Economic Bonus (EB) and the comparative morals of two nations Saturday, Mar 2 2019 

The Ten Steps to Prosperity, which is at the end of most posts on this site, includes:

Step 3: Monthly bonus for all Image result for generous

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:

  1. It would cost the federal government and taxpayers too much.
  2. It would cause inflation.
  3. It would encourage sloth and discourage people from working

Readers of this site understand that as a Monetarily Sovereign nation, the U.S. government never can run short of dollars, and so does not need or use tax dollars to fund its spending.

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
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereigntyFacebook: Rodger Malcolm Mitchell

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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:

1. Eliminate FICA

2. Federally funded medicare — parts a, b & d, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)

4. Free education (including post-grad) for everyone

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

8. Tax the very rich (the “.1%) more, with higher progressive tax rates on all forms of income.

9. Federal ownership of all banks

10. 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 you.

MONETARY SOVEREIGNTY

Is the UBI (aka EB) even possible in today’s world? Monday, Apr 24 2017 

quTwitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

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It takes only two things to keep people in chains: The ignorance of the oppressed and the treachery of their leaders..
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Today, any effort to grow the economy is confronted by the high walls of conflicting claims and biases:

  1. The Big Lie, which falsely avers that federal taxes are necessary to fund federal spending (sadly, believed by the vast majority).
  2. The Libertarians, who claim the federal government should be “smaller” (though no one knows why, or what “smaller” functionally means).
  3. The liberals who claim the federal government should spend more on social programs and tax the rich more to pay for the spending (though federal taxes do not fund federal spending).
  4. The neoliberals, who subscribe to privatization and austerity (though both privatization and austerity always widen the gap between the rich and the rest).
  5. The university and “think tank” economists, who are paid to claim federal deficits and debt are “unsustainable” and lead to slower economic growth (though this counters all evidence).
  6. The conservatives, who tell you that social benefits breed sloth (a false belief that relies on Gap Psychology).
  7. And of course, the socialists, communists, fascists, capitalists and innumerable other “ists,” whose membership often is more the result of blind desire than logical thoughtfulness.

This all comes down to the question: “What is the purpose of government?”

We claim:

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.

But the fundamental purpose of government is to improve the lives of the governed.

Improving the lives of the governed also is the goal of the Ten Steps to Prosperity (below). The specific subject of this post is discussed at: “Ten Steps to Prosperity, Monthly Bonuses for All” and earlier at “The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB (Economic Bonus)

Here are a few excerpts from an article in the April 24, issue of Time Magazine:

Universal Basic Income: A Utopian Idea Whose Time May Finally Have Arrived
Matt Vellar

Recently economists and policymakers began seriously re-examining the 500-year-old concept of a universal basic income (UBI).

We refer to Universal Basic Income (UBI) as an Economic Bonus (EB), only because the term “basic income” seems inappropriate when dollars go to millionaires and billionaires. Also, the amount paid would not serve as a “basic income” as it probably would fall below most people’s idea of basic.

Instead, it would be a bonus.

The government would pay every adult citizen a salary, regardless of wealth, employment income or if they worked at all.

That is primary — one, simple flat benefit to each person, regardless of need, income, or wealth. It is progressive in that the same amount means much more to the rich than to the poor.

But, lest you believe EB is a liberal notion . . .

The idea can be found in Utopia, Thomas More’s 1516 book. A version had proponents in the likes of Thomas Paine, John Stuart Mill and Bertrand Russell, Martin Luther King Jr. ,and conservative economists, Milton Friedman and Friedrich Hayek.

Starting in the late 1960s, the Nixon Administration studied the idea and tried unsuccessfully to get a basic-income benefit through Congress.

Today, thinkers on the left see the UBI as a way to combat poverty and inequality as well as a potential palliative to the disruptions to workers caused by technology.

To the right, the idea is an attractively simple alternative to bloated social-welfare regimes.

EB, as presented in Step #3 of the Ten Steps to Prosperity, is an alternative to Social Security, but not to all social programs. Monetary Sovereignty views it as coming after the elimination of FICA and the establishment of a federally funded Medicare for All.

Critics come from all sides too: they say the UBI is just a decoy to starve government assistance that boosts universal child care or free college tuition.

EB would be a “decoy” only if one believes the federal government can exhaust its supply of dollars, and that federal taxes fund federal spending.

The federal government, unlike state and local governments, is Monetarily Sovereign. It has the unlimited ability to create dollars, which it does, ad hoc, by spending. The federal government needs no income for spending.

Or it’s one more misguided program bound to result in eliminating work incentives, rendering large numbers of people dependent on the government.

This is the largely discredited notion, promulgated by the rich, that poor people are lazy, and if given any support at all, they will refuse to work. In the past, that propaganda has been used to fight Social Security, Medicare, Medicaid, aids to education, poverty aids — virtually every social program.

