Commentary

The Trump Tax Cut versus Universal Basic Income

UBI solves the fundamental problem of modern capitalism, lack of demand

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By Tom Streithorst

Hillary Clinton lost to Donald Trump because she did not provide a solution to the grave economic problems facing the American middle and working class. Hillary pretended the economy was getting better, and of course in some ways it was. Unemployment is considerably lower than it was when Bush left office and in 2015   wages finally went up. But after 35 years of stagnant wages the American people are no longer trusting in elite optimism. Personal experience tells them otherwise. The median male inflation adjusted wage is lower today than it was in 1973. For a while, wives entering the workforce allowed household income to rise but that ended with the last millennium. Typical household income peaked when Bill Clinton left office.

Trump won because he acknowledged the decline of the American middle class and promised a cure. Hillary Clinton and the neoliberal Democrat establishment pretended things were fine, and a huge swath of Americans resented their sanguine attitude. Unfortunately, Trump’s solutions won’t work. Tax cuts directed to the top .01% certainly won’t help most Americans and tariffs on Chinese goods will not bring industrial jobs back to the Rust Belt. All protectionism will accomplish is higher prices at Wal-Mart. Automation, as much as globalization is responsible for the disappearance of high paying jobs. Even China is losing manufacturing jobs. Its output is increasing but robots rather than humans are getting the work.

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It is tragic that the populist revolt against the neoliberal establishment should have been led by a right wing billionaire reality TV star. The left should learn one lesson from this debacle. Let no longer pretend things are all right. If the Democrats are to regain power, they must provide a solution for the growing insecurity in most working American’s lives. The old strategies no longer work. Technological progress has become a job killer.

Every year, technological progress allows us to make more goods and services with fewer inputs of labor and capital. Stagnant wages tell us we need fewer workers. Infinitesimal interest rates tell us we need less capital. And more jobs are set to disappear. The most common job in most American states is truck driver. With self-driving cars only a few years away from mass production, those jobs too will soon evaporate.

There is a solution: Universal Basic Income, a cash payment to every adult citizen.

Everyone gets it, the poor, the rich, the middle class, the deserving and the undeserving alike. You, me, Rupert Murdoch, Beyonce, and the homeless man sleeping in the gutter get exactly the same cash payment. It is nothing if not equitable and fair. UBI is not a new idea. It was mentioned in the Bible, proposed by Tom Paine, almost enacted into law by Richard Nixon in 1969.

The Bible advocated it because small Neolithic communities always took care of their own. Tom Paine favored it because it reflected the value of the land that he considered the heritage of every citizen. Richard Nixon almost made it real (how different it would have made our world, how amazing that Richard Nixon in 1969 was to the left of Barack Obama in 2016) because he wanted to provide a safety net for every American without creating a large bureaucracy.

UBI will:

  1. Reduce inequality.
  2. Help the poorest among us, by giving them what they really need, money in their pocket.
  3. Provide a safety net for all Americans that will allow entrepreneurs to take more risks, the young to attend university, workers to tell unreasonable bosses to “take this job and shove it”.

All good things but not why I expect it will, sooner rather than later, be enacted into law. UBI solves the fundamental problem of modern capitalism, lack of demand. We have, to an extent unimaginable to our grandparents, solved the problem of supply. We eat better, dress better, entertain ourselves more extravagantly and more cheaply than they would have dreamed possible. But they had job security and more and more of us don’t.

If things keep going the way they are, our society will divide into a small elite who own the technology and a huge army of the unemployed living in squalor. A robot can make an iPhone but it cannot purchase one. If we want to maintain demand, we must put money into people’s pockets. A Universal Basic Income stimulates demand far more effectively than any tax cut.

The problem with UBI, the reason it is not yet within the Overton window is it sounds too good to be true. How can we afford it? How can we pay people without demanding work in return? Fortunately, Donald Trump is giving us an opening.

President-elect Donald Trump is planning to propose a tax cut. Over the next decade, it is expected to cost $6.2 trillion, or $620 billion a year. The Republican Congress, deficit hawks whenever a Democrat is in office will most likely approve his giveaway to the very rich. They will argue, quite correctly, that a tax cut will be stimulative and that it will help spur economic growth.

Every Keynesian knows tax cuts will stimulate the economy but we also know that tax cuts give the least bang for the deficit buck. That is because tax cuts, like this one, generally go to the richest among us and rich people have a greater propensity to save than the average citizen. The rich can save their bonus, the rest of us spend it, which is what the economy needs.

The Trump tax cut gives the top 1% an average windfall of $215,000. The top .1% will save over $1 million. Someone at smack in the middle, on the other hand, will garner less than $1000. Those in the bottom 20% will get $100.  Were we to divide the cost of the tax cut by all adult Americans, we can give each citizen $2600 a year. If we can afford a tax cut that will go disproportionately to the very rich, we can also afford a helicopter drop of cash to every adult citizen.

