This article was originally published by The Hindu,
26 January 2014 REPRINTED WITH PERMISSION
The real estate bubble will not burst anytime soon, but capital is being hit as nothing new is created.
Horizontal expansion of Mysore is consuming large tracts of agricultural land. Photo: M. A. Sriram
In a feudal society like India, land ownership has always been a source of wealth and power.
While the traditional feudal class has largely faded out, post-Independence, especially in the last decade, real estate prices have soared to vertiginous heights, bringing realty back to the centre stage of the Indian economy.
The fall in property prices in 11 out of 15 major Indian cities in 2013 as compared to 2012, has created a feeling that the overheated real estate sector is showing signs of correction. Some have gone on to speculate that this might be the sign of an impending real estate bubble- burst. But bankers see no reason to be worried as the Indian realty sector differs from that of developed world in many ways.
First, the mortgaged property’s market value is more than its book value as up to 50 per cent of the value of a property is paid by the buyer in “black”, and banks lend only by book value. So the sector can absorb considerable downward correction. Secondly, a major share of the investment in real estate is in undeveloped land, which is not financed by banks. Finally, money is parked in this sector usually to evade taxes, and this flow of unaccounted funds is not likely to slow down anytime soon.
It is a tragedy that the same factors which make this sector immune to a meltdown, are bleeding our economy. Black money, whether earned legitimately or siphoned off from government-spending, is getting sucked into a vortex of shady land deals, which provide not only anonymity but assured returns. It creates artificial scarcity, jacking up land prices for end-users. Moreover, it creates an incentive for the builder-politician nexus to delay clearances to residential or commercial building projects of individuals or communities without political patronage, leading to a mushrooming of irregular colonies, with non-existent infrastructure such as water lines and sewerage.
It has created a new feudal class of landowners which extracts a rentier’s income from the economy without adding any value. The overdeveloped real estate sector is worthless for India’s balance of trade, as construction projects, even if world-class, cannot be exported. Even if the real estate bubble does not burst, capital is still being destroyed and nothing new is created.
This is the neo-liberal blind spot which fails to see the Physiocrat’s wisdom of recognising that productive work is the only source of national wealth.
However, the productive work, the value added to the economy, is all that most modern economies tax. Real estate, on the other hand, gets its value from location, mostly a result of public utilities like transportation, water, electricity and drainage tending it, and jobs, schools and hospitals in its vicinity. All of this is financed by the community, either as taxes if built by the state, or as user-fees if built privately. So modern taxation is a clear case of taxing private wealth while doling out public wealth to a select few — those who are first-comers, inheritors, cronies or plain lucky.
The logical solution to this aberration would be to tax land at its value. The so-called land value tax was an idea considered by Adam Smith in The Wealth of Nations, but most famously and fervently advocated by Henry George. Ever since the 1868 Meiji restoration in Japan, it has been used in many parts of the world, as in the U.S., Australia and Hong Kong. It has been dubbed ‘the least bad tax’ by Milton Friedman as it does not lead to allocative inefficiency. From Paul Samuelson to Joseph Stiglitz, it has many supporters in the economists’ fraternity. Michael Hudson is a vocal proponent and he has suggested it for China as a way to avoid the fate of debt-ridden Western economies.
Land value tax, when applied to non-agricutural land, might turn out to be the game-changer. It will end speculative land hoarding and bring down prices for the end-user. The money saved thus will be spent on other commodities, increasing consumption and give the economy a boost. It will free a lot of undeveloped land close to cities, which can be developed by state or private players. These developed colonies will be affordable to lower income families which have been spending considerable sums for unapproved land till now.
This will provide the government revenues to develop urban infrastructure. Mining companies, which find it more profitable to squat on natural reserves sensing a rise in mineral prices, will not do that once they have to pay annual tax on the value of the mines. They will have to mine it to earn revenue to pay tax, or choose to return it to the government. Unused prime urban land, of closed mills for example, will be promptly returned to the government for the same reason.
This tax may not replace all other taxes, as Paul Krugman concedes, but may be a one-stop solution to all that ails realty sectors.
ABOUT THE AUTHOR
Dr. Navin Singh is an orthopaedic surgeon who is appalled by the inequality in the Indian economy and believes that inequality in urban land distribution has created a new breed of feudal class in India, usually of politicians and their cronies. He can be contacted at drnavinsingh@gmail.com.
Why and How Should We Build a Basic Income for Every Citizen?
