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Comments

Drew

Just to get this conversation going, I will repeat my prediction that we will continue the halfway version of this by running deficits. I do remember an article somewhere that the Federal Reserve had worked out a way to create accounts for everyone in the US and deposit money directly in them. My assumption is that they have heard the complaints that they should avoid the impact of expanding the money supply in the way that benefits the wealthiest the most.

Geoman

"low unemployment rate presages inflation, and no other indicator matters." That does bother me. And I don't like them "predicting" inflation and taking preventative action. If inflation begins, then yes, clamp down on it. But until and unless we actually see signs of inflation, no.

And the question is - does interest rates control inflation any more? The assumption is labor shortages cause hikes in pay, which get transmitted through the economy. But hikes in pay, like recently with Ford, may result in employers laying off people to reduce costs.

Who cares about unemployment - what are commodity prices doing? Tariffs? Forget the employment rate, what is the % of the total population employed? What about automation rates?

Low employment can cause/be caused by so many factors a straight accounting doesn't capture it.

Geoman

You know the more I think about this, the more silly this is. This idea that these guys can "predict" the future and then act to prevent adverse outcomes. It's just a garbage idea.

How does the economy work? What, in fact, is capitalism?

Capitalism is a method for determining the "best" use for limited goods and services. For examples, we only have so many tons of copper - what is the best use for it? Copper statures, or copper wire? How about copper wire or solar panels? How about copper wire, and slightly thicker or thinner copper wire? How do we decide? We bid on it. Stupid and wasteful uses for the copper fall by the wayside - I can make more money making it into copper wire than the other guy can making copper statues, hence I can bid (pay) more for the copper. better still, if there is a huge need for copper, high prices tell miners to buy equipment and hunt up some more.

And all of this is happening at lightening speed billions of times each day. Attempting to maximize the benefit of each and every resource on the planet.

There is a term in nature called "Emergence". Emergence occurs when an entity is observed to have properties its parts do not have on their own. These properties or behaviors emerge only when the parts interact in a wider whole. Think of a termite mound. Each termite has around 250,000 neurons. Humans have something like 8.6×10 to the tenth neurons. Individually they are dumb. yet they exhibit complex behavior, and construct well designed homes out of dirt and spit. How is that possible?

Termites have 1-2 million individuals in a mound, and the interaction of that many individuals creates emergent behavior resembling a significant collective intelligence - almost as much intelligence as a single human being.

But take the average human being, and using social behavior like capitalism, we can generated a super intelligence. 8.6X10 to the tenth times 7.5 billion people.

That is what is controlling our economy. The more we unshackle that emergent super intelligence, the better off we are collectively and individually.

Unfortunately there is always some smart ass politician who thinks he knows better, and seeks to short circuit the collective super intelligence with his own choices. He doesn't realize that he is literally 1/7.5 billion as smart as a emergent super intelligence based in capitalism. Any correct decision he makes are pure luck.

This is fundamentally why socialism fails. the minute you get rid of the emergent super intelligence and start having a group of people, or worse, one person, make economic decisions your are toast. It's like one ant trying to build a termite colony.

The ego that 600 PhDs think they can outwit a emergent super intelligence of that size is unimaginable. No, they can't do it. Not 600 or 6,000 PhDs, it makes no difference. The emergent intelligence of the economy is vastly more intelligent than they ever will be, and worse, it will always be more intelligent. It will outwit and out maneuver them. It will make utter fools of them every time.

And predicting the future based on just one marker of the economy...has got to be the dumbest idea I've ever heard.

Kartik Gada

Geoman,


You know the more I think about this, the more silly this is. This idea that these guys can "predict" the future and then act to prevent adverse outcomes. It's just a garbage idea.

Indeed. They even completely ignored their own oft-cited metrics of a) the yield curve, and b) CPI. All because of the specter of imaginary inflation that never arrived even in the face of $23T of global QE. They jettisoned *everything* in response to the low unemployment rate, and still can't fathom why inflation has not appeared.

Macroeconomists are massively out of date regarding their own profession. Just like all the mechanical engineers in the 1880s that said heavier-than-air flying machines were not possible. When this happens, history soon sees major turning points.

