[prokes]

Can anyone explain how this can be implemented mathematically? Assume 300 million people @ $12k / year, you are spending $3.6 trillion. That is already more than current government revenue, leaving all current government services unfunded.

[11thEarlOfMar]

- To a large extent, it is expected to replace current programs like welfare and social security. So those budgets, in theory, would be reduced or eliminated and supplemented with Basic Income.

- It will be a taxable income. So a family including two adults would have an additional $24k on which to pay taxes. Those taxes help pay for the program by effectively reducing the additional funding that needs to be raised.

- Theoretically, it will increase wages and employment since there will be a lot more money spent, increasing economic activity. Increasing both wages and employment increases tax revenues, which would again offset some of the cost. I think this is really the biggest factor that needs studying, as it seems to have the most influence on the decision to deploy BI. Ultimately, it is a macro economic decision. It is also the most difficult factor to model and predict without actually implementing it on a large scale. The most important question, in my mind, is what is the extent of inflationary pressure applied by BI?

[dctoedt]

> The most important question, in my mind, is what is the extent of inflationary pressure applied by BI?

Agreed that this might well be the most important question. A study by the NY Federal Reserve Bank concluded that college tuitions skyrocketed when easy money became available from the feds. [0] The abstract says:

<quote>

The causes of the rapid growth in the price of college education have been the source of much debate in recent years, and the similarly quick growth in student borrowing, funded largely through federal student loan programs, has also been of substantial concern. This paper studies the relationship between these twin increases, and in particular, the extent to which increased access to student credit has contributed to rising tuition. To disentangle the simultaneity of the education cost and credit, we exploit detailed student-level financial data and changes in federal student aid programs to identify the impact of credit on tuition.

We find that institutions more exposed to changes in these programs increased their tuition disproportionately around these policy changes, with a pass-through effect on tuition from changes in subsidized loan maximums per qualifying student of about 60 percent, and smaller but still positive pass-through effects of Pell Grant aid and the unsubsidized federal loan program.

The subsidized loan effect is most pronounced for more expensive degrees, for those offered by private institutions, and for two-year degrees or vocational programs.

</quote>

(Emphasis and extra paragraphing added.)

[0] https://www.newyorkfed.org/medialibrary/media/research/staff...

[chimeracoder]

> Theoretically, it will increase wages and employment since there will be a lot more money spent, increasing economic activity.

At a macroeconomic level, that money comes from somewhere (generally taxes), which means that it's also decreasing consumption and/or investment by an equivalent amount. You can make the argument that collecting the taxes to fund a program is still desirable in the end, but it's mathematically incorrect to say that it would have a net increase in economic activity.

To put it another way: what would the money be spent on if it weren't collected as tax revenue? Some portion of it would be spent on consumable goods, and the rest would be saved (invested). Money saved is very important to the economy, because that's how society gets access to capital for long-term investments (whether public works projects or private investments).

[11thEarlOfMar]

> "which means that it's also decreasing consumption and/or investment by an equivalent amount"

I am not sure about this, because the net amount is still new money in the economy, being spent for services, saved, or invested. Yes, a typical person is paying more taxes, but they will have net more money to spend or save: $BI - [Tax on $BI] is still > $0.

As a further example, let's say there is a salon that employs 2 beauticians before BI. After BI, they see an increase in business, and now can employ 3 beauticians, increasing employment by 1. The 3rd beautician is now paying taxes that were not paid before. Those taxes in part can help fund the BI.

[chimeracoder]

> I am not sure about this, because the net amount is still new money in the economy

No, the net amount is zero. Unless you're talking about literally printing money (in which case the costs are spread about in the form of inflation). There is no 'new money'.

> Yes, a typical person is paying more taxes, but they will have net more money to spend or save: $BI - [Tax on $BI] is still > $0.

You're ignoring the number of people who will be paying more in taxes than they will recieve. Even if you make the moral argument for taking their money and giving it to others, you can't ignore the fact that, without the additional tax, the money would literally be used in some other way, either as consumption or as investment.

