Tag Archives: universal basic income

The UBI Revisited

In continuing on the debate over the viability or lack thereof of the Universal Basic Income (UBI), from Slate.com:

What If We Just Gave Poor People a Basic Income for Life? That’s What We’re About to Test

Despite the the fact that the likelihood of a UBI in America is pretty much nil, that didn’t stop the article from being shared by 17,000 hopefuls.

And also the transcript of a recent Freakanomics podcast about the UBI: Is the World Ready for a Guaranteed Basic Income?

The pro-UBI argument seems to be predicated on some assumptions:

1. It will be in lieu of some or all existing welfare programs

2. It will be cheaper than existing welfare

3. Recipients of the UBI will use it to ‘better their lives’, ‘start businesses’, ‘go to school’, and the money ‘will not be wasted’.

From the Slate article:

As it turns out, that assumption was wrong. Across many contexts and continents, experimental tests show that the poor don’t stop trying when they are given money, and they don’t get drunk. Instead, they make productive use of the funds, feeding their families, sending their children to school, and investing in businesses and their own futures. Even a short-term infusion of capital has been shown to significantly improve long-term living standards, improve psychological well-being, and even add one year of life.

But I’m still not sold on the UBI, and maybe that makes me a ‘mean person’ because I don’t think the government should be writing checks to people willy-nilly? If it can be demonstrated that a UBI will be less expensive than existing programs, maybe. If the UBI is being spent on non-essentials, likely won’t help. IQ and education may be good filter for determining who stands to benefit the most from cash payments, versus regular welfare. Smarter, more educated people are more likely to use their income efficaciously, providing a positive ROI to taxpayers.

Maybe individuals who squander their UBI and have to resort back to welfare should have their UBI revoked, since apparently they were unable to ration their money wisely.

The UBI also assumes that the fiscal multiplier is high enough that the UBI will pay for itself, which is a matter of debate:

So what do the data say? There aren’t many studies of the issue. But two stand out: Robert Barro’s work and research by Valerie Ramey, an economist at the University of California–San Diego, on how military spending influences GDP. Both studies found that government spending crowds out the private sector, at least a little. And both found multipliers close to one: Barro’s estimate is 0.8, while Ramey’s estimate is 1.2. This means that every dollar of government spending produces either less than a dollar of economic growth or just a little over a dollar. That’s quite different from the administration’s favored multiplier of four. What’s more, Ramey also found evidence that consumer and business spending actually decline after an increase in government purchases.

Form the Freakanomics transcript, this passage stood out:

ALTMAN: Maybe 90 percent of people will go smoke pot and play video games. But if 10 percent of the people go create new products and services and new wealth, that’s still a huge net win. And the kind of American puritanical ideal that hard work for its own sake is valuable, period, and you can’t question that, I think that’s just wrong.

FORGET: Well, I think that there are lots of kinds of work. I think that people do need to create meaning in their lives, and for a lot of people that does come through work. I’m not sure that they necessarily need eight hours of work a day and 40 hours of work a week to find that meaning.
Forget, like Sam Altman, sees a potentially huge upside in freeing people of the need to work.

FORGET: If you look at the 18th and at the 19th century, some of the great scientific breakthroughs and some of the great cultural breakthroughs were made by people who did not work. These were gentlemen of leisure, right? These were people who had enough family money to support themselves. They certainly didn’t have to dirty their hands doing the kinds of work we take for granted. I don’t think these individuals felt useless; I don’t think their contribution was negligible. I think it was very important to the development of the world.

That’s probably true, so why not give the income to the 10% who will actually use it better their lives and society, rather than everyone? That’s my motivation ind the high-IQ basic income: if studies show smart people are morel likely to be creative, to make breakthroughs, then the best results would be obtained by only limiting payouts to the smartest of society, not everyone. Give high-IQ people the financial freedom to tinker and create, improving society in the process, instead of them having to worry about making ends meet. I think that’s compromise that can satisfy both proponents and opponents of the UBI.

In regard to the Slate article, another problem is a UBI may not be enough for some expenses, like higher education, starting a business, medical bills, or certain types of job training, so projections about what a UBI may be able to accomplish may be too optimistic. Whether it’s education, healthcare, or a basic income, some rationing and judiciousness is needed to ensure not too much taxpayer money is wasted.

