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November 4, 2016 12:12 AM   Subscribe

The Universal Right to Capital Income - "If a universal basic income is to be legitimate, it cannot be financed by taxing Jill to pay Jack. That is why it should be funded not from taxation, but from returns on capital." (via)

Successful Living in This Machine Age (1931)
Mass Production is not simply large-scale production. It is large-scale production based upon a clear understanding that increased production demands increased buying, and that the greatest total profits can be obtained only if the masses can and do enjoy a higher and ever higher standard of living. For selfish business reasons, therefore, genuine mass production industries must make prices lower and lower and wages higher and higher, while constantly shortening the workday and bringing to the masses not only more money but more time in which to use and enjoy the ever-increasing volume of industrial products.

Mass Production, therefore, is production for the masses. It changes the whole social order. It necessitates the abandonment of all class thinking, and the substitution of fact-finding for tradition, not only by business men but by all who wish to live successfully in the Machine Age. But it is not standardizing human life. It is liberating the masses, rather, from the struggle for mere existence and enabling them, for the first time in human history, to give their attention to more distinctly human problems.
Capitalism in the Age of Revolution: Burke, Smith, and the Problem of Value - "The idea of the book is to look at how theorists and philosophers (and even some economists) conceived of capitalism less as an economic system and more as a political system, at several junctures in time."*
Thus we have in Burke two views of value. On the one hand, value is subjective, dependent on the wit and whimsy of the men of capital. On the other hand, there is a hierarchy of value that divides and distinguishes rich from poor, capital from labor. That value is objective. In the case of labor, it can be quantified and measured; in the case of capital, it is beyond measure. So it is the task of capital to set the value at market of whatever it is selling and whatever it is buying. The final intimation of Burke, never developed or realized but hinted at and suggested, was of an objective order of ranks and rewards, in which the better man occupied the superior rank, while the worse man occupied the lower one.

Two moves would follow, for Burke, from the blend of subjectivism in the market and objectivism in the social order. The first would be to call into question not the legitimacy of social hierarchy as such, but the composition of the higher orders, to raise the question of who is rewarded by membership in the nobility. The second would be the growing sense that the proving ground of that social hierarchy—the determination of higher and lower value, not just in the economy but throughout society—was to be found in the market.
Too Smug to Jail - "It's bad enough that the self-pitying jerks on Wall Street who read magazines like The Economist think that paying taxes or giving employees benefits or adhering to any labor or environmental standards are unconscionable burdens. Now we're supposed to be so grateful for their sociopathic pursuit of profits that we should excuse them from the criminal code, too?"

Serfing USA: In the future, we will all be rental serfs - "What the techno-capitalists opted for was a world where we the public would never properly own anything ever again."

Postcapitalism and the city - "If we do not break this cycle, you can easily see capitalism being replaced by a stagnant neo-feudalism... We must promote the transition to a non-capitalist form of economy which unleashes all the suppressed potential of information technology, for productivity, wellbeing and culture... The strategic aim is: to reduce the amount of work done to the minimum; to move as much as possible of human activity out of the market and state sectors into the collaborative sector; to produce more stuff for free."

also btw...
posted by kliuless (54 comments total) 96 users marked this as a favorite
 
I'm genuinely excited by the idea of a universal income, this is a wondeful post, thank you.
posted by SageLeVoid at 12:37 AM on November 4, 2016 [5 favorites]


The Atlantic article reminded me what a blithering idiot Trump is. He says we always get beat in trade deals, that China is killing us. Never mind that we have been exploiting most of the nations from whom we export goods by literally paying nothing for them on a net basis. Our imports from China (and Japan before it) are financed almost entirely through debt. The Treasury bonds they buy are a literal representation of our trade deficit.

They have shipped us trillions of dollars worth of valuable stuff in exchange for not even pieces of actual paper, but bits in a ledger. Bits we can inflate away whenever we damn well feel like because there still isn't a reasonable reserve currency. (Thanks, EU, for repeatedly shooting yourselves in the foot these past several years with stupid economy-destroying austerity measures!)

Even if we take no deliberate action, the natural inflation inherent to a capitalist economy will eat away at that debt in real terms, meaning that our trade partners will get back pennies on the dollar in the end.

The problem with our economy isn't the people sending us free shit, it is with the gains from being sent that free shit accruing to a very small fraction of the populace. Even a slight adjustment in that distribution would more than make up for the job losses, but people who are stuck in an economic mindset that hasn't been valid for over 40 years now keep stamping their feet and insisting that their woefully outdated understanding must be respected as truth.

Back when we were on the gold standard, the federal budget did work like a household budget. We aren't anymore, so the know-nothings need to get the fuck over it and let the adults in the room manage things in a way that will increase everyone's prosperity. Since it isn't a zero sum game, sharing the gains makes everyone richer, including those at the top. The people at the bottom will just give it right back anyway, and that's OK, they'll have more stuff that will make their lives better.

Whether it's done by taxation or borrowing or literally printing money or any other method makes no difference. They money just needs to be kept moving. We have the reserve currency, the worst thing we can do is let people hold on to it and stop it from doing the good work it can do with a higher velocity.
posted by wierdo at 12:57 AM on November 4, 2016 [27 favorites]


Only read the first article so far, but I promise I'll come back in the morning and go through the rest of 'em. Thanks, kliuless!

