andrewducker | Robots and Income

Robots and Income

All you people interested in a possible future of income, go and have a read of this.

In it the writer points out that increasing automation is basically going to create an unemployed class and that something is going to have to be done about this. He basically invents Citizen's Income, an idea I'm wholly in favour of. I sent him an email telling him that the idea had been invented numerous times before (with a few links) and some off the top of my head figures:

In my opinion, the best way to manage citizen's income is as a percentage of the median wage, and then tax _everyone_ at 50% of their wages (obviously you don't tax the citizen's income bit), simultaneously simplifying the taxation of individuals so that there are no fiddly exemptions.

Let's say that the median wage is $30,000 and citizen's income is set at 2/3 of that ($20,000).

if the person was earning nothing, then suddenly they're $20,000 better off.

If they were earning a low wage of $15,000, then they're now earning ($15,000/2 + $20,000 = )$27,500, a substantial rise.

A person on the median wage goes from $30,000 to $35,000.

A person on a high wage ($100,000) is now on $70,000.

And a person on a ridiculous wage ($1,000,000) is now on $520,000

All of these final figured should, of course, be compared to the current income _after tax_.

Of course, living in a country, as I do, with a 40% upper tax bracket, this seems perfectly reasonable to me. I'm not sure the average American is going to go for it, but it would certainly revolutionise the world - no more poor people, anywhere...

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Your plan has the same glaring flaws as Communism.

The biggest reward is for being average.

Excellence is punished.

What's the motivation to work at all, when without having to put forth any effort at all, you receive 2/3 of the average income?

Take me, for instance. I started a new company, which could theoretically be good for the economy, create new jobs, and stuff like that. I've been working like a slave at it, for far less than the minimum wage, for over a year, and I'm still going. Why? Because I think that it has the potential of becoming seriously profitable. That's the only reason why I started, and the only reason I continue.

Now, with your plan, even if it were to become extremely profitable, the government would take away most of my income give to people who didn't take the risk, and didn't do the hard work. In that scenario, there is no way I would have tried it, and I would have simply stayed at my old job, consuming jobs that could have gone to other people.

It wouldn't take away "most" by any means. You'd lose 50%. Which isn't that much higher than the taxes in the UK and probably _less_ than the taxes in Germany...

And it _removes_ the problem of the welfare gap which exists at the moment. This is where you give welfare to only the very poorest people and it becomes economically pointless for them to work. This way round you get more money the more you bring in. Thus you have an incentive.

So...this is going to completely replace taxes? The rest of my income won't be taxed any more? So who is going to pay for all the things that my taxes pay for right now? Road repair, public school systems, public libraries and transportation, healthcare? Do you think this redistribution of wealth isn't going to require administration? Basically, if I earn $1,000,000, you are going to give away nearly half of it to poorer people who don't have the skills I worked for that caused me to be earning a million dollar salary to begin with. Then my measley $500-something-k salary is going to have to be taxed to pay for all the things taxes pay for anyway. Then I'll be right back down to $30k.

Upon re-reading your post, I think I misunderstood something you stated about taxes. So basically, $20k is untaxable, and the rest is taxed at 50%?

And, if I understand his idea correctly, the government also gives everyone $20,000/year, regardless of how much money they make. In essence, no one can make less than $20,000/year.

Yeah, that much I got, thanks.

The $20k is given to you. The equivalent of income support (or dole money or a pension or whatever). This keeps you off of the breadline and means that you aren't throwing yourself into fruitless make-work jobs or starving to death.

Everything you actually earn is taxed at 50%. This leaves you with 50% of anything you earn to yourself (as an incentive to actually work) and uses the other 50% to pay for the redistribution and the rest of general costs.

I do think it's workable, honestly. But I can't get my hands on the figures to be 100% sure. I'm still trying to do so without handing over £100s to the Office of National Statistics.

Um, no. If you look into the maths, then the 50% tax capably covers the rest of your taxes. If it was just going to pay for people to have 2/3 of median income then a 25-30% tax would cover it.

Hogwash. Many important jobs (like being a physician or a research scientist) have rewards other than money and people will still be drawn to these occupations. Also, there is still plenty of incentive to maximize earning. The only difference is that instead of the option being near starvation (as is true now), the option would be $20,000/year. However, $70,000 buys far more than $20,000 and $520,000 (which is honestly IMO more than any single person should be allowed to earn if anyone in a society is in the least bit impoverished) is vastly more than $20,000.

Such a system will have no affect on entrepreneurs and people in useful high status jobs folk, because they do not do what they do to avoid starvation, they do it for fun, because they feel driven to do this job, or because they wish to become quite wealthy - all three goals would still exist. Saying that only the threat of starvation will keep entrepreneurs starting companies and physicians going to medical school is naive and provably untrue - look at humane and civilized nations like Denmark or Sweden, they still have both.

