Universal Income - Freedom Dividends

[Independent]

2) Let those companies keep the $300 million to further fund their expansion, technology development, and job creation.

I'm sorry, but I don't believe the Toyota PR talk.

The immediate impact of "technology development" that improves productivity is a decrease in the number of jobs available. That's what "productivity" means - fewer labor hours for the same output.

We hope that, if all competitors in an industry are pursuing productivity gains at the same time, an efficient market will convert much of that gain into lower prices. Then, the consumers take their savings and go buy some other products, which may have no connection to the first. Some consumers may eat more meals in restaurants, for example.

If everything works perfectly, we get the same number of total jobs, but more consumer utility.

(Of course, some may take their savings on the car and use them to add features to the car they would have bought anyway. That would bring the job creation back to Toyota, but most consumers will not do this.)

 

[GrayHare]

A UBI will decrease the number of people willing to work at a given level of compensation, increasing the cost of labor and reducing the number of jobs. In this way a UBI will worsen the problem it claims to address.

+1

 

[ncbill]

I've seen SS disability used by a number of men, usually older, unskilled blue-collar workers as sort of a UBI (plus Medicare 24 months after qualifying for disability)

 

[dd564]

I've seen SS disability used by a number of men, usually older, unskilled blue-collar workers as sort of a UBI (plus Medicare 24 months after qualifying for disability)

This is one issue UBI would resolve.
If you are already receiving over $1,000 from the government for disability, you would not get this. Issue with disability is if you get healthy, you don't get it again, so no one ever gets off disability. So people who use (or cheat) the disability system collect and honest / healthy don't.

UBI would allow those who are on disability to get off, and maybe become un-lazy because they won't get penalized for going out and working for a few bucks if they can find a part time job.

UBI would go to everyone over 18 who opts in, so in reality the only people being penalized for it would be those who have already been receiving government aid for it.

A value added tax that would currently hit companies like Alphabet and Amazon would be the ones who would most get hit by a tax to support UBI since they are most utilizing the technology advancements. Currently Google and Amazon pay zero tax.

 

[jollystomper]

My questions about UBI are less about whether or not it will people are "lazy", but some of the unintended consequences if everyone is getting UBI:

- What type of financial education will be provided with this, to help people view this more as something for basic needs as opposed to a lottery winning?

- Will it lead to more inflation, as prices for some goods may go up since the makers know that everyone is getting some level of income?

- Will wages for jobs actually go down, since employers will know that people are already getting a basic income, so why pay as much for the labor?

- Will there be those who will try to prey on others more? For example, criminals, casinos, online betting vehicles, who see UBI as a source of potential income for them and this pressure/entice people?

- Would this be indexed to inflation? If so, is that taking into account for future funding?

I am not saying these are reasons not to have UBI. I just hope that as much reasoned "what could go wrong" discussions occur, to minimize the Law of Unintended Consequences from rearing its ugly head.

 

[dd564]

My questions about UBI are less about whether or not it will people are "lazy", but some of the unintended consequences if everyone is getting UBI:

- What type of financial education will be provided with this, to help people view this more as something for basic needs as opposed to a lottery winning?

- Will it lead to more inflation, as prices for some goods may go up since the makers know that everyone is getting some level of income?

- Will wages for jobs actually go down, since employers will know that people are already getting a basic income, so why pay as much for the labor?

- Will there be those who will try to prey on others more? For example, criminals, casinos, online betting vehicles, who see UBI as a source of potential income for them and this pressure/entice people?

- Would this be indexed to inflation? If so, is that taking into account for future funding?

I am not saying these are reasons not to have UBI. I just hope that as much reasoned "what could go wrong" discussions occur, to minimize the Law of Unintended Consequences from rearing its ugly head.

1. Financial advice isn't necessary. People who are bad at money get their allowance and will likely be unable to ever exceed that or get beyond their government support. Wiser people will add it to their income to save more, invest smarter, get more education, take a risk on a new business maybe. The idea is less government decisions not more. It's a partially libertarian idea in nature.