Professor Varoufakis is making quite a proposal there. It's kind of blue sky, utopian thinking, as I'm sure he's aware, but just because it couldn't be imposed on any First World nation without an armed revolution doesn't make it unworthy of consideration. And he's certainly right about two of his three propositions:

- Taxes can't be a legitimate source of financing for Basic Income, because tax revenue is going to decline as more and more people lose their jobs to automation, and a system where the majority of the population is unemployed and Basic Income is primarily funded by taxes taken from Basic Income is analogous to a perpetual motion machine in physics.

- The rise of the machines must be embraced, indeed, because we have no choice. If globalism has taught us anything, it's that corporations will always strive for greater and greater efficiency (in everything but executive compensation), and they'll relocate anywhere in the world that offers them an advantage. The machines are coming for pretty much everyone's jobs eventually, and even if we went all 1984 in our part of the world and banned them, other nations would not, and that's where the companies will go. In any kind of truly free market, mechanical slave labor is going to become the norm.

I'm a bit uncertain about his third proposition, that "universal basic income is liberty’s main prerequisite." But he might be right about it being an truly good thing. It's hard to say because it's never been possible before, so there's no examples to learn from short of a few studies. But one thing that strikes me about the arguments against Basic Income is how similar they are to the objections people had with universal health care. People here in Canada thought that a government funded system would make people greedy, going to the hospital for every little ailment when they didn't need to, and that no one would want to be a doctor when their income wasn't strictly determined by the free market. But it's been exactly fifty years now, and the system continues to work, saving countless lives and providing a safety net for every citizen. Basic Guaranteed Income might do for poverty what Medicare did for sickness.

But the thing that I'm really uncertain about is the conclusion he draws from his propositions: that corporations should pay for Basic Income, because they use advantages and services that were developed collectively, by society as a whole. I think what he's saying is that, because corporations depend upon society for their existence, they are in a sense public property, and thus it's justifiable to deposit a certain percentage of every corporation's shares in a Common Capital Depository, and use that Depository to fund Basic Income for everyone.

It's an interesting idea, but perhaps a little too extreme for me. Still, it might have merit, and I'm curious what other people might think about it.
posted by Kevin Street at 1:49 AM on November 4, 2016 [4 favorites]


I was just reading the nytimes science & society opinion column on self-driving cars "Whose life should your car save?". It's an overdiscussed topic, but what mainly stood out--at least if you read between the lines--this time was instead of the "trolley problem" which some quickly dismiss as ivory-tower thinking, the authors made it possible to relate the issue as a problem of the commons. And while the article won't make the next leap, the obvious but completely omitted implication is: it is an absurdity to privatize a public good--which is what car manufacturers are attempting to do when they attempt politics within the framework, or structure, of existing car culture. Isn't it an interesting subtle shift, in how public discourse/messages around car use shifted from "Use more public transit, drive less" in previous decades to "Invest in (or buy) personal self-driving cars"? But that's how we get stuck with apparent controversies around the trolley dilemma, or as Mao called them, antagonistic contradictions. Recognizing it as a problem of the commons is what helps people recognize the problem in a different light.

So we see this sort of general distribution problem in many examples and domains, in technological change, etc., that affect our daily lives. And people complaining that redistribution--be it lives or livelihoods--is impossible under the given social framework is, well, rather symptomatic.
posted by polymodus at 1:54 AM on November 4, 2016 [9 favorites]


- Taxes can't be a legitimate source of financing for Basic Income, because tax revenue is going to decline as more and more people lose their jobs to automation,

This is the part I just don't understand. Why would people being replaced by (cheaper) machines mean less tax? Instead of $X being split between boss and worker, each with a tax free allowance of n, it's now all going to the boss, and so only subject to one tax free allowance. Insisting that this setup will always produce less tax revenue (when it will produce more revenue full stop) seems like admitting defeat ahead of time on capturing revenue for tax liability.
posted by Dysk at 1:57 AM on November 4, 2016 [5 favorites]


I could be wrong, but the way I look at it is that taxation depends upon prosperity, but increasing efficiency doesn't necessarily increase prosperity. Those n workers are all paying income tax, and other taxes on property and purchases of goods and so on, so the total tax revenue they generate is more than the taxes paid by the boss or by the company they work for. Rich people and big companies already pay a smaller slice of the tax pie than lower income earners, and if they get more income for themselves they'll inevitably use it to hire accountants and lawyers so they have to pay even less.
posted by Kevin Street at 2:10 AM on November 4, 2016 [2 favorites]


Those n workers are all paying income tax, and other taxes on property and purchases of goods and so on, so the total tax revenue they generate is more than the taxes paid by the boss or by the company they work for.

Except if we pay them universal basic income, they keep generating those same sales tax and property tax receipts and so on.

Rich people and big companies already pay less tax than lower income earners

Fixing this would be a good start, but that would of course require political will not currently present. But then so would UBI.
posted by Dysk at 2:16 AM on November 4, 2016 [2 favorites]


But it's just a basic income, it wouldn't pay as as much as if they had good jobs. It's just enough to keep everyone from falling into poverty.

