Postcapitalism and the Impending Death of Work

[Werthead]

 

Quote

Right, mortgages. Those are even more tricky. Should the government pay for those while people are being retrained for other jobs? That would be pricy. On the other hand, I'm not sure how else to handle that issue without causing huge amounts of social and economic disruption. 

This was the argument that rages over social support in the UK: if you are in rented accommodation and are made redundant, you can get your rent paid on income support/universal credit, but if you have a mortgage you don't get any help. You're expected to sell your house and move into rented accommodation and live off your profits from selling your house. But in many cases, if your house has not gained in value then that has no impact and you end up having your rent in your new property paid for you...which is often far higher than your mortgage payments were. So it would have saved the state more in the long run to have simply paid the mortgage.

I've never understood why we don't have national insurance accounts, where you can see where stand in being a demerit or benefit to society. If a situation such as the above arose, you should be able to track how much of your mortgage the government paid and you should then make arrangements to pay that back later on or, at an extreme, the government owns x percentage of your property and you pay it back when you sell it. A more flexible system is required because the current one is ineffective and ends up costing the taxpayer far more than it saves. The same with disability benefits and the employment of companies like ATOS which basically drain money from the taxpayer for doing sweet fuck all.

[Altherion]

11 hours ago, Werthead said:

I've never understood why we don't have national insurance accounts, where you can see where stand in being a demerit or benefit to society. If a situation such as the above arose, you should be able to track how much of your mortgage the government paid and you should then make arrangements to pay that back later on or, at an extreme, the government owns x percentage of your property and you pay it back when you sell it. A more flexible system is required because the current one is ineffective and ends up costing the taxpayer far more than it saves. The same with disability benefits and the employment of companies like ATOS which basically drain money from the taxpayer for doing sweet fuck all.

Probably because keeping track of all of this would be a significant expense in and of itself. The kind of conflict you describe (i.e. between renters and mortgage holders) is one of the major reasons people are arguing for universal basic income. Rather trying to referee such conflicts (and this is far from the only one), we could just give everyone some amount of money with no strings attached and let them do with it as they will. It also takes care of the poverty traps.

[Iskaral Pust]

UBI has lots of benefits but still prohibitively expensive to provide a livable income to everyone (most of whom don’t even need it) unless we develop an entirely new taxation/revenue system.  If we use an income tax system then the UBI is either extremely low or else requires taxation at an extremely high % on income above the UBI — basically communism.  To achieve a UBI that delivers a livable income, it will probably be necessary to replace the broad income tax system with some sort of alternative, e.g. direct tax on production by robots/AI or monetarization (since we’ll have deflation anyway).  There are huge coordination and political problems ahead but I expect we’ll solve it gradually in lots of small incremental steps to deliver govt spending to left behind cohorts. 

[DMC]

4 hours ago, Iskaral Pust said:

To achieve a UBI that delivers a livable income, it will probably be necessary to replace the broad income tax system with some sort of alternative, e.g. direct tax on production by robots/AI or monetarization (since we’ll have deflation anyway).  There are huge coordination and political problems ahead but I expect we’ll solve it gradually in lots of small incremental steps to deliver govt spending to left behind cohorts. 

I don't think it's valid to equate UBI with communism, but I do agree with the general idea that any shift to such is going to be incredibly hard and incredibly unlikely.

[Iskaral Pust]

3 hours ago, dmc515 said:

I don't think it's valid to equate UBI with communism, but I do agree with the general idea that any shift to such is going to be incredibly hard and incredibly unlikely.

I don’t equate UBI with communism it’s just that the math works out like that.  For example, if the US decided that $40k (median income) was the right level for a livable income and then tried to deliver UBI to everyone (not just the unemployed or poor) at that level, then the tax needed to pay for that would be a very high tax rate on all income above $40k. (You need zero tax on the UBI itself)

The combination of very high marginal taxes and an assured basic income would drive a lot of low earners out of the workforce and out of the tax base, increasing the marginal tax rates on the remaining workers to compensate.  This would continue in a few waves until an equilibrium was reached with robots/AI replacing most labor because it’s no longer viable to pay enough wages net of the tax rate to keep many workers interested.  Most of the population would be living on UBI alone and all additional income is almost fully taxed.

