Objections To Universal Basic Income Debunked (Updated Re-Post)

Back in 2017, there was an article in The Week by Damon Linker titled, "The Spiritual Ruin of a Universal Basic Income".  He basically argues that it is a Very Bad Idea for the left to pursue the idea of a UBI because 1) it fails to address (and perhaps even intensifies) the psychological and spiritual consequences of joblessness, which are (in his view) distinct from and worse than the economic consequences, 2) most people couldn't handle joblessness even with a basic income, and would thus become depressed and purposeless and give themselves over to video games, porn, and/or drug addiction, and 3) the left should not concede that automation (and the resulting job losses) is in any way inevitable.  Because reasons, obviously. 

And all of these things are in fact false.  (Or to be exceedingly charitable, highly subjective at best.)

First, only a person of relative privilege could possibly see the economic consequences of joblessness as somehow entirely separate from, and less significant than, the (admittedly real) psychological and spiritual consequences of same.  The former can indeed cause or contribute to the latter in a big way, and it is very difficult to disentangle them.  Material poverty and desperation are in fact well-known to be objectively harmful to the mind, body, and spirit, and only meaningful work (as opposed to work for the sake of work) can really be said to be beneficial to same.  And when the economic consequences are resolved via a UBI, the remaining noneconomic consequences of unemployment would in fact become that much easier to tackle in practice.  Think about it. 

(Maslow's Hierarchy of Needs, hello!  Only when the lower rungs of basic physiological and security needs are satisfied (which UBI does) is it even possible to even partially achieve the higher rungs.)

Second, there is NO logical reason why a UBI and the sort of New Deal 2.0 jobs program that Linker advocates would be mutually exclusive.  The TSAP, in fact, advocates exactly that combination, with both a UBI and a scaled-up Job Corps style program for everyone who wants one (even if not quite a guarantee).  We also advocate shortening the workweek as well, which would spread the remaining work among more workers, thus more jobs.  (The vaunted 40 hour workweek is literally a relic of 1938, and even then was almost going to be set as low as 30 hours.)  Thus, the noneconomic consequences of joblessness can also be adequately dealt with as well, and in any case, one can always choose to do volunteer work (and there most likely will still be plenty of that available) to get the same ostensible psychological and spiritual benefits as paid work.  So that is NOT a valid reason for the left to abandon the idea of UBI, anymore than it would be a reason to abandon the idea of a social safety net in general.

(Actually, John Maynard Keynes, along with many other futurists, predicted that with the increases in productivity due to technology, the average workweek would eventually shrink to 15 hours by the end of the 20th century.  Of course, that didn't happen, since the oligarchs took nearly all the fruits of the productivity gains since the early 1970s, thanks to neoliberalism.)

Third, the idea that UBI will cause most people or even a particularly large chunk of the population to become lazy and/or self-destructive is NOT borne out by the facts.  Numerous experiments with UBI and related schemes have been conducted in diverse cultures and locations in the past half-century, and the overwhelming weight of the evidence to date strongly suggests that this will NOT occur.  If anything, one notable effect is an increase in entrepreneurship due to a decreased fear of failure and more time and money to invest in their goals. Students and new mothers will likely work fewer hours than before since they are no longer forced by dint of economic necessity (the effect on hours worked is likely negligible for everyone else), but is that really such a bad thing?  Of course not.

No serious proposal for UBI has advocated one large enough to "live large" on that alone.  (The most common proposals, including the TSAP's, rarely exceed $1000/month per adult and $500/month per child under 18.)  Thus, there will still be plenty of incentive to work, since unlike traditional means-tested welfare programs, there is no penalty for earning more money than some arbitrary threshold.

In any case, with or without UBI, workers will work, and shirkers will shirk regardless.  Employers may (at first) not be pleased about having to pay somewhat higher wages than before to attract and retain quality employees, but them's the breaks for solving collective action problems.  In other words, it would now have to be entirely by mutual consent, not desperation or coercion.  And ultimately, even the employers themselves will benefit in the long run as well, as Henry Ford famously noted long ago.

(If we really want to incentivize work in the event of a labor shortage, we can, in addition to UBI, expand and convert the EITC to a simpler "reverse payroll tax" that automatically tops up workers' paychecks by matching dollar for dollar up to a point.  Such carrots would work far better than sticks in the long run.)

(And to all of the truly horrible and insufferable bosses out there, well, hear that?  That's the sound of me playing the world's smallest violin for you.  So go swallow your pride (and greed, envy, gluttony, sloth, wrath, and lust, while you're at it), before it swallows you whole.  And at the same time, to all of the users, welchers, leeches, dregs, and ne'er-do-wells, there's the door.  Don't let it hit you on the way out!)

Nor is there any credible evidence that substance abuse would significantly increase either as a result of UBI, and it may even decrease.  But just to drive the point home even further, Silicon Valley entrepreneur Sam Altman argues that even if 90% of the population sat around smoking weed and playing video games instead of working, a UBI would still be better on balance than not having one, as everyone would be free to pursue their passions, and the remaining 10% would innovatively create new wealth.  Not that he thinks that 90% would actually do that, of course, and nor do we, but the point was well-made nonetheless.  One can also point to the Rat Park studies as well.  It is amazing how addiction of any kind diminishes or even disappears when rats (or people) are not treated like caged animals in the aptly-named "rat race"!

(Some cynics will inevitably bring up the infamous Universe 25 "mouse utopia" experiments, but that would really be a gross disanalogy, since a gilded cage is still a cage regardless. And in any case, at the end of the day, rats and mice are not people.)

And finally, a real pragmatist would realize that automation really is inevitable in the long run.  Contrary to what the neo-Luddites like to argue, fighting against it will NOT stop it, only delay it a bit.  The best that we genuine progressives can do is admit that fact and do whatever we can to ensure that the fruits of this automation will benefit all of humanity, and not just the oligarchs at the top.  To do so, we must take the power back from the oligarchs.  And a crucial step to that goal is a Universal Basic Income, so We the People can actually have some bargaining power, no longer dependent on our employers for survivial.  No longer would anyone have to be at the mercy of the all too often merciless.  Whether we get this one right will basically be the difference between a futuristic pragmatic utopia or protopia (as Buckminster Fuller envisioned) or a horrifying technocratic dystopia straight out of 1984, Brave New World, or [insert other dystopian novel here].  So let's choose the right side of history!