To put this another way, from the tax department's perspective a society where the majority of the people live on universal basic income is like a society where 80-90% of the people work at McDonalds or 7/11. There wouldn't be as much tax revenue coming in as there is now.
posted by Kevin Street at 2:20 AM on November 4, 2016 [3 favorites]


Sorry, one last post before bed. I just realized that Professor Varoufakis's proposal addresses the commonly expressed fear that Basic Income would completely replace the social safety net, turning back the clock by wiping out things like unemployment insurance, medicare or social security. By using the Common Capital Depository as a sort of black box that's solely responsible for Basic Guaranteed Income, that means government tax revenue is still available for safety net programs.
posted by Kevin Street at 2:51 AM on November 4, 2016 [1 favorite]


Why would people being replaced by (cheaper) machines mean less tax? Instead of $X being split between boss and worker, each with a tax free allowance of n, it's now all going to the boss

Because many companies will have a race to the bottom. The first company might go automated with the owner keeping all the money, but if the startup cost of buying the machines is cheap enough, someone else will start a company that undercuts them and then someone will undercut them and so on.
posted by Candleman at 3:01 AM on November 4, 2016 [1 favorite]


Dean Baker proposed this back in January.
posted by jpe at 4:16 AM on November 4, 2016


But it's just a basic income, it wouldn't pay as as much as if they had good jobs.

You think three jobs in danger of being automated away in the near future are in any way good jobs? That's sure not my experience.

To put this another way, from the tax department's perspective a society where the majority of the people live on universal basic income is like a society where 80-90% of the people work at McDonalds or 7/11. There wouldn't be as much tax revenue coming in as there is now.

Right, but that's because the 10-20% are pocketing the difference, and the lost tax receipts can be collected from them.

The first company might go automated with the owner keeping all the money, but if the startup cost of buying the machines is cheap enough, someone else will start a company that undercuts them and then someone will undercut them and so on.

So there's less money all round, but everything is correspondingly cheaper? In real terms, that seems like it doesn't necessarily have to be a negative.
posted by Dysk at 4:20 AM on November 4, 2016 [1 favorite]


"Everything" will be cheaper, except for the things whose supply is harder to affect by automation, i.e., housing, education, medical care...
posted by overeducated_alligator at 4:43 AM on November 4, 2016 [2 favorites]


"Everything" will be cheaper, except for the things whose supply is harder to affect by automation, i.e., housing, education, medical care...

Where you also won't be losing tax receipts, because people are still being employed. You don't need things to get cheaper if you aren't getting less money in.
posted by Dysk at 4:49 AM on November 4, 2016 [1 favorite]


The people at the bottom will just give it right back anyway, and that's OK, they'll have more stuff that will make their lives better.

And take note any 0.001 percenter that happens to read this thread, none of the masses no matter how hungry or wretched the hovel they live in will revolt if it means breaking the infrastructure that keeps the 150inch High Def TV from showing 500 channels of advice on how to leverage into the 1%.
posted by sammyo at 5:01 AM on November 4, 2016


I'm not sure I get his opposition to taxation. E.g. he writes "Today, every smartphone comprises components developed by some government grant, or through the commons of pooled ideas, for which no dividends have ever been paid to society." Isn't taxation precisely those dividends paid to society?

But a tax on capital, let's go for it. This is Piketty's recommendation as well.

It strikes me that going after capital rather than income is a big boon for partnerships and sole proprietorships. Maybe that's the intent. But you'd also be giving a huge incentive for clever lawyers to find ways of turning corporations into things that look like corporations but are legally partnerships.
posted by zompist at 5:08 AM on November 4, 2016 [3 favorites]


When robots can make more robots all one will need to do to "live free" is to "borrow" a rich mans "replicator" to make your own and thus become a new "rich man". But there will be quite a rough transition period where large segments of society will be displaced without recourse (truck drivers seem to be on deck) and that will certainly cause significant disruption.

Autodesk is a 3D CAD company that has transitioned into a building trade logistics company, make a 3D model of a house and get a full bill of materials and scheduling (bet that saves a few salary's) I just saw a bunch of robot arms while walking past their Boston headquarters. Carpenters could be right after truck drivers needing a basic income.

Note, it may not work for Autodesk, but look at smart phones, when someone gets the tech right the transition will happen not in decades or years but months.
posted by sammyo at 5:22 AM on November 4, 2016 [2 favorites]


It's a moderately interesting proposal, although in the US it would seem to be a taking under the 5th amendment. That means there would need to be a public purpose, and I don't think "because we wants the precious" is a public purpose. Even if it were, the government would have to pay fair value for the shares, which would be the same thing as just buying shares. Which we could do already.

Let's assume all that away, though. If the government seized shares without payment, it would be entitled to a pro rata slice of dividends. We already have a tax on dividends, so the only differences would be that exempt organizations would bear the tax and it would be unreduced by the taxpayer's deductions.

So it would be a gross dividend tax with source withholding and no exemptions for charities.
posted by jpe at 5:37 AM on November 4, 2016 [2 favorites]


it should be funded not from taxation, but from returns on capital... legislation requiring that a percentage of capital stock (shares) from every initial public offering (IPO) be channeled into a Commons Capital Depository, with the associated dividends funding a universal basic dividend (UBD).

