The Socialist's Dilemma

while i'm not going to go into what a "Prisoner's Dilemma" or the "Tragedy of the Commons" is exactly, i will say that these absolutely show why Communism, and to a great degree Socialism, cannot work... and any refutation of this relies on a utopian society where all people are good, altruistic, and moral but also where there are no selfish or immoral people.

first, let's establish that there are, in fact, selfish people and immoral people... often, they are the same people... an immoral person may be immoral out of selfish reasons... a sociopath may be immoral without being selfish, but that would be the exception which proves the rule... a selfish person may indeed not be immoral, for what is immoral about self-preservation?... a decision which is good for the community as a whole, and therefore deemed moral by a Communist or Socialist society, may not be good for the individual... in fact, it may be directly detrimental to an individual... therefore, we cannot conclude that a selfish person is actually immoral, unless you define morality by self-sacrifice for the greater good, which Socialism often puts forward.

the healthcare debate in America is a prime example of selfish and immoral people in action... is it selfish to desire to keep one's own earned income?... to Socialists, yes... by keeping your own income is to deny needed resources to those who cannot earn their own; e.g. the disabled, the elderly, the young... an orphan may become a ward of the state, and how does the state pay for this orphan but through laying of taxes on those who might otherwise not provide for that orphan... the Libertarians might say it is for private charity to support the orphans, so those who are inclined to may give freely of their own resources... but history shows how poorly that goes for the orphans... during meager times, the larger donors may not have the resources to share, and those who did not give during times of plenty are sure to not give during times of scarcity... many might even assume that the needs are met by some unknown persons, and therefore their generosity is not necessary... you can see this in action at your local Humane Society or pet shelter... furthermore, when private charity is given, often the gifts are contingent on the charity behaving in certain ways... if an orphanage were to solicit charity, yet they squander those meager resources on opulence for the care-givers, donations would surely stop coming... but what happens to the orphans when it does?

likewise, with healthcare, we are often told that there are two choices... one, each person is responsible for their own fortunes... two, everyone must be responsible for the well-being of everyone else... but there are really more choices than this.

like in the Prisoner's Dilemma, each person can act selflessly or selfishly... if they act selflessly, they understand that other people are free to act selfishly... in economic terms, if everyone acts selflessly, the rate of return is equitable with the amount given... but if even one person acts selfishly, the rate of return on any charitable giving will be reduced... the more selfish actors, the lower the return... unless, of course, you yourself also act selfishly... then the rate of return is greater than what is given... but if everyone acts selfishly, the rate of return dwindles down to zero.

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source:

The Economist explains economics: What is the Nash equilibrium and why does it matter? | The Economist

Prisoner's Dilemma

Tragedy of the Commons

The #YangGang can't do math

Andrew Yang talking to Joe Rogan:

• "[The US is spending] $1.5 trillion on 126 welfare programs and Social Security."
• "The real price tag [for UBI] is $1.8 trillion, if you say everyone who is 18 and up. Now for context, the entire US economy is now $20 trillion... and the Federal budget is $4 trillion."
• "When you put money into people's hands, it doesn't disappear. It's going to go right back into the economy."
• "Of the $1.8 trillion, we're going to get back (let's say) $800 billion in new tax receipts."
• "We're going to save $100-200 billion on things like incarceration, homelessness services, and emergency room healthcare."
• "So, if you look at the cost savings, and the value gains, and the economic growth, that actually gains you back about $1 trillion."
• "The way you get back the last $800 billion... we need to put in a new tax that actually gets the American public a slice of every robot-truck mile, Amazon transaction, Facebook ad."

Let's do the math. (FUN!!!)

The civilian population, ages 16 and over and not in jail, is about 258,392,000. Half of which are currently receiving some sort of government assistance. Even if we assume none of them will receive UBI (which, according to Yang, many will get at least a partial payment), then we are paying out $1.5 trillion AT MINIMUM every year. So at least his estimate of $1.8 trillion is somewhat accurate.