What are our goals as a species? This, to me, is the most important question we can ask ourselves as human beings. Another way to say it: What is the meaning of our existence as a species? We never seem to directly ask ourselves these two questions in a collective way, which seems very odd to me. Because if we were discussing these questions openly, collectively and consistently, I believe we would live in a very different society.
What kind of society do we wish to live in? This question is a direct offshoot of the previous. Specifically:
What do we want our society to feel like to citizens living inside of it?
How do we want it to function?
How do we want society to treat its citizens?
What societal designs and features would produce the best outcomes for the most people possible?
How do we bring these designs to reality?
I bring up these questions and write them down here, on this particular date, because I have been asked to do an AMA on the /r/futurology section of Reddit.com, on the topic of Basic Income. My thoughts around these questions will therefore focus primarily on our society's economy today, and on the Basic Income concept. This article will also be discussing the concentration of wealth and income inequality that is occurring today.
Section 1 - A thought experiment using a simplified society
In order to get a discussion started, and to simplify things for a moment, I would ask you to entertain the following thought experiment. Let's think for a moment about a highly simplified society that has the following features:
The society consists solely of one million working-age adults.
To be specific, this society has no children, no disabled people and no elderly people.
The adults all live alone in a single-person residence. There are no marriages, no couples, no room mates.
There are no government handouts or welfare of any kind, nor any charities.
The one million adults are all ready and willing to work. Their educations are complete, for example.
Everything else about this society, in an economic sense, functions as we would expect in a developed, capitalistic economy today. The people in this society all need to pay individually for housing, transportation, health care, food, clothing, furniture, appliances, utilities, smart phones, Internet, entertainment, hobbies, insurance, taxes, etc. as usual out of the wages they take home from their jobs.
If someone owns their own private business, we are going to call the position that the person holds in his/her private business a job. Corporations provide jobs as well.
The people in this society do not have any extraordinary savings. There are no heirs to family fortunes who can sit about idly living off of their inheritances.
That's the setup. As I said, this is a highly simplified society.
Here's the first question: How many jobs does this society need?
The great thing about this highly simplified society is that the answer is obvious: This society needs one million jobs for the one million citizens. Every single working adult needs a job. Otherwise they are unable to live their lives. Without a job , there is no way to afford the normal expenses associated with living a life.
In this society, what happens to someone who does not have a job? If he or she happens to have any savings in the bank, then living off of savings is the only alternative until the savings are exhausted. And then the person becomes homeless. Any jobless person will soon be living on the street, eating out of dumpsters, desperate for a job. If there is no food in the dumpsters, then any unemployed person dies of starvation. If the person contracts a deadly disease or gets seriously injured, the person dies from lack of access to health care. That is the nature of this society.
A corollary to the previous question: What happens if only 900,000 jobs are available in this society? Then there will be 100,000 people in this society who are either homeless, or who are burning through their savings on a path to homelessness.
We can ask other questions about this society as well. For example: How much money does a person in this society absolutely need to make? This question is also easy to answer. We can add up the costs for the lowest level of housing, transportation, health care, food, clothing, utilities, etc. that are viable in this society. We can cut out all “luxuries” like entertainment, air conditioning, etc., and there is some minimum amount of money that an adult needs to make in order to live on the very bottom edge of this society. So if the lowest cost apartment in this society is $400 per month, and the cheapest car (plus its normal insurance, fuel, maintenance and repair) is $300 per month, and the cheapest health care plan is $300 per month plus another $200 per month once you add in all the deductibles, co-pays, etc., and the cost of the cheapest food is $200 per month, and so on, we can add it all up and we can come up with the absolute lowest cost of existence in this society.
Therefore, what does the minimum wage need to be at the very minimum? Again, the answer is obvious: The minimum wage needs to, at the very least, match the absolute lowest cost of existence in this society. And let's note that if we set the minimum wage at the absolute lowest setting possible, there are people in this society who are going to routinely become homeless on a regular basis when something goes wrong. Because when people are living on the bleeding edge, at the absolute lowest cost of existence in this society, then occasionally things are going to go wrong and the person is going to run out of money. The things that can “go wrong” are myriad:
the transmission in the car fails and needs replacing, causing a $1,500 repair bill or the need to buy a new car
the person gets a $200 speeding ticket or parking fine plus towing
there is a serious illness that takes the person out of work for a month
the business the person works for fails and the person needs two months to find another job
etc.