During the post war Golden Age of the American middle class, the benefits of technological progress were shared equitably, through wage hikes. As technology made workers more productive, their wages went up commensurately. Since Reagan, technology has continued its inexorable progress but wages stopped rising. Assets prices (homes, stocks, bonds) instead absorbed the benefits of productivity increases. The rich got richer, workers didn’t.

It would be nice if we could make wages go up but they won’t. Wages, like all prices in a capitalist economy, are set by supply and demand. During the Golden Age, wages rose because firms needed more workers. To hold them, they needed to pay them well. Today, the supply of labor far exceeds its demand. Secure high paying jobs are not likely to come back.

It would be tragic if technological progress immiserates rather than enriches the average citizen. UBI is the solution, a fair and equitable way to share the benefits of growth throughout society. Some advocates of UBI insist the payments be large enough to guarantee every one of us enough money to survive. Ultimately, I think they are right. $2600 a year certainly is not enough for subsistance. But Rome wasn’t built in a day. Let us take advantage of Trump’s deeply inequitable tax cut proposal to experiment with Universal Basic Income.

When the banks went bust, central banks printed billions to bail them out. When the economy did not recover, we printed more billions in the various quantitative easings and again, through bond purchases, gave them to the banks. Trump is proposing to give each of his super rich friends millions. We can do better. When his tax bill comes to Congress, the Democrats have a chance to propose a Universal Basic Income grant to every adult American that won’t raise the deficit any more than his give away to the very rich.

To stimulate the economy, UBI is better than any tax cut. Politically too, it is a winner. The great majority of Americans will prefer a grant of $2600 than the piddling amount they would receive under the Trump tax cut. Trump’s victory has shown Americans are tired of the neoliberal consensus. Let’s take this opportunity to introduce Universal Basic Income to the American people. It can transform our society, stimulate growth, and begin to revitalise the American middle class. It will also help the Democratic Party win elections.

2106 November 26


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  • Luis Gutierrez

    What about UBI coupled with taxing the use/disposal of natural resources instead of taxing earned/unearned income?

  • GaryReber

    This author has gotten one thing right, that “technological progress has become a job killer.” But a redistributed “cash payment” made equally to every citizen, while it sounds good, is not a solution to the continuous concentration of wealth-creating, income-producing capital asset ownership among the already wealthy ownership class and their heirs.

    The author gets another thing right, that “…our society will divide into a small elite who own the technology and a huge army of the unemployed living in squalor.” And yes, “we must put money into people’s pockets.” But instating of “putting money into people’s pockets,” we should empower EVERY citizen to be individually productive and earn the money they put in their pockets, and that does not mean demanding that EVERY citizen be employed and work in return. There is a difference.

    The author gets yet another think right, that while tax cuts will stimulate the economy, “tax cuts, …, generally go to the richest among us and rich people have a greater propensity to save than the average citizen.” Thus, the rich save and invest to further acquire more productive capital ownership in the corporations growing the economy.

    As with all Keynesian economists, this author believes that technology makes workers more productive. That’s because they only see productivity as related to the human work force, and do not see the distinction between the non-human factor and the human factor of production, as independent factors of productions. Fundamentally, economic value is created through human and non-human contributions. And with technological invention and innovation killing jobs, it is essential that EVERY citizen become an owner of the wealth-creating, income-producing capital assets of the future.

    A national basic income or universal basic income is a “welfare” scheme, which does not tie people to individual productive input, but redistributes through taxation of those in society who are productive to those who are unproductive or underproductive. Because it is not tied to new productive engagement, it will not strengthen the incentive to work, where there is no work to be had due to the economy’s stagnation resulting from poor consumption demand.

    What we really need is monetary and tax reform, by which an annual Capital Homestead Account in the form of insured, interest-free capital credit is extended equally to EVERY citizen, without any requirement for past savings, a job, or education. The capital credit loans would strictly be used to invest in new wealth-creating, income-producing capital assets formed by qualified, successful corporations growing the economy. The capital credit loans would be repayable out of the future earnings of the investments, and once paid would continue to produce income for the new productive owners, who would use the income to satisfy their needs and wants, thus resulting in spiraling green economic growth.

    The problem is that technological invention and innovation––change––makes the non-human means of producing––tools, machines, structures, and computerized processes––ever more productive while leaving human productiveness largely unchanged (our human abilities are limited by physical strength and brain power––and relatively constant). This means that fewer and fewer people are necessary to produce the products and services needed and wanted by society. But when a job is one’s ONLY way to be productive and earn an income and jobs are disappearing and the worth of labor is being devalued, we have a problem. The problem is magnified by the fact that upward of 95 percent of the products and services are produced by physical productive capital––the non-human factor––which is owned by less than 10 percent of the population and highly concentrated among less than 1 percent of the population. The result is that primary distribution through the free market economy, whose distributive principle is “to each according to his production,” delivers progressively more market-sourced income to capital owners and progressively less to workers who make their contribution through labor.

