Basic income will be a punch in the air

[K. A. Pital]

For the poor, the situation will differ depending on who you are. It will certainly be more equitable, and a large part of the underclass will make use of paid services (rent, communications, protection) that they were formerly unable to use. This expansion will make these services more pricey, overall, but the poorest will be the greatest winners. Those that worked for a minimal income will suddenly find many things more expensive.

[Fingolfin_Noldor]

Sometimes I wonder if a seller of a certain good were to extract maximum margins for a good by squeezing its suppliers while selling that good at a lower price while making a profit, are we indirectly exporting poverty especially considering many suppliers are working in the third world?

[Arthur_Tuxedo]

The author of the article in the OP seems to be engaging in a no-limits fallacy: Because rent-seeking has perpetuated poverty despite historical gains in productivity, it will always expand to consume any attempts at poverty reduction. It also ignores that a lot of the consequences of Ferguson-style rent-seeking is a direct result of peoples' inability to pay. For instance, your car gets towed and the city wants $400-700, which you can't pay. They sell your car, which means you can't get to work so you lose your job and can't get another one. You file for benefits and the government is now on the hook for many thousands of dollars over a period of years and also loses out on tax revenue, and you are now trapped in a self-reinforcing poverty cycle from which there is no escape. With a basic income, it would be much easier to come up with the money, and people wouldn't be so run down and desperate that they would park illegally and get towed in the first place. While there might be some increase in fines if people could better afford them, these horror stories would be a lot less common.

[Guardsman Bass]

One could reasonably argue that we are not "post-scarcity" in food given that there are still a lot of people spending a third of their income on it.

A better example of "post-scarcity" economics would be, say, drinkable water in the US. If you're willing to drink tap water, water is damn near free, and about the only way to die of thirst is if someone locks you in a closet or strands you in the desert.

The "water" example fits with what I was talking about, about how "post-scarcity" really means "so cheap that it's a trivial expense for most people". There is a giant, mostly invisible-to-consumer water business that costs billions in the form of the utilities. It's the same thing with Stas Bush's "I didn't pay for my apartment" nonsense - just because he didn't see a bill every month doesn't mean it was "free". He "paid" for it in the different allocation of resources by the command economy of the Soviet Union, likely in much less efficient form than in western countries.

Slave economies had a market, it simply decided that labor was part of an employer's capital budget and tried to legally enforce that.

Why do you think I qualified that by referring to the enslaved population, who were denied the right to use and sell their labor as they might have wanted to?

Yes, there were multiple reasons why someone might want to leave the Soviet Union. That doesn't change the point that their economy was so unattractive that they had to forcibly restrain exit by segments of their population, unlike the "forcibly restrain entrance" "problem" the market economies of the West had.

[Simon_Jester]

Market economics predicts that whoever keeps selling cell phones at the old price will outbid the competition, win a bigger market share, and make all the greedy fools he's competing with look like idiots. Impoverished idiots, because he's selling phones and they aren't.

Actually, market economics predicts no such thing. There is nothing in economics that would suggest the equilibrium price is immune to a demand shock and will stay the same by the mechanism you describe. But even if we do away with equilibrium completely and say the market is in a state of disequilibrium, it becomes even more clear that nothing so simplistic will happen when demand massively expands.

That graph looks the way it does because for the commodity in question the supply curve is linear with respect to price, as maddoctor points out. In many cases, I would expect that the price of a "rent" commodity is flat, or nearly so, with respect to the quantity that are being called for... because the number of people who need to product or 'service' is always 100% of the population anyway.

For example, the supply curve for a toll booth on a pre-existing road isn't going to be a sharp linear increase like the one in the graph, because there is limited incentive to raise tolls purely in response to higher demand for the road's use. If anything, the function is likely to be a Heaviside-style stairstep. Below some critical level of output quantity it doesn't make economic sense to even maintain the toll bridge, but above it, you make an increasing profit margin just by charging people the same sum for crossing, at least up until the point where the bridge becomes clogged with traffic.