Kartik Gada

Drew,

I do remember an article somewhere that the Federal Reserve had worked out a way to create accounts for everyone in the US and deposit money directly in them.

Do you remember where you read this? Do you have a link?

Technically, Congress has to expand the Fed's powers, but the Fed itself is too out-of-touch to think this way. The nature of QE that they did exacerbated distortions and non-meritocratic inequality greatly, and they aren't even curious enough to examine why.

The Fed, and by extension the entire profession of Macroeconomists, are the greatest concentration of eggheads in the world at present. Zero ability to question their assumptions, no matter how much evidence.

Drew

My first round of googling brings up articles like this suggesting the practice https://newrepublic.com/article/148998/give-everyone-government-bank-accounts as well as a scam that went around earlier, which indicates that I am probably misremembering. But I will point to this opinion piece as something in the air. Instead of sending Dues direct deposits to everyone, it would be simpler to just have them appear in a Federal Reserve account. Let the Federal Reserve figure out if people are citizens or otherwise eligible.

Drew

Here's an article on failure of negative interest rates in Europe (It's in the WSJ, so you may need to find a workaround) tps://www.wsj.com/articles/negative-rates-designed-as-a-short-term-jolt-have-become-an-addiction-11558363559
Not the same thing as DUES, but you will need to explain why DUES will be a better solution. Until a smaller econonomy like Canada or Singapore or Switzerland tries and succeeds with something like DUES, no small country will, because the assumption is that the currency will just devalue against the major currencies (maybe not Switzerland, but they are an outlier - however they could be a test case of doing dues when you want to devalue your currency, or at least slow its appreciation). The examples people will look for will be the major economies - US, China, EU, Japan. If the Chinese economy has downturn that is a version of the Japanese economy in the 90s or worse, people will see it as an argument against your monetary policy. Yet another reason to hope that China finds a way through.

Kartik Gada

Drew,

You are correct.

Singapore, for example, has a currency pegged to the British Pound, so it won't experience a currency flight.

But even if a country is not pegged, as long as the country is an advanced economy with a trade surplus, a weaker currency is not a problem at all, as their exports become more competitive. Many countries try to keep their currencies down (such as China) for this reason.

Drew

So the question and the prediction becomes when will a government do a a Quantitative easing (QE) or currency devaluation through direct issuing of money to citizens instead of asset purchases or interest rate lowering. I will say 2028 and that it will be a small country like Switzerland with a non-pegged currency. I think pegged currencies will be trickier, because they have to be more prepared if there is a run on their currency so they have less control. Thanks, Drew

Kartik Gada

Drew,

Note that :

a) It could be in the form of the Sovereign Venture Fund model, rather than DUES. DUES is better, but the SVF is easier to swallow politically,
b) If it is the SVF, it might be considerably sooner than 2028.

Also note that by 2028, the ATOM will be 5-6% of World GDP, vs. 2.5-3% now (and 2% at the time of the ATOM publication v1.0 in 2/2016).

Kartik Gada

Geoman,

The interesting thing about the superintelligence point is that on top of the fact that 7.5 billion people have 8.6^10 neurons each, technology keeps adding to the superintelligence.

As technology diffuses faster and faster, and gets more advanced across that diffusion, the caliber of the superintelligence keeps rising. It is significantly more intelligent than even a year ago.

Geoman

Exactly what I was thinking. Computer speeds are important, but so is human development.

Pulling countries out of poverty means adding more brains, more neurons, to the system. Freeing our economies adds more power to the system - it makes it work faster and more efficiently. The singularity is not about just software and hardware, but wetware.

About 2% of humans are geniuses. However, if you are born a genius in Somalia, or Chad, or Afghanistan, your chances of contributing to the world is close to zero. As these areas become more free, as they become more developed, they add more geniuses to the system.

I believe that the emergent superintellgence is really a big part of what is feeding the singularity. As it becomes more powerful, as it becomes more influential over more of the world, the pace of innovation and development will advance ever faster.

If we froze computers and software at today's level of development, but added 20 million more geniuses (IQ >170) to the mix, got every country > 80 on the index of economic freedom, and > 800 on the HDI, what would happen?

