by Guest Contributor | Jan 3, 2018 | Opinion
The crux of opposition to taxless spending (that is, money spent by a government that has not been raised through taxation) is inflation caused by creating additional money.
In The Affordability of Basic Income, a paper written by Geoff Crocker, it states that a government can create additional money without increasing inflation as long as the money supply does not exceed the productive capacity of the economy: and recent quantitative easing in both the US and Europe has given empirical backing to that claim. However, increasing the money supply beyond that point will inevitably create additional inflation.
It would be unfortunate if we never tested the boundaries of our productive capacity. Capacity utilization in the United States averaged 80.32 percent from 1967 until 2017, according to Trading Economics magazine. So far in 2017 the utilization is less than 78%. That means approximately 20% of the productive capacity in the US is an unused resource. Most nations in the world are in a similar utilization bracket, according to Trading Economics magazine.
The GDP of the US in 2016 was $18.5 trillion dollars according to Trading Economics. 20% of that is $3.7 trillion dollars. This is the amount of taxless money that could be added to the economy in the US each year, without causing inflation, in theory. Adding too much too quickly could cause inflation though, because the logistics of using 100 percent capacity takes time to implement.
The key would be to start with a small annual amount, then increase it slowly, if inflation did not occur. If the economy received a slow steady influx of taxless money from the government, the slow steady increase in demand should lead first to a slow steady use of full production, and then to a slow steady increase of production capability, as industry invests in increased production to match increased demand. This would be a platform for continued growth and utilization of taxless government spending, without causing inflation.
The government could introduce taxless spending through any number of programs, and Basic Income could be one of them. It could also lead to lower spending on federal interest payments if it were used to balance the budget, instead of increasing the national debt to do so. Many other programs could benefit as well, such as healthcare, infrastructure repair, education, etc.
Government would still collect taxes, and would still be able to use them to encourage or discourage activities as deemed necessary.
It is also a technology that would require no expensive change to the infrastructure. All major technological advancements in the past that could affect the economy by 20 percent required major investments in time, resources, and investments. The steam engine, railroads, cars, cell phones, and the Internet all took 20 to 30 years, billions of dollars, and countless man-hours to implement. Taxless government spending requires only the change of policy. No new airports, factories or cell towers, just a change in policy.
Taxless spending could provide a form of basic income funding that could be utilized in many nations around the world, without creating a burden on taxpayers, if implemented properly. It would filter into the economy and every person on the planet could benefit from it, not just the well to do. We all deserve to benefit from such a simple solution to an age-old problem, poverty.
Michael Keith has been in the construction industry for 30 years, spent 15 in the Carpenters Union building offices, skyscrapers, and condominiums. Keith had a California Contractors license, and built many custom homes there. He presently remodels Braum’s Ice Cream Store and Restaurants in 5 different states in the US.
Reviewed by Malcolm Torry and Tyler Prochazka
by Pablo Yanes | Dec 19, 2017 | News
Zone 10 – Guatemala City.
With the support of the Swedish Embassy and Oxfam in Guatemala, the Central American Institute for Fiscal Studies (ICEFI) has presented a new book entitled Universal Basic Income: More Freedom, More Equality, More Jobs, More Well-being. A Proposal for Guatemala (2019-2030), was presented in simultaneous events held in Guatemala City and Quetzaltenango. The book explains how inequality is affecting people’s lives and undermining the possibilities of strengthening democracy and development in the world, and Guatemala in particular. In light of this reality, the book proposes a universal basic income (UBI) of Q175 per month (20 €/month) accompanied by increased social spending from 2019 to 2030, which could eliminate extreme poverty and reduce inequality, while generating 4.7 million jobs and potentially boosting economic growth as much as 50%. It also gives scenarios for its financing – including a progressive tax reform – and the main challenges to its effective public administration.
