December 04, 2016

The fiscal accounts of most nations seem to be out of whack. Universal Basic Income would help regain much order

Sir, I refer to Lawrence Summers’ “Trump’s misguided tax reform plans” December 5.

It reads quite, or even very correct, but as so many other recent writings by economists, it does not stimulate taking a strong position in favor or against, that because it is getting harder and harder to distinguish real economic prognosis from fake politically framed one.

Everywhere we look we get the feeling we have lost control over the fiscal accounts and government activities in general… no matter who is in charge. Since it is we citizens who at the end of the day are going to pay for whatever happens, it behooves us to urgently put some order to our government’s affairs. 

The most expeditious way for that could be to use a Universal Basic Income scheme to separate, as much as possible, redistribution, from the rest of government activities.

Doing so, by means of an all citizen to all citizens affair, we would be better able to understand what is going on, and presumably governments would thereafter be more elected on the basis of who offers the best in what should be a governments primary responsibilities to all, and not based on who offers the most to some.

Of course, to diminish the redistribution role of governments will be no easy affair. That is not only because redistribution profiteers will naturally fight back; but also because after so many years of being brought up on the need to cry for a larger share of the redistribution pot, voters have become more genetically disposed to be beggars of favors.

That said, if a UBI is used, we must make sure that it is funded with real money… no funny money, no debt.

It could be funded with savings in current redistribution costs, carbon taxes, payroll taxes on robots, driverless cars and similar human employment substitutes, or by special taxes on income and wealth.

That would provide stimulus for the economy, while at the same time allow all who want jobs to easier reach up to the growing gig economy.

PS. In resource rich countries, like Venezuela and Nigeria, it SHOULD primarily be funded by like the net oil revenues.