What happens to an economy when everyone wants passive income?

[joniboini]

Exactly! Passive income only works because someone else is doing the active work and passive income isn't free money, it's just a cut of someone else's productivity.
Someone has to bake the bread

I guess you could say while it's impossible for everyone to be a landlord, their motivation to become one will likely drive the economy forward. So yeah, while it's an impossible situation, nothing's wrong with chasing it. At the end of the day not everyone will make it, but it's not like they'll become poor overnight unless they make terrible mistake on their decisions. For example, taking a loan without any ability to repay at all.

[viljy]

In his post, OP himself gave answers to the questions of why all people will never become rentiers (passive income is a kind of form of rent) in the current state of the economy. However, instead of passive income, an unconditional basic income may someday be introduced (which will become necessary to maintain effective demand).

This means that a person no longer has to work to live. And then who will work? - Robots and AI - that's who! The absence of the need to work is the destruction of labor (according to Marx), or in other words communism. So, it turns out that by developing AI and the robotizing industry, corporations are gradually building a production base for the commune? - Only if an unconditional basic income is introduced and the market is preserved accordingly.

There is also an opposite scenario for the introduction of AI and robots - total control, where instead of money there will be a CBDC (since CBDC is the same as compound feed for livestock) and no free market. But in the first scenario, the economy needs people as consumers, and in the second case, people are not needed at all, because there will be no economy. Unless corporations extract some other benefit from people, but not economically.

[Die_empty]

To make passive income work, the other person should also do continuously daily effort. So there should still be a balance. Its impossible that all of us will become passive income earners because who will does the job then to bring passive income to the owners or operators when everyone is just waiting effortlessly for their passive income to be realized.

Also, the whole economy will freeze and stop its production if no one stays to do the job, so it would be very unhealthy for the country's economy if ever everyone turns into passive income and stop relying on their active income.

Everybody can't do the same thing or be interested in self-employment. I know some people who said they don't have the flair for business. They prefer to be an employee for the rest of their lives. Others don't have any interest in owning properties; hence, rental businesses will never go obsolete. There will always be buyuers be buyers and sellers in the economy.

The economy cannot go on standstill except the government decided to print money and give money to everyone enough to make them millionaires.

[tabas]

We know that it's not going to happen at all.

The question was not whether it was going to happen or not, he is asking about a hypothetical scenario and what would happen in that case if it is a possible scenario at all.

Yes, I know that it's hypothetical scenario question. But we have to face the reality that it won't be happening because even since time immemorial, there have been people who mostly work with their entire lives and never had thought of having passive incomes.

The workers will always exist because assets is finite and the owner of assets are the top 10% wealthy people.

That's true, resources are limited and that's why there will always be workers. I won't say slaves but that's the thing in the every era.

[Finestream]

Expect the risk of hyperinflation seeing the demand surges high while there are no left produced goods and services.

Know that in order to pay off these assets or businesses, there should be active workers that will continue to generate the profits, and for the interest and dividends to consistently grow.

A highly productive country requires an active labor force as well. If this will not be met, the economy will collapse, and people will be highly affected, thus having passive income for all is impossible to be realized.

[slapper]

In his post, OP himself gave answers to the questions of why all people will never become rentiers (passive income is a kind of form of rent) in the current state of the economy. However, instead of passive income, an unconditional basic income may someday be introduced (which will become necessary to maintain effective demand).

This means that a person no longer has to work to live. And then who will work? - Robots and AI - that's who! The absence of the need to work is the destruction of labor (according to Marx), or in other words communism. So, it turns out that by developing AI and the robotizing industry, corporations are gradually building a production base for the commune? - Only if an unconditional basic income is introduced and the market is preserved accordingly.

There is also an opposite scenario for the introduction of AI and robots - total control, where instead of money there will be a CBDC (since CBDC is the same as compound feed for livestock) and no free market. But in the first scenario, the economy needs people as consumers, and in the second case, people are not needed at all, because there will be no economy. Unless corporations extract some other benefit from people, but not economically.

Most of history, 95% of the life span of all humans, no one had a "job" in the sense we have of employment. Man hunted, woman gathered, man built, woman created, man cared for. Selling hours to some other operation is perhaps a few centuries old, though. So when we ask "who will be the doctor if everyone wants passive income" we're treating a very recent arrangement as if it's physics. Well, mayybe it is the arrangement we're stuck with. I'm not a child that way.

But your Marx point, indeed. If AI and robots are doing the producing, and UBI's out here doing the consuming for us, congratulations: that's post-scarcity communism. Just built by accident, by corporations who were only ever trying to hit next quarter's earnings call. Like the irony is almost too neat.