The only people with any incentive not to work under this system are mimumum wage and near minimum wage employees. Given that automation will soon eliminate most such jobs (I've read about automation plans by McDonalds to eventually replace a crew of 5 with 1 person), they would be unemployed anyway. I hardly see that having most service workers not working mindless service jobs will be in any way problematic. I'd in fact cheer if telemarketers could no longer find people willing to work for them.

Right, and computers will replace paper, too.

If entrepreneuers would have the same chances of earning the same income with less risk and less work, they'll take it.

The take from the rich and give to the poor mentality simply removes the desire to be rich.

Why then are there rich people in Denmark or Sweden? Also, why do you see no difference between making $20,000/year and $70,000/year? While less than the difference between $0.00 and $100,000/year, I hardly see it as insignificant. Under this system, people who earn vast amounts of money will make even more than this.

It is provably true that people still work to be rich in nations with far higher tax rates than the barbarically low taxes of the US or even the somewhat more reasonable taxes of the UK.

I guess your attitude was pretty well summed up below, when you said that people don't have a right to earn more, when other people are earning less.

Personally, I don't think people have a right to take away money I earn fair and square, to give it to people who haven't earned it.

You say it doesn't make a difference, because taxes are already high. I think that the state of our taxes at the moment is terrible. I don't see why I am paying taxes so that Congressmen can drive around in a limo. I don't see why I am paying taxes so that the government can afford to pay temps $18 an hour to sit around for a full day to answer a phone that rings perhaps once (oops, $18 is not really correct, when I had that job I was getting paid $18 an hour, that doesn't include the fee they paid the temp agency).

I think the vast majority of my taxes are mishandled and mismanaged. High taxes alone don't make a government run well, proper care and management do.

Although it's not always true, rich usually equals successful. Rich is just a dirtier term. So you're saying, the successful are coddled way too much in our society, and the unsuccessful are... what? What is the word for being given handouts for doing nothing? Coddled has already been used....

Now, don't get me wrong, there are tons of people who really deserve a helping hand. People who for various reasons at various times in their lives cannot work, can't feed themselves, can't get ahead. But you don't solve that problem by punishing the ones who have avoided that fate.

You want to get rid of poverty? Work on making tax dollars go farther. Work on giving everyone, regardless of race and color, equal opportunities to learn and succeed. Here in Germany, we have public colleges as well as high schools because they have the theory that higher education = higher jobs = higher income = higher taxes = more money for the state. Why not in the U.S.? Raise salaries for policemen, teachers, and even politicians, so that you attract the cream of the crop to the jobs that need them, but let them buy extras like limos and chauffeurs on their own dime.

There are a lot of things that need to be changed. Simple handouts aren't the answer.

Taxes are clearly mishandled in the US, this nation is ruled by plutocrats and greedy politicians. However, it also has far lower taxes than any other first world nation. Almost every other First World nation provides superior health care for most of their populace and far better social services for children, the poor, the elderly, and the disabled. If the US is to do any of that, it needs both higher taxes and more useful and less corrupt spending. I've read numerous reports from Europeans (mostly in Scandinavia) who can clearly see the personal benefits their taxes provide. Sadly, this is not nearly as obvious for most Americans, especially since most tax money goes to help ensure that the US military can destroy the entire world 3 or 4 times over instead of merely once or twice and a good portion of the rest goes to total wastes like "the war on drugs" or to support the hundreds of prisons needed to incarcerate almost 1% of the US population (well higher than any other First World nation). Much of the rest goes to utter fiascoes like the early 90s SNL bailout, tax cuts that benefit only the exceedingly wealthy, or the deeply corrupt no-bid contracts for rebuilding Iraq. In effect, much of US tax money goes from the middle class to the wealthy

Obviously things could be far better here, which is why I'm strongly considering moving to Canada, where taxes are higher, but where they also provide far more personally useful benefits.

Personally, I don't think people have a right to take away money I earn fair and square, to give it to people who haven't earned it.

I do not know how you make a living, but I would bet that my my definitions you don't earn your money if you are any sort of entrepreneur. Much (if not almost all) of money made by any wealthy person comes from labor done by others. While one could argue that a few exceedingly wealthy people like the author J.K. Rowling make their own money, such people are far rarer than people who gain their wealth primarily by extracting it from their workers. Also, even Rowling was dependent upon publishers, distributors, advertisers and people who stocked her books in stores. I see no sense in which anyone who employs others makes "their own money".

Obviously any person whop succeeds in creating a desirable product or service should be rewarded for doing so. However, the idea that they are in some way entitled to the money that their employees earn for them seems both wrong and nonsensical to me. Then again, I think capitalism is inherently destructive and also consider the ownership of private property that one does not personally use (such as factories) to be theft, so my PoV is distinctly fringe in the US (which is one reason I hope to leave in a few years).

