UCA News: Why Pope Francis is pushing for a Universal Basic Income (UBI).

[Xavier]

On UBI, IF you canceled all welfare and medicaid, and fired all the government workers caught up in that scheme, and everyone got the same amount, I would prefer that over the present system.  However, it is still marxist, based on "to each according to his need".  You also have to establish how government has the authority to point guns at people, rob them of their things, and give to others.  Redistribution is theft.  But, per intellectual honesty, I agree that UBI for everyone is preferable to welfare schemes.  Only problem is that the producers will ask for higher wages and you'll be back to where we are.

Right, James. I appreciate you have an economic background and so understand these matters in depth. I believe while discussing last time, we agreed a UBI linked to economic growth would be better than the current system. So for e.g. in the US, the economy is around $ 20T. If the economy grows 5%, to $21T, then there is around $1T to distribute per year, if new money is printed to exactly that amount. I do not see this as any one person's money. Douglas, who invented Social Credit, called it as a "collective dividend" belonging to all society. It is the net increase in society's total wealth. There have been studies done showing 1% of the people in the world own more than 50% of all the wealth. That's not sustainable imo, and a Social Dividend, would help the poor rise faster as the economy grows richer. Both are important, growth in production, and equitable distribution of the value created by the increase of production.

So in India, economy is around $2.8T https://en.wikipedia.org/wiki/Economy_of_India If we have 10% growth, that would be $280B in a year. Since our population is nearly 1.4B People, that comes to a small amount of about $200 per person per year. For a household or family of 4 or 5 people, it may be about $1000 a year, or Rs. 70,000. Not a very large amount, but will help the poor rise faster imo. I would be in favor of starting with a Q-UBI for the bottom 20% of society, then maybe moving it to 40% after 5 years, then 60% and so on.

I'm not sure what will work in the West. I personally think the US has had too much debt, and a very high GDP-Debt Ration. India's external debt is around $560 Billion, a fraction of GDP. The US Economy is very large, the largest in the world, but so is the US debt, as you know. My view is implementing Social Credit - and abolishing usurious fractional reserve banking, as we both agree - may help the US clear its debt over time. It will be difficult of course.

The world itself has too much debt, compared to world GDP. one of the unfortunate consequences of both rampant usury, and too much dependence on loans, in both private and public life: "By the end of 2020, economists expect global debt to reach $277 trillion, or 365% of world GDP." https://www.weforum.org/agenda/2020/12/global-debt-gdp-covid19/ Again, it would be good to write off some debt.

But that's another problem for another time. A Q-UBI such as Rahul Gandhi has proposed for India is workable in 3 to 5 years itself, within the current system. I pray and hope he wins. He has great support here. Gandhi is an economic populist, kind of like Trump in that regard. Let's see how it goes. Many Churches and charities do great work for the poor here in India. India has also come far in a short while, thanks to the IT boom and other factors. "India has been the biggest contributor to poverty reduction between 2008 and 2011, with around 140 million or so lifted out of absolute poverty.[111]"https://en.wikipedia.org/wiki/Poverty_in_India#Reduction_in_poverty

I'm very pro-capitalist generally. I've seen the good effects of capitalism and economic growth in alleviating poverty. But I believe in "compassionate capitalism", capitalism with a human heart, and economic growth backed by real measures for everyone to share in that growth.

And of course, Evangelism is even more important. There may already be as many as 100 million Christians in India. Official reports, like Open Doors, gives it as around 70 million, but everyone here knows its much more than that. I and many others here are working to win millions more to Christ and His Church in the coming decade. Many Indians are open to Christ, and some already worship Him as God. It's the part of Our Lord Jesus being the Only God that's hard for many to accept, but many are coming to accept that as well.

God Bless.

[ralfy]

Increasing debt coupled with increasing energy and material resource use per capita in a world that has physical limits and more wanting to make more money through financial speculation.

[bigbadtrad]

Check out the book McDonaldization of Society. It explains that fast food joints make a lot of money, and much more than people realize. That's because they create the illusion of value while giving the opposite.

For example, french fries have a markup of around 200 pct, and soda around 800 pct. That's because all sorts of fillers and other things are added, and sodas made available with the carbonated water separate from the other ingredients. Purchased in bulk, they can be had for a fraction of the price.

Actually they don't make much money at all. At $1 million dollar investment for the franchise McDonald's yields around $80-120k/yr in profit. The real profit is far more insidious.

The real money is in the real estate and using tax techniques of advanced depreciation, and renting the property to themselves. That's why small businesses will go broke with higher minimum wage and the need for profit while the franchise model will survive. Instead of relying on profit as a means of growth, they use tax deductions, credits and rental income that small people don't know or couldn't afford to use.