After all, as the late, great Buckminster Fuller--the Leonardo da Vinci of the 20th century, famously said all the way back in 1970:

We should do away with the absolutely specious notion that everybody has to earn a living. It is a fact today that one in ten thousand of us can make a technological breakthrough capable of supporting all the rest. The youth of today are absolutely right in recognizing this nonsense of earning a living. We keep inventing jobs because of this false idea that everybody has to be employed at some kind of drudgery because, according to Malthusian Darwinian theory he must justify his right to exist. So we have inspectors of inspectors and people making instruments for inspectors to inspect inspectors. The true business of people should be to go back to school and think about whatever it was they were thinking about before somebody came along and told them they had to earn a living.

Thus, on balance, a Universal Basic Income Guarantee for all is a good idea regardless.  A win-win-win situation for everyone but the oligarchs.  And the only real arguments against it are selfish, patronizing, paternalistic, and/or sadistic ones, which really means there are NO good arguments against it in a free and civilized society.  So what are we waiting for?

For more information and a much deeper dive into this topic, see the TSAP's "Why UBI?" page.

P.S.  I realized that the above arguments are largely utilitarian or consequentialist in nature, which still leave the reader wondering about nonconsequentialist or deontological arguments.  For the latter, Immanuel Kant's categorical imperative can also be said to apply to UBI:  "Always treat humanity as an end in itself, and never solely as a means", as well as his principle of universalizability.  Or as Robert Reich says, "The economy exists to make our lives better. We do not exist to make the economy better."  And let's not forget the Golden Rule:  "Do unto others, what you would have others do unto you", per Jesus Christ, plus the more subtle Silver Rule "Do NOT do unto others, what you would NOT have others do unto you," per Confucius, as well.  Thus, even when ignoring all utilitarian arguments, the case for UBI still exceeds any case against it.

(See also some recent articles that directly or indirectly mention the concept of UBI, here and here.)

And regardless, if we make the perfect the enemy of the good, we ultimately end up with neither. 

(Mic drop)

UPDATE:  And in case anyone brings up the "original intent" of the Founding Fathers of the USA, keep in mind that one of them, Thomas Paine, actually advocated for some flavor of what we would now call UBI, what he called a "demogrant".  So UBI is actually well within the envelope of the Founders' idea of limited government, and truly transcends the usual left-right political spectrum.  Such disparate thinkers from Dr. Martin Luther King Jr. to Milton Friedman to Charles Murray to Nina Turner to Andrew Yang to Ellen Brown to Rodger Malcolm Mitchell to even (however briefly) Hillary Clinton have all gone on the record supporting some flavor of UBI, as has the entire libertarian-leaning red state of Alaska since the 1970s.

A "Job Guarantee", Without The Guarantee?

The TSAP has once endorsed the MMT idea of a Job Guarantee (JG), which is exactly what it sounds like.  Of course, we also supported Universal Basic Income (UBI) with NO strings attached as well for years now, but still maintained that a JG would be good in addition to that.  However, we no longer support that idea anymore.  JG, in all of its flavors, has far too many conceptual, logistical, and ontological problems to be workable at scale, as Rodger Malcolm Mitchell notes in his article, and several others.

So what do we at the TSAP support instead of JG?  Well, we clearly support UBI, hands down.  But beyond that, we support a scaled-up version of something like Job Corps, and which is basically a Job Guarantee but without the "guarantee" part.  That is, simply a jobs program, both for finding and creating jobs as needed, and one that provides only useful work rather than the Sisyphean make-work boondoggles that would inevitably occur in a true JG program.  Otherwise, it is guaranteed to fail.

UBI Is The Only Way To End Modern Slavery

Most of the objections to Universal Basic Income (UBI), from both the left and the right (usually the right), are fundamentally patronizing, paternalistic, and/or sadistic in nature, whether subtly or not-so-subtly.  Those are, of course, very easily debunked as void on their face in anything even remotely approaching a free and civilized society.  But what about the very few supposedly ethical objections that don't quite fit this mold?

One such objection to UBI is that it is really just "crowdsourced slavery", both within nations as well as (especially) with the imperialistic Global North continuing to exploit the Global South.  Or something.

Tell me, how exactly does one "crowdsource" slavery?  And if everyone is getting free money, and all work thus becomes de facto voluntary and optional, who exactly is really being exploited or enslaved?  How would anybody be able to economically coerce anyone else?

And how exactly can it possibly be any worse than the status quo?  (Don't think too hard about that.)

Even the biggest degrowth advocates like Jason Hickel openly support UBI, and he is certainly no imperialist shill.  Ditto for Charles Eisenstein and David Graeber.

True, UBI is unlikely to be global overnight, and will have to start at the national or subnational level.  A global UBI (especially directed primarily towards the Global South) would best be funded by a Tobin Tax on foreign currency exchanges, while a national, subnational, or local one would best be funded by seigniorage via national or local currencies, and/or Georgist-style taxation on the use of natural resources.  But until then, even a globally lopsided national-only UBI is highly unlikely to be any WORSE than the status quo, even if we do still maintain a sizable "trade deficit" in the near term.  In other words, if you make the perfect the enemy of the good, you ultimately end up with neither.

(Some may counter that they are really "making the necessary the enemy of the convenient", but that is really just begging the question.)

Over the lifecycle, we ALL subsidize each other to one degree or another.  Period.  And whether we like it or not, the globalization genie is out of the bottle, and has been for some time now.  And while all empires should of course go back to being republics, returning to complete autarky (whether it be national or small-scale autarky) is a practical nonstarter for the foreseeable future, so a new model of "alter-globalization," perhaps combined with some partial economic relocalization, is the least worst way forward.  (The scarcity mindset sure doesn't help.)

Until then, we need to meet people where they are at.

As for slavery, go look up your own slavery footprint under the status quo.  Go on.  I bet your hands don't feel so clean now, do they?

If you still feel guilty about receiving UBI for whatever reason, then by all means, feel free to to donate it to GiveDirectly then.  Put your money where your mouth is.  Otherwise, silence is golden.

