Which is odd because he specifically ask you to give feedback but never follows through on presenting the actual idea.
He does motivate why he thinks a share of the GDP is so he gets the why, but never actually gets into the what, and how.
I mean the GDP isn't just something you can siphon off money from and give it to someone as it's not a thing that anyone owns.
So if you want to give out a portion of the GDP, I think what he really means is pay a universal income that is locked to GDP growth, but he never really says this.
Run for office perhaps. In other words, if you can't discern a plan, maybe the post is more about Sam than it is about a plan.
(NOTE: I do think he has a plan here, just very back of the envelope. I think he's mulling over ways to incrementally roll out UBI, which if you think UBI is a good idea, figuring out an incrementalist approach is hugely crucial, important work. I don't think UBI is a good idea, but I do think this post is about a real thought and not just Sam posing or something. I have faith that there's real intellectual sincerity here.)
It's useful to try out different metaphors and see what sticks.
[1] https://en.wikipedia.org/wiki/Socialism "There are many varieties of socialism and there is no single definition encapsulating all of them, though social ownership is the common element shared by its various forms"
and Matt Bruenig here: https://peoplespolicyproject.org/2017/08/17/index-funds-are-...
It seems like it would be difficult to lock an entitlement program to GDP without encountering funding gaps at some point, though I suppose a funding gap hasn't stopped the Social Security program from continuing to pay out.
Alaska does this [1]. The only problem with the idea is that some things aren't considered GDP while they grow the pie - open source and volunteering being good examples.
Reynold's old books from the 1960s and 1970s explore a world where manufacturing produces more than enough stuff and there's a huge excess population. It's not dystopian; he outlines how such a world could work. His world is capitalistic but government plays a very strong role.
This model comes from an era when corporations were about equity and dividends, not debt. Altman may see the world that way because he comes from venture capital, which is an equity world, not a debt world. Larger corporations today tend to be heavily debt financed, because interest payments are deductible while dividends are not. That interest paid is a deductible expense powers the debt-heavy corporate structures of today.
Also, if all of your income comes from dividends, you have to be able to handle considerable volatility, even across the whole market. At least 2x. That's not acceptable as a basic income scheme. People will starve.
Good point -- but if this became a significant problem, then one could imagine purchasing a hedging service to smooth out the peaks and troughs. That would have to be considered when fleshing out this portion of the OP:
> We’d also need to figure out rules about transferability and borrowing against this equity.
https://www.bloomberg.com/view/articles/2016-08-24/are-index... https://www.bloomberg.com/view/articles/2017-10-26/maybe-ind...
The basic observation being that if we can get the benefits of capitalism when most equity is owned by a passive investment fund like an index tracker, then what's the problem with the state owning all the equity in that tracker, and redistributing the proceeds to the population?
Note that there are a few significant questions left unanswered in there, but the fundamental question of "if index trackers work why wouldn't communism" is quite provocative.
Hierarchical, centralized corruption of the state is the problem, as evidenced by failed communist implementations. If a more distributed model could be devized, perhaps it could avoid such problems.
That said, I see some strong concerns with this approach:
1) Is this dumb algorithm easy to game by virtue of being so simple?
2) Is it possible for a tyrant that gains power to turn this passive equity into concrete control over the economy organizations?
3) (Probably most germane in the context of the OP), if the majority of the economy is owned by passive investment vehicles, would there be market competition any more? Or would high-risk investment capital dry up, to the detriment of startups and small businesses, and causing the economy to be less efficient overall?
This last concern also applies directly to Altman's American Equity proposal, at least to the strong version where most of the US GDP is tied up in the program. It's possible that the weak version (where a small chunk of the GDP is in the program) would be positive, while the strong version would be harmful.
I don't possess enough Econ expertise to have a strong opinion here, but would be interested to hear others' thoughts on this.
Also, perhaps we should call this concept something other than "Communism", since it only partially overlaps with that ideology; Communism explicitly identifies the "working class" and "capitalist class", and describes the exploitation of one by the other. While the outcome described by American Equity looks like the Communist endgame, in that wealth is collectivized, it is also quite different in many other ways, specifically the preservation of free markets, property, etc.
Anyways, if you like his writing, I'd encourage subscribing. http://link.mail.bloombergbusiness.com/join/4wm/moneystuff-s...
This is the "fixed amount of wealth" fallacy, wherein the author regards the amount of wealth in the society as an invariant, rather than a variable.
The only reason that equity exists at all is because of the efforts of people who created it (and thus own it). Without those efforts, there would be no equity for the state to own. Without a promise of owning that equity, nobody has a reason to make those efforts. Thus, any state policy to "own all the equity" also removes the reason that equity exists in the first place.
And now you're in the Soviet Union; enjoy eating your two bananas every year, because nobody has a reason to bring you any more.
By calling a basic income system American Equity, Sam shifts the conversation away from the word 'income' because this clearly isn't "income" in the traditional sense, to "shared wealth" which is much closer to the ideas brought along. I think it is a reasonable way to look at it, although I continue to believe that what is the fundamental factor is keeping wealth inequality in check. Extreme wealth inequality is just as unstable a system as extreme wealth equality.
Let's take a company like Google and re-imagine it.
From its public statements we know that the bulk of Google's employees cost Google money and cut into its profit. Nearly all of its profit comes from its search advertising business and everything else mostly loses money. If Google was structured as an "economy" than the 1200 or so people who were responsible for search advertising would be like the world wide 1%. They would enjoy lavish perks, free food, daily massages, etc. While all of the other employees would have to work very hard every day doing what they were doing and hope that something didn't come along and get them fired while living out of their car on a salary that was commensurate with how much they were costing Google.
Instead, everyone at the company benefits from the work of the 10% or so of the employees that make all the money in the company with free food and buses that take them to and from work. And even though they are losing the company money by being there, the environment remains vibrant and energized because the company is so wealthy as a whole that they don't have to worry day to day that they will be fired if they do their job to the best of their abilities and be good corporate citizens.
The US is an amazingly wealthy economy. Many of the richest people in the world are citizens of the US. What I hear Sam proposing is that we create public policy around making the US a great place to live for all of its citizens, just like an Apple or Google make their companies a great place to work for all of their employees, regardless of whether they are entry level or C-suite level.
I don't know if it is possible to pull off but I do think it is worth trying to pull it off.
> I think that every adult US citizen should get an annual share of the US GDP.
Sure thing, sama. I hope you saw it[1]: https://medium.com/@simon.sarris/after-universal-basic-incom...
Without addressing these issues, UBI could look like a nightmare even if we're all on board.
I think he's committing the usual assumptions:
1. That what people struggling and suffering in the US need is money, and not some other thing that they've also lost, that may be more important.
> imagine a world in which every American would have their basic needs guaranteed
2. That those struggling would be content if they had the $ part figured out.
3. That such disbursements would ultimately lead to less inequality, and not more.
etc
Just as you can find Silicon Valley techies who think Soylent is the only sustenance a person will need, intellectuals tend to think everyone could be as content as they would be living life in their heads or inventing their own destiny. Most people need to be doing something to feel satisfied and UBI addresses this just as poorly as disability checks. Cue drug epidemics.
> And we should consider eventually replacing some of our current aid programs, which distort incentives and are needlessly complicated and inefficient, with something like this.