Take Starbucks as an example. They don't care if they net a profit from a store, they just want to write off the property and rent the property from themselves as a corporation at the highest rate possible. Instead of leveraging a cup of coffee, they are leveraging cap rates on real estate and income from rent which is far cheaper to pay taxes on than income. Coffee is just their means to do so. It's brilliant.

It also makes it impossible for small mom and pop operations to ever compete with that model. Real people would want to make money to live, corporations just want enough to leverage more real estate.

[ralfy]

Actually they don't make much money at all. At $1 million dollar investment for the franchise McDonald's yields around $80-120k/yr in profit. The real profit is far more insidious.

The real money is in the real estate and using tax techniques of advanced depreciation, and renting the property to themselves. That's why small businesses will go broke with higher minimum wage and the need for profit while the franchise model will survive. Instead of relying on profit as a means of growth, they use tax deductions, credits and rental income that small people don't know or couldn't afford to use.

Take Starbucks as an example. They don't care if they net a profit from a store, they just want to write off the property and rent the property from themselves as a corporation at the highest rate possible. Instead of leveraging a cup of coffee, they are leveraging cap rates on real estate and income from rent which is far cheaper to pay taxes on than income. Coffee is just their means to do so. It's brilliant.

It also makes it impossible for small mom and pop operations to ever compete with that model. Real people would want to make money to live, corporations just want enough to leverage more real estate.

Don't expect high returns in countries facing late capitalism, like the U.S., where such fast food joints are common occurrences. For most of the world, though, where there is an an emerging middle class eager to spend, the opposite has been taking place.

[james03]

Increasing debt coupled with increasing energy and material resource use per capita in a world that has physical limits and more wanting to make more money through financial speculation.

In the real world the increasing debt is seen in the late stage socialism/fascism of the USA.  The debt that is killing us is government debt, which is now forcing the Fed to print more so that all the socialism and fascism can remain financed, regardless of the fact that real estate, rent, tuition, medical, food, cars, and energy are exploding higher in cost.  This is the typical last stage before leftist governments blow up. 

By the way, we aren't anywhere near the limits on energy.  Exxon just brought the Guyana elephant field online, Venezuela has barely tapped their oil reserves, same with eastern Colombia, and there are a trillion barrels locked in shales in the US Rockies.  Then we get to coal.  The limit to energy is leftist politics.

[james03]

Right, James. I appreciate you have an economic background and so understand these matters in depth. I believe while discussing last time, we agreed a UBI linked to economic growth would be better than the current system.

Intellectual honesty on my part, replacing the current distributist banking guild where 13 people decide the interest rate and money supply for a $20 Trillion economy every 6 weeks with a fixed formula system like MMT is an improvement.  Replacing welfare and medicaid with just a check to everyone via basic income is an improvement.  Both still suck.

As I said, if you follow MMT theory governments should have taken money away from unemployed people during COVID as GDP shrank.  We all know that is insane, therefore MMT is insane.  And if you open the door for special rules, first it shows your theory is garbage, and second it opens the doors for other exceptions, like increasing money supply more than the formula during a downturn, etc...  Before long the bankers are back in power with their loop holes.

So I propose this.  Grow the money supply at a fixed rate, say 2%.  Take that money and deposit it into a Chilean type retirement account for all citizens, even the fat sow single mother of 4 kids with 6 baby daddies.  The fixed rate growth prevents any funny business, and putting the money away where people can't touch it will minimize the political pressure to print more money.

My preference is to use the money to lower the tax rate for the Federal Sales Tax (which, combined with a flat tariff and some use taxes like gasoline tax, would replace all other taxes.)  People would benefit via lower taxes and our money would be sound.

Money is a tool for exchanging value for value.  It must retain value and be readily transferable.  It should not be used to give people free goodies.

[james03]

Here is a thought experiment.  Suppose you have two perfectly identical economies, A & B, with 1 difference.  In "B" you decide to plant a huge produce garden and tend it after work.  You sell produce from it and after 1 year you have $1,000 for your work.  Economy B is now larger than "A" by $1,000 of values, i.e. Economy B has additional fresh produce for people to enjoy.  You typical customer paid $10 out of what he would have saved, and you add $1000 to your savings.

Now why, according to MMT theory, should there be a "people's dividend"?   Value for value was traded.  Your hard work resulted in giving the people the value of some additional fresh produce, and the people gave you the value of their time used to procure some money.  It is in balance.  Injecting a "people's dividend" is double accounting and is wrong.

And since the theory is based on error, it won't work.  You'll get inflation.

