Universal basic income trials being considered in Scotland

[JonNC]

You are working because you are making repeated decisions on how to use the computer.

If you were actively investigating companies and picking ones that your expertise tell you have a good chance of success, that is working. If you turn your wealth over to a financial advisor who makes conservative investment decisions for you while you relax in a hammock, the financial advisor is working, but you are not. Yet you get nearly guaranteed money.

If you’re not regularly investigating, you’re taking a risk.
If I turn my wealth over to a financial adviser, I’m still working. In fact, I’m still working when 15% of my income is confiscated for Social Security, because I keep working on making my wife’s future secure if I’m not here.
In short, I would contend, with due respect, that you opinion of what work is is only that: your opinion. Investors are every bit part of the working work, every bit as necessary and participatory as the wage earner who has that job in part because of that investor.
I guess I’m not so fond of trying to draw those kinds of divisions in the marketplace.

 

[SuperLuigi]

Which group do rich investors fall into? Seems like they simply choose not to work.

Investors work alright----they carry most of the risk by their decision-making of where the capital goes.

It is their money that is on the line.

 

[LeafByNiggle]

Investors work alright----they carry most of the risk by their decision-making of where the capital goes.

It is their money that is on the line.

If money is invested conservatively with a diversified portfolio, there is very little risk of loss. And the owner of that wealth need not be the one doing the decision-making. It is quite possible to just let the money roll in. In fact it is what the average investor expects.

 

[SuperLuigi]

If money is invested conservatively with a diversified portfolio, there is very little risk of loss. And the owner of that wealth need not be the one doing the decision-making. It is quite possible to just let the money roll in. In fact it is what the average investor expects.

There’s always the risk of loss, especially with recent government policies.

Also, there’s a lot of decisions to be made----how does one diversify the portfolio, where does one keep the money, inflation, interest rates ect.

It’s not like rich people just take all the money and shove it in a shoebox under their bed hoping no one notices.

 

[abucs]

If money is invested conservatively with a diversified portfolio, there is very little risk of loss. And the owner of that wealth need not be the one doing the decision-making. It is quite possible to just let the money roll in. In fact it is what the average investor expects.

Leaf, tell me about your idea of the average investor.

How did the average investor get their money in order to invest?

How much money are they investing and what is their rate of return in a conservatively diversified portfolio?

If everything goes well, how much money is ‘rolling in’ after fees, taxes, inflation and living expenses for this ‘average investor’?

P.S. Regardless, the fact still remains that the process of someone investing their own wealth in order to create more wealth is fundamentally different from someone using the force of government to take someone else’s wealth. To equate the two is immoral.

 

[zz912]

If you were actively investigating companies and picking ones that your expertise tell you have a good chance of success, that is working. If you turn your wealth over to a financial advisor who makes conservative investment decisions for you while you relax in a hammock, the financial advisor is working, but you are not. Yet you get nearly guaranteed money.

This is a laughable false statement. Economics 101 and Investing 101 would disabuse you of such nonsense.

 

[LeafByNiggle]

Leaf, tell me about your idea of the average investor.

How did the average investor get their money in order to invest?

I’m glad you mentioned that, because I think that is the heart of this sense of investor entitlement. So an investor works hard and gets some money. He is entitled to that money because he worked for it. But now the simple fact that he has that money entitles him to get more money without doing any additional work.

 

[vz71]

I’m glad you mentioned that, because I think that is the heart of this sense of investor entitlement. So an investor works hard and gets some money. He is entitled to that money because he worked for it. But now the simple fact that he has that money entitles him to get more money without doing any additional work.

Taking risks is work.

 

[stinkcat_14]

I’m glad you mentioned that, because I think that is the heart of this sense of investor entitlement. So an investor works hard and gets some money. He is entitled to that money because he worked for it. But now the simple fact that he has that money entitles him to get more money without doing any additional work.

I think you are looking at it from the wrong angle. Deservedness is not really an important factor here. If we don’t compensate investors, the economy will be seriously harmed. If we don’t compensate welfare recipients, the economy will not be harmed.

 

[LeafByNiggle]

I think you are looking at it from the wrong angle. Deservedness is not really an important factor here. If we don’t compensate investors, the economy will be seriously harmed. If we don’t compensate welfare recipients, the economy will not be harmed.

From a purely practical and economic viewpoint, I agree with this. Free money with no strings attached in today’s economy is not sustainable, and it would hurt the economy.

