• Google
    This Blog Web

October 2011

Sun Mon Tue Wed Thu Fri Sat
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31          

RSS Feed

Bookmark and Share

Email Feed

  • Powered by FeedBlitz

« Productive Nanosystems Panel: Applications | Main | Friday Afternoon Fun »

October 11, 2007


Feed You can follow this conversation by subscribing to the comment feed for this post.

Brian Wang

I do not agree that the better (not perfect but better) plan is to get a basic income guarantee. Actual analysis of how most people who rise out of poverty or become wealthy or where countries have the most growth are not consistent with policies that Dale describes. Where the policies are more similar to Dale's prescription do not show a correlation with the desired result.

Where have the most people been lifted out of poverty ? In China. China went away from socialism (guaranteed services) towards mercantilism.

Although there has been wealth concentration (200,000 millionaires.) There has also been the creating of an upper and lower middle class.

McKinsey projection of lower and upper middle class in China

More on China's emerging middle class

You build the industries and growth where you can (like the trillion $ IT industry which has also helped many in India). Then try to keep participation as open as possible.

Wealth is spreading, in spite of the uneven distribution


Robin Hanson analyzed economic growth in the face of future technological revolutions:


He concluded that it was unlikely that any one technology could greatly increase the rate of growth of consumption, due to a couple of factors. One is the presence of bottlenecks in other parts of the economy which will become the new limiting factors even if some present limitations are eliminated; for example, technical training, or distribution, or information availability, regulatory approval, and many other factors. Only if all of these can be simultaneously improved can consumption grow quickly.

The other main problem is the dissipation of returns in a frantic effort to win the technological race to dominance. Left to themselves, investors will pour money into investments in future technology as soon as their expected returns become competitive with existing projects; and it turns out that this is "too early" in the economic sense and causes enormous waste. The result is that even a marvelously productive technology ends up with most of its gains being lost in the development process.

Robin estimates that these factors can be overcome, but it will take time. A simple model shows linear growth in certain key parameters over the past few centuries, and predicts that we will transition to a highly productive economy in about 150 more years.

Therefore I would not be too quick to make policy prescriptions on the assumption that society will reap great wealth from nanotech or any other such technology. It is of course still reasonable to look at potential hazards and dangers, but if Robin's analysis is correct, we will not soon see a massive change in the human condition even from a very optimistic view of technological potential.

Tom Craver

Brian - without advocating it, just tossing it out as an idea (because in general I agree with your position):

What if we instead did a "matching funds" approach? Earn $2000, you get another $200 (10%). Earn another $2000, get $400 more (20%). Another $2000, $600 (30%) more. And so on, up to $20000 earned, $11000 total matching funds, at which point it might cut off or start falling off.

Designed to peak out at a level that will require a person to get some training and do something more productive than waiting tables or yard work (jobs that mainly create leisure time for other workers - nice, but not much of a net productivity gain).

Jamais Cascio

I think it's worth noting that Dale's argument for a basic income guarantee isn't directed at rapidly-developing nations like China and India (and, for what it's worth, pretty much any assertion you want to make about China is likely to include "the most people"), but nations in late-stage/ advanced/ consumer capitalism. [He may also argue for a BIG in developing nations, but that's a separate argument.]

Brian Wang

I have not seen and would like to see any case that can be made for the beneficial effects of guaranteed income for developed countries.

ie. Countries X, Y, Z (say France or Germany or Finland) has more guaranteed income than country A, B, C (say the USA, others) And we can correlate that with more of such and such effects. Also, for the higher income cases we look at inheritance of wealth, lottery annuity winners etc... to show that those people had behavior changes as described. Therefore, those examples of modified behavior indicate that changing the overall structure with guaranted income in the case of far higher growth and overall wealth would have E,F,G superior results. Which we can quantify in an order of magnitude method.

X10 world wealth with guaranteed income means what
X100 world wealth with guaranteed income means what
X1000 world wealth with guaranteed income means what

Also, the productivity motivations (the golden goose) would not be destroyed as can be seen in the examples of comparison of different countries or the same countries with different time periods.

I do not believe in the Nano- santa clause as described by Dale and others, which often is a post-capitalism argument.

I believe that nanotechnology can increase production and lower costs, but that is not nano santa claus. People still have to pay for things. Just like over the past few decades we have more and cheaper electronics but usually it is not free. Plus in spite of computer PC prices falling by 40-100 times over the last 25 years and performance going up by a lot, there are not PCs for everyone in the world. Although the greater computing equivalent (of 25 year old PCs) in cellphones is more widespread.