Bonus points for those who decide they now support UBI, even if only so they can now finally afford to buy ethically sourced, fair trade products instead of the usual cheap junk often produced by slave labor.  If you just spotted the glaring "collective action problem" in the status quo before I mentioned it, you are quite astute, and even more bonus points to you.

Honestly, NO ONE's hands are truly clean in the system we currently live in.  Except those at the very top (the oligarchs) and the very bottom (literal chattel slaves) of the global pyramid, we are all effectively varying degrees of slaves AND slavers at the same time under the global kyriarchy.  And some form of UBI is necessary, even if not sufficient by itself, to finally end this evil system for good.

(Mic drop)

Don't Want A Worker Shortage? Stop Paying Starvation Wages!

The media hype over a supposedly widespread worker shortage gas been rife lately, and of course being blamed on a supposedly over-generous social safety net, particularly the expanded unemployment benefits put in place during the pandemic and still continuing to this day.  That supposedly makes it pay more to stay on the dole than to go back to work.  But the "absent referent" here, the biggest elephant in the room, is that wages are currently still too low.  If the federal minimum wage had kept up productivity gains since 1968, it would be about $22/hour today, similar to the current de facto minimum wage in most of the Nordic countries.  Given how the worker shortage is primarily concentrated in the lowest-paying jobs, the solution is very simple:  if employers want employees so desperately, then stop paying starvation wages, and pay the workers at LEAST what the market says they are really worth, and of course enough to, you know, LIVE on.  Problem solved.  Next.

In the meantime, as for the idea of unemployment benefits being too generous, if a true labor shortage were really a widespread problem, all they would need to do is take the extra $300/week bonus and instead repurpose that money as a wage subsidy to low-wage workers.  The latter bonus could be a sort of "reverse payroll tax" that automatically tops up one's paychecks directly.  Otherwise, leave the current benefits as is, albeit perhaps reinstating the work search requirements after some time, and require furloughed workers who are called back to their jobs to return to work after a reasonable amount of time.

It is worth noting that an actual Universal Basic Income (UBI) contains no such perverse incentives (unlike over-generous unemployment benefits), since one can still receive it regardless rather than have to give it up upon returning to work.  But it can still effectively increase the bargaining power of workers, increasing the de facto minimum wage.

We Need To Do Both

If you are confused about how to save America, you are NOT alone.  To fix this country we need to get out of this nasty rut we are stuck in ASAP.  And to do this, we need to not only reopen the country by ending the lockdowns and restrictions OR only firehose the economy with federal money, we need to do BOTH.  

Yesterday.  In fact, yesterday is not soon enough!

If we keep these restrictions for any longer while hoping to just paper over the massive holes in our economy and society with newly printed money, that will not work in the long run, as we will just keep on damaging the economy and society.  Likewise, if we attempt to reopen with a bang without injecting federal dollars into the economy, it will be a big disappointment since the damage is done and has not been repaired.  Either way, it is like pushing on a string--or like pushing an elephant up the stairs.

As we have already noted in a previous article, we can effectively end the pandemic in ONE WEEK tops without lockdowns, masks, or vaccines, full stop.  Simply send everyone an Indian-style $2 Ziverdo kit (Zinc, Ivermectin, and Doxycycline), and as Karl Denninger notes, the Doxycycline is optional and can be substituted with Vitamins C and D (and if we had our way, also add Niacin, Thiamine, and Quercetin as well).  And for the few severe or critical cases that still occur despite this, there is always the MATH+ Protocol (and even cheap steroid inhalers) to fall back on.  In fact, early use of steroid inhalers seems to reduce the number of severe cases by 90%!  Problem solved.

(In India, adding Vitamin D to the Ziverdo Triple Therapy mix is also known as Quadruple Therapy.)

Oh and by the way, did you know that we are basically at the holy grail of herd immunity in the USA (if not also globally on average) already?  Why else would virus cases be plummeting starting weeks before fully vaccinating a significant chunk of the population, in the middle of winter, even in states and countries with little to no restrictions?  Even with those supposedly scary new mutant strains allegedly running rampant for weeks, no less.  If it can't be due to seasonality, vaccines, or restrictions, then it MUST be due to naturally acquired herd immunity.   Too bad we had to climb a mountain of corpses to get there thanks to the incompetence and malfeasance of our "leaders" who suppressed the treatments and prophylaxis that actually work while throwing the wisdom of the ages out the window like so much garbage.  And that's to say nothing of all the collateral damage deaths caused by the lockdowns and panic.

(NOTE:  The sharp decrease in cases predates the reduction in the PCR test cycle threshold in many places, and was in fact followed by decreases in hospitalizations and deaths, so it can't be entirely due to sleight of hand unless one concedes that all of the data were nearly 100% false from the very start.  Either way, the case for restrictions crumbles.)

Thus, no reason not to end all restrictions and open up right away, full stop.  That is, no more restrictions than we had a year ago in February 2020, other than those that individuals and businesses voluntarily choose to put on themselves.  But again, the damage is already done at this point, even if we don't do any further damage going forward.  We must then do the Herculean task of healing the existing damage done.  Fortunately, the federal government has just the technology to do that--the printing press, or its more modern equivalent, a computer with a keyboard.  Money is simply an accounting entry these days, so make the entry and be done with it.  Yesterday. 

(And before anyone predictably cries "inflation!", the truth is that deflation is actually a much, much bigger risk nowadays in the age of secular stagnation.)

The recent paltry stimulus is just barely scratching the surface of what is needed.  We will need an ongoing Universal Basic Income for all (at least $2000/month per adult and $1000/month per child for the first three months, followed by at least half those amounts per month thereafter). We will need single-payer Medicare For All. We will need to expand Social Security.  We will need to increase funding for schools.  We will need free higher education as well.  We will need a Green New Deal to create millions of good jobs while saving the Earth at the same time.  And we will ultimately need some sort of debt jubilee as well.  Seriously, now is NOT the time to be pikers!

So what are we waiting for?

UPDATE:  As the ever-insightful Bill Sardi notes, we can now add the amino acid lysine to the rapidly accumulating list of treatments and prophylaxis for COVID-19.   It may be the biggest game-changer of all.