Universal Basic Income – Why It Can’t Work in America

From Bloomberg: A Basic Income Is Smarter Than a Minimum Wage

The Universal Basic Income (UBI) is one those economic debate topics that will never be resolved to anyone’s satisfaction, unlike Newtonian gravity, for example, which with the exception of possible quantum gravity, has long been long settled. That’s the problem with the social sciences. Excluding fundamental concepts (comparative advantage, trade, supply vs. demand), pretty much everything else is subject to debate, whether it’s supply side vs. demand side, govt. debt vs. GDP growth, minimum wage vs. flexible wage, fair tax vs. flat tax vs. progressive tax, free trade vs. protectionism, or the best interpretation of the Laffer and Philips curves. Even studies aren’t good enough, because if you look hard enough, you’ll likely find the same number of studies that oppose your viewpoint, and it seems all studies in the social sciences are beset by methodological flaws, if not outright fabrication. The best anyone can do is present evidence, and it’s up to policy makers to choose whether or not to heed said economic these models. In the Case of Bush and Reagan, they went with supply-side (Mundell and Laffer). Obama went with demand-side (Keynes, Solow, and Krugman). Even when something seems certain (Enron’s fraud, for example) doubts can remain – was the trouble with Enron that its management didn’t tell us enough—or that analysts failed to make sense of the data it supplied?

Some try to re-frame it as an immigration issue – ‘either basic income or immigration’ – but eliminating immigration won’t magically make the basic income workable.

A prosperous country with a small citizenry, such has the UAE, could probably sustain a UBI. In 2013, the UAE’s total population was 9.2 million, of which 1.4 million are Emirati citizens and 7.8 million are expatriates. The gross domestic product of the UAE for 2013 was
$402.3 billion, with a nominal GDP per capita of $43,000. Sweden, Norway, and Luxembourg rank much higher, with a nominal GDP per capita of around $90,000. For the UAE, after excluding the guest workers, the per capita GDP surges to $285,000. The USA ranks in the middle at around $55,000 per capita. A basic income for every adult American citizen at $10,000 a year would cost $2.45 trillion annually, or about 13% of GDP. In the case of the UAE, a $10,000 a year basic income for every citizen (including children) would cost just $14 billion, or only 3.5% of GDP. A low or average GDP per capita in an otherwise very large economy implies a Pareto distribution of only a small percentage of citizens producing the bulk of economic value, which is why a UBI may work for the UAE but not America.

Some approaches to the UBI:

High-IQ basic income (a basic income only applicable to individuals of a sufficiently high IQ)

The high-IQ basic income would have the effect of only making the program applicable to only a small percent of the population (the most economically productive and or the potential to be productive), which seems more fair than giving it to everyone indiscriminately. This would dramatically lower the cost relative to GDP and guarantee the highest ROI from the program.

Mandatory birth control for low-IQ recipients of the UBI, with revocation of UBI for repeat offenders.

Credits (food, housing, gas, and electricity credits) instead of cash. the former much less susceptible to abuse, unlike cash which may be squandered on non-essentials.

A UBI is also similar to negative tax rate, which due to entitlement spending already exists for about 20-40% of the population (people who consume more in benefits than they produce in taxes):

A UBI without preconditions will only compound entitlement spending, because what is to stop people from wasting their basic income on frivolities while also drawing from existing welfare programs.

Many people may agree to work for less than the current minimum wage, and on more flexible terms, if they’re supplementing a guaranteed income, not scrambling to avoid having to beg for food.

But this is not the case. Somewhat counterintuitively, the poorest are not starving to death; in fact, they’re more likely to be obese than higher income earners:

More than forty percent of student loan borrowers are not making payments, sometimes even when they are financially capable. So that’s effectively like a ‘basic income’ as far as education is concerned. Similar patterns are observed with healthcare, with medicare, medicaid, and free emergency room treatment for millions of Americans who are uninsured and cannot afford to pay.

The assumption that a UBI, on top of existing welfare programs, will make people more compelled to work seems like a stretch.

Ultimately, given existing negative effective tax rates and the surge in entitlement spending, we’re probably much closer to something resembling a ‘basic income’ than many realize.

The Daily View: ‘Longest Depression’, Basic Income, Pinterest

From Huffingtonpost: Future Economists Will Probably Call This Decade the ‘Longest Depression’

Sounds like goalpost moving, where slightly mediocre growth becomes a ‘depression’.

