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

Wednesday, January 18, 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

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.

Wednesday, April 20, 2016

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

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.



There are more houses off the market in the USA than there are homeless by a large factor. Sure they are in "undesirable areas" close in suburbs. But with UBI those areas could be quite desirable quickly. All the infrastructure is there for local living: streets; abandoned strip malls for locally run eateries and dry goods; and shuttered warehouses for local art venues, studios, and performing spaces that could be licensed to coops for code compliance by the cities. There are more houses off the market in the USA than there are homeless by a large factor. Sure they are in "undesirable areas" close in suburbs. But with UBI those areas could be quite desirable quickly. All the infrastructure is there for local living: streets; bus transit for infrequent trips out of the neighborhood; abandoned strip malls for locally run eateries and dry goods; and shuttered warehouses for local art venues, studios, and performing spaces that could be licensed to coops for code compliance by the cities.
 

Many of the people working those "backbreaking" jobs like truck farming, housekeeping, industrial cleaning, do them with considerable pride in their work in spite of the pay.  As noted above with UBI if these jobs need to be performed by people, they would have to be paid accordingly.  Some are now, as there are employers who want things done right, and you can't coerce a reluctant worker to insure only spot free table ware gets into the cupboard, and the out of the way corners are clean. 


One of the most important people in my sister's terminal support team was the custodian whose good nature, empathy, and respect for her family caregivers made life easier for all, as well as the fact that he kept her room spotless in spite of all the careless traffic.
 
If there were an UBI an income based progressive tax which would discourage wage based jobs, could provide the necessary revenues to support UBI, universal single payer Health Care and universal education. As could any of several business and financial taxes which would discourage employers and financiers.   

With UBI all taxes, business and personal could be consumption based with a progressive value added tax. 

Those wanting jobs would pay no additional taxes on income and those investing in jobs would not be taxed on business income from those created jobs.  But since both businesses and people consume goods, a VAT of some kind would be equitable.  With VAST people existing on UBI only could only consume at the basic level and pay little or no tax.  People with additional income from other sources and businesses supporting them would likely purchase goods and services above the basic level and pay a progressive tax on the difference in cost. 

The only way to prevent revolution by populist or pitchforks is to provide a way for people to opt out comfortably if not necessarily successfully. Providing basic needs for those who opt out, see Scandinavian socialism and post war unions, makes it possible for people to opt out of the zero sum game and still be human. In a modern society where mass production is essentially labor free, the consumption driver for the economy is gone. Some countries are recognizing this and providing a basic stipend that is liveable if not comfortable. Those who wish to contribute to society, and most reasonable people do, will find ways to contribute with artisanship, sale of intangibles on crowd funding sites, and innovation. None of which is possible for a person struggling to feed a family or even hermself.
----------------------------
A thorough analysis of the tax effects of UBI.  
Hat tip to @miniver
https://www.weforum.org/agenda/2017/01/why-we-should-all-have-a-basic-income/ 


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.
J'Carlin said...
The compromises involved in selling art and research to the rich individuals and/or corporations is probably why real art and research so seldom see the light of day. On the hopeful side, the internet and crowd funding may be breaking the strangle-hold of the rich on both art and research. If you build it and post it on Facebook "The people will come."