The Basics of Basic Minimum Income
As we move towards a world where automation may replace many of the boring, repetitive or dangerous jobs that people rely on financially to survive, we will see an increase in the gap between low income and extremely wealthy people.
The middle class is getting pushed away.
I think the scary fact is that the machines are really good at what they do.
At one point in time, over 90% of human labor was dedicated to agriculture, and now in the US only 1.1% of human labor is dedicated to agriculture.
These jobs were replaced by heavy machinery — in abstract terms, the value of human muscles and bones were replaced by machines with their next generation metal muscles — they lift more, lift heavier, and they never get tired or complain.
This was an industrial revolution — and what we’re seeing now is something very similar; but instead of machines replacing physical man-power, this time they’re replacing human brain-power.
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The problem that’s presented is that it’s not socially ethical, or economically advantageous to allow people to drop from a middle income level to a poverty level as automated solutions continue to develop.
We need a new method of distributing wealth as we move into this new world.
Basic Income is a concept that would give every person a minimum ‘income’ that they can use to pay for basic shelter, food, and water. The goal being to have every human on earth living within a basic standard of living, and never having anyone reach a level where they are homeless, starving, or dehydrated due to lack of financial resources.
It’s a fact that when you push humans into a corner, they have two options — submit, or fight.
Hypothetically, if I was starving and had a family to feed, my only option would be to steal from someone who had food & money, or die. It’s a really easy and obvious conclusion, and I think this is the psychological floor we need to make sure doesn’t get crossed.
With automated solutions replacing many jobs — we may see a point in time where its easier / better / faster to steal and be violent, than to be a productive human in society, at which point we have a real problem.
To prevent this from happening, we need to design a system where the needs of lower-income humans are fully met.
This means shelter, food, water, entertainment & education.
With these needs met — we theoretically wouldn’t have looting or stealing because everyone will have a minimum standard of living which doesn’t necessitate doing those things to survive.
There is low incentive to steal because the risk of getting caught is high, and the benefit of having a few extra dollars is very low, because you can already sit on the couch all day with enough money to have food, water, shelter, and some basic entertainment.
The holy grail is a system that removes repetitive, boring & dangerous jobs so people can focus on the things they love — playing basketball, learning science, building robots, dancing — all of which return a value to society in their own way.
“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.”
― R. Buckminster Fuller
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The earliest recorded concept of a basic income was in Classical Athens in 483 BC.
A massive amount of silver was found in the Athenian silver mines. The distribution of this treasure provoked debate among the athenians. Aristides proposed the profit from this find should be distributed among the Athenian citizens, while Themistocles proposed the money be spent building warships for the Athenian navy.
Both of these are methods of distributing a government owned financial windfall, but one goes towards protecting the people, whereas the other goes to increasing the daily well-being of each athenian.
In the US, the idea can be traced back to Thomas Paine in his essay Agrarian Justice.
Paines’ argument was that ‘Men did not make the earth. It is the value of the improvements only, and not the earth itself, that is individual property. Every proprietor owes to the community a ground rent for the land which he holds.”
He proposed a Citizen’s Dividend, where all citizens receive regular payments from revenue raised by taxing the monopoly of land and natural resources.
From this Citizens Dividend there have spawned many iterations of a basic income in the US, with many names and different ways of trying to fund the same goal.
To come up with an ideal solution in 2018, we will need to explore each of these iterations further:
Asset-based egalitarianism (Universal Basic Capital, Stakeholding)
Global Resources Dividend
Land Value Tax
Negative Income Tax
Value Added Tax
All of these systems are similar in their goal, but have varying ways of both funding a basic income, as well as the sociological ‘reason’ for people receiving this benefit.
In this system, the amount received by each person depends on the value of natural resources — or common goods — like location values, financial transactions, the electromagnetic spectrum, the use of airspace, etc.
Thomas Pogge argued every citizen has an inalienable stake in all limited natural resources. His theory contends that the people own the resources.
The state of Alaska has a form of citizens dividend in it’s Permanent Fund — which holds investments on behalf of the citizens, seeded from the states revenue on Oil.
In 2005 every Alaskan resident received a check for $845 , and over the 24 year history has paid out $24,775 to each resident.
Alaska have a working example of a type of citizens dividend — while it won’t pay for everything to sustain daily life, it provides a supplimental income for the residents of Alaska, with the logic that the people collectively own some of the value extracted from the natural resources in the area.
Asset-based Egalitarianism (Universal Basic Capital):
Egalitarianism is a school of thought that prioritizes equality for all people.
Asset-based egalitarianism theorises that we can achieve equality by a redistribution of resources, usually in the form of a capital grant provided when you reach adulthood.
In this system, the redistribution of wealth is funded by an Inheritance Tax — so when someone dies, a large portion of their estate is taxed, and redistributed to the people in the form of a grant when they reach 18 years old.