The 2008 recession, while deep and sudden, was narrow, only lasting about 16 months until growth picked up, where it has remained. Hardly a decade.

Also, the authors seem to be cherry picking the bad data (weak wage growth, China, shrinking labor force) and ignoring the good data such as exports, consumer spending, robust S&P 500 profits & earnings, technological innovation, stock market & real estate gains, etc.

Even China is not settled. It’s too early to say there is actually a mess. There is evidence maybe growth is glowing, but it’s far too early to call it a catastrophe, even though the doom and gloom media has been calling it one for the past year. The debate is over 7% GDP growth vs. 5.5%.

Yeah, if you pick the absolutely worst data out of all of the metrics, the economy is going to look worse than it really is. That’s why averages are so important.

From Why America is Not in Decline

Right now, we’re in a Goldilocks economy of modest growth, no stagnation, tame inflation, and no meaningful economic headwinds. Some pundits like Summers and Krugman bemoan how America’s economic growth is too anemic, especially compared to the 40′s and 50′s, and that its best days are behind it, but as I show here and in the graph below, US GDP growth has broken from the pack, since 2008 exceeding pretty much all g-20 nations. Yeah, 2-3% GDP growth ain’t great, but compared to pretty much everywhere else that has either no growth (Japan, UK, France) or high-inflation growth (Turkey, India, Brazil) – it’s pretty good.

And that is especially impressive for an economy as large as America. We’re never going to get back to 40′s era growth, and that’s fine. Law of large numbers and diminishing returns. It’s harder to grow an economy that is 5x larger at the rate it was growing when it was 5x smaller.
Post-2008 GDP growth is pretty much back to the historical average, or at least back to where it was in the late 90′s and 2000′s. Not hyper-speed growth, but certainty not recessionary.

Recent real GDP doesn’t deviate too much from historical performance:

Real US GDP growth is roughly back to where it was between 1997-2007, and no one was complaining about stagnation back then. It seems like the terms ‘depression’ and ‘recession’ have now been redefined by the left to mean ‘economy is not how we want it to be’ – too much wealth inequality and not enough job creation.

Inevitably, the UBI (universal basic income) comes up in any online economics debate. The UBI is a bad idea that refuses to die. When you consider SNAP is being abused to buy drugs, cigarettes, and alcohol, It’s implausible how a UBI without preconditions could work, which is why I propose the high-IQ basic income – or at least drug testing and or mandatory birth control/abstinence or even sterilization, to prevent further abuse of these programs. As to be expected, civil libertarian and other leftist types play the ‘Nazi’ or ‘racism’ card, but when your lifestyle involves public goods and or has externalities, your personal freedom becomes secondary.

EBT Cards Used in Illegal Drug Trade

Attorneys in the case say that the EBT cards are “a common currency for drugs.” The problem according to Sam Adolphsen, chief operating officer for the Maine Department of Health and Human Services, is that “the state cannot deactivate benefits regardless of how many times recipients lose their cards or say they are stolen.”

At FGA we have cataloged plenty of examples of the fraud that plagues America’s welfare system. The use of taxpayer assistance for the purchase of illegal drugs is possibly one of the worst abuses we’ve seen. Unfortunately, “the two crimes increasingly intersect.”
Adolphsen mentioned that “the presence of EBT cards in drug busts has become so commonplace that welfare fraud investigators at DHHS now regularly check the arrest logs in local newspapers for drug crimes and cross-reference suspects to see if they are also receiving state welfare benefits.” When agents from the Maine Drug Enforcement Agency find these cards, “they report that fact back to DHHS so the fraud unit can investigate.”

Entitlement spending is so high that it almost acts like a UBI.

The lowest quintile of households have a negative effective tax rate:

Some estimates are that a UBI would cost $3 trillion vs. $860 billion for social security. But the problem is existing entitlement spending programs won’t just go away with the ratification of a UBI. If people squander their UBI on non-essentials, which is guaranteed to happen as we’ve seen with EBT abuse, the government will have to step in and provide those essential services as they are doing already. Proponents of the UBI make the charitable, unrealistic assumption that the average American is as careful with money as they are. A UBI without preconditions would just compound existing entitlement spending.