The Stimulus: Too Little, Too Late--But Still A Good Start

The much awaited stimulus package finally passed Congress and was signed into law by Trump yesterday.  While it is a good start, it is far too little and far too late to prevent a coronavirus recession, let alone recover from it--but it may just be enough to prevent or delay it from turning into a full-blown depression.  Hopefully, at least.

First, the FERAL Reserve fired their "bazooka" and cut interest rates to 1% and then to zero, restarted QE, and even cut the reserve requirement to zero as well.  The stock market still crashed.  Then they pledged unlimited cash assistance (via bond and asset buying) to any banks who may need it, a sort of QE on steroids or "UBI for the rich".  The stock market continued to tank, though ultimately seemed to reach an (interim) bottom after declining about a third from its mid-February all-time high.  Then Congress belatedly realized the need for fiscal stimulus, as the FERAL Reserve's measures really only shore up Wall Street and generally fail to "trickle down" to Main Street.  And now the FERAL Reserve is essentially out of ammo in terms of monetary policy.

The CARES Act, the third and most notable of the three coronavirus-related stimulus bills passed so far, among other things bails out businesses big and small, gives relief money to hospitals, expands unemployment benefits, and most famously, gives a one-time $1200 per person to most adults and $500 for children.  The whole package is $2.2 trillion dollars total  While good, this is still unlikely to be sufficient.   Rodger Malcolm Mitchell estimates that we need as much as $7 trillion in newly created dollars to really fix things for good.

What really needs be done are Rodger Malcolm Mitchell's Ten Steps to Prosperity, starting with abolishing FICA, implementing Medicare For All, and implementing Universal Basic Income (UBI), all paid for with new money creation.  We also need a Green New Deal and to improve our public health infrastructure as well.  Also, we at the TSAP believe that we need to pass an Act of Congress adding another, much more effective tool to the Fed's toolbox:  QE For The People, in which the Fed would deposit newly created money directly into the bank accounts of every single American.  This can be done in existing bank accounts, via debit cards, and/or by giving everyone with a Social Security number or ITIN an account at the Federal Reserve.  The latter was actually recommended by an author at The American Conservative of all places, who even described it as similar to UBI, showing that this idea is not just for leftists anymore, but rather transcends the entire political spectrum.  QE For The People will be far more effective than QE for the banks, since it works to stimulate the economy from the bottom up and middle out, not from the top down.

Also, the federal government should use its power of infinite money creation to purchase (at several times the market value) ventilators, masks, PPE, hospital beds, and any other essentials in short supply now, and distribute them for free.  And it would literally cost taxpayers nothing.  And yet, it took a crisis of such massive  proportions to finally and belatedly force the government's hand to even grudgingly give Americans free testing, paid sick leave, and modestly expanded food assistance in the first two stimulus bills.  Now is NOT the time to be cheap!

And lest anyone grouse about the National Debt, keep in mind that our Monetarily Sovereign federal can just print (or more accurately, keystroke) the money.  Yes, really.  That is what it means to be Monetarily Sovereign.  Money is just a simple accounting entry nowadays, so make the entry and be done with it.

Yesterday.

And if Fitch or Moody's or S&P threaten any credit rating downgrades for the USA, let them do what they will.  Then we should #MintTheCoin (i.e. a multi-trillion-dollar platinum coin) and call their bluff.  Problem solved.  Done, done, on to the next one.

It's not only about saving the economy from ruin, but now it's also literally a matter of life and death at this point.  Seriously.  So what are we waiting for?

UPDATE:  As of April, the Federal Reserve apparently has also begun helping Main Street as well as Wall Street, and taking unprecedented steps to do so.  Not quite full QE For The People yet, but hopefully it will eventually pave the way for it.  It's like they finally realized that a fully functioning Wall Street cannot really exist for long without a fully functioning Main Street.  After all, a purely FIRE economy cannot exist without an actual physical economy to back it up.

Raise The Floor, And Also Trim The Top

It is well known that excessive inequality is very harmful to both the economy and society at large.  Even before we learned the truth about Monetary Sovereignty (MS) and Modern Monetary Theory (MMT) in 2018, the TSAP has long supported both a Universal Basic Income for all, and has also supported hiking taxes on the rich as well.  And even after learning about MS and MMT, we still support hiking taxes on the ultra-rich, and for good reason.

Some may be scratching their heads.  Why do we even need federal taxes at all, if our Monetarily Sovereign federal government has infinite money?  They clearly don't need taxes to pay their bills.  But taxes also have other useful functions as well:

• Taxes compel the use of the official currency, thereby giving it value in the first place.  
• Taxes automatically "claw back" excess liquidity in the money supply due to the "velocity of money", thus to an extent crudely preventing demand-pull inflation before it happens.
• Taxes can be used for social engineering (think vice taxes and Pigouvian taxes) in ways that are otherwise difficult, impossible, illiberal, illegal, and/or unethical to do by other means.
• And finally, progressive taxes can be used to "trim the top" when levied on the top 0.1%, thus reducing inequality without leading to runaway inflation.  Rodger Malcolm Mitchell compares this to a "trophic cascade", such as when wolves (i.e. the federal government) keep elk populations (i.e. the oligarchs) from getting out of control and devouring everything in sight.

So what sort of federal taxes would be suitable for this purpose, knowing what we know now?

• A rich-only, steeply progressive income tax like the kind that prevailed before WWII.  At least the first $100,000 to $500,000 would be exempt, and the new brackets would include marginal rates of 50% above the first $1 million, 70% above the first $10 million, and perhaps 90% above the first $100 million.  With NO LOOPHOLES this time. 
• Tax dividends and capital gains the exact same as ordinary income, but index the basis to inflation for capital gains.
• For the largest corporations, especially those who are "too big to fail", a top tax rate of at least 50%, with NO LOOPHOLES this time.  Tax only retained earnings.  Smaller corporations should not be taxed at all.
• The Universal Exchange Tax, i.e. a tiny tax of 0.1% or less on all electronic transactions.  It would actually be highly progressive in practice since the rich make a disproportionately high amount and number of transactions compared to the non-rich.  "The more you play, the more you pay."
• Various vice taxes (alcohol, tobacco, cannabis, etc.) and Pigouvian taxes (pollution and resource depletion).
• Land value taxes and severance taxes on natural resources such as oil and gas.
• And, of course, the estate tax needs to be made more progressive as well.

