Crazy Ideas for Crazy Times: Guaranteed Income

It's been a while since I wrote a substantive blog post, but I just ran across a post from 3 years ago which effectively predicted the crowd funding craze we've seen in the last year in indie games (I referred to it as "pre-pre-ordering", which admittedly is not the catchiest phrase). So I have newfound confidence that things I post under the "crazy ideas for crazy times" label are more feasible than they might sound.

Which brings me to the topic of today's post: guaranteed income. Some of my friends have heard me talk about the idea in person, and I'd like to outline it more thoroughly. We'll start with some background concepts.


The Nature of Money

Most people see money for its value to the individual - as a substitute for services and desirable articles. It seems natural, then, to treat money simply as a tool for facilitating bartering: instead of carrying my goat around so I can trade it on the spot for the chickens I want, I sell my cow for a small value-token which I can later exchange for those chickens. Lovely. However, as I discussed in more detail here, money serves a larger social purpose - it functions like a rapid and constant voting system, and is how the market determines the relative value of goods and services. If you don't have a planned economy, you need some way of determining what kind of goods get produced, which requires a method of measuring the value of goods. Money is a fabulously robust method of decentralized value judgment, especially because every single member of the society contributes to these value judgments whether or not they think of themselves as doing so.

There are, of course, problems with money as the primary measure of value. Most importantly, since money also determines how many goods individuals get, we are extremely covetous of the resource, and often don't spend it in a way that's representative of our perceptions of value. There are also significant categories of goods and services that we simply don't think of as being commercial, even if we find them very valuable. For instance, we may think that a stay at home mother (or father) is creating an enormous amount of value by raising children, but that doesn't lead us to think we should pay parents for their efforts, much less that we should pay particularly skilled or dedicated parents more than lackadaisical parents.

Nonetheless, money keeps a market running, at least as long as there is a constant flow of data - enough money is being spent to tell us where to dedicate our labor.


What the World Needs Now...

Is more people to buy things. That's not my typical answer to this question, but if our immediate goal is to pull the economy out of recession, all we need is for more money to be spent. That's because without spending, we don't have the value-voting data we need to determine what people should be doing with their time, and the result is unemployment. Since those who have the lowest income are most likely to spend every dollar they acquire (out of necessity), the way to increase spending is to get money into the hands of the unemployed, but since they're unemployed (or underemployed), they're not making enough money to spend. So to create jobs, the unemployed need money, and to get them money, they need jobs. That's the default state of things in a recession, and where we've been stuck for the last four years. 

So here's the weird thing that Keynes figured out a while ago: it doesn't matter why you pay these underemployed citizens; you can hire one person to dig a hole and another to fill up the hole, and net effect for the economy would be positive. If you don't believe me, consider how we got out of the Great Depression - certainly new deal policies were helping, but the final push was World War II. Why would it be that having Americans spend their time building tanks that got shipped overseas and blown up would help the domestic economy? The answer is because paying those workers to do anything would have helped the economy, because it enabled them to spend, and get the great value-voting machine running again.

This is the theory behind stimulus spending, which certainly would help the economy if it were done on a larger scale (and has helped some even though the size of stimulus so far has been small). I want to propose something else, or if you prefer, a particular, relatively radical kind of stimulus.


Guaranteed Income

The best solution to the economic crisis, on both economic and ethical grounds, is to simply stipulate that every citizen should have a certain minimum income. If employment were high, this might be accomplished by a robust minimum wage, but when there are not enough jobs to keep workers employed, you need an alternative way to pay citizens. This is the role the welfare system played in the Great Depression before the war created a sufficient mass of state-funded jobs to restart economy. There are a several important differences between a guaranteed income and welfare, which will become clear if I spell out the proposal.

Here's how I envision guaranteed income:

(1) Every qualifying adult citizen gets a grant with no strings attached. The amount should be enough to provide basic needs in the absence of other income (above the poverty line), but not so much as to totally disincentive work. I imagine the amount here to be around $15,000 a year.

(2) In order to qualify, the citizen must, if capable, contribute to society in some way, either by working for pay (meaning everyone who has a job, even a part-time job if it provides enough hours/week, qualifies), by doing community service, or by working on registered unpaid projects (meaning artists, opensource programmers, etc. qualify on the basis of their projects). 

(3) Any citizen can collect, but the grant is taxable income, meaning that those at a high marginal income rate effectively don't collect much (especially given the next point).

(4) In order to pay for the program, I would support a marginal tax rate up to 90% (or more). The marginal tax rate would only reach this level for those making massive incomes - more than, say, $500,000/yr. 

There are several things to note about this proposal. For one, guaranteed income is not a temporary replacement for income from work, like welfare payments are, but a supplement to income from working. This, together with (2), effectively eliminates the concern that welfare discourages citizens from working. The system doesn't focus on efforts of recipients to find work, but on what they can do immediately to have some positive impact on society as a whole. This means that the unemployed are still doing something useful, and that artists can choose to dedicate themselves to their craft if they don't mind living on a minimal income. If a citizen wants to live on more than a bare minimum, they will try to find paid work anyway, and the guaranteed income helps to ensure that they will be able to live off whatever income they do earn. 