However the argument being made against welfare recipients was not “the economy will not be harmed if we deny them payments.” It was “these welfare recipients do not deserve these payments” That is why I began investigating deservedness. Of course I could not establish that they did deserve welfare payments. But I could establish that others are equally non-deserving.

 

[Ridgerunner]

I’m glad you mentioned that, because I think that is the heart of this sense of investor entitlement. So an investor works hard and gets some money. He is entitled to that money because he worked for it. But now the simple fact that he has that money entitles him to get more money without doing any additional work.

That’s the nature of capital, though. Without capital, labor would be grubbing around in the dirt with one’s bare hands, digging up roots to eat. One doesn’t have to give a hoot about the investor himself to yet acknowledge that his capital is necessary. And for him to bother acquiring it or investing it, he has to be reasonably secure in its ownership.

Perhaps I should add that universal basic income could be a boon to the wealthy. Servants are expensive in today’s world, and then there’s the expectation of healthcare and retirement, etc. But if people had a basic income and wanted to supplement it a bit, one could become a gentleman’s manservant or a lady’s aide, peradventure a cook, chauffeur, or gardener.

 

[LeafByNiggle]

That’s the nature of capital, though. Without capital, labor would be grubbing around in the dirt with one’s bare hands, digging up roots to eat. One doesn’t have to give a hoot about the investor himself to yet acknowledge that his capital is necessary. And for him to bother acquiring it or investing it, he has to be reasonably secure in its ownership.

As I said before, I readily acknowledge the practical benefits of capitalism.

 

[Ridgerunner]

As I said before, I readily acknowledge the practical benefits of capitalism.

Not arguing with you. I just wanted to say it.

I added to it, but you responded before I got it done.

 

[LeafByNiggle]

Perhaps I should add that universal basic income could be a boon to the wealthy. Servants are expensive in today’s world, and then there’s the expectation of healthcare and retirement, etc. But if people had a basic income and wanted to supplement it a bit, one could become a gentleman’s manservant or a lady’s aide, peradventure a cook, chauffeur, or gardener.

Is this “trickle up” economics? If I understand you rightly, a UBI for potential servants would make those servants less in need of a full-time income and benefits. Therefore they would make less demands on the wealthy who wanted to hire them. OK, I could see that happening. Nothing wrong with the wealthy benefiting in this way, as far as I can see.

 

[Ridgerunner]

Is this “trickle up” economics? If I understand you rightly, a UBI for potential servants would make those servants less in need of a full-time income and benefits. Therefore they would make less demands on the wealthy who wanted to hire them. OK, I could see that happening. Nothing wrong with the wealthy benefiting in this way, as far as I can see.

Probably not the hardest work, either. I can imagine the chauffeur spending a fair amount of time polishing the Rolls, but did you ever wonder what butlers do when they’re not answering the door? Possibly polishing the silver? But do the kitchen people do that, maybe? And what about the gamekeeper? Does he count foxes when nobody’s hunting and the hounds have all been fed?

 

[LeafByNiggle]

Probably not the hardest work, either. I can imagine the chauffeur spending a fair amount of time polishing the Rolls, but did you ever wonder what butlers do when they’re not answering the door? Possibly polishing the silver? But do the kitchen people do that, maybe? And what about the gamekeeper? Does he count foxes when nobody’s hunting and the hounds have all been fed?

Kind of like what a firefighter does when there are no fires. Clean the equipment, take continuing training. Or a doctor on call. It is worth something to have someone commit to being available on short notice.

 

[Ridgerunner]

Kind of like what a firefighter does when there are no fires. Clean the equipment, take continuing training. Or a doctor on call. It is worth something to have someone commit to being available on short notice.

Actually, it is not too difficult to pick up “casual labor”; people who are otherwise employed but are ready to make a little extra. We do that in ranching all the time, and veterinarians do too.

It has, however, been made a bigger pain than it once was since the IRS reg requiring the filing of a 1099 for any kind of contract labor exceeding $600 in one year for any one person. You can’t file a 1099 without at least knowing the person’s address and SSN. And then there is the question what is “contract labor”. It’s needless paperwork involving people who are often paying no income tax at all or very little. Mostly what it does is waste time and give the recipient a problem with his tax return that costs him more to prepare.

Yes, I know, it’s intended to catch people who work “on the side” but don’t pay taxes on it. But I can’t imagine it really yielding much to the government compared to the trouble it takes to comply with it.