But $1.8 trillion is almost half of the Federal budget of $4 trillion (estimated $4.41 trillion for 2019). Of that $4 trillion, $1.45 trillion is Social Security and $0.45 trillion is welfare. The UBI won't change that, as we are only considering the half of Americans who don't already receive government assistance. So we are adding $1.8 trillion of spending on TOP of the $1.9 trillion already being spent in government handouts. Our budget goes from $4.41 trillion to $6.31 trillion overnight.

"But we get that money back in tax receipts." No we don't. Of federal revenue, ad valorum taxes currently account for $1.6 trillion dollars. Our GDP is about $20 trillion, so ad valorum taxes are about 8% of our GDP. Even if we increase our GDP by the full $1.8 trillion, our ad valorum taxes would only raise $1.75 trillion; an increase of only $150 billion, not $800 billion.

Let's say we place an income tax on the UBI (which is stupid to tax government handouts, but it already happens in many instances). We currently get $2.4 trillion in income taxes, which is about 12% of GDP. We add the same $1.8 trillion, in its entirety, to the GDP and tax it at 12%, we get about $200 billion. So far, between ad valorum and income taxes, took back about $350 billion of the $1.8 trillion.

(EDIT) I just learned that Hauser's Law says:

In the United States, federal tax revenues since World War II have always been approximately equal to 19.5% of GDP, regardless of wide fluctuations in the marginal tax rate.

Ad valorum = 8% of GDP. Income tax = 12% of GDP. Total revenue = 20% of GDP. Damn I'm good (even if by accident).

Saying we're going to save money on incarceration by paying people is to deny reality. The people who already get government funding are the most likely to commit crimes. Yang said he's not going to be paying people UBI to those getting government money (or at least not more than his magic $1000/mo). So the people who are committing the most crimes wouldn't see any more money. No more money = no less recidivism. Therefore, $0 dollars gained.

As for saving on healthcare, we are making the logical leap that some of the UBI will be spent on health insurance and preventative healthcare. If it is, then it's not being put toward very much of the GDP, ad valorum taxes, or income taxes. But let's play along, shall we? Federal spending on healthcare, after you remove services like senior care and R&D, which will not change, we're spending about $500 billion federally. Most of this, $400 billion, goes to the states for services which would include those pesky emergency room visits. Even if we reduce this by half (which is overestimating, but let's be generous), we are only saving $200 billion.

So, with $150 billion from ad valorum taxes, $200 billion from income taxes, $0 dollars from reduced incarceration, and $200 billion from reduced healthcare costs, we have a grand total of $550 billion of the needed $1.8 trillion. We need to create new taxes, such as the Value-Added tax (VAT), and raise $1.25 trillion.

Where. Does. That. Money. Come. From?

This is where the logic breaks down between liberals and money. They think the following:

1. Money put into people's hands goes into the economy.
2. Money taken from them through taxes comes from magic fairy dust.

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figures:

Income Taxes = 37% total 
Social Insurance Taxes = 23% total 
Ad valorem Taxes = 24% total 
Fees and Charges = 9% total 
Business and Other Revenue = 7% total

Income Taxes = $2.4 trillion 
Social Insurance Taxes = $1.5 trillion 
Ad valorem Taxes = $1.6 trillion 
Fees and Charges = $0.6 trillion 
Business and Other Revenue = $0.5 trillion 
Total Direct Revenue = $6.5 trillion

Income Taxes: Individual and corporate income taxes.
Social Insurance Taxes: FICA taxes, unemployment, disability taxes.
Ad valorem Taxes: Sales, excise and property taxes, licenses.
Fees and Charges: Fees for government services other than taxes.
Business and Other Revenue: Revenue from government businesses such as liquor stores and utilities.

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source:
Joe Rogan Experience #1245 - Andrew Yang - Streamed live on Feb 12, 2019
Total Government Revenue in the United States - Fiscal Year 2019
Labor Force Statistics from the Current Population Survey - Civilian noninstitutional population - Age: 16 years and over
We've Crossed The Tipping Point; Most Americans Now Receive Government Benefits - Forbes - by Merrill Matthews - Jul 2, 2014
Total US Government Spending
US Gross Output for 2017 Released