Showing posts with label economics. Show all posts
Showing posts with label economics. Show all posts

Monday, July 24, 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.

Work for income or medical insurance is almost by definition meaningless, whether it is on an assembly line, coding for a rich guy, or flipping burgers. What the progressive left (no relationship to the Neolib democratic party) wants is optional work, where basic income, medical care and education as far as they qualify are rights and any work for supplemental income (taxed) is chosen in a competitive market where skills are rewarded and "Take this Job and shove it"--thanks Nyah Wynne--is a given for meaningless work.
If basic needs are covered people will work at something meaningful to them whether it is needlework, carving, artisans of all kinds, even coders and inventors. If the work is saleable they get extra income to support the local economy and the Government. If not they can try harder or learn to do something else but in any event they subsist and don't die and will work at something saleable or not. 


Those who want to work will have plenty of opportunities under UBI. There are many jobs that require human input. But a job, which is working for someone else will be only one option, and an option at that. Employers will have to compete on working conditions as well as pay to attract those who wish to work for others if basic needs are covered by UBI. If a restaurant owner or retailer needs people, hesh will have to make the job more attractive than opening a lunchroom or storefront shop. 

Job availability will exceed demand, given the "Be your own boss" drive most people have. If a tradesperson with a truck can supplement UBI working for herm neighbors the job premium would have to be very attractive to drag herm across town instead. Keep in mind that any income above UBI is disposable income in the economic sense.

 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.   

Social Security and Medicare for ALL.
Social Security at $1200/Mo Grandfathers Grandfathered in at current rate. No Cap on Social Security Taxes and Medicaid payments. Work optional till dead. All income taxed. Self employment income taxed once.  


Merge Federal SSA, Welfare, Unemployment, and let employees sort themselves out. 
--------------------------------------------------
 


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.

Top 5th Percentile Mobility for the Rich and the Poor.


Stop Pretending You're Not Rich 
New York Times

 The difference between the rich and the poor in the top 19% (excluding the 1%.) collectively referred to in some circles as "Gentry" as in gentirfication is significant in ways the above piece totally ignores and significantly affects the mobility of the next 30%. The meritocracy Reeves sneers at is in fact a reality for the poor getting into the Gentry and for the top school-top job nuveau Gentry and is probably a major cause of the rich losing their place there. The top fifth does not rule. They do protect their privilege with the help of those who do. There are major holes in their safety net in both directions however. 

 Poor by my definition is an attitude not an amount of income. The poor distinguish between wants and needs and buy wants only when they can afford them from current excess resources. They retain that attitude even when they make it into the Gentry.  Many of the gentry were poor once, and still live like it other than eating better. They still save something for the next meal that might not be as good. Depression era parents are classic examples for the new gentry. I grew up in a house where "Hide-a-bed Hash" was generic for saving for a luxury purchase.  That Gentry is smart poor people with decent jobs who watch their expenditures, chose their homes carefully and use their mortgage and tax deductions, 401ks, IRAs, and 529s to provide for their future. They may have a low end status car but they drive it to COSTCO from their good school neighborhood which they got to by buying before the kids were school age into a gentrifying neighborhood with bad schools; trading up with low end purchases in upcoming neighborhoods; and building equity. Cheap home prepared meals are their main nourishment (everybody cooks), and thrift stores and their closet their source of clothes. Entertainment is online, TV, reading and home grown music, with music lessons the only luxury. 

 Rich people buy what they want where they want to buy without regard to resources at any income level.  They generally have a relatively high debt to income ratio, and are frequently a couple of paychecks or a major financial setback away from losing their place in the Gentry.   

 I would suggest that your "different gentry" ie. the good school-good job gentry is a relatively small part of the gentry we are talking about.   They grew up feeling rich even though their parents are probably in the poor gentry or even in the achieving poor in next 30%. This privilege is reinforced especially in the top schools where they mingle as equals with rich kids and the good job gives them the income level to buy directly into the Gentry particularly when both partners (generic) work at high level jobs as most do early in their careers. The Mrs. degree is fairly rare in the top colleges as only driven achievers can get past the glass ceiling in the admissions department.   

  The mortgage deduction provides minimal tax relief for the rich but is a major source of mobility for the working poor. A maxed out mortgage is a debt trap for the rich who can't maintain a rich person's income level as they believe they can.   A 1.1 million dollar house with a million dollar mortgage works only if income stays above $150K. That same house with a conforming mortgage works at $60K. Flipped up several times from a house in a poor but stable neighborhood. This flip up is usually primarily for schools, but works even better for the childless as public school taxes are low in high end developments where private schools are the norm for families with children. At $60K a conforming mortgage deduction reduces taxes significantly. Even if mortgage insurance is needed for the first house.


  If you are at $150K that Yale legacy preference Reeves toots is worth less than a HS All American in any sport or talent and is worth even less if the kid barely meets the academic threshold. Education is the great equalizer in the top 19% and many of the top schools are "need blind" for admissions so that any student qualifying, admittedly a tiny percent of any population, can qualify for entry into the 19% regardless of family income if the field of study is chosen carefully. Only the rich can afford worthless majors. 

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.

 ----------------------------

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/ 

Tuesday, February 28, 2017

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

Sunday, May 15, 2016

How to Spend Your Stimulus Payment

From an unknown email meme.  Courtesy Paul Carrubba 
Economics in a nutshell.


Sometime this year, we taxpayers will again receive another 'Economic Stimulus' payment.

 
This is indeed a very exciting program, and I'll explain it by using a Q & A format:

 

Q. What is an 'Economic Stimulus' payment ?

 
A. It is money that the federal government will send to taxpayers.

 

Q.Where will the government get this money ?

 
A. From taxpayers.

 

Q. So the government is giving me back my own money ?

 
A. Only a smidgen of it.

 

Q. What is the purpose of this payment ?

 
A. The plan is for you to use the money to purchase a ; high-definition TV set, thus stimulating the economy.

 

Q. But isn't that stimulating the economy of China ?

 
A. Shut up.

 

Below is some helpful advice on how to best help the U.S. Economy by spending your stimulus check wisely:

 

* If you spend the stimulus money at Wal-Mart, the money will
  ; go to China or Sri Lanka .

 

* If you spend it on gasoline, your money will go to theArabs.

 

* If you purchase a computer, it will go to India , Taiwan or
  ; China ...

 

* If you purchase fruit and vegetables, it will go to Mexico , Honduras and Guatemala ...

 
* If you buy an efficient car, it will go to Japan or Korea .

 
* If you purchase useless stuff, it will go to Taiwan .

 
* If you pay your credit cards off, or buy stock, it will go  ; to management bonuses and they will hide it offshore.

 
Instead, keep the money in America by:

 
1) Spending it at yard sales, or

 
2) Going to ball games, or

 
3) Spending it on prostitutes, or

 
4) Beer or

 
5) Tattoos.

 
(These are the only American businesses still operating in the U.S. )

 
Conclusion:

 
Go to a ball game with a tattooed prostitute that you met at a yard  ; sale and drink beer all day !

 

No need to thank me, I'm just glad I could be of help.