How would Universal income work?

[JTsyo]

I was trying to think of a simple world and see how things would work. Imagine one with just a government, a company and 100 people. The company is completely run by robots and creates everything the people need and sells the package to them for $100 each. The government needs to pay the people $100 each so that they can buy what they need to live from the company. The government taxes the company at 50% of income and still has a deficit. But there's no one to buy the government bonds. What am I missing? How would this work?

 

[[DHT]Osiris]

Missing the govt generation of wealth based on either selling that product to other govt/countries/customers, and extraction of raw resources to sell to aforementioned govt/countries/customers (or the company that has to make the product). The idea being that the 'wealth' that the govt can share with its people is a product of the 'productivity' of the people. Superproductive society means lots of wealth the govt can spread around. We see this now (sort of) with social programs.

 

[Craig234]

First, I think that's a good approach to looking at the issue. My model for various economic policy issues is an old west town, with a store, hotel, rancher, etc. A point I make with that is, imagine it all working with the people interacting and trading with each other - and now, imagine a guy suddenly owns it all.

Now, he rents the properties to all the people to do the same things, and/or pays them a salary to do them - but the profits go to him. He just owns more and more money. I think that's an
analogy with the problem of wealth concentration.

Anyway, to your question, a pretty simple point is that the income works when it's a reasonably small part of the wealth created. A flaw in your model is, why do they need to charge $100? Is that
the cost of raw goods and operating the production? If there are such costs, then the people have to create the wealth for it to happen, somehow.

 

[Rebel_L]

I was trying to think of a simple world and see how things would work. Imagine one with just a government, a company and 100 people. The company is completely run by robots and creates everything the people need and sells the package to them for $100 each. The government needs to pay the people $100 each so that they can buy what they need to live from the company. The government taxes the company at 50% of income and still has a deficit. But there's no one to buy the government bonds. What am I missing? How would this work?

I am not really sure what you are trying to get at, if you are looking at universal income as some sort of base income for everyone its simply a wealth redistribution system to make sure the bottom end of the socioeconomic scale is able to survive with how well you want them to survive dictating how much wealth you pull from the top to redistribute. If you want everyone in your country to have the same income, tax would be 100% for everyone with the pot being equally distributed. Also where are the luxury goods in your example.... you know the stuff that there isnt enough of to go around for everyone. Our world is resource limited, an example that doesnt consider that will not be very useful.

 

[JTsyo]

I am not really sure what you are trying to get at, if you are looking at universal income as some sort of base income for everyone its simply a wealth redistribution system to make sure the bottom end of the socioeconomic scale is able to survive with how well you want them to survive dictating how much wealth you pull from the top to redistribute. If you want everyone in your country to have the same income, tax would be 100% for everyone with the pot being equally distributed. Also where are the luxury goods in your example.... you know the stuff that there isnt enough of to go around for everyone. Our world is resource limited, an example that doesnt consider that will not be very useful.

What I don't get is how you can tax income for goods and then use that to pay people to buy those goods. Right now you can support some people with super productive workers but what happens when its the majority of the population that is not working?

 

[[DHT]Osiris]

What I don't get is how you can tax income for goods and then use that to pay people to buy those goods. Right now you can support some people with super productive workers but what happens when its the majority of the population that is not working?

Think of it more as the 'nation' entity is what is creating the wealth, and redistributing it elsewhere (preferentially to the lower end of the scale). If you imagine a country which makes goods for its own and other countries, 100% automated from development to distribution, the people don't 'have' to work, nobody has to. The nation's economy essentially runs itself (as long as there's people who want/need the goods being produced) and the wealth from that goes to the people. That's a very extreme example (and probably terrible consequences). In actuality it'd be a hybrid of a 20% workforce and very small job/consumer driven endgame, i'd wager.

 

[Rebel_L]

What I don't get is how you can tax income for goods and then use that to pay people to buy those goods. Right now you can support some people with super productive workers but what happens when its the majority of the population that is not working?

In your example the robots are the new super productive workers that are sustaining everyone (we tax these at 100%). If its still confusing with your one commodity example remove currency from the example and think of the commodity as the currency.

 

[SMOGZINN]

I was trying to think of a simple world and see how things would work. Imagine one with just a government, a company and 100 people. The company is completely run by robots and creates everything the people need and sells the package to them for $100 each. The government needs to pay the people $100 each so that they can buy what they need to live from the company. The government taxes the company at 50% of income and still has a deficit. But there's no one to buy the government bonds. What am I missing? How would this work?

The answer is you don't tax the robot company at 50% but at 100%. Under your system there is no reason for the robot company to make a profit since there is no use for wealth for anything but buying it's own product. At a 100% tax rate this system is fully stable.

 

[Murloc]

The answer is you don't tax the robot company at 50% but at 100%. Under your system there is no reason for the robot company to make a profit since there is no use for wealth for anything but buying it's own product. At a 100% tax rate this system is fully stable.

someone invested the capital to create the robot company and wants something back though.

