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Next global recession = UBI?

UBI economics future recession

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#1
Future historian

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say the next global recession happens in the early 2020s

 

I think there is a high probability during a severe global recession a significant proportion of people who have jobs which can be automated will have there job taken for ever by a machine.

 

this would lead to a permanent spike in unemployment

 

the later the date of the next recession the bigger the spike will be

 

 

this would lead to much more pressure for a UBI from the public


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#2
sasuke2490

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UBI won't come until we reach an unemployment rate that is unsustainable due to automation. I personally believe atomically precise manufacturing would also come about in this time period, driving the cost of living down significantly making a small UBI optional.


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#3
bgates276

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I kind of get what you are saying sasuke. I would add, that in general, automation may take jobs, but in a competitive market, it will also dramatically reduce the costs to produce items and that will be reflected in the prices to consumers. This would make a UBI unnecessary beyond the welfare programs we already have.

 

In my opinion, a UBI is just going to cause distortion, and ultimately if it is introduced, it will lead to inflation. This would occur, either because taxes on corporations will increase, and the businesses will pass those losses on to consumers through price increases, or because the government borrows heavily to pay for it. If it is the latter, it very well could be government is eventually forced to print excessive amounts of money, simply to pay the interest on it, thereby devaluing the dollar. 



#4
Raklian

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I kind of get what you are saying sasuke. I would add, that in general, automation may take jobs, but in a competitive market, it will also dramatically reduce the costs to produce items and that will be reflected in the prices to consumers. This would make a UBI unnecessary beyond the welfare programs we already have.

 

 

 

It wouldn't be inflation if UBI's means of supporting the individual is something besides the form of fiat cash/currency.

 

I think we'll come up with a clever way to do this. I mean, if we're able to produce food at nearly no cost, it'll make more sense to give everyone a monthly allotment for obtaining available food supplies rather than give them cash which would be a wasteful roundabout way of getting the food, right?


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#5
starspawn0

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The discussions here remind me of this Matt Bruenig piece:

http://mattbruenig.c...nt-about-rents/
 

Needless to say, I think the theory is pretty obviously false. Rises in disposable incomes generally do leave people better off, even net of rent payments, even in places where local authorities allow the price of space to spiral out of control.

But if you think it is true, you really should ask yourself what the source of the problem you have identified is. If it’s the case that higher minimum wages, stronger unions, and more generous welfare states are all helpless against rent hikes, then maybe the issue you are worried about has nothing to do with the UBI and everything to do with your area’s dumb housing policy.


Another point worth making is that there is a "time component" and expectations on future prices that has to be taken into consideration: say you want to buy a TV; and say the price of that TV drops by half, and stays there for many months -- and, furthermore, you know it's not going to drop any more. Then, you'll probably go ahead and buy it. But now let's say that the price of that TV starts to decline fairly rapidly with no end in sight. What will you do? You'll probably wait, because you expect the price to be even lower in the very near future -- and you don't need the TV that badly.

This is exactly the problem that comes up with a gold standard and deflation: some people like to argue that if the money supply starts to decrease, it won't be so bad, because everything will just become cheaper (priced in gold coins); so it's a wash. Except, as noted, if the pattern of price decline persists and becomes predictable, it will reduce demand. People will start hoarding that gold, and hold off on making purchases with it.

Most of the smarter Libertarians know this, which is why they support "Monetarism" -- with fiat currency, that is carefully regulated.

#6
bgates276

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I kind of get what you are saying sasuke. I would add, that in general, automation may take jobs, but in a competitive market, it will also dramatically reduce the costs to produce items and that will be reflected in the prices to consumers. This would make a UBI unnecessary beyond the welfare programs we already have.

 

 

 

It wouldn't be inflation if UBI's means of supporting the individual is something besides the form of fiat cash/currency.

 

I think we'll come up with a clever way to do this. I mean, if we're able to produce food at nearly no cost, it'll make more sense to give everyone a monthly allotment for obtaining available food supplies rather than give them cash which would be a wasteful roundabout way of getting the food, right?

