[rubycon22]

What happened? Some people got a one-time $1200 check. What could they have done with $1200 that made you lose faith in UBI?

Or are you referring to the $600 that supplemented the unemployment insurance? But those went to people who were just recently working and had their livelihoods wrecked by government action and/or inaction. I'm pretty sure you would agree they deserve that money and it's okay for them to do what they damn please with it. Even if that means them not going back to work for some time because they have the freedom to. Imagine how less fucked we would be if we just paid the majority of non-essential workers to stay the hell home. Less competition for the essential jobs, so people who do really want to work can work and the essential jobs will be filled.

[emteycz]

It's not about what the people done and faith in them or their claims from moral or other points of views. These $1200 nearly destroyed the European economies. My country is forever indebted now, and they handed out much less and not even to everyone but a small portion of people.

[rhn_mk1]

This is not like a universal basic income though: it was not universal.

Handing of the money in an emergency situation has also the fundamental difference that it isn't meant to be sustainable: it's one off, and the preparation does not include reworking the financial structure of the state to make it permanent, like all UBI proposals I've seen so far.

[emteycz]

I absolutely don't get your point. The financial structure of the state was reworked for these not-universal payouts (this is not the USA, the annual budget is made from scratch each year), and if the payouts were universal and more than one the country would be in literal ruins right now. There is no possibility of making it sustainable in the not-universal form, so how exactly could it be made sustainable if it was universal?

[rhn_mk1]

The difference is: was it reworked to make it sustainable and recurrent, or to make it work this one time?

That it failed in the current political landscape doesn't mean that it will fail in every case, and you haven't presented any evidence ruling it out. Thus "There is no possibility of making it sustainable in the not-universal form" is an unfounded claim.

[emteycz]

How exactly can it be made sustainable in recurrent and universal form, if a low one time not-universal payment nearly crushed the country? Believe me, we really tried to make it work more than one time and for more people. I say we because it required massive amounts of charity on top of the governmental aid.

[rhn_mk1]

I don't claim to have all the answers. But not having a confirmation is not the same as having a refutation.

One thing for sure, a big change will require a long ramp up, or a big shock.

[rubycon22]

What is the alternative in a situation where the government has forced many people out of work?

You were going to have to pay one way or the other. It was just about a matter of when and what form of payment. Most of the world has decided that going into debt was better than paying with the lives of their people. You can renegotiate debt later on. It's just numbers in a excel sheet or some shit. Can't renegotiate the lives of dead people.

[imtringued]

Does your country suffer from unusually high employment in full time positions or why are you worried about debt? Debt is a way to make people work today for a future reward.

If people don't work they lose their productive output irrevocably and can lead to a cycle of poverty. The damage caused by unemployment is far worse than any damage caused by debt because debt can be reversed easily once you have mild inflation around 2-3%. Just the effects of inflation alone will reduce the debt burden, let alone the potential tax increases through higher employment or the economic growth that will happen once the economy is no longer broken.

[emteycz]

Yes, the unemployment rate was around 1.5%-2%.

[Scandiravian]

National debt and private debt are two very different creatures. National debt is for the most part a good thing, since it's a measure of the amount of a national currency is in circulation

Modern economic theory proposes that nations, with full control over their currency, have infinite spending power (aka can go into infinite debt) without any issues, as long as full-employment hasn't been reached

This is of course not entirely possible for many EU countries, since being a member of the eurozone means the country does not have full control over its currency - which was a large contributor to, for instance, the Greek financial crisis

[oblio]

I don't know what kind of economic books you've read, but mine had terms such as "hyperinflation" in them :-)

If anything, stuff like global currencies ($, €) bail out their respective owners because they're world reserve currencies. Some of the smaller Eurozone countries would have definitely defaulted, had hyperinflation, etc, without the Euro. Now they're in recession instead, which sucks a lot but still less than the alternative.

[imtringued]

>I don't know what kind of economic books you've read, but mine had terms such as "hyperinflation" in them :-)

You don't have to issue more currency/debt once you have reached the target inflation rate because if you manage to hit the right inflation rate every year you have already executed your stimulus properly and are reducing unemployment. Consumer inflation is a proxy for worker income because most of the goods or services that are indexed are the product of labor. If the stimulus arrives in the hands of workers first it will mean that worker salaries will grow ahead of inflation.

>If anything, stuff like global currencies ($, €) bail out their respective owners because they're world reserve currencies. Some of the smaller Eurozone countries would have definitely defaulted, had hyperinflation, etc, without the Euro. Now they're in recession instead, which sucks a lot but still less than the alternative.

They are in recession because of a lack of demand for domestic workers which is basically the problem that moderate inflation would solve.

Just look at these charts:

https://www.statista.com/statistics/225698/monthly-inflation...

Inflation is high in Poland and Hungary. Does this mean they suffer from problems? Actually no it's the opposite.

https://www.statista.com/statistics/268830/unemployment-rate...

