Economic Utopian Plan

Economics Economics Questions
161

chloe732 said: “There is no foundation upon which this theory can stand. It is socialism dressed in a new suit.”

Do you even know what socialism is? It is the government ownership of some enterprise. There is nothing in this plan that calls for the government ownership of any company.

The people that are feeding you think tank propaganda do not care about your freedom or well being. They want a winner take all society, not a free society. Great and free if you got the resources to win, terrible and not much freedom for everyone else.

This plan makes sure society works for everyone, like it is supposed to, and makes sure everyone has the freedom to carve out the individual life they want. It is the ultimate libertarian realization of individual freedom, autonomy and power.

162

Re-read the article I posted about the Khmer Rouge.

I also doubt you understand what the “market process” means (Kirzner spent a lifetime studying its meaning). And “capital formation”? You don’t have the foggiest idea.

I tried to help, provide guidance. But you are dug into your position. I leave you there to defend it. Alone.

163

JohnnyFive said: “This is getting a bit desperate now, I don’t think just making it up as you go along is going to work.”

The fact that you don’t have all the information discussed regarding the implementation of this program is not my fault. What was posted here was an outline of the idea.

The notion that you weren’t given all the information ahead of time and that is now your reason to find fault with this program is what looks desperate.

Your idea that you have to make a profit leads to further absurdity. It is often the case that when an entrepeneur starts a business venture that they don’t make a profit for several years, or indeed take any income from the business, they simply eat into their capital until they are established.

If you think employees trading $30k checks is the same as a new business struggling through the start up phase and eating through capital, you don’t know about business either.

But as was pointed out, the whole point is moot because if it did prove unfeasible to monitor fraud, you can just make the dividend 50% of salary and that would put an end to being able to game the system (which was debated ad nauseum by economists who had an interest in this plan).

164

So our genuine budding entrepeneur is drawing no salary whatsoever from his business and therefore is getting 50% of nothing for his dividend? That sounds like a good incentive for entrepeneurship. Then if you tell me that there would be some special scheme to pay entrepeneurs a dividend, again I ask you, how do you differentiate between genuine and fake? Is there some kind of machine in the future that you reads your mind and tells the government what your true intentions are?

By the way, your 50% of salary dividend does not make it a moot point, if anything it makes the situation worse. Say for example Frank and Ernie are friends. Both have savings of $100k (or indeed that $100k could be sourced from your central bank that gives out easy credit). Frank sets up in business as a personal chef. Ernie hires Frank to cook his dinner each night and pays him $100k a year to do so. The government then gives Frank half his salary in dividend which is $50k. So Frank is earning a total of $100k+$50k+$20k = $170k for cooking a boiled egg each night. Frank could then give Ernie back his original $100k or they could come to any arrangement they wanted. This could also be done reciprocally as before. In order to regulate this kind of thing out of existence the government would have to intervene in, and indeed judge the worth of, freely made contracts of employment. In other words, it has to be an authoritarian state.

165

Socialism is a general philosophical position about organizing society. It is an ideology that tells individuals what they should do; it predates Lenin, Marx, Ricardo, ect, and it has been the position of various quacks and misfits. It’s very broad, but its underlying characteristic is that it places “society” above the individual. Here are some other basic socialistic tenants:

  1. Ignores Incentives
  2. Denies Scarcity
  3. Does not understand Capital
  4. Does not understand value
  5. Society as a living organism

Your particular type of socialism most closely resembles the Utopian socialist fantasies espoused by Owens and Proudhon (Flying roasted chickens and seas of lemonade).

166

JohnnyFive said: “So our genuine budding entrepeneur is drawing no salary whatsoever from his business and therefore is getting 50% of nothing for his dividend? That sounds like a good incentive for entrepeneurship.”

The incentive for entrepreneurship is to work for yourself, to develop your own idea and to earn profits.

If you earn a profit, that would qualify you for the $30k dividend in the same way as any other employee.

But the $20k dividend that everyone gets gives people the opportunity to launch a new business without having to worry about surviving. They will always have that $20k to survive on while they try to get their new business off the ground.

Becoming an entrepreneur in today’s system is very difficult when you don’t have that $20k cushion.

“By the way, your 50% of salary dividend does not make it a moot point, if anything it makes the situation worse.”

Yes, it does make it moot. Each person in your scheme will:

-$60k (pay the other a $60k salary)
+$60k (get a $60k salary from the other)
-$30k (pay a $30k tax on your $60k income)
+$30k (get a $30k dividend)
=$0

When you add it all up, nobody has made anything.

