Automation and the negative income tax - Politics Forum.org | PoFo

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#14817506
To provide a start to the debate two excellent videos exploring the future of automation. Both from channels I highly recommend.

[youtube]7Pq-S557XQU[/youtube]

[youtube]WSKi8HfcxEk[/youtube]

They make some compelling arguments that future automation may not necessarily ultimately result in more and better jobs in the future.

So I'd like to take a moment to make a case for one of my personal favorite policy proposals as a solution to the economic disruption outlined here.

The negative income tax is a proposal to create a form of universal basic income so that people making below a certain line get a calculated return in cash on a monthly basis.

This proposal has had proponents on both the left and right among social democrats to libertarians.

It would replace all other welfare programs into one simpler structure. It also provides people with more freedom to make their own choices while eliminating poverty without the need for constant means testing.

The structure of a negative income tax also means that there is no line where if you are making more money you lose all your benefits, so it doesn't discourage working.

It also provides people with the money they need to live even in times of high employment so that we do not see large economic collapses when people cannot consume and businesses collapse in a chain reaction leading to a depression.

Using the US poverty line, ~12,000 a year, as our baseline we can see that at an effective tax rate of 31% that we could entirely replace all forms of welfare with this program would be deficit neutral. The current effective tax rate is about 29.5% so this is not an appreciable increase and could also by covered by a variety of tax's like a carbon tax or an additional tax bracket on people making over a few million a year.

Poverty is gone, people have the opportunity to choose the work they do since they would have something to fall back on. This gives actual legitimacy to the libertarian argument that people can choose where to work and don't have to work long hours for little pay. It allows people the freedom to create their own businesses or develop their skills to pursue a new career.

It also hedges our economy against the future risks of automation and over the course of the next few hundred years provides a mechanism to adapt to an economy that is almost entirely automated from top to bottom.

For areas with higher costs of living, I.E. cities, they could implement their own extra benefit if need be.

It would be a start to a real dedication to equality of opportunity.

This system has been supported by everyone from Milton Friedman to the green party and I think should be strongly considered as an overhaul to our welfare and tax systems in all developed economies.
#14817587
This would massively push wages up as people would not need to work for low wages doing shit jobs as they could choose not to work.

Why would any government bring this in? All governments are ultimately run by the employing class, they will not pursue a policy that would massively push up wages, that is why immigration is high even every developed nation even when right wing parties who claim to be anti immigration are in power. You idea would push up wages and push down profits and this no capitalist country would ever do it.
#14817589
Even if the unemployment rate threatened to topple the entire system?

Even if you bribed them upfront with eliminating the minimum wage knowing full well that wages would rise as a result?

This was something that was nearly passed in the US not so long ago. Predictions of inevitable failure are not so certain.
#14817596
:lol:

The unemployment rate toppling the entire system? They would just start killing off the poor or forcing them to emigrate long before they even considered giving them huge amounts of free money without even forcing them to do pointless shit to get it.

Not that it would ever get that far, unemployed people do not organise, they are too busy just trying to survive.
#14817602
As a simplification of the state welfare system a negative income tax is an elegant solution and for that reason alone should attract the interest of anyone. However what I came to realise is that economics is like ecology, it is reflexive. The presence of state welfare doesn't mean higher living standards it just means more living standards are state filtered because prices adjust. As an example housing benefit just pushes rental prices up. High minimum wages results in higher prices.

A negative income tax will have the effect of increasing prices, so in the context of automation taking over all human work, the only consequence is that the now virtually free commodities produced by machine labour cost a little more than virtually free. Prices adjust.

Owning a share of the machines seems like a better way to go, if selling labour is no longer an option, and just playing rentier. Or just be a charity case. Will the machines by charitable? Will they tolerate being owned? Maybe even those options will be made redundant by thinking machines... Maybe in the end they will dispose of us all as so much bad rubbish.

The real problem isn't economic, as that is self-adjusting anyway, the real problem is how to stay in control over this new slave race when they become smarter and more knowledgable.
#14817686
The negative income tax (assuming a basic income with optimal marginal tax schedule) has some nice theoretical properties, but reality is more complex. To name a few:

- Work serves other purposes in society than just providing income.
- Some people will always be considered to be more deserving of free income than others. For example people of old age or in poor health. In that sense a basic income cannot (fully) replace existing welfare systems.
- Wealthy people who do not work would receive the basic income as well and pay no income taxes (other than on capital income). Of course one could increase the wealth tax.
- How much money people need to lead a decent life depends strongly on the individual situation. Do they have children, if yes, how many? Do the parents live in the same household, do they live separately? Etc.
- A sufficiently high basic income would be very redistributive and very costly.

I'm not fundamentally opposed to it, but those are things to consider, IMO.
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