A person living at the absolute lowest level of existence in this society will necessarily have no savings, and therefore will become homeless instantly in any of these cases. Sure the person could stop eating and starve to death, but most people will choose homelessness over starvation. Remember that we are talking about the absolute lowest cost of existence in this society.
And here we arrive at an important question from the perspective of societal design. Do we really want to design a society where some of the adults are living on the bleeding edge of poverty like this, with the potential to become homeless at any moment? Also, do we really want or expect people in our society to live a life with zero entertainment, no access to any luxuries or fun, etc.? Probably not. What is the purpose of designing a society like that? Why not design it so that everyone in the society has a decent life at some reasonable standard of living?
Therefore, it seems like the minimum wage should really be set at some reasonable level, somewhat above the absolute lowest cost of existence in this society. The minimum wage in this society should provide even the lowest-level workers with a tolerable standard of living.
Which gets to a broader question from the societal design standpoint. Long term, what are the goals we have for the citizens in this society: Over time, do we hope to see people's lives getting economically better in this society, or do we want them staying about the same, or actually getting worse? As a simple example of where this question can lead: Over time, do we want to see average wages rising faster than inflation so people have more spending power, or do we want their wages falling so that more people are moving toward more precarious positions? Do we want the number of working hours per week falling or rising over time? Do we want the quality of food, housing, health care, etc. that people can access rising or falling? And so on.
Over time, some of the citizens in this society will grow too old to work. Those at the lower end of the pay scale will, necessarily, have little or no savings (unless the minimum wage has been set high enough to allow for such savings, and regulations or systems of some type have been put in place to force people to save for retirement). It is simple human nature, for many people, to spend all of the money they receive. So money must be available for saving, and regulations must compel an adequate level of saving.
Given this scenario: How will the society accommodate these people who need to retire? Will it allow many of them to die of starvation? Or will the society accommodate them with some level of dignity as they retire? Will the society set the minimum wage high enough and require people to save for their own retirements? Will it require younger workers to use some of their wages to support the retired people? Something else? These same questions could be asked about the portion of the population who become disabled or so ill (e.g. cancer) that they cannot work. Should the society let these people die immediately, or accommodate them in some way?
Let's assume that, in this hypothetical society, the average take-home pay is $X per person. That means that consumers in this society have $X * 1,000,000 in spending power if there is full employment, and this aggregate number is an important driver for the society's economy. What happens if there is a big economic downturn for some reason and 200,000 jobs evaporate? 200,000 people will necessarily become homeless. Now the consumers only have $X * 800,000 in total spending power, which is definitely not good for the society's economy because of the retraction. Total buying power of the population has fallen by 20%, and 200,000 people are now homeless. How does the society best deal with a situation like that? Should it watch the 200,000 people die? Should it start some sort of temporary welfare system to keep the 200,000 unemployed people alive? Should the government inject $X * 200,000 into the economy in some other way? Where should the money for the welfare system of the injection come from?
What if there is no economic downturn, but instead new technology comes along that eliminates 200,000 jobs? For example, imagine that one company develops self-driving trucks and that eliminate all of the truck driver jobs, while another company develops automated tools that eliminate many of the remaining factory jobs, and another company develops brick-laying, painting and roofing robots that eliminate quite a few construction jobs, plus another company develops a kiosk system that eliminates the jobs of many waiters and waitresses in restaurants, and so on. Now the society has a permanent loss of 200,000 jobs, with 200,000 homeless people and with more pressure on jobs from other forms of automation that are rapidly advancing. How does the society deal with this situation?
What if many of the people in the society stop worrying and caring about the design of the society? What if, at that time, 10,000 of the richest people in this society see the complacency and gain economic control of the government? These 10,000 people decide that their share of the society's wages and wealth should increase dramatically, while the wages and wealth of the other 990,000 people should stagnate or fall to make it possible. What if, in this situation, through processes such as bribery and corruption, the society's government turns its back on the large majority of people and instead begins catering to the wealthiest members? What if that process continues over several decades? Does the society become better or worse as a result of this transition? (Lest you think this scenario is impossible, this article sheds light on the process)
Thinking about these wealthiest members of the society one step further, does this society benefit at all from having citizens with massive wealth? In the same way that there is a concept of a reasonable minimum wage, should there also be a concept of a reasonable maximum wage, so that the wage spectrum flattens and is more equitable to everyone in the society? As an example, imagine these two scenarios:
Scenario 1:
The top 1%, or 10,000 people, makes an average wage of $10 million per year
The other 99%, or 990,000 people, makes an average wage of $30,000 per year
Scenario 2:
The top 1%, or 10,000 people, makes an average wage of $1 million per year
The other 99%, or 990,000 people, makes an average wage of $120,000 per year
In both scenarios, the society's total payroll is about the same per year. But in the second scenario, the 99% make four times more money, while the 1% is still very well off. Which scenario is better for the society as a whole? (If you believe that the $10 million number in the first scenario sounds ridiculous, that is actually normal now. If you believe that the 100X or more difference between the top 1% and the lower 99% sounds ridiculous this article sheds light on the growing pay gap).
