Comment by wallace_f | Hacker News Reader

Comment by wallace_f | Hacker News Reader

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In general, a reasonable axiom of public policy is to focus on correcting negative externalities and unjust outcomes while minimizing interference in well-functioning free markets. Your idea is nice, but we already have mortgage tax credits and have seen the negative effect that has had on the economy.

What's more, is who gets to decide what is a necessity. Once upon a time I flew to Australia, bought a commercial van, a surf board, and converted it into a camper and travelled a loop around the country. I was by definition poor and homeless, but I was in heaven. I don't think this would qualify for any tax breaks under your plan. In this way your plan creates a complex tax code that does not align with me maximizing my utility function.

There are vast benefits to simplifying the tax code, and I would argue a better version of your idea is to guarantee a basic income to everyone.

BI won't work for everyone, such as the truly disabled, but it's a more efficient way of reducing inequality for the truly poor, and more capable of maximizing individual utility functions.

I know you will say "but who will produce useful goods and services," but at the moment I would wager far less than 30% of the population produces useful commerce. The labor participation rate is only about 60%, and many jobs don't produce anything useful. For example, police officers in Utah that settle for 0.5MM for unconstitutional injustices are draining taxpayer funds. Wall St is completely out-of-control. Bureaucracy, military-congressional-contractor-complex, healthcare insurance companies... There is an extroardinary amount of waste.

BI would also benefit the economy by increasing aggregate demand. It would stimulate investment by providing a safety net for indivisuals deciding to retrain or invest in education.

> BI would also benefit the economy by increasing aggregate demand.

That would require that taking something from A and giving it to B would increase aggregate demand. I don't see how that can be.

> It would stimulate investment by providing a safety net for indivisuals deciding to retrain or invest in education.

This safety net may encourage people to drive around Australia in a van who would otherwise work, reducing investment.

> That would require that taking something from A and giving it to B would increase aggregate demand. I don't see how that can be.

Differing marginal behavior between A and B.

Please explain what marginal things A spends/invests money in that does not produce aggregate demand.

Rent-seeking behaviors. Speculative investing.

What do you define as "speculative investing" versus "investing"? And why would the former mean less demand?

In terms of aggregate demand in the domestic economy, anything that either is not purchased from the domestic economy or which produces a lower velocity in the domestic economy has less induced aggregate demand.

To simplify and focus on simple consumption, spending that occurs on locally-produced goods during foreign travel has does nearly nothing to increase domestic aggregate demand in the travellers home country.

The thing about trade with foreign countries is that equal value flows both ways. This means that money spent in foreign countries winds up getting spent domestically, one way or another.

>That would require that taking something from A and giving it to B would increase aggregate demand. I don't see how that can be.

It has been observed in historical data that the MPC for the poor is higher than for the rich--who are more likely to engage rent-seeking behaviors--which increases AD.

>This safety net may encourage people to drive around Australia in a van who would otherwise work, reducing investment.

Once in France I observed toll workers who take a euro from you to use the toilet were often of quite unhappy appearance. I heard "well its good because it gives them a job."

If you truly believe spending a year doing a mundane job that could easily be automated, or long-hours in MS Excel making "fat stacks" on Wall St, much of the lawyering, tax accounting, lobbying, etc, has more inherent virtue than surfing in Australia than we disagree on first-principles about human dignity.

What is the point of doing anything if it does not make people able to be happy, avoid suffering, and live into the future?

If your concern is that nobody will produce anything useful: I would really bet that more than 30% of the population would want to live on more than a basic income for their entire life.

While I agree with you about the human dignity issue, I believe that a horrible, really bad paid job is an incredible, underestimated motivator.

A basic income which allows me to do something fun is quite the demotivator for doing anything more.

The problem is that improving yourself in order to raise you place in society usually sucks: endless learning, boring repetition, countless tired, lonely evenings.

Why would anyone go through all that when they can surf in Australia living in a van off basic income?!

