Review
it hasn’t been the case that there is food or housing production shortfalls due to resourcing for a long time. Said another way, market dynamics conspire to keep food and housing scarce, because it serves the people steering those market dynamics.
Are you sure about housing?
Perhaps you could support your argument by some numbers, such as "how many people want to live in city X" and "how many houses are there in city X". It seems like you suggest that there are plenty of free houses everywhere, but landlords simply refuse to rent them, for reasons not going beyond "either pay me lots of money or fuck you". If that is true, you would serve your cause better by documenting this specific thing.
This undoes the market forces keeping people beholden to unscrupulous landlords and corporate overlords, through providing universal basic livelihood support.
How specifically would this work? A greedy landlord requires a ton of gold. The generous government provides a free ton of gold for every citizen. But now the greedy landlord requires two tons of gold. No problem, the generous government starts providing two tons of gold for every citizen. But now the greedy landlord requires three tons of gold. When will the market forces finally get defeated?
a debit card tied to a transaction processing system that automatically filters and limits transactions to only essentials, and only within sane limits.
So basically food stamps, with some fancy tech on top of that. Let's ignore the tech for a moment. What happens to the food stamp after someone uses it to pay for food.
Imagine that you are an owner of a grocery store, and at the end of the day you are left with $10000 worth of food stamps in your hand. Now you need to play your employees, and also pay your electric power bills. It is definitely illegal to use the food stamps for the latter; and your employees probably wouldn't be happy to be paid in food stamps, because it allows them to buy food, but not to pay their other expenses.
One possible solution is that if you are a shop owner (but not if you are just a random citizen), the government will replace your food stamps with real money. First, it's obvious what happens next on the black market. Second, you introduced a lot of friction and regulation in the system, because now we need to have rules about who exactly qualified as a "food shop owner" and what exactly qualifies as "food" for the purpose of our food stamps. Only bread and butter? What about cheese? What about really expensive cheese? Chocolate? Alcohol?
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You seem to have thought a lot about how your proposed solution would make the world a better place, but too little time checking whether it would actually work.
Also, you seem to assume that robots will do all the work, which is like... maybe, one day; and maybe the day is closer than most people imagine... but we are not there yet. At this moment, most jobs can't be automated.
You’re absolutely right, the post is light on details. To answer a few of your points: I don’t have a deep understanding of housing market dynamics beyond the bad deals and pressures I’ve heard about from many different people, especially in the Bay Area. If we were to develop this into a full proposal for public consumption it would include an analysis of how housing subsidy on both the demand and supply side would affect real outcomes. However, that’s somewhat beside the point, as that analysis has nothing to do with the soundness of the system as a whole, and actively denies the good it’s hoping to promulgate.
The debit card system is much less like food stamps than it is like dynamic UBI with constraints. You may have missed the part when a new corps of inspector-accountants validate businesses before they qualify to participate in the program. Once they do, they get a widget that adds a unique nonce to their transaction strings that the system validates. This solves a lot of problems you mention, also, the dynamic and constrained nature of the cards solve many of the issues people have with UBI: that people would spend on trivialities and non-essentials, and that it wouldn’t be enough to make a difference economically. Could someone buy $500 of alcohol with their five $100 retail transactions a week and drink themselves to death? Sure. That’s their prerogative, and their community Target worker (or wherever, just not the liquor store) could ask them if they’re ok the second time if they believe that shouldn’t happen. Further, if that’s not conscionable by a majority of people, the system could include disallowing drugs and alcohol from approved stores.
I am not an expert, but the standard answer to why anything is expensive is that there is less of it than what people want. With housing, the usual reason are various restrictions: you are not allowed to build new houses anywhere you want to; and sometimes without good political connections you simply won't get a permission to build anywhere in the city. The reason for that is that people who already own houses (that is, those who vote for the local government) want their prices to go up.
This gets further complicated by the fact that the value of living in a city depends on the opportunities that are there (such as jobs, shops, etc.). So when you only build a relatively few new houses, the costs may actually go up -- partially because the costs keep going up almost all the time, and partially because the greater city is now even more attractive for people who want to get there. Someone should do an experiment and build so many houses that it literally doubles the capacity of the city -- I would expect the prices to go down. But such thing is unlikely to happen, because the people in the city would vote against it.