From Businessinsider: Insiders say what’s going on inside $11 billion Pinterest — and it’s not all good

Businessinsider is a notorious click-bait aggregator, spinning minutia into hype and ad impressions.

Reminds be of the Uber California court case they hyped last year, that predictably didn’t go anywhere. Businessinsider incorrectly reported that the ruling would affect all California drivers:

It’s left to Judge Edward Chen to decide whether California Uber drivers will be covered by a federal class-action lawsuit that threatens to reclassify the entire state’s Uber-driver workforce as employees of the company.

Even though the judge ruled the driver was an employee, nothing really came of it, as I correctly predicted. The reason is because the ruling only affected the one employee, and Uber has prevailed over similar lawsuits before. Just another example of this blog being right more often than not.

The ruling does not apply beyond Ms. Berwick and could be altered if Uber’s appeal succeeds. Uber has also prevailed in at least five other states in keeping its definition of drivers as independent contractors.

That was seven months ago and Uber didn’t die, much to the disappointment of the left.

Some people so badly want for this to be 2000 all over again they they have to make things up. They have to turn molehills into mountains.

Back to the Pinterest article:

The visual scrapbook platform should be printing money. Its predominantly female audience browses Pinterest’s various boards for inspiration about their next fashion purchases, vacation destination, or on how to decorate a house — and they also act as free brand representatives by “pinning” their favorite products, making them visible to others.

It may come as a surprise to some, but making money is not important. That’s why so many people lost their shirts shorting the ‘unprofitable‘ Amazon.com

Rather, it’s the the demonstrated ability to make money, which is more important. Should the time come to turn on the advertising money printing press, Pinterest and Snapchat, like Facebook, should have no difficulty making money. There’s already a huge line of advertisers ready to plow hundreds of millions of dollars into Pinterest ads. Investors are patient, knowing that Pinterest will start printing money when the time is right. But right now, Pinterest is still building the userbase and perfecting their ad platform. Like Facebook, Pinterest’s profit margins will be extremely high, and it would not surprise me if this company is worth $50 billion soon. But right now, Pinterest, like many web successful web 2.0 companies, is more interested in taking its time to build positive user and advertiser experience, than milking every user for every last dime.

No Love For The High-IQ Basic Income

Yesterday I wrote an article defending MGTOW, which I later re-wrote because the original didn’t meet my quality standards.

It’s funny but not too surprising how some people get worked-up about the idea of a high-IQ basic income (and the topic of IQ in general), so much so that facts and logic go out the window, making it easy to counter the doubters because there is hardly any actual argument to counter – just emotion and popular leftist misconceptions about IQ that are easily refuted.

IQ is more important than many people want to believe/accept. In our increasingly competitive and technological economy and society, more than ever whether you succeed of fail/life outcomes seem to be influenced by IQ, with smarter people tending to rise to the top. The reality that some people by virtue of IQ are perhaps ‘better’ than others and therefore more likely to succeed is liable to provoke anger as this goes against the egalitarianism that teachers, culture and parents have brainwashed all too many into believing, and rather than accept these uncomfortable truths some people prefer to lash out at the messenger.

For those who don’t know, a summary of the high-IQ basic income and why I support it:

The high-IQ basic income is like a government Mensa that pays its members. It would cost less and have a higher ROI than a universal basic income (UBI). Depending on the requirements, only around 5% of the country would be eligible, so it would cost much less than a UBI. The advantage is that the money would have a higher ROI than a UBI because high-IQ people tend to be more productive and creative and therefore would put the money to use in ways that could boost the economy and improve society, such as starting businesses, coding, tinkering, producing art, and writing – activities that otherwise may not be possible if these smart people are too busy trying to make ends meet than thinking, thinking, and creating.

Some counter arguments I encountered:

Poor people tend to have lower IQs because they have less access to high-quality education, live in areas with higher pollution, the compounding effects of poverty, etc. Solving these problems with UBI and some other programs/policies would have a much higher ROI, no?

