Growth as a result of consumption is destructive. We need to find ways to 'grow' our economy without increasing consumption. For example, measure growth by how people are becoming more educated. If people could live healthily and intelligent and only work 10 hours a week until they were 100, wouldn't that be better than being able to buy a new car every year? Or a 5000sq house with the latest big screen tv?
I believe (or rather, I pray) that we have hit peak consumption which will lead to this problem forevermore. We need to find new ways to improve ourselves than shopping more.
Exciting to see that this is the top comment (at least for now) because I think this is the sort of attitude and vision for the future that will solve many of the health problems in this world. I'm also very excited by YC's UBI experiment.
People should be able to not worry about basic needs and be able to focus on enriching their lives and, by doing so, the world around them.
The idea is that with UBI people don't need to work 40 hours per week at a miserable job if they don't want to. This in theory causes prices for stuff like McDonalds to go up which should reduce consumption. In addition, people are free to pursue things like further education and the arts that are much harder when you're working two jobs to put food on the table.
UBI comes from tax money though. If the idea behind UBI is that people don't need to go work, and won't go buy McDonalds anymore, then tax income is going to plummet. If tax income plummets, what pays for UBI ?
UBI can only succeed if people continue to consume, preferably at higher levels than currently, which would allow others who want to live a life at a higher standard to sell things to UBI recipients, who can then be taxed and support everyone else on UBI.
If UBI encouraged too large a portion of the population to pursue non-taxable income (say, making art and games and giving them away for free because they don't need money), then UBI would collapse from lack of income. Especially so if that art is given away freely to other countries over the internet. So it's a fine line that is probably a lot more complex than people give it credit. There's certainly no guarantee as to what the results of UBI would be, and no guarantee that the medicine won't be far worse than the symptoms.
EDIT: Even if you assume that a UBI could survive if it decreased with a fall in taxable income from a policy and livability perspective, if a person on UBI received $100 one week, and then had it drop to $75 the next, he would get a major shock and public opinion of a UBI would fall apart. You could print money to make sure UBI never falls, but if UBI is going out to the entire population, the amount of money needed would be enormous. That much money added to a system without an increase in real demand (people on UBI would still buy the same stuff), could easily cause hyperinflation. So another constraint that UBI has and I've never heard anybody mention - UBI can never decrease, even if tax income decreases. Plus there's no way anybody could trust politicians to manage something that complex. UBI practically demands a complete restructure of government, society and the economy. Instead of being a 'patch' as many have described, UBI is closer to 'The World 2.0'. It would be the most incredible Second System Syndrome ever seen.
While this is true mathematically, I prefer to think about the opportunity cost of not having a UBI. I (like perhaps many people on HN) basically wasted my 20s trying to make rent while I worked on my shareware game company. I basically failed at that and all of that code went obsolete before it earned me income.
Had I had a relatively small UBI of perhaps $12,000 per year, I could have met expenses long enough to get ahead of the curve. I wouldn't have spent that time burned out and getting sucked into dead end $20,000 per year jobs that took all of my time and energy.
So for me, not having a UBI and throwing away a rather prolific 20 something probably cost the US GDP growth whatever my business might have contributed for a decade, say whatever a typical game developer salary might be (perhaps $60k/yr), call it $600,000. That could easily be 2, 4, 10 times that much if we grew enough to hire other employees.
By not investing in the workforce like the country did with public works before the information age started in 1980, my generation (gen x) lost out on at least a 5x rate of return. My struggles happened just before Prosper and Kickstarter got big, so I ran up staggering credit card debt. Had we chosen a more progressive route, even at a 20% tax rate I would have paid the government back what it paid me, with the bonus of life sucking a whole lot less.
I think a UBI might be one of the few things that can raise the 10% startup success rate because it attacks burn rate directly. It would also allow startups to focus on things more meaningful than video games and social media apps because it wouldn’t just be about trying to get enough F.U. money to get left alone anymore. I had always planned to save enough to be able to work on AI and alternative energy, and now with consistent hard work I have a chance of doing it, but with a middle aged realism that is just not helping my motivation. To be 20 again and told “go do all the things” is one of my deepest wishes and I hope it happens for future generations.
That $600k of production is based on the idea that you would have worked at some point, and people would have consumed your work. That is very different from "let's all stop producing and consuming."
There are many ways to gain funding now if you are expecting returns of the investment. The only thing different about UBI is that it is unconditional.
> If the idea behind UBI is that people don't need to go work, and won't go buy McDonalds anymore, then tax income is going to plummet.
The idea is that people don't need to go work, because robots do all the work, and thus any economic value attached to labor, either real or nominal, converges to zero. It doesn't matter whether people have financial incentives to do work, because people /do no work/. You don't tax labor income to finance UBI, because nobody will have labor income; all taxes will be on capital of some sort, such as land or securities, and such taxes would be sustainable because all income will accrue to capital and none to labor.
Except the value of labor - especially labor such as marketing, or government gruntwork such as FDA approvals - cannot be done by robots. At least today, and probably not in the next 50 years. So there is still a lot of labor that will have to go on.
As for shifting all taxes from income to capital - this can't work without enormous changes to free trade. This means that we'd have to stop free trade entirely (catastrophic for developing countries) or implement UBI across all countries at the same time (definitely impossible in the near future).
The problem is that all the capital holders would have immense pressure to move their businesses overseas if they're going to lose substantial parts of their capital every year from tax. Income and profit taxes don't do this because the business still has to be growing to pay the tax, so you can just increase prices to offset the tax, etc. But a capital tax big enough to cover income for the entire country would be significant percentage of capital every year. Any hole left open in free trade would have that capital rush to other countries where such a tax does not exist.
Plus even if capital stayed, that would further reinforce 'growth at all costs' mindset. You'd have to grow your capital at a rate greater than the tax every year to be successful. You'd have massive corporate thuggery - such as pricing things just above UBI to force people to come in to work as marketers and other roles to push each business above the competition and beat the capital taxes.
What if your whole economy had a bad decade and assets failed to outgrow your capital tax? As with income tax, your tax base has just shrunk. But you can't decrease UBI because your whole population and economy is based around a set price level. You're back to having to take extreme measures to keep everything running, and a mistake will blow your now-fragile economy out the water.
The takeaway for me is that UBI isn't something we could just graft onto our existing system and pretend it's a miracle cure. We are going to need to change our entire system.
> This means that we'd have to stop free trade entirely (catastrophic for developing countries) or implement UBI across all countries at the same time (definitely impossible in the near future).
That's a valid and important concern, and one that I don't have any answers to right now. One possibility is keep capital fixed while making people mobile, i.e. very tight capital controls combined with very loose immigration controls. Capital thus cannot escape to low-tax regimes, and people in developing countries can take still advantage of capital by moving to where the capital is. If that's too difficult to handle, there is also the possibility of "virtual" immigration through political union.
> You'd have to grow your capital at a rate greater than the tax every year to be successful
Since the tax would be about the same as the current (or 1960s, if you're generous) share of the national income from capital captured by wages, capital already grows at at least this rate--otherwise wages alone would be dragging down all economies today, and that's just not happening.
> What if your whole economy had a bad decade and assets failed to outgrow your capital tax?
We'd do what we do today, and draw down the sovereign wealth fund and/or borrow from the bond markets.
> That's a valid and important concern, and one that I don't have any answers to right now. One possibility is keep capital fixed while making people mobile, i.e. very tight capital controls combined with very loose immigration controls. Capital thus cannot escape to low-tax regimes, and people in developing countries can take still advantage of capital by moving to where the capital is. If that's too difficult to handle, there is also the possibility of "virtual" immigration through political union.
For real immigration: that is already happening massively in the form of economic migrants into Europe. If you restrict capital from traveling out of the developed world, you'll turn the developing world into a hellscape that everyone will try to escape. Real immigration of that size would make housing unaffordable, overwhelm all infrastructure, overwhelm local water resources, etc. It's the exact opposite of what we want: we don't want all of humanity in a 100km big city. We really really don't.
For "virtual" immigration - you basically mean annexing the sovereignty of citizens of developing countries. Extremely unlikely, no government would allow that without a fight. But assuming they do, you now have a billion new voters living outside of your country. What do they do the next election? They'll vote in their own leader who will promptly redirect all the social grant money overseas. Hell, I know African leaders, they'll redirect all tax money to themselves in massive quantities. We don't want all of the developing world electing leaders for us, we really really really don't. You'll likely end up with a devout religious leader of some kind because of uneducated voters.
On the tax stuff - we'd need hard numbers to draw a conclusion. I was just giving some examples of how a capital tax would not necessarily solve the problems faced by an income tax and may have far more unknown problems that would only come up after we face the unintended side effects. There's always unintended side effects.
So why would anybody bother to put themselves through school to become something like a doctor or an engineer to build the robots that do all of the work?
People are geared to competing with one another in the social domain.
In order to maintain status, people will continue to get well educated and 'contribute to society' in some way rather than simply sit and be mediocre.
Granted, if you have a UBI, lots more people can maintain their status by say.... becoming top ranked at a video game, but even then so long as it doesn't lead to societal collapse... does it really matter how fast we are improving our civilisation?
I'm willing to allow us to improve slower if it means we grant everyone freedom from worrying where their next meal is coming from.
>does it really matter how fast we are improving our civilisation
Yes, when you consider the global problems we have with energy, climate, food supplies, water supplies, and general poverty it's pretty selfish to just stop pushing forward.
This really, really, is not true at all. Only people who aren't doctors tell themselves it's all about passion. If you remove the financial motivation you will have far less people going through the rigorous schooling and sacrifice of youth required to become a physician.
I would also argue that the vast majority of engineers became so because it was a "good job" not because they're fueled by some extraordinary passion.
The point you're missing is that a lot of people cannot even attend medical school because their parents are too poor to support a child which could be working an underpaid job at mcd instead. And I'm only taking about cost of living, not tuition.
Too poor to attend medical school is not an excuse. If you have the aptitude for medical school there are plenty of scholarships available for people that poor. There are also student loans, which a doctor will be able to pay back without much difficulty.
> rigorous schooling and sacrifice of youth required to become a physician
Which wouldn't be such a barrier to entry if medicine were an undergraduate degree (i.e. an MBBS) as in the rest of the world, instead of a graduate one, and residents and fellows were paid market wages instead of government-depressed ones. Creating skilled and knowledgeable doctors does not require stacking a 4 year degree on top of another 4 year degree--a single 5 or 6 year program should be enough.
I think the comment your replying to is saying that, if you have the passion/desire/drive to become a doctor, having a basic income can help that person get there. Especially so that they don't have to work as much while also going through rigorous schooling.
In addition, those jobs would still be good jobs on top of the UBI. Depending on how the implementation of robots plays out, they may be the only jobs if you wanted to make more than the living wage.
There's a lot of countries where financial motivation to become a doctor is far lower, yet people keep doing it. Don't assume your own drives are shared by others to the same extent.
I have a friend who lived in the USSR and I asked him the same question. In a world where everyone is paid the same, why become a physicist when you could just be a cab driver? His answer was pretty much what you'd expect: different people aspire to do different things. It's not about the money (physicists were working multiple jobs to make ends meet), it was about what they wanted to do with their lives.
And how did that work out for the USSR? An unfortunately small minority of people are driven by enough passion to ignore how they are being screwed by society (sacrifice all of your 20s to go through med school to get the same compensation as a high school dropout that sweeps floors).
But not everyone had the same amount of privileges. People in politics often had bigger apartments, for example. So if you wanted "more" in a communist state, you went into politics.
Because of the psychological joy of self expression doing work like that entails (see Maslows hierarchy of needs).
Some people like helping people, some people like the prestige of being a doctor.
Besides, it's ones family background which predicts ones future career path far more than economic insentives. I would imagine the social strata that is now educated will prefer to have their offspring educated in the future.
Human culture is often a far greater determinant of behaviour than any economic cost-benefit analysis done at an individual level.
I would also point out that in the 17th century there was very little financial insentive to pick up natural sciences and people did just because they could and because they were interested.
I for example would gladly work in my current field (software engineering) even if it did not grant financial benefits because I like it so much.
I think americans are so preoccupied with money because everything is so expensive there. There are far more interesting ways to spend ones life than by surviving (if one goes to a job just to survive - i.e. to get shelter and food, one really is just satisgying ones lower needs on the maslows hierarchy of needs).
Maslows hierarchy of needs is mostly garbage. There is not really any evidence to support those rankings being innate to humans (other than basic survival being top priority).
There is little psychological joy in collecting garbage, cleaning gutters, and shoveling manure. It seems to me that all of the arguments for UBI are predicated on ubiquitous automation of every mundane job, which is a long ways out of reach from where the most advanced countries are (let alone the whole world).
> There is not really any evidence to support those rankings being innate to humans (other than basic survival being top priority).
There's actually considerable evidence that even "basic survival being top priority" doesn't reflect actual human behavior in some important ways.
> There is little psychological joy in collecting garbage, cleaning gutters, and shoveling manure. It seems to me that all of the arguments for UBI are predicated on ubiquitous automation of every mundane job
Well, that depends what you mean by UBI: a mature UBI that can afford to pay a high standard of living will require phenomenal productivity which requires a level of automation which would go far beyond ubiquitous automation of every mundane job.
OTOH, the basic idea of a universal unconditional grant as a replacement for some subset of the existing social benefit system reducing the administrative costs to benefits ratio of the replaced programs and eliminate the adverse incentives of the means-tested programs replaced obviously doesn't require any additional automation than we have now.
"The idea is that people don't need to go work, because robots do all the work, and thus any economic value attached to labor, either real or nominal, converges to zero. "
This is entirely theoretical and will never happen.
My friend, the industrial revolution represented a vastly bigger shift to automation than anything we are witnessing today.
Imagine a 'magic machine' that could do the work of 10 000 horses (i.e. 10 000 horse-power) - and move people from Penzance to London - on coal - no horses or drivers needed!
To be more precise: at the dawn of the industrial revolution, almost 95% of people were doing 'laborious' jobs. 95% of jobs at that time were 'at risk' of being replaced. Most of them were.
Not only did we move forward, but there were so many surpluses, and so much more to do that even common household jobs (maids, butlers, footmen, valets) - could find higher paying work doing other things.
Today, only about 30% of jobs are 'at risk' - and I'd argue they are not at as much risk as we think.
Call centers are not going away. For every task that is automated, 2 more will appear that need human intervention, and 5 more customers will be added (thereby creating more work) - new consumers from the current 4 billion human being who have yet to come into the world economy.
UBI comes from tax money though. If the idea behind UBI is that people don't need to go work, and won't go buy McDonalds anymore, then tax income is going to plummet. If tax income plummets, what pays for UBI ?
People will still have the same incentive to work they always had (to make money) -- but some people will quit jobs they don't like, which will drive wages up (due to falling supply in the labor market). But the reason why UBI is so interesting now is that, with increasing automation, increased wages will have less of an impact on general prices. So prices will hold steady, as people continue to go to McDonalds.
Note that there are other ways to collect tax revenue: sales tax, VAT tax, property tax, wealth tax, etc.
UBI can only succeed if people continue to consume, preferably at higher levels than currently
What basis do you have for saying this? Deflation may actually be beneficial in a basic income scenario (falling prices makes a fixed basic income worth more).
If UBI encouraged too large a portion of the population to pursue non-taxable income (say, making art and games and giving them away for free because they don't need money), then UBI would collapse from lack of income.
Why would they give it away for free when they could sell it for money instead?
> People will still have the same incentive to work they always had (to make money) -- but some people will quit jobs they don't like, which will drive wages up (due to falling supply in the labor market).
The market is already "suffering" from labor shortage, but it's just a cover for companies to demand more H1-B visas. Seeing jobs Americans are perfectly good at doing go overseas says American labor isn't being cut for quality or demand, it's being cut out for cost.
You're right. What H1-Bs do though is allow companies to replace a worker with full mobility and bargaining power (a US citizen) with one who has limited mobility and bargaining power, which drives down industry wages. Now, if the visa were attached to the person but not the company and were valid as long as the holder has a job, this would be much less of an issue.
Give immigrants the same bargaining power a citizen has and both would benefit.
> Why would they give it away for free when they could sell it for money instead?
I think the entire line of thinking is a bit flawed...