Tread very carefully, Sam. As I mention in the anti-UBI article, thinking you can replace case workers who do very real, inefficient, difficult tasks like getting medicaid patients to just sign up and show up at a doctor at all is not easy. You will not eliminate poverty just by giving everyone money, especially if you do it by eliminating the pesky overhead of case workers at the same time. UBI looks great because its easy to explain, but we probably need a basket of hodge podge solutions to meet the needs of the poor. The poor and their needs, I promise you, are much more diverse than the Silicon Valley rich and theirs. Be very careful not to think the poor think precisely like you, just minus money. E.g. what works for a top 1% IQ engineer who lost his job will not work for a senior citizen drug addict who has had trouble holding a conversation with another human for the last 5 years due to his isolation.
[1] Because dang messaged me about it being re-upped on HN so I assume somebody at YC eyeballed it.
There's no reason to assume that anyone at YC sees the posts we re-up. That's just routine moderation. The only reason they'd know about it is if they ran across it on Hacker News like anyone else.
How do you decide which stories are re-upped and which are not?
I would expect something similar to happen to here: this would incentive massive changes in attitude towards national infrastructure and services. Take NASA for example: it's already difficult to convince taxpayers at large to support NASA even to the meager extent that it is; now put NASA into the context of being even perceived as a very minor drag on GDP in a country where citizens expect to get an annual return on GDP, and there's no way NASA would continue to be funded.
Everyone would be willing to forsake long-term goals and returns in exchange for short-term financial incentives -- exactly the problem of so many businesses today.
(Rural areas would also be absolutely gutted by urban centers -- this would become a system that empowers tyranny of the majority.)
I think former President Obama has already replied to this idea more eloquently than I could:
"...government will never run the way Silicon Valley runs because, by definition, democracy is messy. This is a big, diverse country with a lot of interests and a lot of disparate points of view. And part of government’s job, by the way, is dealing with problems that nobody else wants to deal with." ... "...if all I was doing was making a widget or producing an app, and I didn’t have to worry about whether poor people could afford the widget, or I didn’t have to worry about whether the app had some unintended consequences -- setting aside my Syria and Yemen portfolio -- then I think those suggestions are terrific." https://obamawhitehouse.archives.gov/the-press-office/2016/1...
Note the vast majority of corporations are not public and their only shareholders are the individual owners. So, maximizing return on their capital and labor is not based on some "mistaken belief", it is a basic existential requirement. Show me someone that doesn't understand that and I'll show you someone that has never run a business.
That is wrong. The existential requirement is to not lose more money over the lifetime of the corporation than the capital.
Thats because its very expensive when you don't, from the shareholder lawsuits.
You can try to scale up your worldview without getting sued to oblivion, but it is a parallel fantasy.
This appears to be the same idea, but in capitalist language (Americans as stockholders in the US.)
A similar dynamic led to massive pyramid schemes in Albania, which badly eroded public trust in government.
A common thread in Altman's proposals for a better world are their ahistorical presentation, as if no one had ever tried experiments like universal basic income, voucher privatization, planned cities, or the other pet ideas he has backed. If YC wants to experiment with social transformation, it's behind time they hired some adults who know sociology and history, and can put some guard rails around these ideas before they're backed with serious money.
The final thing I’ll say is that government will never run the way Silicon Valley runs because, by definition, democracy is messy. This is a big, diverse country with a lot of interests and a lot of disparate points of view. And part of government’s job, by the way, is dealing with problems that nobody else wants to deal with.
So sometimes I talk to CEOs, they come in and they start telling me about leadership, and here’s how we do things. And I say, well, if all I was doing was making a widget or producing an app, and I didn’t have to worry about whether poor people could afford the widget, or I didn’t have to worry about whether the app had some unintended consequences -- setting aside my Syria and Yemen portfolio -- then I think those suggestions are terrific. (Laughter and applause.) That's not, by the way, to say that there aren't huge efficiencies and improvements that have to be made.
But the reason I say this is sometimes we get, I think, in the scientific community, the tech community, the entrepreneurial community, the sense of we just have to blow up the system, or create this parallel society and culture because government is inherently wrecked. No, it's not inherently wrecked; it's just government has to care for, for example, veterans who come home. That's not on your balance sheet, that's on our collective balance sheet, because we have a sacred duty to take care of those veterans. And that's hard and it's messy, and we're building up legacy systems that we can't just blow up.
Possibilities are "UBI" has been poisoned with negative connotations can you can't talk about it anymore. That's possible but it seems like the overwhelming sentiment on HN and reddit is massive support for it.
As far as I can tell, "UBI" doesn't have negative connotations such as the phrase "welfare queens". UBI is already widely understood. What's the motivation for the neologism "American equity"? (My guess is it's a UBI-indexed-to-GDP.)
More directly relevant to the core point is the short-term/long-term question: as also evident in the stock market, it is not clear that the companies controlled by shareholders are better focused on the long term than the ones where founders have majority control.
It seems what Sam is suggesting is using taxes to redistribute wealth and provide a basic income, which, sure I think a lot of people are already on board with that and more will be as time goes on. But this idea of equity in a country is only confusing the issue.
A government is not a corporation. It does not exist to generate a profit. It should not be run that way. There is no "market" for governmental products or services. A government is necessarily a monopoly over a specific geographic area.
This seems like an extreme case of "If all you have is a hammer...". Sam clearly lives and breaths startups and business, so maybe he sees everything through that lens. It doesn't apply here and I don't think it's very helpful.
I see no reason why companies would do it and no incentive to take a part of the government (is the US government going to pay a dividend?), I'm not certain everyone having a share they couldn't trade would be worth it. I think the ability to trade state monopolies was tried in Russia, how is that looking?
Finally isn't the stated aim of YC to create companies that are monopolies and use network effects to entrench their positions, accumulating wealth into a few hands?
First, the US government would have to turn a profit...
At first it was good. More opportunities for the little men, yay!
Second generation was like: why do I have to work this complicated job? Strive? Mathematicians live no better than janitors. Overcrowded not-so good resorts with bad attitude (remember, no one have incentive to be polite, servicing others, since there is little money to get from eath individual customer. Almost everyone have same wealth)
Third generation is almost total stagnation. Everyone is just sitting in queue of some sort, waiting for hand-out from the almighty government.
Sometimes for years.
Production is forgotten, redistribution rules the world.
I think it is awesome though that influential people are putting forth creative ideas on how to make our country better. We need this
I don’t like the direct results of this policy (taxation, presumably new and higher taxation, specifically to redistribute income and wealth).
However, the second and third order effects are interesting — our immigration policies, assuming the amounts being paid out are meaningful (unlikely at the start) would look a lot more like Canada/NZ — there would be a strong bias toward immigrants who will be net contributors (young, educated, healthy, culturally compatible), vs family unification or politically chosen.
With a correct metric, people would push to reduce military expenditure to the minimum required for actual defense, and to spend the money efficiently; same with other government programs, assuming $300B saved on defense could be turned into direct payments, etc.
While this is obviously risky, in the 2/10 chance where the startup IPOs or gets acquired, everyone stands to benefit a big deal.
I recently heard about the case of a private school which was able to invest $15K in one of $SNAP's funding rounds (the VC partner was a parent at the school). At IPO, the school netted $50M on this investment. This school was already well off but I can imagine what this would do for a lot of public schools if this option were available to them.
