[hardwaresofton]

> No, raising the minimum wage subsidizes innovation. It's better for the people and the technology.

I agree with that as a long term result, but what I'm arguing against is the common refrain of the immediate detrimental effect on current business of increasing minimum wages to living wages. Higher wages for society does lots of great things I didn't get into, but the common refrain is that it will "hurt small businesses".

More people that can take more shots at innovating (also, producing culture which is an exportable good if not valuable in and of itself) is a great thing.

> The only risk is that if gets so high there is more incentive for illegal work. That's one reason why UBI is better.

I don't understand the point here on illegal work -- could you lay out the scenario?

I'm not sold on UBI -- no one has managed to give a satisfactory answer for why it won't lead to persistent (even if minuscule) inflation everywhere. The best people get at is "competition", but very few "free" markets are as competitive as people think they are. Once UBI takes hold, companies will rush to gain a percentage of that UBI (this is almost like securing a government contract that never ends), and businesses will raise prices because at least intuitively every single customer now has more purchasing power and there's room for more profit.

Remember that time that the government gave out $X checks and a lot of products magically became just around $X (in the recent years, very large TVs and stuff)? The market does react when it sees the government give out free money and I'm not sure why people think UBI will be any different. Don't add some new system that will be broken in new novel ways -- just help the people at the bottom of the economy right now, we know how to do it, we just won't because right now we are valuing economic growth more than stability/societal benefit.

[EDIT] - I want to add a personal anecdote -- I have business owners in my family and during the pandemic, and we disagreed over a few things:

- which businesses are really "essential"

- the fact that more people at the bottom of the economy with disposable income means more profit for their own businesses, and just about every business. This means paying their employees more actually results in more profits for themselves in the long run (of course there's a bit of a prisoner's dilemma here).

- The "job creator" narrative really is so ingrained at this point that it was hard to argue my point that businesses do not create jobs, demand creates jobs. Demand comes overwhelmingly from the middle and lower classes (well, except for very specific goods) -- most of the time smart businesses actually do their best to remove jobs (make their operations "lean").

Somewhat out of left field, but a lot has been said about the decline of the music industry -- but if you can get 1% of America to listen to your music, and give you a $1 for an album, that is 3 million dollars. It gets easier and easier to charge the more wages people make -- $5 a lot easier to pay when it's maybe 15mins of work for a worker. This kind of rising tide lifts all boats.

[XorNot]

> I'm not sold on UBI -- no one has managed to give a satisfactory answer for why it won't lead to persistent (even if minuscule) inflation everywhere.

Inflation is persistent - the Fed has an inflation target of 2%! Year over year, that's the inflation rate and they manipulate spending and money issuance to hit it.

If you are holding onto large amounts of cash and not getting a 2% return, you are losing money and that's intentional because the government wants you to either spend it or invest it.

[hardwaresofton]

I should have been more clear on that, I should have written even more persistent inflation (than normal). I see UBI as just a add-more-inflation button.

Also side note isn't it great that the Fed, which is trying to get to full employment is now targeting an average inflation target of 2%? I know that it's more complicated than this (if we allow the dollar to become too weak or too strong there are serious consequences for other counties who rely on it as a reserve currency), but inflation disproportionately damages the working class. So the signal is basically we're going to get people into as many jobs as possible, even if we're devaluing that work with our actions.

[pashamur]

I'm going to refer to Lyn Alden's guide here (https://www.lynalden.com/inflation/), but not all inflation damages the lower class.

In fact, the wealth gap was smallest (relatively) at the end of the 1940s and 1970s, both decades with the most inflation in the 20th century. It all depends on the power of labor vs capital. That's why capital has fought so much against unions - if you bring back unions, inflation can return and it can benefit the lower classes at the expense of the rich.

[hardwaresofton]

Thanks! Lyn Alden's a great source of information -- I'm familiar with her work.

That said, I don't see how any of what you've said points to a problem in my theory -- the power of labor vs capital has been heavily tilted in the favor of capital for a long time now, unions got essentially systematically busted a while ago. I assumed that would be obvious as context.

I assume that you're not suggesting the lower classes are immune to the coming variant of inflation?

[Ericson2314]

> I agree with that as a long term result...

I'm a little confused on what you are saying. A small business that cannot afford to raise wages certainly cannot with cash on hand afford to innovate.

> I don't understand the point here on illegal work -- could you lay out the scenario?

UBI means people are payed better whether they are hired or not, minimum wage only effects those with jobs. The latter incentivizes illegal jobs with skirt the minimum wage laws, since the employer is responsible for wages. UBI being financed "macroeconomically" means there less much less marginal incentive for an employer to go rougue because even if it lowers their wages, it won't allow them to skirt their UBI-funding tax obligations.