UBI isn't about making sure any thing we do for money today remains a skill that anyone else will pay for.
Like with open source some software will be given away, most software will not exclusively solve a problem or even do it well and complex problems will still require paid collaboration to produce complex software.
I think there is a third path that could work even better. If you think about how money really works it first goes to those the bankers deem most worthy. Tech founders, producers of fine products, schools. It flows down a cascade of people's perceptions. If you really think about it money does not necessarily go to that which benefits society as a whole, it does somewhat, but it really the majority goes to those that have the perception of being the best from the perspective of a small subset of society. Possibly a more impartial and scientific method of deciding who gets money would be more beneficial instead of the whim of cabals of bankers.
Not necessarily. It's quite possible to have UBI be part of the money creation process. In order to understand this approach, it's useful to understand how money is currently created. I'd recommend the 4 minute video found here as a starting point:
New money is necessary for our current economy to function. Making UBI part of the distribution of this new money makes it possible to get spending power directly in the hands of all citizens, as well as doing so without raising money through taxation.
In short, a UBI will make us all poorer because people will refuse to provide the things that others actually want, and instead will engage in hobbies that provide little value to the world?
Your phrasing suggests you favor a UBI, yet your actual claims echo mine (and I'm a UBI opponent). I'm intrigued.
A UBI might make us all poorer because we will no longer be able to get dirt cheap goods like McDonald's food produced by people in situations that amount to wage slavery made survivable only by welfare. Without the hidden subsidy of welfare and the stronger bargaining power that comes from the other party being desperate, McDonald's would have to charge a more realistic price that many customers would find makes their food even less palatable. But does this change make the market more or less efficient? I don't think it's a foregone conclusion either way—that's why it's a fun topic to consider.
Welfare is a subsidy for people, not for companies. It raises the cost of labor for companies since it gives potential workers th - in fact ie "stay home and play video games but get money anyway" option.
Absent welfare we'd have far more people working since they'd have no other choice, which would lower prices for companies and create more value for consumers.
I'm also not sure why you are so dismissive of the fact that McDonald's will become more expensive and less available to consumers. Is it because McD's customers are mostly low status poor people that it's so easy to ignore their utility? If the result of a UBI was less healthy organic GMO free vegetables sold to starving artists at farmers markets (or less child care for working women) would that change things?
> Welfare is a subsidy for people, not for companies. It raises the cost of labor for companies since it gives potential workers th - in fact ie "stay home and play video games but get money anyway" option.
When a restaurant pays its full-time employees a wage so low that they need to be on food stamps to survive, that's a subsidy for the company as much as anyone. Since we have a minimum wage, McDonald's can't legally get labor any cheaper than they currently do, no matter how much the labor supply increases.
> Playing with the market causes deadweight losses
Only a diehard capitalist thinks this. We already have a name for this type of pure capitalism. It's called anarchy. I.e. zero government interference.
>In short, a UBI will make us all poorer because people will refuse to provide the things that others actually want, and instead will engage in hobbies that provide little value to the world?
>Your phrasing suggests you favor a UBI, yet your actual claims echo mine (and I'm a UBI opponent). I'm intrigued
Your phrasing, with respect to the GP, suggests that you consider "things like further education and the arts" to be "hobbies that provide little value to the world", and "the things that others actually want" to be "stuff like McDonalds".
As a consequence, I'd encourage supporters of UBI to avoid engaging you on the topic. Your revealed worldview speaks more eloquently than any argument you could come up with.
Unless, of course, that's not your position in re higher education/McDonalds, and you're just mocking him. Either way!
> Provide an argument supporting the notion that people shouldn't be incentivized to produce things that the market values.
Most people should agree that things that "market value" is a means to obtain things people intrinsically value, such as comfort, security, happiness, meaning, procreation, etc.
If, on a macro level, there is a more efficient means to achieve these end goals other than creating things the market values, theres no reason to incentivize that by itself.
In some cases creating things the market values can actively work against these goals, such as many types of advertising and consumer product marketing.
You can't provide comfort, happiness, and meaning without the market to offer those goods. If we have UBI, people are still going to want their toilet unplugged and who will do that if UBI eliminates the need for plumbers to seek income plumbing?
It's likely going to drive the cost of everything up so quickly (because of a massive goods and labor shortage) that the UBI will quickly become useless.
Getting sick of this argument. Just look around you. Tons of people do tons of things all the time even though they don't get paid or don't need the money, or could get by on less.
If a minimal UBI (say, $700/month, similar to today's SSI in the US) is enough in your view to deter people from seeking employment, then how on earth is it that so many people today make more than that, even though they didn't need that much? (You can change the amount around and rerun the thought experiment. Whatever the amount of UBI would be, the existence of many people currently willingly working for more than that amount is proof that people will still strive to make more than UBI)
Enough with this tired argument, think a little before repeating it or at least state a version that explains why somehow we have people today who willingly work for more than the bare minimum
>Provide an argument supporting the notion that people shouldn't be incentivized to produce things that the market values
What?! That's crazy! Even if I were intending on debating any of you guys, I could hardly do it being prompted by this intentional strawman. But, of course, you're one of them! By which I mean an arch-capitalist, or whatever, who cares, whose internal value system precludes the understanding of what UBI might accomplish because, of course, people are just going to "do anything they want[ed] without contributing to society" [0] rather than behave differently under a system whose fundamental assumptions have changed. Just because you're absolutely certain that people would stop taking jobs in "construction, plumbing, electrical, farming, etc if they can choose to do nothing instead" [0] doesn't mean it's true, and dropping that slimy ostensible fact instead of an actual argument is hardly adding value to the discussion, either! At least my actions provided some value to those intending on discussing UBI in good faith -- ie, do it somewhere else, these guys don't seem capable.
>Hinting that someone's argument is absurd adds no value to the discussion unless you illustrate why
I think I'm doing a pretty good job, but just in case, said argument attempted to imply that higher education is a stupid hobby, those seeking higher education without the material means to pay for it in fact desire McDonalds, and for those reasons UBI upsets the natural order of things and deserves throwaway comment mockery. Am I really bound to provide something more substantive? I think I've made the 'response' that 'argument' deserves.
No, you haven't provided anything of value beyond personal attacks at people that had the gall to suggest that UBI might not align well with economics.
Nobody implied that someone would desire to work at McDonald's instead of attend school. However, there is no evidence that people would attend school if they were free from work. If that were true, colleges would be packed with retired people auditing classes.
>No, you haven't provided anything of value beyond personal attacks at people that had the gall to suggest that UBI might not align well with economics
Without some evidence that it is true, the claim that started this all, namely that people who would use UBI to "pursue things like further education and the arts [that are much harder when you're working two jobs to put food on the table]" [0] are in fact "hobbies that provide little value to the world" [1], is insane. The things that "others actually want" [1] are implied to be "stuff like McDonalds" [0]. The comment authored by 'yummyfajitas [1] is a direct reply to the comment authored by 'mason55 [0]; the correlation of arguments are clearly outlined above. Unless you take issue with my interpretation, or unless you believe that 'yummyfajitas was just fucking with 'mason55, his reply is hardly a suggestion that "UBI might not align well with economics" and more "the rightful place of poor people is to provide low-pay services like McDonalds; those who couldn't aspire to higher education without UBI will provide little value to the world with their taxpayer-supported hobbies".
>Nobody implied that someone would desire to work at McDonald's instead of attend school
I never claimed this, but it sure would be handy for you if someone had. Coupled with your apparent belief that casting aspirations on those who can't afford higher education is not only acceptable but self-evident economic theory, the intentional twisting of my words in this way is a pretty clear indicator of what you're trying to do with this reply.
>However, there is no evidence that people would attend school if they were free from work. If that were true, colleges would be packed with retired people auditing classes
Ah yes, retirees -- the very people who might benefit from release from their low-income McDonalds wage-slavery, and who, with UBI, might aspire to go to college in order to bec-- wait, wait, wait. Why are you talking about retirees? That has little bearing on the discussion at hand, unless, of course, retirees are the people we've been talking about all along and I've missed it somehow.
>You are using your assumption that your position is objectively correct as an excuse to not even defend it
I'm making no claim to correctness, and I don't think you could actually state my position, because I haven't yet elaborated it; somehow, this didn't stop you. Please read this [2]. I'm ridiculing the sort of person who can, without the slightest twinge of conscience, drop two smug paragraphs detailing how UBI will make us all poorer by stating his hunches about the behaviour of the poor and the uneducated as objectively correct facts.
I suppose it's possible that the notion that UBI will lead to a new era of sloth, economic chaos, job loss and plagues of frogs is actually factually correct. But that claim is just as untested as my "claim", which is merely NOT(prevClaim). The illustration of the classist notion that people who couldn't aspire to higher education without UBI will become hobbyists who won't produce value is all the point I'm trying to make -- if you don't immediately see how that's intuitively wrong, our conflicting perspectives probably can't allow us to have a meaningful discussion about UBI and the poor and higher education, either.
>In short, a UBI will make us all poorer because people will refuse to provide the things that others actually want
People being forced to "provide the things that others actually want" in a job they hate or hurts them, just to make a living and feed themselves is what makes us really poor.
>If everyone were allowed to do anything they wanted without contributing to society, things would collapse very quickly.
Citation needed.
Especially one that takes into account increasing automation and software, not merely medieval society needs, and which solves a large part of grunt jobs.
Besides, there are people genuinely love working in the fields you mentioned: construction, plumbing, electrical, farming, and that would do them over nothing. Especially with a pay increase over UBI, so that they do them as a choice, not merely because they're forced to not starve.
Maybe not so many for things like sewage cleaning, garbage disposal and burger flipping, but again a pay increase over UBI would help with that too.
This will also help compensate those jobs according to the value they offer to society, not according to how many people starve and can do them at piss poor compensation to feed themselves.
Very few people do construction because they love it. (source: worked in construction after high school) The same applies to most labor intensive jobs with little room for creativity (all of the ones I mentioned).
There is no citation needed to show that society would collapse if essentially all manual labor stopped overnight. To suggest otherwise is silly.
I think there's a big question of what "allowed to" means here.
"We throw them in jail if they don't"? We don't do that presently.
What we're talking about is "in addition to anything they earn, they choose the disposition of $X/yr", for various values for X. If X is $1, clearly everyone is still working. I agree with you that the $40k figure you cite downthread is extremely likely to be higher than we can support. I think there are intermediate values that might work substantially better than $0. Based on toying with numbers that I've done in the past, my guess is that the optimum value $4k and $9k/yr (though I'm not all that confident in that and would probably want to see it ramped up gradually). If you claim that this would mean "essentially all manual labor stopped overnight", that certainly needs a citation.
Ah, so it's a hand-wave of us somehow getting to a point where everyone was perfectly incentivized to automate everything (without price gouging in the case of monopolies) and pay enough taxes to cover the 12 trillion dollars to give 300 million people $40,000 anum? Last year the US brought in a bit over 3 trillion in tax receipts to put that in perspective.
People being forced to give the fruits of their labor to others who are unwilling to do anything in return is also harmful. Strangely, your calculus seems to exclude them.
Take this analogy. Some people have rare diseases. However, because the diseases are rare and not common, not enough resources go into finding cures for this disease. Should no one work on the cure for a rare disease because it will provide little value to the world, in comparison to a more common one?
I'm not saying this directly translates to UBI, but it is something to think about.
Heck, the way capitalism works, people wont invest in cures even for popular diseases killing tens of millions, if they can't make a nice buck from them (e.g. if the majority victims are poor Africans).
And by the same token, they will milk a cure that they've found as much as possible, even if that means that millions (who can't afford it at the price) will die or get bankrupt etc. (Of course if they could sell it a two different prices to different groups (price differentation) they wouldn't say no to poorer people's money, but they can't).
(And the massive profits from such drugs and of such companies overall, reveal that it's not just "recuperating" money spend on R&D).
> the way capitalism works, people wont invest in cures even for popular diseases killing tens of millions, if they can't make a nice buck
1) You're wrong. Bill Gates, etc, are counter-examples.
but,
2) The problem is the word "invest". You're saying in the same sentence that the investment is a loser. That you won't be able to eat if you take it. So change the word to donate, where it's clear the money is gone, and you'll see that people do indeed donate to things that don't help them. All the time.
3) It's not "how capitalism works", it's how any self-sustaining system of value allocation works.
How would they afford to stay open, to give the drug away, if it cost them more to develop and produce it than they made? Literally, how do they pay their suppliers and employees so they can eat and keep producing the drug, if they don't make as much or more than they expend?
The short-term example of this is the guideline that you should put your own oxygen mask on before helping others.
>1) You're wrong. Bill Gates, etc, are counter-examples.
Bill Gates is an example only of (a) the kindness of his heart, or (b) tax-incentives for philanthropy, depending on your level on cynicism.
Both tell us nothing about the system he operates in though (well, except the (b), which tells us something about the government and IRS).
Obviously anybody in any era and system could arbitrary out of kindess/a whim or for some hidden motive give money for a good cause. The question was whether the system encourages such a behaviour, not whether it can happen in some counter-examples.
>2) The problem is the word "invest". You're saying in the same sentence that the investment is a loser.
No, I'm saying that an investment shouldn't necessarily aim for the maximum profit, everything else be damned. I'm saying what enterprises only pay lip service to in their ads and brochures, their "social responsibility". I'm saying that if you can have a lesser profit (still profit mind you) but do far more good, you should do it instead of being a greedy bastard.
As for charity and donations, those existed both before and after capitalism. (In fact they predate capitalism by some millenia), so are no argument pro or against to our topic.
>3) It's not "how capitalism works", it's how any self-sustaining system of value allocation works.
There have been tons of "self-sustaining system of value allocation" (which pretty much means: any society) that didn't value profit first and foremost, or at least better juggled it with other concerns.
That doesn't mean that tons individuals or leaders in these didn't value profit first and foremost -- only that the societies at large had other moral/ethical/etc priorities and, err, values. In Ancient Athens for example, it was all about being a good citizen.
>How would they afford to stay open, to give the drug away, if it cost them more to develop and produce it than they made?
Nobody asked them to give it "away" or to have it cost them more to develop than they made.
That said, an organization can also operate at zero or marginal profit. Amazon did it for more than a decade, and not even for a good cause, just to gain market share.
No, that's the way humans work in a specific belief and motivational system.
Historically societies have had many incentives and motives for behaviour, advancement, job production, etc, outside of profit, that were as or more important to it. This includes religion, morals, ideals, customs, laws, etc.
Christians, for example, were for centuries not loaning with interest, not because they weren't humans, but because they valued a moral code more than profit.
As a fact, we do such stuff too, and have even put it in laws, e.g. against child labour, slavery etc. All those could bring huge profit too, but we value our morals (e.g. anti-slavery) more. People certainly didn't stop doing them because they weren't profitable.
> Christians, for example, were for centuries not loaning with interest, not because they weren't humans, but because they valued a moral code more than profit.
That confuses who's making the choices with who they're making them for.
There were always christians willing to lend for interest, what stopped them was the other xians who thought it was bad.
Also, look as islamic banking as a modern example. It charges almost exactly as much as a system with interest would but the payments are structured as fees, etc.
There's still usury, it's just in the form of ruinous collateral-backed fees, instead of compound interest. A late-payment fee, on the capital plus a previous late-payment fee, is economically identical.
> Should no one work on the cure for a rare disease because it will provide little value to the world, in comparison to a more common one?
Well obviously. We should invest in whatever saves the most expected quality adjusted life years per unit of resource spent. Investing in rare diseases is just silly and missing a huge opportunity cost. Usually.
With or without UBI, people actually don't want crappy mcdo food. They want good food. But good food cost money and and/or takes time to prepare.
So instead of having minimum wage workers working their asses to make some owner millionaire, we may actually get chefs and cooks paid what they deserves.
So, bring UBI, at least it will stop this stupid race to the bottom. And then lets cancel UBI, I don't believe it is anymore sustainable than the current narcissistic/corporatism regime going own, but it cold be a buffer, while we move forward without back-pedaling.
I'm not sure you mean it to be, but your comment reads like an anti-UBI argument.
My hope is that UBI will help grow the labor share of GDP by providing mobility to a segment of the workforce that currently lives paycheck to paycheck.
Whether they do or they don't, I guarantee they make significantly more than the proposed UBI amount.