Poland has the second lowest unemployment rate and Hungary is still well below the EU average. Please bear in mind that this chart only shows the inflation rate in August. I chose this chart because it is a easy to read bar chart. Some numbers may be outliers but the general trend will be the same no matter what chart you look at.

[js8]

MMT doesn't say you can't have hyperinflation due to economic mismanagement, it just says you can bootstrap yourself out of unemployment (a crisis) by printing money.

Just because a government is printing money it doesn't yet mean they practice a sane economic policy, which would be to increase the demand to meet the supply of labor.

[Scandiravian]

I have never understood, why everyone brings up inflation as an argument against this, as if that isn't something that already exists

Inflation is only an issue if you spend money beyond what is required to achieve full employment in the workforce, since new money in the system is balanced with new wealth being generated through work

Inflation can then be controlled through taxation. Raising taxes pulls money out of circulation, thereby reducing inflation

Private banks already have the ability to create money out of thin air, but for some weird reason, that's apparently not really an issue for most people

I can't think of any small European countries that I can imagine defaulting without the euro. Could you specify which ones you think would have defaulted?

[oblio]

Greece, for sure.

They would have defaulted and the drachma would have probably been at a point where a loaf of bread would cost millions of drachmas.

[Scandiravian]

On the contrary, the eurozone is a massive reason for the Greek economy collapsing as catastrophically as it did in the wake of the 2008 financial crisis

It also doesn't matter how "many" of a currency is needed for a loaf of bread, as long as the supply is available. The Italian lira was extremely inexpensive, but as long as the government made sure the supply matched the demand there was no issue

Edit: I'd also say that Greece is not really a "smaller European country", being the 14th most populous European country

[mytailorisrich]

I wonder which "modern" theory this comes from...

Some debt is a good thing because, like for a business or individual, it is generally a good thing to borrow in order to invest for the future (leveraging effect).

But too much debt is not a good thing. Debt must be serviced and one need to find creditors willing to lend.

Infinite borrowing based on "full control of currency" only means that the value of the currency decreases towards zero and creates hyperinflation: can Zimbabwe support a debt of trillions of Zimbabwean dollars? Sure... But how much is a Zimbabwean dollar worth? Close to nothing and people need a wheelbarrow full of cash to buy a loaf of bread.

[imtringued]

Hyper inflation is the result of exhausting your countries' production capacity. This is generally a temporary phenomenon because the supply side can always eventually catch up because the demand side is funding it. In economies where it is a permanent problem it is because either the economy is prevented from expanding production (think of preventing new housing in San Francisco or excessively low unemployment) or because there is too much demand for products (generally through printing more money despite the low unemployment or debt).

Well, if we assume that your country is unable to introduce more money into the economy through no fault of its own (well that's never true) you can still fix the problem by investing into more production capacity and education. The unemployment in Zimbabwe is relatively low at around 5% so any additional money it prints will turn into inflation. If you were to follow MMT you would stop introducing more money because that is the core argument in MMT: print until inflation is back on track. Inflation is already on track in Zimbabwe.

The thing is, once you are in this situation you are almost set up to fall into the pit of success. All you need to do is invest into businesses, expand production capacity through automation and also invest into education. Follow the Chinese model by creating special economic zones where foreign investors can easily do business. Follow the German model of vocational training to solve the education problem. These problems are far less intractable than what first world countries are suffering through.

[Scandiravian]

Sovereign nations don't indebt themselves through banks. They're not taking out loans to fund their spending, so they don't need a creditor

Avoiding hyperinflation is about "how" you spend the money, not where they come from. In the case of Zimbabwe, the events leading up to their crash was massive destruction of productivity, which meant their wealth generation no longer matched the amount of money in circulation

The trust in their currency took a nosedive, because of the confiscation of assets from wealthy farmers - basically a clear message saying, that the government will not protect assets purchased with their currency, making it risky to own and use

Most western economies are much more stable and have high levels of demand for their currencies, which acts as a counterweight to inflation as well

[mytailorisrich]

This is patently false and a rather strange claim.

Sovereign nations do indebt themselves through banks and financial markets in general, most often through the issuance of bonds, which can be defined as highly tradeable loans.

This is why sovereign debt is given a rating by credit agencies and why interest rates on debt freely vary based on the perceived risk by creditors. This also means that it can become difficult for a country to borrow at all (hence organizations like the IMF sometimes stepping in)

There is no magic.

However you spend money, inflation is created by an excess supply, not least when money is printed to cover debts (an effective devaluation). This is actually what happened in Zimbabwe.