(I prefer simple, hard to evade taxes like VATs, LVTs, Carbon taxes, etc.)

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The stuff below the [edit] sounds great to me; since we agree on that I am wondering what about UBI you don't like?

> demand creates jobs

Yes! And nothing creates demand like a UBI since:

> Demand comes overwhelmingly from the middle and lower classes (well, except for very specific goods)

> The fact that more people at the bottom of the economy with disposable income means more profit for their own businesses, and just about every business. This means paying their employees more actually results in more profits for themselves in the long run (of course there's a bit of a prisoner's dilemma here).

UBI is supposed to be the ultimate way to defeat the coordination failure, since the actions of employers (as employers) don't effect the UBI at all! Whereas with minimum wage their actions do matter of a) how many employees b) illegal work perverse incentive.

----------

> I'm not sold on UBI -- no one has managed to give a satisfactory answer for why it won't lead to persistent (even if minuscule) inflation everywhere.

Happy to tackle this

> The best people get at is "competition", but very few "free" markets are as competitive as people think they are.

Agreed

> Once UBI takes hold, companies will rush to gain a percentage of that UBI (this is almost like securing a government contract that never ends)

Sure!

> and businesses will raise prices because at least intuitively every single customer now has more purchasing power and there's room for more profit.

I'll happy grant that they do; this is fine. Turning on UBI is a one-time adjustment, and this would be a one-time rise in prices. (I'm looking at all flows, no stocks here, to examine equilibria more simply.)

The thing to ask is, after that one-time adjustment, are we back where we started? The answer is emphatically "no".

Firstly, remember inflation is multiplicative, but wages are additive. If we scaled all wages by 1.2, prices could rise by 1.2, and we would be back where we started, but adding a fixed amount to wages is non-linear so no price scaling will restore the same distribution.

Remember now how richer people have helped jacking up the price of things like healthcare, childcare, housing, and education? (Those other cost diseases causer are at play). UBI with "compress" the purchasing power distribution so that the gap of "real" prices between that shit show and basic goods must shrink.

Now, we want the shit show goods to stop spiraling out of control, rather than the basic goods to join them. To that I have to argue spooky dynamics and appeal to the Keynsianisms we evidentally agree on. If the last few decades have been a case of too-low aggregate demand, then ratcheting up aggregate demand should lead to virtuous cycles like the WWII mobilization, not vicious cycles like 1970s inflation.

Finally here's a thing to consider: why are tech capitalists rather found of UBI? One might say singularity ideologically, but that's bullshit even if they do believe it. Here's a better one: competition between tech and traditionally elites. I think on some level tech is frustrated that they feel so much more productive than traditional business, but that very productivity frees up labor to make legacy businesses' operations cheap.

UBI, like I said above, is employment-agnostic and will raises taxes and wages on all corps. But if you are a more productive, demand-limited tech company, you can raise output (or embark in new fields) taking advantage of the new demand and make it up in volume. If you are a traditionally company, however, you will get screwed when your UBI-secure employees can bargain harder, and volume therefore can't save you.

[hardwaresofton]

> I'm a little confused on what you are saying. A small business that cannot afford to raise wages certainly cannot with cash on hand afford to innovate.

Well I don't think that's quite true (workers are very expensive -- reforming your business processes could take like $100/month for some SaaS tool that massively saves everyone time or improves some process), but what I was failing to get across is that people get more shots at innovation (and entrepreneurship) with higher worker pay.

There's another thing here -- paying workers more also leads to more income for the businesses that workers frequent, but that's a mess of hypotheticals to go down.

> UBI means people are payed better whether they are hired or not, minimum wage only effects those with jobs. The latter incentivizes illegal jobs with skirt the minimum wage laws, since the employer is responsible for wages. UBI being financed "macroeconomically" means there less much less marginal incentive for an employer to go rougue because even if it lowers their wages, it won't allow them to skirt their UBI-funding tax obligations.

> (I prefer simple, hard to evade taxes like VATs, LVTs, Carbon taxes, etc.)

Illegal jobs which skirt the minimum wage laws aren't my focus. I actually think of those as fine as an on-ramp for recent immigrants who may be in an odd spot where applications haven't cleared but they need cash to purchase stuff to eat. Most normal citizens are not doing this unless you're in a society with lots of marginal fraudulent activity (some EU member states), but those countries have their own problems.

Agreed on preferring harder to evade taxes.

