The sole purpose of government is to improve and protect the lives of the people.
Most people would like to have more money. This includes many of the rich, who already have more money than they can spend, but seem motivated to have even more.
Gap Psychology describes the human desire to distance oneself from those below, on any social scale, and to approach those above.
Thus, growing “richer” requires widening the Gap. This involves not only gaining more for oneself but also depressing others.
Either approach widens the Gap.
That is why the rich, and the Republican Party of the rich, seem so adamant that giving people money will disincentivize people to work.
Strangely, or perhaps not so strangely, the rich do not feel the “disincentive” applies to them, for they generally claim to work just a hard as always, no matter how much more money they own.
Their story is that the poor and middle-classes are congenitally lazy, who only will labor if whipped by hunger, homelessness, or other deprivations.
The fact that millions of people work at demanding, or even dangerous jobs, for low or moderately low pay, does not seem to occur to those who claim that if people are given money, they will refuse to work.
It is a lie, or if not a lie, then at least an ivory tower misunderstanding by academics.
Ask a police officer or a fire-fighter or a public school teacher why they work. It is in the nature of human beings that most of us like to work, and we feel such emotions as worthlessness and boredom when we are not working.
In fact, lack of “something to do” is a major problem for retirees.
All of the above is the hypothesis. Here is some fact:
When a California city gave people a guaranteed income, they worked more — not less
Stockton’s experiment shows what $500 per month in “free money” can do for employment, mental health, and more.
By Sigal Samuel Mar 6, 2021The city of Stockton, California, embarked on a bold experiment two years ago: It decided to distribute $500 a month to 125 people for 24 months — with no strings attached and no work requirements.
The people were randomly chosen from neighborhoods at or below the city’s median household income, and they were free to spend the money any way they liked. Meanwhile, researchers studied what impact the cash had on their lives.
The results from the first year of the experiment, which spanned from February 2019 to February 2020, are now in. And they’re extremely encouraging for its participants, and for advocates who see unconditional cash transfers as an effective way to help people escape poverty.
The most eye-popping finding is that the people who received the cash managed to secure full-time jobs at more than twice the rate of people in a control group, who did not receive cash.
Within a year, the proportion of cash recipients who had full-time jobs jumped from 28 percent to 40 percent. The control group saw only a 5 percent jump over the same period.
When confronted with a non-intuitive result, you surely must wonder, “How can that be? How would giving people money increase their desire to work for money?”
The researchers wrote in their report that the money gave recipients the stability they needed to set goals, take risks, and find new jobs.
In other words, when you’re drowning, all you can think about is staying afloat in the moment. That focus on the now, occupies all your energy and resources.
But if you are given a boat, you now can begin to think about getting food, shelter from the elements, finding land, signaling potential rescuers, etc.
One man in his 30s had been eligible for a real estate license for over a year but hadn’t gotten it because he just couldn’t afford to take time off work. Thanks to the freedom offered by the extra $500 per month, he said, his life was “converted 360 degrees … because I have more time and net worth to study … to achieve my goals.”
That’s a short-term example, but it also works in the longer term. Many intelligent youngsters do not stay in school, because their families need money now. So they are forced to find whatever low-paying jobs they can.
Eventually, these low-level jobs are the first to disappear. During any period or hard times, the under-educated are the first to need unemployment compensation.
Given money, they can continue in school, and find even better jobs, and/or create their own companies. They will be less likely to need unemployment compensation, later.
In the research done to date, unconditional cash does not tend to disincentivize work. In several programs — from Alaska and North Carolina in the US, to Finland and Spain in Europe — it has had no effect on employment either way.
In some cases, it seems to embolden people with an entrepreneurial bent; for instance, in Japan, initial survey results have shown that recipients are 3.9 times more interested in launching a new business.
Employment aside, there are clear benefits to unconditional cash programs. The Stockton experiment shows that getting unconditional cash tends to boost happiness, health, school attendance, and trust in social institutions, while reducing crime.
At its basic level, giving people money reduces their poverty, and crime, especially street crime, is an outgrowth of poverty.
(In the Stockton experiment, money) recipients spent most on necessities like food (37 percent), home goods and clothes (22 percent), utilities (11 percent), and car costs (10 percent). They spent less than 1 percent on alcohol or cigarettes.
These numbers offer a counter to harmful stereotypes and faulty assumptions: that people who become poor get that way because they’re bad at rational decision-making and self-control, and that they’ll blow free money on frivolous things or addictive substances. The evidence does not support these beliefs.
As part of its obligation “to improve and protect the lives of the people” government should give people money. This notion has been criticized on moral grounds. It’s as though not helping a drowning person will force a sink-or-swim mentality, which somehow is morally better.
But, allowing someone to drown is the ultimate immorality.
Here are excerpts from an article describing results around the world.
Everywhere basic income has been tried
Which countries have experimented with basic income — and what were the results?
By Sigal Samuel Updated Oct 20, 2020.The general idea — that the government should give every citizen a regular infusion of free money with no strings attached — has been around since the 16th century. But it’s recently experienced a remarkable resurgence: Advocates ranging from tech billionaire Mark Zuckerberg to libertarian economist Milton Friedman to former Democratic presidential candidate Andrew Yang have endorsed it.
Many people, who otherwise might favor such a plan, are reluctant to “give money to people who don’t need it.” This belief is founded on two concerns:
- The false belief that federal taxes fund federal spending, while in fact no one — not you, not me, not our grandchildren — ever pay for federal spending. The concern, “Why should my money go to rich people?” does not apply to Monetarily Sovereign federal spending. The government creates, from thin air, all the dollars it spends.
