October 14th, 2013, 2:31 pm
QuoteOriginally posted by: exneratunriskQuoteOriginally posted by: Traden4AlphaQuoteOriginally posted by: exneratunriskSo a "real left-wing" wants a market liberation, the orthogonalization of economy and the social system and sharing. Instruments would be unconditioned basic income, changing the reference system for progressive tax from wages to income, cancel all subsidies, ...and ... drumroll ... organize a slim government that concentrates on hard and soft infrastructure.First, let me wholehearted agree with the goal of "a slim government that concentrates on hard and soft infrastructure." And the concept of the orthogonalization of economy and the social system seems attractive on the surface. But is it possible? To the extent that the "social system" involves any transfers of money or money-like instruments, it immediately becomes non-orthogonal to the economy. The redistribution of money among producers and consumers can't help but change economic patterns of production and consumption.∂Standard_of_Living/∂Labour: how do social policies modulate returns on labour?∂Standard_of_Living/∂Savings: how do social policies modulate returns on savings?∂Standard_of_Living/∂Risk_Taking: how do social policies modulate the expected value of risky investments?Or, more generally, what is:Standard_of_Living( Person_i | Decisions_and_Actions(Person_i) )A central challenge to government is to skim enough resources from the economy to provide vital services/infrastructure to that economy without stunting the very economy that the government depends on.Commercial street and working streetIf cs is not greedy it harms itself - if cs is too greedy it harms ws and consequently itselfIf ws does not want more it harms itself - if ws wants too much it harms cs and consequently itselfThis is co-evolution and IMO it doesn't make any sense if the one side claims cs should be more social and the other side ws should be more commercial.Hmmmm... I've always rejected the CS vs. WS dichotomy as a leftist concept that arose from Europe's unfortunate roots in aristocracy. Moreover, the white-collar vs. blue-collar (manager vs. worker) distinction is become increasingly anachronistic in the context of modern organizations. Increasingly, every person in an organization must be a manager of resources (their own, that of their equipment, and indirectly of their coworkers).Instead of a worker-manager dichotomy, I see everyone is part of an economic democracy in which every individual is both a candidate (via the labor, services, products, knowledge that they offer to voters) and a voter (via the labour, money, and other resources that they bid for the candidates). In this context, greed is a double-edged sword. As a candidate, a person must offer more than they cost the voter so that the voter will vote for them. Thus candidates can't be too greedy. As a voter, a person must offer enough (and be discerning enough) to motivate candidates. Thus a voter can't be too greedy (== stingy) with their votes. Finally, both sides must honor their promises.QuoteOriginally posted by: exneratunriskBut the government could make some fundamental decisions, like installing an unconditioned basic income. This would set the co-evolution to another level and and have significant structural consequences (the quality of work and the quality of the economic outputs as well as the will to enter into more risky investments).This is discussed here for decades, but, I guess, the Swiss will be the first to install it.My skepticism of the concept comes from an economic and a mathematical problem with the conceptFirst, let's assume that we have system with unconditioned basic income -- the amount a person receives despite doing no work. 1. How much additional income would a person receive if they work for 1 hour? I would assert that returns on labor must be both strongly positive and differentiated by the value created by the person in order to have a functioning and healthy society/ Someone who produces little output or of low value will be paid much less than someone who produces prodigious output of high value.2. If a non-working person does not spend all of their "unconditioned basic income" so that they accumulate several years of wealth and generate some supplementary income from savings -- should they receive less "unconditioned basic income" in the future? That is, does a person lose their government/social benefits if they are not spendthrift? I don't see how a society that penalizes thrift and delayed gratification can function well.3. If a person saves one year of "basic income" and opens a restaurant or starts a small company, what does the distribution of returns look like (especially after they "share" profits). If the statistics of small business failure (and of venture capital returns) are anything to go by, such a venture might have a 90% chance of losing all their savings and a 10% chance of making 12X their savings (before taxes). But what is the required tax rate on 12X income to ensure that the 10% of "lucky" business starters pay enough taxes to provide "unconditioned basic income" to the 90% of "unlucky" business starters? And at that level of "progressive" taxation, would anyone take any of the risks necessary for progress in an economy?Second, the definition of unconditioned basic income is bound to be subject to upward pressure over time. The "necessities of life" for the next generation inevitably increase in direct proportion to the luxuries that the previous generation of wealthiest could afford. No one wants to be below average. But how can government (or anyone) create an economy in which no one has less than the average level of income without killing the golden goose of motivation (i.e., making all incomes identical so that no one can improve their standard of living or the standard of living of their family through education, harder work, great service, clever ideas, etc.)?