“Winston Churchill once famously observed that Americans will always do the right thing, only after they have tried everything else.”
Several factors will have to come together before we see actual political movement toward any UBI or jobs guarantee legislation, and none of them will be pleasant. Obviously, a deep recession, or even prolonged depression, is looming just below the surface of our economy at the moment with the bulk of GDP having no velocity nor creating demand. We simply have a lot of money swirling around in cash grab booths that are accessible only to a small percentage of the population and everyone else is relegated to envious onlooker status.
We already know that any attempt to insert government into that cash booth to grab some cash for the onlookers is dead on arrival in our deeply flawed system that has allowed our representatives to become paid sponsors of economic powerhouses and shadow royalty. This means that whatever mechanism we use to fund such an ambitious concept as UBI will have to be income neutral, or even positive, to the top percent of the population. They really have no desire to see the rest of us starve, as long as we keep our unmanicured mitts off their banquet table. Luckily, we have the tools at our disposal to do that, but using them means a radical shift in thinking about macroeconomics, taxes, and government funding.
Both sides of the wide divide in American politics have economics all wrong, and the most vocal among them are going to have to sit down and shut up while the rest of us blaze a new trail into a future that doesn’t kill us all. On the conservative side you have deeply rooted libertarian concepts of property rights and personal responsibility that asks “How will you pay for it?” whenever economic legislation is forwarded, and on the liberal side you get a knee jerk “Tax the rich!!” response. Both are wrong, and holding us back.
Taxation doesn’t fund our government. In fact, if you pay your taxes in cash at the local IRS office you will be highly disliked because they are as likely to shred it as to take any other action after crediting your account. The fact that its value has been “canceled” by payment of the tax means it shouldn’t exist any longer. All government spending is accomplished by creating debt, and taxes collected do not factor into that. New money is created for appropriations “in full”, not just the part that represents deficit spending. The unrestrained monopoly issuer of the currency doesn’t need our currency to spend currency.
Taxes exist only to provide a demand for the currency and to give us a braking mechanism for the economy should it approach full capacity and threaten inflation. Spending has to precede taxation or there would be no currency to pay taxes with. This means that, if viewing a balance sheet of the “economy” and not just the budget, the debt is nothing more than a record of reserves left on the private side of the balance sheet, mostly in the cash grab booth of Wall St. and banking. Paying for currency injected into the economy by removing currency from the economy is highly illogical, even if you aren’t Spock.
On the flip side, having a sovereign currency and a debt denominated in that same currency means that we can “afford” any program or benefit that we wish. Obviously, sending everyone a million dollars would be inflationary, but making sure that everyone is financially secure in the basic necessities to sustain life isn’t. Inflation is only a concern when the capacity to produce goods and services falls short of the currency supply used to purchase them. The only thing holding us back from much more sensible fiscal policy that alleviates the suffering of the poor and elevates the middle class is an outdated, and dangerous, thought process rooted in the economics of a gold standard and the writings of economists who were constrained by it.