Please read my math, before you jump on top of me here, because I don’t object to it on principle.
So there are about 230 million Americans above age 18 in the US (number may be out of date, but we have a pretty big target here).
If we gave everyone $1,000 per month, they would have an extra $12,000 per year.
The basic liability would be $2.76 trillion dollar per year.
We would save about $685 billion a year, if we subtracted this income from the social security benefits paid out every year (social security benefits are about $1460 per month).
Okay, so we are down to $2.08 trillion per year.
We spend another $394 billion per year to the states for welfare programs. The poverty line for a US household is about $12,000 per person plus about $4,000 per extra household member. This would mean a significant reduction in welfare programs, as only single parent households, who earn less than $4,000 per child would be eligible. Just for kicks, let’s say this is reduced to $94 billion.
Well, that leaves us at $1.78 trillion dollars.
So I can see that on the first side of the ledger. But what about payroll taxes? Income tax represents 48% of the tax revenue, which would increase or at least stay the same (I assume people won’t prefer less income). Fewer people would qualify for tax credits. But payroll taxes represent another 35% of the tax revenue or about $1.1 trillion dollars in revenue. So whatever reduction in earnings employees chooses, will reduce the revenue collected from payroll taxes. How much is a question neither I or anyone else can answer.
So here are a couple other questions no one can answer. How many people will work less hours, if they have universal basic income? How many jobs will be eliminated by automation?
Whether you are a capitalist or not, there is a casual relationship between productivity and profit. Money in our current system is created inside this mechanism. Bank X loans money to Business Y, who makes a widget for $1 and sells it for $2. Bank X earns interest from the loan. If Bank X has to borrow from the federal reserve to make the loan the interest earned from Business Y minus the interest owed to the federal reserve equal New Money. If Bank X kept a bigger percentage of money in reserve rather than loaning it out, the federal reserve pays them in New Money.
New Money is what defines economic growth.
Karl Marx would say that the price of everything is reflected in the work put into making it. He is right. An economy requires labor to drive its growth. The only difference Marx would have is about the overhead.
As far as work goes, I can only use myself as a gauge. If I evaluate the relationship between my time and my income, my time is always more valuable. I work one job. I changed jobs from an industry, where I made more money, but increasingly was having to work 50 to 60 hours per week. At the end of the day, I would rather have less expensive things than have to hand over more of my life to an employer. The only motivation I have to working more hours is, when my expenses increase. I don’t hate work, but I can always find something better to do. If I had another $12k a year, my ambition would be eliminated completely.
Even if automation replaces the current labor put into making products, we will have new products to make. We will have new things. There will be an arms race to build new and better automation, which itself will require labor. The assumption that we know how many jobs will be lost or gained relies on heavily speculative models of economic theory (which any honest economist will tell you is dangerously inadequate as a means of prediction). The finest economic minds in the world can’t tell you with certainty what will happen in 1 year let alone 10 years.
So this profit thing is pretty big for rich people. If there is a net decrease in productivity, they will raise the price of the product. Wages will need to increase to convince workers to want to trade their time for more money. As inflation kicks in, the value of the UBI will be lessened, which will basically shift the definition of poverty some percentage of $12,000 dollars higher.
I may be missing something, but unless the fundamental economic relationship between labor, pricing and taxation is changed, universal basic income ends up being a regressive benefit. Now some kind of means testing model may make more sense.
If someone sees an error in my logic, I am happy to listen.
edit: When I first wrote this diary, I was using a target of about $20,000 a year (1 parent two children), but I changed it after seeing a proposal, which used $1000 per month (this doesn’t account for children). I didn’t correct all the numbers. I’m sorry if this added confusion.
