Tag Archives: Universal Income

Facebook Co-Founder Wants To Slap $3 Trillion Tax On Rich To Pay For Universal Basic Income

Facebook co-founder Chris Hughes wants to tax anyone who makes over $250,000 to the tune of nearly $3 trillion over ten years, then use the proceeds to provide universal basic income (UBI) to every working American who makes under $50,000 a year, including those providing services such as child care and elder care.

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Hughes, 34, now devotes his time to evangelizing for higher taxes on the rich, such as himself. He’s proposing that the government give a guaranteed income of $500 a month to every working American earning less than $50,000 a year, at a total cost of $290 billion a year. This is a staggering number, but Hughes points out that it equals half the U.S. defense budget and would combat the inequality that he argues is destabilizing the nation. –Bloomberg

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Hughes, who has a related book coming out, has made tackling income inequality his top priority by partnering with the Economic Security Project – a major recipient of his philanthropic efforts. The group is focused finding solutions to provide “unconditional cash and basic income” in the United States due to the effects of “automation, globalization, and financialization” forcing the discussion. 

The plan would essentially be an expansion of the Earned Income Tax Credit (EITC) for low-to-moderate income individuals and families.

The Economic Security Project is a network committed to advancing the debate on unconditional cash and basic income in the United States. In a time of immense wealth, no one should live in poverty, nor should the middle class be consigned to a future of permanent stagnation or anxiety. Automation, globalization, and financialization are changing the nature of work, and these shifts require us to rethink how to create economic opportunity for all. –Economic Security Project

While Hughes notes that the annual $290 billion annual price tag is half the U.S. defense budget, he contends that income inequality is destabilizing the nation – and that there is a “very practical concern that, given that consumer spending is the biggest driver of economic growth in the United States and that median household incomes haven’t meaningfully budged in 40 years,” a Universal Basic Income is vital to maintaining economic national security.   

Cash is just the simplest and most efficient thing to eradicate poverty and stabilize the middle class,” Hughs told Bloomberg at the Economic Security Project’s New York offices at Union Square.

There are many ways to pay for a guaranteed income. However, I do think that the resources can and should come from the people who most benefited from the structure of the economy. We had tax rates at 50 percent for several decades after [World War II]. In the same period, we had record economic growth and broad-based prosperity. I’m not making the case, in the book and in general, that we just need higher taxes. It matters what our tax dollars are going to. Cash is just the simplest and most efficient thing to eradicate poverty and stabilize the middle class. –Bloomberg

You can read the rest of Bloomberg‘s interview with Hughes here.

Source: ZeroHedge

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Finland Abandons Universal Basic Income Experiment After Two Years

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“I felt a great disturbance in the farce, as if millions of socialist voices suddenly cried out in terror, and were suddenly silenced. I fear something rational has happened.”

With high-profile champions such as Richard Branson, Facebook boss Mark Zuckerberg, and Tesla CEO Elon Musk, backing the idea of governments giving non-working people money (from working people) to do nothing – what could go wrong?

Well, two years after enthusiastically beginning its experiment with a universal basic income – in which people are paid an unconditional salary by the state instead of benefits – Finland is abandoning the project as government enthusiasm wanes and additional funding requests are rejected.

As a reminder, The Telegraph explains Universal basic income is a form of cash payment given to individuals, without means testing or work requirements. In some models this is at a rate sufficient to cover all living expenses.

Proponents argue that:

  • The lack of expensive means-testing leads to a higher proportion of the budget going to recipients. This would be more efficient
  • The transparency of universal payments would drastically reduce the need to detect benefits fraud
  • One scheme could replace the current complex arrangement of government benefits, rebates and tax rebates
  • Work will always benefit recipients of this welfare, rather than the ‘benefits trap’ that leaves part-time workers

Critics argue that:

  • Universal income may be inflationary and, in attempting to move all individuals out of poverty, it may simply raise the level of the poverty line
  • It may reduce the incentive to work and studies have found some evidence to support this.
  • A reduction in taxable income would reduce the government’s ability to cover other expenses, such as healthcare

Universal income as a policy dates from at least Thomas Paine’s 1795 Agrarian Justice. It is currently more closely aligned with left-wing politics, where it would be funded through income from nationalised assets.

Several countries have experimented with a universal basic income, including Finland, Canada, Kenya and the Netherlands.
And now Finland has killed the plan  (via The Guardian)

Since January 2017, a random sample of 2,000 unemployed people aged 25 to 58 have been paid a monthly €560 (£475) , with no requirement to seek or accept employment. Any recipients who took a job continued to receive the same amount.