State and local governments, of course, are not Monetarily Sovereign, and thus need to raise revenue to pay their bills.  And they can piggyback on the aforementioned federal taxes and levy their own, especially the Universal Exchange Tax and the land value tax and severance taxes, and thus reduce or eliminate their currently regressive sales and property taxes.  Additionally, federal aid to the states should be increased for precisesly the same reason.

A UBI would indeed abolish absolute poverty, no doubt about that.  And that alone would have numerous individual and social benefits.  But without progressive taxation of the top 1% and 0.1%, it would do nothing to reduce relative poverty, and may paradoxically increase inequality.  And inequality in itself is harmful, over and above the effects of poverty.  Thus, it is not enough to either raise the floor or trim the top, we need to do both.  Yesterday.

Thus, Rep. Alexandria Ocasio-Cortez essentially has the right idea as far as taxes go.  And of course, the oligarchs and their sycophantic lackeys are coming down hard on her, but that just goes to show how effective her ideas are in terms of reducing the Gap between the haves and have-nots, which the oligarchs utterly depend on.  All the more reason to do it.

UPDATE:  Elizabeth Warren recently proposed a wealth tax of 2% on the assets of those with a net worth of $50 million and up (that is, on the top 0.1%), and up to 3% above the first billion.  Only the amount over the first $50 million would be taxed.  Controversial as it is, it actually makes a lot of sense, and the TSAP would certainly not oppose it. 

What "Give People Money" Gets Right--And Wrong at the Same Time

One of our favorite journalists, Annie Lowrey, recently wrote a book called Give People Money:  How a Universal Basic Income Would End Poverty, Revolutionize Work, and Remake the World.  As its self-explanatory title suggests, she is clearly in favor of the idea, at least in principle, and notes all of the many benefits to society that a Universal Basic Income (UBI) would have.  She does a great job of delineating such benefits and thoroughly debunks numerous myths about this big idea.  So overall, it is a good book.

That said, while her thesis starts out practically on fire in terms of ambition, it really starts to coast towards the end when the practical issue of cost starts to seep in.  Then, her proposals start to get significantly less ambitious than a true UBI, namely a negative income tax (like the kind Nixon once proposed and was ultimately weakened into what became the Earned Income Tax Credit) and/or a smaller UBI-style payment for children only.  True, those weaker versions would indeed be cheaper, and far better than doing nothing at all.  And it would certainly be more likely to pass through Congress, no doubt about that.  But the larger point is still being missed in terms of the nature of the cost issue.

And that larger point is that since the United States federal government is Monetarily Sovereign, the whole cost issue is really a non-issue when you think about it.  It is a Big Lie that federal taxes actually pay for federal spending, and that the federal government can somehow run short of dollars.  They can literally create infinite money, thus money is literally no object in that regard, if only they would act like it and dispense with the Big Lie once and for all.

In fact, Rodger Malcolm Mitchell himself advocates a form of UBI that he calls the Economic Bonus (EB), which is Step #3 of his recommended Ten Steps to Prosperity.  It is similar to Social Security for all, but without the FICA tax (which he believes should be abolished), and paid for entirely via money creation (i.e. spending it into existence).  Though the figures he provides are not set in stone, he advocates that we start with $1000/month for everyone over the age of 21 and $500/month for everyone below that age.  The TSAP fully agrees, except that we think the age threshold for the full amount should be 18 instead.  Or perhaps give the same amount (say, $500) to everyone regardless of age to start with.  Either way, once it is started, the numbers can be easily adjusted.  And $1000/$500 is a very handy number since that is roughly the amount that would be enough to eliminate poverty as well as give workers much more bargaining power than they have currently, while still not being so ludicrously high as to trigger runaway inflation or other adverse effects.  And best of all, it wouldn't cost the taxpayer one penny.

And Presto!  The square has thus been circled--or is that the other way around?

Oh, and about that inflation thingy, keep in mind that despite three rounds of QE, nearly $30 trillion in secret bailouts for the banks, $21+ trillion in national debt, and the Pentagon "losing" another $21 trillion despite putting two (or four) wars on the proverbial credit card, all of this money created out of thin air in fact, and economic growth finally roaring back to life (for now), we are still nowhere near the point of runaway inflation.  Not by a long shot.  If anything, we are still under the shadow of what Larry Summers calls "secular stagnation" thanks to chronic, extreme economic inequality and related socioeconomic ills.  And if ever we did get anywhere near that point, we know now exactly how to prevent and cure such inflation via interest rate control, and failing that, simply create less new money going forward.

So what are we waiting for?

We Endorse Andrew Yang 2020 (With Reservations)

As we have noted in the previous post about upcoming Democratic 2020 presidential candidate Andrew Yang, based on his stance on the issues, the TSAP hereby endorses him as our honorary candidate, albeit with the following reservations:

1. First and foremost, the TSAP beleives that the Universal Basic Income (UBI) Guarantee for all should either be the same for all ages, or at least half the adult amount for unemancipated young people under 18.  And people 18 and over should get the full amount, period, without any conditions, and seniors over 65 should be free to choose between UBI or Social Security, but not both. Yang's proposal differs from that in that only people aged 18-64 will get it, and if you haven't graduated high school, you won't get it until age 20.  That is ageist, classist, ableist, and paternalistic, and thus will not eliminate poverty for everyone, defeating the program's purpose.
2. Dovetailing with reservation #1 above, Yang's desire and ideas to help poor people and especially single parents (which the TSAP fully agrees with) kinda clashes with his age restrictions on the UBI.  Many younger mothers (and fathers) along with their children will thus remain locked into poverty until age 20 unless Yang removes that age restriction from the UBI.  And the effects of early childhood poverty can linger long after they are no longer poor.
3. For the American Exchange Program he proposes, the TSAP has quite a bit of skepticism, both logistically as well as in terms of equity.  And the idea of tying it to the UBI for recent high school graduates kinda defeats the purpose of UBI.
4. Nuclear power--the TSAP no longer supports expanding it any further.
5. The nuclear family--Yang does seem to idealize it a little too much at times, though still far less so than Republicans do.
6. His whole plank about the ubiquitous "kids and smartphones" issue, though more enlightened and nuanced than most proposals out there, does still seem to reek of ageism and paternalism a bit.
7. He does not appear to be calling for free college for all like we do, but rather "controlling the costs".  The TSAP believes that, while a step in the right direction, it still misses the mark.
8. He wants to "modernize" military spending, but says nothing about cutting it.  The TSAP says, why not both?  We need to cut our ridiculously bloated military spending yesterday, by at least half--and we will still have the strongest fighting force in the world, by far.
9. He wants to reduce the student loan debt burden, but not have a complete jubilee like the TSAP recommends.
10. And of course, not a single word about the FERAL Reserve and its usury-and-debt-based funny money that is the root of so many of our problems.  Which is understandable, since the banksters would like have him meet the same fate as JFK and Lincoln if he actually stood up to them and tackled this head-on while in office.

