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The Coronavirus Economy NEEDS a Guaranteed Basic Income NOW!

by John Brian Shannon

Well, it appears that Coronavirus returned with a vengeance this week, just as I predicted.

The reasons for it’s return are both simple and complicated, and those reasons are; ONE: In the early days of the COVID-19 pandemic Western governments sat around waiting for someone to tell them what to do, and when someone didn’t, they sat some more, allowing the Novel Coronavirus to spread to thousands of people, who then infected many more thousands of people.

Mind you, once medical professionals told Western governments that Coronavirus represented an existential threat to their countries, they moved quickly to direct citizens towards healthier choices such as ‘social distancing’ and the wearing of PPE’s whenever they left their homes and only essential service workers were permitted to travel to and from work. Both modalities were surprisingly effective in reducing further airborne transmission of the disease.

TWO: A good example of the complete lack of personal responsibility shown by some is represented in the photo below, taken only days ago when the COVID-19 alert threshold was lowered (slightly) and thousands of people (who obviously AREN’T healthcare professionals) mobbed the beaches, disregarding the recently relaxed Coronavirus social distancing rules.

Bournemouth beaches, Coronavirus, UK

Bournemouth beaches under slightly relaxed lockdown rules. Image courtesy of SkyNews.

Consequently, the huge sacrifice made by millions of Britons staying home under lockdown for two months may be in vain!

And many may now catch the disease and perhaps die because a number of Britons lacked the personal discipline to adhere to the (recently relaxed) Coronavirus social distancing requirements!

Let’s hope it turns out that by sheer dumb luck only small numbers of Britons will subsequently catch the disease and suffer or even die on account of the irresponsible actions of those beach going Britons.


Why the UK Needs a Guaranteed Basic Income for the Coronavirus Economy

Due to initially slow response by Western governments (but see the effective response to COVID-19 mounted by South Korea here) and due to the lack of discipline shown by some Britons, it looks like Coronavirus is here to stay for the next two years. At least.

Not only that, but there WILL BE another COVID variant arising this year or next that may prove deadlier than the present Coronavirus pathogen. It’s typical of respiratory viruses that they mutate and those mutations often become more effective at terminating the lives they infect. ‘Nature of the beast’ as they say in virology labs around the world.

So, the economy can’t continue to be locked down and survive Coronavirus indefinitely. It needs real money to be earned, spent, taxed, and reinvested in the whole economy every day of the year.

Consequently, when large numbers of people aren’t working during the COVID-19 lockdown, money stops flowing and businesses begin to die. And that’s terrible for the economy. And it’s even more terrible for individuals who live from paycheque to paycheque as their cash and ‘fridge contents dwindle for as long as the crisis continues.

That’s why it’s no surprise that many headed to the beach over the past few days to gain respite from the living hell they experienced over the past weeks.

See how things are so connected? Demographers see it everyday.



To stabilize the economy and to prevent irreparable harm to persons during this and future Coronavirus lockdowns, the UK needs to institute a Guaranteed Basic Income

Handing huge amounts of taxpayer money to corporations isn’t the answer, as 50% will always and automatically be skimmed-off to add to annual profits and be thence distributed to shareholders — many of whom AREN’T UK citizens, don’t pay taxes in the UK, and may never live in the UK. Which isn’t any kind of pathway forward for the UK economy. So forget that plan.

Putting real money in the hands of Britons is the way forward, especially during times of lockdown, high unemployment, war, or natural disaster. By simply paying adults a minimum income, they can afford to eat, keep the lights on, and keep hope alive for their families for the duration of any crisis or emergency.

Many such facilities already exist in the UK, including all social welfare and Universal Credit spending, food banks, homeless shelters, substance abuse organizations, local charities, domestic NGO’s and foreign NGO’s operating in the UK during the pandemic.

What a GBI means to the UK economy is that all social welfare and charity gets rolled into one payments system — thereby eliminating the many parallel and overlapping programmes that were designed with the best of intentions to, (1) mitigate the effects of poverty on Britons, and (2) alleviate the sudden and unexpected poverty caused by local crises or national emergency.

It means keeping people alive until the crisis has passed (yes, it’s that dire in many cases) so that Britons can then pick up and carry on with their lives after the crisis and once again contribute to the wider economy.


Who Should Get It?

Every adult UK citizen (including senior citizens) who live in the bottom economic quintile and (a) thereby earn less than the annual official national poverty line (about £20,000/yr in the UK) or (b) any adult UK citizen temporarily affected by local crises such as flooding, or national crises such as pandemic, war, or other emergency situations that cause them real hardship; e.g. no money to buy food or find shelter, should automatically be eligible to receive GBI payments.