    Unfortunately, ever since the 1946 passage of the Full Employment Act, economists and politicians formulating national economic policy have beguiled us into believing that economic power is democratically distributed if we have full employment––thus the political focus on job creation and redistribution of wealth rather than on equal opportunity to produce, full production and broader capital ownership accumulation. This is manifested in the myth that labor work is the ONLY way to participate in production and earn income. Long ago that was once true because labor provided 95 percent of the input into the production of products and services. But today that is not true. Physical capital provides not less than 90 to 95 percent of the input. Full employment as the means to distribute income is not achievable. When the “tools” of capital owners replace labor workers (non-capital owners) as the principal suppliers of products and services, labor employment alone becomes inadequate. Thus, we are left with government policies that redistribute income in one form or another, such as a proposed universal basic income.

    The capitalism practiced today is what, for a long time, I have termed “Hoggism,” propelled by greed and the sheer love of power over others. “Hoggism” institutionalizes greed (creating concentrated capital ownership, monopolies, and special privileges). “Hoggism” is about the ability of greedy rich people to manipulate the lives of people who struggle with declining labor worker earnings and job opportunities, and then accumulate the bulk of the money through monopolized productive capital ownership. Our scientists, engineers, and executive managers who are not owners themselves, except for those in the highest employed positions, are encouraged to work to destroy employment by making the capital “worker” owner more productive. How much employment can be destroyed by substituting machines for people is a measure of their success––always focused on producing at the lowest cost. Only the people who already own productive capital are the beneficiaries of their work, as they systematically concentrate more and more capital ownership in their stationary 1 percent ranks. Yet the 1 percent are not the people who do the overwhelming consuming. The result is the consumer populous is not able to get the money to buy the products and services produced as a result of substituting machines for people. And yet you can’t have mass production without mass human consumption made possible by “customers with money.” It is the exponential disassociation of production and consumption that is the problem in the United States economy, and the reason that ordinary citizens must gain access to productive capital ownership to improve their economic well-being, not to a hand-out derived from government coercion that takes from those who make productive contributions as workers and capital owners and gives to those who are unable to earn a minimum sustainable income.

    Binary economist Louis Kelso postulated: “When consumer earning power is systematically acquired in the course of the normal operations of the economy by people who need and want more consumer goods and services, the production of goods and services should rise to unprecedented levels; the quality and craftsmanship of goods and services, freed of the corner-cutting imposed by the chronic shortage of consumer purchasing power, should return to their former high levels; competition should be brisk; and the purchasing power of money should remain stable year after year.”

    Without this necessary balance hopeless poverty, social alienation, and economic breakdown will persist, even though the American economy is ripe with the physical, technical, managerial, and engineering prerequisites for improving the lives of the 99 percent majority. Why? Because there is a crippling organizational malfunction that prevents making full use of the technological prowess that we have developed. The system does not fully facilitate connecting the majority of citizens, who have unsatisfied needs and wants, to the productive capital assets enabling productive efficiency and economic growth.

    America has tried the Republican “cut spending, cut taxes, and cut ‘entitlements,’ eliminate government dependency and shift to private individual responsibility” and the Democrat “protect ‘entitlements,’ provide tax-payer supported stimulus, lower middle and working class taxes, tax the rich and redistribute” through government brands of economic policy, as well as a mixture of both. Republican ideology aims to revive hard-nosed laissez-faire appeals to hard-core conservatives but ignores the relevancy of healing the economy and halting the steady disintegration of the middle class and working poor.

    Some conservative thinkers have acknowledged the damaging results of a laissez-faire ideology, which furthers the concentration of productive capital ownership. They are floundering in search of alternative thinking as they acknowledge the negative economic and social realities resulting from greed capitalism. This acknowledgment encompasses the realization that the troubling economic and social trends (global capitalism, free-trade doctrine, tectonic shifts in the technologies of production and the steady off-loading of American manufacturing and jobs) caused by continued concentrated ownership of productive capital will threaten the stability of contemporary liberal democracies and dethrone democratic ideology as it is now understood.

    Without a policy shift to broaden productive capital ownership simultaneously with economic growth, further development of technology and globalization will undermine the American middle class and make it impossible for more than a minority of citizens to achieve middle-class status.

    We are absent a national discussion of where consumers earn the money to buy products and services and the nature of capital ownership, and instead argue about policies to redistribute income or not to redistribute income. If Americans do not demand that the contenders for the office of the presidency of the United States, the Senate, and the Congress address these issues, we will have wasted the opportunity to steer the American economy in a direction that will broaden affluence. We have adequate resources, adequate knowhow, and adequate manpower to produce general affluence, but we need as a society to properly and efficiently manage these resources while protecting and enhancing the environment so that our productive capital capability is sustainable and renewable. Such issues are the proper concern of government because of the human damage inflicted on our social fabric as well as to economic growth in which every citizen is fairly included in the American dream.