That said, the above reservations aside, we will nonetheless wholeheartedly endorse him for President of the United States.  Just about everything else on his platform we fully and enthusiastically support.  Given all the things he gets right, he will be a major asset to our nation and world.

An Honorary TSAP Candidate, Andrew Yang 2020

Imagine if you were to indefinitely receive $1000 per month, with no strings attached.  That is a whopping $12,000 per year.  Not enough to live large on by itself, but most Americans can certainly use the help these days.  And the only catch?  It would be funded by a certain type of business tax of 10% on most goods and services, that would predictably be passed onto the consumer and thus result in an overall 10% increase in prices.  Clearly, most if not nearly all people would come out way ahead.  Would you take it?

If the answer is yes, then Andrew Yang is your man.  The 43 year old entrepreneur plans to run for President of the United States in 2020, and is promising something than Hillary, Trump, and even Bernie did not--a Universal Basic Income (UBI) Guarantee for all, which the TSAP has also advocated.  And the tax he is proposing is a value-added tax (VAT) that most other countries have, similar to a sales tax but collected a bit differently and built into the price of the affected goods and services.  He believes that robotics and automation will eventually take so many jobs that our collective hand will be forced to come up with a UBI, and his VAT idea for a funding source would theoretically be the best way to capture the gains that businesses make from robotics and automation (and thus internalize the externalities that the resulting losses impose on society).  

Granted, the TSAP proposal is a bit different than his in two ways . First, we do not consider a VAT to be our preferred funding source (though we do not oppose it), as we prefer either the Universal Exchange Tax (UET), progressive income taxes, land value and severance taxes on natural resources, carbon taxes, luxury taxes, money creation, or some combination of these.  Secondly, our proposal would have it for all ages, not just 18-64 like he wants, and under our proposal those old enough to receive Social Security can choose either the UBI or Social Security, whichever is higher (but not both).  And those under 18 would receive at least half the adult amount if not the full amount, with it going to the parent(s) or guardian(s) by default (or to the young person directly, if emancipated earlier than 18).  But otherwise, Yang's bold-yet-modest proposal is right up our alley.  It is high enough to eliminate absolute poverty completely and give workers much more bargaining power, while still being low enough for society to afford as well as low enough to alleviate the largely overblown fear of disincentivizing work (since it is highly unlikely that anyone can live comfortably on only $12,000 per year for very long).  And since there are no means tests or discrimination, and it is strictly individualized, that also means that there are no perverse incentives, welfare traps, or gaming the system either.  And it would be like a giant, permanent B-12 shot for our currently secularly stagnating economy.  It's a win-win-win situation for everyone but the oligarchs, in other words. 

Thus, the TSAP hereby considers Andrew Yang as an honorary candidate for 2020.  We are not sure how he stands on other issues--though we do know he's a Democrat--but unless his stance on other issues proves us wrong, we will nonetheless wholeheartedly endorse him in the meantime.

UPDATE:  Looks like his stance on other issues is also generally within the bounds of what the TSAP supports as well, including (but not limited to) single-payer healthcare for all.  Thus, we hereby endorse him as our honorary presidential candidate for 2020 unless he does an about-face and proves us wrong.

The Real Cause of "Secular Stagnation": Extreme Inequality

Much has been made of the concept of "secular stagnation", namely, that the current and future long-term potential for economic growth has slowed dramatically compared with the not-too-distant past.  Larry Summers defines it as "a prolonged period in which satisfactory growth can only be acheived by unsustainable financial conditions".  And at least since the Great Recession, the data do indeed seem to bear this out.  Most notably, for decades now the American economy has been requiring lower and lower interest rates to get the same effect in terms of boosting aggregate demand, the sine qua non of economic growth.  One can even argue that, relatively speaking, the United States will have had a whopping "lost two decades" of growth from 2000-2020.

But why is this happening, exactly?  Some blame demographic changes, particularly population aging, as one of the causes.  But while this theory may be at least partially true, it only seems to explain, at most, one-third of the trend of secular stagnation.  Others blame the decline in EROEI (Energy Returned on Energy Invested) as cheap and easy fossil fuels are increasingly less readily available than in the past, as well as the planetary limits to growth.  That is indeed true in the very long run at least, and all the more reason to end our inane and insane addiction to growth for the sake of growth, the ideology of the cancer cell which eventually kills its host, by the way.

But in the relatively near term at least, the biggest elephant in the room by far in terms of the causes of secular stagnation would be the extreme level of economic inequality in this country that is now back at Gilded Age levels.  Or should we say, at banana republic levels these days.  The top 1% controls roughly 40% of the nation's wealth, the top 20% controls roughly 90%, and the bottom 80% is left to fight over crumbs.  Wages have lagged behind the cost of living for decades despite exponential increases in technological progress and resulting increases in labor productivity.   The oligarchs at the top took nearly all of the gains.  And the rest of us simply cannot afford to keep spending enough to keep the economy going without digging ourselves deeper and deeper in debt.  Eventually, something has to give, since there is not enough aggregate demand, and increasing debt clearly cannot be sustained forever.

Thus, a more accurate definition of "secular stagnation", would be, in the words of the Economic Policy Institute, "a chronic shortage of aggregate demand constraining economic growth".  They really hit the nail right on the head here.  After all, one person's spending is another person's income, by definition, and any business without enough customers will clearly not stay in business for long.