So I think that in many cases, the curve is either nonlinear (increasing logarithmically, say), or it's going to be a linear function with a y-intercept well above zero at the "price" axis. For example, the impoundment fee for a car, if only one car has ever been impounded, is probably not zero. The fee may well not get much higher or lower as more cars are impounded. And it's certainly not the case that the "quantity" of impounded cars automatically doubles when the police can get away with charging twice as high a fee for the impoundments.

[This argument may reflect an error on my part; I am not experienced in determining the meaning of concepts like 'supply' and 'demand' as applied to cases like the police impounding your car and you paying a fee to get it back]

One could reasonably argue that we are not "post-scarcity" in food given that there are still a lot of people spending a third of their income on it.

A better example of "post-scarcity" economics would be, say, drinkable water in the US. If you're willing to drink tap water, water is damn near free, and about the only way to die of thirst is if someone locks you in a closet or strands you in the desert.

The "water" example fits with what I was talking about, about how "post-scarcity" really means "so cheap that it's a trivial expense for most people". There is a giant, mostly invisible-to-consumer water business that costs billions in the form of the utilities. It's the same thing with Stas Bush's "I didn't pay for my apartment" nonsense - just because he didn't see a bill every month doesn't mean it was "free". He "paid" for it in the different allocation of resources by the command economy of the Soviet Union, likely in much less efficient form than in western countries.

Agreed, although I have no idea whether or not Soviet housing allocation was more or less efficient than the West's, or even how to measure such a thing in order to prove the claim.

My point is that we're not there for food, food is not a trivial fraction of total expenses for most people. By contrast we are there for drinking water; the only parts of the developed world where anyone worries about access to potable water are those where physical resource limitations impose a true limiting "scarcity" on water, in the same way that they do for gold bricks.

Slave economies had a market, it simply decided that labor was part of an employer's capital budget and tried to legally enforce that.

Why do you think I qualified that by referring to the enslaved population, who were denied the right to use and sell their labor as they might have wanted to?

Sorry, missed that subtlety.

Yes, there were multiple reasons why someone might want to leave the Soviet Union. That doesn't change the point that their economy was so unattractive that they had to forcibly restrain exit by segments of their population, unlike the "forcibly restrain entrance" "problem" the market economies of the West had.

True, although that was also the case when they had a fairly free market in the late Czarist era, so it may be a comment more on "First World problems" versus "Second/Third World problems," and less on socialism versus capitalism.

[K. A. Pital]

It's the same thing with Stas Bush's "I didn't pay for my apartment" nonsense - just because he didn't see a bill every month doesn't mean it was "free". He "paid" for it in the different allocation of resources by the command economy of the Soviet Union, likely in much less efficient form than in western countries.

You are really not well qualified to talk about economics if you fail to realize the difference between a direct distribution system and a market system. The fact that I do not pay does not mean it is free from the standpoint of society, but it is not a paid service for me or anyone else, there are no direct payments to be made which makes it accessible to people regardless of income. And guess what? The major difference for a poor person is whether he has to pay upfront, pay at the point of service. It's the same thing with universal insurance and the system where millions are uninsured because they lack the cash to pay directly. What is more beneficial for the poor, who are the subject of this thread, paying or not paying?

I hope at some point in your life you'll figure that out, genius.

That graph looks the way it does because for the commodity in question the supply curve is linear with respect to price

That is the case for the majority of goods (which is why supply and demand curves are a good approximation for market behaviour at all). If we are talking about aggregate demand in society rising - which will be the case with universal basic income - it is logical that the reaction will not be confined to only a single good.

I am not experienced in determining the meaning of concepts like 'supply' and 'demand' as applied to cases like the police impounding your car and you paying a fee to get it back

Let me just tell you that bribes to policemen on the roads to pass, avoid having to go sign the protocols and release your car if it had been taken do rise with the rise of incomes, and it is quite a proportional rise. That's just practical experience, but I do fail to see what's the difference between a general rise in incomes and, well, a general rise in incomes that is triggered by universal income.