Furthermore, the government has also imposed stricter benefits plans, introducing legislation making some benefits for unemployed people contingent on taking training or working at least 18 hours in three months.

“The government is making changes taking the system away from basic income,” Kela’s Miska Simanainen told the Swedish newspaper Svenska Dagbladet.

Of course, the liberal socialist gliterrati are up in arms over Finland’s decision.

Olli Kangas, an expert involved in the trial, told the Finnish public broadcaster YLE:

“Two years is too short a period to be able to draw extensive conclusions from such a big experiment. We should have had extra time and more money to achieve reliable results.”

However, as we previously noted, as automation and AI destroy millions of middle-income jobs, permanently forcing (primarily male) workers from the workforce, Americans are beginning to reconsider their attitudes toward a radical policy tool that’s popular among some segments of the left: Universal Basic Income.

According to CNBC, a recent poll conducted by Northeastern University and Gallup found that 48% of Americans support the measure. In an association that’s hardly a coincidence, the poll also showed that three-quarters of Americans believe machines will take away more jobs than they’ll generate…

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Unsurprisingly 65% of Democrats want to see a universal basic income and 54% of people between the ages of 18 and 35 do. In comparison, just 28% of Republicans support UBI.

While proposals for universal basic income programs vary, the most common one is a system in which the federal government sends out regular checks to everyone, regardless of their earnings or employment. That system is being tested in Canada as well as Stockton, California, which recently emerged from bankruptcy but remains mired in poverty.

Perhaps Finland’s failure will wake some of the free shit army up that it can’t end well.

Source: ZeroHedge

2.8 Million Hong-Kongers Got a (HK) $4,000 Cash Handout Today

With Trump signing a record $1.3 trillion spending bill, of which $700 billion is set to go to the military, average Americans are wondering if they will each get some cash, or at least an army tank, from the government. And, if they were resident of Hong Kong instead of the US today, the answer would be yes (to the cash that is, not the tank), as the local government is literally making money rain.

Today, more than 2.8 million Hong-Kongers who did not benefit from this year’s budget will receive a cash handout of HK$4,000 (US$510) each from the government, following intense public and political pressure on Financial Secretary Paul Chan Mo-po to further share the bumper HK$138 billion surplus announced in last month’s budget, the SCMP reported. And faced with demands to do more for the needy, the government decided to fork out an extra HK$11 billion in handouts.

Financial Secretary Paul Chan said the new scheme shows the government’s goal of caring for the community. “[We are] trying to cover more people who may not directly benefit from the budget,” he said at a press conference on Friday. What he meant is that his is just another way to short-circuit conventional economics and directly bribe the population.

https://www.zerohedge.com/sites/default/files/inline-images/IMG_4492-Copy.jpg?itok=V962w1NWProtesters calling for cash handouts and measures to benefit the poor during the announcement of the 2018 budget.

Asked by reporters, Chan said he would not promise that there will be similar handouts in the future. Secretary for Labor and Welfare Law Chi-kwong said he could not give an exact date when residents could receive the benefits, but said he hoped it will happen before the next budget is issued.

Predictably, handing out cash to some but not others leads to anger, and Chan in his financial blueprint – the first by the government of Chief Executive Carrie Lam Cheng Yuet-ngor – dished out a combination of salary and profits tax rebates and increased old age and disability allowances for at least two million Hong Kongers. The 2018 budget was criticized by many, including lawmakers from both camps, for neglecting specific groups, in particular low-income people who pay no taxes, do not own property and do not receive government benefits.

Asked if the new measure was made after receiving pressure from both camps, Chan responded that he said he would look into further measures two days after the budget was issued.

“[W]e mainly heard the voices in society, and we reflected calmly after listening to these voices and opinions. We agreed that the budget’s caring and sharing component could provide wider coverage,” he said.

Democratic Party lawmaker James To said he welcomed the new measure (duh): “We do not want the government to give cash handouts every year, but the original budget was unfair,” he said. “The Financial Secretary has to think about not giving land rates rebate to big corporations.”

What he meant is that he wants the government to give cash handouts every year.

* * *

According to a poll conducted by the University of Hong Kong’s public opinion program one to two days after the budget announcement, the 500 people surveyed gave the budget 42.8 marks out of 100, meaning satisfaction with the government’s financial strategy plunged to a seven-year low.

Which explains the highly popular cash handout.

