Canada needs a Universal Basic Income, 1st class robots and the smartest artificial intelligence, and to be daring

Sir, as a Venezuelan I am so lucky and so grateful for having two of my daughters and my two granddaughters living in Canada; and so of course I gave special attention to Tyler Brûlé’s “My plan to make Canada great again” September 31.

Except perhaps for that of “some form of national service with both defence and civilian functions”, and which because of my Swedish connections rang a bell with me, his other proposals left me quite indifferent.

I would instead suggest the following three things.

1. To prepare itself for the possibility of structural unemployment that could cause a breakdown of social order. This will probably require the introduction of a modest Universal Basic Income, a social dividend, and not paid by taking on more debt.

2. To gather all possible brain power in order to guarantee that future Canadians live surrounded and served by 1st class robots and the smartest artificial intelligence possible. Thinking of mine being dependent on anything lesser is just too horrible.

3. To immediately get rid of the risk weighted capital requirements for banks. These have banks staying away from financing the “riskier” future, like SMEs, and just keeping to refinancing the “safer” past, or basements in which to live. Risk taking is the oxygen of any development. God, make Canada daring!

PS. On Bombardier the following was my pro-Nafta tweet: “The fundamental question: Would Boeing build better airplanes in the future with or without competition from Bombardier? Keep the pressure!”

@PerKurowski

President Trump, remember Einstein’s “No problem can be solved from the same level of consciousness that created it”

Sir, Martin Wolf, in these moments of so much radical uncertainty, recommends Donald Trump to follow one don’t-rock-the-boat strategy. “Janet Yellen, and the Fed’s inflation target, should both stay” June 19. I wish I could be such an optimist to believe that would do.

If I were Trump I would like the Fed to think about how it could help to create sustainable jobs, not some kicking-the-can-down-the-road financed jobs; and about what to do with the unemployed, if they fail to reach the previous goal.

The current risk adverse bank regulations risk banks building up too large exposures to what’s perceived as safe against too little capital; and hinders the efficient allocation of credit to the real economy. So that just must go… completely!

Why should not Janet Yellen be able to do this? Well as Einstein once said: “No problem can be solved from the same level of consciousness that created it”

http://subprimeregulations.blogspot.com/2016/12/must-one-go-on-hunger-strike-to-have.html

And the structural unemployment that threatens social cohesion must be forcefully attacked before social cohesion breaks down. After, it is quite too late, as we all can see has been happening in Venezuela.

What to do? A Universal Basic Income is one useful tool of many to handle that problem with; and the revenue neutral carbon tax, the carbon dividend, seems a good source to start feeding a UBI scheme that foremost must be financed with real money… that is of course unless you really want to go down the same road as Zimbabwe or Venezuela 

@PerKurowski

Universal Basic Income panics redistribution profiteers. OECD’s model insists on these targeting better the poor.

Sir, Chris Giles writes: “The modeling exercise by the OECD, the Paris-based organization of mainly rich nations that specializes in cross-national comparisons of policy ideas… shows the simplicity of basic income schemes would come at the cost of a need for increases in taxation, less effective targeting of support on the poorest and large numbers of gainers and losers.” “Basic income ‘would fail to reduce poverty’” May 29.

What can I say? The study is full of self-serving premises like “the right to a basic income would undermine the incentives to work because it would ‘sever links between carefully balanced rights and responsibilities of job seekers’”. There it completely ignores the role of UBI in helping the unemployed, without creating any stigma, to get out of bed in order to capture whatever temp opportunities there might exist in a job market characterized by more and more structural unemployment.

Also when the report concludes, “Large tax-revenue changes are needed to finance a basic income at meaningful levels,” any savings of redistribution costs are clearly ignored, and the “meaningful level for a basic income” is undefined.

Sir, this is clearly a case of redistribution profiteers defending the value of their franchise. That is only to be expected.

