Wednesday, September 11, 2019

Universal Basic Income (aka Freedom Dividend) Is Not Free Money



Somebody built the road in front of your house. You did not. Is that a "free" road? Does that road make you lazy? Is that road bad karma?

The road is infrastructure. For most people that is easy to grasp because it is physical, it is there. You see it.

Education and health are also infrastructures. But they are less concrete. You can't build a knowledge economy unless you make massive investments in education and health.

UBI, Universal Basic Income, is similarly infrastructure. It is just like the road. Before the UBI, poverty starts at zero. When you are poor, you are desperate. With UBI, you are still poor. But now poverty starts at 12,000 dollars as per the Andrew Yang proposal in circulation right now. You are no longer desperate. For a couple, that is 24K a year. That is not luxury income, but at least you can hope to get by.

But that's a lot of money in aggregate. It comes to trillions of dollars.

That is the thing.

(1) The income and wealth gap between the richest and the poorest is too wide, in this country as well as globally. That wide gap is not healthy for democracy. It is not healthy for the market economy. In fact, left to its own devices, that gap will keep getting wider and wider until there is a collapse of civilization. This is existential. And so a wealth tax makes sense. Elizabeth Warren is taking the lead on this one. She proposes that you pay two cents for every dollar you have above 50 million.

(2) Andrew Yang talks about a VAT, Value Added Tax, hardly an original idea. Most countries already have it. Instead of taxing income or wealth, you tax every business transaction, not just between companies and consumers, but also between companies. B2B as well as B2C.

(3) All the money that the government is already giving out to people comes to something like almost two trillion. But now, instead of making people fill out forms and harass them and humiliate them, you just give it to them. Cuts out a lot of red tape. Slims down the bureaucracy. Republicans should love this.

(4) My personal favorite that I don't see anyone on the campaign trail talk about is that all data generated by one person is that person's own personal oil well. Data is the oil. Companies may collect it, but they may not own it. Individuals own their data. This data is lucrative enough that it can fund the UBI for all humanity. But I am not at all opposed to the first three.

Humanity is about to enter an Age Of Abundance, mostly technology-driven.

Just like the industrial revolution brought to an end numerous jobs in agriculture, the fourth industrial revolution is about to wipe out sector after sector of jobs. Handled well, we all can be better off. We could see interesting developments like shorter work weeks, longer vacations, people spending more time with family and friends.

I see numerous new jobs being created. People will have their UBI, that might start at 1K a month, but will gradually go up. On top of that, they will have jobs that pay them another 50K or 100K or 200K. These will be jobs that we have not even begun to imagine yet.

Just like a taxi driver does not have to build a car, and so can just focus on driving, think of robots and Artificial Intelligence as the new car. You can always do a value add on top of that.

People having more time for worship is not a bad idea. People having more time to spend with their parents, with their children is not a bad idea. There are tremendous unmet needs in education and health. New service sector jobs will get created. Art will flourish like never before. There will be a music and movies boom. People will travel more and there will be a greater cross-cultural understanding.

UBI is just basic infrastructure for the fourth industrial revolution.

Yang Warren 2020

Nobody is saying American Basic Income (ABI) though. UBI means universal. It can only work if it covers all humanity. It can be rolled out in stages.







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