We'd see an explosion of wealth and knowledge unparalleled in human history. Art, history, literature, every science. We would solve every problem on Earth and conquer the stars, seemingly overnight.

What has been happening so far is computers have been magnifying our intelligence, our index of economic freedom, and our HDI. They are force multipliers. But instead of building better computers, we can work on the other side of the equation, and simply build a better society.

Anyway, we tend to think in terms of computers driving the singularity, but I think it is much more than that, that there are several mechanisms driving toward the singularity, and silly stuff like free economies, nutrition, human development, matter, potentially as much or more than computers do.

Kartik Gada

Geoman,

The speed of net poverty reduction has been high, and while the full extent of this has not been monetized yet, the fact that Data is now being monetized means a greater range of individuals can be meaningful participants.

Anyway, we tend to think in terms of computers driving the singularity, but I think it is much more than that,

Yes, but it is the entire ATOM that drives the Singularity. Computation is just a part of that (albeit the most central part). This leads to innovations in all other areas. Education becomes cheaper and more customizable. Nutrition trends down towards zero cost (500 gelcaps of Vitamin D cost $10, which is astonishing considering what people before the modern era had to suffer from).

Palamas

Great posts. Geoman, that post on the collective intelligence and why socialism is idiocy was a great one.

I have a question for you all though: what negative aspects of the things you call "progress" do you foresee? I don't think you put enough emphasis on this topic given the intrinsic nature of human beings.

Also, is Mr. Khan going to come back and weigh in on the "misandry bubble"? It is amazing that the 2020 date is almost here.

Kartik Gada

Palamas,

I have a question for you all though: what negative aspects of the things you call "progress" do you foresee? I don't think you put enough emphasis on this topic given the intrinsic nature of human beings.

Among other things, it is apparent that once the GDP per Capita of a country crosses $60,000 or so, there is enough ambient prosperity that a few vile individuals can devote their lives just to harassing others and demanding they comply to narratives that are in direct violation of nature. This is discussed in the ATOM publication (Chapters 9-10).

Plus, the inability of government to keep up might lead to scorched-earth policies in their mad attempt to keep power.

Also, is Mr. Khan going to come back and weigh in on the "misandry bubble"? It is amazing that the 2020 date is almost here.

Yes, he will. But we have to be careful, since all sorts of blogs are being de-platformed just for non-compliance with the far-left narrative. The newest wave of little tyrants at tech companies probably were not of age when the original Misandry Bubble came out, but will discover it if we do a follow-up, and delete this entire blog (despite all the non-political content).

Geoman

"I have a question for you all though: what negative aspects of the things you call "progress" do you foresee? I don't think you put enough emphasis on this topic given the intrinsic nature of human beings."

1) Societal disruption. I think we are going to have to re-order everything - our politics, economics, government structure, everything. It is going to be very difficult, and worse yet, the singularity will be rapidly evolving so even the best solution we select today might not be tomorrow. It is why I favor freedom - maximum freedom, since the emergent super intelligence of capitalism is the only thing that can potentially keep up with the singularity. We might just face complete anarchy, or total governmental gridlock.

2) Totalitarianism can be made to work. Look at china and their new social credit system. They are harnessing the power of the singularity for oppression. Others will figure this out as well.

3) "This business will get out of control! It will get out of control and we'll be lucky to live through it!" That is my favorite quote from the Hunt for red October. Basically things will go wrong, horribly wrong. John Barnes wrote a great collection of books called the meme wars - basically supercomputers figure out how to hack and control human beings, and use those humans to fight proxy wars. And we don't even know it is happening, because they are re-writing our memories of events as well. It is just one of the many potential bad endings we face. Elon Musk is so scared it is causing his frenzy to get to Mars - to have back-up human race in case the singularity does something awful.

It's going to be rough sledding the next few decades. But with the lows will come amazing highs. And, well, there is not a damn thing we can do to stop it. Might as well be happy about it.

Drew

I'm with Geoman, I expect things to get better with some rocky periods such as a new version of the 2008 recession as wells as likely personal professional challenges as institutions adapt.
Personally, I'm doing what I call "Enjoyable Insurance". I don't expect my wife and I to have to feed ourselves by our garden, but as we enjoy it and it helps our health, let's invest in it as we can. And if one of those longshot risks like the shutdown of the banking system happens, it will help.