Which, by the way, was also one of the causes of the Great Depression and the long period of secular stagnation that followed until WWII.  The Roaring Twenties also had similarly extreme inequality as well, along with a wildly unregulated financial system.  And we also had a trade war from 1930-1934, which further deepened the Depression.  The only real difference now (aside from the levels of debt today) is the Feral Reserve's monetary policy, but even that will run out of ammo very fast (as interest rates are already low) unless their methods are truly overhauled to accomodate today's realities.

But what about in the long run?  Well, the Keynesian punch line to that is, "in the long run, we are all dead".  Seriously, though, an inequality-induced chronic shortage of aggregate demand not only reduces actual economic growth in the short run, but also reduces potential growth well in the future as well.  That is because less demand today leads to less business investment tomorrow, degrading the economy's productive capacity over time and thus leading to significantly less growth in the long run as well as the short run, creating a vicious cycle and downward spiral.  Hoarding such ludicrous amounts of wealth at the top of the pyramid clearly has serious consequences for the economy and society, and with much larger effect sizes than originally thought.

Thus, policies designed to tackle economic inequality would be beneficial in this regard.  In addition to more progressive taxation of both individuals and corporations (like it was before Reagan) and/or the Universal Exchange Tax and/or Georgist taxation on natural resources, that would also include things like Universal Basic Income (UBI) as well.  And nationalizing the Feral Reserve to make it a truly public national bank that creates money interest-free would be even better still, since usury (interest) and debt-based currency are essentially the biggest weapons of the oligarchy.  Problem solved.

At the very least, in the meantime, we need to raise the minimum wage to $15/hour to give the lowest-paid workers a boost, which will also have a positive spillover higher up the wage scale.  Also, macroeconomic policy (both fiscal and monetary) should seriously prioritize very low unemployment over very low inflation, since tight labor markets have long been known to give workers much more bargaining power relative to employers. And labor unions also need to be revitalized as well.  Yesterday.

So what are we waiting for?

How to Prepare for the Next Big Crash

As we have noted in the previous article, the risk of the next big economic crash continues to loom larger than ever before, and it is most likely too late to actually prevent it from occurring entirely.  That's not to say that there aren't things that should be done to prepare for it to make it less catastrophic, though.  Back in 2014, the TSAP had predicted that a crash would occur within a few short years, and we had written an article then discussing how to prevent it before it occurs or at least take the edge off of it, while ending the previous economic "stagpression" for good.  We also reiterated such ideas in 2016 as well, the year for which the insightful Thom Hartmann predicted the epic crash that was his book's namesake.  (Being off by two years or so is still fairly accurate in our book.)  And we should note that these things would indeed help take the edge off of the next looming financial crisis as well.

Two things come to mind right away:  1) a Universal Basic Income Guarantee for all, an idea that is LONG overdue, and 2) Quantitiative Easing for We the People in general (as opposed to the banks, which only benefits the ultra-rich) by injecting newly-created money directly into everyone's bank accounts and/or via debit card.  Additionally, we need to better regulate the Wall Street casino so such a crisis could never, EVER happen again, and also JAIL the banksters who caused the crisis (instead of bailing them out) like Iceland did.  A complete debt jubilee would be even better still (in general, but especially for student loans), but even the things we just mentioned are a fairly tall order for a government who is bought and paid for by the banksters/oligarchs.  While other things need to be done as well in the long run, such as critical investments in infrastructure and education, the aforementioned measures would go a long way towards fixing our soon-to-be-ailing economy.

Those are the things that should be done at the government level, of course.  At the individual level, there is really not much one can do except get OUT of the stock market while you still can, and take at least most of your money OUT of the big banks (before the "bail-ins" begin) and put it into smaller banks, credit unions, or even under your mattress.  Or even in a big, brown bag inside a zoo (what a thing to do!)

We Need A Carbon Tax-and-Dividend, Yesterday

We at the TSAP have long been pushing for a carbon tax-and-dividend (aka fee-and-dividend, feebate, fee with rebate, revenue-neutral tax, or Alaska Permanent Fund) since we first heard about the idea.  Steve Stoft, James Hansen, Elon Musk, and even some very unlikely supporters like the recently ousted Secretary of State and former ExxonMobil CEO Rex "Ruthor" Tillerson are known to support it to one degree or another.  And the list is growing.

Aside from the primary (and urgent!) reason for it-- mitigation of climate cataclysm--there is also another pressing reason for it:  simple justice.  The distributional impacts of a straight carbon tax (without any rebates) would be highly regressive, hitting poor people the hardest, and studies show that simply having the carbon tax replace other taxes would also be quite regressive as well.  And ignoring that fact would be a major intersectionality fail, to put it mildly.  But refunding 100% of the revenue to everyone in equal amounts would effectively make the tax quite progressive in practice.  And even better, it can also double as a Universal Basic Income (UBI) Guarantee for all, or at least a viable gateway to such a thing.  Once it becomes normal for every citizen to receive even a small amount money unconditionally with no exceptions, then the Overton window of political acceptability would have shifted enough to make it possible to simply increase the amount and/or finance a larger UBI through other revenue sources as well.  After all, if everyone's on the dole, then no one's really on the dole.  And if everyone's a rentier, then no one's really a rentier.  Thus, the idea transcends the left-right political spectrum and becomes an idea that even hardcore libertarians and right-wing populists/producerists can support, not just the left.

What better time than now?

Latest Minimum Wage Study Reeks of Junk Science

A new study claims that Seattle's minimum wage law cost jobs, despite the fact that their unemployment rate dropped dramatically since the new law began to be phased in, faster than the rest of the country, and is now one of the lowest in the nation at 2.6%.  But there is far less here than meets the eye, and their methodology is highly questionable.  For example, they curiously omit data from the entire fast-food sector, ostensibly due to lack of data (riiiiight!), and assume that any decrease in the number of workers earning below a certain wage is a result of fewer jobs rather than those workers simply getting a raise.  Yes, really.  All this specious study really proves is that if you torture the data enough, they will confess to anything.  And of course, Occam's Razor would strongly disagree with these results, which are way out of line with other recent studies.

