Capitalism simply isn't working and here are the reasons why

KamamuraKamamura Members, Reinforced - Gold Join Date: 2013-03-06 Member: 183736Posts: 669 Advanced user
http://www.theguardian.com/commentisfree/2014/apr/12/capitalism-isnt-working-thomas-piketty

Situation seems to be becoming so dire even economists start to tell the truth from time to time. What extraordinary times we happen to live in.
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Comments

  • HamletHamlet Members, Reinforced - Shadow Join Date: 2008-08-17 Member: 64837Posts: 373 Advanced user
    edited April 2014
    Nice. Was also featured on Prof. Richard Wolff's YouTube series Global Capitalism
    http://www.youtube.com/watch?v=vMXfBm0IPd0
    I'll add the timecode later, but if I remember correctly Wolff talks about Piketty right off the bat.
  • DarkflameQDarkflameQ Members Join Date: 2013-02-28 Member: 183451Posts: 327 Fully active user
    The human race needs to grow up and not be so selfish and distrusting, then we can move past the broken model that is capitalism, should take a good few hundred years...
  • KamamuraKamamura Members, Reinforced - Gold Join Date: 2013-03-06 Member: 183736Posts: 669 Advanced user
    Each day, hundreds of enthusiastic new players rush to join the ranks of the TSF to protect the universe, our beloved and the values of our society from the alien menace.

    Glory to the TSF! Glory to Arstotzka ! Glory to the mods!
  • AlignAlign Remain Calm Forum Moderators, Constellation Join Date: 2002-11-02 Member: 5216Posts: 8,207 mod
    I've been eyeing the idea of a basic income more and more after that first introduction I got to it, only this time in a developed country rather than a Namibian village. It would solve a bunch of problems... hopefully. Hard to say without concrete data from a full scale experiment.

    Long text:
    So. Unconditional Basic Income.
    Slight misnomer, as it has the condition of each recipient being a resident, or a citizen, or a taxpayer, or above 18, etc... depending on who you ask.

    High enough to live with dignity, maybe $1200 a month per individual, typically funded by raised taxes such that the average person breaks even, but far from allowing a life of luxury. Or for a more lasting figure, something like 25% of GDP/taxable revenue.
    The bit about it breaking even for the average person is important. Say it requires a 50% flat tax for 15k a year UBI, and you earn 30k - after it gets instituted, you're taxed 15k but receive 15k from the UBI, so your net tax rate is 0%. If you earn less, you'd effectively have a negative tax.
    And I suppose it's worth noting that the median person earns less than the average, so the majority would have more money than they did before.

    Given that it eliminates poverty, many welfare programs can be folded into it, saving on a great deal of inefficient bureaucracy. A sum of money can also be gained from the various governmental efforts to create jobs for the sake of creating jobs, since these are no longer necessary (projects that are valuable in themselves and happen to create jobs are fine). Ditto tax reductions that serve the same purpose.

    There will probably be further savings from reduced health costs (less stress) and crime (less desperation), and some gains from parents taking more time off to care for their children, and students having the free time to focus on their education, but those are too long term to use in initial estimates. Though that reminds me - healthcare, where the costs vary hugely from person to person, should not be one of the dropped programs.


    So why unconditional, and not just giving it to only the poor, who actually need it?
    Mainly because of the difficulties in determining who needs it and who doesn't.

    Would you grant it to someone who was laid off, who quit, or got fired? Would you have to apply for it? Could you apply from anywhere, even in prison, or would a freed convict immediately face destitution and become desperate? What about overseas, if you're on a vacation or visiting relatives when disaster strikes?
    Would you grant it to someone who gets enough to live on from other sources but are legally considered destitute? Or the opposite situation?

    The idea is to do away with finding out each and every little condition where it is or isn't appropriate - and then having to enforce those conditions at greater expense than just suffering potential cheaters to live, while still having deserving individuals fall through the cracks because they didn't know they were deserving, or perhaps didn't know how to claim the benefits, or were outright incapable of doing so.