That simple question - “Which scenario is better for the society as a whole?” - lies at the heart of the concept of a Basic Income. When we think about and talk about a Basic Income, we are thinking about and talking about the design of our society, and how to best provide for the citizens of the society as a whole. This question is especially important in the current economic environment, where escalating automation is eliminating many jobs and threatening many others, and where the wealthy people in society have taken control of the government and are rapidly creating a plutocracy, especially in the United States.
Section 2 - Expanding our view to a real society, the United States
The United States is quite a bit larger and much more complicated than the simplified society we used in Section 1. Let's look at some of the differences.
The population of the United States, as of today, is approximately 319 million people [ref, accessed 9/15/2014]. Of those people:
49.15% are male and 50.73% are female
14.08% or 44,915,200 are age 65 or higher, typically retired
12.43% or 39,651,700 are between the ages of 55 and 64, meaning they will be retiring within the next 10 years.
23.27% or 74,231,300 are age 17 or lower, typically have not yet entered the adult working world [ref, 2013 data]
This means that there are, potentially, approximately 182,366,025 working-age adults in the United States today. This number is derived from the total population minus those age 65 or older, minus those age 17 or younger, minus those in college.
In addition, approximately 10 million working-age adults are on disability [ref][ref]. That lowers the total number of working-age adults to approximately 172,366,025.
Approximately 100,000,000 of these working-age adults in the United States receive varying degrees of welfare benefits from many different programs [ref]. There are food assistance programs, housing assistance programs, medical assistance programs, direct cash payments, unemployment benefits, etc. [ref]. For example:
Among the 108,592,000 people who fit the Census Bureau’s description of a means-tested benefit recipient in the fourth quarter of 2011 were 82,457,000 people in households receiving Medicaid, 49,073,000 beneficiaries of food stamps, 20,223,000 on Supplemental Security Income, 23,228,000 in the Women, Infants and Children program, 13,433,000 in public or subsidized rental housing, and 5,854,000 in the Temporary Assistance for Needy Families program. Also among the 108,592,000 means-tested benefit recipients counted by the Census Bureau were people getting free or reduced-price lunch or breakfast, state-administered supplemental security income and means-tested veterans pensions. The 108,592,000 people who were recipients of means-tested government programs in the fourth quarter of 2011 does not include people who received benefits from non-means-tested government programs but not from means-tested ones. That would include, for example, people who received Social Security, Medicare, unemployment, or non-means-tested veterans compensation, but did not receive benefits from a means-tested program such as food stamps or public housing.[ref]
In short, there are more working-age people in the United States receiving some form of welfare than there are working-age people who do not.
Another interesting fact about the United States is that a surprisingly large portion of working age adults are not working, primarily because there are too few jobs to go around. This may not be obvious, because the declared unemployment rate in the United States seems low, at consistently less than 10% over a long period of time [ref]. The problem is that the official unemployment rate hides the huge number of working-age Americans who are no longer considered a part of the workforce. Currently, only 63% of working-age adults are actually working [ref].
Remember back in Section 1, with the simplified society, people we not able to exit the workforce without becoming homeless. In the United States there is more of a cushion. One member of a married couple can exit the workforce, and 20-something workers who lose a job can go back to living with their parents. This article points out that “More than a third of Americans between 18 and 31 are currently living with their parents” (or in dorms).
Meanwhile, the concentration of wealth both in the United States and the world is increasing rapidly. This video describes the situation in the U.S.:
And this one describes the world-wide situation:
If you do not like these particular videos, you can head over to Google and find plenty of corroborating evidence for the concentration of wealth like this or this, or the collection of articles and links at /r/ConcentrationOfWealth.
The point is: by any rational estimation, the concentration of wealth is out of control and getting worse. We see it in myriad different ways:
The welfare situation seen above is one way to understand it.