Not quite so, given the evidence that IQ is heredible, stable throughout life, and unmalleable. From Wikipedia:

Various studies have found the heritability of IQ to be between 0.7 and 0.8 in adults and 0.45 in childhood in the United States.[6][9][19] It may seem reasonable to expect that genetic influences on traits like IQ should become less important as one gains experiences with age. However, that the opposite occurs is well documented. Heritability measures in infancy are as low as 0.2, around 0.4 in middle childhood, and as high as 0.8 in adulthood.[10][20] One proposed explanation is that people with different genes tend to seek out different environments that reinforce the effects of those genes.[9]

A 1994 review in Behavior Genetics based on identical/fraternal twin studies found that heritability is as high as 0.80 in general cognitive ability but it also varies based on the trait, with .60 for verbal tests, .50 for spatial and speed-of-processing tests, and only .40 for memory tests.[6]

In 2006, The New York Times Magazine listed about three quarters as a figure held by the majority of studies,[21] while a 2004 meta-analysis of reports in Current Directions in Psychological Science gave an overall estimate of around .85 for 18-year-olds and older.[10]

And from Arthur Jensen’s infamous paper How Much Can We Boost IQ and Scholastic Achievement?, summarized by Wikipedia:

.[6] IQ tests are reliable measurements of a real human ability — what people generally describe as “intelligence” — that is important to many parts of contemporary life. Intelligence, as measured by IQ tests, is about 80 percent heritable. Intelligent parents are much more likely to have intelligent children than other parents. Remedial educational programs have failed to raise the measured intelligence of individuals or groups. Indeed, one of the most inflammatory sentences is the opener: “Compensatory education has been tried and apparently has failed.” The article generated extensive discussion and controversy both in the popular press[7] and in the academic literature

From Jensen’s paper, here are two passages that show how efforts to boost IQ through environment have failed:

The left keeps getting the cause and effect wrong. It’s like arguing that if doctors do enough circumcisions babies will eventually be born without foreskin.

Someone else counters:

you realize that one of the main reasons most people want basic income is specifically to provide for ‘other’ 95%… so that we don’t have to basically cull the population?
I am someone who is reasonably sure that I will be able to find gainful employment as long as such exists, but I have no illusions that my neighbors will just quietly starve to death with their families without causing me any undue inconvenience when I remain the only one on my block still able to afford food.
When such a scenario occurs, I can see only 3 general outcomes -
1) my neighbours burn my nice house down on my head, kill me and take my stuff
2) my private, just a bit less-starving or possibly automated, army kills them all
3) we all find a way to get them fed too even though the bother of proving them with the necessities of life is always going to be a net loss for me.
Of those 3 general outcomes, the third one seems less shit.
Tl,DR – Not arguing for UBI here, but any solution that provides for a mere 5% of humans is not a solution, it’s just epic fail. Our current system is already likely to provide for more than that.

A distinction must be made between a UBI, which is universal and without preconditions, and a ‘basic income’, which could have preconditions. A UBI has a much higher likelihood of failing than with preconditions, as I argue here. Inflation-adjusted entitlement spending keeps growing, and a UBI without preconditions would simply compound the existing spending problem.

I think most Americans, who will not qualify for the high-IQ basic income, will see the merits of the program rather than revolt. Most people accept that professional athletes, for example, make more money because they have a scarce skill that society finds valuable; having a high-IQ is also valuable and a scarce resource, and while there are more high-IQ people than professional athletes, the income allotted to each individual who qualifies under the high-IQ basic income would be much less than the paycheck that, say, Alex Rodriguez earns.

Others liken the high-IQ basic income to Nazism, but in all my reading I don’t recall the NSDAP having such a program. The Nazis were more concerned about racial purity than intelligence; second, the Nazis wanted purity – meaning expunging from society those who didn’t meet their strict standards. Our approach is much more humane – to create optimal socioeconomic environments for the cognitively exceptional – not to forcibly remove the less intelligent from society.

The Flynn Effect also came up as a rebuttal, as evidence for how environment can boost IQ scores. Not so fast. There is no actual consensus among the psychometrician community that the alleged rise in IQ scores is attributable to better test-taking ability or true gains in intelligence. It could be that people are getting better at taking the test due to better nutrition, but this does not prove their cognitive capacity (IQ) has increased. Kids who aren’t hungry will score better, which could explain why scores for the lower-end of the IQ distribution and in third world countries have risen, but this is not proof kids are smarter. They could just be operating at their full’ cognitive potential, instead of maybe 75%, thanks to a better environment.