The problem with "corps of inspector-accountants validating businesses" is... well, I guess you would have to experience being their target to understand it. Basically, when there is an army of bureaucrats giving you certificates, that kinda makes you their servant in the sense that if you do anything slightly differently than they want you to do, no certificate for you! Among other things, it means zero innovation, because doing something differently than the current "best practice" means not getting certified. Or it may mean that getting literally 100% score on their criteria is impossible, so everyone needs to pay bribes to get certified. Yeah, in theory it is not supposed to work like that. But in practice, it often does.
I hear you, and it’s really unfortunate that the real life dynamics go that way, since the “bureaucrats” are necessary to defeat subsidy fraud, and the subsidies are what balance the increased demand from living consumption (about 6T by one estimate).
Sometimes it feels like the society is a big computer program, and it doesn't matter if you have the general idea right, as long as there is a syntax error in line 1013, the program is not going too work. (Running a company seems to be the same thing, on a much smaller scale.) Some errors can be fixed by adding a missing semicolon. Sometimes merely fixing an error in one place introduces a related error in a different place, so many places need to be changed in sync.
On top of that, it is a living system. People try to find new exploits all the time. Plus there is a cultural momentum, so that things that work okay in one country will completely fail in a different one; or the things that worked okay a few decades ago no longer work now. The simple model is that people follow the incentives, but in addition to the formal incentives, you have informal ones, such as the opinion of your neighbors. (Sometimes the fear of being rejected by your neighbors is stronger than the fear of legal consequences. And depending on your neighbors, sometimes they push you towards obeying the law, and sometimes they push you towards breaking it.) Now consider that half of the population has IQ 100 or less, some people are psychopaths or drug addicts, so even in the hypothetically optimal system, you will still get people who hurt themselves or others for no good reason, just because the idea occurred to them at the moment.
Also, unlike the situation with programming, there is no clear distinction between the programmer and the system that is programmed. Your attempts to change the system, even for the better, will be actively rejected by those who profit from the way the things currently are, plus everyone who falls for their propaganda. Also, all idealists who have a different vision. Even if you are a dictator, your situation is actually not much better (from the perspective of social engineering), because now you have to keep your army and foreign allies happy, and prevent the population from rebelling against you, which may dramatically limit your options.
...in summary, sometimes it feels to me like magic that things work at all, considering the number of reasons why they should not. I guess it's because there are also millions of people who try to improve things, mostly locally, and they push back against the forces of entropy. But they are often uncoordinated individuals; and also, as individuals, sometimes they die, or burn out, or start a family and no longer have time for their previous activities; and in such cases, sometimes there is a replacement for them, and sometimes there is not and then the local good things fall apart again.
The reason I am writing this is that I don't want to discourage you, but really the devil is in the details.
One typical problem when trying to design a society is: "who will guard the guards themselves?" Like, if you propose an "army of inspectors" to check the business, the obvious next question is who will check this army of inspectors. If you don't have a good answer, sooner or later the inspectors will naturally start doing things for their own benefit, rather than to make the system work as intended. Two typical ways are taking bribes, and trying to make their own work as easy as possible. Taking bribes may motivate them to lobby for making the regulations as strict as possible; seemingly for the benefit of the customers (it will be easy to get a popular support for such proposal), but in fact to give more opportunities to take bribes. (From their perspective, the perfect outcome is when the regulation is so difficult that it is virtually impossible to comply with, or at least so difficult that it would be impossible to make a profit while complying with it, so everyone need to pay a bribe to get approved.) Optimizing for less work means that whenever the business owner proposes a small change, the answer is an automatic no; no one has an incentive to actually think about the proposal. To address this, you would need a second army of meta-inspectors who would check the inspectors, but then the problem might reappear at another level.
And this is not just empty speculation, you can see it at many places. (For example, you need police to reduce crime, but now USA has a problem with criminal policemen protected by the police unions.) I grew up on socialist Czechoslovakia, which in theory was supposed to be a paradise for workers and peasants, governed by wise and benevolent people in the Party. (We typically called it "the Party", because there was only one.) In theory, it was a perfect opportunity to make everything work great. In practice, that didn't happen. Not only was the entire economy mismanaged (the proverbial shortages of toilet paper), but practically all aspects of life were dysfunctional somehow.
The housing situation... well, you applied for a waiting list, waited for a decade or more, and then you were assigned a place to live (you couldn't choose the part of the city; you were happy that you were allowed to stay in the same city because sometimes even that wasn't guaranteed). During that decade or two, you had to stay with your parents, or on your friend's couch; I think there was not an opportunity to rent. (Technically, you could stay in a hotel all the time, but most people didn't have enough money for that.) If you were lucky, there was a job opportunity offering temporary free housing for their employees. So, even if money technically wasn't the problem, the housing still was.