@PerKurowski

http://myubi.blogspot.com

Nations need unions that represent the unemployed and to get a small universal basic income going, before it's too late

Sir, Anne-Sylvaine Chassany, interviewing Laurent Berger writes: “The leader of France’s largest trade union has warned Emmanuel Macron not to rush labour market reforms as the country’s new president kick-starts negotiations over a bill seen as crucial to revamping the eurozone’s second-biggest economy.The warning is a reminder of the labour relations minefield awaiting the pro-business president” “Macron warned by union leader not to rush reform” May 24.

That evidences how much France and all other nations also need unions that represent the unemployed, in order to create some equilibrium among the forces that influence labor politics.

And of course, setting up a universal basic income system, starting it with a small amount, in France perhaps €150 per month, would also begin to open up the roads to that new society in which robots and automation seem to create structural unemployment.

As I have opined since some years we do need decent and worthy unemployments... before its too late.

http://myubi.blogspot.com/2017/01/my-universal-basic-income.html

@PerKurowski

How many university professors know they are educating kids for jobs not to be had?

Sir, Mo Ibrahim writes: “the more time young people in Africa spend in education, the more likely they are to be unemployed… It highlights the worrying mismatch between the skills our young people are taught and those needed by the contemporary job market. This is a recipe for frustration and anger” “Africa’s youth, frustrated and jobless, demand attention”, April 13.

Scary! But it is even scarier if we connect this to Rana Foroohar “Dangers of the college debt bubble”, April 10 and Alex Pollock’s letter of April 12, “Colleges are acting like subprime loan brokers”.

A question. In our universities how many of the professors might be aware of the slim chances of their students’ landing a job in the future that will allow them to service their student debt and have a life… and still say nothing?

In many occasions over the years I have written about the needs to better align the remuneration of professors, at least their pensions, with the future of their students.

It is amazing to see so many professors criticizing bankers for poaching their clients while they de facto behave just the same. Load up the kids with loans, so that we can collect (bonuses) today! 

It will not work, and it will come back and bite us all.

PS. If I owed a student loan I would ask for a debt to equity conversion, offering a percentage of my after tax earnings over a certain amount for a definite number of years.

http://teawithft.blogspot.com/2010/04/if-incentives-are-correctly-aligned-all.html

http://onechildonevote.blogspot.com/2007/01/should-not-higher-education-be-more-of.html

PS. We need worthy and decent unemployments

@PerKurowski

Why has society ignored for so long the structural unemployment that is already here, and that will grow so much worse?

Sir, Sarah O’Connor does all of us an immense favor putting forward data such as “America’s unemployment rate may be close to the lowest in a decade at 4.8 per cent [but] the rising share of people in their prime years (between 25 and 54) who are neither working nor looking for work, now stands at about 20 per cent” “‘Jobs for the boys’ is just half the story in America” February 7.

History is sure going to analyze the question of how a generation that prides itself from having so much knowledge and information at its disposal, could have turned such a totally blind eye to one of the greatest challenges it faces, namely the structural unemployment caused by robots and automation.

Where can we find data about how much robots and automation have substituted for human jobs and salaries, year by year, during for instance the last 20 years? It might exist, but I certainly have not found it.

In 2012, having been worried for quite some time about this issue I wrote an Op-Ed titled “We need worthy and decent unemployments”. But only quite recently are possible remedies to a real inexistence of jobs surfacing into public debate, like that of a Universal Basic Income. Though much too late that is good. Nonetheless the “whys” or the “how comes” of all social blindness to this issue, needs also to be studied.

PS. Why is there no concern with that humans have to so unfairly compete for jobs with robots that are not handicapped by having to carry weights like payroll taxes?

PS. Just like the “whys” or the “how comes” about the silence on stupid bank regulations, based on the silly notion that what is perceived as risky is more dangerous to the bank system than what is perceived as safe, needs to be studied.

@PerKurowski

Are we supposed to be very impressed with the intellectual capacity of Davos’ besserwissers?

Sir, in Wikipedia we can read that Martin Wolf “has been a forum fellow at the annual meeting of the World Economic Forum in Davos since 1999.” If that’s true, which it does not necessarily have to mean in these days of fake-news, Mr. Wolf is as much a “Davos” man as anyone else of them.

