VATICAN: Basic income can’t be ignored, says Vatican expert

VATICAN: Basic income can’t be ignored, says Vatican expert

Charles Clark. Credit to: Michael Swan

 

Writing for The Catholic Register, Michael Swan reports on a talk by Charles Clark, Vatican’s top economic advisor, at an interfaith conference on universal basic income (UBI), held in St. Michael’s College in Toronto on October 20th, 2017.

This talk takes place during a period when a UBI pilot program is running in Lindsay, Thunder Bay and Hamilton, in Ontario, targeting those who qualify as low income.

Primarily, catholic social teaching focuses on human good and UBI aims to promote human well being so, although not directly a part of its teachings, UBI successfully puts in place a framework for catholic practice, said Marquette University’s Jesuit Theologian Fr. Joseph Ogbonnaya.

In Clark’s view there isn’t a Catholic economic policy, but he notes that in light of the Catholic social teaching, which advocates for equality it is sensible for any Catholic, to put forth policies that lead to less poverty and greater social mobility and inclusion, such as UBI. Still, UBI is not a panacea, meaning that we need public goods and the state for public education, public health, for welfare, he said.

Since we live in a society where we obtain what we need through markets, Clark states that we must ensure everyone has sufficient income, at a minimum level, to participate in it and have a decent living.

According to Clark, there is an increasingly unequal distribution of wealth, a result of wages that stall in the face of productivity growth. This is important since for a democracy to work there must be mobility, which in turn depends on equality being ensured, something that society needs to work on, said Clark.

Comments on UBI coming from the Catholic Church have been rare, so in this regard, public appearances as such from a Vatican related figure are refreshing.

 

More information at:

Michael Swan, “Basic income can’t be ignored, says Vatican expert”, The Catholic Register, 27th October 2017

Ellen Brown: “How to Fund a Universal Basic Income Without Increasing Taxes or Inflation”

Ellen Brown: “How to Fund a Universal Basic Income Without Increasing Taxes or Inflation”

Ellen Brown. Credit to: Signs Of The Times

 

Writing for Common Dreams, Ellen Brown makes a case for how Universal Basic Income can be achieved without increasing Taxes or Inflation. At first glance, most will consider this not to be possible, but Ellen argues that through quantitative easing, in which money flows directly into the real economy instead of being put into banks, the opposite may turn out to be true. In line with her reasoning, the author quotes Nobel prize-winning economist, Joseph Stiglitz:

 

“When the government spends more and invests in the economy, that money circulates, and recirculates again and again. So not only does it create jobs once: the investment creates jobs multiple times.”

 

As a consequence of this economic growth, tax and fiscal revenues increase while demands for unemployment benefits and social programs to help the poor, which are paid by the government, go down. All this strengthens a country’s fiscal position. On the other hand, one might assert that getting “new money” into the economy, supply would grow too large and consumer prices shoot up irreversibly, leaving the central bank unable to retrieve its investment. At this point Ellen quotes Prof. Stiglitz again, who states that money issued by the government, through UBI, simply returns to it in fiscal revenues.

 

Ellen further elaborates this in the light of the “velocity of money”, the number of times a dollar is traded in a year, which in a good economy is around seven, which means that on each dollar, taxes will be paid seven times, as it changes hands. $1,00 traded seven times on a 26 percent tax results in $1,82 back to the government, more than it initially put out. Also, it is generally taught in economics class that, from the formula “MV = Py”, when velocity of money (V) and the quantity of goods sold (y) are constant, adding money (M) will drive prices up (P). What is not taught, as Prof. John Harvey, quoted by Ellen, pinpoints, is that V and y are not constant, meaning that demand and supply rise together, leaving prices unchanged.

 

Applying this logic, Ellen sets forth that new demand must precede new supply, that is, employers will add the workers needed to create more supply, once they know there is demand for their goods and services. This has implications for unemployment, for example, which is at 9,4 percent in the US as of January 2017, a condition which at the rise of many innovations may get worse.

 

Nevertheless, a concern with hyperinflation is thrown around in opposition to this form of injecting money into the economy, to which Ellen Brown quotes Prof. Michael Hudson, who states that most cases of hyperinflation in history stemmed from foreign debt services collapsing the exchange rate, not domestic spending, calling upon the example of post World War II Germany.

 

In short, UBI can create more demand and drive new productivity by paying a dividend for living in the 21st century, when automation frees us time to engage in more meaningful pursuits.

 

More information at:

Ellen Brown, “How to fund a Universal Basic Income without increasing taxes or inflation”, Common Dreams, 4th October 2017