VC wins are done with primarily other people's money with bets spread in multiple areas and advantages accruing to people who get a larger portion of any potential gains.
So maybe please stop thinking (as I think Sam probably does) that startups are the answer to everything and that in the end everyone wins if they can be a part of that. Keep in mind also that money put into startups (that was not previously there) also takes away from money that would enter the economy and benefit other groups. In other words Uber takes away jobs from taxi drivers and Amazon takes away jobs from companies that would typically be selling if Amazon did not exist. It's not all a net win. Which is why it's laughable when (in this example) Amazon talks about opening a warehouse and creating X jobs.
Sam has a lot of time on his hands and plenty of good fortune to be in a position to ponder issues like this. Certainly tells you all of his financial needs are met and now he can try to answer to a higher calling.
Assuming there was some way of defining an index, and there was enough liquidity to make it trackable by a fund, which are major problems for private companies:
By what definition of startup do 2/10 of them get acquired or achieve an IPO?
How would such a fund be more efficient for pensions and endowments than investing in VCs now?
Also, I think this fund would be a disfavored source of funds for founders. The big VC firms are successful in large part because they have access to the best investing options. Securing them as an investor opens doors for future rounds and for prestigious opportunities.
VC investing has traditionally been a good ol' boy club, but I think that will change. Openings up investing to everyone will provide more people with an opportunity to prosper.
One basic suggestion is to pool all public education dollars at a larger unit, and distribute across all schools in a given state equitably. Eventually all public schools in a given state will have similar quality, and more importantly, the upper middle classes will now put their considerable resources and energy to improving the whole state system instead of their idyllic town, lifting up the standards across the whole state.
Of course people will be upset about their property values - in fact, that's when you begin to see the true proportions of American social division: People have equity built up in segregation. They bought in to the system.
Many countries have roughly comparable public schools across groups of a couple million people. It is not tiny districts with massive disparities across one another.
Another idea is national health care - the US Government already pays for most of the actual costs: Veterans, active-duty military, Children in need, the poor, and the majority of elderly Americans. These constitute most of the actual costs. The government also pays indirectly through healthcare benefits provided to roughly 1/3rd of America employed via various levels of government (state, fed, local) and government-run entities (like subways, school etc.).
So - the gov pays for the sick people, whereas the healthy working age people pay into insurance. So the costs come out of gov, but the $ goes to private.
We also have massive inefficiency maintaining bureaucracies in hospitals, government, and insurance companies to do billing. Europeans are shocked at just how much of the healthcare $ is spent on this staff, that is more than half of all staff. You can fire every single person doing reimbursements and billing if you had a nationalized healthcare system. You can also remove perverse incentives to docs, who make money by treating you unnecessarily. When Doc has college bills to pay for little junior, you're GETTING that stent, need it or not.
Tiberius Gracchus tried to stop the ancient Roman 1% from stealing the wealth of the 99%. They personally clubbed him and 300 supporters to death, beginning the chain of violence that ended the Roman Republic.
Without rules like that, then all of the safety net programs we have will still need to exist, because people could end up with a net income far below the basic income otherwise.
This is just UBI with a new branding platform, basically. There are tried and true solutions that have an established track record of working, such as universal basic health coverage. It would make more sense for the US to implement those things first, rather than try something experimental.
U.S. health care spending grew 5.8 percent in 2015, reaching $3.2 trillion or $9,990 per person. As a share of the nation's Gross Domestic Product, health spending accounted for 17.8 percent. *
There you go. The $10k per person that is so often bandied about for UBI, and it would do more for the neediest automatically. People with serious health problems would get more out of the system without having incentives to try to game the system or milk it.
* https://www.cms.gov/Research-Statistics-Data-and-Systems/Sta...
The USA could be a lot more democratic than it is at present and until that is fixed, you will keep seeing a minority of the population control policies that affect the whole nation.
I can get behind a lot of those but the Senate? What's your problem with it? Seems like the founders had very good reason to create it.
Edit: And since bills must be passed by both the House and the Senate, Wyoming residents have much more power over what becomes law than CA residents do. [1] http://www.enchantedlearning.com/usa/states/population.shtml
And here I thought I was getting a slice of the GDP when I get a paycheck every 2 weeks.
The US government could be considered somewhat analogous to a joint-stock company, but the US GDP does not correspond to the revenue or income or profits of the US government either. The proper analogue would be the US government's revenues from taxes and other sources, but of course that just makes this proposal into universal basic income. It doesn't give anyone "ownership of a share in America".
If you want people to feel ownership of a share in America, then owning land in America is indeed one way to do it (as the Homestead Act did, which the article refers to). Another way would be to own a share in a US company. One could even corporatize the US government and give every US citizen a share in it. But none of those things would correspond to giving out shares of the US GDP.
Frankly, I'm disappointed to see Sam Altman making such an elementary mistake.
As a practical point, you won't get economic equity before political equity and them that have the political equity have no reason to redistribute it fairly.
What if it was as easy to start a private small business in the US as it was in the UK _for the individual_.
What's easier in the UK?
Starting a business for many people who aren't already wealthy is a massive risk in so many ways that aren't just monetary.
For example, let's consider healthcare.
I have to think about healthcare before I plunge into starting a new business. How do I take care of myself and my family? "Then don't do it if you can't afford to take care of yourself" you say. Sure. I won't do it then. But that's one less attempt at a new enterprise in America.
In the UK, it is a different story. If I fall deathly ill, I know that at some basic human level - I will be cared for. So I can go ahead and start that business. That's one more attempt at a new enterprise in the UK.
Now tell me which is better for the world - a world which is quickly being automated at all levels.
Small businesses are one of the only remaining ways in which people can build something great for themselves while leveraging the automation in this brave new world for their benefit (think Shopify, AWS, etc).
My family has 2 cancer survivors in it. We can't get health care without some collective bargaining.
Unlike a lot of folks here, I've actually done a startup from scratch. I used COBRA to cover the spread until we could set up a company plan. It was a major expense, and I was lucky we had access to a lot more capital than is typical for a company with 0 folks.
I had a ton of fortunate scenarios that lined up to make it so for a brief 2 year period I could imagine trying an early stage startup. Most people won't have those.
The problem with UBI is not just logistical, it's also psychological and cultural. It might work in other countries, but it won't work well in US. For many reason, some good some bad, many people here would not accept receiving what they see is a "hand-out". First they won't accept others receiving it but many would not even justify getting it themselves.
So it would have to be a UBI disguised as something else. A share in the GDP is brilliant I think and solves this issue. It is a bit like they have the oil payment in Alaska, people seem to accept that as valid and well earned income. The GDP dividend would be the same in a way.
I think the shares should be equally divided. Everyone gets a share if they are a citizen of the country or lived here for X number of years for example. Sam Altman gets the same number of shares as Steve the Carpenter, Jane the Software Developer, and Irene the Newborn Baby.
Seems like there's two primary considerations when looking at a concept such as this. The first is how to implement within our current political climate. The second is how it aligns incentives moving forwards. The first is an obvious challenge, so let's assume for the moment that it is solved, and only worry about the second.
Ideally we want incentives aligned in such a manner that citizens:
1) focus on long term health over short term benefits. It may be tempting for people to reject immigrants because of the perceived cost of a bigger denominator, without appreciating the long term numerator upside.