The OP describes the passive income seekers as those who "sit out". As if it's a sign of laziness to not sell 40 years of your mind to an employer. But to me, it's a perfectly logical reaction to a system that rates your life by what you produce.

A mother raising kids isn't "producing". A person caring for dying parents isn't "contributing to GDP". We turned productivity into a narrowly focused discipline and everything else was obscured. Then we ask ourselves, why do people want to get out of it?

[ColdLava40]

What are your thoughts?

It's not possible to have a completely passive economy. People still have to build wealth in order for them to build a reliable passive income source. You can't build a rental home out of thin air can you?

We still need to labor the traditional way and while in the process save up and put our money into something that would work for us while we continue to earn. And don't forget also, a consistent passive income would only be possible in a working economy, with no inflation, which is not possible in our today society.  

[YOSHIE]

What happens to an economy when everyone wants passive income?

If a situation like that happens, I can guarantee that the economy will come to a complete standstill, there is definitely no bargaining and that will not happen in this world, poor and rich people, hard workers and those who have passive income still exist, so that the economy in this world will flow passively, that is, there is day and night, water and fire, all of that is for balance in the real world.

Imagine if everyone in this world chose to be lazy and relaxed, without those who worked hard, of course the economic system would collapse, moreover, those who enjoy passive income would feel thanks to other people's hard work.

Try to imagine it logically, everyone wants to relax in a restaurant, then who serves them or makes drinks or food for them, of course everyone there wants to relax without a chef or waiter, if that happens it means this world is destroyed, including the sectoreconomy.

[Cryptomultiplier]

What happens to an economy when everyone wants passive income?

If a situation like that happens, I can guarantee that the economy will come to a complete standstill, there is definitely no bargaining and that will not happen in this world, poor and rich people, hard workers and those who have passive income still exist, so that the economy in this world will flow passively, that is, there is day and night, water and fire, all of that is for balance in the real world.

Imagine if everyone in this world chose to be lazy and relaxed, without those who worked hard, of course the economic system would collapse, moreover, those who enjoy passive income would feel thanks to other people's hard work.

Try to imagine it logically, everyone wants to relax in a restaurant, then who serves them or makes drinks or food for them, of course everyone there wants to relax without a chef or waiter, if that happens it means this world is destroyed, including the sectoreconomy.

Having capital without labour or consumption is like having a tool that holds no value in usage, thus it is useless when no one is there to use it.
When someone works to earn capital from the one who owns it, that's an interaction there and that's where value is.

Capital must be deployed for developmental purposes to yield productivity or else the capital would just be a dead asset and that's why there must be balance between capital and labor or else there's going to be a collapse in the economic system of such a state where this exist.

[lionheart78]

If everyone becomes landlord, investor and owner then who will become Doctor, engineer, teacher and farmer? There would be shortage of labor who give services and wages would spike for such jobs. Secondly if everyone own assets , the returns on those assets will drop. For example a house that give 8% rental yield would give 5 or 4 percent. So passive income will get harder. Thirdly if too many people sit out and let money work for them productivity will drop. The highlighted point could be if everyone is trying to collect rent then who will pay the rent. You can't eat just the ice cream someone has to make it first.

What are your thoughts?

The world will balance on its own.  If everyone becomes landlord, investor, and owner, those who are not earning enough from these passive incomes will do an active job to reinforce their income.  It is highly possible that many of these land owner will sell their lands and establish businesses where it will hire those who are less fortunate landowners.

People will always look for the most profitable venture, thus, if no one is driving and find being a driver outweighs their passive income, they will grab that opportunity and earn money.  The same thing when food is scarce, people will start planting food do husbandry to cater to the needs of people.  There is no law that says one must have a passive income only anyway.

So even if everyone wants passive income, there is still a need to do active jobs for the sake of more profitable ventures.

[Dogedegen]

If everybody want to become landlord or have passive income in this matter, the price of assets will become high adjusting to the market demand and supply.

The workers will always exist because assets is finite and the owner of assets are the top 10% wealthy people.

This is the opposite of what would happen. If everyone wanted to become a landlord, the competition on the supply side would be so fierce that the prices would drop sharply rather quickly even without money constraints on the other side.

I guess you could say while it's impossible for everyone to be a landlord, their motivation to become one will likely drive the economy forward. So yeah, while it's an impossible situation, nothing's wrong with chasing it. At the end of the day not everyone will make it, but it's not like they'll become poor overnight unless they make terrible mistake on their decisions. For example, taking a loan without any ability to repay at all.