Geoman

Let's follow the logic:

The universe is 14 billion years old. There are billions of galaxies and trillions of stars. There are planets around almost every star. Earth is 4 billion years old. Humans are 3 million years old. Civilization itself is maybe 10000 years old. Our modern civilization is 120 years old. In 50 years we'll certainly see the singularity, maybe less.

Therefore,

Intelligent aliens, statistically, must exist. Too many planets with too much time. Statistically they are older than us. Even slightly older civilizations (say, 500 years)would be light years ahead of us technologically. Civilizations light years ahead of us technologically would travel the stars, or send messages.

So where are they?

This is the Fermi Paradox.

Possible answer - the singularity changes every civilization that experiences it in such profound ways that none survive, or they no longer have any interest in anything outside their own planets. How's that for a possible drawback of the singularity?

Now, while statistically we are very likely not to be the first intelligent race to evolve, someone wins the lottery, why not us?

Or


While life may be common, intelligent life is very rare. Where it occurs it is so widely separated (say one intelligent race per galaxy) that they never meet.

Or

We are living in a cosmic zoo, and everyone is waiting for us to mature enough to even bother talking to.

I'm with Drew - My thing is trying to master as many survival skills as possible. Learn to make things for yourself. Even if you never need it, it's fun.

Kartik Gada

Geoman,


While life may be common, intelligent life is very rare. Where it occurs it is so widely separated (say one intelligent race per galaxy) that they never meet.

I will be of this view by 2030 unless we find something before then, simply because the Accelerating Rate of Change makes it hard for a civilization more advanced than us to remain undetected by 2030 if in this galaxy, and with this becoming ever more true each year after 2030. Detection precision/distance/depth is itself advancing at a Moore's Law-type rate.

Kartik Gada

The yield curve is solidly inverted now.

If the Federal Reserve does not get its head out of the sand and cut rates soon, it will be very hard to avoid a recession.

Geoman

https://news.harvard.edu/gazette/story/2014/02/robots-to-the-rescue-2/

I bumbled into this - termites and accelerated building!

Kartik Gada

Hi Geoman,

That is a good find. Robots for construction, working in a decentralized way like ants do, would be very effective.

Geoman

http://kentuckytoday.com/stories/capital-plaza-project-about-6-months-ahead-of-schedule,15262

I dunno if this is a green shoots thing, but I have noticed a few news articles saying, surprisingly, construction projects are well ahead of schedule. For example:

"One Vanderbilt will top out at 1,401 feet in December 2019, ending two years of creep on the New York skyline. Construction is ahead of schedule and—gasp—under budget at the Midtown East office tower, meaning the building’s opening has been pushed forward to early August 2020."

When does that ever happen in New York?

Nice essay:

https://nintil.com/2018/10/07/building-skyscrapers-and-spending-on-major-projects/

HB

I have expressed my disagreement with universal income from phantom printed money. It is essentially massive exponentially growing redistribution through central monetary mechanisms and policy. I feel compelled to express my objection once again. I have a personal interest in gauging public sentiment for such policies as it helps me geo-arbitrage my investments towards environments that will avoid such catastrophic choices.

Indeed, in a democracy a leader who will redistribute unearned wealth is always just around the corner. I hope this 21st century monetary Lenin who flattens the effort-reward curve does not emerge in the US first. If it looks like he/she will then I need to speed up geo-arbitraging my own personal investments and economic activities. Indeed, that is one of my main concerns and central motivation in the geo-arbitraging of my own activities. Perhaps this is why I happen to write these words from Singapore today.

In my view, Kartik's main tenet is that the ATOM generates so much (exponentially growing) wealth that it can afford to redistribute quite a bit of unearned wealth without seriously impacting the effort-reward curve. In other words without seriously impacting incentives and thus the all important growth rate. I don't share this view I and certainly think that any country's trajectory is still primarily determined by its growth rate. This is especially true in this 21st century and intensifying as we move towards the singularity. The society that has the highest growth rate is the one that will get to the singularity first. As we accelerate towards the singularity everything will grow and also simultaneously compress exponentially. Close to the singularity a society that is just a couple of years of compound growth behind another will be like a society that is a hundred years behind us in today's terms. Small differences will magnify to infinity (as a celestial analogy think how your head and feet would be torn apart from gravitational difference as you approached a gravitational black hole singularity).