2) recognize that all benefit from the success of everyone. Put differently, suddenly I care about the state of the individual with limited opportunities on the other side of the country, because it could impact my own wallet in future years.
3) don't somehow become more disenfranchised or powerless through a secondary market of these "shares".
I think it's wise not to ascribe direct political purpose to the various shares. It would be tempting to try to address power inequality directly via share ownership, but that seems misguided.
I assume there's many more incentive issues to consider, but that's just an initial list. I don't know what the answer is to any of these, but if I were to do a full analysis, I would continue to ask questions about what we wanted to incentivize, and what we wanted to de-incentivize. Then whether this actually addresses/mitigates those considerations in a realistic manner.
It's "a monetary measure of the market value of all final goods and services produced in a period of time," to quote its Wiki definition. That is, we're summing up the value of everything we made that year. It's like a hypothetical number meant to evaluate what we accomplished. It's not like accounts receivable or something. And we already all have a share, by definition....it's the sum of what we all did.
Am I missing something here? Or does Sam not know what GDP is? Seems unlikely, but I really don't get it.
I'm tired of sitting back and seeing companies that I liked but couldn't invest in become > 500m market cap successes. If I spent 4 years at one of these companies I could get _common_ stock, but I can't spend 1k to buy some preferred stock.
The whole startup system is rigged. People are going to start realizing it.
It also seems to give much more credence to luck than statistical evidence (Random Walk) that diverse passive investments outperform active investments, especially when accounting for costs.
Off the top of my head I'm not sure how such a thing could be structured without allocating some non-trivial portion of tax revenue to it, and then figuring out how to sell that to Congress who seem to prefer more targeted things like deductions + pork that let them more actively micromanage where the funds go.
But worth brainstorming about and not ruling out any idea just yet.
My usual objection to basic income applies: Basic income in some form already exists in most European countries. It's just a not-that-big parametric change to our current systems plus a change in mentality and social perception of welfare.
Suggesting that we should implement basic income of x euros is roughly equivalent to suggesting that we should increase the welfare unemployed people get today. If it was politically / economically feasible, we would already have it by now.
If we are open about it, this fight is about an ideal of equality. Altman's fundamental motive is egalitarianism (oppose inequality, promote fairness, undermine white privilege, etc.). He should be sincere and explicit about it.
He's not the first, and he won't be the last. It will never work. People are profoundly, inherently unequal. Individuals are different, by nature, by nurture, and by will. Whether it is in terms of beauty, productive ability, height and weight, intellectual prowess, athletic performance, sexual preferences, leadership, fecundity, musical achievement, what have you -- we humans can be and can do so much in so many different ways, and will always be profoundly individual, different, unequal (unless we are oppressed into conformity by statism, or other forms of collectivism).
Behind the tired ability-needs line lies the notion that since somehow the problem of production has been solved, all we should care about is consumption via the distribution of wealth. This is Marxist nonsense, no matter how much capital (machines and robots) is involved.
This assumes that everyone is cooperating together. I had a discussion with my friend about this and not everyone who plays a game (in this case making the country successful) tries to optimize globally, some optimize locally or just don't care. Ever played a video game and been TK'd?
While this sounds good in theory, I don't think works in reality.
Is Sam proposing that citizens get stock in an actual entity?
If yes, what entity? All public assets are already jointly owned by all citizens so I'm not sure what assets there would be left to distribute.
If no, and it's some kind of virtual entity, how would the proposed dividends be paid? Out of tax money? Why not just adjust the tax laws then (something that has to be done anyway) and make that more fair?
This is an odd way to phrase it. GDP is a measurement of consumption (which is taxed), investment (which isn't taxed until it gains), government expenditure (which is often the action of sharing wealth itself), and net exports (which actually does make sense to share). I think that you want to make more of a direct correlation between a country's wealth and its citizens' wealth, but this is not a great framework for it. I don't know what is, but you should talk with some economists to dive further into this thought.
In general, I'd criticize this for being too vague. The topic you're trying to conquer could maybe be genuinely addressed by Richard Rorty doing a very well funded 5 year research and philosophical study. An investment manager just writing a few words about what is going on in his gut doesn't really do it for me, especially when so much is hand wavy and imprecise, and what is specified (some benchmark to GDP) doesn't really make sense.
I hope that one or more silicon valley billionaires run for national office on this kind of platform.
Sam is smart to point out that one of the main friction points is how this kind of thing pertains to immigration.
What's missing is an updated version of the narrative behind give us your tired, your poor, your huddled masses. Instead we get the vile rhetoric of Donald Trump that blames immigrants and minorities for all sorts of problems.
The American version of this sort of program needs to be fundamentally different from the "stipend" given to Saudi citizens by their elitist monarchs, and it cannot be designed to serve a similar political function (keeping the masses content).
Instead, we must view basic income as a system of positive and negative taxation that preserves the incentives individuals have to work hard to improve their own outcomes.
It must also eliminate the many perverse incentives and psychologically defeating categorizations (welfare, workers comp, etc.) that assault the dignity of those receiving income from the state today.
There are many costs of poverty that are not typically accounted for properly -- the harm done to children whose parents can't manage adequate prenatal or early childhood care, the human capital wasted by those who experience a setback that makes their planned investment in their own skills financially unwise, the time and energy wasted attempting and policing all sorts of major and minor fraud related to state payments, etc.
The biggest enemy to progress in America is the zero-sum mindset that plagues so many people and fuels their resentment toward immigrants. The areas of the nation facing the most decay and the least hope are the ones that seem to have adopted this mindset.
However, doing it at a national level requires a lot of changes, including implementing a national ID (social security numbers already do this but they have no password) and then you are in danger of being tracked by this id and so on, like China does.
However, why do it at the level of a nation? Why not communities small and large, local and virtual? That is what my company's been building since 2011. Well, not necessarily American Equity but a platform that any Community can run, to have its own social network, currency, and so on.
Take a look at these two links:
Equal Is Unfair: America's Misguided Fight Against Income Inequality
https://www.amazon.com/Equal-Unfair-Americas-Misguided-Inequ...
The book I linked to is a couple hundred pages long, explores moral and practical issues, and has almost 20 pages of notes and citations. Far from attempting to "kill the discussion", which is in fact what your blithe comment is attempting, it explores the topic of inequality in a uniquely deep way.
> I believe that a new social contract like what I’m suggesting here—where we agree to a floor and no ceiling
So like...basic income but with limited downside and unlimited upside all the while ignoring income inequality? And Who decides on the payment based on "social contracts"?
> The annual earnings for a full-time minimum-wage worker is $15,080 at the current federal minimum wage of $7.25. Full-time work means working 2,080 hours each year, which is 40 hours each week. [1]
GDP per capita 2016 = 57K [2]
10% GDP per capita = 5.7K
20% GDP per capita = 11.4K
15K - 11.4K = 3.6K
So my options are:
- no work + ubi = Gain 40 hours of personal time per week; lose out on 3.6K if we didn't have UBI.
- work + no ubi = Better off by 3.6K without UBI, but at the cost of 40 hours working a shitty job.
[1]: https://poverty.ucdavis.edu/faq/what-are-annual-earnings-ful...
[2]: https://www.google.de/publicdata/explore?ds=d5bncppjof8f9_&m...
