Basic Income is JUST Compensation
Recognizing what we owe each other
Let's say the cost to produce a widget is $1. What's the cost to produce 1 million widgets?
This may sound like an extremely simple word problem that even some preschoolers could solve. However, if you think the answer is $1 million, you would be entirely wrong.
The cost to produce 1 million widgets is far below $1 million thanks to the savings inherent in mass production. It's a lot cheaper per something to make a lot of something, than it is to create one of it, or even a few. A couple secondary understandings extend themselves as a result of this primary understanding.
First, it's wrong to assume that providing people with more money will necessitate rising prices. Increased demand can lead to greatly increased production, which then leads to lower prices. Just how much production can be ramped up in response to increased demand is a key factor in price determination. Where supply cannot be increased, and therefore more money is chasing the same amount of goods, price increases can be expected. Where supply can be greatly or even infinitely increased, lower prices can be expected, especially where true competition exists.
Second, and I find this point extremely compelling and the real point of this post, is a recognition of our interdependence, and the collective debt we owe each other. Take whatever device you're reading these words on as a prime example. Whatever its cost to you, it only cost that because millions of others like you expressed their demand for the same device. Without everyone else, that device would have cost you ten times, a hundred times, or even a thousand times more than it would have to create just one, just for you.
In other words, we all subsidize each other. It's kind of like every time we buy something for ourselves, everyone else is chipping in too, to make that possible. It can be compared to buying something in a store somewhere with a price tag of $1,000 that only ends up costing us $100 because 900 other people each provided us a $1 gift card to help us buy it. What we're doing right now is spending $100 on a $1,000 item, and ignoring the $900 in help we got, pretending instead that we afforded it all on our own. We didn't. We couldn't. Much of what we buy only costs what it does because of so many other people buying the same thing.
Aside from this truth, when it comes to technological purchases, our tax dollars paid for their research and development. Our tax dollars also often pay to directly subsidize the very corporations that then turn said research funding into commercial products. Additionally, said commercial products are increasingly reliant on big data, and where does big data come from? It comes from all of us, through the actions of our daily existence.
Meanwhile, what is all of this stuff that we’re making made out of? It’s made of minerals, metals, pieces of the Earth, which in turn were forged in the explosions of stars, just like you were. Who owns that star stuff? On the one hand, no one does, and on the other hand, everyone does.
In Alaska, Alaskans are paid on average about $1000 per year for being an Alaskan. Why? Because the oil companies didn't make the oil in Alaska. They're merely bringing it up out of the ground and processing it. The oil is considered owned by all Alaskans, and so they should as owners see some of the revenue generated by its sale.
Now apply this logic to the rest of what was not created by humankind. Apply it to what is not created by any one human individually, but everyone together, like for example land value. Take a million dollar mansion and swap it with an empty lot in the middle of the desert. The mansion becomes worth only the sum total of what its parts can sell for. The empty lot shoots up in value. Why? Because the unimproved value of land is socially created. That value exists because YOU exist.
Do you see now that basic income is not "free money" or "money for nothing?" You are owed it. It is your just and due compensation as part of this interdependent system we call society. We are all stakeholders in it. We are all owed a dividend as investors.
No investor in Apple would ever be okay with being told that in return for their investment in Apple, they merely get the privilege of purchasing Apple products. Their reward is a return on their investment in the form of cash dividends. That’s fair and just. What is true for corporate stockholders should also be true for you.
Don't accept anything less than a cash dividend for your investments in this grand organization called human civilization. Claim what you are owed and demand unconditional basic income. Furthermore, demand that it be indexed to rise with national wealth so as to reflect your share of rising productivity due to automation. The more labor that technology is doing for us, the higher your technological dividend should be. Nothing less is sufficient ROI.
We must recognize our profound interdependence and begin to treat each other accordingly.
Basic income is just compensation.
I don't like the politics of the basic income movement. I fear the growth of government and of the tyranny inherent in big government practices. I am suspicious that people, exercising human nature will reveal that something that seems benign in theory becomes ugly when actual persons practice it.
