How to keep a UBI under control

An important contribution. A potentially effective way to prevent a universal basic income (UBI) from getting out of hand.

My concern is that it would reinforce economic cycles. One of the benefits of our current welfare system is that it acts as a counter-cyclical automatic stabiliser - during a recession, more people are unemployed so payouts to social welfare increase automatically, thereby boosting the economy; during a boom, fewer people are unemployed so social welfare payouts fall, thereby cooling the economy. Very Keynesian.

But this proposed fixed budget share for a UBI means social welfare payouts will fall during economic downturns and increase during booms, thereby reinforcing unemployment and inflationary problems.

Maybe a separate counter-cyclical mechanism - such as an infrastructure body - could fill this gap. Invest in public infrastructure during a slump, hold back during a boom.

So again, and important contribution.

http://aneconomicreality.blogspot.com.au/2017/01/universal-basic-income.html

WA Secession, Part 2

http://mobile.abc.net.au/news/2017-08-31/waxit-explainer-wa-liberals-to-debate-secession-motion/8858912?pfmredir=sm

https://www.theguardian.com/australia-news/2017/sep/03/wa-liberal-party-votes-to-look-into-state-seceding-from-federation?CMP=soc_567

Wow. Not so hypothetical anymore.

The only qualifier I would put on my original comments is that the GST debate is much more important than I previously acknowledged.

But I do think secession would only be a second best alternative. First best would be a federal government that is more responsive to Australia's two-speed economy. If not through the GST system, then through some other fiscal mechanism. But something!

Elon Musk on the bandwagon

https://futurism.com/elon-musk-automation-will-force-governments-to-introduce-universal-basic-income/

http://aneconomicreality.blogspot.com.au/2017/01/universal-basic-income.html

Redistribution is not a dirty word

This interesting article covers a similar point to one I made a while ago.

Globalisation has actually been a stunning success at what it was designed to do - generate wealth.

Happily, it even helped drastically reduce global poverty.

The failure in recent decades to address inequality hasn't been globalisation's fault because it was never globalisation's job.

It has been a failure of government policy to adequately redistribute (not a dirty word) the gains of globalisation to the broader population, through, for example, the tax system.

So the solution is not to retreat from globalisation but for government to do its number one job - redistribution.

Trumpcare vs. Obamacare, Part 2

If Republicans actually justified Trumpcare by saying that health care is not the role of government, but the responsibility of the individual, and that the risk of sickness, bankruptcy and death that comes from this is the inevitable price we should pay for our 'freedom', then I could respect it.

I wouldn't agree with it. Both socially and economically, public health care makes sense. But at least their policy narrative would be consistent with their ideology.

But from beginning to end, Republicans have claimed that Trumpcare will provide BETTER health care to MORE people at LOWER cost, when so much evidence (including the CBO and the insurance industry itself) seems to suggest WORSE, LESS and HIGHER.

So are they being dishonest about their ideology or ignorant about their policy?

Trumpcare vs. Obamacare

If Trumpcare fails to improve upon Obamacare (and you would have to dazzle me to convince me it wouldn't), I worry that Trump - rather than taking responsibility for his failure - will somehow blame it on delayed effects of Obamacare, and on Democrats' lack of cooperation.

And my biggest fear is that his supporters will believe him.

Rewriting the history of economics

It's fascinating to think that Adam Smith, the 'father' of modern economics, may have been beaten to the punch by almost half a millennium.

Arab scholar and politician Ibn Khaldun wrote about very similar ideas all the way back in the 14th century.

He created a labour theory of value and noted the division of labour as the source of individual, societal, national and global wealth, using the example of grain production, compared to Smith's pin factory example.

He discussed the relationship between supply and demand.

He even wrote about the important role of government in maintaining economic activity - something that John Maynard Keynes didn't cover until the 1930s.

Modern economics is much older than we thought.

http://evonomics.com/amazing-north-african-scholar-beat-adam-smith-half-millennium/