Point (4) clearly makes this a kind of wealth redistribution proposal, but I want to be clear that I'm not entirely against disparate income. I don't have any problem with those who pursue more commercially viable careers, or those who are most skilled in such careers making more money than the unlucky/idealistic. I think doctors, lawyers, and CEOs should make more money than academics or video game designers. That's how we encourage people to pursue practical careers. The problem is, after a certain point (say, a half-million dollar salary), increased income simply stops to be any significant motivator for high earners, and it has no effect on the quality of their lives. The difference between a very high and absurdly high income might motivate a person to choose one particular company or specialization over another, but at that point, we should be encouraging employers to come up with better motivators than salary (such as a rewarding working environment, intellectual/creative freedom and authority, or the ability to contribute to projects the employee cares about). 

I've spent most of my life around wealthy people (and was at one point part of a reasonably wealthy family myself), and in my experience, the top few percent of income earners are primarily concerned with their relative, not absolute wealth. A person making more than a half-million dollars a year doesn't benefit from having that money around to spend on what they will, but it may be important to them to be recognized for earning as much money as they do. So even with a high marginal tax rate, if they can convince someone to pay them a $100 million salary, they get to be wealthier than (almost) everyone else around (but they still have to pay the majority of that money in taxes).

Also note that (4) might not be strictly necessary in a recession. If taxes were not raised to pay for the program, it would result in inflation, which in a healthy economy would act like an "invisible tax" - it disproportionately affects those with the more money in savings. In a recession, the stimulus effect could effectively allow the program to pay for itself. I would support (4) nonetheless to ensure the program remains sustainable.

Finally, if you're wondering about the general feasibility of this kind of idea, note that I'm not the only person to propose something along these lines. Norway provides guaranteed income and grants to artists in the interest of promoting culture generally. BIEN is an organization that advocates for basic income, which is essentially the same idea minus (2), the contribution requirement. Similar ideas have been endorsed by an assortment of Nobel laureates in economics (cue cite to wikipedia).

The solution simultaneously solves two problems: it stimulates the economy and invigorates the existing market by increasing spending, while also allowing citizens a way to be supported for working on projects that are valuable but not well suited to market economics. If it were coupled with national healthcare and free college education, we really would have an America fit for the 21st century.

Duets!

I spent most of the day hanging out with my friend Laura, and we ended up recording some songs. First we did a duet of my new song, Vines and Scaffolds, which came out way better than I expected (despite an out-of-tune piano):

http://www.silentellipsis.com/music/VinesDuet.mp3

I was on guitar and lead vocals, Laura on piano and harmonies.

Then we decided to lighten the mood a bit with an Ingrid Michaelson cover:

http://www.silentellipsis.com/music/YouandI.mp3

We both played uke, and hopefully you can tell which voice is which at this point.

It was a pretty great day, basically.

New Song: Vines and Scaffolds

So FAWM was a long time ago, but that doesn't mean I stopped making music. Here's a demo of a song I just wrote (and recorded on my cellphone - welcome to the future?):

http://www.silentellipsis.com/music/VinesandScaffolds.mp3

EDIT: And check out the duet version I just recorded with my friend Laura (admittedly with an out-of-tune piano):

http://www.silentellipsis.com/music/VinesDuet.mp3

And since I know I'm not always intelligible, lyrics:


Vines and Scaffolds

Build a scaffold in my mind
And ask me where I learned to breathe
Show me who I used to be
Then make me answer for his deeds

I always knew you were a child
Because your soul still has its wings
But I mistook your fear for wisdom
And now your fear inside me sings

You never had to make me whole
You only had to make me weak
So I could shatter my own soul
And teach the pieces how to speak

I let your vines crawl up my wall
And wreck it like the cruel sea
And when we pushed that wall it crumbled
But I'm the only one we freed

Now if you gave me seeds and stones
I'd build a garden for my sweet
And if you didn't love your chains
I'd lay my freedom at your feet

I don't want to make you whole
I only want to make you sing
So when you shatter your own soul
You can build a scaffold for your wings

The Other Otter: FAWM Fallout

Well I should have made this post a month ago, probably, but February Album Writing Month resulted in me and my Philadelphia cohort (codenamed The Other Otter) completing (more or less) 5 songs, and writing several more that I intend to work on more once the semester is over. That's a bit shy of the 14-song theoretical goal of FAWM, but it was plenty of fun anyway. The songs are all available on our FAWM page: http://fawm.org/fawmers/theotherotter/

More specifically, we recorded the following demos (all available from these links):

Lorelai - The first song we recorded, written by myself, includes the most instrumental variety (ukes, guitar, harmonica, glockenspiel, and vocals)

Silverware - The song was written and recorded by Angela. We intended to include accompaniment, but it didn't sound right when we first tried it, so the demo currently just includes one uke and voice.

A Song About Physics - This got written when our Delaware friend Em visited. The lyrics were written via a poetry game - we wrote one line at a time on three pieces of paper and then handed them each to another person to write the next. The theme we picked beforehand was "science".

Downtown - A creation of Josh combined with a strange mood, this song is a masterpiece of incoherence, and feature 4 ukes and voices. In each take we did, Josh improvised lyrics on the fly.

City People - A second song by me. Em's bass line was contributed via email.

Also, it turns out collaborative song-writing is pretty fun, so if anyone wants to visit Philly with an instrument and jam, let me know.

Lorelai

For the hypothetical people who read my blog but don't follow me on other social media, I've been convinced to get involved in February Album Writing Month. The goal is simple: write a song every other day for the month of February. That's 14 1/2 songs this year (since it's a leap year - the 1/2 song is usually interepreted as a collaboration). So my roommate, a friend, and I signed up as "The Other Otter" and started writing. I'm not sure we'll finish 14 1/2 by the end of the month, but we've got one down and recorded, and you can listen to it:

On Bandcamp

or

On our Wix Site

We have more songs in the works, so stay tuned!