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> UBI is supposed to be the ultimate way to defeat the coordination failure, since the actions of employers (as employers) don't effect the UBI at all! Whereas with minimum wage their actions do matter of a) how many employees b) illegal work perverse incentive.

Right I get that -- but why doesn't this lead to a stagnant minimum wage? It's been hard enough raising the minimum wage with inflation and/or cost of living (again, it's supposed to be a "living" wage), and that's going to be a lot harder with UBI around. In my mind this starts with making the minimum wage a living wage, then considering whether UBI is still necessary (ex. when too many jobs have been automated).

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> I'll happy grant that they do; this is fine. Turning on UBI is a one-time adjustment, and this would be a one-time rise in prices. (I'm looking at all flows, no stocks here, to examine equilibria more simply.)

Disagree, unless the benefits of UBI are extraordinarily well designed (percentage of some moving metric with inflation adjustment), then it will be much like the minimum wage is right now, and lag inflation and other changes. Businesses will adapt to those costs (and raise their prices) and UBI will fall behind just like minimum wage does now.

> The thing to ask is, after that one-time adjustment, are we back where we started? The answer is emphatically "no".

> Firstly, remember inflation is multiplicative, but wages are additive. If we scaled all wages by 1.2, prices could rise by 1.2, and we would be back where we started, but adding a fixed amount to wages is non-linear so no price scaling will restore the same distribution.

Hmnnn I think it's more a "maybe". Adding the fixed amount will not make it easy to restore the distribution, and I'm not guaranteeing it will be one for one, but some of that different will definitely slip. There is a realized % gain of wages that varies for each household, but businesses don't need to know the exact % to scale prices, they'll rise naturally. Now whether it gets to exact 1.2 (given that the household has a realized scale factor of 1.2%) is up for debate, but I'm arguing that it will not be 1 -- the pernicious thing is that it may even go past 1.2 for certain things.

> Remember now how richer people have helped jacking up the price of things like healthcare, childcare, housing, and education? (Those other cost diseases causer are at play). UBI with "compress" the purchasing power distribution so that the gap of "real" prices between that shit show and basic goods must shrink.

> Now, we want the shit show goods to stop spiraling out of control, rather than the basic goods to join them. To that I have to argue spooky dynamics and appeal to the Keynsianisms we evidentally agree on. If the last few decades have been a case of too-low aggregate demand, then ratcheting up aggregate demand should lead to virtuous cycles like the WWII mobilization, not vicious cycles like 1970s inflation.

I'm not sure that I can blame that uniformly on "richer people" -- there are lots of reasons those sectors are broken. I don't really see UBI shrinking the purchasing power distribution though -- it just shifts the whole curve? What if they just both go up (both basic goods and the shit show industries)?

I don't think anything can lead to WWII mobilization without an actual war and massive debt. I just don't know enough about economics but again, I see it very simply -- why would the price of both the shit show industries and basic goods go down with higher aggregate demand assuming constant-ish supply?

> Finally here's a thing to consider: why are tech capitalists rather found of UBI? One might say singularity ideologically, but that's bullshit even if they do believe it. Here's a better one: competition between tech and traditionally elites. I think on some level tech is frustrated that they feel so much more productive than traditional business, but that very productivity frees up labor to make legacy businesses' operations cheap.

I'm hugely critical of anything tech capitalists are fond of. The vast majority of them are not my friends (as in they do not have my best interest in mind) -- when I hear that they're fond of something, I assume it is because it will be beneficial to them and they feel they already have a space in the world. Elon Musk wants to go to Mars instead of cleaning up the oceans because he runs a company that does that.

I hadn't thought of that motivation (frustration) before but that sounds pretty plausible.

> UBI, like I said above, is employment-agnostic and will raises taxes and wages on all corps. But if you are a more productive, demand-limited tech company, you can raise output (or embark in new fields) taking advantage of the new demand and make it up in volume. If you are a traditionally company, however, you will get screwed when your UBI-secure employees can bargain harder, and volume therefore can't save you.

We don't need a UBI to raise taxes, and I don't want to raise taxes and wages on all corps. I want to raise taxes on the corporations with a massive disparity between generated capital gains and worker wages -- they're bad for society (in my opinion) and I want to disincentivize that behavior. I don't need UBI to do that, I just raise either taxes or mandated worker wages. In an ideal world, taxes just go up, and money is invested into the tax reclamation operations that target people in the top 10%. OK, let's not single those people out -- assuming they pay a reasonable amount near their fair share without any shenanigans, increase the capital gains tax directly, or tax the corners of finance shuffling around dollars every day.