    Our current system is rigged to continually concentrate the ownership of capital in the 1 to 5 percent of the population. The current system is presently propelled by greed in our society, which creates dire moral implications. A new system that would ensure equal opportunity for every child, woman, and man to acquire productive capital with the earnings of capital and broaden its ownership universally does not require people to be any better than they presently are, but it does enable our society to leverage both greed and generosity in a way that honestly recognizes and harnesses productive capital as the factor that exponentially produces the wealth in a technologically advanced society.

    The resulting impact of our current approaches has been plutocratic government and concentration of capital ownership, which denies every citizen his or her pursuit of economic happiness (property). Market-sourced income (through concentrated capital ownership) has concentrated in individuals and families who will not recycle it back through the market as payment for consumer products and services. They already have most of what they want and need so they invest their excess in new productive power, making them richer and richer through greater capital ownership. This is the source of the distributional bottleneck that makes the private property, market economy ever more dysfunctional. The symptoms of dysfunction are capital ownership concentration and inadequate consumer demand, the effects of which translate into poverty and economic insecurity for the 99 percent majority of people who depend entirely on wages from their labor or welfare and cannot survive more than a week or two without a paycheck. The production side of the economy is under-nourished and hobbled as a result.

    While Americans believe in political democracy, political democracy will not work without a property-based free market system of economic democracy. The system is the problem, but it can and must be overhauled. The two prerequisites are political power, which is the power to make, interpret, administer, and enforce laws, and economic power, the power to produce products and services, whether through labor power or productive capital.

    Kelso wrote: “In the distribution of social power, whether it be political power or economic power, all things are relative. The essence of economic democracy lies in the elimination of differences of earning power resulting from denial of equality of economic opportunity, particularly equal access to capital credit. Differences of economic status resulting from differences in advantages taken and uses made of differences based on inequality of economic opportunity, particularly those that give access to capital credit to the already capitalized and deny it to the non- or -undercapitalized, are flagrant violations of the constitutional rights of citizens in a democracy.”

    We need a recognition in America that we should deliberately begin to broaden the capital ownership base in a way that is consistent with the laws of property and the Constitutional safeguards of the rights of men and women to own property and be productive.

    What needs to be adjusted is the opportunity to produce, not the redistribution of income after it is produced.

    The government should acknowledge its obligation to make productive capital ownership economically purchasable by capital-less Americans using insured, interest-free capital credit, and, as Kelso stated, “substantially assume financial responsibility for the economy through establishing and supervising the implementation of an economic, labor and business policy of democratized economic power.” Historically, capital has been the primary engine of industrialization. But as used, as Kelso has argued, has, as well, “been the chief cause of the institutional deformities that have created and maintained two incompatible classes: the overcapitalized and the undercapitalized.”

    We cannot balance the budget without cutting out coerced taxpayer-dependent redistribution of the earnings of capital workers, which if we did at this juncture would collapse the economy and ruin lives, resulting in social strife, personal suffering and degradation, the erosion of freedom, and ultimately anarchy, which will bring on totalitarian government. While welfare, private charity, boondoggle employment and other redistribution measures are now seen as necessary, they do not have to be sustained indefinitely. There are policies that can be adopted and executed to reverse the ultimate direction of collapse of the American market economy system. Such policies are based on the recognition that as the production of products and services changes from labor intensive to capital intensive, the way in which every human being––not just a few, but every person––earns his or her income must change in the same way. At the core of this quiet revolution is the understanding and commitment to broadening the ownership of productive capital.

    We need new justice-committed leaders, especially those who want to end the corruption built into our exclusionary system of monopoly capitalism––the main source of corruption of any political system, democratic or otherwise. We need to advocate the need to radically overhaul the Federal tax system and monetary policies and institute proposals to get money power to the 99 percent of American citizens who now only rely on their labor worker earnings. Under the Just Third Way’s (http://foreconomicjustice.org/?p=5797) more just and simple tax system, access to ownership of the means of production in the future would by provided to every child, woman and man by requiring the government to lift all existing legal and institutional barriers to private property stakes as a fundamental human right. The system was made by people and can be changed by people. Guided by the right principles of economic justice, “we the people” can organize and demand that the system be reorganized to make true economic democracy the new foundation for true political democracy. The result of this movement of new justice-committed leaders leaders and activists will be inclusive prosperity, inclusive opportunity, and inclusive economic justice.

    • ICFubar

      I gave an up tick for the interesting thesis. “One vast an ecumenical holding company for whom all men will work to serve a common profit, and for which all men will hold a share.”
      Which would not work as there would be no price discovery, which I know is not what you are advocating here. I’ll have to think on your ideas listed here for awhile.

