Basic Income is EASILY affordable.

Basic Income — a regular payment of money for every resident citizen, regardless of their circumstances, sufficient to pay for essentials.

It sounds wonderful. Think of all the stress and worry it could alleviate. Think of the freedom it would give you. You’d be supported if you were unemployed or unwell or if you wanted to take time out from work to go to college, to retrain, to start a family, to care for a loved one, or simply because you need or deserve a break.

But, so far, we don’t have a Basic Income system. And why not? Well, there’s probably one reason above all others: Whilst most people would love to have the financial security that a Basic Income system would provide, they’re not yet convinced that it would be affordable.

However, the belief that Basic Income isn’t affordable is usually based on misinformation from people who are deeply prejudiced against the idea or have a very limited and deeply flawed understanding of Economics — or (very often) both!

In fact, for most modern, advanced economies, Basic Income is not only affordable, it is EASILY affordable. And here’s why:

As any competent economist could tell you, the issue of affordability on a macro-economic level isn’t fundamentally about money at all.

As individuals, the amount of money we have limits what we can afford, but nation states aren’t limited in the same way — at least, not in terms of their internal transactions. They have the capacity to control the amount of money in circulation and adjust the flow of money around the economy, so that there is sufficient money in place to enable whatever transactions we require.

Nation States are limited, however, by the real resources they have at their disposal. Whether you’re building hospitals or equipping the armed forces, what you really need are real resources, such as raw materials, capital equipment and manpower. If you have sufficient real resources at your disposal, then you can afford to get the job done. If not, then you have a problem.

Economics itself isn’t really about money. It’s about people and how they organize and allocate the valuable real resources at their disposal to meet their needs, protect their interests and pursue their ambitions.

When you spend money to buy food, it’s the food, not the money, that is the really important part of that transaction. If we have food, but no money, we can survive. If we have money, but no food, we all starve to death.

And this is why it’s so important to think in terms of real resources, not money, if you want to be able to properly understand Economics.

And if we apply this resource-minded thinking to Basic Income, we can clearly see that there is no fundamental affordability problem.

Why? Because, at the moment, people need food and housing and fuel and a few other essentials — and those resources are supplied to them. And under a Basic Income system, they will need exactly the same amount of food, housing, fuel and other essentials.

In other words; Basic Income does not require us to have any more, in terms of real resources, than we have now.

Indeed, we’ll likely have more manpower available for us to use as we please, because we will no longer need to be wasting many millions of man-hours a year sustaining the means-testing systems that are central to our existing welfare schemes.

Fundamentally, in terms of real resources, there is no problem affording Basic Income.

So that’s the most important ‘affordability’ issue dealt with. But there is still a money situation to sort out. The government should be looking to make sure it has sufficient funds to be able to afford to pay everyone’s Basic Income payments, without having to increase borrowing.

This, however, is still a fundamentally easy problem to solve.

Under a Basic Income system, the total amount of money the government will be paying out each week will be more than it is now, but all it needs to do is collect additional revenue to balance out that additional expenditure. More money will be paid out, but there will also be more coming in as tax revenue.

And it is important to note that these extra amounts are merely ‘transfer payments.’ Taxes transfer money from the people to the government — and Basic Income payments transfer that same money, from the government, back to the people.

These additional payments, therefore, don’t represent the use or waste of any additional resources. The government is not spending any more on its own activities. The extra money that it collects from the population, in the form of additional tax revenues, is being returned to the population almost immediately, in the form of Basic Income.

But won’t people object to the extra tax money many people will have to pay? They might, but what people should realize is that it’s ‘net taxes’ that are the important thing here — net taxes being the amount of tax you pay minus the payments, such as Basic Income, that the state pays to you. It doesn’t matter if you pay £80 extra each week in taxes, if you also receive £80 extra per week in Basic Income. Your disposable income each week is exactly the same as it was before.

And Basic Income does not require any increase in aggregate ‘net taxes.’ Indeed, net taxes should be able to be reduced, as we will no longer need to pay for so much bureaucracy.

Ah, but many ‘successful’ people pay a lot more in taxes than they receive in welfare payments. Why should ‘hard-working,’ ‘successful’ taxpayers be required to pay even more in taxes, so that other people can get free money?

And the answer to that is that a Basic Income system doesn’t require any such thing!

Some people think our tax and welfare system should be more redistributive, but if you disagree, that doesn’t mean you shouldn’t support Basic Income. Why? Because a Basic Income system does not inherently need to be any more redistributive than our existing welfare systems.

Consider, for example, an out-of-work family, currently being supported by welfare payments.

If a Basic Income system were introduced, they would of course be paid Basic Income, but most, if not all, of their other welfare payments would stop. There is no inherent need for them to be paid more money overall than they get at the moment — so there is no need for any additional tax revenue to be collected from the rest of society in order to support them.

Even more importantly, they won’t need any more food, housing or fuel than they get at the moment — so, again, there is no need for the rest of us to be subsidizing them by providing them with any more in the way of real resources than they get now.

But what we do get is the additional benefit that they are no longer being discouraged from working by having any of their welfare benefits taken away from them if they find work.

Now please consider a family in which both parents work. They earn decent wages and don’t receive any welfare payments.

Under a Basic Income system, they will be paying more in tax, because Personal Tax Allowances are likely to be scrapped and some tax rates are likely to be higher.

But, on the other hand, they’ll now be receiving a Basic Income, when they didn’t receive any welfare payments at all under the old system.

It is perfectly possible to arrange tax rates and Basic Income rates so that this family pays absolutely no more net tax than they do now.

In practice, of course, some such families will end up paying a little more in extra tax than they receive in Basic income, whereas others will find themselves slightly better off, because the Basic Income they receive will more than compensate for the extra tax they must pay.

On average, however, a Basic Income system does not inherently require any more of a redistribution from ‘rich’ to ‘poor’ than we already have.

So, in terms of real resources, Basic Income is perfectly affordable, because Basic Income does not require us to supply any more real resources than we have to supply at the moment.

In terms of the government’s finances, Basic Income is eminently affordable, because spending on Basic Income can be cancelled out by reduced spending on other welfare schemes, plus increased tax revenues.

And in terms of ‘the taxpayer,’ Basic Income is easily affordable, because it doesn’t require any more ‘net tax’ than people pay at the moment. Indeed, it should require less ‘net tax,’ thanks to savings resulting from reduced bureaucracy.

I hope that’s now clearly explained the issue, so that any non-prejudiced person can easily understand it.

Really, people should now stop claiming that Basic Income is unaffordable. It simply isn’t true!


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