Surely that is tax for all intents and purposes: it's just a clumsily designed and hypothecated one that would be inefficient and unmanageable. You want to tax dividends, tax dividends, what's new about that?

Funding your universal benefits from it from it is probably not a great idea:for one thing the amounts will go up and down according to the state of the economy, not according to people's needs; for another if you really clobber dividends, people will find ways to not pay them: maybe they won't float at all in the first place - and just remind me why privately owned companies are getting off scot free?
posted by Segundus at 5:45 AM on November 4, 2016 [6 favorites]


It's not a tax on dividends. It's a universal partial state ownership.

Imagine a fund that owns ten percent of all stocks. But not only that, they Got them for free.

Businesses can't do things to prevent paying dividends on these stocks without messing with the other 90 of their stockholders.

And the market fluctuations don't matter. because they got it for free. Whatever price they get while selling is one hundred profit. Stocks That fold don't hurt the fund as they are not losing investment capital.
posted by mayonnaises at 6:11 AM on November 4, 2016 [4 favorites]


Either way - tax or stock ownership - the government is getting a piece of the dividends paid. The only differences are that charities are exempt and the tax is determined in part by the income and deductions of the recipient.
posted by jpe at 6:16 AM on November 4, 2016 [1 favorite]


This reminds me of my shock upon learning that unions oppose single-payer health care.
posted by BentFranklin at 6:30 AM on November 4, 2016


Even if we take no deliberate action, the natural inflation inherent to a capitalist economy will eat away at that debt in real terms, meaning that our trade partners will get back pennies on the dollar in the end.

The US's negative NIIP has quadrupled under Obama's Watch®, the 'we can inflate it all away' point isn't an unalloyed positive, as all the so-painfully accumulated pension fund holdings like SSA's SSTF (currently $2.7T) and the rest would have to be written off in this scenario. We can't liquidate the Chinese without liquidating our own savers.

Note that for a while now our trade deficit is not being funded out of treasuries sales, e.g.:

http://ticdata.treasury.gov/Publish/mfh.txt

I, too, think we've now written $8T of promises we can't cash, and I don't know what the endgame is here.
posted by Heywood Mogroot III at 6:30 AM on November 4, 2016


I also disagree about the 'natural inflation' angle.

https://fred.stlouisfed.org/graph/?g=8b4g shows we've had two 'sea changes' in our collective leverage ratio.

Interest on this debt is deflationary, as it takes from the masses who owe and gives to the few who own.
(Now, taking on this debt was certainly inflationary, but that is another story)
posted by Heywood Mogroot III at 6:36 AM on November 4, 2016


Well, there goes my day. I've been a little short on things to read recently, so this will solve that problem. Thanks for the post.
posted by kevinbelt at 6:58 AM on November 4, 2016


Businesses can't do things to prevent paying dividends on these stocks without messing with the other 90 of their stockholders.

—except leaving the country.
posted by esprit de l'escalier at 7:04 AM on November 4, 2016 [2 favorites]


By using the Common Capital Depository as a sort of black box that's solely responsible for Basic Guaranteed Income, that means government tax revenue is still available for safety net programs.

Except, under our current political atmosphere, if we were to set-up a legitimate BGI, there will be a giveback demanded, and that giveback will be, almost assuredly, the tattered threads of what little social safety net still exists (at least here in the US.) So, hello BGI, goodbye SS, Medicare, Medicaid, ADC, etc. etc.

And whatever BGI is established here, it is also assured to not be enough to cover the costs that those programs covered.
posted by Thorzdad at 7:04 AM on November 4, 2016 [2 favorites]


Surely that is tax for all intents and purposes: it's just a clumsily designed and hypothecated one that would be inefficient and unmanageable. You want to tax dividends, tax dividends, what's new about that?

I was thinking something along those lines, but really it's a tax on the raising, no? - which means firms will tend to embrace alternative capital-raising options. I've been out of the game for a while, but could you not just then do a tiny IPO (or even none at all) and raise capital using fixed interest notes or that bullshit family/not-family arrangement that Newscorp has or something?

I love the idea, but shifting the tax source seems a bit easy to me.
posted by pompomtom at 7:06 AM on November 4, 2016 [2 favorites]


On further thought: If you mandated a portion of the VAT/GST/Sales Tax receipts to this fund, might you make those existing arrangements actually be progressive (or less regressive, I suppose), in the longer term? There's an issue in that you are now sitting on a boat-load of cash, rather than stock, but presumably you could chuck it in an index-tracker or something similarly Weberianly (that's totally a word, trust me) impersonal?

Obviously, this arrangement would still be regressive to begin with (and thus, I'd suspect, more politically palatable under current regimes), while the fund is small and the consumption taxes are as-is, but after a while we'd reach the same point as in the proposed model.

I mean, obviously, some political-class toerag will steal it all eventually, but what can you do?
posted by pompomtom at 8:23 AM on November 4, 2016 [1 favorite]


Yeah, I'm greatly in favor of a UBI but I don't see how mixing in partial nationalization of every publicly traded company makes it either more practical or more politically feasible.
posted by PMdixon at 8:53 AM on November 4, 2016 [3 favorites]


I'm all in favour of partial nationalisation of publically traded companies, but I think we'd find that Capital will simply choose a more handy location, and trade legislatures off against each other. It already happens in federal states where the components have differing tax regimes (eg all the trucks registered in South Australia... that whole Delaware thing, etc).

