Eric… That our starting points are very different really runs to the heart of the problem, and is happening because you are confusing wealth and value.

Without the farmer and the potter, the barista has nothing to serve and nothing to serve it in. The barista most definitely delivers value, its just that the value arises from the wealth created by the farmer and potter.

There are no positive economic effects of UBI. You misunderstand the relationship between money and price — price always follows money. When prices are increasing, it is either because the supply of the product is declining or the supply of money to buy the product is increasing (or both). UBI will simply reallocate money into different sectors of the economy, causing prices to rise in those sectors, leaving the folks who receive the income no better off.

Wealth is only created when people take the raw materials of the earth and make useful things from them. When that happens, a whole range of forms of value emerge. Someone builds a building, and now we need someone to maintain it, clean it, etc. As these forms of value are realized, we need money to exchange for them. So as more wealth is created, new value emerges and more money is needed in the economy. You cannot divorce the supply of money in the economy from the creation of wealth without driving up prices.

So is the economy doomed? Our economic growth used to be about the “better mousetrap,” not the loan used set up shop. But we have financialized the economy to the point where growth now depends on credit, not innovation. If we do not stop going do this particular path, then yes, we most certainly doomed.

Written by

I am a charter member of the pocket-protector set, but old enough to make fun of them and otherwise have a healthy skepticism of tech. https://goo.gl/2z5Snr

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store