Non-citizens shouldn’t be eligible for a UK GBI, but should be able to (easily) access enough funds from the UK government to safely transport them back to their country of origin, allowing them to return to their home country until the crisis is over. E.g. A one-time payment of £1250.


How to Pay GBI to Citizens

The best way to pay a Guaranteed Basic Income to UK citizens is, of course, the easiest way. And that is via a reverse income tax, which simply means the UK government issues a monthly credit to individuals via their personal HM Revenue and Customs account to top-up their income to £1250/mo. for as long as they earn less than the official annual poverty line amount in the UK.

As HMRC knows exactly how much you earn due to your most recent income tax form, it’s a simple matter for them to credit your HMRC account to top you up to £1250 for that month and transfer it to your bank account via online banking. Some people may choose to allow HMRC to do this automatically, while others may wish to manually log in to their HMRC account to choose the date they want their GBI deposited into their bank account.

Some may wish to have their GBI payment deposited to their PayPal account. That should be OK too.


UK GBI: Reducing Government Overhead Costs, Supporting Low Income Britons, and Supporting Britons Hit by Natural Disasters/Pandemic, Etc.

Instead of today’s many overlapping and expensive government programmes, some with HUGE overhead costs, a single-payer system would put more actual money in the hands of Britons living below the official poverty line at a lower cost to taxpayers, and to more easily assist Britons during emergencies, again, at a lower cost to taxpayers.

How could it cost less when even more people are likely to receive a GBI, than presently receive Universal Credit?

By eliminating the many costly and overlapping anti-poverty programmes using the single-payer system (HMRC’s payments system) and by dramatically reducing homelessness, drug abuse, property crimes, policing costs, court costs, incarceration costs, mental health costs, and reducing NHS cost of (repeatedly) caring for homeless people or (repeatedly) caring for those injured while engaging in property crimes offences, or who (repeatedly) engage in confrontations with law enforcement, due to the nature of the poverty-stricken life they lead.

Read: Canada’s forgotten universal basic income experiment — BBC Worklife


A UK GBI Improves the UK’s ‘Velocity of Money’ and Therefore, the Whole Economy!

Economists call the speed of the transfer of money from one person to another, the ‘velocity of money’ and it’s a fascinating thing to examine. But to explain it properly, a short video is required to demonstrate how relatively small amounts of money can revolutionize a village, town, city, or rural area…

Now, for a more detailed look at the velocity of money, see Doug Andrew’s excellent example on the topic of how money really works, which refers directly to the ‘velocity of money’ — also known as MV = Py to economists.

FYI – All these examples are sans tax as they’re simple examples designed to demonstrate how velocity of money works.

But in the case of government stimulus — whether government stimulus paid to corporations (a corporate subsidy, or corporate welfare) or paid to individuals as part of a GBI (a personal subsidy, or personal welfare) every dollar or pound sterling of that stimulus (subsidy) returns to the government via taxation within 11-years — and the government is only ‘out’ by the amount of interest paid on the money they injected into the economy 11-years prior. And that’s why you pay taxes…

By the way, your taxes don’t pay for the full amount that the government lends to the economy, you’re paying tax to cover the interest on the money the government lends to the economy. If it wasn’t done this way (so-called ‘Cost of Use’ of money) your taxes would be much higher.

Therefore, British taxpayers don’t pay the full cost of social welfare programmes via taxation, they only pay the interest on the amount loaned to the economy by the government over that 11-year period.

Now, here’s a secret: Since I took my economics education (U.S.A. circa 1991) that 11-year repayment statistic has decreased to 4.3-years (U.S.A. stat roughly similar to the UK statistic) because the velocity of money has increased so dramatically since then. Ask any economist.

Therefore, the huge cost of homelessness, property crimes, policing costs, court costs, incarceration costs, property and vehicle insurance costs, medical costs, etc., to the economy will always be many times more… than the cost of 4.3-years worth of interest payments on money loaned to the economy by the government to solve those problems! Which means, that after 4.3-years (or thereabouts) the British taxpayer should be in for a tax break — courtesy of the GBI and a much better velocity of money factor. All of which equals a booming economy.

Conclusion: It’s cheaper to pay citizens a GBI than it is to pay for the huge costs of poverty on individuals and on the whole economy!

I love economics. Have a great day everyone!

Why the UK Should Tax Robots Post-Brexit

by John Brian Shannon

One point that never seems to get enough attention in the UK and other Western democracies is that there are always more job-seekers than jobs available.

It doesn’t matter which country, which decade, which party is in power; There are always more people looking for work than there are jobs available and it remains a permanent condition in Western countries, much like the cosmological constant that defines the universe remains a permanent condition.