We’d never allow that in reality, so the alternative is that either UBI remains extremely low (just enough for survival, and still results in huge economic inequality between the employed and the left behind) or else we need a very large tax base unrelated to employment income.

[DMC]

2 minutes ago, Iskaral Pust said:

I don’t equate UBI with communism it’s just that the math works out like that.  For example, if the US decided that $40k (median income) was the right level for a livable income and then tried to deliver UBI to everyone (not just the unemployed or poor) at that level, then the tax needed to pay for that would be a very high tax rate on all income above $40k. (You need zero tax on the UBI itself)

This is not an argument I wanted nor expected to get into, but no, it would not be out of the realm of possibility to ensure everyone had $40K a year.  Would it cost the highest earners much more?  Sure, but's its certainly not something that's unthinkable.

6 minutes ago, Iskaral Pust said:

The combination of very high marginal taxes and an assured basic income would drive a lot of low earners out of the workforce and out of the tax base, increasing the marginal tax rates on the remaining workers to compensate.  This would continue in a few waves until an equilibrium was reached with robots/AI replacing most labor because it’s no longer viable to pay enough wages net of the tax rate to keep many workers interested.  Most of the population would be living on UBI alone and all additional income is almost fully taxed.

Yeah, the bolded is what I'm concerned with as well.  And I'm a hard on liberal.  This conception of automation and subsequent UBI, to me, seems like a perfect recipe for class warfare.  And I haven't seen anyone explain how it's not, or at least how that will be rectified.

[Iskaral Pust]

3 hours ago, dmc515 said:

This is not an argument I wanted nor expected to get into, but no, it would not be out of the realm of possibility to ensure everyone had $40K a year.  Would it cost the highest earners much more?  Sure, but's its certainly not something that's unthinkable.

Do the math: $40k times 320 million people is $12.8trn, compared to a GDP of $18.7trn.  So the UBI bill would cost 70% our current GDP, that's before paying for anything else like national defense, infrastructure, operating the govt, etc.  You can modify that down to per-household or per-adult UBI instead, but you still end up with a situation where the govt has to collect almost the entire GDP of the country.  If you aren't taxing the UBI itself -- which is redundant -- then you basically need the govt to tax everything else at 100%, and even that won't be enough.

I don't think enough people have done the math on what it takes to offer a livable UBI to the whole population.  Current tax receipts are less than 20% of GDP annually.  You cannot increase that by 3-4x without turning the economy into communism.  So UBI has to be tiny, or else you can offer a livable social security benefit to only those who need it, but you have to include all kinds of negative incentives to minimize the % of population who seek it.

Edit: I'm a firm liberal too, although I look like a centrist liberal around here.  I want to see significant reform to avoid becoming a banana republic, but I feel compelled to test the math of these dreams.  It's why I couldn't support Sanders: I'm not a fan of politicians who promise infinite free stuff with no idea of how to pay.  Even if we cut the military spending by half (my preferred approach) and ratchet up inheritance tax and introduce a wealth tax and remove all tax evasion by the wealthy, we'll still only have a fraction of what is being promised.

 

[Werthead]

Quote

 

I don't think it's valid to equate UBI with communism, but I do agree with the general idea that any shift to such is going to be incredibly hard and incredibly unlikely.

 

Ultimately, if it simply becomes impossible for a large minority or the majority of the population to make money from employment, then there has to be either a societal shift or millions or tens of millions of people end up on the streets or starving, which is unworkable either (and obviously evicting that number of people would be unenforceable).

 

[OldGimletEye]

I think UBI is definitely something we should keep in mind and be ready to deploy it in the event AI simply leads to a number of people being unemployed and without means of support. It’s definitely an idea that should be talked about and then put on the shelf when its needed. And personally I could care less if it’s “communism” or whatever. It’s more important that that it’s the right tool to fix a problem.