[Ralin]

It's the same thing with Stas Bush's "I didn't pay for my apartment" nonsense - just because he didn't see a bill every month doesn't mean it was "free". He "paid" for it in the different allocation of resources by the command economy of the Soviet Union, likely in much less efficient form than in western countries.

You are really not well qualified to talk about economics if you fail to realize the difference between a direct distribution system and a market system. The fact that I do not pay does not mean it is free from the standpoint of society, but it is not a paid service for me or anyone else, there are no direct payments to be made which makes it accessible to people regardless of income. And guess what? The major difference for a poor person is whether he has to pay upfront, pay at the point of service. It's the same thing with universal insurance and the system where millions are uninsured because they lack the cash to pay directly. What is more beneficial for the poor, who are the subject of this thread, paying or not paying?

I hope at some point in your life you'll figure that out, genius.

He's saying that you personally paid for it in the form of a crappier apartment (and various other goods and services) than your American, Canadian and west European counterparts because of the nature of the Soviet economy.

[K. A. Pital]

He's saying that you personally paid for it in the form of a crappier apartment (and various other goods and services) than your American, Canadian and west European counterparts because of the nature of the Soviet economy.

Hey moron, let me make this perfectly clear. A poor person in the First World has no chance to get an apartment for free (if he has, that is the same direct distribution system which imposes extra costs on the rest of society).

The subject of this thread are poor people. I said that the direct distribution system solves the problem of poor people not being able to receive a service, and solves it better than handouts, because it directly supplies any person regardless of income with a tangible good that this person would otherwise be unable to have, and it eliminates the trade process inbetween, where the extra cash can be simply leeched out by various rent-seekers.

This is not a question of whether I 'paid' for it in the form of other goods being inferior, and frankly, that is not the point I am making.

[madd0ct0r]

I am not experienced in determining the meaning of concepts like 'supply' and 'demand' as applied to cases like the police impounding your car and you paying a fee to get it back

Let me just tell you that bribes to policemen on the roads to pass, avoid having to go sign the protocols and release your car if it had been taken do rise with the rise of incomes, and it is quite a proportional rise. That's just practical experience, but I do fail to see what's the difference between a general rise in incomes and, well, a general rise in incomes that is triggered by universal income.

That would also agree with my experience, black market and corruption, especially in the context of traffic cops where they are unlikely to deal with the same person twice (no relationship to maintain) track the short term expectation economic situation closely.

This does make me recall that the 'favour economy' tends to run along barter instead of monetry. An example would be 6 months of english lessons for someone's daughter in return for a police case being dropped. Barter should be relatively proof against income changes (which is why the poor with fluctuating incomes often resort to it). That doesn't solve the problem of the OP, since Basic Income has to be distributed via cold hard cash.

It does suggest that co-ops, local banks, building societies and other age old financial defenses against rent seeking might well be useful once again.

[Simon_Jester]

It's the same thing with Stas Bush's "I didn't pay for my apartment" nonsense - just because he didn't see a bill every month doesn't mean it was "free". He "paid" for it in the different allocation of resources by the command economy of the Soviet Union, likely in much less efficient form than in western countries.

You are really not well qualified to talk about economics if you fail to realize the difference between a direct distribution system and a market system. The fact that I do not pay does not mean it is free from the standpoint of society, but it is not a paid service for me or anyone else, there are no direct payments to be made which makes it accessible to people regardless of income. And guess what? The major difference for a poor person is whether he has to pay upfront, pay at the point of service. It's the same thing with universal insurance and the system where millions are uninsured because they lack the cash to pay directly.

As an illustrative example, in developed nations you don't pay for police protection. The state does. That doesn't mean it's free, but there is no direct financial transaction between you and the police department. The fact that you indirectly pay money to a third party which elects to give some of it to the police is irrelevant; you still get the protection whether you had money to pay the tax collector or not.

You can't even forfeit your police protection by refusing to pay your taxes- you can get thrown in jail but you still get police protection.