 

 

To be honest, I really don't know because I am not an economist. However, what I think, is that for accounting purposes, anything of any worth always has some monetary value assigned to it, does it not, even if it would be the government providing it. If supply increases relative to demand, what would it matter if it went through the normal channels of the free market instead? Wouldn't it be the most accurate to simply let the mechanisms of the free market decide what it is actually worth, if it was really low cost or next to 'free' anyways?

 

Whenever the government provides anything to anyone for 'free', it is usually done in an inefficient manner, and it's usually just someone else who ends up paying for it.



#7
Alislaws

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I'm not sure UBI willcome along as a solution to a global recession. 

 

Recessions cause lost jobs etc. which means the price of labour is driven down, they also cause companies to lower investment in new technology. 

 

So during/in the aftermath of a big economic bubble bursting is actually not a great time to automate jobs within your company.

 

The movement that eventually gets UBI implemented may start there though. 



#8
funkervogt

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say the next global recession happens in the early 2020s

 

I think there is a high probability during a severe global recession a significant proportion of people who have jobs which can be automated will have there job taken for ever by a machine.

 

this would lead to a permanent spike in unemployment

 

the later the date of the next recession the bigger the spike will be

 

 

this would lead to much more pressure for a UBI from the public

I can't disagree with any of your assumptions or with your reasoning. 

 

Let me make one point, though: Just because there's "much more pressure for a UBI from the public" doesn't mean that pressure will be strong enough to make governments actually create UBI's. By 2030, there might be a literal handful of small, rich countries like Singapore or Luxembourg paying small UBI's, but that's it. I don't think the political will for a UBI will exist in most countries until the middle or this century or later. 



#9
caltrek

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I'm not sure UBI willcome along as a solution to a global recession. 

 

Recessions cause lost jobs etc. which means the price of labour is driven down, they also cause companies to lower investment in new technology. 

 

So during/in the aftermath of a big economic bubble bursting is actually not a great time to automate jobs within your company.

 

The movement that eventually gets UBI implemented may start there though. 

It is a "good" time if the goal is to cut costs.  Recessions actually encourage such cost cutting.  Hence the spiral - cut costs by cutting labor inputs, followed by a greater recession, followed by more efforts to cut costs, etc.

 

Political problem is that there are at least two possible resolutions:  

 

  1. UBI.
  2. Maintain your monopoly and not care about what is happening to everybody else because your monopoly will continue to bring in income.  Especially if the demand for your product is relatively inelastic.

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#10
caltrek

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Ok, here is a trivia question for you.

 

This country decided to oblige the "the government to provide grain to" a major city's "citizens at a price below the market average.  The law" protected "the poor against famine and against speculators and establishes a precedent."

 

Name the city and the year.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Answer: Rome.  123 B.C.


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The principles of justice define an appropriate path between dogmatism and intolerance on the one side, and a reductionism which regards religion and morality as mere preferences on the other.   - John Rawls


#11
funkervogt

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Ok, here is a trivia question for you.

 

This country decided to oblige the "the government to provide grain to" a major city's "citizens at a price below the market average.  The law" protected "the poor against famine and against speculators and establishes a precedent."

 

Name the city and the year.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Answer: Rome.  123 B.C.

The U.S. government has been issuing food stamps and distributing free school lunches for a long time. 

 

That brings me to one of the biggest reasons I don't like the idea of a UBI: Shouldn't we make our existing welfare programs more cost-efficient first? If there's little political will to do that, why should we expect a UBI to be enacted? 



#12
TranscendingGod

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The prerequisite to a UBI is not political will but rather necessity. Political will is born out of necessity. Let us not confuse the temporal, causal relationship between these forces. 


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#13
Alislaws

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TG is right, UBI will likely only come about when it starts to look like we won't have any choice. Its too big and expensive for the wealthier members of society to do anything but fight it tooth and nail. 

 

But at some point, when unemployment among those seeking to work is 50% or more we can either switch to UBI, or we are going to have a revolution with a risk of al the wealthier people being put up against a wall and shot, which should bring them around to UBI pretty fast. When over half the population is looking at homelessness and possibly starvation people will need a solution and UBI looks like a non violent and not particularly disruptive way to keep doing what we're doing for an extra decade or two. 