However the money is distributed today, Hong Kong has now set a very dangerous precedent, one where the government literally has to hand out cash to quell public anger. Call it pork for the people, which is great as long as government funding is cheap and ample – like in the case of the US and its $1.3 trillion porkulus package – however one the money dries out, such “universal cash handouts” just happen to be the fastest road to a revolution by a suddenly disgruntled “free shit” army.

Source: ZeroHedge

Americans Show “Enormous Increase In Support” Of Universal Basic Income

As automation and AI destroy millions of middle-income jobs, permanently forcing (primarily male) workers from the workforce, Americans are beginning to reconsider their attitudes toward a radical policy tool that’s popular among some segments of the left: Universal Basic Income.

According to CNBC, a recent poll conducted by Northeastern University and Gallup found that 48% of Americans support the measure. In an association that’s hardly a coincidence, the poll also showed that three-quarters of Americans believe machines will take away more jobs than they’ll generate…

https://www.zerohedge.com/sites/default/files/inline-images/bernie.jpg?itok=kIERw8-2

Unsurprisingly 65% of Democrats want to see a universal basic income and 54% of people between the ages of 18 and 35 do. In comparison, just 28% of Republicans support UBI.

While proposals for universal basic income programs vary, the most common one is a system in which the federal government sends out regular checks to everyone, regardless of their earnings or employment. That system is being tested in Canada and Finland, as well as Stockton, California, which recently emerged from bankruptcy but remains mired in poverty.

Support for UBI and wariness about automation/AI have become closely linked in the public consciousness. The movement has even inspired America’s first “anti-automation” presidential candidate: New York businessman Andrew Yang is launching a “longer-than-long-shot bid” for the 2020 Democratic nomination, on a platform of adopting a “freedom dividend” (a fancy term for UBI), to help offset the impact of automation.

Advocates say all of the UBI-focused experiments being conducted are an opportunity to show that the policy could boost both productivity, as well as individual happiness and overall wellbeing.

“The claim is often made that if you give people a basic income, they’ll become lazy and stop doing work,” said Guy Standing, co-founder of the Basic Income Earth Network. “It’s an insult to the human condition. Basic incomes tend to increase people’s work rather than reduce it.”

Political philosopher and economist Karl Widerquist remembers a poll from 10 years ago that showed just 12 percent of Americans approved of a universal basic income.

“It’s an enormous increase in support,” Widerquist said.

“We don’t need to threaten people with homelessness and poverty to get them to work,” he added.

“It’s capitalism where income doesn’t start at zero.”

Of course, the odds of UBI actually being enacted in the US are highly unlikely.

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Robert Greenstein, president of the Center on Budget and Policy Priorities, estimates that a program providing everyone with $10,000 annually could cost more than $3 trillion a year, a bill that is more likely to increase poverty than reduce it.

“This single-year figure equals more than three-fourths of the entire yearly federal budget – and double the entire budget outside Social Security, Medicare, defense, and interest payments,” Greenstein wrote in a CBPP commentary last year.

Still, a recent McKinsey study found that automation could eliminate up to 800 million jobs by 2030…

…If such a dire outlook comes to pass, the US – and practically every government – will need to devise a plan for mitigating the devastating impact this will have on employment.

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So – in ten years, eight of which were ruled over by President Obama – the proportion of Americans who want more free shit for doing nothing has quadrupled (from 12% to 48%)… now that is ‘conditioning’!!

Source: ZeroHedge

Fed Hints During Next Recession It Will Release Targeted ‘Universal Income’ and NIRP

In a moment of rare insight, two weeks ago in response to a question “Why is establishment media romanticizing communism? Authoritarianism, poverty, starvation, secret police, murder, mass incarceration? WTF?”, we said that this was simply a “prelude to central bank funded universal income”, or in other words, Fed-funded and guaranteed cash for everyone.

On Thursday afternoon, in a stark warning of what’s to come, San Francisco Fed President John Williams confirmed our suspicions when he said that to fight the next recession, global central bankers will be forced to come up with a whole new toolkit of “solutions”, as simply cutting interest rates won’t well, cut it anymore, and in addition to more QE and forward guidance – both of which were used widely in the last recession – the Fed may have to use negative interest rates, as well as untried tools including so-called price-level targeting or nominal-income targeting.

This is a bold, tactical admission that as a result of the aging workforce and the dramatic slack which still remains in the labor force that the US central bank will have to take drastic steps to preserve social order and cohesion.

