I'm an idiot when it comes to economics, so explain like I'm five:
You are clearly not the only one in this thread with a shallow understanding, however you are the only one w/ the courage to admit it, rather than creating straw-men & dismissal-ism of things you do not understand. Well done.
Isn't universal basic income kinda like having trickle-down economics but without the middle man?
No, that primarily addresses a different issue.
First a few definitions,
'Goods' are categorized as either capital goods (aka intermediate goods, durable goods) or else consumer goods (aka final goods). Capital goods are classically 'PP&E' (property, plant equipment) in the manufacturing era, and is perhaps more likely to include IT servers or IoT embedded controllers today. The tablet that the FedEx driver carries, or that the furnace repair guy I had over yesterday had, are capital goods. These are goods purchased to hold, and use for production, of other goods & services.
Definition
capital the equipment and structures
used to produce goods and services
A consumer good is any good purchased
for consumption and not later used for the production
of another consumer good.
So the fuel you buy to take a day-trip is a consumer good, but the fuel from the same pump used by a delivery van is a capital good.
The intended purpose of capital expenditure is to reduce the cost of producing some final good or service. You might dig a hole with the variable capital expenditure on a teaspoon, a shovel or a backhoe. Clearly the capital good used impacts the total cost. Government can confiscate money to build a bridge that saves commuters hundreds of thousands of hours per year and similarly saves fuel, or else can build a bridge to nowhere. Just spending on capital goods is not enough, the goods must produce final (consumer) goods more efficiently - enough to offset the cost.
Even on a naive consideration there is some optimal level of capital spending. A farmer with 1000 hectares of corn, in the recent era, can certainly justify the expense of one tractor. He might be able to justify the expense of two or three (I don't know), but certainly cannot justify the cost or utility of 1000 tractors.
The decision to buy a(nother) tractor or build a bridge requires a consideration of the marginal change in the production cost of the final good. The farmer is clearly producing corn with measurable output and efficient market value. The product of the bridge is a service saving fuel, and some labor time, but ... it's rather difficult to fully quantify the economic value unless it's made as a toll-bridge.
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Regulation - includes both very good, and truly awful rules that are imposed on production. In either case these increase costs of production, and reduce GDP. We might all agree to be a bit poorer in exchange for a cleaner environment. I'm less convinced that we collectively benefit from regulations that mandate the use of fuel-ethanol, or that underwrite the costs of electric vehicle production.
The regulatory mechanism itself suffers from the general problem of centrally planned systems (requires oversight, policing, adjudication, punishment = lotsa overhead and corresponding costs). There are some excellent arguments that regulation should be replaced w/ market incentives - but that's for another thread.
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Growth -
GDP incorporates all economic production, either directly or indirectly, efficiently or inefficiently. We collectively benefit from higher GDP (aka economic growth). It ultimately means we produce 'more stuff per capita', which is related to the actual goal of HAVING more stuff per capita. It does not say anything about the distribution of 'stuff' among a populace, nor about the disposition of the 'stuff' (for example giving stuff away or destroying it in war or in 'cash for clunkers' destructive lunacy).
The Solow-Swan growth model ....
https://en.wikipedia.org/wiki/Solow–Swan_model
Y(t)=K(t)^alpha * (A(t)L(t))^(1-alpha)
where t denotes time, {0<alpha <1} is the elasticity of output with respect to capital, and Y(t) represents total production. A refers to labor-augmenting technology or “knowledge”, thus AL represents effective labor.
Solow-Swan is not the only growth model, but described a common feature that economic output 'Y' is dependent on effectively spent capital 'K^alpha' wher K is capital, and alpha measures the effectiveness of that capital on producing goods.
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To the main point.
Supply-side economics is a macroeconomic theory that argues economic growth can be most effectively created by lowering taxes and decreasing regulation.
My understanding of the current tax bill (see the committee reports, or selective comments by Ryan and others) it that a primary aim is to reduce taxes on business, encourage capital spending in the US, and reduce certain regulation. This is not purely 'supply-side' in the sense that the goal is not a general tax cut, but a selective one, that is (for political reasons) coupled with some sugar-coated nuggets for the masses who can't accept a serious economic argument, but will accept any manner of foolish demagoguery. So cutting the biz tax rates, and allowing immediate capital expending could plausibly improve capital spending.
The goal, by the Solow model (which I am not especially advocating) would be a 0.9% sustained increase in K^alpha resulting in a corresponding increase in Y. IN any case, increasing GDP growth by 0.9% annually would be enough, over a 10yr window to fully offset the $1.5Trl (over 10 years) lost to the lower taxes collected by static analysis.
Any relief from regulatory burden reduces operating costs, makes product more competitive internationally, and make local (US) investment more attractive - creating additional financial capital by saving & investment.
Any relief from the (very foolish IMO) repatriated profits tax, would encourage US companies to use overseas profits for US capital spending.
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I have serious concerns that the recently proposed tax revision plans will not result in sufficient growth to offset tax reduction. Too much of the sugar-coated nuggets & payola, and not enough actual encouragement toward capital expenditure, I think. The best solution would be to drop corporate taxes & cap.gains rates further, and not personal rates (aside from pass-thru's); this is not politically feasible I think.
I've seen people be really dismissive of the idea of universal basic income not based on any specific criticism (I'm sure there are some valid ones out there) but on the grounds that it just broadly wouldn't help for people to have that money. But then they turn around and support trickle-down economics while saying it would have a similar end result so... it seems odd
I am not dismissive of a guaranteed income scheme. It's actually a very good idea *IF PROPERLY IMPLEMENTED*, but the details are infested with devils.
Anyone using the term 'trickle down' is being dismissive as well. The 'supply-side' notion is clearly centered on economic growth primarily by tax and regulatory reduction, and the general idea makes good sense, whether any specific plan/claim does is another matter.
No matter - 'supply-side' is about economic growth, guaranteed-income is about redistribution - two very different matters. Shall we make more pies, or resolve to divide the existing pies more evenly ? The issues are almost orthogonal/independent.
I know you can't pick apart the specific comments since I don't have the detailed version handy to post here, but just in general - am I missing something? If the goal is to stimulate the economy and you're willing to do that by putting a lot of money with big corporations under the theory that it will end up in the average person's pocket, why would they not trust that putting money in the average person's pocket would stimulate the economy directly? People would still spend that money, right? If anything, they'd spend it more than the corporations do from what I've seen.
But like I said, I am totally uneducated on economics.
I think you need to consider this from a larger perspective. The big challenge is both to create more goods & services per-capita AND to see that the distribution of those goods & services is reasonable. That last bit is fraught with difficult problems.
We certainly can't have a high standard of living if we can't produce things for local use and trade. Virtually every economic analysis shows that saving rates (a means of financial capital formation) in the US are very low, meaning we don't create enough financial capital to fund capital expenditures, so we operate with less capital, less efficiently than we should. So although programs that redistribute, like a guaranteed income notion are plausible, we certainly don't want to fund these by taxing/reducing financial capital, but instead by taxing/reducing consumption.
I have serious doubts that it's politically feasible to create such a consumption tax to fund redistribution anytime soon. It *seems* like a great idea to many when it involves "other people" and particularly the reviled wealthy paying for it. It will seem a lot less palatable when the average worker is paying for it as a high consumption tax. Another issue is that such redistribution removes a clear need for personal savings, and thus could make financial capital more scarce. Why have a savings account, ira, mutual fund when you can fall-back onto a government cushion ? It needs to be studied for such secondary effects at least.