One should note that the unemployment rate in Seattle has dropped so low that it has now reached Massachusetts Miracle territory, albeit for reasons unrelated to the minimum wage.  In the city's white-hot economy, restaurants are having a hard time finding help due to the tightness of the labor market, and are essentaily forced by the laws of supply and demand to pay employees significantly more as a result, regardless of the legal minimum wage. Keynes would have a field day.  And this alone could potentially account for the anomalous results in this yet-to-be-peer-reviewed study that should essentially be considered a radical outlier in the field.

With the issue of the minimum wage now in the spotlight again, we must keep in mind that the whole debate is a giant workaround. Thus, I will let the late great Buckminster Fuller answer the question:

"We should do away with the absolutely specious notion that everybody has to earn a living. It is a fact today that one in ten thousand of us can make a technological breakthrough capable of supporting all the rest. The youth of today are absolutely right in recognizing this nonsense of earning a living. We keep inventing jobs because of this false idea that everybody has to be employed at some kind of drudgery because, according to Malthusian Darwinian theory he must justify his right to exist. So we have inspectors of inspectors and people making instruments for inspectors to inspect inspectors. The true business of people should be to go back to school and think about whatever it was they were thinking about before somebody came along and told them they had to earn a living."

And he said this back in 1970, mind you. With today's technology, it would apply *a fortiori* to our time, if it weren't for the greedy oligarchs who siphoned up all the labor productivity gains since then. How do we put his plan into action, you ask? A Universal Basic Income Guarantee for all is the best and most efficient way to do it.   Until then, by all means, raise the minimum wage.  Fight for $15!   But the root of the problem ultimately needs to be tackled as well, especially in a world of increasing automation and globalization.

The "Spiritual Ruin" of a Universal Basic Income? No, Not Really.

Recently, there was an article in The Week by Damon Linker titled, "The Spiritual Ruin of a Universal Basic Income".   He basically argues that it is a bad idea for the left to pursue the idea of a UBI because 1) it fails to address (and perhaps even intensify) the psychological and spiritual consequences of joblessness, which are (in his view) distinct from and worse than the economic consequences, 2) most people couldn't handle joblessness even with a basic income and would thus become depressed and purposeless and give themselves over to video games, porn, and/or drug addiction, and 3) the left should not concede that automation (and the resulting job losses) is in any way inevitable.

And all of these things are in fact false.

First, only a person of relative privilege could possibly see the economic consequences of joblessness as entirely separate from, and less significant that, the (admittedly real) psychological and spiritual consequences of same.  The former can indeed cause or contribute to the latter in a big way, and it is very difficult to disentangle them.  Poverty and desperation are well-known to be harmful to the mind, body, and spirit, and only meaningful work (as opposed to work for the sake of work) can be said to be beneficial to same.  When the economic consequences are resolved via a UBI, the remaining noneconomic consequences of unemployment would in fact become that much easier to tackle.

Second, there is no logical reason why a UBI and the sort of New Deal 2.0 jobs program that Linker advocates would be mutually exclusive.   The TSAP, in fact, advocates exactly that combination, with both a UBI and a Job Guarantee program for everyone who wants one.  We also advocate shortening the workweek as well, which would spread the remaining work among more workers, thus more jobs.  Thus the noneconomic consequences of joblessness can also be adequately dealt with as well.  So that is not a valid reason for the left to abandon the idea, anymore than it would be a reason to abandon the idea of a social safety net in general.

Third, the idea that UBI will cause most people or even a particularly large chunk of the population to become lazy and/or self-destructive is not borne out by the facts.  Numerous experiments with UBI and related schemes have been conducted in diverse cultures and locations in the past half-century, and the overwhelming weight of the evidence strongly suggests that this will not occur.   If anything, one notable effect is an increase in entrepreneurship due to a decreased fear of failure and more time and money to invest in their goals. Students and new mothers will likely work fewer hours than before since they are no longer forced by dint of economic necessity (the effect on hours worked is likely negligible for everyone else), but is that really such a bad thing?  Of course not.

Nor is there any credible evidence that substance abuse would significantly increase either as a result of UBI, and it may even decrease.   But just to drive the point home even further, Silicon Valley entrepreneur Sam Altman argues that even if 90% of the population sat around smoked weed and played video games instead of working, a UBI would still better on balance than not having one, as everyone would be free to pursue their passions and the remaining 10% would innovatively create new wealth.  Not that he thinks that 90% would actually do that, of course, but the point was well-made nonetheless.   One can also point to the Rat Park studies as well.  It is amazing how addiction diminishes or even disappears when rats (or people) are not treated like caged animals in the "rat race"!

And finally, a real pragmatist would realize than automation really is inevitable in the long run.  Contrary to what the neo-Luddites like to argue, fighting against it will not stop it, only delay it a bit.  The best that we progressives can do is admit that fact and do whatever we can to ensure that the fruits of this automation will benefit all of humanity and not just the oligarchs at the top.  To do so, we must take the power back from the oligarchs.  And a crucial step to that goal is a Universal Basic Income, so We the People can actually have some bargaining power, no longer dependent on our employers for survivial.  Whether we get this one right will basically be the difference between a futuristic pragmatic utopia (as Buckminster Fuller envisioned) or a horrifying technocratic dystopia straight out of 1984, Brave New World, or [insert other dystopian novel here].  So let's choose the right side of history!

After all, as the late, great Buckminster Fuller--the Leonardo da Vinci of the 20th century, famously said in 1970:

We should do away with the absolutely specious notion that everybody has to earn a living. It is a fact today that one in ten thousand of us can make a technological breakthrough capable of supporting all the rest. The youth of today are absolutely right in recognizing this nonsense of earning a living. We keep inventing jobs because of this false idea that everybody has to be employed at some kind of drudgery because, according to Malthusian Darwinian theory he must justify his right to exist. So we have inspectors of inspectors and people making instruments for inspectors to inspect inspectors. The true business of people should be to go back to school and think about whatever it was they were thinking about before somebody came along and told them they had to earn a living.

Thus, on balance, a Universal Basic Income Guarantee for all is a good idea regardless.  A win-win-win situation for everyone but the oligarchs.  And the only real arguments against it are paternalistic and/or sadistic ones, which really means there are no good arguments against it in a free and civilized society.  So what are we waiting for?