Wednesday, 12 July 2017

Basic Income experiment at national level

Since we're hearing more and more on Basic Income, either from governments who are preparing experiments at local level or from influential business men, advertising it (for obvious self-interest, in my humble opinion), a point will come (I think) in which an experiment will be required at national level, in order to assess the metrics and scheme of a Basic Income (or UBI) proper.

I propose two ways to do this:

1) A UBI experiment that takes the form of basic food stamps for all, which would be issued one day before the beginning of every month in value as to cover a month's basic food basket. Food is a regenerating commodity. There is surplus production of food globally, with so many metric tons of unsold bread being turned into fodder each year or simply being disposed off, while people still go hungry, because they are not integrated with the monetary system (with their own's country's system, let alone those of other countries). The price of food, sadly, is another story, and several factors come into play - but that's a subject for another time.

2) A UBI experiment that takes the form of Government interest-free loans to its citizens. I'd levy a 20K loan (the figure is up for the debate, I'd say it can be even higher for the purposes of this experiment) for each adult citizen, extinguishable in 3 years, without any debt payment schedule. In other words, the citizen decides how fast or slow, given the time period, he or she repays the debt. In case the debt is not repaid, it shows up as a tax bill.

I'd be very curious to see private sector consumption patterns under both of these experimental schemes. Their impact on labor force participation & on output elasticity. An impact study will have to be made (obviously) for the schemes. As always, what's important is the impact on demand and supply, not on trivial Government deficit and debt to GDP ratios - unless the countries in question are currency users, and not issuers (in the sense that the Government spends and taxes either in a foreign currency or is working under a fixed exchange rate or metal standard).

BIG/UBI tests at local level will always yield net positive results for reasons which should be fairly obvious - idle capacity being available, and the extra income afforded to the region in question is far away from putting a strain on the economy's ability to adjust to increased demand. What every supporter & doubter of BIG/UBI should be looking for is - what I call - sustainable behavior patterns. Less stress. Less crime. Smaller drop-out rates. Lower hospitalization rates. Fewer cases of domestic violence. Smaller poverty rates. Increased worker solidarity at the workplace (i.e. more bargaining power for labor). And improved labor participation, whether this occurs in a formal job, or outside of a job (voluntarism).

Feel free to comment if you agree or disagree with the above. Thanks.

Important note: This is in no way an advocacy of BIG/UBI as a "silver bullet" solution or panacea to the myriad ailments afflicting our societies.

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