      • Robert Lapsley

        If the intention is to stimulate the economy it would be hard to deny the value of dropping some cash in the hands of those for whom basic needs are unmet. It would not address the fact that of the classic factors, land, labor, and capital, labor is (i.e. human capital) both the most and least valued, depending on what WE deem of value: intellect valued, unskilled work force, not so much. On the one extreme we have human capital in the form of Michael Angelo, Einstein, Steve Jobs, Vermeer, Francis Crick, and scores more, the likes of which continues in short supply. And then we have the general labor pool, skilled labor, and more importantly for my point, the “contingent work force” that provides the unskilled labor I use daily, a rising tide, a flood of wasted potential. This sea of humanity at the lower end of the labor spectrum are the greatest in number and their numbers are growing faster and faster. Consequently their economic value is discounted, their input is worth less and less, ” a dime a dozen” as they say. Our economy can not keep up with their growth and struggles to provide work for them, and certainly does not have enough meaningful work. Why ain’t exactly clear, I am not even going there for now. But readers of this site know the evolutions of economy are complex and many varied factors contribute to current state of wealth distribution. But I return again and again to my thinking values lead… if we start looking at our value attributions and their contribution to “price discovery” we might find some low hanging fruit to consider. I am interested and would like to hear your view, and others thoughts on the relationship between price discovery and value attribution.

        That rare company at the top of histories honor role were respected, esteemed, valued, and they never did want for material wealth. They might have wanted for more knowledge, but not for conspicuous consumption. I think most people would opt for honors and respect. That of course, as they say “begs the question” Who, what, how, where, when, why, our values?

        • ICFubar

          These are the thorny issues of how the human economy distributes the wealth of the generated surplus in hopefully a humane and economically just manner.What we do know is that the present system is unjust. Far more knowledgeable and incisive minds than mine have delved into this conundrum. It is my belief society must work towards providing a basic standard of living across the planet with the difficulty of spanning the multitude of cultures and political structuring. What is deemed ‘valuable’ also changes across the human experience but a basic standard of living is probably something that could be agreed upon under the human ‘rights’ charter as outlined in agreement at the U.N., which despite its major failings has produced some fine rhetoric but mainly as platitude. This set of rights is well within the ability of the world economy to provide the only question is how to implement such an action in a world predicated on greed and zero sum thinking. There have been many avenues of thought directed towards distribution of wealth and I tend to take a smorgasbord approach but also tend towards an anarcho-syndicalist model for solving this problem along with reform of the monetary system where money is originally issued debt free and where the secondary market of lending at interest is subjected to public oversight to prevent speculative bubbles and has individual caps on market share and also with view to overall negative and positive debt-debt free numbers. Under this model society determines what to produce, how much to produce and how it will be produced as the ‘market’ determines the validity of this production. Sorry, I’m being interrupted here for the urgent use of the computer so I’ll leave it here for now.

    • damie11

      I would like more clarity, Gary, about your interesting response. Are you suggesting that credit be provided to purchase stock or to create one’s own company or to do both? I do not see how over supply can be solved with an increase in supply. My other thought reading your response, concerned carrying capacity. Current consumption unsustainably uses renewable resources and depends largely on non-renewable fossil fuel resources. Expansion into inexhaustible energy sources such as wind and solar are limited by the amount of wind and solar available any given day. I believe we must move towards an environmental economic system that views humans as part of, not master of, the larger biosphere. Harnessing the productive capabilities of the under-productive, under-capitalized masses will bring on the collapse of the environment even quicker. Can you provide a clarification to my first question and a response to my second concern?

    • Use more advanced technology to solve the problems caused by less advanced technology. Stop pushing for jobs; start pushing for full-fledged nanotech printer-replicator technology. Once everyone owns one and has access to unlimited CAD online, any remaining scarcity in production will end. Likewise, all centralized production will end. Everyone will own his or her own means of production, and will live a very highly advanced form of subsistence production. Leave politics out of it. Politics has NO answers to the problems addressed here at Evonomics.

      • Dave Carson

        These things are not the replicators you see in star trek. They are not the answer. The problem with statements like this are that they are rooted far in the future. We are no where close to being able to create the things people need to be self sustaining.

    • Sam

      It for the fact that the stock market is ownership of the means of production, which undercuts your assertions, well put. Then there is the assumption that the next tech is like a movie and people aren’t greedy, well….

  • Lexi Mize

    It would seem to me that if we don’t know why we’re in this predicament we won’t be able to fix it.

    “I don’t know why your car won’t work.
    — Let’s change the tires and see if that helps. Nope.
    — How about a new paint job?”

    So, why do we have such egregious inequality in the US today?

    We were on a pretty good road post WWII. The ratio between lowest paid to highest paid in any public corporation was not so outrageous.

    If wages for the lowest paid could have kept up with the increases in top corporate offices, or if those top wages would have stayed down below the stratosphere, maybe we wouldn’t have this situation. Workers would have been made partners in capital ownership.

    If corporations didn’t disband labor (or have their lobbyists bully congress into disbanding labor), we might not have such wage disparity. Again, workers could have joined the capitalist system rather than be sidelined in it.

    If corporations hadn’t abandon the US worker and undercut them with off-shore labor… it might have helped reduce the spread. Globalization is a problem true, but more equitable distribution would have prepared the US worker better.

    If government had enacted tougher rules about how much lobbyists can bribe congress, what corporations can spend in campaigns, what global corporations must do with their international profits, what high-finance and Wall Street can get away with e.g. Glass-Steagel, if government had not turned into a corptocracy — beholden to the plutocrats — rather than be the champion of its citizens, we might not be in this unholy mess we find ourselves in.