    There are also ethical reasons, of course. Should you have to give up your privacy to receive help? Is it acceptable to subject people to intense scrutiny and intrusive questioning, given that what we're trying to do in the first place is help? Treating every applicant like a criminal, just in case they are one?
    Ultimately it's easier to cancel it out with taxes.


    But, isn't it a work disincentive? Money for nothing...
    No - it does not actively incentivize not working. To do that, it would have to be something you stopped receiving or get less of if you worked.

    Current welfare has this problem - the infamous "welfare trap", and it gets exacerbated by the fact that working costs you a certain amount compared to idleness, be it money for transportation and childcare, or time that you no longer have to spare and would otherwise have spent on things that save you money, such as going by bike/foot for an hour to a supermarket where prices are much cheaper. Luckily, the vast majority of people are a decent sort and tend to work despite the lesser gains.

    In all real-life tests done throughout the world, people either worked only slightly less (handful of percent in Manitoba - students and mothers mainly), or worked more than before, due to various entrepreneurial activities that were previously impossible. Unfortunately none of these can be considered completely indicative, since they were temporary and not paid for with local tax raises, but it does show people working even though they get free money.


    All the same, won't people quit working once their basic needs are covered?
    Well, you can already do that now, with welfare and unemployment benefits, yet people generally don't. The reasons are many - wanting to contribute, the chance to advance, social status, wanting to learn...

    A realistic option to quit could actually do some good. It would give workers ground to bargain on with a potential employer, which is as it should be - after all, it's supposed to be a contract between employer and employee, with the employer giving money in return for employees' time, not the employer being benevolent and charitable.

    The ability to quit without falling into abject misery also means unethical work can be refused, or even reported by workers, and I'd certainly like a world where no-one felt obligated to keep their mouth shut about terrible crimes just because they'd be out of a job and livelihood otherwise.
    And finally, there's various kinds of work that goes completely unpaid at the moment even though it adds value to society and even the economy. Parenting and open source software production comes to mind.


    What about inflation?
    It's hard to say beforehand, but it shouldn't cause too much inflation, as the money is taken from elsewhere, rather than created from scratch. Basic necessities are already given out by various programs to people in need, so the things that would get purchased most are being paid for already by someone, otherwise unemployed people would be starving to death on the streets, so total demand oughtn't rise much.

    As for shrewd businessdoers who see people getting more money and decide to raise prices... hopefully they'll be outcompeted by anyone that doesn't raise prices.


    And immigration?
    This part gets me hesitating the most. While I kind of doubt people would start immigrating in huge waves just for the opportunity to live a basic lifestyle, I don't have any data to back that belief up.
    Personally I don't want to exclude immigrants, as it would create the kind of underclass we're trying to prevent.

    As long as they spend it in the local economy it should just circle right back into the tax base, but I'm a little worried about money sent to family & others in home countries. Then again, investors go for opportunities outside their own country whenever it's a good deal, and that seems to be acceptable. I don't really know how all that works out.


    Automation causing unemployment? Hasn't been a problem in the past.
    Well, there sure are all sorts of new jobs now, but the total number of work hours has nevertheless decreased. We no longer have 60-hour work weeks, no longer work on Saturdays, no longer have kids working in factories, have more paid vacation days... to solve the current unemployment troubles, cutting the work week again should work.

    Which would solve the problem temporarily. Automation keeps progressing, so we'd have to cut hours again, eventually.
    And with increased bargaining power, workers could request less work hours on their own anyway, no need to mandate it.

    Somewhat ironically, automation would probably accelerate in the short term, since if employees start demanding higher pay it becomes more cost effective to use any machines that are currently too expensive.


    And those who'd make less after taxes and UBI than now? What's in it for them?
    Depends on what exactly you do, but short-term you might see more happy and therefore productive employees, more customers, less junk applications sent out purely to meet means-tested welfare demands instead of actually interested applicants with relevant skills...

    Long term, people will be able to educate themselves full-time, so you should get a bigger pool of workers to pick from, which means more chance to get really good ones... as well as more wage competition.
    So yeah, that was super long... but it's a terribly unintuitive idea at first glance, so it requires a lot of explaining.
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