2. Inflation mainly occurs now in housing, healthcare, and education. All which have strong government rules.

Pricing for consumer foods, clothing, and electronics would still have high amounts of competition, (and in some cases have decreased over time (electronics especially)), so unlikely that across the board they could raise prices without a competitor undercutting them. Luxury items may increase in price however, but basics unlikely. Market supply and demand.


3. Will wages go down? Possibly. At the minimum wage level no. But it's hard to predict what the job market will look like. I would anticipate it becomes more of the current trend where highly specialized jobs would still pay more but low specialized jobs would become more competitive and lower paying. (With the premise that almost no jobs will exist someday for 80% of people, a UBI or other support system would be needed to prevent an uprising among the unemployed). (or everyone could file for disability)

4. Whether the money is spent on food, gambling, clothing, or education, it almost doesn't matter because money will be changing hands which would boost the economy whether it goes to the local bar/grill or the local casino or back into lottery tickets. Provided it's not a heavily taxed entity (lottery tickets) it would almost be a dollar for dollar trade in most cases which means someone else would also spend that money after it was spent.

5. I don't know. I would guess this would become something candidates make promises about every 4 years after it's implemented.


Part of the deal is we're already doing this for welfare and disabled people, many who are lazy and playing the system. So why not grant it to all so there is no reward to being lazy. If we gave this money to people with ambition it might provide more economically positive benefits than an increase of tobacco, fast food, and alcohol sales / consumption.

 

[USGrant1962]

...

A value added tax that would currently hit companies like Alphabet and Amazon would be the ones who would most get hit by a tax to support UBI since they are most utilizing the technology advancements. Currently Google and Amazon pay zero tax.

"Companies" do not pay taxes. They only collect them on behalf of the government. Only people pay taxes. Owners, employees, and customers. There is no other source of money.

 

[razztazz]

"Companies" do not pay taxes. They only collect them on behalf of the government. Only people pay taxes. Owners, employees, and customers. There is no other source of money.

Therefore they don't make profits either. It's always other people's money.

 

[kite_rider]

Glad this topic has come up. I've been thinking about it for a while and this conversation has expanded my thinking.

The first idea that should go with UBI is that it's not meant to be your ONLY source of income. Just like Social Security is not meant to be your only retirement income. People seem to be able to accept this idea with SS, even though plenty of people haven't saved for retirement. I think this preserves the incentive to earn something in a capitalistic society.

The conversation about paying for it doesn't seem so complicated to me. I don't see a difference between UBI and SS, so UBI would be it - no SS in the future. We are currently spending over $1T a year on SS, so that would be a big chunk of the $2.4T that was mentioned earlier regarding UBI. I'm told that welfare programs overall are about $600 billion. So there is another chunk out of the $2.4T. Add a VAT to get about $800 billion and bingo! We're there. Maybe add some payroll taxes to support a phase out period for current SS recipients and perhaps some higher income tax to boost the overall UBI payment if people think it needs to be higher. If you are making income, the UBI payment would probably compensate for the added tax anyway.

The real benefits of UBI as I see them are the lack of stigma on receiving it, the reduced overhead with distributing it, and ability of recipients to pursue income generation without fear of losing 'benefits'.

 

[kite_rider]

While true, I think many of us are wired differently than a lot of working people (in the US). As a group, we are less likely to define ourselves by our jobs, or to feel a sense of loss without one. This is more of a philosophical point then economic. While I'm in favor in theory of a broader safety net, and UBI simplifies the equation, I'm not sure it would fit with the horatio alger mythology that seems to frame a lot of the social construct.

The US worker more typically identifies with their job than some other cultures. "we are what we do." It's more hard-wired in the US to consider one's work as one's contribution to society. So a huge cultural shift would be needed to make UBI acceptable to a large portion of those it would ideally help most. Today, it's not hard to find stories of folks eligible for welfare who just won't take it, out of pride or embarrassment or whatever.

In my pre-FIRE'd days I would have agreed with the idea that people define themselves by their jobs, but now days I think that's an old fashioned idea.