One of the ironies, in ranching at least, is that no 1099 is issued for the sale of livestock at the stockyard or anywhere else. Some guy might run a hundred thousand dollars worth of livestock through the ring, but nobody reports a thing unless the seller does himself.

 

[abucs]

… But now the simple fact that he has that money entitles him to get more money without doing any additional work.

No Leaf, for the second time it is not entitlement it is the opportunity to create more wealth by investing your own wealth. This has been the great success story of capitalism that has lifted literally billions out of poverty.

When we are young it is easy to be swayed by the story of the big mean boss growing rich because of the labour of poor workers who haven’t got any other choice because of circumstance. This story is easy to latch onto emotionally which can orientate one towards how to view economics. But this story is not a substitute for reality.

I have tried to bring reality into the equation by asking you questions about the ‘real’ average investor you mentioned but you didn’t respond. I gave the real world examples of the tomato grower and the printing business but you didn’t respond. I tried to point out that someone’s investment must create new wealth for there to be profits which is fundamentally different to receiving wealth from the government who took it from someone else. One is creating wealth which is the foundation of capitalism and the world’s biggest economic success story and the other is democratically agreed stealing. It is important to deal with the reality of that difference.

Let me try again with another example.

A guy builds a house, perhaps with the help of his family. The house is now a form of wealth. He has wealth. This is new wealth created by him (and his family) and he now has the opportunity to use this wealth.

He decides to take advantage of this wealth and let out a room and receives income from a lady renter. The renter is happy because she now has a place to live. The guy is happy because his wealth is generating new wealth. The government is happy because they get tax from the rental income (now that is receiving money for doing nothing ), the accountant is happy because the guy now employs him to do his taxes,

Now after a while he receives so much money he looks at where he can invest this money. His wife is a great seamstress and has connections at the local theatre company. He talks to his wife and she sees an opportunity to provide costumes. She does all the leg work for contracts and legal advice etc and they use the money from the renter to form a small company and start to make costumes. They might go into debt a little to get it started but it works out really well, Now they are getting the income from the renter and from the local theatre company who are buying their costumes.

There is such a large demand that they employ a few people to help with the costume creation and design, including the renter. After a while they expand to other theatre companies and start making lots of money. They convert the house into a workshop and buy another bigger house (that someones else has built), They decide to leave their talented renter / employee in charge of the workshop and retire on the income stream that is being generated by the business.

Now you can say they are just sitting back and doing nothing but it is not the same as if they had decided right at the start to do nothing and receive government benefits.

It is nowhere near the same.

They have provided accommodation, employment to a growing list of people, costumes for a growing list of community theatre companies, extra business for material makers, sewing machine makers, patterns and handicraft stores, accountants, bank lenders, theatre companies, cleaners, transport workers etc etc and along the way they have contributed tax. It is not the same as if they had sat back and received benefits.

Now if we take another scenario and instead of creating the costume company they gave their wealth (that they created) to a financial manager and he invested it with someone who started a costume company and a bike hire company and a landscaped garden company etc etc the family would not have earned as much income as if they had done it themselves but exactly the same thing occurs. The economy and the community benefits exactly the same way through more employment and more taxation. There are now a couple more links in the chain because the financial planner and his staff are taking some renumeration and of course the actual business owners (costume, bikes, landscapers etc) are getting the lions share of the profits but the capital was what started the whole ball rolling.

If the man believes he can create the company and it works out then his family can get the lions share of the profits. But if they try and they fail, as most businesses do then they will lose badly and the economy and community will not benefit. So it is a good thing for everyone that the capital invested does not fail but succeeds. It is the financial planners job to put the capital in the best place so that the community will benefit. But you need real wealth to start this off. You need the wealth created by the investors. You can’t just summon it up out of thin air. If you could, poor countries would not be reliant on rich countries to invest in them.

Going back to our example, if the family cannot create a successful company themselves then it is better for the community that the original family employs the financial planner to best utilise their wealth, The wealth that they originally created which wasn’t there before.

This is the most efficient use of capital which is the underpinning of creating more wealth. The investors are not doing nothing like the government benefit receivers. They are utilising their wealth for the good of the community to create more wealth for many people beyond themselves. If their wealth does not create more wealth then there are no profits and inflation will quite quickly reduce the fruits of labour.

They are not entitled to anything and their invested wealth is what helps society.