- The legitimate belief that federal spending should help narrow the Gap between the rich and the rest. I suggest that the simplicity of “Give the same amount to everyone” is far more actionable, and just a fair, as an income-based (or wealth-based?). The rich always find a way to game the system, and they would game this system, too.
Alaska: Since 1982, the state has given each citizen an annual check just for being alive, effectively wiping out extreme poverty. The money — which can range from around $2,000 per person when oil prices are high to $1,000 in cheaper gas years — comes from the Alaska Permanent Fund, a state-owned investment fund financed by oil revenues.
Economists investigated whether the payment was leading people to work less and found that “the dividend had no effect on employment” overall.
North Carolina: Since 1997, revenue from a casino on tribal land has been given to every tribal member, no strings attached. Each person gets on average somewhere between $4,000 and $6,000 per year. Economists found that it doesn’t make them work less. It does lead to improved education and mental health, and decreased addiction and crime.
Manitoba, Canada: Choosing one farming town, Dauphin, as a “saturation site” where every family was eligible to participate in a basic income experiment. The basic income seemed to benefit residents’ physical and mental health — there was a decline in doctor visits and an 8.5 percent reduction in the rate of hospitalization — and high school graduation rates improved, too.
Finland: The government chose 2,000 unemployed citizens at random and gave them a check of 560 euros ($635) every month for two years. Participants were assured they’d keep receiving the money if they got a job. The income didn’t help them get jobs, but it did make them feel happier and less stressed. The recipients also reported that they felt more trust toward other people and social institutions — from political parties to the police to the courts — than they did before getting a basic income.
Spain’s “B-MINCOME” experiment started offering a minimum guaranteed income to 1,000 households randomly selected from some of Barcelona’s poorest districts. Under the two-year randomized controlled trial, households could receive up to 1,675 euros ($1,968) per month. There was also a control group of 383 households. Preliminary results showed that the basic income boosted life satisfaction and mental health while making participants neither more likely nor less likely to find employment.
Iran rolled out a nationwide unconditional cash transfer program to compensate for the phase-out of subsidies on bread, water, electricity, heating, and fuel. The government gave out sizable monthly payments to each family: 29 percent of the median household income on average. Economists found that “the program did not affect labor supply in any appreciable way.” The program is still running, and it’s the only such program in the world to run nationwide.
Namibia: All residents below the age of 60 living in the Otjivero-Omitara region of Namibia received a basic income: 100 Namibian dollars ($6.75) per person per month, no strings attached, regardless of their socioeconomic status. As a result, child malnutrition dropped and school enrollment rates went up, while poverty-related crime (like theft) fell.
India: Between 2011 and 2012, a pilot project in the state of Madhya Pradesh gave a basic income to some 6,000 Indians. Every man, woman, and child in eight villages received a monthly payment: 200 rupees ($2.80) for adults and 100 rupees for each child. The results: Receiving a basic income led to improved sanitation, nutrition, and school attendance.
Japanese billionaire Yusaku Maezawa announced that he would give away 1 billion Japanese yen — about $9 million — to 1,000 random Twitter followers. Recipients of the cash benefit are now 3.9 times more interested in launching a new business. Recipients saw a decrease in divorce rates, from 1.5 percent to 0.6 percent. And more than 70 percent of recipients said they experienced a significant increase in happiness.
SUMMARY
Poverty is the lack of money, and the cure for poverty is to supply money to the impoverished.
We use the term “poverty” to describe merely being short of money. It does not need to be the abject, begging-in-the-street form of poverty, to have a negative effect on a family.
Just being unable to afford college or unable to live in a good home, are serious monetary and psychological negatives, not only for one family, but for that family’s economic surroundings.
Poverty does not indicate a moral lack. It is the result of bad fortune, whether at birth or at any time thereafter. Punishment does not cure poverty, because poverty itself is punishment.
Blaming the needy for their situation provides no benefit, moral or monetary, either for the impoverished or for the rest of humanity.
Withholding money from the impoverished is like withholding medicine from the sick.
The U.S. federal government, being Monetarily Sovereign, has the unlimited ability to create dollars. It is infinitely rich. The dollars it would give in the form of a basic income are not tax dollars. No one ever will pay for those dollars. They are created ad hoc, from thin air.
People receiving money are not less likely to work; the reverse is true. And they are more likely to be more productive members of society and less likely to commit crimes.
Giving “no strings” money to people has time and again proved to benefit the people themselves and the rest of the private sector. Everyone benefits.
See Step #3, Social Security for All (below).
There are no downsides.
Rodger Malcolm Mitchell
Monetary Sovereignty Twitter: @rodgermitchell Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..
THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.
The most important problems in economics involve:
- Monetary Sovereignty describes money creation and destruction.
- Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”
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 Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps:
Ten Steps To Prosperity:
- Eliminate FICA
- Federally funded Medicare — parts A, B & D, plus long-term care — for everyone
- Social Security for all
- Free education (including post-grad) for everyone
- Salary for attending school
- Eliminate federal taxes on business
- Increase the standard income tax deduction, annually.
- Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.
- Federal ownership of all banks
- Increase federal spending on the myriad initiatives that benefit America’s 99.9%
The Ten Steps will grow the economy and narrow the income/wealth/power Gap between the rich and the rest.
MONETARY SOVEREIGNTY