[james03]

Don't expect high returns in countries facing late capitalism, like the U.S.,

Don't expect high returns in socialist/fascist economies like the US, where anyone who is successful will be looted by the government and hassled by insecure, inadequate, impotent sociopath government officials who can only feel important by destroying.

The one exception are the companies plugged into the fascist system.  They can get all sorts of subsidies, waivers, and loop holes and will make huge returns, as they don't need to compete and can dip their beak into the government loot.  This is the US.  Look at the $80 BILLION of taxpayer money given to the wind turbine companies in Texas.  The owners of those companies are flying around in private jets, even though they are in business is to destroy value.

[james03]

If you can't beat them, join them.  Remember I was educated in Venezuela and know how to play the game.  I've already started checking out and will check out fully in a year or two.  I will dip my beak into the socialism and fascism and spend my days riding motorcycles and jug fishing for catfish.

But I need the horse of Animal Farm to roll up his sleeves and just try harder.  And I have plenty of people like ralfy to do that.  He will work his job and dutifully pay his taxes..... to me.  I'll get money to build my solar array, and I'll get my money to super insulate the redoubt. I also have a friend who will be teaching me all about Ag subsidies. 

So instead of freezing my butt off in arctic conditions so that people have gasoline and natural gas, I and many other producers will be sipping cold beers and fishing.  And when enough producers quit, as seen in every socialist situation, and the energy system falters, I'll be fine with my solar array just watching the show.  The leftists, who believe in utopia, won't be prepared.  Don't get it twisted, I welcome socialism and will thoroughly enjoy myself.

Leftists have a fatal premise to their theories that they really need to reexamine.  And that is the theory that no matter how much they abuse and enslave the producers, the producers will find work arounds and keep producing.  What happens when the producers become the world's greatest looters?

[Xavier]

Intellectual honesty on my part, replacing the current distributist banking guild where 13 people decide the interest rate and money supply for a $20 Trillion economy every 6 weeks with a fixed formula system like MMT is an improvement.  Replacing welfare and medicaid with just a check to everyone via basic income is an improvement.

Improvement, yes, I agree. That it's bad, I disagree.

Yes, in an exceptional case where GDP decreases, theory says the money supply will have to be correspondingly contracted. There are one or two ways that can be actually done. First, since it is very rare that such an event as annual GDP net decline will happen, like once in a lifetime, it can simply be put off to the next year. Suppose the GDP instead of increasing from 100 to 110 declines first to 95 in one year and then moves to 105. So forget the payment in year 1, and pay the smaller amount, the increase of 5, in year 2. That would solve it. There are some others, but this should suffice.

Let's take your thought experiment on how it would normally work.

Here is a thought experiment.  Suppose you have two perfectly identical economies, A & B, with 1 difference.  In "B" you decide to plant a huge produce garden and tend it after work.  You sell produce from it and after 1 year you have $1,000 for your work.  Economy B is now larger than "A" by $1,000 of values, i.e. Economy B has additional fresh produce for people to enjoy.  You typical customer paid $10 out of what he would have saved, and you add $1000 to your savings.

Yes, so let's suppose Economy A and Economy B have $500 in value and currency units before this garden. Let's suppose there are 10 people in both economies; as you said, they are perfectly identical. Now, when Economy B has grown to $1500 in terms of goods or produce, what can be the basis for justifying why the money supply should remain at $500? This theory, MMT, would say, bring up the money supply to meet the value of goods. In other words, the new $1000 created should be distributed as $100 each to everyone.

So consider the entire economy as a giant corporation. The government is not in debt. The basic accounting equation would reduce to Assets=Equity. What is the asset increase here? The $1000 in new produce. How should the monetary side of the economy be altered? By increasing $1000 in currency units, to bring it to a perfect balance. This balance would avoid inflation in the economy.

MMT treats the economy as a giant corporation and every stakeholder in the economy, as how ordinary shareholders are treated. When the value of the corporation increases, each person's holding also correspondingly increases. So everyone gets a dividend. And also everyone is motivated to grow the economy more, so that everyone can share in the collective growth. That creates a virtuous cycle.

Also, if there was only $500 in the economy so far, how will anyone buy your produce? It would be impossible to buy the produce, because there would be too many goods, with too little money to buy them. Going by theory, if there was too much money in the economy to begin with, say $2000, then $500 should be withdrawn. Value of Goods=Value of Money Supply is the equation here.

MMT is a theory in progress and so not beyond criticism. But I think it could work and would be better than what we have now.

God Bless.

[lauermar]

In answer to the OP question,  is UBI a good thing and does it work? The answer is no and no. It is Marxism dressed up in new terms.