In this system, it’s not a monthly allocation of money — but a lump sum that people get when they reach adulthood, which should give them a good starting point to build their lives.
This is an interesting system that basically taxes rich people when they die, cutting down generational wealth, and spreading it across the population.
A wealth tax taxes the total value of personal assets — including bank deposits, real estate holdings, assets in insurance and pensions, ownership of businesses, financial securities, etc.
A wealth tax is different than income tax because it taxes someones accumulated purchasing power — whereas income tax is a tax on the flow of assets (only taxed when moved).
Currently when you pay taxes, it’s on the activity of that year, but not the total assets a person holds. Adding a wealth tax would find another revenue source to fund a BMI.
In essence, social credit is a secondary form of money — in that it’s a credit that allows you to redeem for other goods and services.
Say you coach a little league team, you could receive social credit from all the families, and much like airline miles, could be redeemed in other places within the community for equal value of goods or services.
If you acquire lots of social credits, it means you’re an important and helpful person within the community. Businesses will offer discounts / free goods to people who provide to the community, because providing to the community in turn makes their business better and more profitable.
Land Value Tax:
‘Roads are made, streets are made, services are improved, electric light turns night into day, water is brought from reservoirs a hundred miles off in the mountains — and ll the while the landlord sits still. Every one of those improvements is effected by the labour and cost of the other people and the tax payers. To not one of those improvements does the land monopolist, as a land monopolist, contribute, and yet by every one of them the value of his land is enhanced. He renders no service to the community, he contributes nothing to the process from which his own enrichment is derived. (Winston Churchill, 1909, quoted by Barker 2003: 116).
Land Value Taxes are different from Property Taxes in that property taxes tax the value of the property including all improvements, whereas Land Value Tax taxes the maximum potential value of the land itself, and any improvements made by someone other than the land owner.
The value of a property has 3 factors:
- Scarcity Value
— Value of improvements made by landowner
— Value of improvements made by other people / public sector.
With a LVT, you would pay taxes on the maximum value of the land and improvements made by other people, but not improvements made by the landowner.
This incentivizes developers to maximize the value of their plot of land, because the taxes they pay is not on the actual property value, but the potential value of the property should it be used in the most productive way.
Henry George argued that because the supply of land is fixed, and its location value is created by communities and public works, that rent of land and all components of value not created by human hands or minds is the most logical source of public revenue:
* the electromagnetic spectrum,
* fish in the ocean,
* mineral wealth,
* airport time slots, and so on.
Global Resources Dividend:
This is a method of tackling global poverty by the philosopher Thomas Pogge.
In this system, nations would pay a dividend (tax) on any resources that they use or sell — which results in a ‘tax on consumption’.
If people decide to use a natural resource, they would pay a dividend. This includes oil, but also the various uses of reusable resources (e.g. polluting water). The dividend results in higher costs for natural resources, and thus amounts to a “tax on consumption”.
A social dividend is the return on the capital assets and natural resources owned by society.
This would be funded through a tax on ‘property income’ — of which there are 3 forms. The first is rent, which you receive from owning land, which is a natural resource. The second is interest — money made by owning financial assets, and third profit — received from ownership of ‘capital equipment’ which is a good (equipment) that is used in the production of other goods and services.
The concept of a social dividend overlaps with the concept of a universal basic income guarantee, but is distinguished from basic income in that a social dividend implies social ownership of productive assets whereas a basic income does not necessarily imply social ownership and can be financed through a much broader range of sources. Unlike a basic income, the social dividend yield varies based on the performance of the socially owned economy
Negative Income Tax:
In a negative income tax system, people earning a certain income level would owe no taxes, whereas people earning more than that would pay a proportion of their income above that level; and those below that level would receive a payment in proportion to the amount their income falls below that level.
A negative income tax is intended to create a single system that would not only pay for government spending, but would also fulfill the social goal of making sure that there was a minimum level of income for all. It is theorized that, with an negative income tax, the need for minimum wage, food stamps, welfare, social security programs and other government assistance programs could be eliminated, reducing the administrative effort & cost to a fraction of what it is under the current system.
Basic Minimum Income is typically described as a new kind of social welfare in which all citizens (or permanent residents) of a country receive a regular, liveable and unconditional sum of money, from the government. There would be no state requirement to work or to look for work. An unconditional income that meets a person’s basic needs (at or above the poverty line), is called full basic income, while if it is less than that amount, it is called partial.
With basic income, it is not implied that humans have a natural right to resources, land, etc. — which is the case with a Social Dividend.
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With this basic overview, we can start to paint a picture for the landscape of basic income, the thought processes behind it, and potential ways to restructure society to fund this proposed wealth redistribution.
The next essay will discuss specific funding goals, and some creative ideas for generating enough money to fund a full basic income or social dividend.
Originally published at Julian Sarokin — The Future Will Be Simple.