When studying social inequality in Guatemala, the book mentions income inequalities, worker insecurity, the scourge of child labor and lack of employment guarantees, the still unaffordable cost of the basic food basket, the acute chronic malnutrition ravaging Guatemalan children (especially indigenous and rural children), the visible discrepancies in women’s political representation in public and private power arenas, widespread poverty and extreme poverty – also more and more wearing the face of indigenous and rural women – and the complex, institutionalized racism permeating all realms of society. All this is reinforced by the overwhelming problems of corruption and lack of transparency, by paltry public spending on the production of universal, quality goods and services, and by a tax policy that lacks legitimacy among the citizenry due to the unfair way in which taxes are collected and certain economic sectors are granted privileges.
For ICEFI, this reality requires alternative proposals to help mitigate social inequality and its more harmful effects and build economic, social and fiscal scenarios for underpinning sustainable, inclusive economic development. Together with improved public goods and services, a UBI – understood as a sum of money allocated by the State to each citizen or resident – would have a positive impact on Guatemalan society. With a monthly per-person amount of Q175, the UBI could eliminate extreme poverty and reduce inequality. The study, which should be considered a seminal work subject to discussion and more in-depth examination, also reveals that a UBI such as the one proposed could generate 4.7 million jobs in the coming years (33% of the working-age population in 2030), spread out over the entire national territory in agriculture, industry, finance, and commerce – an effect that could boost economic growth by close to 50%. Moreover, the related bankarization would promote the formalizing of businesses aimed at providing goods and services to the public. Inequality would be reduced from 0.538 to 0.472, as measured on the Gini index – better than Costa Rica (0.504 in 2014) but still far from what has been recorded for Uruguay (0.379 in 2014).
As for taxes, the proposal includes financing mechanisms (with and without tax reform). The tax reform scenario is based on a modernization of the income tax, elimination of tax privileges, and gradual reduction of income and value-added tax evasion. The book also emphasizes that implementation of a public policy such as the one proposed implies a revaluation of the State’s role as the main guarantor of individual rights and booster of development and democracy. Fiscal policy can potentially close the current gap between the economy and citizen well-being. With a modern fiscal outlook and political agreement for a profound fiscal reform, the country could have the resources for financing a UBI and other public programs aimed at enhancing social well-being, smoothing the way for compliance with the 2030 Agenda for Sustainable Development while driving productive transformation, access to credit and economic formalization.
In this book, ICEFI recognizes that a UBI would not solve all the problems the country urgently needs to face as a result of its past and present. Together with improved public services, however, it could provide a minimum though effective floor of social protection for tackling inequality and all its related phenomena. At a time when most citizens are unhappy with the current economic and political model, the study can also serve as a basis for debate on alternatives for change. Discussion of a UBI in Guatemala is expected to bring together small, medium, and large enterprises, merchants, producers and cooperatives, as well as social organizations pushing agendas for development and democracy.
The study is available in Spanish.
by Eduardo Abreu | Dec 1, 2017 | News
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
by Micah Kaats | Nov 24, 2017 | News
In recent years, basic income has found support across the political spectrum. While some have justified it as a human rights issue, others believe it to be necessary in the fight against poverty and rising inequality. According to many supporters, these are sufficient justifications in their own right. However, many basic income proponents also cite the growing threat of automation to employment. Put simply, as robots become smarter and cheaper, more and more workers will find themselves out of a job, and basic income programs will be required to offset rising unemployment and job displacement. This view is particularly popular in Silicon Valley and has been championed by the likes of Elon Musk, Richard Branson, and Mark Zuckerberg. However, a new report from Pearson, an education publishing company, challenges this line of reasoning.