    So, if we want to pay everyone a meager stipend (2 months of my family’s health care bill – whoopee!), yeah, great. But it won’t solve the underlying problem…

    which is: corporate power in government.

    • Lev Shakhmundes

      I am with you, Lexi
      I would summarize your presentation this way. Huge corporations, commanding huge amounts of money, have developed disproportionate political influence. Donald Trump does not seem addressing the problem. The assessments I am aware of conclude that the wealthier one is the more beneficial the tax cut is.

    • Dave Carson

      We need to get rid of the Fed. This country was founded on the principle of an equal monetary system. The gold standard which the rich stole from us. The gold standard has an intrinsic balance as there is a finite amount of these resources.

      This finite amount does not reward hoarders. If one man holds all the gold then no one can afford his services and something else becomes valuable. It must be distributed in a more equal fashion in order for an economy to sustain itself. The current system rewards hoarders and keeps the masses in indentured servatude forever struggling to stay afloat.

      Vote to end the Fed.
      https://youtu.be/iFDe5kUUyT0

      • Lexi Mize

        Thanks for that video.
        We’ll never get rid of the FED. Too many oligarchs who control or who ARE the government — profit from it. However, we can take back a larger share of what the plutocrats are stealing from society. The way to do this is to enact Constitutional Amendments which will limit corporate control of government. Even this is a long shot. CorpGov does not want to be limited. But, if enough relative poverty, and relative suppression builds, we may be able to get new blood into Congress that in 2028 or 2032, amend our laws to wrest back control from corporations.

        The Equalitocracy Manifesto:

        • Stronger financial regulations.
        • Amendment 28: Corporations are not people.
        • Amendment 29: Non-sequential term limits for Congress.
        • Amendment 30: Campaign contributions limited to one day’s average
        gross pay, per candidate, per annum, per citizen.

        (Equalitocracy – government by the equal)

  • Helmut_Schmidt69

    The author does not understand foreign exchange rates. Prices are not going to get higher at Wal Mart because of Trump’s trade tariffs. They will get higher because China is switching to the new Bancor, and the US Dollar will rapidly fall in value making imports much more expensive.

    Trade tariffs are necessary in the short term to allow domestic industry to rebuild to meet demand. This will not have as dramatic of an effect on jobs for the reasons you state, but it is still essential. It is the only way affordable goods will be available at Wal Mart.

    Once world exchange rates stabilize and balance of payments surpluses and deficits are balanced, there won’t be any need for trade tariffs as competitive currency devaluation will be impossible.

    And, isn’t this site about evolution? The UBI can’t possible work, given the bell curve distribution of intelligence. Probably half of people, definitely 1/3, do not have the biological ability to manage money. They will just waste it. We will always need social services to care for these people.

    It is far better to have a job guarantee, even if it is make work jobs. This also provides structure to people’s lives who are not that intelligent.

    Most liberals are still wedded to the insane Tabula Rasa myth and can’t handle the reality that a significant proportion of people are born stupid. That’s fine. They will never change their mind until China has CRISPR machines in every family planning clinic and they engineer a super race of high IQ humans.

    In the meantime, at the very least, learn about how exchange rates work. Read up on the first UN conference in 1944. Read about the Triffin Paradox. Read about Russia and China calling for the Bancor. Read about China issuing sovereign debt denominated in IMF SDRs, an early Bancor prototype that will likely be replaced in time.

    This is all just theoretical stuff that while interesting in say, a Star Trek episode, doesn’t have much to do with the reality of America in 2016.

    • Lev Shakhmundes

      Helmut, are you on LinkedIn? If you are, let’s connect. You will find me there by my name. We can undertake to straighten out with the universal basic income and its alternatives.
      Anyone else is interested in doing that? What I have in mind is to aim at a publication in a reputable journal.

  • Helmut_Schmidt69

    Also, what is the deal with this site? I mean, it’s pretty clear we’re seeing a big shift in politics. No one, except a few radicals in major cities, believe in the Democratic Party nonsense of racism, sexism, homophobia, etc. That’s all they got, and it’s getting pretty offensive. You combine that with blatant neoliberalism, and well – you’ve got a party that really stands for absolutely nothing.

    Now, the Republican Party hasn’t been any better, but it’s much more of a blank slate. It’s entirely possible the party will change quite radically back into the Progressive Party.

    It’s pretty foolish at this point to have this site turn into a Democratic Party apologist machine. Persons such as myself well versed in progressive economics find the entire party a bizarre cadre of degenerate freaks more interested in virtue signalling and ego gratification than doing anything constructive either at home on a national basis, or even for their neighbors.

    • John Davies

      “Virtue signaling”!

      I’d been looking for a phrase to describe the liberal obsessions with transgender bathroom rights & the like, while entire economic classes disappear, and there it is, thanks.