I think the missing piece is that UBI base pack does not contain everything a person could want from life, and many people are still working even if they are in the minority.

This stuff gets difficult if you say that technological advancement and everything else also becomes fully robot-driven, but that's sci-fi for now, while UBI is a practical policy that could be implemented any day.

 

[sandorski]

The answer is you don't tax the robot company at 50% but at 100%. Under your system there is no reason for the robot company to make a profit since there is no use for wealth for anything but buying it's own product. At a 100% tax rate this system is fully stable.

That is pretty much Communism. I don't mean that negatively either, but if All Labour ever ends up totally Automated, Capitalism is dead. It's nearly impossible for that to happen though, because Innovation will continue to bring forth new Products and Industry which will require Human input. That said, whether Full Employment or anything near that is possible in the future is questionable.

 

[Sunburn74]

The example the OP gives is not a good example of a universal income. Really universal income is the floor for a civilization. We have a universal income right now in the US for people who choose to participate in society (ie non-homeless people) in the form of foodstamps, medicaid, etc.

There have been propositions by notable economist and behavioral scientists to simply pay all US adults $40K per year and to leave them alone to do whatever they want. First of all, it is not communism (there is no suppression of the right to work or launch business or income gained on top of the minimum income). The people who propose this believe that if you free up more people from having to work to support basic existence, you will have more entrepreneurship, research and development, better participation in politics and education and the arts etc. All of the dreams people have say in college, you can actually chase if you were so motivated. In fact, you only need a extremely small percentage of people who prior would have been caught up in a relatively unimpactful rat race to turn to say scientific research, successful entrepreneurship, teaching, politics, the arts and literature etc to make it worthwhile given the impact these people have (one steve jobs is greater for mankind's development than 60,000 people working in a factory assembly line or in marketing positions at various companies). Aristotle wrote on this topic. I can't remember the quote but basically it was about needing to having time to sit and ponder about the stars, time which was not available if you needed to be farming all day to put food on the table.

 

[agent00f]

The example the OP gives is not a good example of a universal income. Really universal income is the floor for a civilization. We have a universal income right now in the US for people who choose to participate in society (ie non-homeless people) in the form of foodstamps, medicaid, etc.

There have been propositions by notable economist and behavioral scientists to simply pay all US adults $40K per year and to leave them alone to do whatever they want. First of all, it is not communism (there is no suppression of the right to work or launch business or income gained on top of the minimum income). The people who propose this believe that if you free up more people from having to work to support basic existence, you will have more entrepreneurship, research and development, better participation in politics and education and the arts etc. All of the dreams people have say in college, you can actually chase if you were so motivated. In fact, you only need a extremely small percentage of people who prior would have been caught up in a relatively unimpactful rat race to turn to say scientific research, successful entrepreneurship, teaching, politics, the arts and literature etc to make it worthwhile given the impact these people have (one steve jobs is greater for mankind's development than 60,000 people working in a factory assembly line or in marketing positions at various companies). Aristotle wrote on this topic. I can't remember the quote but basically it was about needing to having time to sit and ponder about the stars, time which was not available if you needed to be farming all day to put food on the table.

The problem with UBI is that people do tend to be lazy if there's no incentive to anything for sustenance. Instead of pondering about the stars & such, more will watch honey boo boo all day.

 

[Sunburn74]

The problem with UBI is that people do tend to be lazy if there's no incentive to anything for sustenance. Instead of pondering about the stars & such, more will watch honey boo boo all day.

Making honey boo boo takes work. Someone was highly motivated to tell the honey boo boo story.

The argument behind the universal income is that people will seek out ways to fill needs. A universal income allows for supplementation of basic needs. However most of us need more than meeting our basic needs to be happy. We want children, we want to be inspired, we want to laugh and cry, we want to fly through the air, we want to not die from illness and so on.

As long as needs exist there will be people motivated to fill them. How many times have you seen charities and foundations started by average people because their child fell sick due to a disease? or because of some other tragedy a movement was launched? And so on. Money isn't the o my motivator there is; in fact if it were we'd all be bankers and stock brokers yet so few are really all that interested.

 

[agent00f]

Making honey boo boo takes work. Someone was highly motivated to tell the honey boo boo story.

The argument behind the universal income is that people will seek out ways to fill needs. A universal income allows for supplementation of basic needs. However most of us need more than meeting our basic needs to be happy. We want children, we want to be inspired, we want to laugh and cry, we want to fly through the air, we want to not die from illness and so on.

As long as needs exist there will be people motivated to fill them. How many times have you seen charities and foundations started by average people because their child fell sick due to a disease? or because of some other tragedy a movement was launched? And so on. Money isn't the o my motivator there is; in fact if it were we'd all be bankers and stock brokers yet so few are really all that interested.

I'm just pointing out that avoiding death is a powerful motivator, arguable the most, and thus useful toward some end. It's not the only motivator, but that's besides the point.