The very low wages of a large number of Americans – so low that workers require public assistance to make ends meet - also points in that direction. [ref]
The escalating cost and burden of a college education is another [ref][ref].
The monopoly position of cable companies that provide Internet service, the very poor service they provide and the high prices they charge is another indicator. According to CNN: “Broadband Internet speeds in the United States are only about one-fourth as fast as those in South Korea” while costing U.S. consumers almost twice as much on average.[ref].
And so on.
What do all of these trends indicate? They show that the way we have currently designed our society in the United States is heavily skewed toward the wealthy, to the point where a large majority of the U.S. population is suffering while a tiny percentage is concentrating a shocking amount of wealth at everyone else's expense.
Section 3 – How might we solve the problems caused by the concentration of wealth and income inequality in the United States?
How might we begin to solve the problems caused by the concentration of wealth and income inequality in the United States? In the current economy, as we currently think about it, one way we might begin to find a solution is by significantly increasing the minimum wage, and then scaling other wages appropriately. In addition we would simultaneously slash the wages, stock grants, cash bonuses, etc. received by the wealthy by establishing a maximum wage. In this way, prices would not have to rise at all, while the vast majority of the population would be significantly better off (see the Scenarios in Section 1 for a quick demonstration). This is not a “tax on the wealthy” or a “redistribution of wealth”, but instead a change in the fundamental design of our society and the rules that govern it. This is how we, as a society, choose to design our society to equitably treat all of the citizens who make up the society.
In other words, as a society we would reject the idea of the concentration of wealth and change the rules so that, as a result of those rules, society's income is available to everyone across the full population.
This solution is a start. However, it fails to understand and address three important factors happening in the American economy right now:
The first is the significant mismatch between the number of adults in the labor force and the number of jobs, as expressed by the unemployment rate and the labor participation rate in the United States seen in Section 2.
The second is the very large number of people who are receiving various payments from a hodge podge of government programs, including retirees, those of disabilities, those receiving unemployment benefits, those on various forms of welfare, etc.
The significant loss of jobs that has already started to occur, and is about to accelerate in the United States, due to automation, artificial intelligence, computerization, robots, etc.
The last of the three is extremely important to recognize because it is imminent and has the potential to destroy the lives of millions of people if not anticipated and handled properly. You can learn more about the problem in the article Robotic Nation. However, simply by looking at current news articles, we can see what is starting to happen. Here are just a few examples:
Driverless cars are improving rapidly, and it is easy to understand that they will begin to eliminate all the jobs held by truck drivers, taxi drivers, etc. That is a million or more jobs that will be lost.
There are currently 3.7 million full-time K-12 teachers in the United States [ref]. Yet there is a host of new tools, including MOOCs, apps, computer-aided instruction, etc. that will start eliminating teaching positions in the near future [ref][ref]. The pressure to reduce the cost of public education is relentless, and so is the advancement in the technology.
Combine those trends with similar trends in factories, the construction industry, retail, etc.
It is easy to see where we are heading – the future will need far fewer workers. Computers, automation and robots will eliminate jobs in increasingly large numbers, and also apply downward wage pressure. Which is completely backwards from what could be happening is we designed society for the benefit of all. If the wealth were not concentrating, every worker would be benefiting from the increases in productivity created by all of this new technology. Wages would be rising and the work week would be shortening. Instead, all of the benefits are flowing straight to the 1% and everyone else is suffering.
This is where the idea of the Basic Income comes in. It is a standardized way of addressing the large scale unemployment that is coming soon, as well as simplifying welfare, retirement and disability payments, as well as making the productivity increases available to everyone in society instead of the elite few.
The idea is simple: everyone in society receives a regular income simply for being alive. The ultimate goal is for the Basic Income payment, by itself, to provide a comfortable living for every member of society without working.
The obvious question with the Basic Income is, “where will the money come from?” The good news is that there are many possible sources. The article Robotic Freedom demonstrates more than a dozen techniques.
One simple and working model is easily seen in the Alaska Permanent Fund, which has been providing an annual cash payment to all of the citizens in Alaska for several decades. It is easy to imagine the same program expanding nationwide, and the amount increasing.