Food... was cheap (heavily subsidized) and available, but only the basic forms. If you walk in a supermarket today, imagine that you would have to choose a subset of maybe 15% of the stuff that is there, and that will be all that is ever available, in the entire country (except for a few super expensive luxury shops). Forget about things like "yogurt with fruit flavor" or "low-fat yogurt". Be happy to buy the yogurt if they have one in the shop; there is only one kind, so it's easy to choose. One kind of bread, two kinds of milk, etc. All restaurants in the country cook the same set of meals, based on the government-approved book of recipes, and the inspectors check that they never deviate from a recipe, even if the customers would really prefer something different. But, yeah, unlike in Soviet Union, at least nobody was starving.
Before you object to comparison with socialism, my point is that this (as far as I know) didn't happen on purpose. The ruling party might have had its ideological objections against the ways markets work, but they had no reason to prevent the workers from getting housing soon or eating tasty meals. Actually, considering that most workers mostly care about their houses and food and beer, improving the housing and meals would increase the stability of the regime. And yet. The lesson is that things can easily go wrong even with good intentions, if you regulate a bit too much.
Thank you for sharing your experiences. It’s a story of how the best intentions go awry due to human nature and how free markets are a way of working around this. The vibrancy and efficiency of motivated people competing to make things better is a strong and vital force in the society that fosters it, and to some extent people who grow up that way tend to take it for granted. Thank you for the reality check.
In a way, this is an argument, not for social Darwinism, but for creating the possibility to escape the mean. If you take a distribution and flatten it, you eliminate the worst outcomes, but you also eliminate the vibrant top and middle. I’m guessing that allowing for a bottom allows for a much more elevated middle.
In a sense, this means that the current system is working as intended: wealth inequality gives us the highest middle.
If we ignored housing, then "free market + some taxation and giving the money to the poor" kinda sounds like the best of both words. Unfortunately, the increasing rents can eat the extra money given to the poor. (See also: Georgism.)
Maybe if we could get UBI high enough that people could survive on that alone, it would no longer be necessary to live in cities (close to good jobs) and people could avoid paying too high rent. Or maybe not, because ultimately all land belongs to someone? Not sure.
Georgism for sure. When we build the political will to reclaim all titles to land and charge leases held for the public by the government, UBI is easily and appropriately funded. As you say though, the question is whether it will ever be enough to live on given other market forces.
My hope has been that a system like the one I described can get ahead of all of it by defining the minimum purchasing power as exactly what’s necessary to live on. In principle this only works when the economy has a high post scarcity multiplier, that is, one unit of work gives you four or more units of goods. As you mentioned before, automation may not be there yet, but as a hint of things to come, our current per capita GDP is double the current living wage floor.
I think you've re-invented Communism. The reason we don't implement it is that in practice it's much worse for everyone, including poor people.
I find this comment flippant and unworthy of a community like LessWrong. First of all, you’re denying the politics of millions of earnest people, many as educated and gifted as you, and second of all, you’re equating a 21st century democratically steered market economy with the totalitarian central planning of 20th century Stalinism. You’re right that no one wants that.
You're right, I was taking the section saying "In this new system, the only incentive to do more and go further is to transcend the status quo in some way, and earn recognition for a unique contribution." too seriously. On a second re-read, it seems like your proposal is actually just to print money to give people food stamps and housing vouchers. I think the answer to why we don't do that is that we do that.
Food is essentially a solved problem in the United States, and the biggest problem with housing vouchers is that there physically isn't enough housing in some areas. Printing more money doesn't cause more housing to exist (it could change incentives, but incentives don't matter much when building housing for poor people is largely illegal).
You’re still not reading the post closely enough. This isn’t just food stamps and housing vouchers, it’s real dollars created for purpose, with matching subsidies on the supply side. That means if there’s 4T new dollars of housing spending, the system allocates 4T new dollars of housing subsidies to build new homes. There’s two nuances that your gloss misses, first, producers aren’t just compelled to honor welfare tokens. Second, the dollars are created, not gathered through taxes. Both points make the system more palatable to entrenched interests and ordinary people.