That graph looks the way it does because for the commodity in question the supply curve is linear with respect to price

That is the case for the majority of goods (which is why supply and demand curves are a good approximation for market behaviour at all). If we are talking about aggregate demand in society rising - which will be the case with universal basic income - it is logical that the reaction will not be confined to only a single good.

I am not experienced in determining the meaning of concepts like 'supply' and 'demand' as applied to cases like the police impounding your car and you paying a fee to get it back

Let me just tell you that bribes to policemen on the roads to pass, avoid having to go sign the protocols and release your car if it had been taken do rise with the rise of incomes, and it is quite a proportional rise. That's just practical experience, but I do fail to see what's the difference between a general rise in incomes and, well, a general rise in incomes that is triggered by universal income.

[/quote]Er, before I go reply to this at length, it sounds like you are talking about policemen who collect bribes individually and (according to official policy of their department) illegally. In that case, yes it will make sense for the corrupt police to calculate the size of the bribe they demand, and to base it on their victim's ability to pay.

What happens in the US does not involve this very much. Most such police 'robbery' in the US is done with at least the pretense of a serious, lawful, orderly system... that just happens to have ruinous consequences for the very poor that are merely irritating for everyone else. Much as Anatole France observed: "In its majestic equality, the law forbids rich and poor alike to sleep under bridges, beg in the streets and steal loaves of bread."

In the context of this kind of abuse, the amount of money that is being extracted from a poor target has to be fairly predictable, and it cannot be so high that richer persons will raise a complaint. That is, you can criminalize poor people sleeping under bridges, but you cannot criminalize them sleeping under tents, because there are too many rich people who like to go camping and will be offended by that. You can charge five hundred dollars to get a car out of police impoundment (that is, out of having been towed away to a lot under police control as punishment for breaking a parking violation). But you can't charge two thousand dollars, because there are too many people with at least some political leverage who will think two thousand dollars is excessive.

The supply curve is a descriptive function that relates P, the price per unit, to Q, the number of units that are going to be purchased, by asking "what price will the producer offer the goods for, given this level of demand?" The exact shape of the price curve does NOT have to be linear for this to work. The shape of the price curve simply cannot be predicted without either empirical data, or actually looking at the details of what's going on in that particular industry.

In the car-impoundment 'industry,' there are external factors limiting how much the police can charge, because it has to be low enough that powerful local figures don't start complaining of the extortion. And the price has to be basically uniform for everyone, or at least uniform for everyone not rich enough to keep a lawyer on retainer... which includes quite a few people that have at least limited political influence at the local level.

As a result, the price per unit may increase only very weakly, or not at all, when you increase the number of units (that is, the number of cars being impounded). And the supply curve may very well not shift, or shift only slightly, when the poor start to get richer, unless everyone else starts to get richer too.

That's why such things are so pernicious- they become specifically harmful under conditions of severe income inequality, because they are the equivalent of the laws forbidding the poor to sleep under bridges. They are invisible to the successful and powerful man, but extremely onerous to the poor and powerless.
___________________________

Now, to take an alternate example of a situation where your argument is totally valid- let's talk about, say, math tutoring. At the moment there are lots of low-income people who cannot afford to even think about hiring a math tutor for their children, but who would if they could. With a guaranteed minimum income, they could afford that- the demand curve rises on the graph because more people are bidding higher for the tutors' time.

On the supply curve this will result in a move to a higher price regime, and in this case your prediction would be correct.

The argument that you may have missed is that for many of the specifically rent-seeking economic agents that form a trap of inescapable poverty for the very poor... Their ability to raise their rates is limited by external factors, or can be, with the result that making a modest-sized adjustment to the poor's demand curve actually can have a large impact on the equilibrium quantity, without much impact on the equilibrium price.

[Me2005]

Hey moron, let me make this perfectly clear. A poor person in the First World has no chance to get an apartment for free (if he has, that is the same direct distribution system which imposes extra costs on the rest of society).