[Scandiravian]

I think you're missing the point

A nation doesn't issue bonds to cover the cost of its spending, but to remove money from circulation. It's simply a way of saying "hey, there's too much money around. If you let us remove some of it now, we'll give you back more in the future"

There's literally no situation where a sovereign nation would not be able to pay out the bonds it has issued. It's simply a matter of making the money printer go "brrrrr" and presto - the debt has been resolved

In the most broad terms, the only difference between realising bonds and simply printing the money is the lag time

As you say yourself - there is no magic

In the case of Zimbabwe, and as stated very well by imtringued in the other post to this thread, Zimbabwe could have invested in production, education, and infrastructure to grow the economy, instead of trying to sell bonds, which is essentially saying

"Hey, you know this currency that is rapidly loosing value - we're going to print so much more of it in the future! Doesn't this seem like a great investment?"

[emteycz]

That's interesting - if what you're saying is true then why is the government's next year policy significantly increasing taxes, essentially stopping all investment and reducing social safety payouts to nearly zero - all of that in order to pay debt? We're not in the Eurozone, were THE ONE country with nearly total employment, and were the fastest growing European economy before the pandemic.

[Scandiravian]

I'm not sure what country you're referring to - could you specify that?

[js8]

In addition to the above, which I agree with, you might also view money not as a resource, but a vote in economy. If we assume that people are motivated by money, they will still work even on UBI, because what UBI shifts is just who is voting (who is making the decisions to produce stuff).

So having an UBI is not really that different than change in demand from one set of products to another, which the economy should be able to handle even according to classical theories. But people are still rewarded for useful work even in the system with UBI, as usual. In fact, if many people decide not to work with UBI, and you do a useful job, your salary might go up, since demand from all these people for your work has gone up.

[Scandiravian]

I've never thought of it that way. It's an interesting idea, that I want to understand better, so I'll spend a few hours reading up on this today.

Your post taught me something new, which I probably wouldn't have found out on my own. Thank you :)

[username90]

> National debt is for the most part a good thing, since it's a measure of the amount of a national currency is in circulation

Why do you say this as a Scandinavian when all Scandinavian are fiscally responsible and don't take on more debt every year? Taking on debt isn't a good thing, you can have currency without having any debt as a nation, they aren't related at all. People arguing for that are just trying to manipulate you into believing they are on your side.

[Scandiravian]

I think you're skipping over "for the most part" in my post

Are you talking about private debt or governmental debt? They are, as stated in my first post, two entirely different things

[username90]

Government debt.

https://tradingeconomics.com/sweden/government-debt-to-gdp

For example Sweden where I live has reduced their government debt to GDP ratio pretty consistently the past 25 years, and I haven't noticed any problems with it. People saying that we would have problems if governments balanced their budgets are just big fat liars.

[Scandiravian]

I think calling other "big fat liars" is a sad approach to a discourse. I don't know who the "people" you refer to are, so unless you specify that, I can't comment on it. I can't remember making a claim like that

In fact reducing national debt through taxation is an effective way of reducing inflation. Reducing national debt does not mean the economy will fail.

The economy is not a binary system ("success", "fail"), so the more interesting question to me, is whether Sweden's economy would have done better if they had chosen a different economic policy

[mtgx]

Is it the checks that indebted the governments or the economy lockdown? I'd have to imagine the economy lockdown/slowdown has an orders of magnitude larger impact.

[mytailorisrich]

It illustrates, if needed be, that handing meaningful amounts of money to all or most of the population in a recurring way is not sustainable.

The responses to the covid lockdowns, which are incredibly expensive, were only considered because they were one-offs and time-limited.

If payments are restricted to a minority, the poorest, then it boils down to what already exists in most European countries and the question is then "what's new?"

In general UBI proposals are ideological solutions to ideologically-constructed problems. They are not realistic nor practical and thus thin on practical considerations and hard numbers.

[chous]

Most people are getting poorer. Their only way out is fighting for a job, but jobs are scarce, and the situation will get worse exponentially due to technological unemployment.

That's not an ideologically-constructed problem.

It's pure logic. What is ideologically-driven, in my opinion, is claiming that "other jobs will be created, so no need to worry". Which implies, on the other hand, that the poor deserve being poor, due to their own negligence, lack of education, or laziness. We don't need to care about them. We provide a capitalist system which rewards the brave and the competent, and it's meritocratic. That is pure ideology, not based on reality.

[mytailorisrich]

This not pure logic. This is a logical fallacy and a strawman argument.

You do not put forward any argument to my previous comment, and in fact illustrates my point.

At the moment there is an economic crisis due to the covid pandemic. This is a specific, time-limited issue and welfare has stepped up to help people, at an extreme cost. This is not sustainable and only considered because it is an emergency in nature.

If jobs dry up due to automation then there will indeed be scope to discuss UBI based on taxing 'robots' (so a clear and plausible way of financing it) . This is not what UBI as proposed now is about.

No-one has claimed that the poor deserve to be poor and/or do not deserve help. There are plenty of welfare schemes in Europe and quite a few of them result in effective UBI, but only for the poorer who actually need it.