A leader that cries "...you did not get what you deserve. You deserve more from this unjust world that is stacked against you.." is always popular. Indeed societies have routinely fallen for this banana peel throughout history and will continue do so. Perhaps it's our/your turn. This banana peel takes many many forms. There's almost always a virtual infinity of bad choices and few optimal ones. Voters are typically dumb sheep who are extremely vulnerable to the vast array of bad choices. So I hope some other society tries this first.

I also understand the wager engaged by authors who subscribe to ideas that fall under the general umbrella of what is called modern monetary theory: "Its likely to be catastrophic but as long as it is even temporarily accepted I get enormous worldwide fame. If it fails I remain a rather anonymous blogger. There is little to lose in enticing voter-lemmings to support my theory".

I don't think that there is some great conspiracy. Many of the proponents of modern monetary theory truly believe in it. As a matter of fact it is voters themselves who will weed out the true believers in these theories and promote them to high office -- with catastrophic sequences. I just hope that this does not happen to the society I live in so that we get the chance to see the mistake from afar. But I'm not sure about that, and that is why I geo-arbitrage and stay mobile!

Rather than not enough redistribution rough the monetary system we have the opposite problem. The electorates of developed democracies seem poised to vote themselves into the middle income countries once again. They keep voting themselves ever more redistribution financed by debt. Why? Because "They Can!" But politics, no matter how big, cannot overturn the laws of nature. Prosperity consumed must first be produced and when prosperity is redistributed to lesser participants the effort - reward curve flattens, aggregate motivation decreases, growth rate cannot keep up with the world average -- and you fall behind in the trajectory towards the singularity. Growth below the world average is a mathematically deterministic trajectory to extinction. Simple arithmetic of compounding. The essence of prosperity in any society is to maintain a growth rate above world average even *after* having achieved developed country status. Otherwise you revert back to middle income country status as the faster growing world average inevitably catches up with you.

We as voters of developed democracies have dug ourselves into a hole by voting ourselves ever more goodies from the common trough. We have so far financed it with debt and are on track to find out at which point will markets see enough risk to refuse financing us any further. Seeing the risk ahead of us we now get the "bright" idea to finance our unearned goodies by printing money representing unearned wealth -- the elixir and perpetual hope of prosperity with no/less effort. The perpetual trap that we fail to recognize once it is spay painted a bit. Now it comes to you spray painted as monetary policy.

Kartik Gada

HB,

Yet again, this is not 're'-distribution, as nothing is taken from person A to give to person B. Rather, technological deflation is being spread more evenly, where the benefits are taken from the deflation and given to humans.

I state yet again that the ATOM-DUES program mandates a shift to 0% income tax on humans.

The status-quo today is far worse, where the 3-4 biggest tech companies can shut out all competition, control the flow of news itself, and use loopholes in the tax code that smaller companies cannot use. Note that existing QE benefitted the largest entities the most, so that has to be recognized as the status quo to be improved upon.

It can never be described as 're'-distribution when none of the net payers are humans.

This is also nothing like Modern Monetary Theory, since MMT does not account for technological deflation, and has no provision for a 0% and eventually negative tax rate on humans.

HB

And yet again all these monetary and central banking mechanisms are indirect but definitive redistribution methods. It is like people who keep coming back at you with perpetual motion machine contraptions (some of them clever indeed) and you have to find the flaw...

If someone, in this case vast numbers of people, are given unearned wealth and prosperity then somewhere in the system there is redistribution. You don't have to be an economist with detailed knowledge in the intricate complexities and mechanics of various economic areas to figure that out. Just like a non-economist of the nineteenth century who had no knowledge to understand the then intricate theories of Marx could still figure out that his system is based on redistribution since a lot of people are theoretically enjoying unearned wealth -- except that overall wealth is low since few people have the desire to produce wealth that will be distributed. And just as in that system, when redistribution is effected through monetary means the motivation of producers decreases and your society is left behind. In this case left behind on the race to the singularity. Of course, depending on magnitude, typical guaranteed income redistribution is not as strong as it is in Marxism, but it still has a significant overall impact on incentives to produce, and thus depresses the overall growth rate. And growth rate is the all important parameter when it comes to prosperity and velocity towards the singularity.