Given the choice between making $12k with UBI and sitting on one's ass, or making $50k (guessing here) + 12k UBI to work as a garbage man, do you really think people would just up and quit?
A 40" TV is, like, $300 [0]. The average American watches 5 hours a day [1]. Replace your TV every year, that's $0.16 per hour of entertainment. I probably pay more than that in bus fare and late fees to use the public library.
Big-screen TVs don't belong on the list of excessive consumption items anymore. They are incredibly cheap and deliver enormous utility relative to expenditures that get drastically less hate, like a data plan for even the cheapest smartphone, plane tickets/vacations in general, picking the crossover instead of the compact sedan, picking the very slightly nicer apartment, etc.
I don't know about you, but I don't see watching 5 hours of TV per day as being compatible with the living healthily and being intelligent that the poster you're replying to offered as an alternative, so putting TV on that list seems appropriate.
Money isn't the only currency we use to pay for our current lifestyle. Time, attention, energy, passion and such are all necessary to participate in the kinds of life we want to be living. TVs may not cost a lot in money, though as another poster rightly pointed out, TV also includes programming charges too, but that sedentary activity (both physically and mentally) has a lot of non-monetary costs that prevent you from doing and experiencing other things.
There are a lot of people telling me to be angry that poor people on welfare have big-screen TVs. In the internet personal finance community, big-screen TVs are the #1 example of frivolous irresponsible spending.
Those people aren't mentioning cable or the time spent watching TV. Just the fact that the screens are large. That may have been ostentatious in the 90s but it really isn't anymore - that's all I'm saying.
I think "TV" is a stand-in for "watching TV". That is a common sense reading. And what do you watch on TV? Your statement is correct if you only watch broadcasts, but that is only 9% of the USA public. Almost 90% of USA households have cable. The cable is a monthly fee. That changes the economics that you suggested.
In the UK, the economics are slightly different, but recall that UK taxpayers pay a fee to the BBC.
Going to go off topic here, but I grew up in communist Slovenia back in the day where you had to pay the TV license fee if you owned a TV set. Now, the government provided an official method of canceling the TV "subscription" without physically hauling off the TV appliance, by sealing the electrical plug.
I have a fond memory of one day when my grandma decided to cancel her TV fee. An actual lineman came in at some point, came into the house, stuck this metal lockout device over the plug, and sealed it with a lead (Pb) seal. It was one of my favorite things to play with because it was so squishy and easy to dent.
Wow, that plug is quite, well, foreign to US ears.
In the US, selling a house built before lead paint was outlawed requires a lead disclosure to the buyers (at least in some states). Repainting a house that old requires capturing all the paint chips and dust lest some bit of lead escape and be eaten by a kid.
Intentionally putting a chunk of lead into a house where a child could reach it... you might as well stick a giant, neon "SUE ME" sign right next to it.
Uk taxpayers do not pay a fee to the BBC. Every household that uses equipment to receive live broadcasts much purchase a TV license, but that's quite different.
That's a semantic argument really. The license fee funds the BBC, and the BBC are the ones who care about collecting it (even if at arms length with the official 'enforcer'). Every argument about the future of the license fee, or not paying it on an individual level, explicitly state the BBC as the benefactor of this fee.
The fact that it's tied to equipment capable of receiving live broadcasts (until September) is not much more than a clever workaround.
It's not a semantic argument! The BBC is paid for by people who want to use television equipment (modified slightly to account for new technology). It's not paid by taxpayers, it's paid by users.
Maybe if Cable is free but...most places it's ~$50 a month[1]. Which means the cost of entertainment is closer to $.53 per hour[2]. Which isn't cheap as cheap as you say.
Keynesianism says that spending money on anything is good, no matter what. War is good, make work projects that do nothing are good, spending money on frivolous consumer goods is good, etc.
Austrian school recognizes that investing in productive capital that lowers the cost of production and resources consumed in production is actual real economic progress. For example, let's say you have an island with coconuts. If you pay everybody $100 to go out and buy coconuts, the price is going to just go up. If you pay them $100 to plant more coconut trees or make tools to harvest them more efficiently, there are going to be more coconuts and the price is going to go down. Keynesianism would say the two are equivalent economically because AD = C + I + G + (X-M) and in this equation C and I are perfectly interchangeable.
Hayek is one of the reasons we're in this mess, so - coconuts or no - it's hard to believe that more Hayek is a solution.
I don't recall Keynes saying any of the things you claim he said. He actually said this:
"If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing."
Perceptive readers may notice a certain hint of irony in the above, which Austrian economists - being literally minded, on the whole - may have missed.
Hayek is NOT one of the reasons we're in this. He has been largely ignored as an economist, unless one makes the assumption that Satoshi was influenced by Hayek's "The Denationalization of Money".
As a political theorist he has had a fair amount of impact with the "Road to Serfdom", which he worked on after Keynes was mysteriously elevated to Sainthood after his death and Hayek largely ended his pure economics writing. There's a great interview with Hayek where he bemoans his lack of impact: https://www.youtube.com/watch?v=Oqhe4K1Jz-8
Borrow/confiscate money from non-struggling groups and hand out to struggling groups. Might work in some cases, but hardly a long term solution.
Besides, how is current economical fragility Hayek's fault?
Edit: re-read the original comment. Seems like the irony, or rather sarcasm is in Keynes's suggestion to organise note-digging as a form of free enterprise with tenders and competition for digging rights. (Sounds like Bitcoin by the way.) If that is the hidden message, it looks rather pointless.
The irony is that people look only at the first inequality and think that Keynes advocates for make-work, whereas if one looks at the implicit inequality, Keynes is actually advocating for productive stimulus, or failing that, handing out money without wasteful, feel-good conditions such as requiring people to break rocks (or dig for notes).
The problem is that the media almost always use this implicit syllogism:
"70% of GDP is consumer spending. Therefore, the economy depends on consumer spending. Therefore, we need to goose consumer spending if we want to help the economy."
No, the problem is that the whole western economy can "logically" function only based on "growth" as in "more consumption, more production every year." But math is not on our side:
Well, obviously not unlimited in the mathematical sense (the ordering of elementary particles in the visible universe is finite), but there is a lot of stuff that the laws of physics allows which we would like to do, but are currently incapable of doing. Just to name a few:
Ensure sustainable energy production, halt and reverse global climate change, eradicate all disease and suffering, make aging and death optional, ensure that working for a living is optional, allow all humans the possibility of ethically experiencing most experiences and capabilities available to the richest 0.01%, cure all physical and mental disabilities and enhance human bodies with new senses and physical capabilities, create easily-available artificial intelligence which is at least as capable as the smartest human alive and acts in humanity's interest, and so on.
The fact that we would like to achieve something is very different from proving that we're even capable to reach that: until proved it's just a wishful thinking.
And the "growth" is mathematically impossible. Even growth of "just 7%" in energy use, for example, means doubling the use in just 10 years. And doubling is not "just times two, easy" once you've already used a half of everything you have. It's physically impossible. Watch the video.
On one hand, I guess it's good we have creative, unbounded thinking.
Sadly - I'm starting to think that most Engineers have never opened a book outside of Engineering, certainly not any history, ethics, politics or economics books.
--> Human potential is definitely unlimited.
Since the dawn of recorded history - and even beforehand - we have, by enlarge, almost always been innovating and moving forward. From neolithic, to ancient Egypt, to antiquity, to the Renaissance, Enlightenment, Industrial revolution, Modern era and information era - it's always been moving forward. Even the 'dark ages' were not really dark, only compared to those writing history in East Roman Empire / Byzantium.
My Grandparents were born on farms. No electricity. No running water. No radio, tv, cars, radio, internet. They passed away very recently.
What makes your skepticism a little funny is that right now on planet earth there is more 'innovation' going on than at any time in all of history. It's like an 'innovation explosion'. It's such a big shift that we are in a new epoch.
-----> As for your interesting ideas (aging death option, work only if needed) ...
You must be young. I don't think you've met enough types of people yet. Your treatise is missing a moral foundation (arguably), more importantly the nature of life. 'Cures disease'. Is 'dwarfism' a disease? What about being just a little short? What about sagging eyes from age 40-90? What about kids born with super genes? Or blue skin because their parents think it's cool?
These ethical questions will have to be answered long before we even start to fix things like 'cancer'. But even then - is cancer at age 80+ really a disease, or is it just literally 'death'?
More pragmatically, you're missing the bit about distribution of surpluses. The age old question. "nsure that working for a living is optional". Working for a living is already optional. It's called 'welfare'. Some of my neighbours do it. One guy, on my street collects his welfare every month and spends 4 days high on crack, and then the rest of the month sleeping in the park. Is this what you mean? Because I can assure you that people in this state are not happy, and it's a far more complicated thing than we know. So, should people who work their entire lives, very hard, and take great risk ... have to pay for his crack habit?
It's just one example, but it's the biggest issue missed when any of these techie types start to talk about 'the future'. Technology will surely improve our lives on the whole - but the issue of distribution is as old as time, and technology will probably only exacerbate, not solve the issue. At the foundation is both an understanding of human nature - and also a moral cause. The later of which is even harder to found, we do it today by rough consensus, not necessarily by understanding.
I wish more techies would study finance and history, I think these conversations would be different and we'd be better at solving problems.
More just "energy use explosion." We've probably already used half of all oil available to us (at the prices under which we can do what we do now). It took nature some hundreds of millions of years to accumulate so much easily usable energy. We've released half of it in just around 100 years. All the projections that "prove" that we can continue are always based on the "current use" and never on the "projected growth" (like noted: just 7% yearly growth means doubling in 10 years).
" It took nature some hundreds of millions of years to accumulate so much easily usable energy"
You're thinking in terms of an epoch.. namely our current one.
Energy sources change over time.
Oil is just the latest incarnation.
Nuclear is the next, obvious solution, when fools who don't actually understand it get out of the way.
There is enough known Uranium deposits to power the world for 100's of years and this is assuming: A) ancient, inefficient reactors (we have made so much progress, but not allowed to build newer things, and can do even more), and B) we haven't used any new fancy techniques or explored for more Uranium in 50 years.
Your bit about Oil is a little wrong (we don't know what 1/2 is): we keep finding new deposits. Using new tech (indirect drilling, undersea, deep digging, Oil Sands, more efficient extraction) we keep moving back 'peak Oil' they keep telling us we're supposed to be at. Eventually we will, but something better will be available by then.
We could go Nuclear today and wipe out Co2 emissions and cut energy costs by more than 50%. Probably more.
Fusion is maybe not that far off.
When the Nuclear and Fusion revolution take off - the 'Oil' era will look to people living in that era as 'wood burning' looks to us now - totally arcane, inefficient and 'low power'.
Do the proper research, the nuclear option is much less promising as the proponents claim (again, "wishful thinking" not the facts). Again not under the assumption of zero growth that they use. Check the real numbers and the technologies known to actually work, and see how long the "growth" is physically possible. That's our subject: the possibility of continual growth.
"Do the proper research, the nuclear option is much less promising as the proponents claim"
I agree that Nuclear Tech today has problems, but we haven't made real investments in 50 years. Do you realize how far airline, rail, and road safety has come in that time?
I firmly believe that if we put as much $$$ into Nuclear - as we have in Solar - that we'd be way past the safety problems.
Also - there is absolutely no physical limit to 'growth'.
Yes - commodities are limited and so is space. But we are making better use of both at an exponential level.
As some things become scarce, the prices rises, we figure out how to better make use of them.
My friend: Plastic.
Plastic did not exist 100 years ago. It was not 'on the horizon'. Nobody was even dreaming of it. But imagine life without plastic. We couldn't make a thing without it!
So 'plastic'. A single, new, and unforeseen innovation that fundamentally changed everything. And that's only one of many innovations of that era.
What is the next 'plastic'?
Will we be able to simply forge metals or other minerals as we need them in a fusion reactor?
If fusion ever works - this is within reach.
Fusion means not only cheap energy, put possibly the ability to make many elements on the periodic table like Star Trek.
Again - the possibilities are unlimited.
As long as we don't wipe ourselves out, this will go on forever.
That said - we measure 'growth' in dollars, and we don't measure dollars in anything :). I suppose you could make the comparative value argument for real growth, and that it depends on 'happiness' or some sort of intangible.
At least in classical economic terms - growth will go on ad nauseum.
Ever considered what plastic is made of? Ever tried to read why the fusion rectors don't work? Ever asked some who knows physics if "forging metals in a fusion reactor" has any scientific sense?
The possibilities are unlimited only in unsupported dreams.
This is very true its destructive to the environment to just be zombie consumers buying more "stuff". If you would be given carbon emissions as a currency and then you could choose to spend it. Products may be different. A long lasting product would be cheap and a short lasting product would be expensive.
Instead of measuring GDP as our metric, measure how much basic income can be generated without causing inflation. Rising basic income levels with stable GDP and stable prices (or even falling) is utopia.
Agreeable, in theory at least. The fact is, though, when one person gains, someone else loses out, in this case, biz owners. Corporate execs aren't going to raise wages and keep prices the same, not unless they have some means to compensate for it (Hello, McDonalds!)
> We need to find ways to 'grow' our economy without increasing consumption. For example, measure growth by how people are becoming more educated.
That isn't the same as growing the economy. Changing the definition of a word doesn't not change the reality of the thing it refers to. In this case, economic stagnation due to lack of growth.
'we have hit peak consumption'. I'm wondering - who is the 'we' you have in mind? Folk across vast areas of the planet might be at a loss to know what you're on about.
Other than spending money, there is only saving and investment. Some believe that our current lack of demand is caused by too much money chasing too few investments.
Most consumption doesn't involve big houses and TVs. Those exist as signal items mainly because they're paid for with debt, which increases the amount of money in circulation.
Education is now a good that also increases debt, with mixed results. Throwing money at it does not change the predictive value of the standardized tests used to "ration" education.
Without increases in the money supply, there simply won't be growth. There's only so much the central banks and government can do; at some point, people either spend or they don't.
The one thing that can be done is to try to adjust inflation upwards, which increases the risk of lazy investments.
Absolutely agree. Check out videos on youtube under the search "New Economics" for more info about this. There's some great channels (like the New Economy Coalition) with full lectures, but check out this short primer video on the concept:
https://www.youtube.com/watch?v=FrIhloNEwT8
But the measurement of consumption is in currency, typically USD. If you get that education via a free MOOC, then its contribution toward consumption measures is the cost of the electricity and bandwidth you used... essentially zero.
Our culture of consumption has roots in our biological drives. We are more attractive reproductive mates if we have more material resources. Therefore, a bigger house >> a small house, etc. although, as a side note, we seem to have lost the direct connection between the two -- people continue to want fancy stuff well past their reproductive age.
For the world you want to become true, something else must become biologically attractive.
That sounds veeeery far-fetched. How about societies where material resources aren't the main goal? How does that explain poor people having more babies? Is there any known correlation between "having more stuff" and reproduction at all?
If any, the somewhat accepted reproductive drive is "passing down your genes" - and people/animals/any creature that displays more "power" tends to attract more mates. And power doesn't translate to material resources in most cultures/societies/animal races...
Material resources are the most obvious way to demonstrate you have "power".
As for poor people with many babies -- it could be due to lack of access to birth control, or sometimes an insurance against high infant mortality rates. When your livelihood depends on how many hands are helping you in the farm, you want to make sure you have at least X babies.
You both missed the most obvious answer as to why poor people generally have more children; poor people typically have more time on their hands and encounter boredom more frequently, thus they fill this time with intercourse. Couple this with a lack of birth control and viola, more children. Of course in the context of farming having more hands around is essential to survival, in most other cases though more children will further impoverish the couple.
Or because poor people are generally not using up 5-10 additional years of peak reproductive age in education and career building before starting a family. It's complicated, but starting to produce children at 18 vs 30 tends to mean that you have more chances and those chances are somewhat higher quality, due to fewer complications, lower chance of congenital defects, and lower rate of cesarean section, among other factors.
Very excellent point, obtaining an education is quite the time investment and humans are definitely more fertile in their early 20s than any other time. I actually had not taken this into consideration...
>>You both missed the most obvious answer as to why poor people generally have more children; poor people typically have more time on their hands and encounter boredom more frequently
Wow... you basically equated "poor" with "lazy." Nice.