The irony:  The poor, on average, toil much harder than do the rich. Think of the maids who clean Bill Gates’s offices.  Who works harder, the poor for whom life is a daily struggle, or the rich for whom life is served on a silver platter?

Most UBI skeptics, and some proponents, sooner or later come to the conclusion that the costs would be absurdly prohibitive in any case. One critic puts the figure in the U.S. at $3 trillion annually.

We aren’t sure who that “one critic” is, or how he came up with his figure, or whether the author means $3 trillion is “absurdly prohibitive” politically or financially.

Politically, any figure is prohibitive in the view of anti-deficit, pro-small-government, people. Financially, any figure is affordable for a Monetarily Sovereign government, with the only limit being an inflation that cannot be controlled via interest rate controls.

With 325 million people in America, that $3 trillion figure comes to about $9,000 per person, annually, or $36,000 for a family of four — a bonus of about $9 thousand per person, annually, or $36 thousand for a family of four — perhaps overly large for a bonus.

U.S. GDP is about $20 trillion. Annual spending for total Social Security is about $1 trillion a year.

About 73% of federal spending is for social benefits. That is why Federal spending cuts invariably punish the lower and middle income recipients, not the rich.

In 2017, about 40 million adult retired Americans will receive approximately $670 billion in Social Security benefits, an individual average of about $17 thousand annually. That should continue.

That should continue.

Step #3 of The Ten Steps to Prosperity, suggests paying adults and children different amounts. If our estimated 245 million adults each received $9,000 annually, and the 75 million children each received $2,000, the total expenditure would be about $2.2 trillion, totaling about $22,000 annually for a family of four. about $22 thousand annually for a family of four. 

This would add about $1.2 trillion to overall SS spending, adding 6% of GDP.

Depending on the Multiplier Effect, changes in government spending create much larger changes in Gross Domestic Product. This is one reason why much larger increase in Gross Domestic Product.

This is one reason why federal deficits are stimulative and federal surpluses are recessive. 

Whatever the spending figures may be, they are affordable for a Monetarily Sovereign nation. The the sole question is inflation, which is why we recommend that the Ten Steps be implemented sequentially.

The inflationary effects of each step can be evaluated before the next step is taken.

Early this year, Finland became the first European country to pay unemployed citizens an unconditional monthly sum. The two-year national pilot program, gives 2,000 unemployed Finns ages 25 to 58 a guaranteed €560 (around $590), money that would keep coming even if they find work.

The country’s social-security agency says the test is intended to cut red tape, alleviate poverty and, especially, reduce unemployment.

Its existing system can disincentivize taking work because even low earnings prompt a cut in benefits.

EB does not advocate benefits substantial enough to discourage employment. Benefits should be considered a bonus rather than as a substitute for earnings and savings.

Similar experiments are moving forward in Canada, the Netherlands and Italy. The Indian government appears to be mulling a small UBI as a strategy to cut the country’s most extreme poverty.

Y Combinator, a startup incubator, is trying it with 100 families in Oakland, Calif., this year, paying each between $1,000 and $2,000 a month.

Big difference: Y Combinator is monetarily non-sovereign, so is much less able to afford EB than is the federal government.

The Monetarily Sovereign federal government should conduct the test, though with the current political makeup, that would be difficult to effect. The anti-big-government, anti-spending, anti-deficit beliefs result in anti-middle and anti-poor legislation.

Tech’s big thinkers, like Bill Gates and Elon Musk, have concluded a UBI is likely inevitable. They see a great wave of job-destroying robots and artificial intelligence on the horizon.

Today, despising the poor as indolent, criminal and aimless has become de rigueur in America’s current politics. This attitude provides the excuse to press the poor down. Read: Gap Psychology and the Big Lie.

But, the poor not only are today’s and tomorrow’s valuable consumers, but they can be tomorrow’s “makers.” Brainpower is not limited to the rich, and if current events are any measure, brainpower often is absent in the coddled rich.

Thus, by Ebeneezer Scrooge standards, government-provided benefits are revulsive, but if government doesn’t provide social benefits, of what value is it?

As the above graph indicates, social benefits plus military and interest account for 94% of federal spending. Social spending and defense, for the welfare of the people, is the primary purpose of the federal government.

Rodger Malcolm Mitchell
Monetary Sovereignty

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The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.

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:
1. ELIMINATE FICA (Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.
2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (H.R. 676, Medicare for All )
This article addresses the questions:
*Does the economy benefit when the rich can afford better health care than can the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE A MONTHLY ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA (similar to Social Security for All) (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB (Economic Bonus)) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:

Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012

Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONE Five reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE FEDERAL TAXES ON BUSINESS
Businesses are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the federal government (the later having no use for those dollars). Any tax on businesses reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all business taxes reduce your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and business taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.

The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.

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