As far as specifics, yes, something is taken from person A and given to person B. The main thing that is redistributed is that the benefits of deflation are disproportionately earned by those who elevate the society towards the singularity, yet they are (re)distributed widely to lesser participants through the monetary system. As this deflation intensifies so does the redistribution. Why bother contributing to the exponential growth towards the singularity if you are going to reap a significant proportion of benefits though do-nothing universal income anyway? Just sit back, relax and let the work of others carry you to exponential growth and the singularity. Universal income will let you have most of the benefits of technological chance with some not so big delay. Just wait a little longer and your universal income in a few years (welfare couch potato) will be able to buy what the richer contributor to the singularity can buy today (say a Google employee). No need to sweat it out, get an education, become competent, pass seven interviews at Google etc.

Seems like the monetary side of singularity thinking upends every aspect of monetary theory, except for the technicality that deflation is somehow bad, something to be suppressed by all means. This makes no sense.

I don't argue that the level of redistribution today might be higher than the DUES proposal, though that depends on the level of DUES *and* convincing the electorate to keep a lid on the DUES amount per the calculations of some economist. You don't suppose that you will get politicians who say "you did not get the DUES that you are due, you deserve more, vote for me who, like a monetary Santa Claus, I will double your basic income. Not in a decade! Not after five years of exponential growth! Not per the schedule of some elite economist -- but tomorrow! Right after the election, in my first one hundred days of government. Can we double, triple, quadruple DUES? Yes, we can!"

Also, realistically, good luck getting rid of all other taxes and replacing it with DUES. Even if somehow miraculously implemented, large swaths of the population will immediately misuse their DUES, send their daughter to private college instead of Oregon State, or buy her a BMW otherwise she may get depressed away from home, end up in the ditch and ask politicians for "help", "please redistribute, I'm hurting!". Will politicians and the public leave these significant proportions of the population in the ditch? With what excuse? Under the moral narrative of self responsibility?

On current trajectory of voting ourselves ever more goodies from the common tax trough we will likely get the existing income taxes, plus DUES redistribution through the monetary system, plus likely an eventual European style VAT over twenty percent on everything we buy. This is what is actually happening except that instead of DUES we have primarily redistribution from savers who do not want to take risk (that is savers that were counting only on the delayed gratification portion of the investment reward, not the taking risk potion) to the population at large and especially to those who take investment risk. Of course, the final chapter on those who took risk (and I'm one of them) has not been written yet, but that's another story. The entire distortion could unwind in the next recession. Recessions have a way to prick bubbles and unwind distortions, and then the public myopically blames the recession instead of the underlying distortion. They blame the first sandbag that gave way on the levy rather than the fact that they left their politicians no choice but to dam a river without outlet. They will blame one of Trump's tweets for starting the recession rather than the fact that for decades they have kept voting for goodies from the common tax trough, converging the US economy to the same incentives, and structural growth rate(!), of a European welfare state.

BTW, modern monetary theory is as modern as Marxism was once the new Modern Theory of Capital. Banana peels of en easier unearned prosperity are everywhere. They will not be the first or last to be stepped on. It is my main task to avoid them. Just don't get caught in "the new hope for change" in 1917 Russia. I escaped the European continent just for that reason. Their subpar structural growth, not even half world the average growth rate, is a dead end. The dead end of an ever growing and exponentially compounding growth deficit. I'll escape again if I have to.