Someone should tell this guy about SPY/SPX.
You're talking here about distributing amounts starting in the hundred-200 billion dollar range and eventually ramping that up to 4-8 trillion. Is this just going to redistribute wealth from income taxes, or is it going to be an incredibly high corporate tax, or what?
I think that part of the reason why the threat of war is much lower now than it was in the past is because patriotism is at an all time low.
Another problem is that this already exists in the form of the US dollar. The better America does economically, the more the US dollar will be worth relative to other currencies. Maybe if the Fed stopped manipulating the money supply, people would actually be able to see the value of the USD increase predictably when the economy does well.
I totally agree with attempts to redistribute USD to its citizens to even things out.
Nonetheless, I think that cryptocurrencies will solve the problem of inequality without the need for government intervention.
But getting there is going to be a huge mess, with the establishment fighting every inch of the way.
So it's nice to see someone whose voice will be heard saying it's the way to go.
I question the sense in developing large stretches of arid wastelands (among other biomes) that feature beautiful, unique and delicate ecologies.
No, it makes far more sense to appropriate all existing developed land and rebuild as extreme density. The original owners can inhabit the top floor of each new building.
We could even graduate the heights of each new building according to existing property values, ensuring the continuity of our arbitrary class system. The taller the building you inhabit and the further up it, the more remarkable you must obviously be as a person.
My modest proposal maintains these unique landscapes held in public trust for future generations while ensuring that the wealthy can continue to look down on the rest of us.
Win-win!
It's everything they hate, stealing money from their worshiped 'supermen job creators' to give unearned handouts to 'lazy others'. These ideologues care about 'society' only in as much as facilitating 'great individuals'.
The kind of hate campaign that will be launched to stop this in its tracks if it becomes anything more than wide-eyed utopianism will be unparalleled in history. Any so called experiments will be sabotaged with prejudice and fail.
Did I fall asleep and wake up back in 1992? Because in 2017, neoliberalism had been in decline for quite some time in the US, losing influence in both the Republican and Democratic parties (not, of course, to the same alternative in each.)
A Senator couldn't make this happen. The President couldn't make this happen. I'm gratified to have thought about this for a moment and don't want to detract from the core idea but it is very much an idle musing. Even for someone in Sam's unique position, this is just a "Wouldn't it be nice if?" post.
Silliness.
That's the biggest misconception about poverty. It isn't about not having access to financial help when you need it (we already have plenty of programs in the US that should - in theory - solve those same problems).
Poverty in America is more about culture and lack of education. Give any amount of money to many of the poorest citizens in the country, and they'll be no better off after a week of frivolous spending.
Too much and for too long, we seemed to have surrendered personal excellence and community values in the mere accumulation of material things. Our Gross National Product, now, is over $800 billion dollars a year, but that Gross National Product - if we judge the United States of America by that - that Gross National Product counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage.
It counts special locks for our doors and the jails for the people who break them. It counts the destruction of the redwood and the loss of our natural wonder in chaotic sprawl.
It counts napalm and counts nuclear warheads and armored cars for the police to fight the riots in our cities. It counts Whitman's rifle and Speck's knife, and the television programs which glorify violence in order to sell toys to our children.
Yet the gross national product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials.
It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile.
And it can tell us everything about America except why we are proud that we are Americans.
If this is true here at home, so it is true elsewhere in world.
~ Bobby Kennedy 1968
But here is the challenge to our democracy: In this nation I see tens of millions of its citizens — a substantial part of its whole population — who at this very moment are denied the greater part of what the very lowest standards of today call the necessities of life.
I see millions of families trying to live on incomes so meager that the pall of family disaster hangs over them day by day.
I see millions whose daily lives in city and on farm continue under conditions labeled indecent by a so-called polite society half a century ago.
I see millions denied education, recreation, and the opportunity to better their lot and the lot of their children.
I see millions lacking the means to buy the products of farm and factory and by their poverty denying work and productiveness to many other millions.
I see one-third of a nation ill-housed, ill-clad, ill-nourished.
It is not in despair that I paint you that picture. I paint it for you in hope—because the Nation, seeing and understanding the injustice in it, proposes to paint it out. We are determined to make every American citizen the subject of his country's interest and concern; and we will never regard any faithful law-abiding group within our borders as superfluous. The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little.
--
In 2017, around 80 years later, we can perhaps strike ill-clad, and adjust that third a bit, but the rest is still all too true. And some will complain that what we once considered the "lowest standard" has shifted - but a part of decency is accommodation of the worst off within the best of our capability, and our capabilities today have vastly grown compared to our systematic outreach of decency.
Or now maybe
"Machines should work. People should enjoy life."
Or, there is the old
"Machines should work. People should get a guaranteed basic income. If anyone wants more, then they can work for more."
All the ballpark US national arithmetic I did says that we can't yet afford a guaranteed basic income.
E.g., for something simple, supposedly Bezos is now worth $100 billion. But if divide that by the US population of, say, 333 million, then get just $300 per person, just once, and have confiscated all of the Bezos wealth. Point: Not even Bezos is rich enough to provide a guaranteed annual income for everyone in the US, not for a year and not even for just one month just once.
But, maybe when computing is doing enough of the work, then, for a simple solution for the needed revenue, tax the computing, processors and Internet data rates and nothing else. Maybe.
Or, maybe, people should manage computers that manage computers ... that manage computers that do the work for everyone. Okay -- apparently we're not there yet.
For the issue of housing costs, housing is expensive close to where there are good jobs. And there the costs are for the limited real estate close to the jobs and high taxes for K-12 schools, police, roads, etc. And the high housing costs eat up nearly all the income from the jobs because the jobs pay just enough to cover the most important employee expenses, e.g., housing.
But if get out to rural areas, then housing costs can be much lower. If people are going to have a guaranteed income, then they may want to live in areas without much in jobs and with lower housing costs.
But there is a flaw in Sam's proposal: People will still form competing interest groups, e.g., political parties. Then too many of the groups would rather fight for the interests of their group and not join for the good of all. That is, too many groups would rather fight for a bigger piece of the pie they like than for bigger pies for everyone.
In times past, such interest groups could fight in the streets. Then the ancient Greeks invented democracy: Do the fighting at a ballot box. Since a big winner at a ballot box would likely also win in the streets, it's in everyone's interests just to go with the results from the ballot box instead of shedding blood when the outcome is already known.
Basically, democracy is still important and for the same, old reasons.
It's not quite the same but there is extensive existing material to cherry-pick ideas from. E.g. https://socialsecurity.procon.org/
The way you get that income into a shareable pot is via Tax.
So the best way to do this is still good old "Income Tax."
Unfortunately those with the most income don't like to have it taxed. And national policy tends to correlate pretty reliably with whatever those people want. Anything akin to what he's suggesting would help even things out, but that is precisely why they won't permit it. The only way for the masses to assert themselves is through their brute numbers.
If you support UBI, why wouldn't you support reducing the age requirement on social security to 18+? Social security already exists, we don't need to re-invent the wheel. Obviously we'd need to change the eligibility requirements so that you didn't need to pay in. Now we just need a story about where the money will come from to finance it for the long-haul.
The problem that's trying to be solved by this is legitimate, but I don't see much value here beyond it sounding a bit clever. There are ideas out there already that aren't making headway for the same reasons this idea wouldn't.
