Saturday, September 27, 2014

Who’s afraid of a big bad guaranteed basic income?

Note: Reading about the structure and execution of a GBI here would go a significant way to enhancing this particular blog post.

The political trepidation behind the very attempt to legislate a guaranteed basic income (GBI) should be quite surprising, but sadly is not. A GBI should be one of the major goals of the progressive movement, but there has been no effort to achieve it, largely based on the notion that a GBI is thought of as “politically unfeasible”. However, what is interesting from a logical and rational perspective is that there is no direct fundamental reason why a vast majority of United State citizens would object to a GBI regardless of their political, religious or other moral leanings.

For example suppose:

You are a Democrat –

A GBI is generally the Holy Grail with respects to eliminating poverty and hunger. With a GBI poor individuals will be able to create a stable savings account and advance their economic position without the significant threat of falling into the poverty trap. In addition all individuals will be able to afford to attend college, if so desired, creating a more educated and creative society. Individuals that have already attended college would have a greater ability to pay off student loan debt in a timely fashion removing the potential of being financially crippled by consistent payments during hard times. Finally no longer would an individual be handicapped and imprisoned by the poor decisions of their parents for regrettably the economic climate of the United States no longer only demands hard work and reasonable intelligence, but social and political connections.

You are a Republican –

A GBI is an effective means to reduce the level of bureaucracy in the Federal government resulting in the simple and transparent consolidation of all government “safety net” programs which include, but are not limited to: unemployment insurance, general welfare, supplemental nutrition assistance program (SNAP a.k.a. food stamps), school meal programs, low-income housing assistance, home energy bill assistance, refundable portions of the Earned Income Tax Credit and Child Tax Credit, supplemental security income, etc.

There is reason to suspect that the supplementary income provided by a GBI will also increase the probability of marriage and strength family bonds in general. One of major reasons why marriage rates have decreased over the last few decades, especially the last decade, is that most younger individuals are holding off marriage because they do not have the necessary financial resources. Some individuals could argue that small-scale studies disprove this benefit, but that argument misinterprets the results of those studies. Based on logic and the existing marriage climate a GBI should increase marriage probability.

Finally a GBI would significantly enhance market efficiency by increasing the available spending and investment capital in the environment. Not only would individuals have more available money to drive the consumption elements of the economy creating more indirect business opportunities and jobs, individuals would have additional capital that could be utilized to establish their own businesses. Basically instead of relying on venture capitalists or harder to acquire bank loans, which creates market inefficiencies by removing money from the general consumer environment, the money acquired from these businesses stays with the company founders and in the general consumer economy. Keeping more money in this part of the economy will accelerate economic growth. However, if bank loans are needed a GBI would increase credit flow from lending institutions due to increased confidence in repayment.

You are a Libertarian –

A GBI significantly enhances personal freedom by reducing the severity of economic obstacles. Instead of being bound to a job one hates and has little skill at solely because one needs the paycheck to eat, an individual can use the GBI to make decisions not bound by the need for a paycheck. The GBI will accomplish a noted goal, reducing the size of the Federal government. Finally a GBI will further the development of a genuine meritocracy, that winners and losers are determined by talent, hard work, drive, intelligence, etc., instead of a somewhat fixed system where an individual can be consistently placed at a significant disadvantage by elements outside of his/her control.

Regardless of one’s political affiliation a GBI would create a dramatic reduction in lost human potential. For example instead of having an individual who is interested and gifted in engineering, psychology, teaching, law enforcement, etc., bound to a low level undesired service job simply to put food on the table or to help his/her family, this individual will now be able to pursue jobs with their valued skill sets and interests. This rejuvenation of human potential will increase economic efficiency and growth as well as increase physical and mental health.

You are an Environmentalist –

An environmentalist may balk at the above mention of economic growth through additional consumption. However, it is important for environmentalists to recall that a vast majority of “environmentally friendly” energy and transport options are significantly more expensive than their less friendly alternatives; with the additional funds from a GBI individuals will be able to more easily support positive environmental changes increasing the probability for continued economic growth while at the same time reducing the damages born from global warming and other pollution factors.

You are a “Insert Religion Here” –

One of the major tenets of every major religion is to help the poor; supporting and creating a GBI is one of the best strategies for helping the poor. In addition a GBI would free up significant charitable donations to various religious organizations from domestic commitments and allow them to be redistributed to global charitable projects, if so desired. Overall anyone who truly believes in the message of their particular religious faith should support a GBI.

You are in the Upper 15% Income Bracket –

Intuitively one might think that rich individuals, make no mistake those in the top 15% income bracket are rich, would be opposed to a GBI because of the small changes it would make to the tax code resulting in a very slightly reduced direct return. However, a GBI would also significantly increase the amount of disposable income to the general public, which would significantly increase the moneymaking opportunities for rich individuals through investment. It stands to reason that intelligent rich individuals would support a GBI because they could identify the worthwhile new business opportunities in which to invest, either directly or indirectly through stocks, thus increasing their overall wealth as well as improving society in general. Therefore, rich individuals should support a GBI as a means to increase their personal wealth, increase the overall prosperity of the country (enhancing international negotiating power) and reduce market uncertainty and inefficiency increasing overall productivity.

With a vast majority of the public falling into one of the above demographics that would logically support a GBI it is rather peculiar that no reasonable effort has been made by the Federal government to establish one. As stated at the beginning of this thought exercise it appears that preconceived notions about a GBI not being “political feasible” has derailed its viability before even identifying whether or not these preconceived notions are accurate. The interesting thing about this philosophy is how can a piece of legislation be defined as “dead on arrival” if no one actually brings the issue up for discussion? Allowing these assumptions to control the actual perception of various ideas prevents the United States from identifying and establishing quality legislation like a GBI. Overall there is little reason to object to a GBI as long as it is operated transparently and is cost effective for it benefits everyone in society even if some individuals may not immediately realize it.

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