The motivation to do something wrong such as oversupplying one market is not moving the economy forward, it moves an economy backward. This would be a decentralized way of reaching the consequences of state planning, it never works out well. That is why market dynamics prevent these kinds of situations. As more and more people try to rent out for income and compete with other landlords, prices start dropping which lead to more people abandoning this idea.

If a situation like that happens, I can guarantee that the economy will come to a complete standstill, there is definitely no bargaining and that will not happen in this world, poor and rich people, hard workers and those who have passive income still exist, so that the economy in this world will flow passively, that is, there is day and night, water and fire, all of that is for balance in the real world.

Imagine if everyone in this world chose to be lazy and relaxed, without those who worked hard, of course the economic system would collapse, moreover, those who enjoy passive income would feel thanks to other people's hard work.

Try to imagine it logically, everyone wants to relax in a restaurant, then who serves them or makes drinks or food for them, of course everyone there wants to relax without a chef or waiter, if that happens it means this world is destroyed, including the sectoreconomy.

You understand it, some here actually think that this would work out in some way even if it were possible. This would be a disaster, any kind of oversupply always is. One of the reason why they are able to suppress wages in the modern world is exactly through the oversupply of human capital, importing illegal and legal people to take jobs at salaries that should no longer be paid.

[r_victory]

The entire world cannot live off passive income if "wealth" is not generated. To harvest, one must plant; you cannot simply harvest. Passive income comes from company shares in the form of dividends or from investment interest. How can one receive income if that income is not generated?

[Berry2d]

Expect the risk of hyperinflation seeing the demand surges high while there are no left produced goods and services.

Know that in order to pay off these assets or businesses, there should be active workers that will continue to generate the profits, and for the interest and dividends to consistently grow.

A highly productive country requires an active labor force as well. If this will not be met, the economy will collapse, and people will be highly affected, thus having passive income for all is impossible to be realized.

The activeness of works at site yield more positive results more than when  there is no much worker available to add in productive force for sufficient productivity as at when needed.
One difference between highly productive countries and low productive countries is the existence of more man power at site to make production more possible,  most countries that understands the importance of man power never neglect the presence of workers at site.
Having workers at site most times is not the problem, the problem is how to handle and provide what is needed to create a conducive environment for then.

[Crypto_Timothy]

What are your thoughts?

Actually I have thought about this before and I would always say that job you feel is less or not important if there weren't anyone doing them, you would feel the impact.
I grew up around this mentality that you should be able to fix electrical problems, mechanical problems, every single handyman job required and I would ask myself, if I did all those things, then those people who went to school and study this profession, how would they survive? Because they wouldn't see job to do if anyone could just handle stuffs by themselves. In every booming economy, everyone has a part to place and you must play that part very well for the economy to grow.

[CryptopreneurBrainboss]

Thirdly if too many people sit out and let money work for them productivity will drop. The highlighted point could be if everyone is trying to collect rent then who will pay the rent. You can't eat just the ice cream someone has to make it first.

What happens is the economy cease to function properly and then the government will be forced to import workers as immigrant from other countries. On another note it is almost impossible for this to happen as we'll always have the rich and the poor in the economy, the both class of wealth needs to function side by side for an economy to be in operation.

It can only happen as an imagination but in reality we'll always have the landlords and the tenants, we have the builders and the users, the developers and the consumers, we'll always have those that will bring about innovations and then those that will consume the new innovations for the world to function.

The economy of the world can't be a fairytale, what you just need to do is to try your best to be in the better bracket and not to be those at the end of the food chain.

[Davidvictorson]

If everyone becomes landlord, investor and owner then who will become Doctor, engineer, teacher and farmer?

This is literally not possible

There is a way the world is structured to have a balance.

Besides, most people will go towards the path of their passion and not everyone will be Doctor, engineer, teacher and farmer or other professionals.

In a way passive income also runs the economy because what is passive for one person is the actual income for another.

[Marvelockg]

If everyone becomes landlord, investor and owner then who will become Doctor, engineer, teacher and farmer? There would be shortage of labor who give services and wages would spike for such jobs. Secondly if everyone own assets , the returns on those assets will drop.

Is there a possibility that everyone will become doctors, engineers and house owners? Such possibility is almost as small as zero. Even in the most civilised society that seems to have a seemingly proper wealth distribution structure, there still exist the least set of people in the society like beggars and the likes that still exist in that society.

A society will always have the rich, the poor, the educated, the uneducated, the house owners and those that will rent the apartment. Because life is in phases, at certain stage, people will have to do some passive jobs till they grow to own system that gives them to ability to become proper land owners and the likes.