The US has a technology sector that is as much, if not more, productive than a resource extraction industry. Why not use that sector to raise quality of life for citizens?
Now, do you remember when the FED under Obama printed a trillion dollars a year for five years? Do you know where that money is? Is part of that in your pocket? I don't think so. Well, give that kind of money to 100 million americans in an installment of a thousand dollars a month and that would cover their basic needs while the whole country produces more with all the tax cuts to the producers. Of course much less regulation would do wonders to the economy, like eliminating patents, minimum salary laws, health and education regulations, etc. Go back to letting the individual produce with their own hands and minds without governemnt intervention and that will bring much more prosperity than any other idea. Except politicians won't like it.
So in short, while inflation (money printing) is a kind of taxation, we could easily print money (10% of GDP)to give it to the needy while reducing the size of government and regulations to increase production.
Note, they break out agriculture and animal products into a lot of categories
As a trivial example: GDP goes up if I sneak into a car lot one night and set fire to all the cars.
We need a better measure of "useful" economic production.
https://www.investopedia.com/ask/answers/08/broken-window-fa...
Reconstruction after destruction becomes part of GDP if it is performed but this reconstruction usually takes production resources that would have gone elsewhere otherwise. The person to pay for the reconstruction will spend less elsewhere.
Directly, it doesn't change at all. If it results in people being hired to cleanup and the card being replaced, it does if you consider things one step out, but that might not be the result and, in any case, things get more complicated as you consider more distant effects even if the one step out effects would increase GDP.
Framed any other way, this has been done before. You could argue that Universal Health Care attempted exactly this but instead of providing money back, it went to a universal pool for care. Same for Social Security, Education and other endowment programs.
https://www.amazon.com/Who-Owns-Sky-Common-Capitalism/dp/155...
It would help most of the other 96% of humans, though. Nationalism is fucking disgusting.
I know this is a major issue in CA, NYC, and probably a few other cities, but I'm not really well versed on how much of an issue it is elsewhere. Where could I learn more about this? Preferably sources with data and not just journalistic fluff.
Imagine we lived in a world where labor was unimportant because machines did most things better than humans could. These machines would still required time and natural resources (space, energy and matter) to produce goods and services.
For most people, "working" in this world would consist of going online, buying or trading an amount of energy, buying raw materials or spent matter that is ready to be recycled and pressing a "Start" button. Machines would produce some new goods or services.
Some people may also work on designing new better machines that produce finer goods. This would be mostly creative work as the technical part would mostly be automated. The machines could be specialized for maximum efficiency and quality.
People wouldn't have to go out to work. Machine owners could watch webcam feeds of their machines working in an industrial park somewhere. The finished goods, spent matter (trash) and the machines themselves, would be picked up and delivered by self driving delivery robots.
To get some variety, people would trade the production of different machines and they would trade excess spent matter. They would also trade the machine designs and the land or space to host the machines. The machines would sometimes have to be replaced when worn out or obsolete.
Now assume total energy production was constrained globally to a more or less fixed rate based on what could reasonably be captured from the sun. People would own shares in energy production capacity.
There could be a level of inequality in this society. This depends on how much governments would allow ownership of things to be concentrated, especially ownership of energy, useful space and natural resources.
A good way to prevent too high inequality would be for everyone to be shareholders in global production. Every day, shareholder would receive a dividend, an amount of energy/matter to be spent. They could use it in machines to produce stuff or services, trade it or maybe store it in a battery.
This is better than UBI because it aligns production incentives with consumption incentives and make the system naturally sustainable. If people vote for policies that are inefficient and reduce production, they will simply get a smaller dividend. I'm not making a value judgment either. What people collectively want might not always be a larger dividend. But at least the trade-off will be more explicit and sustainable.
A UBI is just a round about way of distributing the wealth generated by automation when the real fix should be having broader societal ownership of those productive assets.
(at least compared to other VCs, you may still disagree with his absolute numbers)
I am going to ask people i work with at my union and non union jobs and get their response to that sentence.
I'll report back what comments i hear.
However, the thing I think you want to do...
Well, do it.
Start ACME Ultra-Automation Inc., hand out shares, and sell widgets.
-----
edit: In case it's not clear, I'm serious. I want to do this, and would, but I lack hustle.
I am not against communism or socialism, it just seems like that’s what Sam is describing here.
Is the US even making a net profit?
Is that because they don't "understand the dynamics of how economies work"?
This is a terrible idea.
Can't they just wake up and put their mental energy and money on something that actually make sense?
They put their money on problems that have a clear path of solving.
Americans cannot agree to use their money on other Americans who have different values than them, westernized social welfare systems occur in homogenous cultures.
In the US, the homogenous elite and majority power cannot agree to use their money on problems that affect a completely different culture in the lower classes. In continental governments such as the EU, you see the same thing.
When thinking of it, I am often convinced that money is a poor solution to the most challenging problems. Sam likes the idea of universal income, but to me that's like supplying extra oxygen/fuel to an engine, but if the engine is broken it won't do anything, for example I won't be surprised that if every citizen gets extra $2K a month, the cost of "healthcare" will magically raise exactly by that same amount.
If I were in a similar position I'd likely opt for the most fun-sounding futuristic project that doesn't involve all that pain.
(Also, in reality we all own in a share of the massive debt the federal government has taken on to fund wars and corporate welfare. So much for that.)
+1
Headline: Sam Altman Starts new Murica Token ICO
or maybe he hands them out daily for free given some proof of USA'ism similar to the Universal basic income token
-- Lee, founder https://bitbank.nz
jeez, make a joke and get downvoted right away?
more kids = more shares
I hope you're ready for a wall of text. Had to break this into multiple posts...
I have several comments about what you're proposing, to the extent that I understand it.
> I think that every adult US citizen should get an annual share of the US GDP.
Right of the bat, you're starting with GDP, which is an inherently flawed measure of economic output. Namely, it gets imports and exports backwards. If you want to distribute incomes to people, it would be useful for the amount of the incomes to somehow line up roughly with the amount of stuff they'd able to buy with those incomes. The higher the potential imports, the more people can potentially buy.
As a thought experiment, we can imagine that foreign countries are analogous to firms that don't use any labor to produce what they produce. The output of the firms, of course, adds to total GDP. And the output of the countries subtracts from total GDP. This is despite the fact that the two are the same thing.
I've written a blog post about this: http://www.suncho.com/blog/20170616_gdp_is_wrong.html
> I believe that owning something like a share in America would align all of us in making the country as successful as possible
No. It wouldn't. The problem here is that you run into the tragedy of the commons. Everyone receives the benefit whether they happen to be contributing or not. This creates an incentive not to contribute because you're going to receive the benefit anyway. This is why communism doesn't work.
The good news is that we by and large don't need most people to contribute. So an incentive not to contribute might not be such a bad thing.
> the better the country does, the better everyone does
Yes. But the good news is that you really don't need to incentivize people to be involved in making the country successful. The innovations of the few can benefit the many.
> give more people a fair shot at achieving the life they want.
The idea that people should have to "achieve" the life they want is a little silly. We have to resources to give everyone an amazing life without them having to work for it. We're operating way below our productive capacity.
There's a Buckminster Fuller quote that I really like:
"We must do away with the absolutely specious notion that everybody has to earn a living. It is a fact today that one in ten thousand of us can make a technological breakthrough capable of supporting all the rest."
