Monday, 6 June 2016

Would you make FI accessible to all?

Rejected by the Swiss. Interesting. What would the outcomes be like? Something like this could cause a massive immigration pull to the country but do you generate a second class citizen who doesn’t qualify, would such discrimination be enforceable? The belief that such a basic income would lead to a generation / nation of feckless loafers rather than one liberated from the shackles of enforced employment to forge new industries and innovate free from the risk of failure leading to penury and no social stigma for a universal benefit.

Would it be universal? There would be massive tax and spend implications, standard arguments of “loss of talent”, marginal income and taxation levels (there’s going to be a “sweet spot” where you pay a massive marginal tax rate as you lose the basic income but still aren’t earning huge amounts. The requirement for a large increase in administration to deal with it, generating a higher tax bill again to load onto those who choose to work still (and then keep a smaller share of what they earn).

One article I’ve read on this raised the positive thought that it means people can spend their time much more how they want, rather than to the highest possible earning capacity, but the negative side was a load of people who would misallocate capital in the form of pointless exercises – think Sinclair C5’s everywhere, destroying capital and the productive capacity of the economy, and by extension, causing the resources from which a basic income was drawn – the tax base – to be permanently eroded, also, what would be the point of education or higher learning generally?

However, people currently not enjoying their jobs are misallocating their energy and skills and the economy is missing out as a result. Lots of university degrees are handed out pointlessly already and this results in the same lower levels of productivity and potentially poorer mental health, further diminishing potential output.

What would be the government’s desired outcomes? More discretionary spending on goods and services in the economy, exacerbating the disposable society? Freeing people to pursue their dreams? Saving money on organising the welfare state? Or at worst a politically motivated move to outflank an opponent, a good reason to see such a policy fail to deliver positive outcomes and what a bad government gives at one point, they can take away at another when times are hard.

I think better education, flexibility and access to opportunities would be a better focus. Apparently societies which are more individualistic are happier as you feel more liberated to pursue what makes you happy rather than sticking to a broader societal expectation. Therefore to equip people to do that better would, I think, generate better long term returns for individuals and the wider economy – though I would add a mandatory course on finance to ensure people knew the basics, so would be in less need of excessive or extended amounts of state aid!

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