In any case, I don't think I'm saying anything new. We had discussed these things in the past without resolution. My personal interest is in judging public sentiment so I don't get caught in what I think will be an irreversible catastrophic monetary and societal experiment. I'd rather see it happen from afar, then return if it proves successful. If it looks like this monetary redistribution is going to happen in the US first then I'd rather abandon ship preemptively. Just like I'm not going to wait until 2020 to see a Bernie Sanders a Kamala Harris or an Elizabeth Warren in office. I'm already well underway to diversifying large portions of my net worth and business activities outside the US and have accelerated the process recently as these candidates seem to be polling higher than the current administration. A recession that potentially pricks the debt and gigantic central bank balance distortion coupled with a socialist in the presidential office? It's not going to be pretty and I'd rather watch from as far as possible. I cannot completely extricate myself from the US in such a short time, plus there's going to be plenty of shrapnel to affect almost every corner of the earth. So, I'd rather be as far from the ground zero of this American socialist experiment as possible. ....If it turns out to be paradise (what a joke) then I'll return. If not then Americans will not have to share their socialist paradise with me the greedy capitalist. There are plenty of opportunities in the world. Sorry for the sarcasm here at the end but, if anything, a sucker is born every second!

I do want to conclude though by saying that differences aside this remains one of the best, most relevant, and indeed most prescient websites when it comes to the big picture. It is the only website that deals with the most important trend likely to affect every human's rather near future: the singularity. Actually, even if one does not quite believe that things will converge on a singularity -- I'm myself ambivalent about it -- people should understand that compounding exponential growth (or the catastrophic lack thereof), and accelerating(!), is the one single parameter that will have the most decisive impact on their lives.

So don't get me wrong Kartik. This is a great website and I'm quite grateful for what you add to human intellect. I wish your all important website had a lot more traffic. I wish people were not that myopic. Looks like after three billion years of snail pace evolution slow growth thinking is actually ingrained in our DNA. Perhaps the singularity awaits those who escape...

...and with that I'll push the post button. Just returned from Asia and jet lag is setting in.

Kartik Gada

HB,

The problem still remains :

i) You don't seem to be taking into account that under ATOM-DUES, the income tax has to eventually go to 0%. This in fact reverses the re-distribution that exists. That spreading technological deflation evenly is re-distribution is debatable, but the removal of income tax indisputably removes a very irrefutable and punitive redistribution.

ii) You don't provide an alternative destination of where the central bank printing should go. Among other ideas we have here is the Sovereign Venture Fund, which is more workable but far less evenly distributed in gains (i.e. the other 80% of the population may see nothing).

On specific points :

Even if somehow miraculously implemented, large swaths of the population will immediately misuse their DUES, send their daughter to private college instead of Oregon State, or buy her a BMW otherwise she may get depressed away from home, end up in the ditch and ask politicians for "help"

Of course this will happen. It happens even more today. There will always be people who mismanage their money, or sign up for debt that demolishes the next several years of DUES. There will still be an improvement from what we have today.

Why bother contributing to the exponential growth towards the singularity if you are going to reap a significant proportion of benefits though do-nothing universal income anyway? Just sit back, relax and let the work of others carry you to exponential growth and the singularity.

I argue that their participation as consumers is itself moving the exponential change along. Their spending money generates data. A homeless person on the curb is not generating data.

Plus, a lot of valuable volunteer work is already done (i.e. Wikipedia, blogging, etc.). We will get much more of this, as a segment of the population has such an inclination.

HB

Producers giving people money as unearned salary so that they can then become consumers buying their products makes no sense to me. When it comes to this type of transaction the producer essentially works for free.

Suppose you *work* to produce something and so in an effort to sell more you find a bunch of homeless people on the street and give them your money so that they can buy your product. Indeed they pay you, essentially giving you back your money, and purchase your product. You've essentially worked for free. If you print money and give it to them then same result. You've just diluted your money by the value of the product you gave the homeless.

I don't provide an alternative destination for where the central bank printing should go because I don't want the central bank to print massive amounts of money in the first place. Such printing constitutes redistribution through the monetary mechanism.

Disconnecting the link between work done and money earned is just a bad idea that disincentivizes production and will set countries that implement it on a lower growth rate to arithmetically deterministic marginalization and economic extinction. Just like in the past.

The only way I'd ever even consider accepting replacement of current redistribution schemes with universal income is if the constitution were somehow amended to prevent imposition of any other taxes including income tax and made that explicitly difficult to change. But even so I recognize that a constitution cannot go against the people it governs forever. Ultimately the people control government and government controls the Supreme Court. The constitution only provides some inertia to majoritarian legislation on a whim, hopefully giving the pitchforks enough time to think about it twice, and hopefully cooler heads prevail. Because when you become a pitchfork happy democracy then you know that sooner or later you will be next.

