> Would you agree productivity per labor hour must go up under UBI to be successful?
No. Keep in mind that labor is just one among many resources that we use in production. Our economy has a lot more resources (including labor) at its disposal than we're currently making the best use of. A successful basic income just gets the economy producing closer to its capacity by giving people more spending power to buy things.
I don't think that labor productivity is a super useful measure of economic performance. That being said, basic income would almost certainly increase labor productivity. That's because labor productivity is just a calculation of how much stuff we produced divided by the amount of labor we used. If the amount of stuff we're producing increases and the amount of labor we're using stays the same or decreases, then that's an increase in labor productivity.
I suppose you could imagine a scenario in which we have a basic income a lot more people are working. If the amount of additional labor we're using outstrips the amount of additional wealth that we're producing, it would be a decrease in labor productivity. But I think that's very unlikely to happen. And that's because the proportion of excess productive capacity in the economy is probably vastly greater than the proportion of labor we'll ever be able to activate.
Even if we had every man, woman and child working double time, we'd still probably see an increase in labor productivity under a basic income.
> Sam believes this will come through automation / AI.
It's true that technological advances increase our economy's productive capacity. But that's very different from saying that technology automatically increases our actual production levels, or our labor productivity.
In other words technological advancement allows us to produce more, but that increase in production doesn't happen on its own. We won't produce stuff unless people will buy the stuff. So automation and AI will only increase production levels (and therefore labor productivity) if there's someway to fund spending on products. That's where basic income comes in. Basic income allows people to buy things. Then that causes us to make the things for them to buy.
An interesting characteristic of the labor market is that it's generally where we expect people to get their incomes from. Technology allows resource utilization to be more efficient. Labor is no exception. So, on their own, technological advancements mean less money going toward labor, which leads to lower incomes, and hence lower levels of production.
Historically, we've come up with various ways to boost people's incomes to compensate. The biggest one is probably stimulating the private financial sector so people and firms can more easily borrow in order to spend. The firms, in turn, create jobs with that borrowed money and this distributes income to people. Basic income is a way to achieve a similar effect, but in a more stable way that doesn't create asset bubbles in the private financial sector.
Basic income can also get you further. There are only so many projects worth investing in and only so many jobs worth hiring people to do. Without a basic income, we have lots of people working at jobs that don't really contribute to the productive economy and labor productivity plummets.
> Actual labor hours will go down and wages up, due to decreased incentives to work.
It really depends. There are plenty of jobs that people would love to do, but they can't afford the low wages. Basic income would open up that possibility for people. So for those particular jobs, the wages would likely decrease. Furthermore, more people would be free to volunteer as well.
It also depends on what you count as labor. Does volunteer work count as labor? What about interning? How do you tell the difference between a hobby and volunteer work?
Certainly there are some undesirable jobs that basic income will give people the freedom to say no to. In order to get people to continue to work those jobs, you'd have to increase the wages or make that work desirable in some other way. Perhaps the costs are too high for the employer, so they decide to substitute some other resource for that labor. But is any of that a problem?
> Unless A outpaces B, productivity will decline.
Hmm. Are you calculating productivity per dollar spent on labor or productivity per hour spent on labor? I think we normally think of labor productivity as the amount of production per hour of labor.
> If it does outpace B, wages or taxes must capture all of the increase or inequality rises quickly as fewer "working" people are capturing the rewards. These wage/tax increases will then slow the growth.
I'm not following you here. Assuming that we're running an output gap (i.e. not using all the productive resources we could be using), basic income causes our economy to produce more. Its effects on wages would be complicated. Taxes are kind of separate issue.
Basic income doesn't do anything to directly address inequality, but it raises the income floor. If even the poorest among us is rich, will inequality be that big of a problem? Maybe it will still be a problem that we have to address. I don't know. But if inequality does end up being a problem, that's a separate issue and we can address separately from the problems that basic income addresses.
> I guess I don't see how UBI wouldn't decrease the labor participation rate
It could go either way. And part of it might depend on what we define as labor. If there's no minimum wage, for example, where do you draw the line between hobbies and labor? How much pay counts as a job? What does it mean to be self-employed? Does there have to be some kind of formal labor contract in place? Does any of this matter for determining the prosperity of our society?
> and then how a low participation rate economy would grow faster than a high rate one.
Economic growth isn't constrained by the amount of labor being contributed. It's constrained by the amount of spending in the economy. If labor were our limiting factor then less labor would mean less production, as you say. And at least in the developed world, except maybe in certain special cases (e.g. wartime), that hasn't been true for decades if not centuries.
