When I saw the thread title I thought it was going to be like that South Park episode where everyone becomes metrosexual.
Not necessarily. If UBI are paid from tax collections, those taxes could easily be collected on dollars imported into the city from outside its jurisdiction.A UBI doesn't create economic productivity. It does many good things, but it also allows people to consume more than they produce very easily. UBI cannot really be done at anything other than a national scale, where outright currency depreciation will counteract the lack of real productivity.
The city that gives out a UBI, but to people who consume more than they produce, will be buying more from outside of the city than the city produces. Each turn of the economic cycle, it will get worse. The city's currency cannot depreciate to counter-act this, which means that the net money will flow out of the city, in the form of destroyed wealth inside the city.
Not necessarily. If UBI are paid from tax collections, those taxes could easily be collected on dollars imported into the city from outside its jurisdiction.
If we re talking about a city (Metro area, let's say) then all company and personal revenue that originates outside of that metro area is "imported". That revenue stream would include sales tax, hotel taxes, income taxes, etc. If I live in that city and earn my living by working for a company whose HQ is two states away, then my income is also "imported". When I spend money in town and it is taxed, then that tax is on imported income.I see, sure. But that would require changing the nature of the city's taxation powers. Tariffs could work to reduce importing. I have a bit of trouble running the numbers using an external currency plus tariffs, actually. Especially given how much a city needs to import.
If we re talking about a city (Metro area, let's say) then all company and personal revenue that originates outside of that metro area is "imported". That revenue stream would include sales tax, hotel taxes, income taxes, etc. If I live in that city and earn my living by working for a company whose HQ is two states away, then my income is also "imported". When I spend money in town and it is taxed, then that tax is on imported income.
The goal is to have more imported income, not less. In the above situation, money from outside the metro area builds a strong service sector job base an increase the tax base for the city. The tax growth allows for UBI.
BI is only useful for two things. First it can life people out of poverty and second it can replace income lost to automation or other reasons they can no longer work. Pnce someone gets the money, how they spend it doesn't matter. they just feed the economy like everyone else. How you get the funds for the UBI is the issue. As a retired person living in NM, my SS UBI comes from Washington and benefits the NM economy. As a US citizen, that money does not grow the US economy; it only supports the existing national "service sector". So as long as you are growing the national or local economy faster than the population, you can afford some level of UBI. Illegal Mexicans who come to the US to work in agriculture, generally improve the region's economy since they enable the sale of food to cities outside the region. When they work in service sector jobs that cannot be filled with locals, then they are contributing to the multiplier and keeping money from being spent outside the region, because the region cannot supply the service efficiently if at all. If I cannot find a good Mexican restaurant in Albuquerque, then I take my money to Santa Fe....Yeah, any increases in productivity would happily feed into the UBI, and the imported money would fund the purchases made from outside the city as well. I get all that. My major concern was that a UBI allows people to 'live beyond their means', but they'd be using the money to purchase imports. Hygro was talking about how there would be a flooding in of low-productivity people, because of the free money. I just don't think it would work.
At a national level, especially with sovereignty, there is much less 'importing'. And so the UBI dollar will be spent purchasing things from outside the side. If production was insufficient, the currency would devalue as external goods were imported. With an advanced economy, a UBI could still be ruined with too much immigration, but it also is able to 'internalize' in order to compensate for inappropriate spending on imported goods.
I just hadn't run the model using tariffs to maintain the currency's utility when it's not a sovereign currency. Functionally, it's very similar to devaluing (since you need more dollars to buy the imported good), but I suspect it will shake out very differently from that.
A UBI doesn't create economic productivity.
It won't necessarily drive investment in the UBI-giving city though. Or even in the same country.It does though. I keep telling you consumption drives investment...and you keep saying stuff like this...
It does though. I keep telling you consumption drives investment...and you keep saying stuff like this...
Point is, if there's unused capacity in the economy (and there is lots of unused capacity in the Western economies right now) then giving people money to spend can absolutely cause that slack to be picked up.
You're literally watching this happen at a national scale. Hand American people money, and they buy stuff from overseas.
UBI really needs a national scale, and it needs control over the currency
The world is multi-factorial, obviously. But 'people buy Chinese imports' is certainly part of the story. And there have been continued deficits for some time, so clearly some money is being spent and not being taxed. If you look at where the median spending is, I suspect it will heavily go to people with a reasonable propensity to consume (actually, I don't know, I just suspect)The American people haven't been handed money in a long time, and plenty of other policy decisions were made that allowed Chinese imports to flood the country.
It's why I included Greece, where the analogy is stronger. But I have to 'use' cheap money instead of free money in the analogy. I needed both an instance of free money AND cheap money. Not easy to find!I don't like this analogy.
When you hand poor Americans free government cash on a one time basis, the money goes to food, cigarettes, alcohol, car payments, gasoline and gadgets.The American people haven't been handed money in a long time, and plenty of other policy decisions were made that allowed Chinese imports to flood the country.
Unlike when you give it to upper middle class Americans, who spend it on food, cigarettes, alcohol, car payments, gasoline, gadgets and the housing bubble.