According to Williams’, Reuters reports, central bankers should take this moment of “relative economic calm” to rethink their approach to monetary policy. Others have echoed Williams’ implicit admission that as a result of 9 years of Fed attempts to stimulate the economy – yet merely ending up with the biggest asset bubble in history – the US finds itself in a dead economic end, such as Chicago Fed Bank President Charles Evans, who recently urged a strategy review at the Fed, but Williams’ call for a worldwide review is considerably more ambitious.

Among Williams’ other suggestions include not only negative interest rates but also raising the inflation target – to 3%, 4% or more, in an attempt to crush debt by making life unbearable for the majority of the population – as it considers new monetary policy frameworks. Still, even the most dovish Fed lunatic has to admit that such strategies would have costs, including those that diverge greatly from the Fed’s current approach. Or maybe not: “price-level targeting, he said, is advantageous because it fits “relatively easily” into the current framework.”

Considering that for the better part of a decade the Fed prescribed lower rates and ZIRP as the cure to the moribund US economy, only to flip and then propose higher rates as the solution to all problems. It is not surprising that even the most insane proposals are currently being contemplated because they fit “relatively easily” into the current framework.

Additionally, confirming that the Fed has learned nothing at all, during a Q&A in San Francisco, Williams said that “negative interest rates need to be on the list” of potential tools the Fed could use in a severe recession. He also said that QE remains more effective in terms of cost-benefit, but “would not exclude that as an option if the circumstances warranted it.”

“If all of us get stuck at the lower bound” then “policy spillovers are far more negative,” Williams said of global economic interconnectedness. “I’m not pushing for” some “United Nations of policy.”

And, touching on our post from mid-September, in which we pointed out that the BOC was preparing to revising its mandate, Williams also said that “the Fed and all central banks should have Canada-like practice of revisiting inflation target every 5 years.”

Meanwhile, the idea of Fed targeting, or funding, “income” is hardly new: back in July, Deutsche Bank was the first institution to admit that the Fed has created “universal basic income for the rich”:

The accommodation and QE have acted as a free insurance policy for the owners of risk, which, given the demographics of stock market participation, in effect has functioned as universal basic income for the rich. It is not difficult to see how disruptive unwind of stimulus could become. Clearly, in this context risk has become a binding constraint.

It is only “symmetric” that everyone else should also benefit from the Fed’s monetary generosity during the next recession. 

* * *

Finally, for those curious what will really happen after the next “great liquidity crisis”, JPM’s Marko Kolanovic laid out a comprehensive checklist one month ago. It predicted not only price targeting (i.e., stocks), but also negative income taxes, progressive corporate taxes, new taxes on tech companies, and, of course, hyperinflation. Here is the excerpt.

What will governments and central banks do in the scenario of a great liquidity crisis? If the standard rate cutting and bond purchases don’t suffice, central banks may more explicitly target asset prices (e.g., equities). This may be controversial in light of the potential impact of central bank actions in driving inequality between asset owners and labor. Other ‘out of the box’ solutions could include a negative income tax (one can call this ‘QE for labor’), progressive corporate tax, universal income and others. To address growing pressure on labor from AI, new taxes or settlements may be levied on Technology companies (for instance, they may be required to pick up the social tab for labor destruction brought by artificial intelligence, in an analogy to industrial companies addressing environmental impacts). While we think unlikely, a tail risk could be a backlash against central banks that prompts significant changes in the monetary system. In many possible outcomes, inflation is likely to pick up.

The next crisis is also likely to result in social tensions similar to those witnessed 50 years ago in 1968. In 1968, TV and investigative journalism provided a generation of baby boomers access to unfiltered information on social developments such as Vietnam and other proxy wars, Civil rights movements, income inequality, etc. Similar to 1968, the internet today (social media, leaked documents, etc.) provides millennials with unrestricted access to information on a surprisingly similar range of issues. In addition to information, the internet provides a platform for various social groups to become more self-aware, united and organized. Groups span various social dimensions based on differences in income/wealth, race, generation, political party affiliations, and independent stripes ranging from alt-left to alt-right movements. In fact, many recent developments such as the US presidential election, Brexit, independence movements in Europe, etc., already illustrate social tensions that are likely to be amplified in the next financial crisis. How did markets evolve in the aftermath of 1968? Monetary systems were completely revamped (Bretton Woods), inflation rapidly increased, and equities produced zero returns for a decade. The decade ended with a famously wrong Businessweek article ‘the death of equities’ in 1979.

Kolanovic’s warning may have sounded whimsical one month ago. Now, in light of Williams’ words, it appears that it may serve as a blueprint for what comes next.

Source: ZeroHedge