The reality, on the other hand, is that most poor people have to work multiple jobs just to make ends meet, and have a lot less leisure time than rich people do.
You can't deny that social welfare programs feed a self enforcing cycle of apathy in some segments of the population that contribute to the ability to remain lazy while still surviving. You are 100% correct that I should have phrased it better to not generalize all poor people, only a specific subgroup. I understand that some people bust their asses to scrap by and it wasn't my intention to demonize them or throw them under the bus.
Does anyone have metrics on what portion of the welfare receiving population falls into the "apathetic" segment vs the "bust their asses" segment? Seems to me that what side of this issue people end up on comes down to which segment they believe is the majority, and that belief seems to almost never involve critical thinking.
The US has a really high number of working poor that continue to have children at higher rates. Lack of determination and motivation to stay away from lifestyles that increase your chance of early pregnancies certainly factors at the individual level. Low achievement environments tend to socially entrench the values or conditions that keep people from achieving economic success (demonizing education, emphasis upon group responsibility over individual achievement, sports or religion celebrated as a center of social functions instead of something like academic or economic symbols, familial responsibility guilt trips, ad infinitum). This happens both in rural and urban areas in the US as well. I'm not sure how relevant this would be in the rest of the world, but children leaving home for economic opportunity via education is something most of Asia has shown some cultural validity in my experience.
Poor people do not have more children because of "boredom." They have more children because they are less educated and because of higher infant mortality rates.
Or you know: lack of access to birth control, particularly the pill. A high infant mortality rate doesn't actually explain anything, particularly in developed nations where that's not true.
You're correct that it was a bit of a pontification, but does it not seem like to much of a stretch to say that the more wealth you have the more options you have for entertainment? If you spend a majority of your time stuck at your house around the opposite sex and can't afford to do much else that in turn you will end up having more intercourse?
I don't buy it either, sounds like something banks made up.
Some people just like material possessions and are attracted to others who can give them more stuff.
A lot of guys have this simplistic, masojanistic view of women, that is, women are attracted to men with money because they're better mates (can provide for offspring); However, I know men who date independent women so they can surf all day.
You know what? Female partners want to mate with them just the same, even though they don't posses "power".
They want to have sex with guys who are in peak physical condition. Something about people who are able to hunt and survive is attractive.
But you said date. How long do these relationships last? Are they getting married and having children?
I myself am attracted to 18 year olds with small tits and firm asses but I wouldn't want to date or marry one. The maturity and outlook on life is not there.
I am however married to a woman two years my senior, she has a great ass and is mature.
Sexual attraction does not make a relationship, it is only a part of the puzzle.
I couldn't agree more, and am ecstatic that there are other like minded people. I believe my response to this Quora question, is one way to get this outcome. Would be curious to get your reaction to the idea.
The U.S. federal government first imposed a [temporary] personal income tax in 1861, in order to pay for the Civil War. The tax was later made permanent in 1913. In other words, our country is stuck on a nineteenth century tax model, collecting 95% of our revenue from labor and investment. I believe government slaps taxes on income and investment out of sheer momentum. If all you have is a hammer, everything looks like a nail. If we were designing a tax framework from the ground up, it would surely look different. In its simplest form, I’d say it would entail taxing “bads” instead of taxing “goods”. Let me explain.Of the $2.4 trillion in federal tax receipts collected every year in the U.S., 95% comes from taxing labor and investment. These are activities that generate social benefits; jobs, goods, and technological progress. Economists call these positive externalities, but we can simply call these “goods”. On the flip side, less than 2% of the $2.4 trillion in federal revenue comes from taxing—waste, pollution, and resource depletion—activities that generate social ills like obesity, heart disease, cancer, urban sprawl, materialism, and resource wars. Economists call these negative externalities but we can simply call these “bads”. A sensible tax policy would entail taxing “bads” instead of “goods”. Today we have it backwards, with the bulk of the federal tax burden, (95%) falling on taxing “goods” like labor and investment, instead of “bads” like resource depletion, waste and pollution.
Some will argue that such a system would be regressive and punish those that can least afford it. However, this system can be combined with a monthly federal stipend of a couple of hundred dollars for every single man, woman and child in the country to make the system progressive. In this scenario, those who save energy and resources, make money, and those that waste it, pay. Nonetheless, everyone, rich or poor would have a strong incentive not to be wasteful. More importantly, it would eliminate the disincentive to work.
This approach would help solve some of our nation’s largest problems. People would be healthier since the prices we pay for food would reflect the energy and resource intensity of meat vs. produce…thus leading people to consume more produce. We’d start seriously investing in energy efficiency, not because of government mandates, but because it would make financial sense. The approach might even help put our fiscal house in order since it would imply eliminating corporate welfare and all subsidies, including those for clean energy. Market forces would take over without all the loopholes that inevitably skew our personal decisions and ultimately the national economy.
Families would have a strong incentive to save and invest, instead of waste and consume, reversing a century of falling savings rate. It might even help reverse the last 60 years of cultural decay…combating materialism, consumerism, and the decline of the family.
I won’t argue at what level our economy should be taxed. My point is that if we will have any tax what-so-ever, it should not come from the work of; the policeman protecting our streets, the agent insuring our home, or the entrepreneur creating new industries and jobs for society. If nothing can be said to be certain except for death and taxes, then let’s use taxes to help us live longer, richer lives, and leave a world for our children that is not worse off than the one we
found.
This led me to create this site http://www.writegreen.org. Might have to give is 30 seconds or so to load (I've got it hosted on slow Heroku tier) The idea was to empower citizens to use their own philosophy to advocate sustainability with our politicians. The ideas is, change your politicians, not just your light bulbs.
Or perhaps we should replace the income tax with a property tax? Thus, you can only keep property if you are productively using it, or some such thing. Perhaps subject to some kind of sliding scale to have a higher rate on more expensive items.
See also: "Jubilee", a topic you will almost never hear mentioned in American churches.
> I believe (or rather, I pray) that we have hit peak consumption which will lead to this problem forevermore. We need to find new ways to improve ourselves than shopping more.
I think if we had more time we could certainly be consuming more, at least it's my limiting factor (besides money).
Imagine if we halved the work week or invented a pill that would let us survive on 1 hour sleep a night, that creates a lot more hours of consumption.
> For example, measure growth by how people are becoming more educated. If people could live healthily and intelligent and only work 10 hours a week until they were 100, wouldn't that be better than being able to buy a new car every year?
At least on the margins, nobody is doing this. And I doubt it's because the GDP numbers says not to.
Likewise, people were very skeptical about centralized currency/printed money when it was first introduced. Or if you want something more recent - skeptical that industry would ever surpass agricultural production, or services would ever overtake industrial goods, without destroying economy. Doesn't mean it _can't_ happen...
If you look at what fiat money had become in past, e.g. Germany of 1920s, you'll see that the doubts were quite founded. Even if you take a look at most important modern currencies, you'll see how much trickery is involved (quantitative easing, etc).
"Growth as a result of consumption is destructive. "
I'm sorry, but this is completely ridiculous.
'Consumption' is the primary driver of economic growth, and it will always be thus.
Without 'consumption' there is literally no economy.
If people want to work 10 hour weeks, they can do that, though I should point out, most kinds of work activities, especially the high value ones, don't work that way.
Better to work 40 hour weeks for 10 years, save everything, and retire.
Surely we need to find a way to clean up after ourselves and solve the problem of fewer resources and more garbage, but in general 'consumption' is good, or else there is no 'work' and no 'jobs' - even 10 hr/week jobs.
Can you elaborate on this? What are you classing as natural forces? Spiritual revolutions?
Such a small comment is so easy to dismiss because what you mean is not clear and those of us reading it can dismiss it as trite, obvious, or irrelevant without consideration or if we do give it consideration we are at the mercy of our own interpretation of the words used - either way it makes something you obviously cared enough about to write a null contribution to the conversation.
You mean 'unnatural forces'? As a species we have made great progress in mitigating natural forces. Not utopian, but there is enough resources, logistics and actors to feed the entire world, if a relative few didn't have to take all they can sequester for themselves. I see more forces pertaining to greed (infinite inflation racket, regulations as barriers, control of *-opolies, artificial shortages boost prices) holding back humanity.
If game theory is natural law then it should apply to all humans, regardless of background. How does it apply to the groups of people who aren't driven by amassing material possessions (hunter-gatherer tribes, monks/nuns, etc...)?
I'm so tired to hear about growth. Growth is not a very beneficial situation to be in. We should focus on sustainability. Do we tell people to grow as fat as they can be? No, we encourage a sustainable in and out, just what we need for a happy and healthy life.
Billionaires are not a thousand times happier or healthier then millionaires. Growth is overrated.
There's a baseline of wealth that we must sustain, then we need to focus on horizontally scaling that baseline to as many people as possible, and finally, we must work to sustain that scale too. Growth appears twice in this equation, but always at a very well defined scale. We need to grow to reach the baseline, and then grow to have everyone base-lined.
Once we have achieved the above in a sustainable way, then we should focus all our remaining efforts into having fun, being curious, enjoying ourselves, and enjoying each others company. This should similarly be handled in a sustainable way. A heroine high is not a sustainable enjoyable and fun activity. Going for a walk along a park or a coast is. The dosage is important, a night out partying here and there is sustainable, day after day of it is not. Sprinkle in some learning and curiosity, I for example, would keep coding for pleasure. In fact, sustainability will probably motivate people towards sciences and technological advancement even faster, as we'll finally let free of our intrinsic motivations to do so.
To quote Nietzsche: "To escape boredom, man works either beyond what his usual needs require, or else he invents play, that is, work that is designed to quiet no need other than that for working in general."
The first part of that quote is Growth, endless, unhealthy, never ending Growth, simply to address our own boredom. The second part is sustainable life, easy, playful, and fun.
I really hope as we progress, I stop hearing about Growth, and I start hearing a lot more about Sustainability.
"Growth is not a very beneficial situation to be in."
Again this is false.
There are so many financially illiterate people here on Hackernews.
Growth is a great situation to be in. When there is growth - there is money for projects, hospitals, infrastructure etc.
When there is no growth - everything goes out the window, and the first thing to go are longer term things like 'sustainability'.
You want to switch to solar - then you need a lot of 'growth' - why? Because the US cannot function on 40 cents/kwh electricity.
Now - growth by 'adding bodies' - which is where most growth comes from in the West - is bad. Immigration is where 80% of GDP growth comes from and that is definitely a Ponzi scheme.
IF you normalize for growth across US and EU countries, it's much more similar. The US simply imports people to grow the GDP whereas EU does less of that.
So, to your point, measuring GDP/capita would be a good start for 'sustainable growth'.
"As someone else pointed out "growth for the sake of growth is the ideology of a cancer cell"."
Not really. Cancer cells are destructive.
Growth in and of itself is not.
In some ways - i.e. 'deforestation' - yes.
But almost all medical advances for example amount to 'growth' and almost all of them are 'great'.
Most of the economy is now in services and not things tied directly to 'energy or resource consumption' - ergo, growth is almost entirely positive in the general sense.
'Growth' usually means: better meds, better entertainment, faster and safer travel, more access to education, less poverty, cooler stuff. Usually.
No we haven't been working less hours. Women have been added to the workforce, so we have close to twice as many people working now. Stress is increasing in society generally.
> There are so many financially illiterate people here on Hackernews.
it's people using misappropriated financial terms to describe their social ideologies, even though the financial terms are ideologically neutral. they can be used to describe many different social configurations, not just the ones that currently exist.
I'm financially illiterate, so you'll have to pardon me. But why is growth necessary for spending? If my income is steady at $10,000,000 a year, I have money for projects, hospitals, and infrastructure. No growth, but I do have money.
Not sure I'd call myself financially literate, but I do have an MBA and computer science degree for whatever that's worth.
The short answer to that is it's necessary to encourage people to invest. $10,000,0000 is only a meaningful figure if it is spendable ... which means that people want to receive that money and others want to spend it. In order for someone with excess money to spend it, they need to be incentivized to do so. If they get no return on their money, then why would they spend? If on the other hand, they can grow their money by spending it, they will. That's why, for example, a VC would take the risk of spending it on a startup (or someone more risk averse would spend on bonds). If you're just stashing money under your mattress, then the economy comes to a halt. For the most part, people don't need $10,000,000 to live a happy life so the excess money they have will not be spent unless there is a growth opportunity to use it.
Having said that, I agree with many others on here that "growth for the sake of growth" is dangerous and I'd like to see more focus on happiness (rather than money) and sustainability rather than growth. The growth spurt we had in the 20th century is likely not going to be reproduced in this century (the industrial revolution is a rare and unusual event). We need to find some way to keep this world moving forward in a low growth era, but I don't necessarily know how that will happen.
+ Buying a ticket to ride the bus is 'consumption'.
+ The gas is 'consumption'.
+ Buying medical devices, medical equipment, paying for doctors - is all 'consumption'.
+ Food, clothing, internet, your mobile - it's all 'consumption'
+ Almost everything you buy is 'consumption'
+ Consumption drives most of the remaining parts of the economy - so no consumption, no B2B = no economy.
+ You will not have a $100K job of consumers stop buying things, you will have a $1K a year job.
Exactly. Americans are spent out. The US savings rate is near a low. Americans are spending 95% of their income, and for the bottom 90%, it's more than that.[1] About 1 in 7 Americans has trouble getting enough food.
What we're discovering is that, when it doesn't take that many people to make all the stuff, the economy winds down to a state where most people are just surviving. This is a new thing. Historically, the big problem was making enough stuff. For millenia, society ran out of labor before it could make enough stuff. We're past that. And we have no idea how to cope with this.
Agreed-- most of the assumptions we've been working on are no longer true, and we're not adjusting to these changes very well.
I've been interested lately in some very old economists who, insofar as they remained extremely general, have become more and more prescient. Henry George's writings on the post-scarcity "fools' paradise"[0] are more relevant than ever.
We see this today, as the return to scarce natural resources (such as land) and IP is far outstripping the increases to the return of labor.
If production ends up centralized not through some communist revolution, but merely by advancing technology, do we still end up with an essentially centralized economy? It's hard to even call it an economy, it's more a distribution schedule driven from the bottom by a fear of a bloody uprising.
I don't think production needs to be centralized for this to happen-- it's a variant on Ricardo's Iron Law of Wages/Iron Law of Rent. The theory being that workers tend towards being paid the bare minimum that they'll put up with being alive and procreating.
Now if technology means that it's trivial to give everyone plenty, this may not be "bad," but it wouldn't be exactly egalitarian.
To add on, we spent our savings, then we maxed out adults on debt, and now we've nearly maxed college students. Unless we start being more OK with children carrying large debts, I think we have to come to terms with the fact that our trajectory was always unsustainable, and we've finally found the side opposite where we started.
Unless you're being sarcastic, the casual way in which this is being proposed makes me very uncomfortable. That is imperialism in all but name. An example of such a phenomena is that South Africa was forced to take on millions of tons of American "waste" poultry. It hurts our economy and makes us policy slaves. The IMF is another institution which has a long history of forcing African countries to act counter to their best interests. We'd like to retain some scraps of our sovereignty.
Not at all what I was thinking. I was imagining the US spending money to build highways and electrical infrastructure and water purification plants etc. At that point people can start spending money on luxuries we produce rather than on basic needs we don't.
True but I bet it lasts us until either 1) after my lifetime or 2) we can redirect our efforts to supporting large numbers of people on other worlds or the terraforming necessary to start that process.
Quality food is more expensive than junk food, but it's still not very expensive. People just don't eat strategically. A gallon of whole milk is 2400 calories well balanced between carbs, fats, and proteins. It costs < $3 and can be purchased at any convenience store, gas station, or grocery store. If you're lactose intolerant, you can achieve the same number of well balanced calories with cheese, nuts and yogurt for only an additional $1 or so.
Cheap quality food (quality food in general, for that matter) requires preparation, and food prep requires time and energy, and to a lesser extent cooking utensils, spices, etc. that people who don't already cook probably don't have on hand. I often struggle to make myself cook a healthy meal after coming home from a laid back developer job. I can't imagine what it's like after a day at a mind numbing minimum wage job (or multiple such jobs)...
