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Alan Friesen
The Wall Street Journal
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Comments by "Alan Friesen" (@alanfriesen9837) on "How South Korea Experiments With Universal Basic Income | WSJ" video.
This is great. Now we have a working model that we can analyze and determine whether the pros outweigh the cons.
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@DefenestrateYourself This goes a little beyond a strong safety net and groups that have automatically received money regardless of income here in the United States haven't necessarily fared so well. But I do have an open mind and I'm very cognizant of the possibility that labor may not be available for everyone in the future and the repercussions of such an environment. I really hope this proves successful and gives us a good model going forward.
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Demand boosts the economy. Production should increase until either demand is met or practical limits of production are achieved. If spending outstrips the increasing rate of production then prices will be inflated. The poorer the people you give money to, the more efficiently the money increases demand because those are the folks most likely to spend it immediately. Of course if you restrict payment to the poor than it creates a negative incentive for recipients to find other ways to improve household income. Also, universal distribution increases the diversity of producers that benefit from the program at the first point of sale.
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@all2jesus If money is distributed to the people than demand is not artificial, it's real, though diminishing if the value of that money decreases. If too much money is injected into the economy too quickly than the price of production will go up because of the discrepancy in the value of money collected through sale of goods and services and its value when used to purchase supplies, capital and labor. Of course that affects some firms more than others. Proper allocation of resources depends largely on the limits of production which are diminishing rapidly as technology explodes. There may be a few products out there that are limited in production by lack of raw resources but I can't think of any that couldn't be classed as luxury items and labor is plentiful in most economies, at least those that aren't locked down. Where both poverty and a work ethic exist, increased demand would not lead to a misallocation of resources, but rather to a correction of currently misallocated resources.
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@all2jesus That equilibrium point will not be the same point as before though. It will have a higher area under the curve which means more product will have been distributed and people and firms will have benefitted absolutely. If this monetary injection leads to a price spiral then other problems weigh heavier into the equation and the overall value of the policy is greatly diminished.
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@all2jesus I don't think supply will go up faster than prices. Prices will go up as soon as sellers realize that their inventory is being exhausted. That will stimulate orders which will increase production until the limits of production are reached, at which point the limits of production are addressed and if possible, relieved. So long as inventory moves faster than orders can be filled the prices will rise. Once production outpaces sales then inventories will grow and price hikes will slow.
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If people don't have money then distribution is inefficient. Products have to be distributed to people. If this is not happening because the money is not in people's hands than you create an artificial scarcity, people suffer, and the economy shrinks.
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@all2jesus Collecting money through taxation and redistributing it universally is not creating an artificial money supply, it's reallocating it form one crucial mechanism—investment, which allows for firms to establish themselves or to borrow to make large capital purchases—to an equally crucial mechanism—purchase, which provides income for firms allowing them to maintain their capital, employ workers, and pay back their investors with interest. This allows a government to effect the balance between these two crucial mechanisms. And let's be real, it helps them get votes. One thing a lot of people seem to forget is that the economy is supposed to be a tool for the people, not the other way around. In order for the economy to be an effective tool it has to be efficient, but it shouldn't chew people up and spit them out in order to maximize efficiency. This means that firms shouldn't be able to abuse and exploit its human workforce. It also means that people shouldn't have to be left penniless just because the economy has no current use for them (I'll save the commentary on the psychological damage of this predicament for another thread).
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@all2jesus While we might have some agreement about the broadest of goals I doubt we'll ever see eye-to-eye on the best way to achieve these goals. Your comment about the consequences of taxing firms is one I disagree with. When a business is taxed it's a tax on profits. This doesn't effect the means of production, including labor. The exception to this is payroll tax, which I think we are in agreement that that should not be a tax. I have a very different view of charities, most of which I consider scams. I think dependence on charities for the well-being of any people is an indication of the failure of government to protect the citizenry and promote the general welfare. I also really don't like the way that philanthropy offers a salve to the souls of the most avaricious among us or the way it allows those who are most fortunate to skew the funding priorities of society to their pet projects. Not to mention the talent and energy wasted chasing grants. Our best scientists spend most of their time begging, the science is done by unpaid grad students.
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