But, for now, I think, at least here in the US, there are variety other policies that we can pursue or at least think about that would help most people. A few things would be aggressive full employment policies, providing better job training and location services, expanding the EIC, strengthening labor power by doing things like cracking down on wage theft, putting a stop to the Republican Party’s incessant war on unions, strengthening minimum wage laws, funding our safety nets, fixing our screwed up retirement system, better anti-trust enforcement, and making sure our financial system has no more hiccups.

[DMC]

4 hours ago, Iskaral Pust said:

Do the math: $40k times 320 million people is $12.8trn, compared to a GDP of $18.7trn.

Yeah as you mentioned later that's a bit of an exaggeration.  Around 23 percent of the population is under 18.  Don't know about you, but I don't plan on giving kids $40K (frankly, I have reservations giving 18 year olds $40K, but I suppose that's the idea).  Anyway, overall you're right - it'd still cost about $10 trillion, or well over half of GDP.  Entitlement spending is currently approaching 20 percent as is.  It that a drastic difference?  Sure.  But considering the topic I hardly think it's unthinkable.

42 minutes ago, Werthead said:

Ultimately, if it simply becomes impossible for a large minority or the majority of the population to make money from employment, then there has to be either a societal shift or millions or tens of millions of people end up on the streets or starving, which is unworkable either (and obviously evicting that number of people would be unenforceable).

Sure, when accepting that premise it makes sense.  But I think Iskaral Pust is correct to raise the myriad logistical concerns that such a process would entail.

[Rippounet]

Just a few random thoughts as I need to go to bed and probably will miss something but...

Let's say you put in place UBI, but that instead of mostly financing it through taxes you use monetary creation. Your basic problem would be inflation, right? Either the value of money goes down (i.e. you need more money to buy the same stuff) or the value of stuff goes up through the black market (Soviet-style inflation, i.e. stuff is sold through the black market, leading to or worsening shortages in the regular avenues).
Except... What if you couple UBI with mass production of most stuff? Isn't inflation linked to the fact that there is a finite amount of products to buy in the first place?
My point is, if you implement UBI, but are careful to have a considerable amount of products that can -and will- be purchased by the people benefitting from it (houses, foodstuff, cars, electronic devices... etc), wouldn't you not only negate the worst effects of inflation, but even possibly obtain economic growth? Or am I being too economically naive here?
It seems to me there must be a way to make UBI work if it's coupled with an adaptation of production. Which wouldn't even be that important in most developed societies.
Of course, in order for this to work, you'd need a decent corporate tax rate (so the state gets part of its expenses back), as well as some form of prices control (since left to its own devices the market would see prices rise).
In a nutshell you would need significant government control of the economy. But it would still be far from communism, in the sense that the means of production could still be privately owned. At least at first, eh eh...

So, while UBI might be nigh-impossible to implement in the US (where it would just end up as an indirect subsidy for large corporations), I can definitely see it work elsewhere.

[felice]

5 hours ago, Iskaral Pust said:

I don't think enough people have done the math on what it takes to offer a livable UBI to the whole population.  Current tax receipts are less than 20% of GDP annually.  You cannot increase that by 3-4x without turning the economy into communism.

I don't see the downside. But you're assuming that GDP doesn't increase as a result of having a massively automated economy, which doesn't seem entirely reasonable. And you don't tax the UBI when it's paid out to citizens, but that money doesn't just disappear - it gets spent, and you tax it when it becomes non-UBI income for whoever's selling. A flat income tax of 70% isn't that bad if you've got $40k in tax-free UBI to supplement it. For someone who works for $10k a year, it's an effective tax rate of just 14%. For someone who continues to work for the current median income, it's about a 35% tax rate, but on twice as much total income.