      But a nice article other than the tilt to the presently irrelevant Dems. A UBI sounds a no-brainer.

      If the present volatility is any indication, in 2020 President Pence may be swept from office by a 79-year-old Bernie Sanders, running under the Our Revolution banner.

  • Kevin Cox

    Instead of a big bang UBI we can gradually work towards a redistribution of income generating capital from the Commons. Land, natural monopolies of services like education, health, transport, water infrastructure, energy infrastructure are a few. Doing this will gradually reduce the need for taxes as the government can fund those with fees for regular currencies. There is less of a demand for taxes to redistribute income. The savings from a more efficient financial system can be used to pay for the transition.

  • Ishi Crew

    While i support UBI, and see wealth/income inequality as a huge problem, which overlaps with technological change and huge inequalities in education/skills/competency, i do not think the issue is ‘lack of demand’. As a sort of ‘green’ or environmentalist, i think the problem there is too much ‘demand’ for what i view as ‘junk products’ (junk food, junk media, junk entertainment, junk development, sprawl, highways, energy, security and military and police and prison forces etc.).

    Both a UBI and ‘guaranteed jobs’ programs have the problem that they can be used to support production and consumption of ‘junk’.

    I also think the article is incoherent because it doesn’t crunch the numbers. A UBI would have to funded by either taxes (essentially progressive taxes, so its a negative income tax) or else by just printing money (and some propose that—some think govt debt can go to infinity with no problem—maybe the US economy should be retooled to simply produce (print) dollars, for a green economy).

  • Duncan Cairncross

    Excellent
    I am all in favor of a decent UBI – by simply empowering everybody to say “NO” a decent UBI will go a long way towards leveling the power imbalance that currently makes capital so much stronger than the workers

  • Lev Shakhmundes

    The tax cuts contemplated by Donald Trump are not a substitute for the UBI in that the latter does not play in his motivation. Therefore, one vs the other, as in this article’s title, is out of place.

    The UBI is deemed to solve the problem of ever-increasing disparity in incomes over the last several decades, not “the fundamental problem of modern capitalism, lack of demand”, even if there is such.

  • Chris Mack

    You need to spend more time on this. Keynesian economics is fundamentally flawed, and ‘trickle-down’ economics is a fallacy that you seem stuck with as an unquestioned belief. It’s wrong. Tax breaks for the wealthy will NOT stimulate the economy. Tax the wealthy – create tax breaks for small business. Work from the bottom up, not the top-down. THAT is how you stimulate the economy.

  • Petercvs

    One practical way to implement the UBI without economic shocks is to decide on the appropriate level of the UBI and phase it in over 10 years with 10% UBI in year 1 and reducing basic welfare payments by 10% each year so that after 10 years basic welfare payments have been replaced by the UBI. A similar 10% per year “phase in” of the ammended tax rates would also be needed.
    This method would absorb any sudden changes and give citizens time to adjust to the new system.

  • Partha

    A wealth creation mechanism relying on tax cuts for the rich and for businesses requires
    the creation of many jobs, uncompetitive in a more closed economy, to pay through a higher
    level of economic growth. Suits Donald Trump who has no need of his Presidential salary if
    he is allowed to keep his presumably tax free dividends in hedge funds invested in his large
    foreign holdings. In the meantime Government spending in infrastructure projects and a
    redesigned healthcare insurance program takes care of income redistribution for those who
    were being left out by job losses. A major assumption in this is that lower trade levels will
    sustain the US economy from the shock of mounting deficits at home.

  • Steve

    Disequilibrium Theorists: The Smartest Economists On The Planet, But…still stuck in accounting equilibriums and the end of the economic cycle of action of Start, Change and Stop, that is Stop as in Deflation, despite the fact that the inherent nature of advanced capital economies is cost inflationary.

    still stuck in accounting equilibriums and the end of the economic aspect of the physical universe cycle of action of Start, Change and Stop, that is Stop/Deflation, despite the fact that the inherent nature of advanced capital economies is cost inflationary.

    I’m quite sure they will be able to come around to half of the solution to our long term problems in advanced economies, i.e. a universal dividend. They’re already advocating “a modern debt jubilee” which is the first part of the three steps we need so why not a universal dividend? But as I pointed out above they’re still stuck in accounting equilibriums and fallacies like the velocity of money and stock/flow consistency, and so they’re also stuck in the end reality of inherently unstable advanced economies where the flow of total costs always exceeds the rate of flow of total individual incomes, namely deflation. And yet the underlying and continual state of modern economies is cost inflation as described above. Hence they don’t see that the third policy way to end an inherently cost inflationary modern economy is a discount to retail prices to consumers which is reciprocally gifted back to those merchants.

    The dual policies of a universal dividend and a retail discount would resolve the other glaringly contradictory and yet still unconscious problem in advanced economies, namely the monopoly paradigm of monetary distribution, debt only. Just integrate debt only with its opposing paradigm of gifting…using The Cosmic Code as a consciousness raising and truly progressive model of course, and we’d soon have a roaringly profitable economy with steadily falling prices.

