Your last paragraph is certainly exemplified by the replies here.
I grasp economics generally. My point is that that sentence was not understandable and filled with jargon. If you canāt explain it in a way normal people can understand it (on a bodybuilding forum) it suggests to me that you donāt understand it.
You have made all sorts of wild assertions like thisā¦
and expect us to buy it because you are using jargon, but provide no proof. Many economists disagree with that statement. Sure in the past cars have provided more jobs than horses did, but many think automation is a bit different.
Sure GDP is going to go up with automation. I can buy that. I donāt buy that the rewards from the GDP growth are going to be evenly distributed at all. There isnāt incentive for that to happen.
If you donāt understand the statement you donāt grasp economics. But Iāll explain it.
When automation lowers costs and improves margins, companies rely less on more expensive forms of capital to finance new projects: common equity, preferred equity, debt, etc. as they have more retained earnings.
This means projects are financed with a lower weighted average cost of capital (WACC). Thus, more projects exceed the estimated after tax (return on invested capital) ROIC threshold to be profitable and are undertaken.
These new projects require the scarcest factor of production, labor. Additionally, the productive process is lengthened,meaning there is more specificity at each stage of production. As a result, the output of goods and services increases, lowering their prices.
We now have more employed people, more productive labor, and more disposable income left after expenditures - higher savings, which in turn creates a positive feedback loop and creates lower WACC and continues this virtuous cycle.
Make sense?
If the policy is set up in a zero sum fashion, I am not convinced that the value of the dollar falls, and inflation occurs. Some people gain money from UBI, many people pay more than their UBI check in taxes. This results in the same amount of overall money in the economy.
FYI thisā¦
is fallacious reasoning. Other possibilities exist outside of me not grasping economics.
Iāve worked in manufacturing for 20 years and this is a fairly simple explanation of how automation works. Iāve automated several people out of jobs and sleep like a baby at night. Depending on what is being automated, you need people to maintain the automation. If it is systemic you need someone to maintain that program and most likely modify it as time goes on. Thatās a job that wasnāt necessary before the program was created, which also put a programmer to work at least for a while.
Maintenance techs will be needed to run the machines, etc.
Even back office jobs have changed dramatically in the last 40 years. Think of procurement for manufacturing. Have you ever seen a McMaster Carr parts catalog? One person today can easily conduct 10 times the number of purchases in the same time span with email and the internet than they could have back in the day when they needed to order by catalog.
Nobodyās going to ditch the website just to keep that catalog, although they keep sending us a copy every year. It is an impressive tome, after all.
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Thereās no such thing as a zero sum fashion.
- the money is taken from producers to takers, output of goods and services fall, prices rise
- UBI payments deficit financed, crowds out private sector borrowing, raises private companies WACC, fewer projects undertaken, lower output of goods and services
- delta between tax receipts and outlays plugged by printing money, purchasing power per monetary unit falls
Maybe I am missing something, but how do you do this? Even a modest $1k per month/per person UBI amounts to 3/4ths the national yearly budget (per the article I linked above, yes I know the math is slightly simplified but many other articles I have read tend to agree with this). It appears that it cannot be zero sum without a) raising taxes or b) decimating the federal budget.
Yes I realize that automation creates some jobs. I just am not convinced that the created jobs equal the destroyed jobs. I am not for limiting technology. I think we should embrace it. I do perhaps think that social programs will be needed in the future if destroyed jobs out number created jobs.
Yes it makes the Bible look like a short story. I used to have one. Now I just use the website (and I use it a lot).
How would you go about proving this? Many inventions and discoveries were from people who had rich parents and spent their time fiddling with things. People who at the time were not seen as productive members of society.
How do we know that the growth from inventions of people with more time on their hands doesnāt equal that of businesses investing more money?
UBI would allow more small innovative businesses to start as people will not be attached to their jobs as strongly.
How do we quantify and compare these things to the things you mention?
It would be done by increasing taxes most likely. What isnāt understood is growth that comes from people who now are financially able to innovate, start new businesses, grow their business.
I am not convinced that it can be a zero sum game, but I am also not convinced it canāt be.
The vast majority of innovation is from companies hemorrhaging cash, they need constant infusions of capital to continue R&D expenditures while staying afloat.
Iāll agree with you if we are limiting innovation to improvements on existing technology.
I have several patents from a large company with a large RND budget. My patents are mostly improvements on existing technologies. To get new technology my previous company usually bought it from small start ups. Companies with only a few people working out of a small building or garage.
I see what you are saying. However, increases taxes lowers buying power for a given salary and cheapens the goal of an UBI.
For it to be a zero sum game, the number of innovators would have to drastically go up. The percentage of truly life/technology changing inventions is quite small. Not just anyone can up with things like PayPal, Facebook, the smartphone, etcā¦ Itās hard to think outside the box because the box is extremely large nowadays.
I am all for subsidizing innovators and entrepreneurs in some fashion (I donāt have any idea about what kind of policy could do that though).
Too many people on UBI will be perfectly content to sit at home on their butts and spend their non-earned money on hookers and blow.
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And those larger companies buy them because there is an exit opportunity for both the seller and acquirer. The exit opportunities are contingent upon robust capital markets, yet those markets become less robust and more inefficient as growth in government to finance UBI and other handouts crowd out private sector capital raises.
It isnāt a science.
A āŖāphysicist, an āŖāengineer and an āŖāeconomist are stranded in the desert. They are hungry. Suddenly, they find a can of corn. They want to open it, but how?
The physicist says: āLetās start a fire and place the can inside the flames. It will explode and then we will all be able to eatā.
āAre you crazy?ā says the engineer. āAll the corn will burn and scatter, and weāll have nothing. We should use a metal wire, attach it to a base, push it and crack the can open.ā
āBoth of you are wrong!ā states the economist. āWhere the hell do we find a metal wire in the desert?! The solution is simple: ASSUME we have a can openerāā¦
I heard a similar joke fromā¦ an economist (with a doctorate).
And does that PhD economist work for Citadel or Bridgewater?
Now weāre back in fantasy land. You know, that answer was very unscientific.
Maybe, or only a few come up with really crazy inventions that dramatically increase GDP.
I remember reading an article from the mid 1800s that basically said the same thing. We just donāt know what technology will be available in the future.
That is a possibility. I am not sure. Maybe just one inventor creates something to offset all of the ass sitters. We just donāt know what happens when you give people the free time and a bit of financial security to innovate.
I agree here. Many of those small companies have the goal of being bought from the start.
Possibly the goals of the small innovative companies / individuals change with UBI. Maybe the goal is not to sell, but to grow. Maybe this forces more of the big companies to actually become innovative, and not just buy the small innovative companies. Maybe that spurs growth.
There is a correlation between financial independence from work and innovation.
Again, I am not convinced it is zero sum, just not convinced it isnāt either. It isnāt unreasonable to wait until being convinced before choosing what I believe.
No, he is, or was (he may be dead now) a world famous economist who was a guest lecturer at my university. He was teaching a political science class. Places like you mentioned would consult people like him.
I just asked a question regarding his employment. Why are you taking offense?