FWIW, some ideas on how to reduce time spent on cooking:
1. Pressure cooking - saves not just time, but also energy.
2. Cooking in bulk, e.g. over the weekend, freeze or refrigerate the contents, and heating in a microwave over the weekdays.
Personally, I think the biggest tragedy for low income people is that many small food stores that accept food stamps do not stock healthy foods well, instead favoring higher margin junk, processed food: http://www.nytimes.com/2015/03/21/opinion/see-no-junk-buy-no....
There is also the problem that a lot of healthy food is ridiculously overpriced, catering to the upper middle class population who wants to "eat healthy" and believes some nice "feel good" marketing material instead of careful thought. There still exists very good food that is very cheap, such as the beans mentioned in this discussion.
Lentils operate in a similar fashion.
It takes effort to identify such things though.
> There is also the problem that a lot of healthy food is ridiculously overpriced, catering to the upper middle class population who wants to "eat healthy" and believes some nice "feel good" marketing material instead of careful thought.
This has more to do with wealthier individuals who live in a bubble where they've convinced themselves that that "healthy" requires buzzwords like organic, non-GMO, free range, etc. If your normal diet consists of frozen chicken tenders and french fries, then switching to cooking your own lean chicken breast and fresh potatoes is a healthy upgrade to your diet, regardless of what buzzwords may or may not be on the packaging.
I agree in general, but there some foods which are exceptions. Identifying these exceptions - I mentioned a few of the important ones - is the key to eating a healthy and inexpensive diet that is also easy to prepare.
I mean, how many people regularly calculate the cost per calorie of the foods they buy? And if you don't do that then you're letting food costs happen to you, rather than effectively controlling your food costs. Hence my comment about most people not eating strategically.
If you have time to prepare food, then eating well for very little money is easy. It's harder to find foods which are healthy, cheap, and as easy to prepare as fast food or junk food.
That's why I like milk so much and wish more people consumed it as a staple in their diet: it's cheap and available everywhere. And, if you buy a half gallon (or however much you drink in a day), you don't even need to refrigerate it. Just lug it along with you throughout the day and it'll get better tasting as it gets warmer (room temperature milk is the best, IMO).
It's also why I like cheese, yogurt, and nuts. None of them require any preparation whatsoever.
Yeah, I know some people can't deal with milk, which is why I pointed out some alternatives.
What I'm trying to say is that you can have a pretty well rounded, convenient to find/prepare diet for less money per day than a single fast food meal. I think the real problem with the American diet is not cost, it is that our culture surrounding food is driven by the companies who sell food, rather than a collective desire to establish a healthy, inexpensive, and convenient diet.
It's not new. It's called feudalism. When a powerful elite owns just about everything, a minority of the people serve as specialists at the master's pleasure, and the rest are peasants/serfs (or rogues/thieves).
People have been saying this since 2009, yet the S&P 500 is up 250% since then.
We need to put things in perspective.
The reality is:
The US has greater inflation-adjusted GDP growth than most of the world, including much of Europe, the Middle East, and South America, and Japan http://i.imgur.com/SBqFqtt.jpg
Profits & earnings for tech companies, payment processing, retail, and consumer staples companies have far-outpaced GDP growth. A lot of the lag comes from the chronically weak financial, commodity, and energy sector.
It's much harder to grow a large economy than a smaller one. There's diminishing returns to scale. It's harder to grow an economy at the same rate it was growing when it was 10x smaller.
2% real GDP growth, while slow, is still growth. Most people cannot perceive the difference between 2% growth and 7% growth.
Real GDP is back to 2003 levels, and far fewer people were complaining about slow growth back then
Slow growth doesn't preclude discovery and innovation, things like web 2.0, smart phones, apps, theoretical physics, mathematics, uber, self-driving cars, on-demand entertainment, etc.
So while more growth may desirable, 'slow growth' isn't too much to lose sleep over.
A lot of ppl have mentioned the UBI, but it's worth reminding that the effective income tax for the lowest 20-40% of earners is negative
Of course the S&P 500 has been growing, central banks are buying stocks left and right. What's worth mentioning is that both governments and companies have massively increased their debt during that period, so its really hard to judge what the 250% S&P 500 growth means.
The S&P 500 growth means that companies are confident enough in their future cash flow that they will borrow money against that to buyback their own stock. This has been a trend since the 80s.
We are living in situation where, instead of competition driving profits down to 0, or profits being used to finance investment and growth -- profits are simply returned to shareholders. Low interest rates are only reinforcing this. It's a great time to be a shareholder, and not a great time to be a consumer.
Alternatively, it means that executives that are mostly incentivized by short-term stock price movements via option grants have found a way to juice their compensation.
The S&P is growing because companies are borrowing to buy back their stock. It is illegal stock manipulation but that law is no longer enforced. This makes money that used to be taxed as dividends eligible for capital gains treatment and it taxed at a lower rate than it would be as dividends. this lowers tax income to the government. A downward spiral with no end in sight.
Earned Income Credit, for one thing. I can't speak to the accuracy of the 20 to 40 % claim, but I remember getting a significant EIC credit one year in the 80s.
it's interesting that the report mentioned the start of 2001 as the low GDP growth for US and EU......but it's also around the same time that China joins WTO.
For 15 years, jobs, communities and quality of goods were sacrificed in US and europe for cheap, shoddy goods that were produced by laborers in China in abysmal conditions, the rewards reaped by Chinese communist party insiders.
For 15 years, US and european companies outsourced their money and time to China, only come to find out that by being short sighted to profit, they've lost their trade secrets, technologies, know-hows, skills, market shares to Chinese manufacturers and technology companies. They paid a big price to learn that with the Chinese government, Only China wins. There's no win-win for both. When dealing with Chinese government, you lose.
So we're at an interesting intersection in 2016. China's membership in WTO is at its end this year. China is exposed as having an authoritarian regime that is hiding trillions of debt and likely having a 0-2% gdp growth. It is exposed as having an anti-foreign environment where companies like Uber, Wynn, Yum, Apple are all suffering. What will happen?
"“Made in China 2025” initiative, which aims to ensure Chinese-made components and materials account for 70 percent of China’s manufacturing inputs by 2025."
I'm not voting for Trump, but he has definitely hit a nerve with his anti-China rhetoric - "cuz it's true!". I'm pretty sure that sentiment also alienated him from most of his party's establishment.
I don't know that I will vote for Hillary, either, since the Clintons are like "Full speed ahead!!!" with the free traitor, er, trader, crap.
Using the Solow growth model, economic growth has three factors: population growth, technological improvement, and financial savings. All three factors are reducing growth in the developed world. Populations are stagnant or declining, technology may be displacing more jobs than it creates, and we are in more debt than ever.
So what is the root cause? Birth rates fell because of declining economic prospects, and savings declined for the same reason as well. Alone among these three factors, technology has continued its advancement, except now instead of improving labor it is a substitute for labor.
There were other supply shocks, such as the oil crises and more importantly the baby boom in developing countries that made outsourcing possible. But those are transient factors in the long run.
In the long run technology stands alone as the disruptive factor. We can try to mask the problem with financial debt or economic redistribution, but the problem remains that unskilled labor is no longer needed, and skilled labor is an increasingly high hurdle to clear.
Not if the immigrants are past school age and have not learned needed skills in their home countries. Implicit in the population growth factor is education and training that makes those new people marketable.
The article speaks mostly of Macroeconomic forces such as increasing the money supply.
The problems with the economy are mostly caused by microeconomic issues. Politically induced scarcity ("economic rents") that results in higher prices, externalities, and asymmetric information.
A very, very large problem is the use of zoning laws which reduce density and overuse of historic landmark status which artificially increases land value and hence the cost of renting apartments and buying houses. This results in a transfer of income and wealth from people renting apartments and buying houses to landlords.
Income that should be going towards purchasing goods and services and thus stimulating the economy goes towards landlords instead. Removing the politically induced artificial restriction on zoning would lower the cost of housing and stimulate a housing boom.
This is the reason for the high cost of housing in NYC, SF, LA, Boston, Washington DC and other cities.
In NYC, there is a limit of 13,000 taxi medallions which resulted in a medallion market value of $1.2 million. After Uber/Lyft came along the value dropped to $700,000 and not surprisingly the cost of taking Uber/Lyft has decreased compared to taking a taxi. This makes it so that New Yorkers can spend less income on taxis and taxi-like vehicles and more on goods and services. Of course course, the "taxi medallion landlords" have lost big time, because the political scarcity of medallions has been undermined.
Many occupations have unnecessary licenses or unreasonable licensing requirements in order to create scarcity in that occupation creating artificially high prices while keeping others who would like to work out of the market.
Stop the "rent-seeking" of "economic rents" through Federal Laws and we'll make sure the markets are more efficient a huge growth to the economy.
What is baffling, and perhaps others can comment is why the NYTimes is writing economics columns without addressing the microeconomic inefficiencies which includes "economic rents." Can't they find someone with a basic understanding of economics to write an appropriate column?
Piketty argues, from extensive historical data, that the hi growth of the 1950s-1970s was unusual, and low growth is the norm.
So we might want to look at another aspect, such as how wealth is distributed - the low growth rate tends to accentuate the accumulation of growth on capital, so those who inherited a lot of wealth capture even more of it over time, without having to do anything with that capital [ such as investing in startups, building next gen transport systems ]. Which means we most likely need a much more aggressive tax on uber-high incomes and uber-large inheritance wealth.
[ Im not saying don't look at wealth creation technologies such as - nanoscale 3d printing, VR-work-from-home, asteroid-mining etc. ]
Reading Piketty's Capital is a bit like waking up in the matrix after taking the red pill - the gradual torrent of facts hits you viscerally, because you really had no idea things were this extreme.
Piketty is one of the rare to actually pinpoint the problem and call it like it is. This NY Times article definitely does not, even if has some of the elements. Even early on it writes: "This trend helps explain why incomes have risen so slowly since the turn of the century". Maybe it is the other way around. I mean, if our economy is based on increasing production for the sake of increasing production, so by the same vain consumption needs to keep up, but then people can't afford consuming, or whatever they are consuming wasn't the result of value addition.
Then there is the CBO farce, and the use and abuse of GDP, and also believing to know what other people actually wants to buy, while also omitting to include what is it that 81% of the people with declining income can buy.
I'm shocked to see no one here has even discussed over-regulation as an issue. The more things you tell people they can't do, and instead mandate they do things they may not want to or need to do, the less opportunity they have to do things they want to do, which is what people generally are willing to pay for (an thus increases economic growth).
Nah. The US isn't that heavily regulated. Anybody can start a business. It's been decades since the ICC limited entry into trucking and the CAB limited entry into the airline business. Whining about regulation is mostly complaining that you can't dump your externalities (pollution, employee injuries, etc.) on other people.
It hasn't been mentioned because compared to the last 70 years of high growth there are now fewer regulations on business and industry than ever before, in the US at least.
I'm not sure that simply showing the absolute number of regulatory policies helps to show that the economy is more regulated than ever. For instance, how many of those regulations have to do with the explosion of computers and the Internet, which were industries that simply didn't exist before 1997? I'd like to see a breakdown of the scopes of the regulations and types of the regulations. I'd be inclined to agree with you if the majority of regulations were economically focused, but I suspect that a majority of the regulations are environmental, health, and information related.
should coincide so closely with a period of increasing de-regulation
?
The last 16 years has seen little or no de-regulation. The last serious bout of de-regulation that I can remember was back in the 80's when Reagan threw out the rulebook on airlines or when the RBOCs were allowed to reconstitute themselves.
Yeah, it's true, the big stuff was all pretty much done by the end of the last century. I'm aware, and I'm not worried about that. I assume no big regulatory change is going to have immediate effects - companies take time to re-align, especially ones in the kinds of mature industries that get to be heavily regulated in the first place. So for my purposes it's good that this is the case, since it means we've had enough time to sit back and observe what happens.
So, on that front: We have this hypothesis that regulation is a huge drag on the economy, and that we should therefore deregulate in order to stimulate greater economic growth. If this is true, then you would expect that we'd see the US economy to take off during or shortly after the bulk of the deregulation. With that prediction in mind, go back and look at the graph of GDP growth by year. In the three economies shown, de-regulation instead coincides with periods of consistently declining or perennially weak growth.
Which, to me, suggests that it's not reasonable to be so confident about the idea that regulation will have this or that profound effect on the overall economy. The idea that regulation is a horrible drag doesn't seem to have much of an empirical leg to stand on. I don't see much evidence that the opposite is true, either. The two regions that entered the graph with higher growth were also just exiting a period of rebuilding and recovery following a very destructive war, for example, so it's tough to say the pattern you see for them isn't a reflection of outside factors.
Three people pushed the little down triangle on me, because...why?
Because my response violated HN guidelines? No, actually it didn't.
Because it didn't introduce new information? Actually, it did, didn't it? bunderbunder incorrectly asserted that the last 16 years has been a period of deregulation, and I pointed out that compared to the 80's when at least three major industries (airlines in 1978, telecommunications in 1984, and finance in 1980), almost nothing was deregulated similarly in the last 16 years. On the contrary, two fairly major examples of new and disruptive regulation that we did get in the last 16 years were Sarbanes-Oxley and the ACA.
"I'm shocked to see no one here has even discussed over-regulation as an issue."
I think regulation (and the notion of over/under regulation) is a fascinating and worthwhile discussion to pursue. Honestly, it's something people should be debating.
However, I insist that you describe the low, or no, regulation regimes you have lived under (or visited for significant periods ... months/years).
When and where ?[1]
There is a "must be this tall to ride" barrier for discussing small government and/or over regulation, and this is it. As a community we should insist on this basic test of legitimacy.
[1] Yes, I'll accept NOLA. Maybe even Houston in the 90s ...
> However, I insist that you describe the low, or no, regulation regimes you have lived under (or visited for significant periods ... months/years).
Seriously? So we can't ever discuss the way things should be without firsthand experience of living under those conditions?
Scenario:
You are a slave living in a mining pit. Each day you look up from your drudgery and see free people picnicking in the grass high on the edge of your pit. You turn to the man chained next to you and say, "I believe a world where we were free would be better than this one. Look at those people up there."
He turns to you and says, "I insist that you describe the low / no slavery regimes you have lived under before we can debate the merits of your proposal."
The cheap rhetorical trick of dressing yourself in the language of oppression because somebody is paid to make sure that canned goods aren't vectors for botulism is straight-up disgusting behavior that cheapens actual, you know, fucking slavery. I dunno if it's the Austrianized ignore-history,-thinkpiece-as-governance culture that might make this seem like something that is A-OK, but it's super not and you should be better than this.
I get paid to write online. The things I write are typically intended to be published somewhere online. I rarely read paper books or magazines, yet I consume information all day. When a system is infused with information, it often can accomplish the same thing -- or something better/more -- with less material matter.
I think no one is measuring any of that. The fact that I can do freelance work online means I can earn less (gross) and keep more of it (net) because I do not need a car to get to work or clothes to meet dress code, etc. So, I am seeing real gains in my quality of life -- paying down debt, eating better, better health etc -- than I could achieve when I had a corporate job. The "overhead" for having a corporate job meant that by the time I quit, I was far deeper in debt than when I got the job. It was a frustrating, frightening way to live. Now, the money I earn is net gain, not "Oh, my god, I can't eat without a job, but having a job has me barreling towards bankruptcy!"
This. The disconnect from "having a real job" and working is spreading. The corporate sector seems to be rapidly declining in exactly this way.
In my most recent gig, having to be onsite was a huge drain on productivity. It really needed to be roughly 10% of my time. I stayed way ahead of my job mainly by doing stuff at home - just the moronic network filters alone meant I had ... 10x the bandwidth available.
But onsite was still required.
I have two kids around 30 or so; neither has an onsite corporate fulltime job.
ROI is what matters. It is not just monetary either, people working long hours often make suboptimal eating and sleeping decisions which damage their health.
In first generation post-WW2, we built out productive infrastructure, and started to do so with our savings. In the second generation, we expanded with debt spending and started to increase consumer debt. Now, most well-educated new entrants to the market have already taken more debt than they have an appetite for, so they're saving to pay down that debt. There may be quite a few who are still doing frivolous things with their money that could go to service the debt, but in the end we're all paying off activity that already happened, to one extent or another.