Now, having said that, I have to admit that I have been asking something for years (long before I had heard of this idea of a basic income) that answering has proven pretty difficult.
When society no longer needs the labor of its people how do you distribute the wealth of that society to its people?
We are approaching a dangerous point in time when resources will remain scarce, meaning the price of actual things, raw materials, energy, and finished products will be determined by supply and demand realities. Labor, however,, will be dirt cheap, approaching zero cost over time as technology and engineering continue to advance toward full automation of almost all physical tasks. This will create a gap that could destroy our society on a worldwide scale.
If we can get beyond this phase to a time when energy is also approaching zero cost over time, maybe as a result of fusion technology maturing, or other renewables becoming efficient enough to provide real usefulness on a very large scale, the crisis may pass. With unlimited energy the gathering of resources (even if that means from sources throughout the solar system) can be accomplished using almost free labor and almost free energy. At that point we could enter an almost Star Trek like era where money is unknown and things are basically free.
That gap, though, the period of time between the almost free labor that is on the near horizon, and the almost free energy and resulting abundant resources on a significantly farther horizon, is very scary. A time when the value of a human is in great question. What can you offer vs. what do you need?
I don't know the answer, I don't think anybody does. I don't think the basic income idea is the answer, but it will have to be something similar for sure. Somehow we have to meet the needs, and even the wishes, desires, and whims of the people with resources that carry a cost, in order to maintain a healthy social order, but how do we recoup that cost to do that?
Yours is an interesting post, on a topic that is rapidly becoming extremely important. Thanks for posting.
If you spend enough time really diving deep into the idea of basic income, I think you'll see it is indeed the answer you're looking for, and something we absolutely must achieve to get from here to where you're thinking.
Here's a chapter along these lines that I wrote for a book on technological unemployment:
https://medium.com/basic-income/cutting-the-gordian-knot-of-technological-unemployment-with-unconditional-basic-income-e8df7f8eaa16
I will have to make time to read your chapter, but having not done so yet I would ask where does the value of the "money" come from in the basic income? Our money used to get its value from the gold standard, then was switched to a formula instead. That formula was built on the nations economy, which is built upon the work ethic and the idea that the value comes from the sweat equity of work and production. In the basic income economy where does the underlying value of money come from?
Money itself doesn't have value. It is only a place holder for value. If the benefits of a UBI are valued by people/society, then there is no reason why money can't be used to represent that value.
No that doesn't make sense to me. We have a huge national debt, above $20 trillion. That debt has the effect of making the US dollar less valuable because much of the debt is created by printing money that has no root value, so it gets its value by devaluing other dollars. How does printing more money that does not spring from economic production avoid contributing to this decline in value for every dollar we currently hold? When you say money is only a place holder it is true, but when you create more place holders that doesn't necessarily create more places, it just increases the claims on the places that already exist. I think this basic income idea is just a fancy costume for simple socialism, an idea that has never succeeded anywhere in creating value. It shares the same shallow appeal of being compassionate, but really only covers over a problem that isn't being addressed at its root. When things are limited (resources) and they are needed or desired they have value determined by availability. That's basic supply and demand. Basic income money will increase demand, but not increase supply. That means the things demanded will increase in value thereby decreasing the value of the money (the place holder) used to obtain them. Where am I getting this wrong?
It's not as simple as 'increase money supply --> increase inflation'. There's a lot of factors that contribute to inflation and there's a lot of contention between different schools of economic thought. You can see this most clearly in this graph -
which shows total money supply compared to gdp over time. As you can see, total money supply has ballooned and is growing exponentially. Yet inflation now is no higher than in the past (in fact it's lower).
(edit: ignore this next paragraph, I got confused between different comment threads) And just a quick note on your point about "economic production"... you are essentially making a begging-the-question fallacy. That is, you are assuming from the start that steemit content isn't economic production, and therefore have to conclude that steemit content isn't economic production. I'd ask you, why do you think it isn't economic production? If paying money to go to the theatre is economic production, why isn't paying money to read someone's written content?
