People working X hours a week are guaranteed to be spending those X hours producing something useful to society, or at least to their employer. People not working are not.
Sure, some people who are not employed may be raising children or volunteering or doing something else beneficial to society,and encouraging them to work instead would be society's loss. But if we trust in the market economy, those people don't exist, and our real loss is people who are unproductive while on welfare who would be productive given a minimum wage job.
I'm curious if UBI could have this effect long term. One possibility could be that as people have reduced existential pressures they begin to explore the things that actually interest them and reduce the activities they do to solely generate income. This could have two positive effects. The first is an explosion of long tail creativity and innovation. The second, a correlation of sorts, could be that people reduce their society (environment etc) harming but income generating activities.
They don't even have to be raising children or volunteering to benefit society. As long as they spend the money that's given to them, the market benefits.
Scenario 1) The government gives me $1000 and I buy $1000 dollars worth of goods and services, so now the economy is better by the net gain of $1000 worth of transactions - i.e. the mutual benefits of trade.
Scenario 2) I have a job, do my job and my employer pays me $1000 dollars. Then I spend that on $1000 worth of goods and services. Now the economy gets the benefits of $1000 worth of trade plus everything that I did for my employer, which is in excess of $1000 according to his calculation.
You compared Scenario 1 to Scenario 0 and said that Scenario 1 is a win, but the context was 1 versus 2, where it's a negative. In scenario 2, the employer could be the government paying me to improve the roads, for example, instead of the government handing me the money they would have paid me. In which case the difference is the improved roads.
What about the case where you have people whose paid job does not actually fundamentally add to any significant measurable net good? In that case, these people are also consuming the resources of the organization by taking a paycheck, taking up space, etc.
Perhaps corporate profits would not have to be so huge and prices could be lowered if the pay for work done was more closely related to the value added.
For that matter, how about all the jobs that nobody necessarily "wants" to do, are low paid, and yet critical to the functioning of societies?
Not entirely related to the original point, but I believe in the case of scenario 0 vs 1 market benefits by having more rational actors. That is, if you're not dirt poor, you're able to make better decisions and that makes markets work in a more optimal way.
Not true. The deadweight lose from taxation results in less economic benefit than not taxing and redistributing the money. Keynesian economics doesn't work. Assuming the administrative cost of taxation is non-zero, that cost means that $500 given to someone cost someone else >$500. So we spend $500 + deadweight loss to 'gain' $500 in economic gain.
So the benefit of giving that money must provide a gain greater than the deadweight cost. That gain could be non-monetary (a mom raising her kids for example) -- but just the 'spending' doesn't benefit the economy because spending $500 actually cost much more than $500.
The 'deadweight' administrative cost is itself an economic benefit - it's money paid to some administrator, who will thus have extra money and will be able to return it to the market in turn. It just means that the $500 of benefits isn't actually $500, and doesn't just go the end recipient: it's actually $550 (or whatever) and goes to the end recipient as well as the administrators and other intermediaries who deliver the money to the end user. That extra money doesn't evaporate into the void.
Under your interpretation there is no possible way taxation, waste, or even fraud is ever a losing proposition. You fall into one of those holes Keynes said you could dig and fill up to help the economy.
Unfortunately taxation itself reduces the incentive to produce and distorts the economy, and the Broken Window Fallacy is still a fallacy.
Taxation doesn't distort the economy. This is such a nonsense statement that it's difficult to say it's even "wrong" -- it's simply meaningless. Taxation and the fundamental ability of the sovereign to create demand for its money tokens is the very basis of any modern, capitalized economy. There is a strong argument to be made that taxes drive money and make economic exchange possible [1].
(BTW, Hacker News is simply terrible at discussing economics. This comment is hardly unique.)
> Broken Window Fallacy
The entire thread and discussion is a bit off-putting but it's worth noting that the question is, as always, what to do about unproductive assets. Nobody is advocating that healthy, able-bodied people should all receive free money from the government. That's why the Broken Window Fallacy is stupid. It's a fallacy against a straw man.
And yes, when it comes to unproductive assets there's good reason to believe that the government should step in and act as the "producer of last of resort." There's always work to be done. The government is never going to run out of money. And, in reality, you're going to end up giving these people money anyways (unless you want to see women and children starving the streets) so you might as well try to see some returns. I've never been a fan of basic income but a Job Guarantee[2] makes perfect sense. Finland would be far better off putting these people to work for the government. Basic income in this form (giving people free money while encouraging them to go to work for private producers) can, ironically, depress wages, unfairly subsidize badly managed firms, and ultimately hurt the economy. Unfortunately westerners are terrified by the spectre of communism so you don't get this sort of large scale public production any more.
>the question is, as always, what to do about unproductive assets.
If we consider the goal of society to be increasing overall utility, then someone enjoying their free time is not unproductive because they are producing utility (for themselves). There may be more productive things they could be doing, but we shouldn't ignore that baseline. If the work offered by a Job Guarantee scheme is not producing as much utility for society, then it would be more efficient to just give them the money.
Sure, some people who are not employed may be raising children or volunteering or doing something else beneficial to society,and encouraging them to work instead would be society's loss. But if we trust in the market economy, those people don't exist, and our real loss is people who are unproductive while on welfare who would be productive given a minimum wage job.