Money from heaven can be real or fake and it can be dropped by trusted helicopter pilots or as Universal Basic Income

Sir, Robert Skidelsky writes: Because “there is no assurance that a lot of such helicopter money would not be hoarded…contemporary advocates of helicopter money like Willem Buiter and Adair Turner see it mainly in terms of monetary financing of additional government spending. The government should pay for, say, an investment programme not by issuing debt to the public but by borrowing from the central bank. This will increase the government’s deficit, but not the national debt, since a loan by the central bank to the government is not intended to be repaid. Thus the government acquires an asset but no corresponding liability.” “A tweak to helicopter money will help the economy take off” August 5.

Have these statists gone raving mad? “The government acquires an asset but no corresponding liability?” Is this a Ponzi fiscal revenue scheme?

Have these statists gone raving mad? In this world of cash-strapped citizens would they not know better what to do with their helicopter money than some bureaucrats with other people’s helicopter money?

And besides, helicopter money could be real money and it could be fake money… and only fiscal revenues Ponzi schemers would be thinking of dropping what’s fake.

And besides, helicopter pilots could be trusted, or only doing the drops on their favorite neighborhoods.

So, if you introduce a Pro-Equality tax, and drop all those revenues by means of a Universal Basic Income scheme equally to everyone, both the hoarding and the redistribution profiteering will be small.

Sir, if we are not expecting to profit on the redistribution, is that not what we, poor and rich, all want and need? 

@PerKurowski ©

FT, are you aligned with the interests of redistribution profiteers and besserwissers, or with citizens’?

Sir you refer to that “Next month, Switzerland will hold a referendum on whether to introduce an Unconditional Basic Income”, and then you opine “this measure seems premature today [though] it is worth running data-driven pilot projects to test the concept’s future viability. More effective tax regimes and smarter forms of wealth redistribution will be needed to ease our social strains.” “Bring on the robots but reboot our societies too” May 7.

I come from Venezuela, where the poor, from that so lauded 21st Century Socialism, have not received more than about 15 percent of what should have been their individual share of the fabulous oil revenues over the last 15 years, tops. So please don’t tell me an unconditional universal basic income, in this case funded by oil revenues, “seems premature”… it is way overdue.

And Sir, why do we really need to test the hypothesis that people know better what to do with their own resources than what the governments with other’s resources? Is that to find ways to help profiteers and besserwissers to keep control over the redistribution?

As I have written to you I support a worldwide gas/carbon tax which revenues should be paid out by means of a universal basic income, in order to align the incentives in the fight against climate change and against inequality.

And I also support a social pro-equality tax, which revenues should be paid out entirely by means of a universal basic income, from citizens to citizens, so as to avoid all the dangerous populist and demagoguery intermediaries.

Sir, if we can separate all the redistribution from governments’ normal functions, then we will also be able to make these perform better for us. For instance, we might suddenly realize that all tax evasion and tax avoidance put together could be less than government waste.

PS. And bring on the robots to bank regulations. These at least have smaller egos that stand in their way of admitting and learning from their mistakes. The robots would, long ago, have eliminated the risk weighted capital requirements for banks, which only dangerously distort the allocation of bank credit to the real economy, for absolutely no good reason at all. 

@PerKurowski ©

What a government spends is a lousy proxy for what the citizens receive; it ignores redistribution costs and profits

Sir, Tim Harford writes that the idea of a universal basic income “appeals to three types of people: those who are comfortable with a dramatic increase in the size of the state, those who are willing to see needy people lose large sums relative to the status quo, and those who can’t add up.” “Could an income for all provide the ultimate safety net?’ April 30.

And while doing so he uses figures for UK’s social security spending of £217bn, and on health and education spending of £240bn. 

Over the last 15 years the poor in Venezuela have most surely received less than 15 percent of what they would have received, had only the oil revenues been shared out equally among all citizens as a universal basic income. In such a case, supporting a net oil revenue funded universal basic income could be done by someone like me, someone who wants the state to become much smaller, who wants poor people to obtain more, and who can add quite well.

The basic mistake the undercover economist makes in this case, is that he equates all social support received by the needed with what is spent on them. That ignores the redistribution cost and profits. A universal basic income, that would put aside in different account much of the redistribution, would help bring more transparency to what the real cost of real government’s functions are. In these Panama Paper days, when so much concern is expressed on the issue of tax evasion and tax avoidance, there is little mentioning of the possibility that pure tax revenue waste could add up to much more.

Many wealthy non-leftists do harbor serious concerns about the growing income inequality, not only because of a sense of justice, but also because they know it could come back to haunt them. And so for them, a universal basic income distribution of a pro-equality tax, and which would not have to cost more than 2 percent in administration fees, might seem as a quite reasonable way to go.

Also many of us concerned with climate change but who also do feel quite uncomfortable with all the climate change profiteers who surround most initiatives, could find a huge gas/carbon tax paid out by means of a universal basic income scheme much better. For a starter it would beautifully align the fights against climate change and inequality.

And please, whenever I mention “redistribution profiteers’, I do not only refer to those who get cold cash and favors, but also to those so much worse, those populist and demagogues who take out their share in political power.

By the way here is a question for the Undercover Economist: Would our economies be better or worse had the QEs been redistributed in equal shares to the citizens?

PS. The problem with governments is not they are monopolies. It is they are operated and exploited by too many monopolists.

