Maybe it could be funded in part by eliminating tax loopholes for the wealthy and corporations
Or maybe by scrapping every other benefit from the budget because closing loopholes isn’t going to make a dent to a $3 trillion program. Even if you closed down all military spending, you’d be less than a quarter of the way to funding it.
It might increase spending by the poor, but by definition it will decrease spending (and investment) by the rich and middle class. TANSTAAFL.
Regards,
Shodan
No, not by definition. The rich tend to save more so it would still be a question of whether higher taxation would decrease their spending vs their saving.
And it’d increase spending by the poor more than it would decrease spending by the rich. Just because there are two different terms of opposite sign in the equation doesn’t mean that they exactly cancel out.
Actually, yes it does. We are talking about equations here.
The rich have $X. If we leave it in their hands, they will spend $Y and invest $Z where Y + Z = X. If we take $X from them and give it to the poor, the poor will spend $X. X = X = Y + Z.
If we borrow $X instead of taking it from rich people, then we are incurring debt and that has to be repaid with interest. If we just print up money and hand it out, that inflates and ultimately decreases the nominal value of X to X in constant dollars. TANSTAAFL.
If your argument is that it is better to spend than to invest, then you are going to get a good deal of pushback from most people who got rich, or anyone with a 401(k) or who expects to live on anything beyond Social Security in retirement.
Regards,
Shodan
I had to recheck the thread title to understand what you guys are talking about. Andrew Yang’s proposal stems from the belief that the demand for labor is declining. Concern that his UBI will disincentivize work is therefore quite misplaced: it overlooks the essential predicate for the whole policy!
And some seemed to overlook that the guaranteed income is NOT means-tested. This can make the money an incentive for work! — For example, when the extra income allows someone to afford childcare payments needed before employment is an option.
Do we face a future where the demand for labor will be “too low”? Maybe. Are we, as Yang contends, already there? I have doubts. That’s why, rather than endorsing Yang’s proposal, I propose things like taxpayer-funded healthcare and subsidized childcare. These are big steps in the right direction if Yang is correct, and good policy even if he’s not.
Thank you for alerting this lefty Dem to the existence of this theory that’s “taking over the Dem left.”
I’m always the last to get the memo. 
Shodan, you just made exactly the same point that I did: Transferring wealth from the rich to the poor will increase total spending. If the disagreement is just over whether increasing spending is a good thing, then that’s what you should have led with.
I’m rather agnostic on MMT. I’ll confine myself to just two comments:
(1) Its proponents are generally much smarter than most of the message-boarders who argue against it.
(2) Since MMT is very closely related to the principle “Deficits don’t matter” it’s easy to associate it with one of America’s two major political parties more than with the other.
Spoiler Hint: Google Who said “Deficits don’t matter”?
I tested this Google just now and, while my prediction — Dick Cheney — showed in the #2 and #3 slots, the #1 Google result was … Warren Buffett!
On 2/15/19 in the Andrew Yang thread
On 2/26/19
The guy who is a crackpot for running for President is not making any moves in the direction of running for President 11 days later?
For anyone else, Andrew Yang has announced his candidacy for President in the 2020 race and is halfway to qualifying for the national Democratic debates.
Did you read post #43? Did you notice the reference to saving and investment?
And will reduce investment by a corresponding amount. Therefore, the argument that UBI increases spending is either an assertion that spending is better than investment, or an argument against UBI. Which are you asserting?
Regards,
Shodan
In my understanding of economics, spending is generally better for the overall economy than investment (and spending generally leads to investment, while the reverse is less likely to be true), under the principle that businesses will have the motive to expand and hire more when they have more customers. But if businesses just have more money, without the expectation or fact of more customers, then they are less likely to expand and hire more.
Which makes sense common-sense-like, ISTM – if I own a burger shop, and I’m about exactly meeting my customers’ demand while making a decent profit, then I’m not likely to expand or further invest (i.e. hire more cooks and buy more grills) just because my taxes go down, because I have no expectation that the demand will be there to meet my increased supply. But if there are suddenly longer lines for my burgers, and I’m having trouble filling demand, then I’ll be much more likely to hire more cooks and buy more grills to meet that increased demand… and having more customers gives me more money to spend on these things, just as having lower taxes would have.
Which makes me wonder why no one that I’m aware of has coined the term “demand side economics”.
The Job Creators are going to become sufficiently motivated any day now …
This is why I advocate for a UBI that is surviving with dignity, but not with comfort.
If you can sit in your tiny little room and stare at the walls, eat bland but nutritious and healthy food, and play or consume basic entertainment that is provided for free, and do nothing else, then sure, you aren’t going to do much work, but you aren’t going to cost much to keep alive either.
I think that most people would want to have at least some small luxuries and comforts, and be willing to work for them.
I think it is an over-simplification to say that spending is better for the economy, just as it is an over-simplification to say that investment is better.
If you don’t have the capital to invest, you can’t serve more customers, so the increased demand doesn’t help you.
In your hypothetical burger shop, I the owner am making a profit. I was going to spend some of the profit to live on, and invest some in expanding my business. Now the government takes away some of it. I still have to live, so I am not going to reduce the amount I live on. I just have less to expand the business, so I am less likely to expand, and therefore increased customers (assume everybody wants to spend their UBI in my restaurant) don’t help me as much.
So I go to borrow the money to expand from someone else. Guess what - everybody is in the same boat, and there is less money to invest.
People invest when they expect to make money. But you have to have money to make money. That’s why “UBI will increase spending” misses the point - it has to equally reduce investment.
Is investment always better than spending? Of course not. But you not only need more customers, you need to be able to serve those customers. And to serve more customers, you need to be able to invest. Maybe you turned away a dozen customers because you don’t have seats for them. You don’t make a lot off customers like that.
Regards,
Shodan
But why are you planning to expand your business? ISTM that the only reason you’d do this is if there were more demand for your burgers – i.e. more spending. Without more spending, there will be no investment.
IOW, I’m saying the spending has to come first – spending can lead to investment by itself, but investment can’t lead to spending by itself, all else being equal. With more demand, even if you can’t borrow the money right now, you can change your strategy and save a bit more knowing that the demand will be there when you eventually save enough to by another grill and hire another cook.
But if there’s money for investment, but no expectation of additional demand (i.e. more spending), you have no reason at all to invest.
Investing might be better for the individual, but spending is better for the economy as a whole.
Which economist has said spending is better for the economy?
Another way to think about it – I can think of tons and tons of examples of slow economies in which there was plenty of money available to invest, but relatively little spending going on – such as the recent slow economies in the US. 10 years ago, there were plenty of rich people with money they could have invested, but because there was a lot less spending going on, they held onto it (speaking generally).
On the other hand, I can’t think of a single slow economy in which there was tons of spending going on, but little investment… can anyone else? If this is rare or unheard of, then that would seem to indicate to me that government policy should probably always favor spending, since historically the problem is always on the lack of spending activity, rather than the lack of investment activity side.