    And finally, if we would be very smart we’d make sure that the dividend was abundant enough and the discount percentage high enough to reverse any inflationary naughtiness by businesses raising their prices just because they wanted to. That way both individuals and enterprise would become increasingly free from debt and their current dependence on it, and that would force the problematic business model of finance to take its smaller, non-dominating and ethically correct place in the economy….alongside every other business model.

    This way Disequilibrium theorists would become truly and elegantly consistent and recognize that the above policies would actually create “the higher disequilibrium” of a continual rate of flow of total individual incomes in ratio to the rate of flow of total costs/prices

    The Cosmic Code: Bring wisdom and consciousness to economic theory.

    wisdomicsblog.com

    • Dave Carson

      You CANNOT erase debt in this economic system. It is inherently based on debt. It is impossible to bring about the end of debt because of its nature. As long as the centralized banking cartel exists we will all be indentured servants.
      https://youtu.be/iFDe5kUUyT0

      • Steve

        I’m not advocating the elimination of all debt. I’m advocating for a greater rate of flow of total individual incomes in ratio to the rate of flow of total costs/prices…on a continuing basis which will continually increase economic freedom for both the individual and for enterprise and prevent the build up of debt as well.

        • Dave Carson

          You’re not understanding how the system is designed. Debt is inherent to the design. Our money is created from nothing. If I print up a single dollar and tell you you have to pay me back $1.25 for that dollar how do you pay me back? I’ve only printed $1. The only way you can pay me back is if I print a second dollar which I charge you for that. Now you owe my $2.50, but you only have $2 again how do you pay back that debt?

          It is designed to keep nations in constant debt that CANNOT be paid back. Nothing you or anyone purposes can ever change this unless the Fed is eliminated.

          • Steve

            I’m not misunderstanding the system. I understand exactly what you just said. Actually the system can go on for very long periods of time except debt will inevitably build up. What I’m saying is in order to stop AND reverse that tendency you have to integrate monetary gifting into the system in a fashion that is direct to both the individual and businesses and that is at a sufficient rate of flow that it reverses the rate of flow of debt build up. That is the definition of economic freedom and free flowingness.

          • Dave Carson

            The only way that can work is to eliminate the Fed. (Which can be done) you can’t reverse a rate of flow of debt in this system. It is inherent to the system.

            Unless the individuals who “create” the money are willing to forgive the debt it is the only outcome. That is completely out of governments hands. Basic income won’t do anything but create even more debt, which will eventually come to fruition. The only reason it hasn’t come to that in America yet is because we have such a strong work force, but it’s dwindling. And that is by design.

            The finding father’s knew this. The American Revolution want about “freedom” it was about freedom from centralized banking and having the freedom to create our own monetary system. America has had it and then a central bank emerged, took the country into bankruptcy, was eradicated, we grew our economy again and a central bank reared is ugly head again. It’s happened three times in our batons history and every time it was disastrous.

            People are better off without basic income. It will hurt before it gets better though. There in less the problem. No one wants to be the generation that had to go through the hurt to get to the monetary equalibrium.

  • How about a “grand bargain” package deal combining something like the “Fair Tax” (replaces income/FICA taxes, and exempts groceries currently eligible for food stamps) together with UBI (replaces the Fair Tax “prebate” as well as Social Security/SSI, disability, and all other means-tested aid programs), elimination of the Federal minimum wage, and a “Robin Hood Tax” on the sale of stocks, bonds and other such financial instruments?

  • Dave Carson

    Neither tax cuts nor basic income will do anything. The problem lies in the federal reserve. As long as it exists citizens as well as countries will remain forever in debt.

    I urge everyone to watch this, because until everyone understands it, it will never change. https://youtu.be/iFDe5kUUyT0

  • Sam

    What if we used state power to dominate what’s next worldwide? That’s the strategy of Singapore and China. And it is working. The former goes at it with brains the latter basically at the barrel of a gun with criminal internet. But the US would bring innovation and huge power.

  • Sam

    Just by the way of you are right then triple all Vet benefits and double all social security retirement benefits and pay for it with zero payment for being lazy. Done.

  • Homer Connor

    The mistake is it is assumed that the rich invest their money increasing jobs and productivity when what they actually do is gamble on Wall Street and call it investing.

  • Sean Meehan

    UBI would be a better-targeted stimulus than corporate subsidies and tax cuts to the top, but it’ll never be more than a tool to deconstruct welfare as we know it. It will end up doing harm by contributing to inflation in the long run, because it doesn’t deal with depressed production resulting from idle workers.

    Those who support UBI should consider it a step in the right direction, but there are better reasons to push for a Job Guarantee as the ultimate countercyclical solution to the wasted productivity inherent in the neoliberal insistence on maintaining stocks of unemployed labor to promote price stability and stave off dreaded inflation. Yes, Trump is destined to fail, but make sure the alternative is as good as it can get, and not just a boondoggle from the right to undermine the safety net.