[viljy]

In his post, OP himself gave answers to the questions of why all people will never become rentiers (passive income is a kind of form of rent) in the current state of the economy. However, instead of passive income, an unconditional basic income may someday be introduced (which will become necessary to maintain effective demand).

This means that a person no longer has to work to live. And then who will work? - Robots and AI - that's who! The absence of the need to work is the destruction of labor (according to Marx), or in other words communism. So, it turns out that by developing AI and the robotizing industry, corporations are gradually building a production base for the commune? - Only if an unconditional basic income is introduced and the market is preserved accordingly.

There is also an opposite scenario for the introduction of AI and robots - total control, where instead of money there will be a CBDC (since CBDC is the same as compound feed for livestock) and no free market. But in the first scenario, the economy needs people as consumers, and in the second case, people are not needed at all, because there will be no economy. Unless corporations extract some other benefit from people, but not economically.

Most of history, 95% of the life span of all humans, no one had a "job" in the sense we have of employment. Man hunted, woman gathered, man built, woman created, man cared for. Selling hours to some other operation is perhaps a few centuries old, though. So when we ask "who will be the doctor if everyone wants passive income" we're treating a very recent arrangement as if it's physics. Well, mayybe it is the arrangement we're stuck with. I'm not a child that way.

But your Marx point, indeed. If AI and robots are doing the producing, and UBI's out here doing the consuming for us, congratulations: that's post-scarcity communism. Just built by accident, by corporations who were only ever trying to hit next quarter's earnings call. Like the irony is almost too neat.

The OP describes the passive income seekers as those who "sit out". As if it's a sign of laziness to not sell 40 years of your mind to an employer. But to me, it's a perfectly logical reaction to a system that rates your life by what you produce.

A mother raising kids isn't "producing". A person caring for dying parents isn't "contributing to GDP". We turned productivity into a narrowly focused discipline and everything else was obscured. Then we ask ourselves, why do people want to get out of it?

I read somewhere that primitive people spent on average no more than 4 hours of their time a day gathering and hunting. The rest of their time was free. And, for example, women picking berries in company and gossiping, or men hunting together, can hardly be qualified as a dull job. So indeed, for most of the history of mankind, there was no need for labor in the modern sense.

Society changes only when the mode of production changes. Moreover, the former mode of production may still exist for a long time (for example, slavery still exists today), but it is not dominant in the economy. And mass robotic production is a change in the way of production. This is bound to cause a change in the structure of society.

We are already seeing signs: the virtual disappearance of the proletariat, which is being replaced by the precariat, the weakening of trade unions, rising unemployment, flexible employment, and the disappearance of some social guarantees.

Yanis Varoufakis explained well why one can do one thing (fight the consequences of the crisis) and get something completely different (technofeudalism) in describing how technofeudalism arose or how "platforms" replaced the free market. After all, no one imagined that traditional retail would be destroyed by giant online marketplaces. Now the marketplace actually controls what you will sell and buy and on what terms (and whether you will sell at all if you are a seller).

So it is quite possible, by developing AI and robotizing production with one goal (to increase profitability), to change the social structure in a completely unexpected way. By the way, there is a book, I do not know if it has been translated into English: Vasily Koltashov "Capitalism of crises and revolutions: as formative epochs change, long waves are born, restorations die, and neo-mercantilism sets in." The author of this book argues very argumentatively that there has never been any socialism, much less communism, in human history (neither in the USSR nor in China). So only a mirage, a simulacrum, was "defeated".

[lovesmayfamilis]

To have a passive income, you need your money to work. Where will you get your money if you don't work? Will someone bring them to you? Utopia, isn't it? Now, in the near future, robots and AI will replace many professions in one way or another, displacing people. But again, money is needed to live in this world, and people will have to retrain in order to have funds for their future passive income. From the very beginning, the world was designed so that someone would be rich, and someone would work for this rich man, so thinking utopian thoughts about universal equality is like doing useless and stupid things. However, the world provides opportunities to choose who to be and what to strive for. Such thoughts and ideas are more useful in motivating your personality to develop and improve and, therefore, to be in demand.

[Porfirii]

-snip-

The workers will always exist because assets is finite and the owner of assets are the top 10% wealthy people.

Of course, in fact, what would be the point of living on income or being rich, if you couldn't buy the services you wanted with your money? and most services, even today, require human labour to provide them. As long as everything is not completely automated and/or robotised, we will continue to need waiters, hairdressers, doctors, psychologists or policemen. In some cases, vocation is important, but in most cases the most important actor is probably salary, and that is why for the balance to be maintained, the percentage of rentiers must remain relatively stable.