Another source of funds for a Basic Income is all of the money currently collected and spent on welfare, unemployment insurance, social security, medicare and medicaid, etc. These streams can blend into the Basic Income pool as the size of the Basic Income payments grows to a reasonable level such that it begins replacing welfare etc. To put it another way: eventually the Basic Income payments will be large enough to completely replace Social Security payments, welfare payments, unemployment payments, etc. The amount of simplification and streamlining from this transition will be impressive.
Here is another technique. Think about the current mismatch between the number of working-age adults in the United States and the number of jobs, as well as the low wages many workers are receiving compared to the poverty line and the cost of living, especially for families. As mentioned previously, we start addressing these problems by significantly boosting the minimum wage and scaling other wages accordingly, while also establishing a maximum wage.
Then, as a society, we start creating new jobs. Imagine the following scenario. Right now, in most states, people pump their own gas. But in Oregon and New Jersey, the states actuallyprevent this practice. Gas must be pumped by attendants. If we applied that philosophy across the country, we would suddenly create hundreds of thousands of new jobs. These jobs would all pay a living wage because of the new minimum wage rules. That same philosophy could easily be projected across many industries, until we have created enough new jobs for everyone to have one.
Would this process raise prices? Maybe not, because the maximum wage frees up a great deal of cash for the minimum wage (see also Scenario 1 and 2 in Section 1). But even in the absence of a maximum wage, the actual increase in prices could be small, as demonstrated in this article.
But as you think about it further, you realize the following. No one actually wants to fill these new gas pumping jobs. Who wants to stand outside pumping gas all day long on a bitterly cold winter day? No one. And besides, automation has eliminated the job, so no person actually needs to do it.
?Therefore, instead of creating an actual job and requiring an actual person to fill it, we create the job on paper only. Every gas station begins to employ several of these virtual employees. The pay checks for these virtual employees do not go to actual people, but instead go into the central account described in Robotic Freedom, and from there provide the Basic Income checks sent to everyone in society. Gas prices would rise a small amount to cover these new virtual positions, and the benefits would flow to everyone.
In addition to these new virtual positions, we do this: As human jobs are eliminated in the near future by automation – for example truck drivers, teachers, waitresses, factory workers, etc. - all of the jobs remain on the books as virtual jobs, creating new revenue streams for the Basic Income. Prices do not change much, if at all, under this system.
Over time we grow the Basic Income revenue streams and increase the Basic Income so that it provides a living wage for every citizen.
The key point here is simple. It is easy to get a Basic Income for everyone started, and to provide increasing amounts of money to recipients of the Basic Income. The thing we need to do is redesign society to make it happen. By doing it we welcome instead of dread the roboic takeover of the workplace. Eventually, everyone in society is on a permanent vacation made possible by their Basic Income checks.
The new design of our society provided by the Basic Income would recognize these four simple facts, as discussed in Section 1:
Everyone in the society needs a source of income in order to live their lives.
There is a minimum amount of money that is required by every person in our society to live their lives. Therefore, the amount of money received must be sufficient to provide for all of the essentials of life like housing, transportation, health care, food, clothing, etc.
In addition, in our society we want each citizen living not on the bleeding edge of poverty, but instead to experience a comfortable standard of living. And we want to live in a society where things are getting better for everyone rather than getting worse.
There is no benefit to society when a massive concentration of wealth occurs, and myriad harmful effects spawned by the concentration of wealth. Therefore we eliminate that economic possibility by establishing rules and regulations that make the concentration of wealth impossible.
In short, we redesign society to benefit everyone rather than the elite few.
Section 4 - Where do I hope that Humanity eventually arrives with the Basic Income?
Where can the idea of the Basic Income take us as a society? This question underpins the bookManna, and by reading the book you can see for yourself how far a Basic Income can go.
Ultimately, as I have previously discussed in this article and in my forthcoming book, our goal should be to apply the Basic Income concept worldwide, so that every human being on the planet receives its benefits, in a process I call Heaven on Earth.
This is a new vision for the human species. We should create Heaven on Earth for every human being - seven billion people living together peacefully, comfortably and without suffering. We try to get as close to that goal as possible, in an environmentally sustainable way.
What would Heaven on Earth mean in reality? It would mean that each and every person on the planet has access to an an abundant supply of healthy food and clean water. That each and every person has access to luxurious housing and clothing. That we are all safe. That we can all communicate with everyone. That we all have free and open access to education and entertainment. That cutting edge health care is available freely to everyone, and the cutting edge is advancing as rapidly as possible, curing more and more diseases and ailments as fast as we can. And so on. We do that in an environmentally sustainable way. Obviously there would be no wars. Obviously we would have to find safe, compassionate ways to resolve our differences. Obviously we would need for Heaven on Earth to be environmentally sustainable - otherwise we poison the planet and destroy ourselves.