167

If unemployment will now pay $20,000/yr instead of $0/yr, shouldn’t we expect to see a massive increase in unemployment under this plan?

168

Freedom is not the same as having the “right” to free things, even if it is robots doing it for you, it is truly amazing how many internet loonies make the same assertions about freedom.

You still have not answered the cabana boy beach problem. I assume that more people want to have the sun tan lotion applied as opposed to being the cabana boy/girl, therefore we have a scarcity, something that you state can be eliminated in your society.

So lets instead focus on your material scarcity solution instead. Lets assume that every person has their own replicator machine that lets them create any food, clothing or item they want. If I want to replicate my own concert halls, baseball stadiums etc. and some others also want to do the same, people will very quickly run out of land to do these things. Land is also a scarce thing.

169

JohnnyFive said: “So our genuine budding entrepeneur is drawing no salary whatsoever from his business and therefore is getting 50% of nothing for his dividend? That sounds like a good incentive for entrepeneurship.”

The incentive for entrepreneurship is to work for yourself, to develop your own idea and to earn profits.

If you earn a profit, that would qualify you for the $30k dividend in the same way as any other employee.

But the $20k dividend that everyone gets gives people the opportunity to launch a new business without having to worry about surviving. They will always have that $20k to survive on while they try to get their new business off the ground.

Becoming an entrepreneur in today’s system is very difficult when you don’t have that $20k cushion.

You are seriously confused now. You say that if you earn a profit you qualify for the $30k, are we back to the old “if you work you get a straight $30k”? I thought we had now swapped in an ad hoc way to your new scheme of “the dividend is 50% of your salary”? I don’t even know your position anymore, and it’s pretty clear that you don’t either, but on the basis of what you say above…

A man who sets up in business as a personal chef is an entrepeneur. FACT

If he cooks one person a piece of toast, once a year, he can make a profit. FACT

Therefore he is entitled to $30k. FACT.

Care to deny any of the above? In order to stop the above happening, as I have now repeated so many agonising times, every single tiny detail of life would have to be regulated, judged, and enforced. Does a government toast inspector have to come and inspect the toast of this chef in order to determine if his cooking is worthy of being called a business and deserving of the dividend? Will there be a 500 page “QUALITY OF TOAST ACT”?

..and the salient point is this. How would you then differentiate between a genuine personal chef business, and one that is not really demanded but is purely arranged to gain the dividend? The answer is that you cannot. The two parties (or multiple parties) can arrange the flow of money such that both gain from the arrangement.

“By the way, your 50% of salary dividend does not make it a moot point, if anything it makes the situation worse.”

Yes, it does make it moot. Each person in your scheme will:

-$60k (pay the other a $60k salary)
+$60k (get a $60k salary from the other)
-$30k (pay a $30k tax on your $60k income)
+$30k (get a $30k dividend)
=$0

When you add it all up, nobody has made anything.

So you are taxed at 50% of income, and you receive a dividend of 50% of income? How can I possibly take you seriously?! Gee I wonder why it cancels out to zero. If you adjust the percentage figures to something sane where you are taxed less than your dividend you will find that both parties have gained.

170

Mises Pieces said: “If unemployment will now pay $20,000/yr instead of $0/yr, shouldn’t we expect to see a massive increase in unemployment under this plan?”

Everyone gets the $20k whether you work or not. And if you are unemployed, and interested in working, there should be some civic or charitable organization that everyone would be able to volunteer at which would enable them to qualify for the $30k.

So someone can remain unemployed and just collect the $20k. And I do think this would cause a lot of people to quit the jobs they work at that they do not like. I think that is progress. If your life would be better served by not wasting it doing some job you have no interest in doing, you should have the freedom not to do it.

Of course, that would naturally beg the question of what happens to the economy when nobody shows up to work. It turns out that we are able to already automate 55% of all the jobs people do. So business would just automate.

When somebody is no longer forced to work some job that they don’t want to do and we use machines to do that job instead, that is progress.

The goal ultimately would be to just get machines to do all the jobs nobody wants to do. So people can spend their time doing what they want instead of what they don’t want. They would live a life of leisure.

But as pointed out in another response, this does not mean a nation of slackers. It means the work people do is exclusively productive leisure activities, which is where human beings are most productive. Menial, repetitive jobs that a machine can do (like cashier) is a waste of human talent, a waste of the most valuable resource we have.