I make a note of this because now Wolf writes: “weakening of globalisation partly reflects the exhaustion of easy opportunities for global commerce and the feeble growth of demand since the crisis. But it also reflects shifts in policy: the post-crisis re-regulation of finance has had a pronounced home bias, with reduced support for cross-border activities.” “Populism will not lead to a better world” January 17.

What? Do we now have a “pronounced home bias”? What about Basel II’s risk weights of 0% the Sovereign, 20% the AAArisktocracy, and 100% “We the People” and that are mostly still in place?

No, though I might run the risk of being be tilted a vulgar populist by Davos’ Wolf, I assure you Sir that I do not find much wrong in reducing the regulator’s pronounced risk aversion bias; that which have them favoring the lending to “safe” corporates wherever they are, or to friendly and “safe” Sovereigns, over the lending to “risky” SMEs and entrepreneurs in their own localities.

And what’s that running around like chickens, scared of some possible horrors of neo-protectionism, in a world that has been so much changed? Do the Davos intellectuals really think that Trump would be able to impose really major increased costs on the American consumers? Like telling its kids “the price of an I-phone will be 50% higher because it has to be made in America… and you must now wait one year more to have it delivered? Forget it! That would be like introducing a 50% tax on all purchases on the web, so as to defend the local mom and pop stores. The smuggling of drugs and fake goods would then be minor compared to that of the so many new entrants.

What Davos should be doing though, is to analyze the need for new solutions in a world in which, because of increased automation, there will be more and more structural unemployment; and also one in which, for sustainability reasons, perhaps some consumers’ aspirations must be reduced.

I believe a Universal Basic Income might indeed be one of the best tools available. I fret though about leaving the discussions on such beautiful and delicate solutions that can so easily be distorted into a monster, in the hands of the so many redistribution profiteers and besserwissers always present in Davos.

PS. Basel II assigned a risk weight of 20% to those rated AAA-AA; and one of 150% to those rated below BB-. Sir, are we supposed to be impressed by the intellectual capacity of the Davos group that saw nothing wrong in considering those perceived as very risky a much bigger threat to the banking system than those perceived as very safe? You tell me!

@PerKurowski

“With a basic income, the numbers just do not add up” Do not add up for whom, for the redistribution profiteers?

Sir, John Kay writes: “With a basic income, the numbers just do not add up” June 1, and the first question that pops into my mind is, does not add up for whom?

For instance if in my country Venezuela, all net oil revenues were shared out using a “variable” Universal Basic Income scheme, it would definitely not add up to Maduro and friends, but it would sure add up a lot to most other citizens, especially to those poor who have only received a very small fraction of what should have been their per capita share of those revenues.

If we go the Universal Basic Income route, then we can also better separate the redistribution function from all government functions, bringing heightened transparency, and which clearly would add up to a chance for better governments.

I favor paying that Universal Basic Income to all citizens, with no question asked, as a Societal Dividend. It should be a citizen-to-citizen affair so that there is no need to thank any bureaucrat or politician for special favors.

And a UBI could signify a decent and worthy partial solution to that future structural life term unemployment of millions that we can already begin to detect.

How much should the amount be? Let each country explore what it can, and lets take it from there. There are better times and there are worse times; and you sure do not want to de-capitalize that society paying you dividends, much less put it in debt in order for those now to collect income from the future generations.

And let us not forget that the Universal Basic Income is in much re-injected into the real economy, which could help it to grow and generate jobs.  

And you could fund Universal Basic Income from different sources in ways that help to solve problems… like with carbon taxes, so as to align the incentives of the fight against climate change with the fight against inequality.

Kay ends writing: “Social welfare systems everywhere make use of both types of information — contingent and income-related — to balance cost and effectiveness. That is why they are, inevitably, complex” The truth is they are much more complex than need be, precisely because that’s the business of the redistribution profiteers.

@PerKurowski ©