Figuring out how to embrace joblessness as a positive force for humanity is probably the most important social challenge we currently face.
I also wrote a blog post about this: http://www.suncho.com/blog/20150326_morality.html
> And we all work together to create the system that generates so much prosperity.
As I've said, we really don't need everyone to be working together. Furthermore, even if you really want people to be working together, your plan to doesn't incentivize us to do that.
> I believe that a new social contract like what I’m suggesting here--where we agree to a floor and no ceiling--would lead to a huge increase in US prosperity and keep us in the global lead.
When we distribute money to people (e.g. through a basic income), there's always going to be an amount that's optimal for social prosperity. I agree with you that it would be a mistake to put a cap on the amount of the basic income that's below what's socially optimal. I cringe every time someone says that the basic income should be exactly equal to the amount that pays for everyone's basic needs.
But it would also be a mistake to put a floor on the basic income that's above what's socially optimal. That being said, I think we have enough available resources that the optimal amount of basic income would be well above what most of the "basic needs" people are calling for.
> Countries that concentrate wealth in a small number of families do worse over the long term--if we don’t take a radical step toward a fair, inclusive system, we will not be the leading country in the world for much longer. This would harm all Americans more than most realize.
I mostly agree. If we flatten out the aggregate demand curve by providing an evenly distributed income to everyone, then that increases quantities demanded of many of the things we produce and allows us to scale up production. This gives more people more access to more wealth.
> Today, the fundamental input to wealth generation isn’t farmland, but money and ideas--you really do need money to make money.
Hmm. Sort of. Even today there are resources we use that are factors of production that aren't farmland, but that are analogous to farmland. And we still have farmland, of course. Technological improvement allows us to use such resources more and more efficiently with time. Our overall productive capacity increases with time. We also have financial resources and we can certainly make money out of money.
But then another important factor is demand. We're not going to generate (i.e. produce) wealth if nobody's going to buy it. Our technology can improve all it wants, and our productive capacity can go through the roof. If people don't have the incomes to pay for all this stuff, it won't matter.
As far as ideas go, I'm not sure how important they are. Ideas are a dime a dozen. There are no new ideas on the face of the planet (except of course for my ideas, which are unique and special). Execution on ideas can be great. Innovation can be great. But as long as we're constrained by demand, none of that is going to help. Demand is our bottleneck. By focusing attention elsewhere, we're prematurely optimizing a part of the code that isn't going improve performance.
> American Equity would also cushion the transition from the jobs of today to the jobs of tomorrow.
Huh? Are you saying that if everyone had an income it would give them the freedom to work on things that are actually going to matter?
> Automation holds the promise of creating more abundance than we ever dreamed possible, but it’s going to significantly change how we think about work.
It depends on us significantly changing how we think about work.
> If everyone benefits more directly from economic growth, then it will be easier to move faster toward this better world.
Yes.
> The default case for automation is to concentrate wealth (and therefore power) in a tiny number of hands.
Yes. If we rely on wages for people's incomes and production is constrained by consumer spending levels, then the result of automation is necessarily a reduction the amount of wealth we produce. And the people who do have access the the wealth are the ones who somehow still have sufficient incomes to purchase it.
> America has repeatedly found ways to challenge this sort of concentration, and we need to do so again.
Yes. But it's been pretty ugly so far. A lot of it involves contorting the labor market in an attempt to get somewhere close providing people with sufficient incomes through wages. I hope we can do better in the future.
> The joint-stock company was one of the most important inventions in human history. It allowed us to align a lot of people in pursuit of a common goal and accomplish things no individual could. Obviously, the US is not a company, but I think a similar model can work for the US as well as it does for companies.
If the joint-stock company actually depended on their shareholders in order to be successful, then you'd have the same problem with the tragedy of the commons. But it doesn't. The shareholders and the workers at the company are different but overlapping sets of people.
What the joint-stock company really did was it allowed you to bet on the success of the company. And it allowed you speculate by betting on the price of the stock, which wasn't always the same thing. Unless you have a really high stake in the company, if you think the stock price is going to drop, the incentive isn't to improve the company. It's to sell the stock.
Your plan feels like it's trying to achieve something different.
> A proposal like this obviously requires a lot of new funding [1] to do at large scale
Depends what you mean by "new funding." There's no reason (except politcal) why we can't fund people's incomes by running higher government deficits.
> [1] It’s time to update our tax system for the way wealth works in the modern world--for example, taxing capital and labor at the same rates.
I'm not sure how useful it is to think of taxation as a way to fund spending. The amount of money the government should spend for optimal benefit to the economy has very little to do with the amount of money they take in through taxes. If you can deficit spend without causing inflation, then you should do it. Taxation just makes things more complicated.
Taxation is useful if you actively need to remove money from the economy to combat inflationary pressure or to conserve resources. But as far as inflationary pressure goes, the Fed still has a ton of room to raise interest rates and shrink the private financial sector, which is where most of our money flow comes from these days anyway.
The private debt that we rely on is also very unstable. It consists of a brittle web of interconnected debt obligations that grows more fragile with time as it builds up. So a deficit-funded basic income can help stabilize the economy and prevent 2008 from happening again. You're replacing unstable money backed by private debt with stable money backed by government debt. The decision to deficit spend is not a choice between debt or no debt. It's a choice between public debt or private debt.
And if you're distributing the new money to everyone evenly, instead of people with money getting more money to spend on stuff they already buy, people without money are getting more money tospend on new stuff. This creates an incentive for producers to produce more rather than to raise prices. Because of this effect, a deficit-funded basic income might not cause very much inflationary pressure in the first place.
> And we should consider eventually replacing some of our current aid programs, which distort incentives and are needlessly complicated and inefficient, with something like this.
Sure. But I think you can introduce the basic income first. Then, we might eventually realize that some of these other programs have become entirely pointless.
> Of course this won’t solve all our problems--we still need serious reform in areas such as housing, education, and healthcare. Without policies that address the cost of living crisis, any sort of redistribution will be far less effective than it otherwise could be.
I'm not so sure about that. A basic income would allow people to live in cheaper places because they don't need to be as close to jobs. That, in itself, can take pressure off housing prices. But it's because housing prices in currently-expensive areas won't really matter as much anymore. It will become far more okay not to live there.
The biggest problem with education is that it's too tied to the labor market. If people don't have to worry about educating themselves in a very specific and restricted way just in order to survive, then that takes the pressure off tuition prices. If people are free to eductate themselves by exploring on their own, following their natural curiosity, and making use of free online resources (which are only getting better and better), then that takes demand away from colleges.
As far as healthcare goes... hmm. Yeah. Healtchare is a problem. I have a lot to say about healtchare, but I won't say it here because this post is already way too long.
> but I think we could start very small--a few hundred dollars per citizen per year--and ramp it up to a long-term target of 10-20% of GDP per year when the GDP per capita doubles.
I like the idea of gradually ramping up a basic income. You'd just keep ramping it up until the additional increases stop providing additional benefit to society. And, of course, as technology improves, the optimal amount of the basic income would increase.
However, we really need to let go of tying it to GDP. Even if we had a more sane metric of economic output than GDP, the basic income necessarily changes the level of economic output. As people get more money, we will produce more stuff for them to buy.
