Unconditional Basic Income – an Economic Model for a New Renaissance

Unconditional Basic Income - a New Economy - main

By Elizabeth Edgett

Guest Writer for Wake Up World

How can we solve poverty and boost the economy without causing massive environmental damage?

Here’s how. It’s called a Unconditional Basic Income (UBI).

The fundamental challenge today is that we need redefine the value of work. We need to stop relying on corporations to create jobs. That’s not what they do. They exist solely to create profit. They do this by lowering wages and/or decreasing the number of workers (jobs) required to get that profit. Yet both left and right leaning governments continue to try to induce corporates (through tax breaks and other programs) into creating jobs and/or raising wages.

But corporations don’t create jobs or raise wages. This is a misguided ideology. Instead, corporations take this ‘corporate welfare’ and hoard the profits in offshore tax havens, getting richer while the country (and others like it) goes deeper and deeper into debt. This ideology has never worked, and it never will.

So let’s get real…

It is a mathematical fact that this ideology does not provide enough jobs (or wages) for the population … period. Unemployment is built into our current model.

It is also a fact that consumers  create jobs, not corporations, because no jobs are created if no one buys products. Consumer demand = employment.

It’s time for the “Third Way”…

The Unconditional Basic Income

The U.S. Basic Income Network defines the UBI as “… an unconditional, government-insured guarantee that all citizens will have enough income to meet their basic needs.” [1] While it may sound radical to some people, the idea of a UBI is not new. In fact, English lawyer, social philosopher, author and statesman Thomas More proposed it in his work Utopia in 1516. [2]

This one, simple economic change could solve inequality, homelessness, poverty, unemployment, welfare, pensions and the minimum wage issue all at once, reverse the effects of recession almost overnight and take huge amounts of pressure off the environment and ourselves. It’s this ‘Third Way’ that can break the Left/Right ideological impasse. (Relying on banks and corporations to create jobs is an economic ideology that has proven itself futile.) It supports innovation by allowing corporations (including small businesses) to focus on their trade and frees them from having to provide social services and jobs. It also frees people from living under the thumb of state-run social programs, such as welfare programs and oppressive work situations, reducing bureaucracy in the process.

Most importantly, it recognizes the value of the myriad unpaid work that is done every day by parents, grandparents, volunteers, artists, musicians, writers, students, friends etc.

It would immediately take stress off the environment because people would not be forced to drive en masse to meaningless jobs and make useless widgets for a living. They could afford to buy organic food, and support organic agriculture. They could make ecological lifestyle decisions because they would not be forced to buy the cheapest of the cheap. The planet and the people on it would heave a massive sigh of relief.

As an Unconditional Basic Income (UBI) system, everyone gets the same amount, roughly the equivalent of a US $10 per hour job. Everyone gets it, rich or poor, working or not, and there’s no means testing, so NO new bureaucracies.

But this is not socialism! People can choose to work and can make as much money as they want to above the UBI, so capitalism remains intact.

The simplicity of the idea is its beauty. The UBI has been supported by both left and right leaning politicians as a way to eliminate poverty and avoid violent revolution. [3] [4] [5] Both Milton Friedman and Martin Luther King supported the idea of a Basic Income.

Switzerland will soon hold a referendum on this. If it passes, it could herald a new day for humanity. [6]

Unconditional Basic Income - Improvement Enjoyment Community

The Economy of the Unconditional Basic Income

The UBI can be funded by diverting most present social service funds into this more efficient model, and then shutting down large numbers of redundant government departments (retaining education and medical etc). Theoretically, the UBI is so simple it could be run on a single computer that transfers the UBI into everyone’s bank account automatically every month.

Another source of funding could be a Financial Transaction Tax – a tiny percentage taken off every stock market transaction. This would also address the out-of-control microsecond computer trading issue on the stock markets. As of 2012, there was an estimated $21 trillion missing from the global economy because it is hoarded in off-shore tax havens for multinational corporations and the richest 10%. I think this is the place to look for missing tax dollars. If we tax these corporations properly, (i.e., tax stock market transactions and stop giving them subsidies in the mistaken hope that they will create jobs) then we will start to force them to bring that offshore tax haven money back into the general economy.

