Because of how they utilize that money. The poor will spend it, because they need to. The rich invest their money since they do not need it all. Those investments are continuing to grow. Even if you transfer some of that money to the poor, they are spending it where? At Amazon etc...
Money being spent causes the economy to grow. How is that a bad thing? The investments of rich people often never see the consumer economy.
It doesn't matter how they utilize it, UBI is still reducing inequality. You are allowing families to purchase things they wouldn't have had the money for otherwise. Quality of life purchases that the well-off take for granted.
We need to rethink reward structures in this country. The fact that an investor can put up some capital and then gain "dividends" for as long as a company exists is ludicrous to me. They aren't actively doing anything to earn those dividends. It's simply a scheme to reward those with capital and assets.
Meanwhile, the employees who work hard to contribute to GDP and grow the company see a fixed salary. They do not see those dividends for the rest of their lives, instead when they leave a company it's over. Why? Why don't employees build up dividend streams from the companies they helped build? Why do Amazon employees get paid minimum wage and are denied bathroom breaks when Bezos' net worth can swing $9B in a single day? Why aren't all employees, from Janitor to CEO receiving dividends from the success of the company?
It all seems ridiculous to me. We need to encourage people to work hard and innovate, not sit on piles of capital and assets.
I'm someone who invests heavily and takes advantage of the system. But I see the flaws and it really bothers me.
My proposal would simply be to make it a legal obligation for all companies to provide ownership in the company proportional to salary each year they are employed. Not only that, it's a special type of stock which is paid dividends on profits before external shareholders. This stock should have exclusive premium benefits over any other stock. A lot of thought would need to be put into how to structure this so it could not be gamed.
External shareholders could still see a return. But I think the days of seeing massive returns on capital need to be over. It should be a fight just to beat inflation imho.
To be honest though I'm still thinking about this a lot and don't have an exact answer. So this idea is in flux. That doesn't mean it's not a problem though.
Employees are welcome to use a portion of their salary to purchase a stake in the companies they work for already. Mandating that their employer do that on their behalf (thus decreasing their cash salaries) probably wouldn't go over too well.
If fact, its generally considered a poor idea to own shares in the company you work for - if the company takes a downturn, not only do your shares lose value, you're probably also out of a job.
> The investments of rich people often never see the consumer economy.
That's not true at all. Investments from the rich contribute greatly to the economy -- otherwise they would not be investments. Let's say that I had a billion dollars, and all I did was stick it into a savings account. The bank uses that to fund mortgages, LoCs, provide business loans, etc. Those all have a direct effect on the economy.
More likely the rich are investing in a combination of VC, real estate, and the stock market. Those are ALL job creators.
Really the only thing you can do with money that DOESN'T contribute to economic growth is bury it in the ground or spend it overseas.
Money spent well causes the economy to grow. Mindlessly spending money on things that aren't worth their cost is simply waste, and causes the economy to shrink.
In economics it is generally assumed that money wouldn't be spent if the transaction wasn't expected to generate a net benefit for the spender. If you make spending money a goal in its own right, however, then that is no longer true, and spending can result in a net loss instead.
The money has to come from somewhere. Assuming we're not completely stupid about it, the rich will pay more in new taxes than they'll get back from UBI.
So what? If those few people provide services to a great number of people who freely choose to spend their (now increased) income on housing, those people have improved the lot of a large number of people and have earned that wealth (upon which they'll be taxed).
Indeed, if UBI becomes a significant possibility (but before it's a certainty), I think that buying low-end rental properties would be a good idea as I'd expect UBI to result in a net increase in household formation. This is literally giving people freedom and agency with which to live their lives in the way they choose.
My guess is the now-incredibly-rich rentiers (with guaranteed income) will start lobbying the government for concessions (e.g. restriction on new housing, tax-breaks) that further distort the very inequality UBI is trying to solve.
No one loves UBI and its noble objectives more than I: but I'm worried about this inherent failure mode.
What's the failure mode? That broad swaths of society get provided a fundamental service (shelter) in a way that is profitable to the people most efficiently and effectively providing that service?
I think when people approach this problem as "how do we best punish the rich?" rather than "how do we best help the poor?", it's very easy to get stuck spinning in circles.
(IMO) No one should care that there are very rich people. We should instead care that there are not very poor people.
The failure mode is that rentiers and middlemen will eat up all of the UBI income, leaving most people’s material standard unchanged. Given the state of healthcare and housing in the US, this doesn’t seem an improbable outcome.
I’m sure, by contrast, you could do UBI in a country with robust state housing and healthcare programs, like for example Austria, and avoid these concerns.
Landlords need to compete for tenants. High rents are only tenable in hot employment markets with bad policies imposing shortages. Everywhere else, high rents lead to more construction which leads to lower rents, and the landlord who refuses the going rate sees his units go empty.
Ok, show me the real world place in the US where this actually holds true. This hypothetical gets touted around, but I’ve never seen it play out this way anywhere I’ve lived.
For example, I currently live in a second-tier Midwestern city in the midst of a housing crisis. Wages aren’t great relative to their respective industries, but rents and home prices are still skyrocketing. There’s no influx of new construction outside of the luxury sector in a few neighborhoods, a lot of which sits empty. Meanwhile, existing landlords just collect ever larger checks from their properties without meaningful continued investment.
Are developers complaining about not getting permits to build more? That's the usual failure mode in cities.
Median rent in Toledo, OH is $550/mo. With a median household income of $33,687, renters clearly could pay more, but there's no shortage letting landlords demand more.