Again, we meet the tragedy of the commons, where the 'commons' are tax receipts and the 'public' are various, not-necessarily cooperative governments. So, I suppose if we do this, and do have the requisite cooperation between all the various governments, perhaps we should tack on world peace as a rider?

(again: totally in favour, if a tad skeptical)
posted by pompomtom at 9:09 AM on November 4, 2016 [3 favorites]


So, I suppose if we do this, and do have the requisite cooperation between all the various governments, perhaps we should tack on world peace as a rider?

World peace is one of those things that used to be a serious aim, but somehow was turned into a joke, now that we need it more than ever thanks to things like climate change and the inequality crisis brought on by automation and liberated global capital. Like lots of others I'm sure, too often I end up arguing with some paranoid Alex Jones fan about "one world government" as if this is the most sinister aim imaginable.

My response is always "of course I want one world government, would you prefer a never ending series of wars and the constant threat of nuclear armageddon that we have now?"

This drives the "argle bargle Agenda 21" crowd nuts. Usually what follows is a rant about freedom and the evil UN and despotisms around the world, and whatnot.

So I usually follow up with some high dudgeon of my own about how they don't actually have real objections on principle other than the desire to keep a privileged position in a world of morally repugnant inequality maintained by the industrial butchery of the powerless. This usually leads to a termination of friendship or a serious erosion of familial ties.
posted by [expletive deleted] at 11:46 AM on November 4, 2016 [8 favorites]


I'll post this link because an AltCoins could conceivably do similar things, like say by selecting a group of human participants at random to confirm a transaction.

Bitmain's new Xinjiang computing center will control as much as 75% of the total Botcoin hash power, when it comes online next month.
posted by jeffburdges at 1:56 PM on November 4, 2016


There's another component to the whole partial nationalization thing: institutional investors represent a huge portion of public company shareholders. These investors include mutual funds, public pension funds, union funds, etc.

If there were a sufficiently effective UBI, private retirement and municipal pension funds would have less reason to exist. It would be a weird shakeup in the composition of shareholders and that might have an impact on the market.

Likewise, shareholder activism is very common and only growing moreso. What would be the regulatory limits on the Federal government-as-shareholder in voting proxy ballots or in other corporate governance issues? Would the US have to abstain from voting its shares? If so, how can it exercise its rights as a shareholder to influence the direction of the company vis-a-vis their shareholder value? There would be in this scenario no "exit" option (the government can't sell its shares). You could, I guess, have a universal dual class stock system where the government has no voting rights...

But all of this sounds infinitely more complex and unnecessary compared to just taxing capital gains more.
posted by overeducated_alligator at 2:32 PM on November 4, 2016 [1 favorite]


I've often felt Income tax was botched up by not restricting the Sixteenth Amendment to only a fragment of the population, say richest x% and highest earning x%, and similarly restricting the power to demand information on income and possessions to the richest 2x% and highest earning 2x%. In essence, there should be a baseline progressiveness in that the tax should be applied only to the rich. We would've increased x at various points in time of course, but at least the tax would stay somewhat progressive.
posted by jeffburdges at 5:36 PM on November 4, 2016


The federal income tax is highly progressive.
posted by jpe at 5:42 PM on November 4, 2016 [2 favorites]


Capital gains tax, not so much.
posted by Heywood Mogroot III at 5:51 PM on November 4, 2016 [1 favorite]


—except leaving the country.

. . . don't let the door . . .

the unhappy corporation may leave the country [to where, Mexico, Madagascar, the Moon??] -- but the business opportunity will remain, regardless.

Capital is not the scarce commodity it was 200 years ago. It's just digits on an LCD screen now.

The more money we push to the masses the more business there will be.

This was the experiment we ran 2003-2007, when consumer debt was rising by $10,000 per year per household:

https://fred.stlouisfed.org/graph/?g=8bKN

(real per-capita annual consumer debt take-on)

thanks to the housing bubble and the cash-out refinancing that was raining $$$ on all home owners.

The only problem with UBI, as mentioned above, is that it does not address the structural scarcity of supply in things we need -- housing, higher education, health care.

Give everyone $1000/mo, and rents will just go up $1000/mo, AFAICT.
posted by Heywood Mogroot III at 6:00 PM on November 4, 2016 [1 favorite]


Capital gains tax, not so much.

That's part of the income tax system, and it's very progressive even with the lower cap gains rates (a feature shared by every other country)
posted by jpe at 6:46 PM on November 4, 2016


Noting also that the current cap gains rates are 23.8% - 25%, compared to 25% in the post-war period. In other words, right around where they've been for most of the 20th century.
posted by jpe at 6:49 PM on November 4, 2016


The housing/rent situation definitely feels that way if you live in a place like the Bay Area, the Northeast, or South Florida, but many areas of the country have population and wage growth that exceeds the growth in housing cost. While rents often do tend to increase to absorb any extra spending power, that situation is to some extent a self inflicted wound.

