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  1. Instead of complaining about inequality, we should honestly say: “America has a distribution problem.”

    Yes, the word “redistribution” is a horrible taboo, but that doesn’t change the facts. First ask the right question, then you can start looking for an answer.

    $15/hr is one way to address the distribution problem, but probably not the best.

    One-size-fits all is ridiculous in a country as diverse as America: median household income in Silicon Valley is about $100k/year, and in the rural South it’s less $25k. Bumping up the minimum wage won’t make an apartment in Palo Alto any more affordable, and it almost certainly would hurt businesses in poorer areas.

    ** Historical redistribution to the top **
    Since 1970, the bottom 80% of the income distribution has seen almost no growth at all; it’s all gone to the top 20%, and even more disproportionately to the top 1% and 0.1%. And during this time, productivity and per capita GDP have continued to climb. Poverty in america is a choice, as is forcing low-wage jobs on the poor for survival. This hurts families and is highly inefficient.

    Any per capita redistribution scheme has two unavoidable variables: total GDP and the number of heads you divide it by.

    Desirability / morality / ideology can only play a secondary role to reality: If the math can’t work, it doesn’t matter how good or good or bad you think something is, it’s not a real choice.

    Here are some back-of-the-envelope calculations to illustrate the cost of giving every citizen a fat share of _present_ median real GDP—a wild extravagance not being proposed by any UBI advocate I’ve ever heard of. It’s a total edge case but will be instructive.

    (From now on, I’ll use GDP and income loosely/interchangeable for rhetorical purposes. Please just roll with it.)

    Median per capita income is the level above which 50% of the population earns more, and 50% earns less. The *average* income of the half of the population with income below the median will be half-way between $0 and $median, which today is about $50k.

    Let’s use some handy round numbers that are close enough. If median income is $50K/person/year, the bottom half of the distribution would have an average share of GDP of $25K/year, some earning more, some less.

    Raising this group’s income to the real level of the current median would mean you need to add 25% of current total GDP to the mix (in real dollars, over time).

    Folks with $49,999 would get $1, and those with $0 income would receive the a payment of 100%, e.g. $50k cash money as a handout. [This sounds crazy, but each homeless person typically costs tens of thousands of dollars per year right now to keep on the street.]

    To boost the low-income group to the current median income means half of the population would need a supplement of half of median income. The total cost of this project would therefore be 25% of GDP (plus administrative costs).

    At 2% real growth, it takes 12 years to add this much to GDP.

    At 1.5% real growth, it takes 15 years.

    Practicality dictates you can’t just redistribute all of the gains from the next 15 years—work will be rewarded. But to be accurate, practically all gains have been redistributed to the top for decades, so turnabout here would would be fair play.

    But even redistributing only *half* of the GDP gains to the bottom half (which has a chance at sounding fair), we’re still only talking about 28 years before it’s totally financed at a gentle and historically low 1.5% growth rate.

    UBI has a very low administrative overhead, since you only need to ID people and cut them a check.

    [Better: a special free bank account, since there are millions of unbanked/underbanked people among those who need the extra income the most.]

    UBI naturally means that you pay monthly sums to everyone and tax it back from incomes beyond a certain threshold, like any other progressive tax. What you don’t do is restrict recipients based on need—keep it simple!

    My point with this calculation is that even a bonkers-high level of redistribution is affordable within just a few years—and without completely depriving those at the top of the income distribution of the gains from growth.

    Considering all of the bad things correlated with poverty (and probably largely caused by it): property crime, health and educational achievement problems being front and center), it would be reasonable to assume that a UBI would actually net higher-than-expected growth/reduce societal losses, making the overall project even less expensive and more realistic than I’ve outlined here.

    Other things that make sense and _are affordable_: A Canadian-style health system of affordable universal coverage, free public universities, and massively-improved daycare to ensure that everyone who wants to work can afford to.

    http://siliconvalleyindicators.org/data/economy/income/median-household-income/

    https://en.wikipedia.org/wiki/List_of_lowest-income_counties_in_the_United_States#100_poorest_counties.2Fparishes_by_median_household_income

    http://www.motherjones.com/politics/2013/09/charts-income-inequality-middle-class-census

    https://en.wikipedia.org/wiki/Household_income_in_the_United_States#Distribution_of_household_income

    http://gladwell.com/million-dollar-murray/

    http://econintersect.com/wordpress/wp-content/uploads/2012/09/household-incomes-mean-real-dshort-2012-September.gif

  2. I am not sure I buy into the scare-tactic an $8/hr job is better than the possibility of no $15/hr job. Basic consumerism shows that low income people spend ALL their income, which in turn is a boost to the economy. Someone making $100K year can still only eat so many Big Macs, whereas someone making $8/hr possibly can’t get any. Employers also get to deduct 100% of salary costs, a benefit to the employer. McDonald’s is also a brilliant profit-making business, and their research shows demographics indicate a future shortage of workers, thus making automation a good investment. Scare $15 tactics can certainly exploit this to make it about fair wages. There are many other sides to this argument, but keeping poor people oppressed with unfair wages by using scare tactics should not be one of them. If scary is the motive, consider the small-shops that went under when big box stores came to town, swapping out relatively decent jobs with opportunity, for dead-end min wage positions. This is a complicated concept and I hope the discussion can be robust and solution oriented, as opposed to one that comes from the position that the beatings will stop once the attitude improves.

  3. Lets not forget ACA, FMLA.

  4. The more people who are working and producing in the private sector, the higher the GDP given any specific scenario. The higher the GDP, the higher the average person’s buying power. That is straight math that you cannot alter. How to distribute equitably? Equitably has to be based upon the value that society puts on the labor otherwise the incentive is for people to learn how to do things that have less value which again reduces the average person’s standard of living.

    America’s relative standard of living was much higher versus other countries through the early 1930s when the federal government share of GDP began to expand substantially from an average the first 150 years of under 5% to today’s 25%. America’s share of the world’s GDP went from near zero to roughly 50% of the world economy by the late 1800s and was maintained through WWII after which many other countries began to catch up as their governments became more like ours and ours became more like theirs.

    Play the game the same as the rest of the world except better doesn’t produce the spectacular difference in the average American’s standard of living like play a different, better game with minimal government interference and maximum personal freedom in economic decision making. When charity was left to the local community instead of Washington, there was less poverty and less acute poverty. There were also less permanent structural poverty passed on from generation to generation and easier routes out of poverty.


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