 

[Murloc]

The example the OP gives is not a good example of a universal income. Really universal income is the floor for a civilization. We have a universal income right now in the US for people who choose to participate in society (ie non-homeless people) in the form of foodstamps, medicaid, etc.

yeah, that's guaranteed minimum income and it's different because you don't get food stamps if you're not poor.
In my country the guaranteed minimum income is monetary (i.e. it really is a number not a bunch of programs that sum up) and it really allows you to live just fine, but you have to demonstrate you're looking for work, participate in their programs and all that stuff to get it, and it only amounts to the portion of the minimum living income that isn't covered by your work (which in some cases, is a negative incentive).

It's fleshed out here https://en.wikipedia.org/wiki/Guaranteed_minimum_income

You understand the difference but a big amount of people don't so it's best to make this clear.

I guess the keyword is basic, what can be implemented is universal BASIC income, otherwise the motivation gets lost.

Anyway, it's an idea meant for a time where demotivated people are unable to find work regardless.

 

[SMOGZINN]

someone invested the capital to create the robot company and wants something back though.

I think the missing piece is that UBI base pack does not contain everything a person could want from life, and many people are still working even if they are in the minority.

This stuff gets difficult if you say that technological advancement and everything else also becomes fully robot-driven, but that's sci-fi for now, while UBI is a practical policy that could be implemented any day.

The problem is that the OP created an extremely simple system that gave no reason for profit to exist. If there were other commodities for the Robot Company, or it's shareholders, to buy there would be other things to tax so you would not need to take all the taxes needed for the UBI from the Robot Company. The OPs system was zero sum, so the answer has to also be zero sum. Create a system that simple and the answers will be equally simple.

 

[ElFenix]

What I don't get is how you can tax income for goods and then use that to pay people to buy those goods. Right now you can support some people with super productive workers but what happens when its the majority of the population that is not working?

selling bonds is a hedge against inflation. government doesn't have to sell bonds. it doesn't have to tax either. could just print all the money needed but that would tend to create inflation.

 

[agent00f]

The problem is that the OP created an extremely simple system that gave no reason for profit to exist. If there were other commodities for the Robot Company, or it's shareholders, to buy there would be other things to tax so you would not need to take all the taxes needed for the UBI from the Robot Company. The OPs system was zero sum, so the answer has to also be zero sum. Create a system that simple and the answers will be equally simple.

IMO the crux of this whole issue isn't really economic but human. A lot of people really don't have much curiosity (I've seen little evidence this can be taught) and thus rely on mechanical labor which is increasingly obsolete in a technological world.

Folks with some intellectual curiosity (ie creativity) will always be on the lookout for something more to life, but for the rest it's always been an inherent zero sum game. This couldn't be more evident than in the US politics as of late.

 

[Orange Kid]

You either need to tax the company at 100% so the government recoups all the money to give back out again or create a Federal Reserve that just prints more money whenever it needs it and lends it to the government there by creating a giant deficit to be sold to the Chinese.

 

[desura]

It would have to be done in conjunction with completely dismantling a big chunk of the state, local, and federal government. It is meant to replace the social services that government provides. Since many government services are from the local level...enacting universal income on a federal level would be quite difficult because it would require a huge increase in taxes on top of the taxes which fund local social services.

I'm for it. I'm not a big fan of government bureaucracies, especially ones that try to make decisions for other people. But it would be almost impossible to enact in a workable form. The free marketers would object to giving money for nothing. The liberals would object to the dismantling of the social services bureaucracies. The fractured decision-making structure of the state, federal, and local governments would mean that it was unevenly applied.

 

[digiram]

Why are we talking about UBI, we can't even get U healthcare in this country. I think that just having that at least would free up some into taking the risk of entrepenuership. Of course, that could lead to further competition and we can't have that.

 

[Craig234]

Why are we talking about UBI, we can't even get U healthcare in this country. I think that just having that at least would free up some into taking the risk of entrepenuership. Of course, that could lead to further competition and we can't have that.

It's important to note the conflict between the 'official party line' promoting competition because it benefits consumers, while the most powerful industries actually are at war with competition to protect their profits.

 

[SMOGZINN]

It's important to note the conflict between the 'official party line' promoting competition because it benefits consumers, while the most powerful industries actually are at war with competition to protect their profits.

What they really mean is 'competition for you, monopoly for me'. The concept of competition has been turned into another tool of maintaining the corporate oligarchy. Only small business compete, large ones cooperate.

 

[Craig234]

What they really mean is 'competition for you, monopoly for me'. The concept of competition has been turned into another tool of maintaining the corporate oligarchy. Only small business compete, large ones cooperate.

It's the natural order for small but powerful groups to form and exploit the majority. Politics tends to see similar when both parties get put in power by the same interests - it's why there is resistance to that.

 

[pcgeek11]

How would Universal income work?

It wouldn't.