How would it spur innovation? After enacting a BI, we've just reduced the labor supply and funneled resources toward consumption (since rich people invest, poor people consume, and we've shifted resources from rich to poor).
Simple arithmetic shows we now have less resources devoted to investment. So how will this innovation actually occur? I realize demand for it might go up, but if supply doesn't increase correspondingly, so what?
>funneled resources toward consumption (since rich people invest, poor people consume, and we've shifted resources from rich to poor) //
That's a natty turn of phrase but I'm calling bullshit.
Rich people invest with the excess financial wealth they have after they've consumed hugely more than a poor person.
Give me more money and I can afford to eat better (reduced healthcare burden), can repair my house (reducing total resources needed over the lifetime of the building; and again there are health implications). Give that money to someone rich and yes, they will invest - sucking more value away from the populous without producing more value - but they'll also do things like buying a private jet which consumes/pollutes hugely and wastes resources.
Perhaps some of the wealthy won't be able to have private islands and maintain their more liquid assets, for shame.
Why not cooperatives and micro-investment? Why does a rich capitalist have to be the investor and suck all the value from the system?
If you believe that the rich consume and the poor invest, then the best stimulus during times of recession is tax cuts for the rich. I take it this is your preferred policy for the next recession?
There is no particular reason investment has to come from rich people. That's just how western economies seem to work. As I noted, in Namibia, poor people do seem to invest new wealth.
Where did I say that the poor invest (they do, in The West, eg in pensions, but we're talking generalities)? We're all clearly consumers. Rich people costume more than there share, they still have excess financial wealth to invest.
Redistributing this would allow poorer people opportunity to take part in investment which in turn should lead to more redistribution.
Tax increases for the rich in recession would (with a similarly naive analysis to the one you proffered) reduce the tax burden on the poor and allow then to become richer, increasing their consumption. Millions can buy a new TV instead of one person getting a yacht.
>agreed that the rich invest while the poor consume //
You just twisted my words and acted disingenuously.
I said, for the third time, the rich consume. The rich consume far more than the poor. The rich invest more than the poor, but that's because the poor don't have money to invest. Take all the money from the rich and give it to the poor and consumption and investment will shift. The people holding the money aren't as special as capitalism would have us assume.
The point is what will happen in aggregate. If the poor gain $1 additional and the rich lose $1 additional, will investment go up or down? If it goes up then we should target fiscal stimulus at the rich during bad economic times. If it goes down then a BI will reduce future investment.
You are unfortunately in the situation that the stated reasons for your preferred policies contradict each other. That's quite strange - it's almost as if those stated reasons are post-hoc justifications and not your real motivation.
Well putting aside that you might be making a kind of post-hoc fallacy there with your equation; Is reducing labor supply really a bad thing?
Most developed countries have unemployment permanently somewhere between 5-10% or even more during recession. Some, like Spain, have closer to 25%. Reducing labor supply may be the only answer.
It's not that I don't agree with you in principle. But you can only gain productivity if there are things for people to do. The fact of modern society is that we are running out of jobs.
Really? Child care is easily available to working mothers? House cleaning services are cheap and readily available to all skilled workers? Professionals sit in the back of their car working on their laptop while a driver watches the road?
There are lost of things to do. We have a situation of labor scarcity, not a surplus.
Complaining about a labor surplus right now is like a 350lb man eating french fries on the theory that he might starve in the future.
Some jobs aren't paid enough for people to do and still afford to live. Basic income actually fixes that by giving people a baseline to live off, upon which their salary can build.
If those jobs "aren't paid enough for people to afford to live" then India should be full of a billion rotting corpses. I was there last week and I feel like I would have noticed the apocalypse.
A much better solution than BI would be a guaranteed job and/or an expanded EITC. These solutions - while not sounding as cool and hipster as BI - have no labor disincentive and cost a lot less.
Putting aside the absurd comparison of living costs in a 3rd world country vs 1st world...
India is filled with a ton of misery. It's the only country in the world where I saw dead people just lying in the gutter. The Mumbai slum was one of the worst places I've ever been and you want to hold that up as some sort of ideal? That people should just live down to that level instead of striving for better? If it wasn't for the Indian government welfare programs, that slum would be filled with rotting corpses.
I didn't hold it up as an ideal. I held up the middle class experience there as an example of what happens when labor isn't scarce.
You seem to think I'm endorsing having very few goods and services. I'm not. On the contrary, I oppose policies like BI which will reduce goods and services available.
More money for consumers -> more money that can be earned by businesses -> more incentive to come up with innovative things for people to spend money on
Forget about money - that's a red herring which is confusing you.
Humans are needed to actually invent those innovative things. But in the BI world, we have fewer humans actually devoting their time to this. (See simple arithmetic above.)
How many potential innovators and inventors are currently slaving away at menial jobs instead of pursuing their passions? The idea that innovation is driven purely by investment is an oversimplification.
Labor supply = Labor servicing consumption + labor servicing investment
Rearranging this implies:
Labor providing investment = labor supplied - labor providing consumption
Simple arithmetic shows we now have less resources devoted to investment. So how will this innovation actually occur? I realize demand for it might go up, but if supply doesn't increase correspondingly, so what?