As a ballpark, if the payout is $5,000/person/year * 300,000,000 people = $150,000,000,000/year, that's $150,000,000,000/year that needs to be raised in taxes in order to cover the program. Every dollar that gets paid out has to be funded through money that would otherwise be in someone's bank account, and which they either would spend or would save (invest).

[orlandob]

Money supply increase does not necessarily lead to inflation.

[11thEarlOfMar]

Got it. Thanks.

[greedo]

Debt. The government will simply pump more liquidity into the economy. Not that this will cause any side effects, right? This idea is all a non-starter anyways, at least in the US. As a "pure" form of communism, there's little to no real support once the details are actually discussed. Redistributing this amount of money is impossible; we can't even run a balanced budget in the US.

It goes against so much of the American ethos of independence and self-worth that I think we'll have self-driving flying cars before BI or UI.

[cname]

Can you explain how a basic income equates to "communism"?

[alanwatts]

What about a BI based on resources rather than the dollar? There already exists a renewable surplus of food, water, and shelter.

There are around 4-6 empty houses in the US for every homeless person and around 40% of food goes to waste.

So providing for the most basic physiological needs of the ~45 million impoverished people in the US is not a problem of production, it's a problem of distribution and waste management.

[brbsix]

See the economic calculation problem as outlined by Mises. There's no way to efficiently allocate resources absent a price mechanism.

Also, how are you supposed to acquire all these resources in the first place? It's kind of an important detail.

[alanwatts]

I read the first bit of Mises theory, which is full of fallacy from the start:

>The problem referred to is that of how to distribute resources rationally in an economy. The free market solution is the price mechanism, wherein people individually have the ability to decide how a good or service should be distributed based on their willingness to give money for it.

This is a catch-22. Normal people are given a highly limited amount of money, the supply of which is arbitrarily dictated by a handful of bankers. So the ultimate power of setting prices lies with them. This is explicitly outlined as one of the three main objectives of the Federal Reserve: maintaining stable prices.

>The price conveys embedded information about the abundance of resources as well as their desirability which in turn allows, on the basis of individual consensual decisions, corrections that prevent shortages and surpluses;

If this were true, there wouldn't be 4-6 empty houses for every homeless person, or starving people when vast surpluses of food exist around the corner. There is no such thing as a "free market" and yet the ideology of one persists as a way to prevent any such innovation.

[alanwatts]

>There's no way to efficiently allocate resources absent a price mechanism

Obviously math and science would be involved. However, the dollar is not created based on a mathematical or scientific standard, it is created by a handful of oligarchs based on closed source subjective speculation and confidence, "voodoo economics", and the broken window fallacy.

>how are you supposed to acquire all these resources in the first place?

The resources don't need to be acquired, they're already sitting there. They just need to be shared. So empathy for humanity is where the real deficit lies, and one of the main reasons for this is the fallacy of Malthusian-Darwinian economic ideology.

[kilroy123]

Pretty sure the number is significantly smaller than that. Children under the age of 18 wouldn't get money. People in prison likely wouldn't get money. I'm sure there would be other reasons to decline some people. Such as mentally disabled. (maybe parents or care giver would receive more?)

So it would probably be around 200,000,000 - 250,000,000.

[chimeracoder]

> People in prison likely wouldn't get money.

Well, people in prison are the ones who need money the most, given that they're currently working for a fraction of minimum wage just to buy basic toiletries.

> I'm sure there would be other reasons to decline some people. Such as mentally disabled. (maybe parents or care giver would receive more?)

And then you get right back to the whole question of determining who is eligible, or isn't eligible, and having some means of enforcing that... and we're right back where we started, with a means-testing system.

[xienze]

> Children under the age of 18 wouldn't get money.

But their parents will get some sort of bump in their BI, surely.

> So it would probably be around 200,000,000 - 250,000,000.

A floor of $2.4 trillion now. Downright affordable!

[kilroy123]

We would also remove all _current_ forms of welfare. No more food stamps, low income housing, maybe even medicare. I think social security would even be on the chopping block.

The total costs for all of this is no doubt close to 2 trillion. This isn't that unrealistic.

"Total Social Security and Medicare expenditures in 2013 were $1.3 trillion". [1]

https://en.wikipedia.org/wiki/Social_programs_in_the_United_...