In most cases where rents are truly out of control there are problems imposed externally on the market like zoning rules that make it difficult, overly expensive, or at times impossible to increase density combined with a lack of buildable land. For example, it's basically impossible to build up in San Francisco due to both zoning and the public's unwillingness to allow increased height because of a preference for preservation of neighborhood character.

In South Florida, most of the land legally available to build on already has something on it. In many cities around here, excessive parking requirements imposed by the zoning code makes increased density impossible in a cost effective manner, leading to too much of the new construction being at the high end of the market. In others, the FAA restricts height due to airports.

Simple zoning changes and a greater investment in public transportation would reduce the need for parking and increase the amount of land where higher density development is feasible. From the buyer/renter's perspective, why live in a dense neighborhood when the commute will be just as bad as it is if you live out in suburbia? And with people forced into cars due to poor alternative transportation options and an inability to increase road capacity further, that is precisely the situation that results when high density development occurs outside of the urban core.

It's not an inherent problem, it is a problem created by poor resource allocation and the rules (and politics largely shaped by those long standing rules) that encourage it. It's a perfectly solvable problem, in the main, not a law of nature.

Even in NYC, where density is encouraged in many instances, the issue is exacerbated by inadequate funding of transportation improvements causing long commutes that drive up the cost of everything that is within reasonable commuting distance. Granted, it is difficult to stay ahead of the curve, but it is possible to do if you don't rest on your laurels for literally decades.
posted by wierdo at 6:51 PM on November 4, 2016 [2 favorites]


In other words, right around where they've been for most of the 20th century

Funny how Romney wasn't paying anywhere near that in 2010.

Or this Trump clown.
posted by Heywood Mogroot III at 7:15 PM on November 4, 2016


Romney gave a ton to charity, which drastically cut his taxable income. And the rates were increased in 2013.
posted by jpe at 7:18 PM on November 4, 2016


Okay, I've read all the links (didn't watch the documentary, but it's bookmarked), and my head is spinning. There's so many people saying so many different things, but I think I've got a rough and fuzzy picture of the story that kliuless is telling in this FPP. The most important links are the first one (by Varoufakis) and the seventeenth one (by Paul Mason), with the fifth link (by Corey Robin) providing a sort of structure to the arguments in-between.

The idea, I think, is there are two different tendencies within capitalism, that are exemplified (in the Robin article) by the ideas of Edmund Burke. These tendencies are concerned with the concepts of value and hierarchy. One tendency views value to be derived from capital, so people that have more capital are of higher value to society (as job creators) and are naturally associated with higher status in the social hierarchy. The other tendency is to view value as something that is purely determined by the free market. In this view the value of something (or someone) is only what other people are willing to pay for it, and the status of different people may rise or fall in the hierarchy as their worth changes with market variations.

This second tendency is the one that has mostly dominated economic thinking. And it's the one that's more naturally associated with ideas of social responsibility and progressivism, because in complex modern economies the efforts of a great many people are required to contribute to the whole, so we all have some value. Here's a quote from the Atlantic essay (twelfth link) that illustrates what I'm saying:
In the unusually lyrical passage that concludes the opening chapter of The Wealth of Nations, Smith celebrates the “joint labour” that is required to meet even the most basic needs of a typical worker. “Were we to examine, in the same manner, all the different parts of his dress and household furniture”—shirts, shoes, table, and chairs, to say nothing of the food he eats or the roof over his head—“we shall be sensible that without the assistance and co-operation of many thousands, the very meanest person in a civilized country could not be provided, even according to, what we very falsely imagine, the easy and simple manner in which he is commonly accommodated.” For Smith, the cooperative nature of capitalism helped to blunt the selfish tendencies his system otherwise seemed to endorse. Humans not only had to work together for a complex economy to develop, but, as Hume had suggested, such daily engagement strengthened bonds of trust, established common purpose, and fostered mutual understanding.
But this second tendency is being undercut. First by economists like Milton Friedman, who believed that making money is the only real job of capitalism, then later by the businessmen who were inspired by this kind of thinking to go back to a greed-is-good conceptualization of capitalism as war. People like Trump are the personification of this, since he sees life itself as a battle with winners and losers, and the winners are defined by the amount of money they have. The first tendency reborn, in other words.

Automation will exacerbate this tendency within society, since it will create a very large class of people who have no jobs and no capital, and thus no status in the hierarchy. (One assumes they'll slowly rot away in slums.) The people who still have jobs won't have have capital either, because they'll own nothing and have to spend all the money they earn on rent for the things they need to live. The Rentiers at the top of the hierarchy will rule supreme.

The way out of this is Universal Basic Income (perhaps paid for with a depository like Varoufakis is suggesting), since, rather than reemphasizing the second tendency (as one might expect in proposals for reform) it will instead decouple value from capital entirely. When everyone has enough money to live on, no matter what, they can do any kind of work they want, and the value any individual has within society will become much harder to quantify. The hierarchy will become fuzzy and spread out. People will do all sorts of things because they want to do them, or because they believe those things should be done, and contribute value to society that can't be defined by dollars and cents. Thus the struggle between the two tendencies is resolved by going beyond both of them.
posted by Kevin Street at 7:54 PM on November 4, 2016 [6 favorites]


>World peace is one of those things that used to be a serious aim, but somehow was turned into a joke, now that we need it more than ever...