There is evidence that the Flynn Effect has tapered-off in 1st-world countries, suggesting that a good environment will allow an individual to live to his or her full cognitive potential, but not exceed it:

The end of the Flynn effect? A study of secular trends in mean intelligence test scoresof Norwegian conscripts during half a century

The present paper reports secular trends in the mean scores of a language, mathematics, and a Raven-like test
together with a combined general ability (GA) score among Norwegian (male) conscripts tested from the mid
1950s to 2002 (birth cohorts c1935–1984). Secular gains in standing height (indicating improved nutrition and
health care) were also investigated. Substantial gains in GA were apparent from the mid 1950s (test years) to the
end 1960s–early 1970s, followed by a decreasing gain rate and a complete stop from the mid 1990s. The gains
seemed to be mainly caused by decreasing prevalence of low scorers.

There is some evidence IQ scores are actually declining:

British teenagers have lower IQs than their counterparts did 30 years ago

Tests carried out in 1980 and again in 2008 show that the IQ score of an average 14-year-old dropped by more than two points over the period.

Among those in the upper half of the intelligence scale, a group that is typically dominated by children from middle class families, performance was even worse, with an average IQ score six points below what it was 28 years ago.

The trend marks an abrupt reversal of the so-called “Flynn effect” which has seen IQ scores rise year on year, among all age groups, in most industrialised countries throughout the past century.

Flynn effect could also be endogenous, meaning that while IQs may be higher, IQ scores don’t rise throughout the persons’s life to suggest exogenous factors. This means Jensen’s argument about the futility of trying to boost IQ scores through intervention still holds. National IQ scores could be boosted through assortative mating, but environment-based programs for ‘first world’ countries are of limited effectiveness at boosting cognitive capacity and is the wrong approach. Environment will help an individual reach their full cognitive potential, but not exceed it, which is what the whole idea behind the high-IQ basic income is about. We already have the resources to challenge the cognitively average, but the cognitively exceptional are often underserved by society, especially in the public schools, where only a tiny percentage of the federal education budget is allotted to gifted programs.

The squandering of America’s most important resource, cognitive capital:

Screenshot taken from: Victims of Public Education By Donald Kordosky

Related:

The Great Debate: Automation, Jobs, Wealth Inequality, Basic Income, Post Scarcity

The Great Debate: Automation, Jobs, Wealth Inequality, Basic Income, Post Scarcity

Billionaire Cartier Boss Warns of Imminent Uprising, ‘Envy, Hatred’ of Poor People

There is also an accompanying video:

The 65-year-old Rupert, who has an estimated net worth of about $7.5 billion, seemed deeply perturbed about the impending disappearance of the middle class due to robotics and artificial intelligence, which he said would “put hundreds of millions of people out of work.”

An example of the Luddite Fallacy. Replace ‘robotics and artificial intelligence’ with ‘internal combustion engines’, etc. New technologies create new jobs for all skill levels, whether it’s automobile engineers to people who wash your car. For example, every major brand has a Facebook page, and these companies hire people to oversee these pages by removing spam and answering questions – a job that didn’t exist as recently as five years ago.

Tell me how the tens of thousands displaced by McDonalds automated ordering and kitchens will be equally replaced by robot related jobs (hint: they won’t, and also not everyone is able to upskill so easily)
What do you say to the 60-200k/year 50-60 age truck driver about to be displaced who’s not intelligent and good at learning? Just pay 50-200k to go to college with no guarantee of a job, or even graduation given the low likelihood you can pass the classes, and still expect less pay than you currently earned pre-automation.

What happened to the buggy driver, the blacksmith, the butter churner? New technologies create new jobs. There are tens of millions of people employed in the IT sector – jobs that didn’t exist 30 years ago. That’s called structural unemployment…something that even liberal economists accept as economic reality, and ultimately desirable in the long-run.

However, one could also argue that eventually the fallacy will become reality if the IQ threshold required to perform the least intellectually demanding work rises high enough that it excludes a sufficiently large percentage of the population; being that the Luddite Paradox is based only on empirical data, there is no immutable ‘law’ that says that can’t happen.

A gloomy scenario, Productivity and Employment — A Structural Change?

Increasing automation could in theory result in a permanent underclass of millions falling between the cracks, either in poverty or teetering on it.

Then question comes up, shouldn’t we offer a basic income to help people who are left behind?

How about a high-IQ basic income and welfare contingent upon some form of birth control (eugenics). An unconditional basic income just going to perpetuate the problem by creating generations of dependents.