[Altherion]

11 hours ago, Iskaral Pust said:

I don’t equate UBI with communism it’s just that the math works out like that.  For example, if the US decided that $40k (median income) was the right level for a livable income and then tried to deliver UBI to everyone (not just the unemployed or poor) at that level, then the tax needed to pay for that would be a very high tax rate on all income above $40k. (You need zero tax on the UBI itself)

I think $40K per person is something to keep in mind for when the machines have well and truly taken over. At that point we will be in a post-scarcity society and yes, in the best case it looks quite a bit like the future communism promised. However, we are indeed rather far from this and what we would most likely start with is closer to "Social Security for all" or of order $15K for every adult and half of that for every child. Going based on the census quick facts, this amounts to roughly 323 million people * ($15K * 77% over 18 + $7.5K * 23% under 18) or $4.3T.

This is still quite some time off, but it is not impossible especially if you assume that it will replace practically all other benefits. It does mean that the corporations and extremely wealthy will have to share and thus more or less assumes a non-trivial threat of violence from the displaced workers.

[Loge]

12 hours ago, Iskaral Pust said:

Do the math: $40k times 320 million people is $12.8trn, compared to a GDP of $18.7trn.  So the UBI bill would cost 70% our current GDP, that's before paying for anything else like national defense, infrastructure, operating the govt, etc.  You can modify that down to per-household or per-adult UBI instead, but you still end up with a situation where the govt has to collect almost the entire GDP of the country.  If you aren't taxing the UBI itself -- which is redundant -- then you basically need the govt to tax everything else at 100%, and even that won't be enough.

There's a difference between the total population and the workforce. Giving literally everybody 40,000 dollars may not be viable but that's not necessary. The US has 125 million households. Median household income is about 60,000 dollars. That's 7.5 trillion dollars.

As for the machine revolution, I rather doubt that that's going to drive the GDP through the roof. We have already reaped most of the benefits. All the menial manufacturing work has been outsourced to Asia, where labour is still cheap. Once salaries there catch up, it's more automation but that's not going to bring significant change to the developed world.

[Iskaral Pust]

1 minute ago, Loge said:

I haven't been following the whole debate, but where did you get those figures from? The US has 125 million households. Median household income is about 60,000 dollars. That's 7.5 trillion dollars.

We have ~320m citizens and a median income of approx $40k.  Who said UBI would be applied at the household level?  That’s not universal, and would rapidly lead to a disintegration of formal households (big incentive to appear independent).  You could perhaps apply a lower amount to minors, as dmc515 did.  It doesn’t change the magnitude of the math.

I not aiming for precision.  I’m trying to show that providing any sort of livable income to everyone — when the majority don’t actually need it — requires a tax base beyond anything that has been conceived.  Taxing the rich won’t do enough.  We’d need them to first get a lot richer and then continue getting richer despite incredibly high marginal taxation. 

The best chance of doing it might be moneterization (Rippounet echoed this too), especially if we’re seeing deflation otherwise.  

[Loge]

If UBI is on a per capita level it would have to be way below the median income per employee. How you treat families versus single persons would obviously be a matter of debate. Handing out UBI strictly on a per capita level would start a breeding contest as it would turn children into a source of income. We already have that phenomenon. People living on welfare tend to have more children. 

Anyway, 7.5 trillion out of an 18.7 trillion GDP is about 40%. That's less than many governments in Europe collect in taxes and social security payments. And you don't need that much for UBI. If the government provides free education of a decent quality and universal health care the cost of living goes down considerably. UBI would largely make retirement schemes obsolete, too. So, you don't need to hand out anywhere near 60,000 per household in cash. 

Moneterization sounds a lot like what the mediterranean countries were doing before the creation of the Euro. Hire everybody into the public service and pay them with money you just print. Doesn't seem to have worked so well given how eager they were to join the Eurozone.

BTW, there is precedent for what happens when a large part of the workforce becomes redundant. In ancient Rome, peasants were replaced by slave labor. As the empire grew, wealth became concentrated in the hands of a few rich families. The bulk of the population were either slaves working for the rich or proletarians, who were being fed and entertained by the government (bread and circuses). 