The subject of this thread are poor people. I said that the direct distribution system solves the problem of poor people not being able to receive a service, and solves it better than handouts, because it directly supplies any person regardless of income with a tangible good that this person would otherwise be unable to have, and it eliminates the trade process inbetween, where the extra cash can be simply leeched out by various rent-seekers.

This is not a question of whether I 'paid' for it in the form of other goods being inferior, and frankly, that is not the point I am making.

I've worked with apartment-subsidy programs in the US, so yes, they do exist. The problem is exactly as you say though - you only get the apartment (free or significant subsidy) if you either A) continue to live there, despite possibly being further from your place of work or B) you earn less than an arbitrary amount; and earning one cent more disqualifies you from the subsidy and kicks you into the regular marketplace, where you need to pay 200%-400% more (Around here; I hear in NYC and California it can be much worse) for an equivalent dwelling. The arbitrary amount appears to be such that you'll end up loosing money if you're in the regular market, and it's likely that you loose also tens of thousands in additional aid from other programs as the "arbitrary cutoff points" tend to be the same.

It makes it so the poor are heavily incentivized to earn less that that arbitrary amount or suddenly pay significant sums on services they're used to getting for free/cheap. We really need a gradual come-down from full subsidy to none as your earnings increase and I'm not sure a basic income provides that. I'd also be worried that a basic income would just get absorbed into the regular spending of the individuals. So despite theoretically being able to save some cash for a rainy day, the exact same emergency debt-spiral scenarios outlined above would continue to happen.

[salm]

Would it make sense to combine basic income with laxer labor laws? I know that in the US it is pretty easy to hire and fire people but in a lot of Europe it is very difficult.
Now, if everybody had guaranteed income for basic needs like food, clothing and shelter it wouldn´t be that necessary to protect people from getting fired.
Since robots might take a lot of jobs anyway it might be good to introduce some sort of system that encourages rotating employees somehow and combine that with more education later in life.
For example you work in your job for a couple of years, Peter Principal your way to your position of incompetence, get fired, go to university in order to correct this incompetence and then come back 3 or so years later with improved skills in whatever you sucked at.
Obviously this education would need to be covered by basic income as well.

[Ralin]

Would it make sense to combine basic income with laxer labor laws? I know that in the US it is pretty easy to hire and fire people but in a lot of Europe it is very difficult.
Now, if everybody had guaranteed income for basic needs like food, clothing and shelter it wouldn´t be that necessary to protect people from getting fired.
.

One of the better basic income arguments is heard is that it would give people more ability to toss the finger to bad employers and job offers and be able to survive while they look for better. Which would in turn force employers to offer better part, benefits and working conditions and thereby benefit everyone, except for Wal-Mart and McDonald's

[salm]

Isn´t that related to each other? Both cases require people to be less dependent on employment. Therefore it is possible for people to simply avoid shit jobs and it is also possible to make it easier to fire people in order to get rid of shit employees.

[Guardsman Bass]

More specifically, it gives workers at the bottom of the economic spectrum much more liberty to walk away from jobs, or refuse to take them. Not so much with higher-income workers, but they don't need it as bad anyways - they usually have much more resources to wait out unemployment spells or take legal action against unfair workplace practices.

I've read arguments that it would be a means to get to "robot socialism" (I don't think it would actually be socialism, per se, but that's the colloquial term). The basic income would allow people who want to work doing what they love to take a lower wage, while allowing workers doing jobs they hate to demand a higher one to work. That would drive productivity gains and labor-saving technology, allowing you to raise the basic income, doing the same process listed above, and so on and so forth until you're at the point where there's much fewer people doing jobs they hate (and they're doing them for good money), while most people are basically living off the stipend doing what they want. Meanwhile, the whole thing would be built atop tons of automation and robotics.

It makes it so the poor are heavily incentivized to earn less that that arbitrary amount or suddenly pay significant sums on services they're used to getting for free/cheap. We really need a gradual come-down from full subsidy to none as your earnings increase and I'm not sure a basic income provides that.

That's one of the reasons why I tend to prefer building and/or creating-through-nationalization more public/co-op housing instead of rental subsidies.