It's a counterintuitive concept. It's hard to come to grips with what exactly is going on when money is created and used. An important point that very few people realise is that essentially ALL economic growth proceeds from debt. If the economy grows by $X from one year to the next, there needs to be nearly $X of new money loaned into existence (it will be $X multiplied by about 97% - which is roughly the percent of non-base currency in the monetary supply - minus some value to account for the speed of money through the economy - which I think is usually a multiplier of something like 1.1 - that is, each dollar can add $1.1 dollars of economic growth as it moves through the economy).
Two points. 1 - I disagree that inflation is low. The means of calculating inflation may result in a lower number than the means used in the past, the things that make up the basics of family spending may have altered slightly over time due to technology, but I doubt you would assert the cost of living has declined. I would assert the cost of things like food has dramatically increased. Housing took a huge tumble, and is now recovering (but likely to tumble again.) The value of the money people have to spend on their lives is much lower than in the past. Despite the means of calculation, this is inflation. Printing trillions of dollars to bail out the economy is inflation. Deficit spending by the government is inflation. And distributing money for universal basic income will require either creating new money (inflation, devaluation) or elimination of spending in some other areas.
Two - Why would you assume my comments had anything to do with whether creating content on Steemit has value? Why would you think I recognize no value in paying to see a movie? What part of my comment led you to that conclusion?
You added a paragraph after I began my reply. When you talk about money being created, if we accept the premise that money is just a place holder then creating money has nothing to do with growing the economy. Adding value grows the economy, money is just the place holder to measure that added value. If you add money that is not based on added value then you have decreased the value of all the money by distributing it to a larger number of notes.
Oops, sorry about that. I am confusing two different comment threads I am contributing to.
Regarding inflation, I'd have to have a deeper look at that. I understand there is another method to measure inflation other than CPI, and that that measure might be more realistic and is higher, but I'm pretty sure it's still fairly low as well. And keep in mind that adding demand doesn't necessarily lead to constrained supply and therefore price rises. If supply isn't operating at full capacity it can expand to cover the greater demand. Prices only go up when the ratio of demand to supply goes up. And production gets more cost efficient at higher outputs usually too.
Ok, now I've read it, I like your style by the way, good presentation. I'm still not convinced, but as I said in my earlier reply this is something I have been thinking about for a very long time. I think I first began to ask the people around me about this more than a decade ago, and I still wonder how we will survive it. Value comes from a combination of need, desire, and scarcity. People provide all the need and desire, and nature provides the scarcity. It is the scarcity part of the puzzle that I am not satisfied basic income addresses. But, again, thanks for an intriguing read.
Dude that is a most excellent aricle. thank you..
In Ontario Canada it's called universal Income and they're experimenting with it but it is still not what you refer to as to what they actually owe each and everyone of us.
Here's a waste of taxpayers money, a homeless man owing in Quebec more than 100000 in fines. He is doing everything you and I do except he has no home to do it in, so they keep fining him, while he has no job, no Income and no Home; seems Insane. and he's only one...there are many..
Congratulations @scottsantens! You have completed some achievement on Steemit and have been rewarded with new badge(s) :
Click on any badge to view your own Board of Honor on SteemitBoard.
For more information about SteemitBoard, click here
If you no longer want to receive notifications, reply to this comment with the word
STOPSo glad I found you on Steemit. With jobs being replaced by technology the idea of Basic Income is a conversation we absolutely need to be having. I'm still new to the idea, so I find your articles most enlightening and helpful. Appreciate your insights!
Hey man - really appreciate the accessible explanations and arguments for UBI. Learning a lot from you. Keep going!
Thanks Scott, interesting and inciteful post. Following...
Another great read, I'm just loving reading your work. I just came across the idea of UBI recently I downloaded the book "Manna" and I'm just about to get into it now. Thank you so much for sharing your knowledge in this area, it's truly important work.
Congratulations @scottsantens! You have completed some achievement on Steemit and have been rewarded with new badge(s) :
Click on any badge to view your own Board of Honor on SteemitBoard.
For more information about SteemitBoard, click here
If you no longer want to receive notifications, reply to this comment with the word
STOPNICE post