This is entirely due to the baby-boomer demographic changes. Saving on a generational and national scale is basically impossible: things you make today are going to break down, wear out, or become obsolete thirty years from now. The only way the retiring generation can receive care is by obligating or mandating younger workers to pay for it.
This is the core of why college is pushed so hard, why home ownership is pushed so hard, and why interest rates are so low. The baby-boomers need to have someone paying back debt thirty years from now, so there's a ton of money sloshing around trying to fund current consumption.
"things you make today are going to break down, wear out, or become obsolete thirty years from now."
Planned obsolescence started not too long ago and everything now needs replacing much earlier than thirty years. We can see its inefficiency in every industries generated from this money printing scheme. Turning what once was considered permanent and high quality will now break and need replacing.
Everybody is doing it, and it's hard to stop, but it probably should stop.
I guess the flip side of this is that we can have access to so many things, so affordably. I don't need an industrial-grade waffle iron, but it's kind of fun to have for the occasional weekend if I've got space.
Having said that, I tend to avoid that side. If I have to buy something, I tend to do a buy-it-for-life type of purchase. This drives my fiancee crazy, as I spend 50% more money and 500% more time making my purchase. Most of the time it's not even about the money; I just get upset when I have tons of trash, so I try to avoid buying things that make or become trash.
and this is the niche manufacturing opportunity of the future.
I have a friend living it right now - he makes buy-it-for-your-grandkids-lives tools and sells direct via the internet to his end user. His end user is in a particular niche and my friend is an expert in it.
His stuff is expensive, niche, and his marketing consists of crappy phone videos on Facebook. He is authentic however, his stuff is super high quality, and he gives great customer service. His business has been growing at 30% a year thanks to the internet allowing him to reach the few people that care about his niche. He will surpass $1M in gross sales with a high net margin, and he has zero competitors in his micro niche - a million dollar micro niche.
And its truly micro - 200 units per year of the $800 piece of equipment, and the rest of the sales in the 14,000 accessories he has for the equipment. He is doing quite a bit better than a well paid SV engineer and is direct to 10,000 consumers. His moat is impenetrable.
Even without planned obsolescence, it's still difficult to make things that have value thirty years from now. Even infrastructure has issues on this timescale: nuclear reactors are designed to function for forty years with maintenance, and roads something like 26 years before re-doing the asphalt. And there's only so much infrastructure that's worth building, based off the intensity of economic activity that it facilitates.
I think there are multiple interesting factors at play here: most importantly downward pressure on prices (brought by technology) and the unequal distribution of wealth/income.
Technology has made a lot of stuff far cheaper than it used to be. Instead of buying a photo camera, a video recorder a tape recorder, etc. you can buy a smartphone for the price of one of these individual items (at 1980/90 inflation adjusted prices).
A lot of services we consume have become a lot cheaper as well. Compare Netflix & Spotify for a few $ months to buying individual movies & CDs. A lot of people spend their free time on Youtube/Facebook/Reddit essentially spending nothing at all.
A lot of younger people living in cities are no longer purchasing cars or homes. Overall travel has become a lot cheaper as well. IKEA has commoditized furniture which used to be extremely expensive a few decades ago.
Cheaper prices mean lower spending & lower GDP.
At the same time a smaller group of large companies is capturing the profits in the low cost sectors (again IKEA, Netflix, Google, Facebook). These companies are making huge profits per employee and they are facing very little successful competition.
A majority of the middle class (that doesn't work for any of these highly profitable companies) has very limited free cash flow, due to the rising cost of housing and education and the stagnation of wages. They can't afford to purchase expensive homes, expensive furniture or expensive cars.
More wealth is going to the highest earners, where each additional $ contributes a lot less to GDP than it would in the hands of a middle class household.
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I'm throwing a lot of stuff together here, but this is what I'm missing from most discussions about the economy: try to describe trends with the concrete situation at hand rather than with generic theories that have been around for decades yet have mostly failed to predict the economic outlook correctly (it seems like the rise of behavioral economics could help here)
A lot of it seems insufficient demand after asset bubbles. Houses or whatever keep going up for a while, people mortgage themselves to the hilt to buy and when the bubble pops cut back spending to pay off the debts over the following decade or three. That leads to less spending jobs tax revenue and so on.
The solution I think should be something like governments borrowing money at the near zero rates we have at the moment and doing stuff like investing in infrastructure and things that will boost spending. When you get back to too much money chasing too few goods and inflation they can back off but we're way off that point in most economies at the moment.
>The solution I think should be something like governments borrowing money at the near zero rates we have at the moment and doing stuff like investing in infrastructure and things that will boost spending. When you get back to too much money chasing too few goods and inflation they can back off but we're way off that point in most economies at the moment.
This is a popular idea but the problem is that in practice the cutting back never happens, so you end up with government policy together with central bank interest rates causing deeper recessions, or even creating the depressions they were intended to prevent.
Is it possible that some things are just a lot cheaper than they used to be, and from a macro perspective focused totally on dollar figures this looks like shrinkage?
I used to drive to the bookstore and spend $22 on a brand new hardcover book because it was written by a famous author and promoted heavily at the bookstore.
Now I might buy a Humble eBook Bundle and pay $8 for 8 books, and the car, the bookstore, and the big advertising campaign are all long gone (but for the most part, not missed).
There's very little out there I want to spend a lot of money on (travel is the main exception).
I believe there are efficincies in the marketplace that are not captured in the financial data - everything in my daily life is much easier now that I have a smartphone in my pocket and everything is online. Maybe the fact that everything is more efficient means one can get more value with less - thus, making the daily consumer effectively better off although the capital is hurt. What does this mean for the economy in total? Everything except truly constrained things like land are utterly commoditized?
To elaborate - we measure the price of the big mac, but put no price a) finding the big mac b) finding the cheapest bigmac (both of a and b are easier, but there is no way for the McBurger chain to capture the value of this) c) discovering bigmacs are actually bad for you, abstaining from them and saving a ton in healthcare costs later on, and also living longer (thus, consuming and producing more over ones lifespan).
It makes sense to not measure those things because they don't increase our overall happiness or productivity.
You can't live off imgur cat pictures or spreadsheets about big mac nutrition. If that were the case the Western populations would be as happy as they were never before. People need a house, an occupation that gives meaning to their lives, the right to political participation and shape their everyday experiences. These things are currently under a lot of fire and it won't go away by appeasing the population with Netflix.
It's really not that much of a mystery, if a whole segment of the population is robbed of these opportunities it's going to get ugly.
"It makes sense to not measure those things because they don't increase our overall happiness or productivity."
I disagree. The accessibility of everything nowadays reduces the opportunities for frustration very often (i.e I don't need to queue at a bank at my lunch hour except in very special circumstances). Thus - more happiness.
"You can't live off imgur cat pictures or spreadsheets about big mac nutrition."
No, my comment was not about the internet alone. It was about the secondary effects accessibility of information has on daily life in the strictly physical domain.
"People need a house, an occupation that gives meaning to their lives, the right to political participation and shape their everyday experiences."
Yes, I agree. The human life is very shallow without the joy of self-expression. I was not suggesting smartphones connected to internet will replace life. My comment was about the fact how they reduce the tedious, non-productive segments of life.
When you get to a 70% service sector of course growth is going to be low [1]. Waiters aren’t anymore efficient than they were 100 years ago (probably less) and the same applies to nearly every service industry. Without improvements in unit labor costs then the economy can't grow per capita.
Note that very long run GDP per capita growth is driven more or less by technological change, and there's no reason to expect that technological change is constant.
Major technological innovations are often discrete, their impact can take decades to be fully realized in the economy, and the timing of the next major innovation is unpredictable.
There is a great deal of grumbling, dour dissent with any sort of technological change outside of the tech sector - aka the "true believers". I'd stop short of calling it Luddism but it's like that.
I've presented far too many solutions to non-specialists who stared in unblinking misunderstanding at these solutions to think otherwise.
I'm more amazed we had the high growth we've had in the past. Why would the steady-state of such a complex worldwide system be at a point where we have good employment, rising standard of living, growing populations, relative peace? There are so many other local minima which we've managed to hit over man kind history...
The key word is sustainability. Without it something has to give. It should be obvious that given finite resources on this planet we can't continue expanding our population and the standard of living indefinitely. The reason the trajectory we were on could not continue is that it was not sustainable. We can't have more people in the world, every such person living in a McMansion, with two cars in the garage, buying new gadgets all the time. And really why? Wouldn't it be better to have a contracting population that consumes less?
Humanity would be better off trying to reduce the population size, reduce consumption ($ and resources), maximizing the utility/$ of goods rather than the absolute $ of crappy goods sold. Aiming for more equal distribution of wealth. Less conflicts. Social security (so sure, basic income but not as a catalyst of growth). Everyone should work less hours and earn enough to sustain themselves with a reasonable standard of living. So this is all perhaps a deflationary, negative growth, environment.
Agree wholeheartedly. Sustainability is key. The last generations were raised being told that success is growth, I hope the next generation will be raised knowing that success is sustainability.
People complaining that UBI wouldn't help are missing an important point. In the US, and most of the world, we have a demand problem not a supply problem. The UBI "plan" then is to bump up the wealth of those that would essentially immediately consume it, which generates demand. It's not controversial to argue that an extra $1000 a year to a millionaire will just end up being reinvested, while most Americans (the bottom 50%+1) would easily spend it all sloshing it back into the economy.
UBI won't help because in reality, it will not look like what it's proponents think it will.
It is naive to assume that the Congress will pass anything near as simple and elegant as the UBI proposals put forward by advocates. It won't replace many parts of our current welfare system, but will be an additional cost on top of them. It's also naive to expect that everyone will receive the same amount under UBI, which would make it neither universal nor basic. UBI proponents really ought to read this: http://marginalrevolution.com/marginalrevolution/2013/11/wha...
It's also a fact that under every realistic* version of UBI ever proposed, the poorest people in the US would receive less money from the government than they do now, while people who do not need money from the government would start to receive it. It is therefore a regressive policy.
* by realistic, I mean "does not have an annual cost greater than the entire US government revenue."
I see that a UBI would help in the short term, by getting cash in to the hands of people who don't currently have cash. But it doesn't do anything to solve the systemic problems we have. Internet and telephony companies are still oligopolies that charge huge extractive sums of money for digital services, our food production system degrades the environment, and health care prices are out of control.
Yes, we absolutely need to get more wealth into the hands of regular people, but setting a fixed income from on high doesn't do anything to change the power structures that led to so many people being disenfranchised in the first place.
To me, there is a problem when power is concentrated in one place, and remote megacorporations flood the market with goods that won't last but are so cheap most people (irrationally) choose them. The end result is that those in power have no connection to consumers except as sources of money, and people and the environment get treated as disposable.
I see the solution as something more like what the New Economics Movement has been talking about, which has a big focus on local businesses. What do you think of this video?
Then that's not going to result in much good. To grow the economy, you want investment, not people funneling a free $!000 to China for some cheap consumer goods.
A company that sells goods to consumers who can't buy it?
Those aren't doing any good.
There are mountains of cash right now, all seeking investment. They have trouble finding anything worth investing in. This is why we see massive valuations - with zero interest rates, a tiny revenue stream is worth a huge amount of cash.
> The United States is adding jobs at a healthy clip, as a new report showed Friday, and the unemployment rate is relatively low
One of those isn't true and the other is misleading. Healthy would be something to combat the massive existing unemployment. Unemployment Rate has little to do with growth. Let's not talk at all about how GDP numbers are being manipulated quarter after quarter and the endless easing putting us in a freefall, since that news is inconvenient for the administration who did it (Clinton then Obama...hmmm). The republicans just continue existing policies anyway so it's self-serving Fed shenanigans as usual. Typical vacuous NYT narrative is what I got out of it.
> Like most things in economics, the slowdown boils down to supply and demand: the ability of the global economy to produce goods and services, and the desire of consumers and businesses to buy them. What’s worrisome is that weakness in global supply and demand seems to be pushing each other in a vicious circle.
This is the sort of thing that makes people think economists live on a different planet. "Demand," in particular the "desire of consumers and individuals" for things, is something we have in spades- for a good example, walk down a main street of any city and you'll find some people who desparately want to stop being homeless. The problem, and on a more general scale this is the whole problem of our kind of economy, is that their demand doesn't matter.
These homeless people could, in many cases, work- they could do things that generate more value than they require in exchange to live decent lives. But their kind of work is ubiquitous, and they have no control over the market for it; as a result, the market has been manipulated by much more savvy actors to shift that labor market against them. Once this happens to a kind of laborer, an entire segment of "demand" is functionally removed from the economy.
The answer to that sort of thing has been known for ages- unions, substantial minimum wages, perhaps even basic income. But while the article talks about the kind of economic inequality that these measures combat, it does an impressive job of not putting two and two together. Economic stagnation and inequality are two sides of the same coin, but no one talks about this- because the managers of the economy are, predictably, wealthy, and have everything to lose to redistribution of wealth.
It seems that a potential solution to this, as various economists have proposed, is "helicopter money". In other words, have the central bank print money and distribute it to the people. The main criticism for this is that it is irreversible -- there would be no asset to balance the liability on the Fed's balance sheet. But this is an extremely simple problem to solve: monetize government debt. In that case, we would no longer call it "helicopter money", and recognize it for what it is: basic income. Despite all its flaws, basic income inspires a wide variety of Internet discussions about social justice and robots (as if automation is something that just started happening now, and not at the beginning of the 18th century) but ultimately it can be understood as a tool of monetary policy. And if you manage to hand people free money and yet the economy STILL doesn't grow, and inflation STILL doesn't rear it's head -- guess what? That's a GOOD thing. That's called... utopia. So maybe we should stop caring about GDP, and measure progress with a different metric: how much basic income can our country stably generate?
If companies and service providers know that an individual canpay $50 more. What insentive do they have to keep costs low? As it stands the price of living is absurd. Free money would only provide excuses for higher charges. GDP can be increased by making people buy more but is that really the solution?
As it stands we have a ton of communities that are not sustainable and end up a net loss. Where Mcdollars have value. The issue with these communities is that they cannot produce their own food, materials for housing or clothes and once factories leave they export nothing. If you want higher gdp, making sustainable communitiesis far better than printing free money. One makes more areas attractive to live tge other makes the average citizen have umbilical cord connected to the central bank
jganetsk had already answered your question, you simply have to read what they wrote. Anticipating a question like "What insentive do they have to keep costs low?" they answered before you wrote, when they wrote: "And if you manage to hand people free money and yet the economy STILL doesn't grow, and inflation STILL doesn't rear it's head -- guess what? That's a GOOD thing."
Put differently, the government should print money until inflation appears. This is what Keynesian economists have been recommending since 2008, yet most Western governments went in the opposite direction and engaged in long bouts of austerity.
The US has been buying bad debt with borrowed money (QE). There is so much cash in circulation that the banks don't know what to do with it.
"So no, the Fed is not printing money. In fact, the Fed is doing much worse than that. In allocating $4 trillion borrowed from banks, it’s supporting the very government spending and housing consumption that got us into trouble to begin with. More to the point, the Fed is financing ongoing economic hardship through its expanded borrowing of bank reserves."
So the solution is "take a chance maybe it works". We already are inflating our money every year. Every year the dollar is worth a little less. This is usually done on purpose, if i remember correctly it desentivises holding cash. By inflating the dollar, people who simply just hoard it make less money than reinvesting.
Jganetsk didnt address it. They simply pretended that there is a chance it will work
The Center for Economic Policy Research has a great free pdf ebook on Secular Stagnation from 2014 which has essays from a variety of economic heavyweights discussing the possibility of lower growth going forward.
There are two ways producing widgets can grow 10%.
The standard way is where production methods stay the same, and 10% more offices/factories are added and 10% more workers are added. The reason this would be done is because there was a 10% growth in demand for widgets. This would be due to a 10% growth in population that could afford widgets, or a 10% growth in income for consumers/workers that they decide to spend on widgets.
With population growth shrinking in the standard consumer societies, that aspect goes out. Insofar as income, the average US inflation-adjusted hourly wage today is below what it was 43 years ago - it has shrunk. So the demand is not really increasing. Since demand for widgets in general is not going up, companies are not desperate to employ the average worker, and thus wages are stagnant (or as I said, the average US inflation-adjusted hourly wage has shrunk over the past 43 years).