Most people probably want to live on more than just a basic income. And assuming we cleaned up the waste and fraud in the economy, it is reasonable to assume we would only need around 1 in 3 people to maintain current economic growth. Like I said, way less than 50% really do much of any useful commerce at the moment. A lot are making things worse.

I disagree on both counts.

First, I believe that most people would rather relax and take it easy as long as their basic needs are covered (food, shelter, porn, games and some weed).

Secondly I think that we need SO much more work done around us, and of so much better quality. Everywhere I look I see crumbling cities, broken infrastructure, decaying building and wild nature reclaiming areas that used to be domesticated and manicured. The work being done is crappy, substandard and simply done badly. It's like nobody even thinks anymore.

Business are crying for better, smarter employees but they are unable to get them no matter the cost. Consumers are crying for better services and products but are facing a race to the bottom everywhere we look. Markets are failing everywhere due to the massive governmental interventions.

Maybe all this will be solved when robots appear, but for right now there is a lot of work to be done...

> Business are crying for better, smarter employees but they are unable to get them no matter the cost.

If this is true, it's because the existing system actually locks people in place rather than enabling improvement. Willingness to pay more once a state is achieved doesn't actually free people to achieve it. Doing what work one can for now to survive competes with investing time into self-improvement, which is literally a luxury many cannot afford.

> A basic income which allows me to do something fun is quite the demotivator for doing anything more.

I disagree that this is generally true (all of human history shows that humans generally want to continually gain both improved material position over time and more than those they see around them if there is an avenue to do so.)

Moreover, that's a rather distant theoretical complaint, anyway, because a basic income that provides anything more than the kind of marginal existence provided by American public welfare programs now (but with fewer disincentives to work) is probably far outside the ability of the economy to sustain without enormous technological progress.

>is probably far outside the ability of the economy to sustain without enormous technological progress.

FWIW we already spend nearly $10,000/person on transfer payments, welfare, housing, health, etc.

Yes, people getting that much in outside income annually are usually still recieving some of those payments and subsidies, and still living pretty marginally. The idea of a sustainable, near term, more-than-marginal UBI is a pipe dream.

Nobody has managed to automate janitorial services yet. There are a LOT of boring, unpleasant jobs that need doing. I doubt the economy can be sustained by only happy jobs. There are only so many astronomy, forest ranger, and talk show host jobs.

I know, and have known, quite a lot of people who would be happy to do nothing productive and have someone else provide their needs.

In a way, it's a bit like college. How many people learn something by auditing a course? Not many - it's the pressure of exams and grades that provides the motivation for most students. All you have to do is look at their study habits - procrastinate until the last moment and then cram.

Rather than taxing individuals like companies, which would create an even more intangible tax code, I was suggesting a more precise way of determining "fair" tax brackets -- similar to the article. Right now tax brackets seem to be determined more or less arbitrarily with a healthy dose of single sided lobbying.

If we set the goal of defining tax brackets such that they affect any given person in any given bracket in a comparable way, it gives them meaning and inherent fairness. The measurement of real disposable income could be determined by aggregating costs across representative demographics. It's similar to the minimum wage. Right now so many things in our law are just magic numbers. Giving them actual meaning would likely not only make the law more fair, but also make it more transparent and difficult for special interests to lobby against.

I imagine we're headed inevitably towards a basic income thanks to automation. I just don't see any other way around it from either the consumer or the producer side. Companies need to earn money. Companies earn money from people who generally work to earn money in a very circular system. Take mass employment out of the picture and the whole system starts to break down. But I think that's beyond the scope of this post.

It could be argued that the whole concept of "basic income" is very much a "rent-seeking" behavior, as receivers are not technically producing anything of their own while relying on someone's else "surplus".

And nearly every living person on earth has been profiting from rent-seeking from the second they are born into a world with food, medicine, water, maths and science, etc that has been created and improved-upon by people long-dead now.

If all people benefit from something then it's hard to find a problem with it. That's presumably not the case for someone who is a high level producer comparing a UBI world to a non-UBI world and seeing only an outflow.

I'm curious how that's wrong.

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