The problem is that lack of money isn't the reason there's not enough housing in places that people want to live. Zoning laws intentionally exclude poor people because rich people don't want to live near them. Allocating more money to the problem doesn't really help (see: the ridiculous amount of money California spends on affordable housing), and if you fixed the part where it's illegal, the government spending isn't necessary because real estate developers would build apartments without subsidies if they were allowed to.
Also, the most recent election shows that ordinary people really, really don't like inflation, so I don't think printing trillions of dollars for this purpose is actually more palatable.
The idea is to balance spending with subsidies, to prevent inflation. In this new system, there’s nothing preventing people from migrating from antagonistic municipalities to places where subsidies are approved because of good planning and political climate.
In the past ten years, I have been developing ideas to resolve key issues that I have encountered in my own life, and in the lives of the people around me. In probing these issues for their root causes, I have identified the threat and reality of economic deprivation as the primary motivator of everyday suffering. Just a few of the issues that this current work resolves:
1. Non-voluntary family participation
2. Non-voluntary work
3. Economic entrapment of intimate partner violence sufferers
4. Exploitative working environment and compensation dynamics
5. Food deserts
6. Under and over development
7. Multinational capital concentration, and subsequent self-determination violations
8. Product quality and decency issues
9. Environmental damage and non-systemic thinking
No one system so far alleviates these issues. This one will.
(i)
Beginning in the early 1990s, certain national banks started to experiment with money creation as a means of achieving certain economic goals. The national bank of Japan came up with the quirky and elegant term “quantitative easing” for this process, and various other central banks picked up the process for their own goals.
QE really picked up speed after the 2008 housing crisis, when the US Fed utilized QE to bail out the financial system. Conventional thinking up until that point, at least in the US, was that creating money for this purpose would be wildly inflationary and so out of bounds for any prudent central bank.
The results tell a different story. If anything, QE was deflationary. Subsequent QEs have borne this point out, with the most recent academic discourse about the actual effects of QE on the broader economy being undecided.
The current financial system elite as embodied by the US Fed and their discourse, talks with two mouths. On the one hand, when it comes to real human needs like social programs and direct assistance, they advocate for rigid “financial discipline”, talking about debt and taxes and interest rates, and on the other, when their colleagues in banking are in distress, printing money to bail them out.
We now live in an era where central banks have tested the tenets of MMT[1] in microcosm, to the benefit of their closest allies, and the capacity to utilize monetary policy for humanitarian ends now demonstrably exists in the hands of monetary policy makers.
(ii)
The current system imagines a world in which money, instead of being primarily earned through work, flows through the economy in guided ways to bring about humanitarian goals. I imagine money as a given much like light from the sun: input to the system.
With this framing, we can start to talk about the best way to utilize this new capability to bring about human flourishing.
In the current economic system, those in power artificially sustain a “state of nature” where every adult is faced with survival pressure to “earn a living”. While at least some people need to work to create food and housing, it hasn’t been the case that there is food or housing production shortfalls due to resourcing for a long time. Said another way, market dynamics conspire to keep food and housing scarce, because it serves the people steering those market dynamics. This is frank social darwinism and it needs to end.
In the new system, market dynamics still determine prices, but financing for essentials, and supplying those essentials are automatically present through universal consumer support, and matching subsidies. This undoes the market forces keeping people beholden to unscrupulous landlords and corporate overlords, through providing universal basic livelihood support.
This universal livelihood support comes in the form of a debit card tied to a transaction processing system that automatically filters and limits transactions to only essentials, and only within sane limits. The funds for the cards materialize automatically through an integration with the Treasury and Fed, the Treasury issuing perpetual no interest bonds titled according to the region of the outlay, and the Fed creating money in turn.
The bonds are mostly a form of bookkeeping, since the Fed holds these indefinitely, and record the market transformation induced by the system.
Simultaneously, the transaction processing system tabulates all ongoing transactions, identifying matching subsidies to support consumer demand. This requires sophisticated but tractable algorithms and data collection to target producers most responsible for consumer supply.
All of this requires a new corps of inspector-accountants trained in on-site and online business validation to verify that business operations utilize given subsidies toward supplying essential demand, and follow market rules to buttress product quality, environmental savvy, and worker wellbeing, as well as recording supplier networks for the subsidy algorithms to process.
With all this in place, the humanitarian economy is complete. Everyone spends in proportion to their needs, and the system subsidizes the people supporting them. Since the money creation is balanced on supply and demand sides, this effectively creates new market capacity in proportion to the money creation, the ideal outcome for monetary policy. Not only that, but the externalities of this market creation are an end to involuntary poverty, inhumane working conditions and compensation, and most forms of economic coercion.