What if we made Heaven on Earth our world-wide, species-wide goal?
This idea may sound ridiculous right now. Perhaps impossible. I also realize that it sounds super-idealistic in the current political climate. That's because our thinking is so backwards at the moment; our current societies so poorly designed. However, robots and automation could easily make Heaven on Earth possible in the near future (as described in Manna and Robotic Freedom). In fact, if we simply design our society to take advantage of robots, spreading their productivity benefits out to everyone rather than allowing the concentration of wealth, Heaven on Earth for everyone is easily within our grasp in the not-too-distant future. Along the way we can start to provide a Basic Income to everyone as well as incrementally shortening the work week.
Let me ask you this. Would our lives be better, would they have more meaning, if we knew we were working together as a species toward common goals like Heaven on Earth for everyone? What if we begin consciously working together toward common goals, designing our worldwide society for the benefit of all? What if we all had a feeling that everybody was working together, because we are all members of the same team? Would that make life different? Would that make life better? Would it make life more meaningful? Would that give each of us hope when looking toward the future, rather than the dread that many of us are legitimately feeling right now?
I think it would. In fact, I know it would be better. The Basic Income is one step in the direction Heaven on Earth, and we should fight to make it happen as quickly as possible.
Thank you for reading today, and for considering the possibility of a better future for everyone.
Unconditional Basic Income – an Economic Model for a New Renaissance
Elizabeth Edgett
This article was originally published by Wake Up World, 24 November 2014 REPRINTED WITH PERMISSION
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).
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]
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.
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
As 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.
What kind of society do we wish to live in? This question is a direct offshoot of the previous. Specifically:
Section 1 - A thought experiment using a simplified society
A corollary to the previous question: What happens if only 900,000 jobs are available in this society? Then there will be 100,000 people in this society who are either homeless, or who are burning through their savings on a path to homelessness.
And here we arrive at an important question from the perspective of societal design. Do we really want to design a society where some of the adults are living on the bleeding edge of poverty like this, with the potential to become homeless at any moment? Also, do we really want or expect people in our society to live a life with zero entertainment, no access to any luxuries or fun, etc.? Probably not. What is the purpose of designing a society like that? Why not design it so that everyone in the society has a decent life at some reasonable standard of living?
What if many of the people in the society stop worrying and caring about the design of the society? What if, at that time, 10,000 of the richest people in this society see the complacency and gain economic control of the government? These 10,000 people decide that their share of the society's wages and wealth should increase dramatically, while the wages and wealth of the other 990,000 people should stagnate or fall to make it possible. What if, in this situation, through processes such as bribery and corruption, the society's government turns its back on the large majority of people and instead begins catering to the wealthiest members? What if that process continues over several decades? Does the society become better or worse as a result of this transition? (Lest you think this scenario is impossible, 
Section 2 - Expanding our view to a real society, the United States
In short, there are more working-age people in the United States receiving some form of welfare than there are working-age people who do not.
Section 3 – How might we solve the problems caused by the concentration of wealth and income inequality in the United States?
It is easy to see where we are heading – the future will need far fewer workers. Computers, automation and robots will eliminate jobs in increasingly large numbers, and also apply downward wage pressure. Which is completely backwards from what could be happening is we designed society for the benefit of all. If the wealth were not concentrating, every worker would be benefiting from the increases in productivity created by all of this new technology. Wages would be rising and the work week would be shortening. Instead, all of the benefits are flowing straight to the 1% and everyone else is suffering.
?Therefore, instead of creating an actual job and requiring an actual person to fill it, we create the job on paper only. Every gas station begins to employ several of these virtual employees. The pay checks for these virtual employees do not go to actual people, but instead go into the central account described in 
Section 4 - Where do I hope that Humanity eventually arrives with the Basic Income?
Let me ask you this. Would our lives be better, would they have more meaning, if we knew we were working together as a species toward common goals like Heaven on Earth for everyone? What if we begin consciously working together toward common goals, designing our worldwide society for the benefit of all? What if we all had a feeling that everybody was working together, because we are all members of the same team? Would that make life different? Would that make life better? Would it make life more meaningful? Would that give each of us hope when looking toward the future, rather than the dread that many of us are legitimately feeling right now?
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