When were companies investing the capital necessary for automation, technological improvement etc.? From the 1940s to the 1960s. When demand was high due to increased population (baby boom). There was a baby boom because after a long depression, the economy started paying good wages to the average worker due to strong unions and government stimulus starting heavily during World War II. Money in workers/consumers pockets led to increased consumer demand.
Due to the highest unionization rate in American history after World War II you have high wages at these growing companies. How to lower costs? Invest in automation, invest in technological improvement.
Without high wages, and some of the other factors mentioned, the financial impetus to invest in technological improvement and automation fades. It's always there, but it ebbs in the absence of high demand, high wage employees.
> 81 percent of the United States population is in an income bracket with flat or declining income over the last decade. That number was 97 percent in Italy, 70 percent in Britain, and 63 percent in France.
Ok so growth slowed in the West, but weren't a lot of people brought into the middle class in the East?
> It argued that the internet would not have the same transformative impact on how much economic output would emerge from an hour of human labor as 20th-century innovations like electricity, air transport and indoor plumbing did.
There's lots of back office automation going on in the Fortune 500 that is eliminating white collar labor. I seriously doubt these statements about productivity. If its productivity per capita they want then just wait until self driving trucks wipe out millions of jobs.
Am I missing something here? Isn't this basically what happens when labor (the jobs I mean) moves somewhere else and automation eats away at whatever is left?
I'm hearing lots about this low-growth economy from various major news sources, but it doesn't seem to me to be consistent with the data that I can look up on my own.
If you look at a 20-year plot of the S&P 500 (not the same thing as the GDP, I know, but still some kind of indicator of economic health) the net growth probably is low, but only because of the giant housing crash that causes a rapid setback right in the middle of the time period we're measuring. It looks like we've been growing at full speed ever since.
> It looks like we've been growing at full speed ever since.
S&P 500 valuations after the crisis are out of touch with reality. Look here: http://www.multpl.com/shiller-pe/. The stock market is incredibly overpriced i.e. companies' earnings aren't growing as much as people and institutions are buying stocks, driving their prices up. The reason for the bull market is that with near zero interest rates, everyone is looking for an investment vehicle that offers better inflation-adjusted returns than cash and bonds, even if it means taking more risk.
There are a lot of calls in these comments for basic income, or schemes like it. But that is just redistributing existing wealth, not creating new growth, which is exactly the problem we have. You have to produce things before they can be consumed, and this is also the case with economics.
Historically, the wealthy do not create many things. When not funding wars (which do advance knowledge, btw) or accumulating capital, they use their disposable income to fund intellectual things (which can be science) and art and the crafting of luxury goods. But, they're generally not inventors. Why would they be? They already have the lush lifestyle. And, while it's fun to think about things, invention requires a lot of work and grit and getting dirty. But, worse - invention makes you look like a weirdo to your peers, who would prefer things stay in stasis. So, the inventors usually come from the middle classes.
Historically, middle classes are formed when there are unexpected population booms (because usually, more population means more production). And, during these times, there's a short window of time when production exceeds consumption. And, when that happens, there's room for excess production to go toward invention. If it is all timed right, the invention period can produce excess growth which can create more invention, etc. But, naturally, Human systems fall back to wealth inequality, because that's a stable equilibrium.
Now, it's going to be very unexpected if we have another population boom anytime soon since we're moving more toward population plateau. And, at 7.35 billion people, we'd need the world to quickly support a couple billion more. But, another big, apocalyptic war could happen or maybe disease, in which case there would be a subsequent imbalance in production and consumption. Otherwise, things will kind of reach the equilibrium point and stay there for a long time.
Basic income is cool (in my mind), because it frees up large portions of the population to invent new stuff. There's currently a very short window of opportunity for basic income (or something similar), because most elite are (naturally) against it. But, another alternative, maybe, could be if all the billionaires of the world suddenly realize that they're all going to die soon and they collectively decide to continue on this earth for a lot longer (since many don't believe in God anyway). In that case, they could dump most of their capital in life-extending inventions, and that could keep things going for longer. (The cynic in me has always wondered if that's partly what billg is doing with all his humanitarian stuff - save a few billion people, get the smartest of them into becoming inventors, and as a side-effect get (virtual) immortality.)
UBI is even worse than redistributing existing wealth. It is a simplistic plan to throw more fuel on the monthly-rent fire, ignoring that price feedback will eagerly consume it.
I had been wondering why it had quickly gained mainstream popularity, but then I realized it is simply the latest way central banksters can conjure money to have it collected by their cronies.
What we need is an end to this many-decades regressive policy of forcing inflation, so that a middle class is once again able to save and thereby gain economic security and bargaining power.
In case you were unaware, inflation is incredibly low and has been so for quite some time.
Thinking that handing out free money will automatically and immediately cause price inflation is naive. If that were true, why would we still have such low inflation after nearly a decade of expansionary monetary policy?
The price index is rising slowly, but the inflation that's causing it is unprecedented (eg the absurdly low interest rates and talk of going negative). In a technological economy, we'd expect the price of goods and services to be continually decreasing, as price is the fundamental metric an economy optimizes for. Instead, the fed has insisted on rising prices so that everybody is kept working more, in spite of ever-growing technological progress. Predictably, the components of the CPI that are directly dependent on production decrease, while the sectors that have been financialized (housing, education, healthcare) shoot up as that is where conjured money is injected at the consumer level.
A lot of people move to the city because that's where the jobs are. If the job is no longer the primary motivation to choose their location then they would go into a low cost city and decrease the pressure on the housing market of the high cost city.
Yes, many people will move to rural areas where a lack of competition for land will keep housing prices down. So BI will be good general welfare program for those rural lower-paced areas.
But if one wants much income beyond the BI, they'll still be lured cities for their economic opportunities. Housing competition will still exist there, and thus we'd expect housing prices to stay in line with what people can afford by rising. So the economic divide between the rural poor and urban rat racers will actually increase.
I think much the interest in BI comes from urban rat racers frustrated with making rent, wishing for a relief from that pressure so they could take time off. But simplistically adding money to the situation will have the opposite effect of what they want, just as how college loans fucked up college tuition.
I think it partly has to do with how we measure growth (i.e. GDP). For example, try using a laptop and a mobile phone from 2001 for a week or so. How does that feel? No growth, ehu? ;P
Another aspect I think is how much "non-monetized" value the Internet is creating. What would you pay for access to an Internet search engine (like Google or one of it's competitors), if you really had to? Going without is just not an option, but the price still hovers around zero.
That brings us to yet another aspect; the Internet puts a huge downward pressure on all (comparable) prices. I think this is a major factor behind the lack of inflation: hiking prices is just not possible the way it used to be.
There might be diminishing return for every new credit money created which in turn leads to lower growth.
It is also not certain that low interest rates will lead to inflation. If you were a big company and suddenly got a lot of cheap credit. Would you A) increase the wages of your workers or B) invest in cheaper production through automation? What does choice A) or B) yield for consumer prices, do they go up or down?
I often see articles like these result in a broad call for a universal basic income. The reasons are simple: it doesn't dictate what you should or should not spend your money on; it provides a standard-of-living floor; it balances out the inequalities of a globalized and increasingly automated world.
I have a different proposal: instead of guaranteeing basic income, guarantee broad access to basic services.
Off the top of my head, I see five basic services anybody in an industrialized society ought to have provided for them: food/water, shelter, transportation, health care, electricity/information. If these needs can be met cheaply enough, then we won't need a guaranteed income. The basics are cheap enough and if you want a higher standard of living, you can work towards it, but in a market society there are winners and there are losers, and at least under the guaranteed service mechanism, the losers aren't mired in poverty.
In the short term, food/water and electricity/information are nearly cheap enough to be universal. We just don't choose to provide it in a low-tax society.
Medium term, health care costs can be reduced through automated diagnosis and operations. Some automated surgeons exist today and there was a recent report that IBM's Watson was able to correctly diagnose patients.
Long term issue will be shelter and transportation. Even with self-driving automobiles, providing shelter for everybody will require a delicate balance between dense urban housing (which is currently in high demand and very expensive) and suburban sprawl (which is harmful to the environment and requires vast and expensive infrastructure like roads and water).
By investing heavily in an ultra-low-cost society, governments can ensure all people have access to the services they need, while refraining from redistribution-via-taxation, which, while good in intentions, dents the very growth and ROI necessary to make these big investments.
Are you proposing the the government directly provide these services? No thanks. You're providing an alternative to UBI without providing any explanation of why it would be superior, while ignoring the very real impact which competition has on lowering costs and increasing quality.
What is the benefit of that? Generally, government services are inferior to those provided by the market. Just take a sample of public housing or government cheese to see why having the government provision services is suboptimal.
If the government wants to get into these businesses, it should do so as a non-profit corporation directly competing with private sector alternatives. Then we can see if government cheese is actually more desirable than private alternatives.
> in a market society there are winners and there are losers, and at least under the guaranteed service mechanism, the losers aren't mired in poverty.
UBI would be a market solution and could still prevent losers. Poverty reduction and personal choice are not mutually exclusive.
What you're proposing has been tried before and failed.
Just to clarify, I didn't say the government should provide such services, but rather invest heavily in the cheapening of such services, such that the private sector can provide them at such a low cost that they become trivial expenses. For example, subsidized agricultural research results in cheaper food, but the government isn't responsible for growing crops or distributing them.
the very real impact which competition has on lowering costs and increasing quality.
Oh please, what fallacy. Here on HN you have neoliberal truisms like this being repeated, at the same time as articles about celebrated icons of American capitalism clearly stating that in business they always seek to establish monopolies and that competition is for losers.
As an example of how fallacious this line of bullshit is, look at what privatization and 'competition' did to Australian telecommunications (instantly bought by foreigners, now a national security threat... some of the most expensive internet in the western world... metered downloads in 2016... new government program to fund infrastructure is broken down in to a government-pays, private-industry profits model... fiber is virtually unheard of, and is exceptionally difficult to acquire even eg. for a relative who lives right opposite the Sydney Opera House in central Sydney!) Whereas, here in China everyone can have fiber and a flat screen and a mobile phone for almost nothing, and they had no infrastructure at all 20 years ago.
> Here on HN you have neoliberal truisms like this being repeated, at the same time as articles about celebrated icons of American capitalism clearly stating that in business they always seek to establish monopolies and that competition is for losers.
The fact that you don't understand how those are literally two sides of the same coin shows how limited your understanding of economics is. Competition driving down prices is precisely why as a businessman I want to avoid it and establish a monopoly.
Since you lack even the critical thinking skills or economic understanding to see how monopoly benefiting businesses and hurting consumers is entirely self-consistent, it's not really worth arguing with you much more.
I'll just point out that we have numerous examples of competition benefiting consumers. For example, airline deregulation has led to a sharp reduction in ticket prices.
In the unfortunate cases where supposed "privatization" has had ill effects, if you look below the surface it's usually the case that the underlying market is anything but free. For example, internet service where only incumbent providers are allowed to offer operate and new entrants are barred from entrance while costs are subsidized by taxpayers. I suspect that the Australian telecommunications industry falls into that category.
Actually, I was describing the progression from government run to "competition wins!" to commercial actors to commercial actors barring competition. Net result: effectively replaced something government owned (accountable to people, non-profit motive) with something privately operated (accountable to investors, sole profit motive). But you seem to have missed that, instead spending three paragraphs attacking your perception of my person.
Where is this eloquent description of that? All you did was try to imply that monopoly-seeking and competition are incompatible.
Incentives are fundamental to human behavior. Corporations will automatically try to seek a monopoly position, but if the government isn't involved they can only maintain it until a superior alternative is created (see: Facebook supplanting MySpace).
The problem with that approach is that it's very centralized in a soviet kind of way. You have a small group of people deciding what people should get and how they should get it. The state then becomes the decider of what people need - and that distorts market forces. In that model, you will get bread queues and tenements.
If you give people real money, it allows them to 1) be creative in how they use it, and 2) stimulate 2-sided markets, which enables creation of new things.
While it's true that centralization does have its problems (nobody wants a Soviet style system), I feel that you are conflating political issues with the original point, which was that giving out money is unnecessary if access to basic services is guaranteed. I do think that's an interesting point.
On the political side, since the Soviet system we have seen some incredibly effective centralized planning from China, who have an arguable 3000 year nominal history of political meritocracy and no democratic hangups. Also, we now have new options emerging through technology: direct, lower cost referendum-like voting on a broader range of issues being one.
Finally, "real money" is a very loaded phrase... just because a government guarantees a scrip does not make it any more real than, say, Bitcoin or human time. What drives fiscal systems, fundamentally, is the shared belief that a dollar acquired today can be useful if spent tomorrow. If you look at the key properties of money - ie. medium of exchange, unit of account, and store of value - then what the centralized, universal access to basic services proposal removes is all three properties of the handout: exchange, accounting, and storage.
What are the impacts here? Exchange: people are properly accounted for by the government when seeking services and cannot ask for things they do not use personally. (This could be seen as positive, but could also be seen as negative if the government is particularly inefficient at scheduling the supply of services.) Unit of account: There is no need to account monetarily for services that are provided, instead they are simply recorded has having been provided and the supply-side costs (medicine, food ingredients, etc.) are accounted for as standard. Storage: Society as a whole has an interest in allocating efficiently the resources used in basic services (shelter/food/medicine/education) as this is cheaper overall and results in less wasted resources; allowing recipients to store and hoard these is probably not in society's interest.
Overall then, perhaps there are some positive points in avoiding executing UBI in terms of cash handouts, and instead focusing on services. Of course, the real gotcha is going to be transition and utility ... without major society-wide restructuring, the cash-based approach promises a far simpler path of transition.
It's really not. The system you've described is literally how the Soviet union operated, and is in fact the norm for poverty reduction programs today (ex. public housing, public healthcare, etc.).
Without competition, programs inevitably acquire bloat and siphon off money to those with political connections. It's ironic that you mention China as an effective example of communism when most of their growth has come since moving more towards a free market.
What exactly do you think is the advantage of the government directly providing services?
Please don't inflict a communist nightmare on the rest of us.
You are entitled to an opinion, but it is no more correct than any other.
how the Soviet union operated
I believe that we have new technology, statistical and information literacy in the population, and technical and social means of validating the actions of government now. Though I wouldn't suggest this in practice, it would for example be possible to run UBI-style services on a smart-contract system off a blockchain...
It's ironic that you mention China as an effective example of communism
I didn't mention communism. I think you are conflating anything state-operated with "evil socialist-communist-coldwar Russian China Cuba impending failure!" in the way Americans often do, very much untruly. What I said was that China has some good modern examples of strong achievements from centralist planning on a society, which is true, as I live there and see them first hand. In the last few decades China has established the best network of infrastructure in the world, the most electric vehicles, and has pulled the highest number of people out of illiteracy and poverty of any country or political period ever in the entire history of humanity. That's pretty impressive by any measure.
What exactly do you think is the advantage of the government directly providing services?
As discussed, potentially a direct service model can offer better capacity to account for the ultimate use of resources allocated through such programs, as well as less waste through discouraging hoarding and providing more efficient allocation.
In addition, there is probably a psychological benefit to such an approach since, as Kennedy's speech posted above indicates so eloquently, economic figures so often miss the point. Happiness, health, purpose, safety, comfort, wellbeing, education. These are not things you can simply buy on a national scale by giving token quantities of money to people.
You didn't use the word, but a centralized economy where the state directly provides goods and services is the definition of communism.
I'm not afraid of a communist boogieman. I don't think your system would necessarily even be evil, just woefully inefficient. If there's no competition for providing services, what incentive is there to improve them?
You point to technology as a means by which we can provide a high standard of living cheaply. Who do you think is going to develop technology without market solutions in place?
I have no problem with the government funding social benefits. I think there's lots of room for that. I just don't think there's any reason to think that the government should be in the business of directly providing such services. It's the difference between SpaceX and NASA: both are funded through taxpayers, but SpaceX has competitive pressure to provide better services at a better price.
I agree that China's growth is impressive. Yet you completely ignored my point that such growth has largely come through increased liberalization of the economy—ie. the opposite direction of what you propose.
> As discussed, potentially a direct service model can offer better capacity to account for the ultimate use of resources allocated through such programs, as well as less waste through discouraging hoarding and providing more efficient allocation.