Pearson’s analysis, with help from researchers at Nesta and the Oxford Martin School, diverges from previous reports on automation (Frey & Osborne, 2013; Arntz et. Al, 2016; McKinsey, 2017; Richard Berriman, 2017) in two key respects. While previous studies have tended to focus exclusively on the potentially destructive effects of automation, Pearson’s report also incorporates the potential for growth in jobs and skills that may be complemented by automation. The study also considers how automation may interact with seven specific global trends to affect supply and demand in the labor market over the next decade: (1) environmental sustainability, (2) urbanization, (3) increasing inequality, (4) political uncertainty, (5) technological change, (6) globalization, and (7) demographic change.
Pearson’s report relies on a combination of expert testimony and, perhaps fittingly, machine-learning. Two panels of artificial intelligence experts in the United States and United Kingdom were asked to rate the future prospects of thirty occupations in the context of the seven global trends identified by the researchers, and to report on how certain they were in their predictions. This information was then fed into machine-learning algorithms, along with data from the U.S. Department of Labor, to generate predictions for more than 1,000 occupations in the United States and United Kingdom.
Using this model, the researchers at Pearson reached the following six conclusions:
- 20% of the workforce are in occupations that will shrink.
This figure is smaller than previous high-end estimates of 47% (Frey & Osborne, 2013), but also larger than more conservative estimates of 9% (Arntz et. Al, 2016). In line with previous findings, Pearson reports that routine, physical or manual abilities will become less valuable over time. However, Pearson also notes that certain sectors typically considered doomed by automation such as agriculture, trades, and construction, may actually show pockets of job growth where new skills are required to complement new technologies. So, it can be said that there cannot be a complete elimination of people in the workforce. Instead, building skill sets to work alongside automated machines could be the way to go. For example, with large industries adopting newer technologies and automation to improve the production process, an automation parts supplier could be the need of the hour, as there will always be a requirement for people who have the necessary knowledge to handle new machines and implement efficient functionalities.
- 10% of the workforce are in occupations that will grow.
Specifically, the researchers argue that jobs involving judgment and decision making, teaching, active learning, interpersonal skills, complex problem-solving, originality, fluency of ideas, and systems thinking will all grow in value. Jobs in high demand will include teachers and education professionals, sports and fitness workers, caregivers, managers, hospitality workers, legal professionals, and engineers. Occupations in the public sector, as well as those resistant to globalization, emerge as particularly resilient. Further, jobs in the construction sector and those that involve outdoor manual work could also need constant manpower, as we see companies such as Crane Renovation Group reaching out to potential workforce to increase hiring and provide consistent jobs. Pearson also points out that jobs and skills that will become more valuable are not specifically confined to any one particular income bracket or skill level.
- 70% of the workforce are in occupations where their future is uncertain.
- So-called “21st century” skills will experience higher demand.
- Both knowledge and skills will be required for the future economy.
- Occupations can be re-designed to pair uniquely human skills with technology.
A global leader in education publishing itself, Pearson argues for sweeping reforms to education systems so that they may adapt faster to the changing needs of labor markets, and begin offering more flexible pathways to employment including credentials and microdegrees. Pearson also advises business leaders to start thinking of ways to redesign roles to balance technological and human resources. Finally, the researchers encourage individuals to develop skills that are “uniquely human” and commit to becoming lifelong learners.
However, the report is not without limitations and the researchers note the large degree of uncertainty baked into any analysis of job creation, which is notoriously more difficult to predict than job destruction. Critics have also argued that Pearson greatly underestimates the difficulty of implementing public and private reforms in the context of the political and social turbulence accompanying severe job displacement.
Nevertheless, despite these limitations and the challenges that lie ahead, Pearson’s researchers remain optimistic about the future of work. They summarize their findings rather succinctly: “The bottom line of our research, we can all stop agonizing about machines taking our jobs.”
You can download the full report here, or visit the microsite.
by Karl Widerquist | Nov 21, 2017 | Opinion, The Indepentarian
The devil’s in the details is a common saying about policy proposals. Perhaps we need a similar saying for policy research, something like the devil’s in the caveats. By this, I mean that the evidence any particular piece of research can provide is only a small part of the evidence people need to fully evaluate policy proposals. Non-specialists involved in the debate over that policy are often unable to translate caveats about the limits of research into a firm grasp of what that research does and does not imply about the policies they want evaluated. Therefore, even the best scientific policy research can leave nonspecialists with an oversimplified, or simply wrong, impression of its implications for policy.
