Universal Basic Income will Accelerate Innovation by Reducing Our Fear of Failure
Scott Santens
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Capital, or currency, is a commodity. Too much of it creates inflation, and too little creates depressed markets. We make many mistakes in how we account for capital in the economy, but the biggest is probably how we arrive at GDP. Assuming a fairly even distribution of earnings and growth overstates the available capital and induces fear of inflation, which then creates a chain reaction of consequences that ends up stifling markets.

We should stop the envy economy where we constantly worry about who gets their fair share of available capital and concentrate on the velocity (how something moves) of capital. Money made from money has no velocity, but money created and injected into the economy at the bottom has a very high velocity because it moves through several hands rather quickly and doesn’t become sequestered until it reaches the top. The best system would replace every dollar so sequestered with a new one injected at or near the bottom, keeping a dynamic velocity of capital moving at all times in the economy. This used to be accomplished with tax policy that balanced taxes and risk, but our current model is to ignore risk and apply taxation equally to profit, no matter its benefit or harm to the economy. Profit from high risk venture capital is taxed at the same rate as that from low risk financial instruments.

Another critical mistake we make with the currency is applying the rules and thinking of a “pinned” currency to an “unpinned” sovereign currency, which we have had since 1971 when we abandoned the gold standard. The idea that we have to allow a crumbling infrastructure to hold back our economy because we can’t “afford” to update it is absurd beyond all reason. Infrastructure pays for itself, or it shouldn’t be classified as infrastructure. This also includes national health and education. If we need a bridge or a school we should simply build it and distribute the currency required to pay for it into the economy.

I know this is a long response, but the basic understanding of what I have included is critical to better understanding the benefit of a basic income. To work properly, this income needs to be universal, without a cutoff point that would stifle effort to make more. One would hardly be motivated to create additional income if every dollar earned was subtracted from the basic income. All ventures start small until the waters have been tested, and allowing everyone to have the full advantage of their efforts is the best way to create incentive. Sure, Bill Gates would also get a government check every month, but it’s impact would be insignificant when compared to the single mom starting a business from home without fear of failure.

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