A basic income for everyone? Part 2

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Yesterday I quoted a Dutch newspaper that was advocating a basic income for everyone.

Imagine what the anti-tax crowd would make of this! Communism! It is as likely to happen as a government run by Epicureans. I’m sure the early communists had a similar idea, but to force it through they felt constrained to collectivize agriculture, continue Tsarist repression, and to set up gulags in Siberia to deal with the people who disagreed. For such an idea to work you have to have a consensus about mutual cooperation in society, agreement on the role of government, a willingness on the part of the wealthy to support the system, and, probably, a homogenous population. A living minimum wage is more attainable, and it is this that we should aim at. Nobody should work full time and not be able to pay for food, clothing and a roof over their heads. Surely, these basic human requirements are the building blocks of the pleasant life, as advocated by Epicurus.

A basic income for everyone? The idea.

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In a rich society like ours, everybody ought to be able to live comfortably. And maybe the best way to ensure this is just to give out “free money”: to guarantee every citizen a “basic income”. Most economists – and most taxpayers – are aghast at this idea, assuming that “if you hand people free money, they will immediately stop working”, and spend it on fast food and beer. But a World Bank study shows that people work more effectively after they have been lifted out of poverty. Here in the Netherlands, many have no incentive to get off the dole because a minimum-wage job often pays less than unemployment benefits. With a guaranteed income, there’s no such trap: “Work always pays.” Even if a segment of the population remains jobless, the programme would pay for itself, because of the billions saved in welfare bureaucracy, and in reduced crime (another proven benefit). The fact is that our economy does not have enough vacant jobs for everyone, and there’ll be even fewer as robotics and software evolve; many people might be better off volunteering than seeking a dead-end job. “Almost everyone wants to make something of his life and contribute to society.” A basic income makes that possible. (Rutger Bregman, de Volkskrant, Amsterdam)

The above is a long extract, so I will comment on it tomorrow.

Scotland: what you may not know

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Today, Scotland makes its own policy for its health service, nurseries, schools, colleges, universities, police, prisons, courts, councils, cultural institutions and in some areas of economic development. Most things of importance, really.

The Holyrood parliament is responsible for more than half of public spending in Scotland, but less than one-tenth of the tax revenues. An annual block grant from the UK government (mostly England) makes up the balance between what the Scottish government spends and what it raises in taxes. In 1999, the first year of the devolved parliament, public spending per head in Scotland was 12 per cent higher than in the UK overall, a figure that is essentially unchanged 16 years later.

In 1999, Scotland spent a higher share of its budget on health and education than England. But since the SNP took office this share has fallen below that south of the border. Spending on schools in Scotland was cut by the SNP by 5 per cent in real terms from 2010/11 to 2012/13. Health spending in England is set to increase by 6 per cent in real terms from 2009/10 to 2015/16; but in Scotland it will rise by only 1 per cent over the six-year period, as a result of SNP policy. In the second half of that period, from 2013/14 to 2015/16, health spending is expected to actually fall in Scotland; again, the policy of the SNP.

With its generous subventions from the rest of the UK, and having cut education and health, what are the SNP spending the balance on?  The answer is twice as much per person on enterprise and economic development and agriculture than the UK average, three-quarters more per person on transport and approximately one-half more on “recreation, culture and religion.” (source: “Prospect” magazine, edited).

Since the best things to come out of Scotland are malt whisky and sticky toffee pudding, I suppose economic development passes muster. But religion? How’s that for a priority?

We are usually better together than apart, better cooperating than squabbling. The Scots have let their hearts rule their heads and are in no mood to listen to the facts of their less-than-competent SNP government. But who am I to judge the poor, downtrodden, destitute dears?

Privatization – for the citizen or the corporation?

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Under a law passed in 2006 the US Postal Service was forced to pre-fund its retiree health benefits through 2016.  Most organisations pay for health care as when the bills come in.  Not USPS. The postal service had to find over $5.5 billion a year to pay up-front for the healthcare of employees who were not even retired, but might be before 2016.

This political requirement put a strain of the cash flow, estimated to be $50 billion. In 2009 Congress gave the USPS a breather, allowing them to pay just $1bn. But not since. Every year since 2009 they have had to find $5.5billion.  

The result of this has been a reduction in service, even as demand has dropped for conventional mail. As service suffered, so came the call (surprise, surprise!) to privatize the postal service. The beneficiaries? FEDEX and commercial services. Did they lobby the Republican Party to cripple a major American institution in this manner. I don’t know, but the whole business has the nasty reek. “Shrinking government until it is small enough to drown in a bath” is the stated aim of the extreme Right. In return for campaign contributions, one is justified in assuming. Neat. Meanwhile, no one has stood up for the US Postal Service.

Thomas Jefferson and the military

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Jim Scanlon is a retired American History professor. The following is an edited version of a letter sent to a friend of mine and a reader of this blog. I thought it was an interesting take on Thomas Jefferson and the military.

Thomas Jefferson frequently expressed the view that “The earth belongs to the living and not to the dead.” He believed in pragmatism: what is true is what works. One should not be bound by the precedents of the past. Therefore, as president, his goal was a wide distribution of property and low taxes. He believed that there were no beggars in America, and that Europe had many. The cause of this disparity was the expensive armies and navies of the Old World which sucked up the nations’ wealth.

On this assumption he developed a theory for both navy and army that relied essentially on militias, led by trained officers. West Point (to train them) was established during his first administration. Rather than a full, conventional fleet, he created the much maligned gun boats (very large rowboats with a single cannon mounted at the bow), plus some frigates that were used to attack the Algerian and Tripolitanian pirates (a story full of unbelievable cheese-paring by the Administration. Ed.). The militia system didn’t really work, and a fleet on the cheap didn’t stop the British fleet dominating the American coast or the pirates capturing the whole crew of one American ship, to huge embarrassment.

The United States, nonetheless, flourished when it didn’t have a large army, but showed an astounding ability to create an army out of virtually nothing in a very short period of time (1861, 1917, 1940). The rise of the “military-industrial complex” (Eisenhower) from the 1940s onward likely has slowed economic growth, but “I am not economist enough to know how”.

My comment on the last paragraph: some people made fortunes out of the Second World War, and created huge companies with large workforces. The military-industrial complex formed a lobby that had gotten used to making lots of money, and wanted to go on doing so. Conservatives, the chief supporters of a robust military, are always quoting the Founding Fathers. Perhaps they should be invited to study the views of Thomas Jefferson. The country doesn’t need the current huge, unwieldy military, and would be the richer for it (and less debt-ridden) with it carved down to size. But then, like the Bible, one can always find something in the Constitution to support your view; conversely, one can ignore inconvenient truths.