Maybe it's the town I live in, or crowd that I'm hanging out with; but one's occupation rarely comes up in my social circles. It's a lot more about the powder days you've got so far this season, the miles you put on your bike, the peaks you plan to climb, the flights you plan to master (paragliders), the modifications you've made to your camper van, etc. Mind you that the people I'm talking about are young and old, rich and poor (money wise), educated and not, employed and un-employed, etc.

With the 'Gig' economy, the great recession, general acceptance of remote work, and ever changing economy there seems to be a lower level of defining yourself by your job.

 

[KenZ71]

Whoa the hot topic disclaimer and warning before replying was interesting

Yes UBI would be fantastic but is it sustainable for generations ?

Some might social security is not and never was sustainable for generations yet it is still here. Will be for another 3 or 4 generations? We all have our doubts.

I ran a youth group for a few years and dealt with a lot of families who said they could not afford sending kids to summer camp while holding a giant coffee from dunkin. Or show up next month sporting New tattoos. Also had some families clearly struggling but found a way. My point here is society has many flavors if you will, some abuse the system. Some have pride and find a way.

Jobs list to robotics is nothing new. Take a ride through an old mill town where the manual labor was replaced by machines. Some of the town's recovered some haven't. But society still exists.

Lastly, if you really object to the lower cost of goods and lost jobs due to robotics go volunteer. Help out with job retraining.

 

[dd564]

Whoa the hot topic disclaimer and warning before replying was interesting

Yes UBI would be fantastic but is it sustainable for generations ?

Some might social security is not and never was sustainable for generations yet it is still here. Will be for another 3 or 4 generations? We all have our doubts.

I ran a youth group for a few years and dealt with a lot of families who said they could not afford sending kids to summer camp while holding a giant coffee from dunkin. Or show up next month sporting New tattoos. Also had some families clearly struggling but found a way. My point here is society has many flavors if you will, some abuse the system. Some have pride and find a way.

Jobs list to robotics is nothing new. Take a ride through an old mill town where the manual labor was replaced by machines. Some of the town's recovered some haven't. But society still exists.

Lastly, if you really object to the lower cost of goods and lost jobs due to robotics go volunteer. Help out with job retraining.

People abuse the current system, and if someone was going to, they likely already are, but I would only be in favor of UBI as long as it doesn't get taken away from people who decide to still work wherever they can. (don't penalize ambition like we do now).

I don't know if it's sustainable for future generations, but our current system with widening gaps of wealth distribution isn't either.

 

[Independent]

"Companies" do not pay taxes. They only collect them on behalf of the government. Only people pay taxes. Owners, employees, and customers. There is no other source of money.

This is correct. Companies may write the checks, but humans end up with the financial cost.

Furthermore, economists generally agree that the final incidence of a Value Added Tax is the same as a sales tax - consumers pay.

Therefore they don't make profits either. It's always other people's money.

Yep. Stockholders understand that profits may first appear on the company books, but they are there temporarily until they get transferred to the stockholders. That's why we buy stocks.

 

[Independent]

The conversation about paying for it doesn't seem so complicated to me. I don't see a difference between UBI and SS, so UBI would be it - no SS in the future. We are currently spending over $1T a year on SS, so that would be a big chunk of the $2.4T that was mentioned earlier regarding UBI.

If you go back to post #10, http://www.early-retirement.org/forums/f52/universal-income-freedom-dividends-96425.html#post2194672 you'll see that the $2.4 trillion only covered people from 18-64. So we can't use SS retirement to offset the cost. Some of SS goes to disabled people below 65, so that's an offset. But, I believe that a UBI would have to provide benefits for children, so that's an additional cost.

Add a VAT to get about $800 billion and bingo! We're there. Maybe add some payroll taxes to support a phase out period for current SS recipients and perhaps some higher income tax to boost the overall UBI payment if people think it needs to be higher. If you are making income, the UBI payment would probably compensate for the added tax anyway.

The real benefits of UBI as I see them are the lack of stigma on receiving it, the reduced overhead with distributing it, and ability of recipients to pursue income generation without fear of losing 'benefits'.

I agree that one of the big theoretical appeals of a UBI is that it gets rid of the rules and administration for many of our existing means-tested programs. However, if we're going to fund it with a brand new VAT, that means a whole new set of rules and administration for the VAT. If we care about simplicity, we should increase the rates in the FIT. (There's also the issue of progressive vs. regressive taxes.)

