The Ten Steps to Prosperity, which is at the end of most posts on this site, includes:
This step proposes we give a monthly Economic Bonus (EB) to every man, woman, and child in America, regardless of any other income or wealth they may have.
You would receive the same EB as the poorest receives and as Bill Gates receives.
No need to go through the convoluted steps our gigantic tax code demands, to determine what is “income,” and what kind of income it is, and when you received it and how you received it, etc., etc.
If you live in America, you receive your monthly EB.
The whole economy benefits by receiving dollars from the government, but the poorer would benefit proportionately more from this direct infusion.
It’s just more dollars for the economy, and it costs no one anything — not you, not me, not even our federal government, which creates dollars, ad hoc, by paying bills.
How much should the EB be? My early thought is $1K per month for each person above the age of 21, and $500 per month for everyone below that age.
Why not more? Or less? I wish I could give you a strong reason, but there is none. The U.S. government already has done something similar.
In a weak attempt to moderate the Great Recession of 2008, the government mailed each taxpayer a check for as much as $500, depending on their tax return.
Had the government sent every person $5,000 rather than the $500 maximum per family, the recession likely would have ended immediately.
Starting with $1K and $500 per month allows time to evaluate results. The program could be stopped during the first year, modified, or extended indefinitely.
Perhaps sending money to the “lazy” poorer, goes against our Puritan grain and our self-image of deserving what we get. But we should move past that notion.
There are many reasons people don’t have money, and unwillingness to work isn’t anywhere near the top of the list.
There have been three primary objections to EB:
- It would cost the federal government and taxpayers too much.
- It would cause inflation.
- It would encourage sloth and discourage people from working
Those readers also know that our Monetarily Sovereign government has absolute control over the value of its sovereign currency, the U.S. dollar, so federal deficit spending does not and has not ever caused inflation.
Finally, moral readers understand that a nation can be considered great only if it is willing to care for the poorest and least powerful of its people.
Liberals think the purpose of government is to protect the poor and powerless from the rich and powerful. Conservatives think the purpose of government is to protect the rich and powerful from the poor and powerless.
Here is an article describing Finland’s experiment with something similar to EB, and the attempt to care for anyone who lacks sufficient income for a healthy productive life:
New Scientist Magazine, Feb 16, 2019
Universal income study finds money for nothing won’t make us work less
By Joshua Howgego
For the last two years the Finnish government has been giving 2000 unemployed people a guaranteed, no-strings-attached payment each month.
It is the world’s most robust test of universal basic income, and the preliminary results, released this morning, seem to dispel some of the doubts about the policy’s negative impacts.
Universal basic income comes in different flavours, but the essence of the idea is to give everyone a guaranteed income that covers their basic needs, like housing and food.
Here it differs from Step 3., Monthly Bonus for All, in that it has the specific goal of covering listed needs rather than merely to give everyone money.
But merely giving everyone money has the advantage of eliminating all argument about what “basic needs” are, and how much is “basic.”
(What kind of food? How much food? What kind of housing? What housing location? Is education basic? Etc.)
Crucially, the income is the same for everyone all the time – it does not get reduced if, for example, a person gets a job or a salary increase.
This approach is the same as for Step. 3.
The Finnish results were hotly anticipated because the experiment’s careful design promised robust evidence on UBI.
“This is an exceptional experiment, both socially and globally,” said Pirkko Mattila, Finland’s minister of social affairs and health, at a press conference.
The experiment began in December 2016. Kela, the Social Insurance Institution of Finland, randomly selected 2000 people aged between 25 and 58 from across the country who were on unemployment benefits.
It then replaced those people’s unemployment benefits with a guaranteed payment of 560 euros a month. They would continue receiving the payments whether they got a job or not.
Continuing to receive payments, whether or not employed, is similar to what EB would offer.
The experiment ended on 31 December 2018 and compared the income, employment status and general wellbeing of those who received the UBI with a control group of 5000 who carried on receiving benefits.
The surveys also showed that the UBI group perceived their health and stress levels to be significantly better than in the control group.
“This is early data but nonetheless a significant moment as global interest gathers in basic income,” says Anthony Painter at the RSA think tank, which is working with the Scottish government to scope out a possible trial of UBI in Fife.
Supporters of UBI say that it frees people’s time for social goods like looking after children or serving their community, although this wasn’t measured in the Finnish trial.
Additionally, requiring unemployed people to continually prove they are looking for work creates a lot of stress for them, which is bad for their health and may mean they are less likely to be able to find work.
The above are just two of the many criticisms of the Modern Monetary Theory’s “Jobs Guarantee” (JG)proposal.
It also creates bureaucracy for the state.
The above is another of the many weaknesses of the JG proposal.
Not only would JG necessitate a huge bureaucracy, but the bureaucracy constantly would have to change with changes in the economy. As more or fewer people were unemployed, at any given time, they would need service.
On the other hand, basic income is expensive, even if it replaces existing benefits. And some say it could encourage people to work less.
“The criticism levelled at basic income that it would disincentivise work is not supported by [the Finnish] data,” says Painter.
There was no difference between the two groups in terms of the number of days in employment in 2017.
The fact that UBI and EB would be “expensive” (however that term is defined) is a feature, not a flaw — at least in the case of the U.S. government.
“Expensive” by any definition merely means that the government pumps more growth dollars into the economy.
Interestingly, Finland is monetarily no-sovereign. They use the euro, which is not their sovereign currency. Finland does not have the unlimited ability to create euros. It can run short of euros.
Yet it was Finland, and not the U.S., that felt the moral and economic needs to run the experiment. It makes one wonder about the comparative morals of the two nations.
UBI is a concept that originated at least 200 years ago. But over the past few years it has become a fashionable policy idea, with many countries exploring pilot studies.
One reason for the increased interest is the fear that automation might displace large numbers of people from employment – essentially robots taking our jobs.
There have been several other trials of the idea, but none were definitive. Take for example the Mincome experiment, in which the 10,000 citizens of Dauphin in Manitoba, Canada, were guaranteed a basic level of financial security in 1975.
Recent analysis of public records from the time showed that it was only young men and young women who spent less time in work during the trial, and this because they were either in college or looking after babies.
Again, the Puritanical “sloth” concern did not emerge.
Yet there was no control group. And it wasn’t a true basic income, because the money wasn’t given unconditionally — people’s earnings were topped up when they dropped below a threshold.
Painter points out that, because the Finish experiment chose people randomly from across Finland, it can’t tell us about any regional differences in the effects of UBI. “There is a strong case for further experiments,” says Painter. “It would be good to see ‘saturation’ pilots where everyone in an entire area receives a basic income.”
Today, the U.S. debates various, insufficient versions of Step 2, Federally Funded Medicare –Parts A, B & D, Plus Long Term Care — for everyone, and has not even addressed the easily-taken Step 1, Eliminate FICA — all because of non-existent cost issues.
Other nations, that do not have as much financial ability as the U.S. to support social benefits, recognize the need and move forward with experiments and actual implementation.
Meanwhile, the wealthy and Monetarily Sovereign U.S. focuses on how to reduce Social Security, reduce Medicare, and pay for walls and other ways to keep out refugees.
Yes, it makes one wonder.
Rodger Malcolm Mitchell
Search #monetarysovereigntyFacebook: Rodger Malcolm Mitchell
The most important problems in economics involve the excessive income/wealth/power Gaps between the richer and the poorer.
Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.
Implementation of The Ten Steps To Prosperity can narrow the Gaps:
Ten Steps To Prosperity:
3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)
The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.