@PerKurowski ©

The fights against climate change and inequality would both benefit much from a Basic Universal Income union

Sir, Martin Wolf, discussing the seemingly accelerating threat of climate change writes: “If carbon pricing were to deliver the desired shifts in investment, it would require credible commitment over the long term. But commitments for the long term can barely be credible.” “Why fossil fuel power plants will be left stranded” April 6.

That really depends on how carbon pricing is structured. The real challenge is to keep at bay the climate change profiteers, be that governments, be that private companies.

In my country Venezuela, were the subsidies for domestic gas (petrol) are monstrously large, but where there is an imbedded resistance to high gas prices, that could be solved if the government paid out all domestic gas revenues directly to the citizens in equal parts… and that at a cost that would not be larger than 2 percent tops.

In the same vein I have also suggested that if all funds derived from carbon pricing, or carbon taxes, were to fund a Universal Basic Income scheme that fights inequality, then all the incentives are perfectly aligned, and it would be politically very difficult to eliminate it.

In fact all the fight against inequality should also proceed with the basic principle of keeping the redistribution profiteers at bay, and Universal Basic Income helps to do that.

An added advantage is that separating the redistribution flows from the taxes needed to fund the governments operations, would bring much added transparency to fiscal matters, and thereby make life more difficult for demagogues.

And of course the resulting flows would help to sustain the demand needed for economic growth.

PS. The Universal Basic Income could also be additionally funded by means of a Pro-Equality Tax

@PerKurowski ©

What if all redistribution is paid by a special tax and shared out equally keeping redistribution profiteers away?

Sir, Marin Wolf discusses the utterly important issue of redistribution of income (and wealth) “The welfare state is a piggy bank for life” April 1.

Citing the Institute for Fiscal Studies Wolf writes: “in the course of adult life, only 7 per cent of individuals receive more in benefits than they pay in taxes”. That sounds as the society is very equal or that the redistribution is very inefficient/costly.

In Finland they are currently analyzing the possibility of a Universal Basic Income. That might not redistribute efficiently over lifetime needs but, by keeping redistribution profiteers away, it might still be a much better alternative than current procedures.

Wolf writes: “benefits paid to individuals, such as housing benefits, tax credits paid to those in work and pensions. In the UK, such benefits amount to a huge sum: 33 per cent of current spending (and 12.5 per cent of gross domestic product) in 2014-15.”

How much money does that represent per citizen? What if it was just paid out directly to all from a specific pro-equality income and wealth tax? If done so that would make it easier to separate re-distribution from the general government functions, and that added transparency could at least help keep some political demagogues at bay.

What causes more inequality, market or government imperfections? In Venezuela, that is a question easy to answer. The poorest Venezuelans have not received even 15 percent of what should be their per capita share of the net oil revenues

@PerKurowski ©

With respect to inequality it behooves us all to stop demagogues from opening appetites that cannot be satisfied

Sir, Tim Harford adds valuable elements to Piketty’s r>g inequality discussions, those that have so many redistribution profiteers drooling in anticipation. “Capital ideas in a time of inequality” March 19.

To Harford’s initial discussions on rates of returns we must keep in mind that the ownership of the capital measured, might be constantly changing. And it is very hard to statistically reflect the continuity value after discontinuities like wars, and other potential wipeouts and resets. And the effect of the survivorships bias on returns, though very hard to measure, might be huge over time.

When it comes to this issue of growing inequality, which is serious indeed, I have always been more for analyzing what could be distorting the allocation of wealth, and in how we can open up opportunities for all to participate in its creation.

And since from the evidence it seems we do need a pro-equality tax on wealth, it is also important to make certain that the redistribution is done in a cost effective way. In my country, Venezuela, I always propose that our net oil revenue should be shared out to all citizens, instead of being concentrated in some political besserwissers’ hands. In this respect it is with a lot of enthusiasm I now follow the idea of universal basic income being studied in Finland and lately in Canada.

But, in all this debate, instead of referring to measured balance sheet wealth, should we not better always think in terms of realizable and transferable wealth? For instance, what about all that wealth stored in art hanging on private, or stored away in the cellars of public museums? If we want to transfer part of that value to the poorer in any significant way, how do we proceed? I mean this is very important, because to open up appetites, ignoring these cannot be satisfied, is precisely what dangerous demagogues do.

Friends, if we had managed to keep the profiteers out of the redistribution, would not the current inequalities be lower? Should not redistributing income and wealth max cost 2 percent?

@PerKurowski ©

The strongest opposition to a universal basic income (UBI) would come from the redistribution profiteers to be substituted

Sir, John Thornhill discusses an upcoming book of Andy Stern titled “Raising The Floor”. In it the author “argues powerfully for the US government to provide a universal basic income (UBI) of $1,000 a month to every citizen” “A basic income — welfare for the digital age” March 15.

Having seen a real fortune in oil income being wasted and stolen away in my homeland Venezuela, I have for soon two decades been proposing something similar… although clearly there we would be talking about much less money per citizen.

In Venezuela, during the years of XXI Century Socialism I seriously doubt its poor got more than 10% of what would have been their per capita share of the country’s net oil revenues.

And lately I have also proposed a Pro-Equality tax on the wealth of all paid out in equal shares to all.

But, when it comes to opposition to the idea, that will surely come the strongest from the redistribution profiteers… those who have a vested interest in doing the redistribution.

@PerKurowski ©