The cheap electronics still needs electrical infrastructure and other expensive things to work to the desired effect.

So I do not see what the basic income prescription for a MM world would achieve or what people are expecting with it.

I do not see why the forces for guaranteed income would gain the upper hand in implementation when the wealth gains of the century or two have not given them the upper hand.

I do not see the plausability of a case being made with comparative history, example markets, different countries.

Brian Wang

In terms of partial income redistribution methods, there are plenty of examples of those programs.

Canada provides GST tax credits to those with lower income. I have not looked at it in a while but I believe it was, make little or no money and get $1000-2000/year.

There are other places with varying degrees of tax credits, welfare, aid with different clawbacks or where there is no clawback.

There are probably various kinds of analysis of the effects of those programs.

Again I am unclear what larger positive result is expected in terms of overall human behavior ?

What I think is that when the amount is too small then it does not really factor significantly. 10-20% it is nice and people want it but it is not the overriding thing. Small social security amount, some medicaid etc... nice, want it but I am mainly concerned with getting, building and keeping the main income source.

If it is bigger, then you get say the fishing industry combined with welfare. Fishing for 3 months, and making a good year worth of regular wages, and then sitting on welfare for 9 months until the next fishing season. Basically people game the system, often for suboptimal productivity.

Brian Wang

I look at past and future productivity growth

I do not see a nano Santa claus future but a massive series of improving sales at Walmart. The nano santa Claus portion will be about 1%, or around the current levels of domestic and foreign aid and charity.

Again, I see no indication that steeply progressive taxation, massive extention of welfare and/or a big basic guaranteed income will have a beneficial result. Productivity will still matter. Countries and regions that do not adopt those measures will outcompete those that do.

There is the comparison of someone poor in America versus someone fairly well off in Cuba. The poor american comes off fairly well in comparison. Certainly more can and should be done to help those who are being left behind but the prescription of steeply progressive taxation, massive extention of welfare and/or a big basic guaranteed income has generally been shown to be an economic disaster.

Brian Wang

Some reference info:

Guaranteed minimum income
Portugal is by far the closest a country has come to actually having fully implemented such a system.
The U.S. State of Alaska has a system which guarantees each citizen a share of the state's oil revenues.

progressive tax at wikipedia

Income redistribution

Welfare states

Nation  Welfare spend(%GDP) percap(PPP$)   
Denmark 29.2                $29,000 
Sweden  28.9                $24,180 
France  28.5                $23,990 
Germany 27.4                $25,350 
Belgium 27.2                $25,520 
Switzerland 26.4            $28,100 
Austria 26.0                $26,730 
Finland 24.8                $24,430 
Netherlands 24.3            $27,190 
Italy   24.4                $24,670 
Greece  24.3                $17,440 
Norway  23.9                $29,620 
Poland  23.0                $ 9,450 
United Kingdom 21.8         $24,160 
Portugal 21.1               $18,150 
Luxembourg 20.8             $53,780 
Czech Republic 20.1         $14,720 
Hungary 20.1                $12,340 
Iceland 19.8                $29,990 
Spain 19.6                  $20,150 
New Zealand 18.5            $19,160 
Australia 18.0              $25,370 
Slovak Republic 17.9        $11,960 
Canada 17.8                 $27,130 
Japan 16.9                  $25,130 
United States 14.8          $34,320 
Ireland 13.8                $32,410 
Mexico 11.8                 $ 8,430 
South Korea 6.1             $15,090 

Figures from the OECD and the UNDP.

Recently it seems that Germany and France are rolling back aspects of the welfare state, because of lack of ability to afford it. However, they did show that more welfare than the US level could be tolerated for several decades.

However we are not talking the strong socialist levels of income redistrution of the old Soviet Union, Cuba or Maoist China.

Marshall Brain argues in favor of an eventual $25,000 guaranteed minimum in the USA

Note also that the federal government currently collects and spends more than $2 trillion. That works out to approximately $7,000 per man, woman and child in the U.S., or $20,000 per U.S. household. It is very easy to imagine a system that pays U.S. citizens $25,000 per year.

Tax levels of 10-40% of GDP are not crippling to economies. So redividing and redistributing those tax funds is economically possible. The questions then become what is optimal and what things are politically possible in each country.