**sorry, think I hit a comment size limit *sigh* trying again to finish my point....

I do not know how you make a living, but I would bet that my my definitions you don't earn your money if you are any sort of entrepreneur. Much (if not almost all) of money made by any wealthy person comes from labor done by others.

This is an non-sensical argument. The people who, through entrepreneurial development, create jobs and opportunities for others not only make their own money, but make lots of money for other people.

If I start my own company as one person, and start earning some income, it's likely that I'll hire another person to help take over some of the workload. That's one person getting food and income that doesn't have to be donated by the state. If my company continues to earn money, I'll end up hiring a team of employees - secretaries, janitors, management, whatever professionals I need - all who will be gainfully employed as a direct result of my profitable idea. Your insinuation that entrepreneurs do not earn their money is close to ridiculous. In fact, by coming up with a profitable idea, the entrepreneur allows others the opportunity to earn money, at a significant amount of personal risk.

But you know, when you say things like you consider ownership of factories to be theft, then I believe we are on two completely different planes in our discussion, so I think it probably won't get us anywhere at all.

It's purely a moral norm that the profit from a business "belongs" to the person who owns the business, rather than, say, equally to each person who contributed, or on an hour-by-hour contributions basis. It's a very entrenched norm, but it isn't the only way of seeing things.

As I see it: if I start a business, employ three people, and the business fails, all four of us are destitute, and all four of us have the same, social, security net. The risk is actually the same for all four, but my potential profit is higher.

Actually, the risk far from the same. The owner of a business has legal and financial risks that employees do not have. For example, the owner of a business normally invests money into it, whereas employees do not. If a company funs afoul of laws, which is stunningly easy to do accidentally, the owner can be arrested, whereas employees generally cannot (I'm not talking about purposeful breaking of laws by criminals here).

If I start a business and hire three people, say each of us gets a salary of $30k. After a year, the business goes bankrupt and shuts down. My three employees go away with $30k of profit. Whereas I have paid $2,000 a month for an office, $20,000 in advertising, $100,000 for stock, $20,000 for office furniture, computers, supplies, etc., salaries of $120,000. That's not even counting business taxes, legal advice, accountants, tons of other expenses businesses have. Balance that against my own $30,000 salary, and I think you can see that the financial risk is not the same for all four employees.

And if, on the basis of a salary with the company, one of the workers has bought a house with a whacking great mortgage? Salary isn't profit, as it's eaten up with living expenses (somewhat akin to a business's running costs, no?).

Erm, no, actually not.

The business owner also has living expenses, and they are totally separate from the running costs of the business.

Profit is profit, and what you do with that profit is up to you. If I buy a computer game for $5 and sell it the next day for $10, I have made $5 profit on that game. If I went out to dinner that night and spent $20, completely unrelated to that game, it doesn't mean that I didn't make $5 profit. It only means that I have to sell more games if I want to support my lifestyle.

What people do with their money is completely out of the scope of this discussion. What if the employee invested all of that salary wisely and ended up with six times his investment at the end of the year! What if you blow it at the casinos? What if you hit the jackpot at the casinos! Doesn't matter to the discussion at hand, and has nothing at all to do with the risks of starting a business.

In the scope of the business, if you go into it with zero, don't invest in anything job-related, and come out of it with $30k, your profit is $30k. If you invested $100k, your profit is -$70k. Since normal employees (not co-owners) are not asked to invest in the company, they also don't have any risk.

Catching up on my reading.

"Personally, I don't think people have a right to take away money I earn fair and square, to give it to people who haven't earned it."

How much is fair? If your business nets you enough income to maintain a comfortable lifestyle, is that fair? If it nets enough to give you and ten other people a comfortable lifestyle, and you keep it all, is that fair?

By your rationale, you are implying that any monopoly is automatically fair, as they 'worked' to earn that money. So, effectively, the oil-cartels are 'fair'. Interesting notion.

Yes government mis-manages taxes. However, Andy is proposing a more utopian solution - a fairer taxation system, that is well managed by a (the) government. He's not just proposing "give more money to the government", he's proposing that it's used wisely. So, while I think what you said is true, I don't think it's part of the argument.

You raised the "Rowling" point. There are plenty of other authors out there struggling to make ends meet, who's output is far more plentiful if not as well received. Is this fair? Especially as it's 'art', and is therefore subjective? How much money does JK need? Regardless of how popular her works are, what does it acheive to have her soaking up money like that? How does society benefit? Why should she, who wrote novels for seven years, now be able to do whatever she likes for the rest of her life, while doctors and nurses and many other people who contribute health and safety to society will have to work till they are 60-70, to ensure they have enough money to be comfortable throughout their lives?

