Tuesday, September 10, 2019

Universal Basic Income - New Zealand Leads The World

What is Universal Basic Income (UBI)?

Universal Basic Income is the concept that every individual is entitled to and given a minimum income just for being alive or a member of a community. Such a guaranteed income gives every individual a feeling of self worth, gives them more life style choices and makes them less exploitable.

Is UBI neccessary?

Despite our perception that we live in a world of scarcity, in actuality we live in a world of abundance. Advances in knowledge and technology have brought us to the point where we can feed clothe and house every living individual on earth. Scarcity is intentionally introduced to benefit various power sectors.

We are now entering an age where all the dangerous, repetitive, cognitive and mundane jobs can be done better by Artificial Intelligence and robots.

Rather than limiting the number of working hours per person to share the available "productive work hours", we should broadly redefine what constitute useful work.

We can view UBI as rewarding "community centric work" and wages as rewarding "economic centric work".

Is this not communism or socialism?

This is capitalism starting with everyone having a minimum income rather than from zero. When everyone has money to spend capitalism thrives, and the worst aspect of capitalism, wealth inequality, is mitigated.

How can UBI be paid for ?

Our monetary system will be digital soon. With digital money, taxation (Value added tax) can be coded into every transaction. Money can also be easily coded for UBI distribution. There will be huge savings in the verification, collection and distribution of tax revenues, and elimination of corruption and unfairness within such a system.

As AI and robots displaces the dirty and mindless portions of "work" in our economy, UBI gives us the ability to pursue "work" that we value, treasure and appreciate individually and by our community.

Huge monopolies will form, but efficient monopolies will mean more and greater value creation for taxation, and the social impact of monopolies can be modulated with the right incentives.

One of the most interesting aspect of blockchain technology is token issuance for securing the blockchain. People and businesses compete to win these tokens and use them to transact even though they were never issued as legal tender by any government. This brings up the question as what constitutes money, but that is for another discussion.

For our discussion here, the fact that a token independent of any government can be accepted as money means that we have a "source of new money" that can be use for the purpose of UBI. Such a source will transcend government and borders. All it will require is a uniquely identifiable token wallet and general everyday use of these tokens worldwide.

Government support for UBI.

Some countries have experimented with various form of UBI however no country have instituted it as a principal pillar.

The state of Alaska however have instituted an annual dividend for every citizen finance from oil revenues.

New Zealand has a universal pension* of about $1000 USD a month for every citizen above the age of 65. This amount is not means tested and is opt in. We can argue that this is UBI for every citizen aged 65 and above financed from taxation. New Zealand has a 15% Value Added Tax on all goods and services with only financial transactions and exports zero rated.

Recently US presidential candidate Andrew Yang** have made UBI a central platform of his campaign. His proposal is to make $1000 USD a month payable to every citizen above the age of 18 finance in part from a value added tax on all goods and services at a rate of 10%. Except for the age of eligibility the system is very similar to the New Zealand's system.

Economic impact of UBI.

Most farm based small towns are capable of having a sustainable economy. Factory towns however are decimated when the factory closes and the monetary lifeblood of the community is shut off. This is now happening on a grand scale worldwide as the fourth industrial revolution*** takes hold. A UBI for every citizen will mean that financial lifeblood of communities become independent from the location of revenue generators. Mom and Pop businesses will generate jobs, employment and thrive. This will be a game and life changing phenomenon.

*    https://sorted.org.nz/guides/retirement/about-nz-super/
**   https://www.yang2020.com/
*** https://www.britannica.com/topic/The-Fourth-Industrial-Revolution-2119734