What a load of rubbish. What do you mean by "hoarding?" People who dare to purchase two cars?
You can't just assert that direct government services would be more efficient without any evidence. We have abundant evidence, both theoretical and empirical, that the market is much better at allocating resources efficiently than central planners.
> Happiness, health, purpose, safety, comfort, wellbeing, education. These are not things you can simply buy on a national scale by giving token quantities of money to people.
Why not? You seem to not understand economics. What in your view allows a government service to provide these benefits (by using taxpayer money to provision them) while giving people the money to buy those services directly would not?
I'm glad you live in China. Perhaps you should move to North Korea to see how effective an even more centrally planned government can be.
Like I said, you are definitely confusing things: socialism/communism/modern China/NK-style dictatorships.
All states provide services, or they wouldn't exist.
Who do you think is going to develop technology without market solutions in place?
There was an HN article recently about Wifi, which was developed by Australian government researchers at a famous research institution now being dismantled on the same faulty capitalist/neocolonialist reasoning you are peddling. The internet, wifi... many interesting modern developments have been government funded.
It's the difference between SpaceX and NASA: both are funded through taxpayers, but SpaceX has competitive pressure to provide better services at a better price.
No, SpaceX and NASA are very different. SpaceX is a for-profit business, whereas NASA is a national (some would say international) research institution. For example, a friend of mine from Australia is currently doing an internship at NASA's JPL facility in the field of applied chemical geology with a pure research goal.
China [...] growth has largely come through increased liberalization of the economy
You are incorrect. There is liberalization, but effectively the government still runs all the roads, train networks, airports, communications infrastructure, education and media.
hoarding?
You know, medicine or food or real estate or whatnot. We were not talking about cars.
We have abundant evidence...
{{citation-needed}}
What in your view allows a government service to provide these benefits (by using taxpayer money to provision them) while giving people the money to buy those services directly would not?
If I give someone $2 a week, even if there are 20,000 people in a town, how long will it take them to coherently organize savings amongst themselves build a $2M road to the provincial capital? Some of them are leaving, some of them are old, some of them ride bicycles, some of them don't drive, others prefer the train, there are rumours of a new train line. Sometimes a decision just needs to be made. And if every village builds a direct road to the capital, is that really a desirable network topology? No. There are concerns at play that those affected cannot or will not have the time to research and execute. Whereas, history teaches us that a commercial actor, which you propose, would by definition cut nearly all available corners to prioritize profit, whilst working to establish an effective (explicit or implicit) monopoly on the sector, leaving portions of the people underserved. Oh, and they'd be tollways.
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I can't imagine the nightmare that a government-provisioned Google would be, for example.
Straw man.
the service they provide (space exploration) is largely identical.
Did you read my comment? It's chalk and cheese.
the market is more capitalist than it was 50 years ago
Instead of discussing the point you make a tangential point then essentially falsely assert that because the market is more capitalist all the good stuff comes from capitalism. Having a discussion with you is completely insane.
You think under UBI people would use their limited income to hoard medicine?
I was discussing the relative benefits of a service-based model.
The idea that some central planner knows better than people what they need is the height of arrogance.
You are conflating providing essential services with providing everything. The scope was: food/water, shelter, transportation, health care, electricity/information.
Capitalism does not automatically imply corruption or inefficiency.
No, but it implies a profit motive which usually suggests a few things, the foremost being chiefly crap service for everyone in low population density areas that isn't easily serviced.
The Japanese rail system...
... is terrible unless you want to get from a major town to a major town. I recently spent 2 days stuck there trying to get between point A and point B along the coast. Why? As you say...
> All states provide services, or they wouldn't exist.
Sure. There are vast differences in the amount of services provided, from minimalist contract enforcement all the way up to full government control of everything in the economy.
> The internet, wifi... many interesting modern developments have been government funded.
Yes, and they generally only saw consumer adoption once for-profit businesses got involved. I can't imagine the nightmare that a government-provisioned Google would be, for example.
> No, SpaceX and NASA are very different. SpaceX is a for-profit business
They operate differently, yes. But the service they provide (space exploration) is largely identical. By all accounts, SpaceX has been much more successful at that and has dramatically lowered the cost of launches.
> You are incorrect.
No, I'm not. I have studied Chinese history in depth and have visited many times. I recognize that many services are government provisioned, but that doesn't change the reality that the market is more capitalist than it was 50 years ago.
> You know, medicine or food or real estate or whatnot. We were not talking about cars.
You think under UBI people would use their limited income to hoard medicine?
The idea that some central planner knows better than people what they need is the height of arrogance.
Where did I argue that all services should be privately provisioned? It probably makes sense for governments to build roads, since that's something that really does benefit from central planning. Even for things which I think the government should do (ex. universal health care) I think it should do it through a free market (ie. provide a national insurance company which competes directly with private insurance).
Capitalism does not automatically imply corruption or inefficiency. The Japanese rail system, for example, is admired around the world. Yet it's entirely privatized.
I agree with you on some of those things. For instance, it would probably be difficult to develop a road network that spans across groups of people without some planning and coordination between those people's governments. And, this is where governance does help.
But, even though governments may identify and enumerate the collective requirements of where those roads will be (for better or worse), it would be hard to imagine the government being efficient or innovative at executing the work.
If people want to coordinate their collective goals together, that can be effective, and I'm a supportive of that. But, that's a huge difference from having an external group of people dictating what those goals should be and how they should be achieved.
This. One other thing I might suggest is some sort of variable cost model where every person gets 1 unit of water per day for free and then consumption above that scales up. Most people will consume more than the bare minimum to survive (lets say the unit is 2 liters). Doing this raises the base for everyone to be able to contribute to society yet still collects money needed for infrastructure costs, etc. ) One we have some of the utilities under this system, things like health care would be nice follow-ons.
> We are suffering from "housing inflation" in the US and that is causing serious problems.
No, we really don't. There are huge portions of the country where housing is cheap and plentiful.
The problem is that there aren't jobs there. If we had UBI, people could avoid barely scraping by on low-wage jobs in cities and instead thrive in low-cost areas.
I do not just mean increased cost. I mean houses have literally gotten bigger on average, while holding fewer people. Meanwhile, supply of affordable housing has shrunk and homelessness is on the rise.
> I mean houses have literally gotten bigger on average, while holding fewer people.
What's wrong with that? In areas where we have plenty of space, it seems perfectly fine.
I agree that affordable housing is a major problem. I think UBI would easily solve it because if housing doesn't need to be concentrated in urban areas it's much cheaper to build abundant affordable housing. Heck, there are areas of the country where you could get housing for almost nothing—as long as you didn't need to be tethered to a job in an urban locale.
What is wrong with it is that it is directly related to the lack of affordable housing and rise in homelessness. Even where there is abundant space, it makes homes too expensive for ordinary people with ordinary wages.
I supplied two links, stuff I wrote previously. I don't care to get into a pointless internet fight. Suffice it to say I think you are wrong about this.
I am not tethered to a job. I have portable income, in spite of being chronically ill and currently homeless. It allowed me to move someplace cheaper, a stepping stone in my plan to get off the street. I think UBI is not a good solution. Gig work done right and more appropriate housing options for our new demographic reality are needed.
I read your links and appreciate you sharing them. I didn't see any compelling arguments against UBI.
> What is wrong with it is that it is directly related to the lack of affordable housing and rise in homelessness.
Yes, in the status quo it is because economic centers have high demands for housing. However, you can't dispute that there is still plenty of affordable housing in the country if your income isn't tied to a location.
> It allowed me to move someplace cheaper, a stepping stone in my plan to get off the street. I think UBI is not a good solution.
I think gig work is great. I'm fortunate enough to be able to work from anywhere in the world and agree that it's very helpful.
Unfortunately, the reality is that the majority of the populace likely does not have skills which would provide for gig work. I'd much rather give them a portable income of their own (UBI) so they can move to somewhere where housing is affordable, instead of either letting them slide into the cracks or forcibly constructing affordable housing through central planning.
However, you can't dispute that there is still plenty of affordable housing in the country if your income isn't tied to a location.
No, I can dispute that. The general expectation is that young people should rent a multi bedroom place and get a roommate because we simply do not build housing appropriate for a young person who desires to live alone. Historically, we had more SROs and boarding houses. We do not have housing that serves our current demographic.
We have also seen a rise in trailers, which I see as slum housing, not minimum decent housing. In theory, I could move to a place like Alabama and rent a trailer currently. In practice, that would be disastrous for me because of how negatively it would impact my health. Slum housing does not fix problems. It worsens them.
I believe UBI would basically be a welfare program and would cause a great many problems. But building sufficient amounts of decent, affordable housing appropriate to the needs of singles and childless couples would go a long way towards solving a lot of problems that have been deepening in the US for decades.
With appropriate housing, a minimum wage job at a grocery store should support you decently so you aren't living in dire poverty and do not feel trapped.
"As a matter of arithmetic, the slowdown in growth has two potential components: people working fewer hours, and less economic output being generated for each hour of labor. Both have contributed to the economy’s underperformance."
Really? So it's basically the workers fault because they're lazy?
I'm still trying to find the time to complete Piketty's Capital, but one thing that I was surprised to learn from it thus far is that global population growth has a much greater impact on GDP growth than you might think. I'm loath to leave a comment like this without citing some of his data (not at my disposal, atm) but if I recall correctly, it's like more than half of GDP growth (roughly). As global population growth slows, and it is, invariably economic growth is going to slow down. It sounds like a common sense thing, but the numbers Piketty put on it were very surprising.
Real issue is that humanity's ability to exceed technology is limited. Even if humanity was to conserve more resources and invest more, majority of value and effort would be to increase the rate of returns from technology.
Do you consoder economies of scale a technology? I ask because it seems to me that economies of scale in manufacturing and agriculture have been a huge driver in producing more with less inputs (especially labor inputs).
We got not in a small part by China having double digit growth in GDP for well more than a decade, this or course is no longer the case. Double digit growth is not sustainable. The fact that it went on for as long as it did was an anomaly. Also double digit growth is something that while not sustainable is also maybe something that might not be desirable either. I would recommend this read on the subject:
Because we are focusing more and more on sustainability, which means more conservation, less consumption all around, and therefore low growth.
Beyond that, the entire foundation of economics is flawed. Computer scientists and software engineers should seriously examine the underlying assumptions of economics and revise them to be in line with technical reality.
Money is a technology. Think about the design from first principles. If you are an economist, you probably can't do that, because the design is fixed in your mind and first principles aren't known or considered unchangeable.
The financial industry and elites sucking up all of the capital and holding it, while heavily lobbying to maintain a low-tax environment and to prevent governments from spending on infrastructure and lifestyle improvements for the general population, although they generally are borrowing at near zero or negative interest rates. This results in insufficient demand and secular stagnation. No investment = no growth.
Luxury goods and services are doing well, though.
Also, the United States is not adding jobs at a healthy clip; the jobs are worse and the prime-age (25-54) employment rate has only retraced halfway since the stock crash nearly 10 years ago. The US intentionally pushes a strange number for joblessness that drops people from being counted, and can be adjusted through legislation lengthening and then reducing the period during which unemployment benefits can be collected. The rate jobs are being added would be fine for an economy not recovering from a crash. This is not that economy.
1) 15 years ago marks the crashing of the dotcom bubble, which was used to recover from the recession of the early 90s, which was caused by Reagan ruining the country. So, IMO the way to view it is that Reagan destroys the working class and causes it to live on credit and prayer while cutting infrastructure spending and lowering taxes on the rich. The best thing he does is spend an enormous amount on the military and other welfare for the rich, which creates some sort of replacement demand, although he finances it by driving the national debt into the stratosphere.
2) Clinton deregulates everything, ends welfare as we know it, and encourages a bubble in stocks. A bubble is not a boom - a bubble is a time when people take out loans with collateral that is on fire. During this, he raises taxes, which shifts the Reagan debt to personal debt. The stock bubble crashes as soon as he leaves, and what seemed to be a reasonable amount of debt for the working class to carry became a crushing amount of debt.
3) Then Bush encourages another bubble to save the economy, and it's in houses, an asset that is spread widely among the working class. They mortgage those houses to pay off their debt, and many get to buy some stuff. Bush immediately starts spending again like a maniac in the Reagan model, with an administration consisting largely of exactly the same people: wars on multiple fronts, welfare and tax cuts for the rich, and massive government contracts for insiders.
4) The bubble crashes as Bush leaves, and Obama comes in with a mandate for a massive national veer to the left, wastes most of it on an inadequate healthcare program of right-wing origin that is very nearly a no-op, and in almost every other way is continuity to the Bush administration. He freezes government spending in the lowest interest rate environment in history, and fills the demand hole by handing free money to wealthy people through the bailouts and QE, shifting all of that public debt partially to private working/middle class debt.
5) The rest of that free money has nowhere to go, due to the previously mentioned historically low interest rates, and in addition the tailing off of the marginal return on further investments in technology and industries based on the invention of the transistor, so it ends up in a combination of traditional large industry/natural resource extraction, banks (betting on a repeat of the experience of the bursting of the property bubble, where banks failing from intentionally taking on irrational risk was rewarded by direct, open payments of cash and grants of credit), and tech companies in-name-only, where service companies use the internet in place of phones (as in the original dotcom bubble where they were used in place of mail-order catalogs), or where the actual profits were made in services for B2B, such as advertising or computing infrastructure (the kind of stuff that large industries/finance/fake-tech-companies can park all of their cash in.)
tl;dr it's just kleptocracy.
Majorities of the youth and the marginalized now openly despise government, and have made this election cycle the scariest one we'll see until the midterms which will be the scariest one until the next presidential election. This "low-growth world" is the closest thing we're going to get to a bubble in this financial cycle, since the working/lower-middle classes are seeing absolutely no benefit from QE and the bank bailouts (unlike dotcom and the property bubble.) The only place to fall is open rebellion, tribal violence, and the aimless violence of suicide, mass shootings, and property crime.
15 years ago marks the crashing of the dotcom bubble, which was used to recover from the recession of the early 90s, which was caused by Reagan ruining the country.
I couldn't disagree more. The US economy was crap through most of the 1970's. The 1980's was one of the strongest periods of growth in the US for a long time. And the growth in wages was across all income quintiles. In fact, the runaway growth for the top income brackets started to take off in the 1990s.[1]
The 80s weren't a strong period for investment, they were a strong period of deficit defense spending and tax cuts, which were stimulative. When that became unsustainable, the bottom dropped out of the economy. The history of the presidency since Reagan has been continuous giveaways to the wealthy financed by credit taken out by the middle class on phantom assets that vanish into thin air as the president exits. The way the Reagan era was different was that the asset was American world hegemony as a hedge against the eternal threat of Russia (which collapsed partially because it couldn't spend as fast as we could in Afghanistan.)
(Also, according to every graph on the page you linked, the incomes of the top 5% started their climb in 1981, dipped in 1989, recovered to the 1981 trend in 1993, and maintained it steadily until 2001. I don't know how you're reading that differently. After 2001, even the incomes of the top 5% are stagnant, and the important groups become the top 1% and the top 0.1%.)
Low growth is sustainable! Rampant consumerism and the drive by corporations to move money faster and faster by changing resources to garbage is a drug that needs to be stamped out. The addiction to population growth just to fund social security schemes is similar. Societies can get addicted too.
Now we just have to figure out how to weather the human->robot worker transition smoothly.
"Growth" is really just cheap oil ("energy prices"). As this is an obvious path to imminent doom, energy prices go up and thus growth diminishes. Cheap(-er) energy is what's keeping the States ahead of the EU too.
The world isn't black and white, mostly. Sometimes there is an easy explanation to things though.
What we're missing is cash in peoples hands to spend on innovations. For many 80% of income is going to rent. How can you even hope to build an economy on that?
The developed countries must impose 50% or higher tariffs on imported goods, services and intellectual property to protect their workers.
The USA enjoyed very high growth rates in the 1800s.
When economists get around to simulating the economy via agent based modelling of every decision making financial entity, akin to how weather is forecasted in voxels, then Free Trade will be revealed as the root cause of the slow growth rate of the developed countries.
I believe (or rather, I pray) that we have hit peak consumption which will lead to this problem forevermore. We need to find new ways to improve ourselves than shopping more.