> I have no delusions about the challenges of such a program. There would be difficult consequences for things like immigration policy that will need a lot of discussion.
Immigration is really interesting, at least with respect to a basic income. Because if we opened up immigration and provided all the immigrants with basic income, that would provide a huge boost in demand. Plus we'd have more human minds living right here in America. And the human mind is, of course, the most valuable resource. Basic income plus open immigration is a very powerful combination.
> We’d also need to figure out rules about transferability and borrowing against this equity.
Yeah... This equity thing doesn't really make that much sense. Straight up cash would be a lot simpler.
> And we’d need to set it up in a way that does not exacerbate short-term thinking or favor unsustainable growth.
Yup. This brings us back to resource conservation again. We can achieve resource conservation by taxing the use of those resources we want to conserve.
> However, as the economy grows, we could imagine a world in which every American would have their basic needs guaranteed. Absolute poverty would be eliminated, and we would no longer motivate people through the fear of not being able to eat.
Yes.
> In addition to being the obviously right thing to do, eliminating poverty will increase productivity.
Yes. It would increase productivity primarily by giving people more money to spend, which would induce more production. It might also reduce the total amount of labor we employ. More production and less labor means more labor productivity. But I don't think that labor productivity should be a goal in itself. Higher productivity is merely a consequence of achieving production while also using less labor.
> American Equity would create a society that I believe would work much better than what we have today. It would free Americans to work on what they really care about, improve social cohesion,
Replace "American Equity" with deficit-funded basic income and I'm sold.
> and incentivize everyone to think about ways to grow the whole pie.
Nope. Not this part (for reasons stated above).
So there's your feedback. I hope this was helpful.
Cheers!
https://deanbaker.net/images/stories/documents/Rigged.pdf
Chapter 9 Rewriting the Narrative on Economic Policy
The standard framing of economic debates divides the world into two schools. On the one hand, conservatives want to leave things to the market and have a minimal role for government. Liberals see a large role for government in alleviating poverty, reducing inequality, and correcting other perceived ill-effects of market outcomes. This book argues that this framing is fundamentally wrong. The point is that we don’t have “market outcomes” that we can decide whether to interfere with or not. Government policy shapes market outcomes. It determines aggregate levels of output and employment, which in turn affect the bargaining power of different groups of workers. Government policy structures financial markets, and the policy giving the industry special protections allows for some individuals to get enormously rich. Government policy determines the extent to which individuals can claim ownership of technology and how much they can profit from it. Government policy sets up corporate governance structures that let top management enrich itself at the expense of shareholders. And government policy determines whether highly paid professionals enjoy special protection from foreign and domestic competition.
Pretending that the distribution of income and wealth that results from a long set of policy decisions is somehow the natural workings of the market is not a serious position. It might be politically convenient for conservatives who want to lock inequality in place. It is a more politically compelling position to argue that we should not interfere with market outcomes than to argue for a system that is deliberately structured to make some people very rich while leaving others in poverty. Pretending that distributional outcomes are just the workings of the market is convenient for any beneficiaries of this inequality, even those who consider themselves liberal. They can feel entitled to their prosperity by virtue of being winners in the market, yet sufficiently benevolent to share some of their wealth with the less fortunate. For this reason, they may also find it useful to pretend that we have a set of market outcomes not determined by policy decisions.
But we should not structure our understanding of the economy around political convenience. There is no way of escaping the fact that levels of output and employment are determined by policy, that the length and strength of patent and copyright monopolies are determined by policy, and that the rules of corporate governance are determined by policy. The people who would treat these and other policy decisions determining the distribution of income as somehow given are not being honest. We can debate the merits of a policy, but there is no policy-free option out there.
This may be discomforting to people who want to believe that we have a set of market outcomes that we can fall back upon, but this is the real world. If we want to be serious, we have to get used to it.
Bill Gates' (to name a random American citizen) has a far larger share in the GDP than most other Americans. If you want to solve that raise your taxes on the rich and lift up those that are at the lowest end of the scale. That will have a lot more effect than some fiction where you get to do a bunch of make-believe bookkeeping.
Of course in the current political climate this will not happen, in fact the reverse will happen, tax cuts for the rich at the expense of the poor and the middle class.
Or go a step further do what nobody has the balls to do: tax wealth
That's what all these schemes are really trying to do, albeit in roundabout and inefficient ways. Taxing wealth has it's own complexities (unrealized gains and non-cash assets are the big ones) but it'd be saner than a negative tax (i.e. entitlement) calculated off GDP.
And whence the money for the share? Taxes. So this is just a UBI.
This, like all UBI proposals, seems like a way to dress up a massive tax hike: "but you'll be getting your share of GDP!". The only way to get me to like a UBI is to have UBI replace absolutely all (and I do mean all) welfare programs so that we can just haggle at every election over one headline UBI number + necessary taxes. And the initial UBI and tax rates would have to be no more burdensome than the current total of welfare it would replace, and preferably significantly less burdensome than that. Many UBI proponents, of course, would not mind this because they'll aim to ratchet up the UBI and taxes for it in a way that becomes culturally irreversible -- and that's a reason to be against UBI.
And incidentally, all instances of "soak the rich" in American history have actually been "soak those who aren't rich but have high incomes". The truly wealthy have no income as such -- instead they have capital. And why don't we just tax capital? Well, because every time it's been tried anywhere it's been a disaster for the overall economy: capital (and wealthy people) flees.
I'm ready for the downvotes, by the way.
Another difference, aside from wording/marketing, is that the UBI is implemented as a progressive redistribution of future wealth generation as opposed to a tax on existing wealth ("as the economy grows...")
I don't understand why this is something people believe needs "solved". Did you build Microsoft?
(Whether this will actually happen is a separate topic; but there's a reason why Sam Altman doesn't just propose your tax-the-rich scheme.)
Did you know the richest 2.7% of all earners pay > 50% of all receipts collected by the government(1)?
Or that -- when asked explicitly whether the rich should pay more -- most (3/4) people, like you, say "yes", but when asked what the tax rate should be for top earners, precisely 3/4 of respondents said it should be 30% or below(2). Again, the top rate is 43% right now.
(1) http://www.pewresearch.org/fact-tank/2016/04/13/high-income-...
Yeah but the value of that share doesn't increase when GDP goes up. That's the difference.
> raise your taxes on the rich and lift up those that are at the lowest end
I believe that is what Sam is suggesting. With the caveat the amount of tax collected is again tied to GDP.
> Of course in the current political climate this will not happen
Which is why he is proposing a potentially more palatable variation.
Be more constructive and less defeatist please.
The only thing you will end up achieving is stop the next Microsoft from happening, not the next Bill Gates from happening. The next Bill Gates will happen else where.
The footnote proposes to tax capital the same as labor.
An interesting thing about Bill Gates is what a tiny sliver of GDP he managed to capture over almost 40 years. Something like $0.1 trillion out of several hundred trillion dollars.
The hard part, which barely gets any discussion is:
* How do incentives work? How do you incentivize the production of new wealth?
* How does immigration work? You can't have open borders and mountains of free stuff.
* Does this replace or augment existing welfare programs?
* Does this actually make people's lives better? How do you know? What happens if it doesn't work out?
And so on.
100M people died of socialism in the 20th century. Can we just STOP with this madness please?