This plan improves people’s quality of life and makes the economy more efficient and productive.

171

“It turns out that we are able to already automate 55% of all the jobs people do. So business would just automate.”

Who pays for this, though? Wouldn’t this require a massive capital investment, divert resources away from consumption, and drastically reduce the standard of living? If automating all those jobs were that easy, and that beneficial, companies would already be doing it. Your plan to make labor more scarce may encourage some companies to automate their jobs, but it doesn’t make it any less prohibitively expensive. You seem to be ignoring time preference. People may prefer a slightly less efficient method of production that does not require the waiting time or capital investment that a more efficient (in the long run) process would require. Like Hoppe has said, there’s a reason that Robinson Crusoe constructs a fishing net instead of a fishing trawler, even though the latter may be more efficient. If we make labor artificially scarce, we are only handicapping ourselves, regardless of some 3rd party’s preference for long-run efficiency.

172

Ignores Incentives

What, exactly, in your opinion, creates incentive?

Denies Scarcity

All scarcity?

Does not understand Capital

It’s hard to speak on other’s intelligence, but honestly investment is not that difficult a topic.

Maybe you meant markets, instead?

Does not understand value

Whatever its truth value, I find this one of the most ironic statements I have ever seen. Isn’t value subjective? If one values a prosperous society, it is still their personal subjective value.

Society as a living organism

Metaphorically, correct. +1

What’s wrong with seas of lemonade? It sure would help with that scurvy problem…

173

JohnnyFive said: “You are seriously confused now. You say that if you earn a profit you qualify for the $30k, are we back to the old “if you work you get a straight $30k”? I thought we had now swapped in an ad hoc way to your new scheme of “the dividend is 50% of your salary”?”

I don’t know why this is so hard for you to follow. If this plan gets implemented, however they decide to pay out the dividends, whatever someone who works as an employee is entitled to, that same entitlement will be extended to entrepreneurs who earn an income.

“I don’t even know your position anymore, and it’s pretty clear that you don’t either, but on the basis of what you say above…”

There is no position. This is an idea up for debate that was emailed to someone who posted it on this website. It is not the final draft of a bill being presented to congress.

If you want to argue that it should not be implemented at all, I would argue against that. But if you have ideas on how you can make it better, feel free to offer them.

I personally think (and have argued this position) that you can pay the $30k to anyone who earns a $30k income because you can prevent people from setting up shell companies that just trade checks with people in order to qualify for the dividend just like you can prevent anyone else from setting up shell companies to commit fraud.

But others have argued that a better plan is to pay out half your income up to $60k in order to qualify for the $30k dividend so that you avoid having to prevent dividend cheats.

A man who sets up in business as a personal chef is an entrepeneur. FACT

Agreed

If he cooks one person a piece of toast, once a year, he can make a profit. FACT

Very unlikely, but possible.

Therefore he is entitled to $30k. FACT.

Not fact. You would need to make a minimum of $30k in order to qualify for the $30k dividend if we did what I propose. I think you can easily weed out dividend cheats just like you do with tax cheats.

Today, you can eliminate your entire tax bill if you deduct personal expenses and just claim they are business expenses. But the IRS requires you to show that you were making a legitimate attempt at trying to make a profit. That is a WHOLE lot of grey area that is much more grey than what we are talking about.

But despite the grey area, the concept of taxes has not completely fell apart. They lay out rules and you are required to follow them, otherwise you do not qualify for the tax deduction.

Catching dividend cheats would be easier because it only works by swapping checks with a closed group of people.

But if you wanted to avoid having to find dividend cheats, you can just make the dividend 50% of your income.

Care to deny any of the above? In order to stop the above happening, as I have now repeated so many agonising times, every single tiny detail of life would have to be regulated, judged, and enforced.

That is part of your responsibility as a business owner. There are rules you need to follow. Have you ever been to an audit? They are going to want to know everything about every last reciept and expense. Every detail of your business life is judged.

..and the salient point is this. How would you then differentiate between a genuine personal chef business, and one that is not really demanded but is purely arranged to gain the dividend?

If you had 30 clients who paid you $30k each to cook them food and it just so happens that you have to hire each of your clients to do work for you for $30k each, that would not be a legitimate business for profit.That would be a shell company set up to fraudulently collect dividends.

“So you are taxed at 50% of income, and you receive a dividend of 50% of income?”