My response is always "of course I want one world government, would you prefer a never ending series of wars and the constant threat of nuclear armageddon that we have now?"

Fuck yes.

Of course, I was educated by hippies, who thought that war was bad and utlititarianism was worth consideration, and killing/enslaving/impoverishing people was bad and all that stuff. TBH I've largely absorbed those views, and have trouble grokking counterarguments to them.
posted by pompomtom at 7:28 AM on November 5, 2016 [1 favorite]


who thought that war was bad and utlititarianism was worth consideration

Those two things don't make much sense together. If you're on board with utilitarianism, you'll support war when it increases aggregate happiness.
posted by jpe at 9:33 AM on November 5, 2016


I don't think it's inconsistent to argue that war never (or close enough to never) increases aggregate happiness.
posted by tobascodagama at 9:40 AM on November 5, 2016 [2 favorites]


Those two things don't make much sense together. If you're on board with utilitarianism, you'll support war when it increases aggregate happiness.

Bit of a derail, but not true of rule utilitarianism necessarily.
posted by Dysk at 9:43 AM on November 5, 2016


There are two main issues I have with "one world government" ideas :

First, civil wars are often bloodier than wars between nations, so why do you want to replace the wars we have with even bloodier ones? It's extremely far from obvious that "one world government" decreases the chance of nuclear war either, quite possible the opposite I suspect.

Second, there is relatively little chance that nuclear wars could cause our extinction, but a respectable chance an asteroid could do so. To date, all our ambitious space programs have required a competitive or military purpose. I'd expect "one world government" to cause the kind of malaise that ended the space program, thereby decreasing our chances of survival as a species.

Third, it's hard to make decisions well. And social parasites like lobbyists evolve to exploit any processes instituted. We need democracy because it reduces the blood shed involved in past forms of national decision making, but that democracy must evolve so that the parasites do not eat it alive. Afaik, it cannot evolve much in a single nation because then it becomes a political football. Instead, democracy evolves by rewriting a constitution after a nation gets itself into a big mess, while copying the good and not the bad from other nations.

I think we want more like fragmented experimental world democracy. Ideally, we might kill off all the benefits that states gain from scale, so that states actually benefit from shrinking and subdividing.

There are interesting ideas that resemble "one world government" but might actually represent more this sort of diversifying or punishing power. We could for example establish a principle of "no invasion without representation" that required countries who to invade other countries to make their victims a kind of territory who could vote in the invader's elections for a while. I'd love to see Clinton and Trump campaigning for the Iraqi vote, for example.
posted by jeffburdges at 2:47 PM on November 5, 2016


I like the sentiment, tobascodagama, but it only holds from a current perspective, not a historical one.

We know the possibility of nuclear war played a huge role in the space program, which massively increased our species chances for surviving an asteroid on a collision course with earth. And utilitarianism goes off the rails if one does not require that someone be around to be happy.

I'd imagine metal working was tightly integrated with warfare, so all technological benefits that derive from metals become complex. etc.

We can today make a case against even such future-historical benefits of war though : Just accept that competition among groups remains important, but tout the benefits of modern forms of competition that avoid bloodshed.
posted by jeffburdges at 3:03 PM on November 5, 2016


We know the possibility of nuclear war played a huge role in the space program, which massively increased our species chances for surviving an asteroid on a collision course with earth.

The nuclear arms race, famous for increasing our chances of survival,
posted by Greg Nog at 5:45 PM on November 5, 2016 [7 favorites]


Whether it's done by taxation or borrowing or literally printing money or any other method makes no difference. They money just needs to be kept moving. We have the reserve currency, the worst thing we can do is let people hold on to it and stop it from doing the good work it can do with a higher velocity.

re: velocity, fwiw :P
-Yellen Questions
-A dent in the surface of time
-Negative Rates and the Fiscal Theory of the Price Level
-Sims highlights fiscal dominance at Jackson Hole
-The global pivot towards fiscal policy
-It's the demography, stupid!
-There is no r*
-Fiscal subservience – a reply to Chris Sims
-The Bank of Japan is testing Romer's hypothesis
-The Stakes of the Helicopter Money Debate: A Primer
-Why Do We Talk About Helicopter Money?
-Helicopter Money Is in the Air

also along these lines are 'money financed fiscal stimulus' more generally and 'fedwire for all' -- have the fed disintermediate (ineffectual) banks.

I think what he's saying is that, because corporations depend upon society for their existence, they are in a sense public property, and thus it's justifiable to deposit a certain percentage of every corporation's shares in a Common Capital Depository, and use that Depository to fund Basic Income for everyone.

kind of like an extension of the (georgist) alaska permanent fund or norway's -- or any other -- sovereign wealth fund(s). also interesting to think about the bank of japan's purchase of ETFs, putting it on course 'to become top owner of 55 firms in the Nikkei 225', and vanguard's increasing shareholder activism as a 'passive' investor.