Brian Wang

List of countries by tax revenue

I am not sure the list is complete in terms counting all state, local, property taxes. I think it is centrally collected income and sales taxes.

A lot of that money is inefficiently used anyway so trying to take large chunks of it for a straight up redistribution may not be bad. It is then "just" the political fight of taking it away from those who currently get it.

Brian Wang

A few % points of GDP for redistribution within a country has some basis.
Only about 1% for international aid and charity has been shown.

I do not think a big redistribution outside of a country will fly.

The in country redistributions is a country by country and state by state thing. Some amount could be possible particularly in some places in Europe and South America.

Note: HK and Taiwan and some asian countries and regions have very little taxation. They seem to be doing very well growth and competition wise.

Brian Wang

A case can be made that those countries with more welfare have had higher level of systemic unemployment. But some of that is related to other parts of the policy bundle.

Jamais Cascio

I could easily excerpt the whole thing, but here's a recent piece from the Washington Post talking about the notion that the European welfare state has rendered it sclerotic:

5 Myths About Sick Old Europe

Here are two very simple benefits of a basic income guarantee:

* Enables greater entrepreneurial risk-taking, as the danger of failure is lessened (something that universal health care would even more strongly support).

* To the degree that we're moving into a world in which the greatest risks are knowledge-enabled, having a broad cadre of people who have the time and opportunity to think about how to respond to such problems would be beneficial. Currently, only universities and think tanks regularly support that kind of big thinking. There are many more people who would want to engage in this kind of activity -- witness the blogosphere, as one example -- but can't for any extended period because of the need to meet basic financial needs.

brian wang

So then places like Portugal and Alaska should have the most or highest rate of entrepreneurs. hmm. They don't.

Two decades of unemployment over 10% in France. Wow they are down to 8.7% this year. They and Germany have been reforming labor laws.

23% unemployment in those under age 26

Here's a comparison of youth unemployment rates in different countries(via Eurostat).

unemployment rate, ages 15-24

Greece 25.8
Italy 23.1
Belgium 22.4
France 21.7
Spain 20.7
Finland 20.7

Germany 13.8
United Kingdom 12.6
United States 11.0
Ireland 8.4

Latest month available, from Eurostat

I think the quality of entrepreneurship is more closely correlated to a culture of risk taking, amount of people in the area with the right education/attitude/experience, quality of funding support, education institution, etc... the Silicon Valley model. A guaranteed $25K/year would be interesting, but someone who really wants to be an entrepreneur can do it during evenings and weekends while still working a day job - paying more than $25K/year OR they are willing to quit and take the risk.

France had big barriers to entrepreneurship

This from Euractiv (a european website, June 2007) Europeans remain less inclined to become entrepreneurs. With far less people willing to start a company and twice as many failures in the EU than in the US, experts discussed whether Europe is creating the right conditions for success, as the creation of more and better jobs remains the top priority.

So : more welfare, more guaranteed income but less entrpreneurship.

France and German GDP growth have still been msotly lower than the US up until this year. The US got hit with the housing problems and has had 5 years of the wasteful Iraq war. The Eurozone growth overall looks better because of higher growth from some eastern europe successes and ireland.

Universities may support big thinking but in most places that big thinking does not lead to new successful businesses. (Stanford, MIT and some other places being exceptions)

brian wang

Addressing the first section on the Euro "myths".
Europe getting to $16 trillion GDP.

A lot of this is due to the weakness of the US dollar vs the Euro. I think a lot of this is because of the Iraq war. The US $ was also weak at the end of the Vietnam war. Also, Europe got a bigger by adding more members, not from stronger growth of its original members.

China's economy was 20.94 trillion yuan at the end of 2006. It is having 11.5% growth in 2007. adding about $300 billion from growth another 100 billion from exchange rate improvement.

2.8% growth, 420 billion (on 15 trillion)
1.4 trillion from euro currency appreciation.

China by itself contributes about 70% of the economic growth compared to Europe. On a PPP basis it is more. China and India contribute more real economic growth in spite of smaller economies. Currency appreciation for europe is going to stall out and reverse at some point. China is going to keep growing at a faster pace for longer.

Hopefully a non Bush president will get balanced budgets again in 2009 and the US currency will improve.

Brian Wang

According to the IMF

Perspectives on global growth

On a PPP basis China contributes 4 times as much to global growth as europe. On a PPP basis China has a larger share of global GDP than Europe. Europe is the largest trading group by 4 times over china and over twice as much as the USA.

The comments to this entry are closed.