Either way, businesses would not have to pay for the UBI. A UBI is different than a minimum wage because employers do not pay for a UBI. It is funded through taxes. Employers in embattled low wage industries could therefore  continue to sustain their businesses and pay low wages, because people would no longer need to be paid high wages by industry. They would be working to add to their Basic Income and improve  on their basic quality of life — not just survive.

Because there is no means testing for a common UBI, no extra bureaucracy would be needed. In fact, the UBI has been shown to “promote efficiency and a shrinking of the federal bureaucracy”. [7]

There would be no effect on inflation, as long as the UBI is funded through taxes and not through ‘printing’ money. (Inflation is caused by money creation in excess of demand.) Employers also won’t need to inflate prices because they won’t have to increase wages. In fact, a UBI would be better for business as there would be more people with disposable income buying products. Business would increase overnight — instant consumer demand and instant stimulation.

Additionally, as shown in pilot projects, a UBI will cause an increase (in some cases doubling) of small businesses as people use the UBI as startup capital. This increases market supply and competition thus further reducing the possibility of inflation. The UBI encourages market supply to reflect consumer demand, thereby avoiding inflation while supporting the economy. It’s a win-win.

The Economy of the Unconditional Basic Income - Inevitable

A Renaissance of Human Creativity

Wherever a UBI has been trialled, people worked more, not less, and started small businesses. The amount provided was adequate enough that they didn’t need to go into debt to the banks to ask for a startup loan. For instance, in Dauphin, Canada’s “Mincome” experiment, and in Omitara, Namibia, crime decreased, health care costs went down, and the overall economy improved. Two basic income pilot projects have been underway in India since January 2011 resulting in better food, better healthcare, better children’s school performance, a tripling of personal savings and a doubling of new business startups, all leaving the overall economy much healthier than before the UBI.

With issues of social and economic wellbeing and inequity addressed, the potential of a UBI is a renaissance of human creativity never before seen in the history of mankind. We have many unpaid workers in our communities. Volunteers, artists, musicians, homemakers, grandmothers, etc. It’s now time that they were valued, and rewarded monetarily, by our society.

British economist Guy Standing explains…

“Globalization has brought not just greater inequalities but also chronic economic uncertainty to the world’s population. Governments have failed to effectively develop or adapt social protection systems to reduce economic insecurity.” [8]

“I believe we must see basic income as a question of emancipation, a question of building freedom, building control over life and of social justice, not just as a measure for dealing with poverty. We must understand that the debate on basic income must be seen in the context of a global transformation taking place in which inequalities are becoming unsustainable and… a tiny plutocracy is gaining income from the system while the growing precariat is facing falling wages, unstable labour and a loss of rights. They are being turned from citizens into “denizens”, losing rights. This is unique.” [9]

It’s time for real change — an Unconditional Basic Income! But politicians won’t do anything this positive without a grass-roots uprising from the people.

Demand a UBI! Tell your friends, share this article, and help make the UBI go viral!

The Unconditional Basic Income — a Video Introduction

To learn more:

  • http://www.vox.com/2014/9/8/6003359/basic-income-negative-income-tax-questions-explain
  • https://web.archive.org/web/20150918230000/http://www.ted.com/conversations/14456/why_basic_income_should_become.html
  • http://www.economist.com/blogs/democracyinamerica/2013/11/government-guaranteed-basic-income
  • http://www.euractiv.com/section/social-europe-jobs/interview/van-parijs-an-unconditional-basic-income-in-europe-will-help-end-the-crisis/
  • http://www.theatlantic.com/politics/archive/2014/08/why-arent-reformicons-pushing-a-guaranteed-basic-income/375600/
  • http://web.archive.org/web/20150705112120/http://www.guystanding.com/files/documents/Basic_Income_Pilots_in_India_note_for_inaugural.pdf

About the author:

elizabeth edgettAs a child, Elizabeth Edgett “would gaze out at the sky, journeying to imaginary places”. Today, she is a fantasy fiction writer, and astrologer.

Elizabeth contributed this compelling article, a departure from her usual work, because “I just want this  important idea to go viral”.

You can connect with Elizabeth and learn more about her work at twitter.com/ElizabethEdgett

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