The concept if the high-IQ basic income is discussed here, along with other proposals to helps America’s most important resources, cognitive capital:

A possibility is a high-IQ basic income. It would be like a government Mensa that pays its members, and anyone from rich to poor is eligible for payments provided they meet the IQ requirements. Depending on the requirements, only around 5% of the country would be eligible, so it would cost much less than a universal basic income (UBI). The advantage is that the money would have a higher ROI than a normal UBI because high-IQ people tend to be more productive and creative and therefore would put the money to use in ways that could boost the economy and improve society, such as by starting businesses, coding, tinkering, producing art, and writing – activities that otherwise may not be possible if these smart people are too busy trying to make ends meet than thinking and creating.

A basic income without preconditions seems ripe for abuse, the result being more entitlement spending. Some better ideas:

  • The high-IQ basic income
  • Welfare contingent upon birth control
  • A joint-venture between private companies, donors, and the government to fund the basic income, bypassing the taxpayer
  • A UBI-like program that replaces existing entitlement spending programs
  • Another concern by the left is, who will buy ‘stuff’ without a strong middle class; wouldn’t the economy fail?

    Last time I checked, there are 7 billion people in the world, of which only around 100 million constitutes ‘America’s middle class’. Then you have the Pareto Principle in that the richest 20% contributes 80% to consumer spending. B2B is also a major part of the economy. Companies are (and will) do doing just fine, even if middle class participation is lagging. The totality of the data – from record high exports, quarter after quarter of blowout profits & earnings, record consumer spending, surging stock prices, to rapid gains technological innovation – suggests that wealth inequality, as bad as it may seem, isn’t actually hurting the economy as measured by the data. The left wishes it were, but incantations of doom and gloom won’t make it so, sorry.

    “How is society going to cope with structural unemployment and the envy, hatred and the social warfare? We are destroying the middle classes at this stage and it will affect us. It’s unfair. So that’s what keeps me awake at night.”

    To invoke the Fermi Paradox, if it should happen, why hasn’t it? Maybe because people realize that revolting would make things worse, that as much as wealth inequality may suck, modernity and improving living standards borne out of free market capitalism is better than alternatives such as Communism *. Yes, wealth inequality keeps rising, but our dollars buy things that never existed decades ago, new products that have much more utility than old technologies. A $300 iPhone has considerably more utility than a 1960 TV set and rotary phone. Netflix costs $10-20 month, versus 20 cent movie tickets of earlier generations, but Netflix has much more utility in that you can watch pretty much any movie or show ever produced.

    So that is one resolution to the automation/job question, that improving living standards and ‘abundance’ wrought by technology will allow people who are permanently unemployed to live a relatively comfortable standard of living, even if they reside at the poverty line, through what is the ‘post-scarcity’ hypothesis.

    However, while automation is lowering prices for some goods, on the other hand, despite recent trends in automation, prices for other goods & services like healthcare, education, phone bill, day care, cable & internet, have risen when adjusted for inflation, a phenomena called bifurcated inflation. So while a computer is very cheap, the electricity, software, and internet required to make the computer functional will negate the inflation adjusted savings. The same for TV – the hardware is very inexpensive and the picture of good quality, but the cable bill is very high. The quality may be better, and there may be more features, but it won’t be cheaper, as illustrated by the crudely-drawn graph below:

    Microsoft Office is still expensive, 20 years later.

    Firms are not going to let their earnings fall due to automation and will make up the difference elsewhere, and that will come from ancillary services. Look at how much entitlement spending has surged in recent decades, despite the promise of lower prices through automation. Automation and robots will make some stuff cheaper, not not nearly enough to create the ‘post-scarcity’ economy many hope for.

    Ultimately, there are no universally accepted solutions and explanations for how rapid gains in automation will affect the economy and society, which is why this topic is the subject of so many impassioned online debates.

    * Edit: But how about the Nordic economic model, with programs such as universal healthcare? The problem is Nordic countries have a lot of private debt – a fact that is often glossed over by the left, and that universal healthcare is often not what it’s cracked up to be, with long waits. Nordic countries also have very high prices for goods that are otherwise cheap in America. The Nordic model may not be applicable for countries as large and populous as America.

    Related:

    No, it’s not time for a basic income
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