The only problem with UBI, as mentioned above, is that it does not address the structural scarcity of supply in things we need -- housing, higher education, health care.

this brings up the productivity debates and baumol's cost disease -- a corollary of which is that technological deflation in some stuff eventually lowers that stuff's weighting in the consumer basket, leaving stuff not amenable to productivity improvements (housing, higher education, health care) for whatever reason to take a greater chunk out of your hard-earned paycheck. here's delong, who puts it succinctly, "What is the low-hanging fruit here? I would focus on our value-subtracting industries:"
  • In finance we now pay some 8% of GDP—2% of asset value per year on an asset base equal to 4 times annual GDP. We used to 3% of GDP —1% and change of asset value a year for assets equal to 2.5 annual GDP. It does not seem to me that our corporate control or our allocation of investment is any better now than it was then. Certainly people now are trading against themselves more, and thus exerting a lot more price pressure against themselves. They are making the princes of Wall Street rich. Is there any increase in properly-measured real useful financial services that we are buying for this extra 5% of GDP? Paul Volcker does not think so. And I agree.
  • In health care administration we now pay another excess 5% of GDP. Our doctors, nurses, and pharmacists do wonderful things. But as Princeton's Uwe Reinhart likes to say, you do the accounting and our health care administrators are about one-eighth as productive as German administrators. Why? Because they’re all working against each other. Half are trying to get insurance companies to pay bills. The other half are trying to find reasons why this particular set of bills should not be paid by the insurance company. Do any of you understand your health insurance EOB—Explanations of Benefits? If so, I congratulate you! Or, rather, I do not congratulate you: I there’s something psychologically wrong with you if you do understand them.
  • Mass incarceration—add up the effects on human capital and find another 2% of GDP that other countries do not pay that we are spending for, as best as I can see, no net value whatsoever.
  • The bet that we have made over and over again over the past 35 years that what the economy really needs is lower taxes on the rich. Elite conspicuous consumption is, by definition, not a source of social welfare--it is utility for the rich extracted by spite from the rest. It shows up in GDP as a plus. It does not show up as a plus in any even half-plausible societal well-being calculation.
  • NIMBYism. At this conference we have talked a little bit about occupational NIMBYism. It may be a big factor—I am not convinced, but I also am not unconvinced. But there is more. As Bronwyn said yesterday, anyone who lives in San Francisco or D.C. or Boston has got to be very impressed with residential and land-use NIMBYism as a major factor. But our judgment that land-use NIMBYism is an important factor may just be the myopia of where we Route 128 and Silicon Valley people have to live.
anyway, albert wenger (for one ;) is working on it: "In the near future we will have the ability to provide a diagnosis for anybody at zero marginal cost. Now that's important because it means that anybody in the world anywhere should have access to a diagnosis. If we can help someone at zero marginal cost, we probably should be doing it."

oh and...
-The case for basic income
-Elon Musk thinks universal income is answer to automation taking human jobs
posted by kliuless at 1:35 AM on November 6, 2016 [4 favorites]


The most important links are the first one (by Varoufakis) and the seventeenth one (by Paul Mason)

just as an aside, varoufakis and mason have conversed a bit so it's probably not a coincidence their thinking aligns; mason was doing a documentary on the greek crisis -- #thisisacoup -- which i haven't seen and varoufakis figures prominently in it, of course, but not without some disagreement apparently.

here's mason at google :P (and at the RSA!)

economists like Milton Friedman, who believed that making money is the only real job of capitalism

not that i'm one to defend friedman, but he did promote negative income taxes as a form of basic income and its modern incarnation survives as the EITC, if not the GAI, alas. here's chapter 12 of friedman's capitalism and freedom on 'the alleviation of poverty':*
It can be argued that private charity is insufficient because the benefits from it accrue to people other than those who make the gifts -- again, a neighborhood effect. I am distressed by the sight of poverty; I am benefited by its alleviation; but I am benefited equally whether I or someone else pays for its alleviation; the benefits of other people's charity therefore partly accrue to me. To put it differently, we might all of us be willing to contribute to the relief of poverty, provided everyone else did. We might not be willing to contribute the same amount without such assurance. In small communities, public pressure can suffice to realize the proviso even with private charity. In the large impersonal communities that are increasingly coming to dominate our society, it is much more difficult for it to do so.

Suppose one accepts, as I do, this line of reasoning as justifying governmental action to alleviate poverty; to set, as it were, a floor under the standard of life of every person in the community. There remain the questions, how much and how. I see no way of deciding "how much" except in terms of the amount of taxes we -- by which I mean the great bulk of us -- are willing to impose on ourselves for the purpose. The question, "how," affords more room for speculation... The arrangement that recommends itself on purely mechanical grounds is a negative income tax.
as delong and krugman have noted, right ideology has left friedman behind. speaking of which, here's hayek on universal health care, social safety nets and public housing:
There is no reason why in a society which has reached the general level of wealth which ours has attained [NW note: Hayek was writing not in prosperous post-war America, but in war-torn, austerity-ridden Britain in 1943] the first kind of security should not be guaranteed to all without endangering general freedom. .... [T]here can be no doubt that some minimum of food, shelter, and clothing, sufficient to preserve health and the capacity to work, can be assured to everybody. ... Nor is there any reason why the state should not assist the individual in providing for those common hazards of life against which, because of their uncertainty, few individuals can make adequate provision...
posted by kliuless at 1:06 PM on November 6, 2016 [3 favorites]




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