Telling people to “Get a job!” to solve their poverty issue or quality of life issue isn’t the answer to handle a force majeure like an eternal shortage of jobs. If everyone who could be employed followed that advice there would inevitably be 10% of the population who would miss out on a job simply because there isn’t the level of demand necessary to employ everyone who wants to work (or who needs to work to pay the bills) in any Western country. (Remember, official unemployment figures show only the number of people receiving unemployment insurance payments, not those who’ve exhausted their UI benefits and still want to work, nor do official figures show those who gave up looking for work and returned to college, or became a homemaker or unpaid intern, etc. There are significant numbers of these people in every Western nation)

Indeed, our Western economic model is predicated on human redundancy which works to keep significant downward pressure on wages, and that helps business to control their labour costs and thereby contributes to the bottom line.

It’s not that companies are evil entities, everything they do in this sphere is legal and is considered normal practice in our economic system. So, if you’re blaming industry for this state of affairs, I’m sorry, you’ve missed the point.

Government regulation over many decades have produced this result and it’s only government regulation that can solve or mitigate the consequences of this unfortunate situation, which has evolved it must be said. Nobody would create such a system from scratch. The system has evolved in piecemeal fashion.

Yet as creaky and wobbly as it is, it works. But it’s costly and it underperforms compared to what could be done.


The Robot-Tax Tour!

With all of that in mind, let’s go on a little tour to show us what rolling all social welfare programmes into one streamlined entity can do for the UK and it’s citizens, and what a low-ish tax on robots could do to pay for that all-in-one social care system:

  1. Imagine a low-ish tax on robots in the UK that accumulates enough annual revenue to pay for the country’s welfare system, disability benefits system, Universal Credit system, is able to top-up the monthly income of poverty-stricken senior citizens to a minimal level, end the need for food banks, solve homelessness and homeless-related costs like policing, court, and incarceration, and do away with the need for many overlapping social welfare programmes at all levels of government.
  2. It’s important to remember that all these programmes are already paid for by various levels of government and that I’m merely proposing to roll all of them together into one super-streamlined programme and have a ‘robot tax’ pay for it.
  3. Let’s also say there is massive duplication of services (there is) in all of these present-day programmes and that such duplication is costly to the various levels of government and to the taxpayer who pays every penny of it through taxation.
  4. The prime beneficiaries of all that paying seems to be industry, which enjoys the benefit of a labour pool permanently mired in a state of ‘job insecurity’ that works to keep workers ‘hungry’ for work and working for wages lower than would otherwise be the case. Shareholders around the world admire your contribution to their annual dividend payments!
  5. At present, robots aren’t taxed in the UK. Yet, these job-stealing marvels produce many times the output of a human being. Which means that if “Robert the human” produces 100 widgets per day, a robot can produce 1000 widgets per day. This means that “Robert” and 10 other people like him can be replaced by ONE ROBOT. But that statistic doesn’t tell the whole story because ONE ROBOT can work much faster than “Robert the human” and it can work for the full 24-hours and produce 10,000 widgets daily; Meaning ONE ROBOT can replace 1000 “Roberts”. The ratio then, is likely around 1/1000. Each robot replaces 1000 workers. See the future more clearly now?
  6. So, if one robot can replace 1000 workers and thousands of robots are going to take almost all manufacturing jobs, almost all agricultural jobs, almost all call centre jobs, and almost all clerical jobs, how many people will become “redundant” by 2033? And the answer according to the highly respected PwC is; 50% of all workers.
  7. Yet, even with those changes on the horizon (remember, this is already happening, it isn’t going to suddenly start in 2030 and be completed by 2033) it’s happening now and not one word about it has been uttered by world governments. Or maybe they know enough to keep quiet about the fact that EACH ROBOT can replace 1000 workers, thereby improving profits for companies. And as long as taxpayers aren’t rioting about it then maybe taxpayers finally accept that they exist, in part, to subsidize corporations.
  8. Another major consideration is that for each 1000 jobs replaced by ONE ROBOT the government is losing the income tax revenue generated by 1000 workers! The government must also pay former workers unemployment insurance payments or Universal Credit / welfare payments, or pay them via other anti-poverty schemes. Perhaps politicians think taxpayers don’t mind paying for all those costly and sometimes overlapping social programmes to support people whose jobs have been replaced by technology? That’s in addition to paying mega-millions to cover the costs of homelessness (in cases of long-term unemployment) and the crime / policing / court costs / incarceration costs that are associated with homelessness, illicit drug use, and other medical and mental health related costs. To put numbers on only a small part of this problem, each UK prisoner costs the taxpayer £81,000 per year to house + free medical + free dental + free prescription medications. Wouldn’t you rather have it that robots paid poverty-stricken people £13,056/yr + free medical + free dental + free prescription medications to help prevent them from ending up in prison in the first place?
  9. It’s not about being a Luddite! It’s about helping industry hire as many robots as they want (guilt-free!) yet taking care of living, breathing human beings in the meantime. That way, UK businesses can thrive as never before, hire only the humans they need, and still have a large pool of human labour to jump-in on an as-needed basis to fulfil those functions that robots can’t easily perform, such as customized or highly specialized orders.
  10. By rolling all UK anti-poverty programmes into one streamlined single-payer system and paying for it via a reasonable tax on robots, human workers can continue to live, eat, and remain housed (and remain ready to work on an as-needed basis) and UK corporations can begin to reap unprecedented profits!