Yes, there would be some income where the additional tax exactly offsets the UBI, so people at that income see no net effect. People below that level will gain and people above that level will lose.

 

[Sunset]

Mathematically challenged is the problem with UBI

Who could live on $12,000 per yr, it's possible but pretty low living.

What would be the cost if replacing SS with it:

The cost of UBI would be: 328246549× $12,000 = 3.938958588 Trillion per year.

So how do we get that much money, tax everyone, but wait that takes away the very money we just gave them.. So just tax the rich, but at those rates, after a couple of years, the rich are poor and need the money as well

We would need to print more money, then inflation would be like Venezuela, sky-rocketing, and soon a weeks groceries would be $12,000

 

[samclem]

4. Whether the money is spent on food, gambling, clothing, or education, it almost doesn't matter because money will be changing hands which would boost the economy whether it goes to the local bar/grill or the local casino or back into lottery tickets.

With a prosperity pump like this, why limit ourselves to $1000 per month?

 

[pb4uski]

The aspect of this topic that refers to less jobs as a result of automation being faster than population decline makes me wonder if we might end up regressing to single breadwinner families like much of my parent's generation... where one spouse works to bring home the bacon and another manages the home front... but whether the SAH spouse is male or female would be a function of capabilities rather than gender based.

 

[marko]

I just don't understand this.

I reminds me of the joke about the visitor who leaves a $50 deposit at the local hotel while he tours the small town.

The hotel owner takes the $50 and runs and pays the barber, who then takes it and pays the butcher...the $50 makes its way all around town, each person paying off their $50 debt until it makes it's way back to the hotel owner. The visitor then says "No I'm not going to stay" and takes his $50 and walks out of town but now everyone's debt is paid.

As far as jobs being lost, the buggy whip maker didn't stop working, he just went to work as a car mechanic. The guy who worked at Blockbuster Video didn't stop working, he went to work for the cable company.

We have more technology today than ever and have something like 95% employment. I wonder what percent of jobs today didn't even exist 10 years ago; I just read that 85% of jobs 10 years from now don't exist yet.
New jobs get created as technology takes others away.

Lastly, does anyone really believe that a stipend payment will free up the time for the next Michelangelo to surface? Unicorns.

Maybe it's just me.

 

[marko]

Heck, we go thread after thread after thread about SS and Medicare not being financially sustainable.
Now we're talking about giving away money to everybody??
Again, unicorns.

 

[dd564]

I just don't understand this.

I reminds me of the joke about the visitor who leaves a $50 deposit at the local hotel while he tours the small town.

The hotel owner takes the $50 and runs and pays the barber, who then takes it and pays the butcher...the $50 makes its way all around town, each person paying off their $50 debt until it makes it's way back to the hotel owner. The visitor then says "No I'm not going to stay" and takes his $50 and walks out of town but now everyone's debt is paid.

As far as jobs being lost, the buggy whip maker didn't stop working, he just went to work as a car mechanic. The guy who worked at Blockbuster Video didn't stop working, he went to work for the cable company.

We have more technology today than ever and have something like 95% employment. I wonder what percent of jobs today didn't even exist 10 years ago; I just read that 85% of jobs 10 years from now don't exist yet.
New jobs get created as technology takes others away.

Lastly, does anyone really believe that a stipend payment will free up the time for the next Michelangelo to surface? Unicorns.

Maybe it's just me.

If what you were saying were true, people wouldn't be worried, but coal miners did not learn to code.

When an industry is reduced, we are horrible as a nation at training these affected workers to learn new skills and adapt.
One of the leading jobs in the US is truck driving and by several people's estimates, by as early as 2030 this profession will be greatly affected with automated trucks.

The driver behind automation is financial. Automated trucks, robots, etc, are cheaper and more reliable than humans. With the driver of change being financial, what would the reason be for these companies to create new jobs just to still employ people?

Also, our unemployment rate is 4%, but the quality of jobs for the lowest 50% (probably 80%) is declining. Pay is frozen if not decrease and education and healthcare have gotten more expensive.