(iii)
The major primary outcome of deploying this system initially will be the removal of the need to work to avoid economic deprivation, and the subsequent exit of a large number of people from the workforce.
To see this as a good thing we can hold in mind the following: businesses that survive at the expense of the health and wellbeing of their subsistence workers are perpetuating modern serfdom, and deserve a correction, *and* technology is already available to transition the businesses most affected to automated processes.
In the case of retail, where the exit most likely has the largest effect, businesses can transition from a service orientation to a self-service paradigm with backing automation. This looks like warehouse stores with robotic stocking and self checkout, but also the professionalization of jobs like sales clerk in commodity department stores.
In the case of other jobs that pay close to minimum wage and can’t be automated, like tricky human interactions or dangerous and complicated physical labor, the wage floor is now automatically living, and any compensation must encourage people who do not otherwise need to do so to engage in these difficult and draining tasks.
This has two amazing benefits: first, it incentivizes the market to stop encouraging dangerous and complicated interactions with the natural and social environment, and second, for truly beneficial work, it encourages adequate compensation. The teacher spending all her life and energy raising other people’s children to be good citizens gets to be fairly rewarded with spa days and relaxation and all kinds of luxury from her salary.
At this point we stop and take stock: this humanitarian economy encourages a humanity that is more relaxed, less adventurous, and so more ecologically sound. This flies in the face of historical economic values: humanity has encouraged itself through various market forces to go further and do more than previous generations, in order to earn a bigger piece of the pie.
In this new system, the only incentive to do more and go further is to transcend the status quo in some way, and earn recognition for a unique contribution. Likely status signaling as a proxy for reproductive fitness is still a robust driver of economic activity, so those who wish to play economic games for a sense of control of their environment still have a stage to do so, but now they cannot use nefarious means to coerce others to play their game, and any number of new games are possible!
That leaves us with the mega projects. How does an Elon Musk go to the stars if no one wants to build his rockets? First of all, robotic means are available to machine and assemble rockets, and second of all, the high end of the market above the Walmarts of the economy still exists: with the need to signal freedom from survival needs eliminated, luxury naturally will change from excess or frivolous consumption to more substantive signaling in the form of access to and engagement with culturally relevant artifacts: arts, sciences, and technology. That is, what differentiates someone working a very valuable profession, really, working at all, and someone floating along on basic subsistence support is their degree of cultural achievement: can they appreciate the Bhagavad Gita, Wagner, a brilliant and singular sunset.
(iv)
In Sid Meier’s Alpha Centauri[2], the factions portraying societies in microcosm have the ability to spend resources on secret projects that give their societies unique advantages.
In the humanitarian economy, too, we have the ability to fund special projects that benefit the system as a whole or achieve social goals: like space exploration, big science or health, and great engineering or architectural feats like the Hoover dam or Burj Dubai.
The humanitarian economy imagines a process whereby project organizers are rewarded with full funding through the same QE mechanics and backing subsidies to producers, to the extent that they document and verify worker organization, plan development, local permit and planning engagement, and ecological benefit.
With this section of the outlay operative, construction organizers could develop plans, permits, and site evaluations for new housing projects, new universities, and any other building needs. Researchers at prominent universities would no longer depend on byzantine grant application processes, but would complete research proposals and receive funding nearly automatically, as research funding requirements are so comparatively low. Similarly, funding and venue support for art installations and performances becomes trivial and the arts become ubiquitous.
Projects like building and maintaining a new fusion reactor for a given region become a matter of organizing, not financing.
(v)
Since it is within our power to enact this new humanitarian economy, it becomes a moral[3] question of why we do not. If the vast majority of democratic participants would affirm the sentiment that “Working conditions are really bad for people earning minimum wage”, and “Life would be better if everyone could afford food and housing”, the question of why we do not implement this or another system like it becomes urgent.
The prevailing sentiment and orthodoxy of monetary policy, that sovereign debt matters, that the role of the issuing authority is exercising fiscal restraint, poses a stern ideological barrier to MMT-focused policies and the new economies they enable. However, when we inspect the actions of the same ideologues and who benefits from their policies, we can clearly see that fiscal restraint is code for "benefit people who deserve it" or even more directly, "benefit people close to me".
[To some extent we can recover the good of the central bank as custodian of the economy by honoring their honest management of macroeconomic indicators like inflation in the interest of economic stability.]