Tax robots in the UK.

2018 looks to be a good year for world’s top industrial robotics companies, with many of them innovating and simplifying the industry. Industrial robotics services are also benefitting, expecting an incremental growth of well over $4 billion by 2021. Image courtesy of Technavio.com


ONE SYSTEM INSTEAD OF MANY

How to accomplish all of that? By switching all anti-poverty programmes in the UK into one streamlined single-payer system that pays every unemployed adult £1088/mo + free medical + free dental + free generic prescription medication. (This option is limited to those earning less than £13,056 per year from all sources, according to their latest income tax return)

LOW-INCOME UNEMPLOYMENT INSURANCE RECIPIENTS PAID BY THE SINGLE-PAYER SYSTEM

Due to previously working at a low wage job, a person receiving unemployment insurance payments may receive less than £1088/mo. from their unemployment insurance plan, therefore in such cases the single-payer administration would simply ‘top-up’ their monthly payment to £1088/mo. + the healthcare benefits listed above.

It would become one step easier by having the single-payer assume full responsibility for payments to that person and the unemployment insurance administrator would simply reimburse the single-payer administration the monthly amount they would’ve paid to that unemployed person anyway. (Limited to unemployed adults earning less than £13,056 per year from all sources, according to their latest income tax return)

LOW-INCOME SENIOR CITIZENS PAID BY THE SINGLE-PAYER SYSTEM

To lift senior citizens out of extreme poverty and to allow them to live a more dignified lifestyle (in return for helping to build the great UK we see today!) and be better positioned to assist younger members of their family, any senior who reports less than £13,056 annual income would have their monthly income ‘topped-up’ to £1088./mo and receive the same benefits as anyone else on the single-payer system. (£1088/mo. + free medical + free dental + free generic prescriptions)

Again, a government or private pension plan is already paying those seniors a predetermined monthly amount. All the single-payer system would do is ‘top-up’ the income of seniors to the £1088./mo (plus the benefits above) and those pension plans would simply transfer those payments to the single-payer administration which would merely ‘top-up’ the difference in the monthly amount and pay the senior directly. (Limited to seniors earning less than £13,056 per year from all sources, according to their latest income tax return)

UNIVERSAL CREDIT AND OTHER ANTI-POVERTY PROGRAMME RECIPIENTS PAID BY THE SINGLE-PAYER SYSTEM

Instead of the many overlapping and inefficient organizations trying to cope with the needs of poverty-stricken UK adults, the single-payer system can work more efficiently to meet the needs of those who otherwise may fall into ill-health, depression, homelessness, crime, or any other poverty-related condition that results in real costs to the UK government and society in general. Those costs are already being borne by UK taxpayers along with a perceived loss of personal security and mobility freedom among the UK population.

All of these overlapping and inefficient social welfare programmes should be ended by 2020 and replaced by a streamlined single-payer system based on the social insurance number and the individual’s latest income tax return. This is commonly known as a ‘reverse income tax’ among economists. Every UK adult who earns less than £13,056 per year (from all sources) would automatically be enrolled in the single-payer system and begin receiving payments the same month they file their tax return.

When every unemployed adult or retired Briton is earning a minimum of £13,056 per year + free medical + free dental + free generic prescriptions (using the reverse income tax/single payer model) AND all of it is paid for by robots that create 1000-times more wealth for their companies than human beings will ever create, that will be the day that the UK scores the biggest win since the National Health Service was founded.

Among the ‘wins’ of the reverse income tax/single payer model would be the end of homelessness and its associated crime component and a corresponding reduction of property insurance rates, and the end of wasteful, inefficient and overlapping anti-poverty organizations (both public and private) for just a few examples of the benefits of the single-payer model.

And all of it paid for by a moderate tax on robots and other job-stealing technologies that (each one of them) can do the work of 1000 human beings — which means that even with the ‘robot tax’ UK businesses will profit as never before!

It would create a better future for individual Britons, for UK business and their bottom line, and for every level of UK government when compared to allowing the status quo to continue unchanged.


Related Articles:

  • New study shows nearly half of US jobs at risk of computerization (University of Oxford)
  • Will Robots Really Steal Our Jobs? (PwC)