[Bennis of the Brown Shield]

I don't really see the point of giving out a UBI to everyone instead of just to those that actually need it. Giving a UBI to someone who works is just shuffling money around; taxing a big part of his/her paycheck just to then give it back to the person again. 

Something like a negative income tax sounds like a more effective system. Meaning that there would be a certain minimum income you are entitled to regardless of job or employment status, but it doesn't kick in unless you actually hit those thresholds. 

How expensive such a system would be would surely depend on how big part of the population actually ends up becoming permanently unemployed, no? 

[Liffguard]

25 minutes ago, Khaleesi did nothing wrong said:

I don't really see the point of giving out a UBI to everyone instead of just to those that actually need it. Giving a UBI to someone who works is just shuffling money around; taxing a big part of his/her paycheck just to then give it back to the person again. 

I think the idea is twofold. One, it cuts down on the infrastructure needed to administer the welfare system. If everyone gets exactly the same cheque in the mail (or electronic transfer or whatever) every month then that's much easier to deliver than if it's means-tested. Two, it removes perverse incentives, loopholes etc. and make it so that people can't game the system. You'll always be better off working than not.

I'm not saying I necessarily agree with UBI (not necessarily opposed either), but I think that these are two of the arguments that proponents use fairly often. I've heard lots of sensible-sounding support for negative income tax as well.

[Bennis of the Brown Shield]

11 minutes ago, Liffguard said:

I think the idea is twofold. One, it cuts down on the infrastructure needed to administer the welfare system. If everyone gets exactly the same cheque in the mail (or electronic transfer or whatever) every month then that's much easier to deliver than if it's means-tested. Two, it removes perverse incentives, loopholes etc. and make it so that people can't game the system. You'll always be better off working than not.

I'm not saying I necessarily agree with UBI (not necessarily opposed either), but I think that these are two of the arguments that proponents use fairly often. I've heard lots of sensible-sounding support for negative income tax as well.

I don't think the difference in necessary infrastructure is that big. Negative income tax wouldn't need much beyond people's tax statements to work.

Widespread cheating on those would hurt an UBI as well, since that would mean that people would be paying too little into the system. 

[Luzifer's right hand]

A realistic UBI would probably be far bellow median income imo.

In Austria the median income is € 22215.19 per year. (Although median income is a worthless metric anyway because of the 1%.) 

In Austria we have a needs-based minimum benefit system(Mindestsicherung) which is € 827.82 per month(€ 9 933.84  per year) for singles living alone .

You only get it if you have less than € 4222.70 in savings.

You can live of the Mindestssicherung although rent can be difficult even with the housing benefits you get on top of it.

 

Some additional details for people who are interested:

€ 620.81 per month for singles with a roommate

€ 1241.74 € per month for couples.

Some regional governments offer more than that minimum(921.30 € for singles in the federal state I live in for example).

You get additional benefits depending on the number of children in a household.  

The roommate thing was added later, if I remember correctly, because a lot of couples separated(at least officially) after the Mindestsicherung replaced other kinds of social security.
 

There are lot of conditions though and the amount is often reduced if you do not comply and you have to look for work if you are able to. 
Unless you are disabled or need it for work(if you earn less than € 827.82 your income is topped up) you might have to sell your car if you have one.  

More or less the only valuable property you are allowed to keep is a house or flat if you live in it. 

You get the basic health insurance which is pretty decent even be euro-commie standards although I guess the Scandinavians beat us in that regard.  

Cut backs are coming of course because we just got a far right & neoliberal government.

Some regional governments have already reduced the maximum household income to 1500 €(you could get significantly more depending on the number of children) and reduced the amounts for persons entitled to political asylum unless they agree the certain integration related conditions. Vienna is the state with the least cutbacks(because its the only state ruled by a left only coalition) and some people, especially migrants, moved there because of that.