For example, popular media reports about medical research often leave people in the United States today with the impression that the medical professionals make widely swinging recommendations about prevention and treatment of diseases, when medical consensus is actually slow to change and even slower to reverse a change once made. It is possible that the misperception of an erratic medical consensus exists because nonspecialists don’t have the background to understand the difference between a medical consensus and an oversimplified or sensationalized report of one study.
Whatever the problems of this type are with medical research, they are likely to be much greater with social science research in general and Universal Basic Income (UBI) experiments in particular. At least some medical research is fairly straightforward. Many medicines affect people only on an individual basis, and all we might want to know about a medicine is whether it is safe and effective. In many cases, medical research can address that question directly in a controlled experiment, and hopefully, it’s not too difficult to communicate the results to nonspecialists.
Although medical experiments might not always be this straightforward, UBI experiments can never be straightforward. I believe this problem is so big that I’m working on a book, provisionally titled Basic Income Experiments—The Devil’s in the Details, to discuss the enormous difficulty of conducting a UBI experiment that successfully raises the level of political debate over UBI.
UBI has complex economic, political, social, and cultural effects that cannot be observed in a controlled experiment. Researchers conducting experiments know that experimental evidence alone cannot fully answer the big questions about UBI: does it work? Is it cost-effective? Should we introduce it on a national level? They have to be content with making a small contribution to a large body of knowledge about UBI. When research is conducted of, by, and for specialists, mutual understanding of the limits of research usually requires no more a simple list of caveats, many of which can go without mention in a group with a great deal of shared, specialized knowledge.
The same is not true when policymakers and citizens make up part of the audience of research—as they do for research on major policy issues such as UBI. Citizens and policymakers want answers to the big questions mentioned above; they understandably try to interpret experimental results in light of those questions. But as I will argue throughout the book, they have great difficulty understanding what UBI experiments do and do not imply about those big questions. The devil is in the caveats.
Most academic specialists are professionals at writing for other academics within the same specialty but amateurs at communicating with nonspecialists. The book argues that these communications barriers affect not only how specialists report their research to nonspecialists but also how they design and conduct it.
It is no coincidence that UBI experiments are getting underway just after an enormous growth in the discussion of UBI in many countries around the world. In that environment, one of the goals of UBI experiments is—or ought to be—to raise the level of debate over UBI. The book will argue that past experiments have a mixed record in raising the level of debate over UBI: although all of them have provided valuable evidence, some have succeeded in raising the level of debate, and some have been so misunderstood that they might well have had an overall negative affect on the level of debate. This effort to raise the level of political debate (like the UBI debate) requires knowledge and skills that researchers have no special training to do and creates risks that research aimed purely at other researchers does not have, including the vulnerability to spin, misuse, sensationalism, or oversimplification.
The goal of the book is help researchers, policymakers, citizens, journalists, and anyone else interested in UBI experiments bridge gaps in understanding between them to help the experiments succeed in the goal of raising the level of debate. I hope that this effort will be valuable to researchers designing, conducting, and writing about UBI experiments, to policymakers commissioning and reacting to experiments, to journalists reporting on experiments, and to citizens involved in the debate or simply interested in the topic of UBI.
To help people bridge these gaps, the book has to explain how many significant barriers there are to conducting experiments that successfully raisr the level of debate. So, I will have a lot of negative things to say, but that should not distract readers from my overall enthusiasm for UBI experiments. They are worth doing, and worth doing well in all relevant ways. And to readers who are unenthusiastic about UBI experiments, I say, they are coming; it’s important to make the best of them.
A meeting during the Indian pilot project, c. 2011-2013
