators of VAST revenue.  The basic retail beverage category was a generic soda, and fancier drinks and called liquors were in a respectable VAST category. 

Mary and John adapted the kitchen to modern standards with untaxed pick, place and flip robots for the basic bistro foods. John was an excellent chef so made to order gourmet meals were added to the menu.  Each table had an electronic order pad for the basic items with a note that the servers had the day’s specials.  Servers were a relatively low cost employee as many people enjoyed the work and the basic untaxed floor was low so servers to the basic meal tables were a nominal expense.  Servers with up-sale skills shared the added value of the gourmet meals with John and both were subject to the VAST tax on services which was built into the price of the up-sale on which the VAST goods tax was paid by the consumer.  It is little wonder that communities liked nightclubs.  Mary chose not to charge for the added value to her hosting services and paid no VAST but took the added value as profit in the business.

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This group of stories (A work in progress. All are invited to create stories with or without VAST in the comment section) explores a society with a *Universal Basic Income (UBI) and a **Value Added by Status Tax (VAST) The basic assumption is that the evolving world standard of a right to medical care, education through whatever level you can get admitted to, including vocational education, basic transportation infrastructure, and UBI is funded by a progressive consumption tax.

**VAST For each category of goods and services that people and businesses use a basic level of subsistence is established that is untaxed. Home meals basic unprepared food at a local store is a home category. Simple restaurant meals as in licensed and inspected food trucks or push carts, and fixed shops selling basic take-out meals with or without indoor seating. For skilled work establishments space for a person and herm tools. For an office a cube with a computer and desk. For retail, self-selection kiosks and a central check out.

A basic wage, that is a wage necessary to induce an unskilled UBI recipient to commit to a standard work week job, is untaxed. Skilled services would be taxed on the percentage of the basic wage that is needed to attract the specific skill. The wage VAT is a cost of doing business, necessary to induce the worker to accept the job.  The worker is not subject to additional taxes on income until is spent on consumption.  Robotics could also fit into the VAST framework. The cost of a dumb pick and attach robot might be assigned as basic. More sophisticated robotics would be subject to a VAST schedule.

A community would establish a basic value for each category.  Any enhancements to these basic levels would be reflected in the cost of the goods or services. A downtown restaurant with tables, service staff, concierges, and fancy decor would cost many times the basic value. Up to 2X basic, a 1% VAT based on the increment over basic would be added to the bill. At 3X basic, the VAT would go to 2%.  At 4X basic the VAT would be e.g. 4%.  At 10X basic the VAT might be 20%. At some point the VAT would reach 100% that is, half the cost of the good or service would be VAT. Levels would be adjusted according to the values of UBI, medical, and government services needed giving politicians at all levels something to argue about. Localities might for example impose a VAST to fund operation and improvements to local infrastructure. Note that wages, capital gains, and net worth of a business or estate are not taxed at all until value is withdrawn and converted to consumption. 

**UBI is a stipend paid to all citizens and legal immigrants by direct deposit that is just adequate for all basic needs: housing, food, recreation, transportation, etc. A basic assumption is that in all modern countries single payer health care, education, and basic infrastructure is in place.  The UBI is unrestricted in use, the recipient may spend it as they please, trading off housing, food etc. without restrictions except that no other support is provided by the state.  Savings is not structured into the UBI which is intended to be basic needs only.  Any employment or self-employment income is supplemental to UBI and does not affect the basic stipend.  UBI is not subject to tax, as the assumption is that in a VAST system consumption supported only by UBI must be in the basic category to make ends meet.  Nicer goods and luxuries in higher VAST categories would be supported by employment of some variety. 

If an income tax is preferred a graduated tax would be imposed on all income in excess of UBI no matter how generated.  That is any income other than UBI must be reported and taxed accordingly.

Original post 1/5/17      

Subsistence Spending and the Hood Economic Multiplier

A person choosing not to work would necessarily spend every penny of UBI just to stay above the poverty line. Almost none of that would go out of the neighborhood. Even bus fare to the MegaMall is not figured into the poverty line.  Since poverty economies are generally cash economies, and the savings rate is essentially zero at the poverty line, the economic multiplier of each external dollar to the community is huge. Whether that external dollar comes from UBI, street vending, busking, or graft, that dollar supports many local businesses most of which buy locally. with cash.

A good lay explanation of the multiplier effect can be found here: http://economicsonline.co.uk/Managing_the_economy/The_multiplier_effect.html

1/18/17