Yes, up to $60k. It would work like a negative income tax (which is what economists have proposed as an alternative to a basic income and exists in the US today). Everyone who makes under $60k would get a full refund.

174

What are you saying here ? If someone makes $29 000 profit they do not get a $30 000 dividend, if someone makes $31 000 they get it. Sounds like a very fair system.

175

ulrichPf said: “Freedom is not the same as having the “right” to free things, even if it is robots doing it for you, it is truly amazing how many internet loonies make the same assertions about freedom.”

You are the one who has the meaning of freedom wrong. There is both negative freedom and positive freedom. The whole philosophy of freedom which modern society rests on comes from the enlightenment era. The definition of freedom then was both negative and positive freedom. It meant freedom to something as well as from from something.

The freedom to travel (negative freedom) means nothing if you don’t have the means to travel (positive freedom). The freedom to own property and trade means nothing if everyone refuses to give you a job to earn an income.

Positive freedom does not mean the price of travel or anything else is free, but it does mean the price of travel is within one’s means.

Some would say that modern libertarianism hijacked the term freedom and tried to redefine it to mean only negative freedom. It just so happens that modern libertarianism only benefits wealthy people and the movement is funded largely by very, very wealthy people.

The US was founded on traditional, enlightenment era freedom, not modern libertarianism’s version of freedom.

“therefore we have a scarcity, something that you state can be eliminated in your society.”

I never said scarcity can be eliminated, nor is that claimed in the manifesto!

“So lets instead focus on your material scarcity solution instead. Lets assume that every person has their own replicator machine that lets them create any food, clothing or item they want. If I want to replicate my own concert halls, baseball stadiums etc. and some others also want to do the same, people will very quickly run out of land to do these things. Land is also a scarce thing.”

I don’t know what you are talking about! The manifesto does not contain the schematics to build a replicator machine or to eliminate scarcity.

176

^Bullcrap. Freedom does not mean, “I get to have something”, it means “I’m allowed to do what I want”. That’s all. Stop trying to twist it’s definition and use it’s connotations. There is no negative or positive freedom. It’s just freedom. It has nothing to do with means, and everything to do with will. Your either for it or against it. Clearly, your against it when it comes to economics.

177

“The freedom to travel (negative freedom) means nothing if you don’t have the means to travel (positive freedom). The freedom to own property and trade means nothing if everyone refuses to give you a job to earn an income.”

In this case, isn’t the only way to grant someone a “positive freedom” by eliminating the “negative freedom” of someone else to choose not to hire you? How can you have freedom when one group of people is forced to support another group? Why do you believe such positive freedoms should take precedence over others’ negative freedoms?

178

What does America have to do with anything ??? I am not American. There are libertarians all over the world.

If I refuse to give somebody a job and then you force me to do it you are violating MY rights, a positive right is a violation of a negative right. If I call you and idiot, you should still hire me I take it ?

If 80% of the population is living from your free $20 000 handouts, how else can it work other than your replicators or apple picking robots ???

179

Mises Pieces said: “Who pays for this, though? Wouldn’t this require a massive capital investment, divert resources away from consumption, and drastically reduce the standard of living? If automating all those jobs were that easy, and that beneficial, companies would already be doing it.”

The company that wants to automate would make the investment. But it wouldn’t be on the order of trillions per year that would change the makeup of our overall investment and consumption.

Companies do not do it already because they have a labor pool to tap into that are the most sophisticated machines on the planet. Companies would rather pay a human cashier than an automated checkout even if the cashier is more expensive, especially if their competitors have human cashiers.

Also, it is bad public relations when a company eliminates jobs. Wal Mart looked into automating its warehousing operation but had to do it secretly. When the plan was revealed, they killed it. Wal Mart is the largest employer. But they could automate their entire operations and eliminate hundreds of thousands of jobs if they wanted to.

Some automation no single company can do on their own. Automating transportation would require government rules and standards that every company would have to subscribe to.

180

Mises Pieces said: “In this case, isn’t the only way to grant someone a “positive freedom” by eliminating the “negative freedom” of someone else to choose not to hire you? How can you have freedom when one group of people is forced to support another group? Why do you believe such positive freedoms should take precedence over others’ negative freedoms?”

The same group that provides you with negative freedom (the government who protects you from people stealing your money) can also provide you with positive freedom (the government providing you with a guaranteed job or passing a minimum wage regulation).

You do not have to violate someone’s negative freedom in order to provide positive freedom.