Even a constitutional guarantee replacing all taxation with universal income would still be a rather vulnerable contract. We have clearly seen how sustained discord between the people and the constitution results in the constitution either being changed or ignored (the latter being the more expedient and thus more prevailing mechanism). Case in point see the legal gymnastics the Supreme Court went through to justify government healthcare.

So any basic income is likely to be voted on top of existing redistribution mechanisms and also likely to quickly balloon overtaking the deflation schedule.

Case in point, look at the 2016 Swiss referendum to give people universal income. Right off the bat the aspiring referendum community organizers proposed a universal income of $2500 per person per month. An astronomical amount on first attempt even by Swiss cost of living standards. And no changes in income tax were to accompany approval of the universal income. Luckily the wiser Swiss voters rejected it. Still 23% were unable to resist the Santa Claus of this massive redistribution. I can't imagine how such a referendum might go down in a country with much more gullible voters. Swiss rejection aside self destructive and irreversible choices are always just one vote away. You vote for something Iike that? Good luck reversing it. Good luck taking it away. The country's production incentives go from one of the best in the world to Argentinian levels. As the decline takes hold, the more the economy suffers, the more people hurt, the more basic income they need --and vote for! The vicious cycle quickly dismantles the country from most competitive in the world to middle income. Especially as everything (including country prosperity rankings) change ever faster as world growth rate and everything human keeps accelerating.

DUES and other unconditional income schemes essentially do socialism's work of redistribution by spray painting it as monetary policy. As all redistribution schemes they are eternally popular as you can always let people be productive promising them returns and then democratically change your mind and redistribute when convenient. However, societal trust is very difficult to build, but very quick to dismantle. Case in point, people in the US were lured into saving money into their Retirement accounts under the promise of favorable tax treatment, including allowing your children to stretch their inherited IRAs over their lifetimes. The new democratically (with small d) approved "Secure act" does away with that by forcing your children to withdraw all your IRA funds in either five or ten years thus pushing your (potentially orphaned at an early age) children into astronomical tax brackets as children or young single adults. BTW the bill was approved by the house 417-3 so the deceitful bait and switch mentality it embodies seems to be bipartisan. What is society essentially telling you? They tell you:

"We, the people, lured you into putting as much money as possible into your Retirement Accounts by promising you favorable tax treatment. But now we voted ourselves too many goodies from the common tax trough and we need money to pay for them. So we are now going to renege on our favorable Retirement Account tax promise and now that you've built a nice nest egg we will actually corner your children into paying more taxes than if you had never put that money in the Retirement Account trap in the first place. Why do we do that? Why are we creating a society of jerks? Because Yes! We Can!"

After such events one justifiably wonders: Are Roth accounts indeed safe from taxation? Really? Who guarantees that? Democracy?

Similarly we can just dilute your saved earnings through money printing and universal income.

When it looks like democracy is turning into pitchfork democracy it's time to move out. Once the pitchforks come out it may be too late. I've seen that movie many times. Starts with Santa Claus but turns into a horror movie.

As I said, societal trust takes a very-very long time to rebuild once destroyed. Look at the basket case societies of the ex communist block. Three decades after their rejection of communism still virtually everyone behaves like a jerk and not much can move forward.

Universal income and all the politics that go with it will set the US in the same irreversible decline pathway. I'm already diversifying out of the likely coming American socialist experiment (as if we don't have enough data points already). I'm certainly not going to wait for universal income redistribution. Hence my interest in quantifying public support for it and likelihood of its implementation.

BTW, I see little risk in diversifying out of the US at this point because, universal income aside, markets seem to be largely discounting the probability and/or impact of the imminent American socialism banana peel. If it does not happen then I can always go long US once again. We will have to see if markets continue to discount this probability/impact in the summer of 2020 with a Bernie Sanders, Kamala Harris or Elizabeth Warren leading in the polls. But, as I said, I'm not going to wait until then. Will likely be too late.

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