 

 

That brings me to one of the biggest reasons I don't like the idea of a UBI: Shouldn't we make our existing welfare programs more cost-efficient first? If there's little political will to do that, why should we expect a UBI to be enacted? 

 

One of the principal arguments in favour of UBI is that it replaces a great many welfare and other social programs. Also because it is universal, you no longer need to worry about means testing people, which means overall its more expensive, but a much smaller % is spent on administration, and inspectors and application processes and stuff, So you get more per $ spent. 

 

With some things, your UBI might not be enough to cover everything, (like if you are severely disabled and need constant care) so you would still need some targeted welfare programs for people in these sorts of exceptional circumstances. 

 

The other advantage of UBI is because it removes the necessity of work, it allows you to do away with a whole load of worker protections and controls on employers. You can let the market set wages and employment levels, and because people don't have to work, they can turn down work which is not paid well enough, or not safe, or unpleasant and poorly paid.



#14
funkervogt

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That brings me to one of the biggest reasons I don't like the idea of a UBI: Shouldn't we make our existing welfare programs more cost-efficient first? If there's little political will to do that, why should we expect a UBI to be enacted? 

 

One of the principal arguments in favour of UBI is that it replaces a great many welfare and other social programs. 

If existing welfare and social programs were eliminated or sharply shrunk, then rich and middle class people would be more supportive of creating a UBI. However, people who currently depend on welfare and social programs would mostly be opposed. People tend to be afraid of change, even if you show them empirical proof that the change won't actually hurt them. I worry that the deal-killer will be a failure to compromise on the issue of the overall scope of entitlements. 

 

 

Also because it is universal, you no longer need to worry about means testing people, which means overall its more expensive, but a much smaller % is spent on administration, and inspectors and application processes and stuff, So you get more per $ spent. 

True, though even with $0 in administrative overhead, the cost of a UBI could break the bank unless large cuts to other areas of government spending were made. 

 

 

 

The other advantage of UBI is because it removes the necessity of work, it allows you to do away with a whole load of worker protections and controls on employers. You can let the market set wages and employment levels, and because people don't have to work, they can turn down work which is not paid well enough, or not safe, or unpleasant and poorly paid.

A UBI would also disincentivize some people to work at all. They would just play video games all day. 



#15
Alislaws

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...

1. If existing welfare and social programs were eliminated or sharply shrunk, then rich and middle class people would be more supportive of creating a UBI. However, people who currently depend on welfare and social programs would mostly be opposed. People tend to be afraid of change, even if you show them empirical proof that the change won't actually hurt them. I worry that the deal-killer will be a failure to compromise on the issue of the overall scope of entitlements. 

 

...

2. True, though even with $0 in administrative overhead, the cost of a UBI could break the bank unless large cuts to other areas of government spending were made. 

 

...

3. A UBI would also disincentivize some people to work at all. They would just play video games all day. 

 

 

- There are not enough people on welfare to outvote the people not on welfare, or we wouldn't have all this right wing austerity everywhere. If we get to a scenario where the economy is about to collapse, the existing welfare programs will be going either way. 

 

- One way to lower costs would be to not pay some people twice, through UBI and also existing welfare programs, one of which they don't need. (either one really, but If UBI gives you enough to live on, you don't need any other welfare program)

 

The main way to pay for it would be to Tax the people who own the massive automated companies, which are making huge profits because have almost no employees. (Or they're making low profits, and everything is so incredibly cheap that your UBI can be quite small.)

 

-Yes some people would just sit around doing nothing all day. I don't think this would be a significant problem. If it was I would expect that the best way to help would be to improve education standards and try to provide people with avenue for interesting employment, rather than threatening people with homelessness and death through starvation. 

 

I suspect you have never been out of work for very long or you'd realize how boring and empty a life of sitting around doing nothing but playing videogames can be.

 

Remember the scenario here is that 50% of your population is currently unemployable. if a couple of the people with relevant skills refuse to work, its kind of a drop in the bucket. 

 

If you see massive numbers of people refusing to contribute in any way, you could switch to a system where necessities are provided for free to all according to their needs, and anything unnecessary requires money which requires you to be in a job or (if you're one of the unemployable people) in full time education. 


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