So if automation does happen, you can have two approaches.

1. Stick your head in the sand until it's a major emergency which will create a bad plan.

or

2. Thoughtfully plan something that might make sense before the worst happens.

Right now the wealthiest 1% own 40-50% of the money. This will grow to 65-70 in the next decade. I would anticipate that in 16-20 years it will be nearing 80%.

When 99% are down to 20 percent of the wealth, the 99% might elect for communism vs buy into a plan that makes better sense that is implemented too late.

 

[Chuckanut]

I know of several young families where only one parent (the husband) works and they do OK, though they certainly are not jetting to Switzerland every Winter for a few weeks of skiing in the Alps.

The solution seems to be this: The husband works in a field where he earns a good but not huge wages . In my area that means something in the area of 100,000 a years. One guy is an electrician and the other is in some financial area for a bank. So, we have two trained educated men working in fields that pay well. No minimum wage jobs even at $15 an hour.

Mom stays home and is the deal seeker extraordinaire. Food is bought in bulk at warehouse stores and, when possible, wholesale outlets. Clothing come from Costco/Walmart and/or 2nd hand stores. Dad hunts a few weekends a year and stocks the freezer with venison. Between them can can fix almost anything to keep it going a while longer. They use the library a lot for free DVD's and now some streaming movies. Cars are always bought used - at least 5 years old so some 'blow the dough type' gets to eat the initial depreciation.

Their house is small but adequate. Vacations are camping or visits to relatives who can put them up. From what I can see both families are doing well.

It's not a slam dunk. The big threat on the horizon is higher and higher taxes - property, sales, car tabs, gasoline and others have gone up recently.

 

[Sunset]

There is no communist country left in the world. They have all abandoned Communism. Including Cuba, which is the closest to pure Communism.

Even 20 years ago, when I was there, it was obvious.
Many of the people there were trapped but still you could see the capitalist nature of humanity as many folks had a little illegal side gig/endeavor which netted them many times the monthly official salary.

You could also see the collapse of nearly everything, after all, why work hard everyday, when your neighbor did hardly anything, but everyone was paid $20/month. Even communists can see unfairness, so very little got repaired, farms were abandoned (after all you didn't own the farm you worked on, so who cared if it overgrew with weeds).

It has gotten so bad, that buildings sometimes collapse in the major cities, which by the way have nearly no lights on at night.

Now the Cuban govn't has officially opened up some avenues for private enterprise as they realize Communism is dead.

 

[dd564]

Sorry, my intent of this thread was not to defend communism.

My point is simply that if automation lays off millions and the wealth gap increases, at some point, voters will demand something different and more extreme.

The longer the wait to address, the more extreme the actions by those who get upset.

 

[marko]

The driver behind automation is financial. With the driver of change being financial, what would the reason be for these companies to create new jobs just to still employ people?

Jobs evolve into other areas over time.

Companies don't create different, new jobs for people displaced; many of those companies just don't exist themselves anymore (Blockbuster). People go out and find new jobs, many of those jobs didn't even exist before ten years ago.

As noted, maybe the nerdy Blockbuster clerk went on to work for the local cable company as a technician or installer or at the local Apple store/cellphone store. A good number of jobs didn't exist 10 years ago but now employ people who, perhaps were displaced by technology.

We can always cherry pick and point out the unfortunate coal miners and such but I tend to have a more positive view of what technology can do for people including create better, more pleasant job environments.

Regardless. If things are all that dire, I doubt that handing out $12K to every single person in the country is going to make a dent in the problem.

 

[Sunset]

Sorry, my intent of this thread was not to defend communism.

My point is simply that if automation lays off millions and the wealth gap increases, at some point, voters will demand something different and more extreme.

The longer the wait to address, the more extreme the actions by those who get upset.

That has always been possible all through history, and did happen, and will happen again.
Instead of some form of Communism, it could be Fascism that blossoms up like it did for Germany after WWI , when inflation what super high, and jobs scarce, and reparations were required.

However, I don't think the process of automation which has been going on for over a 100 years is going to suddenly change the world faster than people adapt.