At the other end of the spectrum, while I'll happily pay more tax to see people off the streets, and a more balanced society, I wouldn't tolerate free-loaders. The £20,000 hand-out would definitely be conditional on behaviour deemed acceptable by society, and as mentioned elsewhere, utilising those people with less specific skills to do necessary menial tasks such as keeping the streets clean.

Capitalism is many things, but no one with the least bit of unselfishness could ever describe it as fair. It attracts me, and I'd love to earn millions and retire, but I still wouldn't consider it 'fair'. Fortunate, but not fair.

I didn't bring up the Rowling point.

But yes, I think that so long as money is earned legally and ethically, it is fair. If every person in the world wants to feed their obsession with Rowling and give her money, let them. She, for whatever reason (because I haven't read her books, and if I do, will only buy them used, because I don't feel like giving her my money), makes people happy, she deserves it.

I, as a consumer, have the right to spend the money I earned however I want (so long as it is legal and not immoral). If I want to give it to you, or to Rowling, or to the poor, is my own choice. Who are you to say, that person has enough money, she's not allowed to sell books anymore?

My God, give people who work hard and create things that other people want the ability to achieve success, and you will see the benefits to society. How many people have been motivated to write, because they see her success? How many children have been motivated to read because they love her books? How much taxable income has been brought in, both nationally and internationally, by her success?

I absolutely hate the idea that financial success should be artificially limited. The closest that the world can come to being "fair" is to give everyone the same opportunity to succeed, and reward them when they do.

I wholeheartedly disagree. "Financial success", as you term it, only ever benefits individuals. There's another word for it - greed.

OK, JK gets all that money. What I was questioning is - what's she going to do with it? She can't possibly spend it all, therefore what good does it do her? Why does she need it? Where is the benefit in her having anything over a few dozen millions? So she can figure on the "rich-list"? What does that acheive?

Your attitude seems to be "Who cares? It hers." which frankly, I find astonishing. I find it astonishing that anyone can feel that way. While I think there are genuinely some wasters in the world, who take complete advantage, I think there are far more people who don't get the same opportunities as you and I, and are far less well off. These people deserve our pity, and I for one would welcome measures that would even things out, even though it meant I had slightly less.

You are way off topic on Andy's post anyway. Essentially, he says that the current minimum income for everyone is zero, and tax is too little. He suggests raising that minimum income to £20,000, that everyone (including JK) would be entitled to. Earnings above that (from the £10,000 a year admin job to JK's astronomical income) would be taxed at 50%. The rich would therefore stay richer than the poor, the overall wealth would just be more evenly distributed. All he's doing is moving the base-line from zero to £20,000. People who earn money would have more than those who earn none, therefore the incentive to work is still there. JK would still have more money than her contemporaries, as she can only pay tax on what she earns. If she pays more tax, it's because she earns more money, but she'll still be wealthier, as she pays the same proportion of tax.

I take it you don't think there should be a welfare system? Certainly, your attitude seems to be "every man for himself", which has always been my interpretation of "The American Dream". Why should I pay ANY taxes? After all, I earned it. In fact, we should privatise all amenities, and that way the people who can afford garbage collection can pay for it, and those who can't, well, too bad? How far would you be willing to take your opinion that if you work (hard or otherwise) for your money, you should keep it?

Andy didn't suggest anything too radical - increased income tax, for the eradication of poverty. In reality it would never work, but the theory is commendable.

You surprised me.

I should add, I never said JK should not be allowed to sell books. But why not sell them at half the price they currently are? The negative impact of that is that she'd only have around £125million, instead of £250million. Poor lass.

The positive impact is that your 'altruistic' benefits, such as kids being encouraged to read, would only be furthered as the books would be more affordable, and therefore more readily available to people with less means. Your comment regarding giving everyone in life the same opportunity - this is where it starts.

Take another 'creation' then - medicine. Should individuals and/or companies be able to create, say, a cure for Aids and then only sell it to those who can afford it? After all, their hard-work created it, so why shouldn't they control how they benefit from it?

Talking to me?

Hmm, second time I've responded from the email and it didn't get posted. Sorry.

I said that you had accused me of several things that I neither said nor implied. I believe that I stated in another part of this thread that I was actually for welfare, for instance, and I think that you saying that I have an "every man for himself" attitude is neither called for nor justified by my opinions stated here.

I believe you're wrong that becoming financially successful benefits only individuals, but in the face of the earlier accusations, which I found a bit too hot for a friendly discussion/debate, I don't really motivated to continue.

No hard feelings, though.

You're right - I came over too strong. I'm sorry.

It's ok :)

Oh i agree...

I get clasified as "entrepreneuer" My driver, pure and simple is money, I enjoy the process of making it, but the aim, and the milestones that have driven me to this is Money.

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Robots and Income

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