Ep. 190 Universal Basic Income, Trade Deficits, and Other Areas of Confusion

25 May 2019     |     Tom Woods     |     2

Bob and Tom take some outstanding and very important and helpful listener questions in this episode, such as: what is one legitimate contribution a Keynesian has made? Can trade deficits be bad? What are the best critiques of Austrian economics you’ve heard? And plenty more.

Related Links

The Importance of Capital Theory,” by Bob Murphy
“On Trade Deficits: Murphy vs. the World, Part 1 of 3″
“On Trade Deficits: Murphy vs. The World, Part 2 of 3″
“A Philosophical Economist’s Case against a Government-Guaranteed Basic Income,” by David R. Henderson
“Austrian Business Cycle Theory: Answering the Critics”
“How to Return to Gold,” by Tom Woods
Benjamin Powell on Sweatshops
Ep. 269 End the Fed, Then What? (Tom Woods Show)

Debate Mentioned

Ep. 519 Debate/Discussion: Should Libertarians Support a Basic Income Guarantee? (Tom Woods Show)

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  • Roger Barris

    A good discussion. Some additional comments about UBI:

    1. There is a point that Bryan Caplan makes, which is that in our current welfare system, we actually make very few payments to able-bodies, working-age people without dependent children. So, in our current system, the proverbial surfer dude living in his parents’ basement and voluntarily doing nothing, gets very little. In a UBI, this would not be the case – this person would be paid to play “Grand Theft Auto” all day. I doubt that this comports with anyone’s sense of justice.

    2. As many people have pointed out, there is much more to working than just getting a check. For most people, it is an important socializing activity and it is also a tremendous source of self-worth. None of this would exist with UBI and, to the extent that UBI induced people to stop working, all the pathologies associated with not working would grow. This is the reason why, for example, someone as liberal as Noah Smith is against UBI.

    3. It should be pointed out that many of the benefits that libertarians see in a UBI – reduced bureaucracy, enhanced individual dignity, ability to choose individual consumption, elimination of “poverty traps” – can be achieved by replacing the current hodge-podge of over 60 federal poverty programs (and many more state and local ones) with a simple system of cash payments to the poor. We could do this without losing the ability to exclude the proverbial surfer dudes and without having to implement the massive tax increases that a full UBI would require. Libertarians sometimes say that Milton Friedman supported a UBI, but this is not true. He supported a simple system of cash payments to the needy – instead of the multiplicity of in-kind benefits they currently receive – along with a robust negative income tax (such as the Earned Income Tax Credit, but larger).

    And, Bob, Cochrane’s blog is called “The Grumpy Economist.” But he isn’t really grumpy. He’s actually a really nice guy. And his article ripping into Krugman (attached below) is a classic.

    Roger

    http://ricardo.ecn.wfu.edu/~cottrell/ecn272/cochrane.pdf

  • Craig

    This is the second time I have heard Bob make the argument that the fiduciary media accumulated by foreign central banks as a result of the US trade deficit is the same sort of thing as saving money. By this means he avoids dealing with the contention that that accumulation amounts to the trading valuable goods for worthless pieces of paper by dismissing it as equivalent to denying the virtue of saving. I think this is a false reductio ad absurdum because it misses the point.

    It is essential to the value of saving that it be possible to use the money saved at some later time to purchase real goods of value comparable to the money saved. The whole point of the contention that Bob is dismissing is that this is not possible (especially in the long run). The Treasuries (and the currency deposits) accumulated by the foreign central banks will not be, and cannot ever be, redeemed for anything with a value comparable to the goods delivered. Saving is not a virtue if the savings are invested with Bernie Madoff (or the US government).