By Request: How to Transform The Society of Any Nation (in a “5 min read”)
By: Stephen Yearwood
Tags: Unemployment, Poverty Alleviation, Taxation Reform, Minimum Income, Economics

for Citizens:

no unemployment (at no cost to anyone)

no poverty (without having to redistribute anything)

no taxes (of any kind — people or businesses)

for the nation:

no public debt (at any level of government)

for the world:

more sustainability (even without more regulations)

Some time ago I stumbled upon a way to achieve all of the above. For the record, I do have an M.A. in economics: Atlanta University, 1988.

All of the above outcomes could be accomplished with a single legislative Act — a revolutionary, but not radical, restructuring of the monetary system. It is revolutionary for obvious reasons; it is not radical because it leaves every bit of the existing institutional structure in place, even the dreaded (by some) central bank. It would make the existing economy fully self-regulating, with built-in safeguards against inflation.

Changes that would not be required to achieve those outcomes are noteworthy. No limit on income or property/wealth would be required. Also, no particular economic behavior (altruism, greed, etc.) would be required, so no changes in economic behavior would be required.

The key to this proposal is an “allotted income.” It would not be paid to all citizens, but it would be available for an unlimited number of people. The total of that income would form the supply of money for the economy. [The supply of money refers to actual currency (whether physical or digital), as opposed to the money supply, which includes also money credited to accounts when banks make loans and additionally, in broader definitions of the money supply, fungible assets of various kinds.]

The money for the allotted income would be created as needed. As at present, the money would not be ‘backed’ by anything, i.e. would not be exchangeable upon demand for any officially sanctioned asset such as gold or silver (or land, or some form of ‘social capital’, as some would have it).

Unlike at present, no entity would have the means to influence, much less determine the size of the supply of money. It would be determined by demographics — and only that.

The allotted income would be paid to citizens who were retirees or were adults too incapacitated to work any job. It would thus replace public programs established to provide people in those categories guaranteed incomes, such as, in the U.S., Social Security.

The allotted income would also become the minimum pay for citizens. As such, it would be paid by the entity administering the allotted income (below), not employers. Employers would use non-monetary benefits to compete in a free labor market for minimum-pay employees.

Employers could designate any position to be a minimum-pay position. People would be free to work in that position for that pay (plus negotiated benefits) or not. (Positions paying more than the minimum in wages and salaries would continue as at present.)

Not-yet-retired citizens who were able to work would have to work to receive that income; cost-free jobs performing some public service while being paid that income (but without any collateral benefits) could be provided through government for an unlimited number of citizens. That is how unemployment would be eliminated. People employed thusly would form a ready reserve of workers that employers could recruit, using benefits.

The amount of the allotted income, which would be the same for everyone being paid it, would be based on the current median income — say, in the U.S. $15/hr.; $600/wk. (As the minimum pay, to prevent inflation it would have to start at the current level and be gradually increased to that level.) That, along with a guaranteed opportunity for all citizens to be paid that income, would eliminate (involuntary) poverty. (People, such as the proverbial ‘starving artist’ — or revolutionary political economists — could still make that choice, though presumably no public financial assistance would be available.)

To prevent inflation money would have to be returned to its place of origination (below), but people and businesses would be able to accumulate plenty of money (which would also help prevent inflation) and, unlike taxes, no money would be collected from any person or business before it could be used for purchases or investment.

The amount of money that was returned would be determined by the functioning of the economy, not any particular entity. That is how the economy would be self-regulating.

The allotted income could be administered by a newly created Monetary Agency or by the existing central bank. It would create the money and be the place to which it was returned. Either way, its would be a purely administrative task, with no discretionary authority involved. (Either way, the central bank would continue to exist.)

The same entity that administered the allotted income could also directly fund government (though if it were the central bank that would require a change in the law to allow it to do that). That is how taxes and public debt would be eliminated.

The amount of that funding would be based on the current per capita rate of total government spending (including all central, intermediate, if any, and local government). The total of that money would be provided to the central government; whatever was not spent there would be apportioned to the intermediate level (in the U.S., the states), based on population. States (or other intermediate entities) would presumably fund local government similarly. (In democracies legislators at higher levels of government would presumably realize that the less that was spent there, the more would be available for lower levels of government, where the people who voted for them lived.)

With no taxes, no public debt, no need for any kind of public financial assistance, and not even any means to try to ‘manage’ the economy, government, especially the central government, would be a much smaller presence in society. With both the supply of money, in the form of an income paid to individuals, and the funding of government governed passively but effectively by demographics, the total output of the economy would be governed, passively but effectively, by demographics — which is why this restructuring of the monetary system would increase sustainability.

Any nation — or group of nations — even all nations — could adopt this system. Poor nations could create viable economies overnight, without the environmentally detrimental side-effects of ‘development’. We could eventually have the same allotted income for every nation on the planet without compromising national sovereignty.

further reading: my Web site (such as it is —and the link might not work), www.ajustsolution.com (as I got to this idea in thinking about a really just economy), and essays posted under my name on Medium (medium.com), including “A Cure for the Ills of Capitalism,” “A Call for a (Further) Central Bank Revolution,” “DDI: A Minimum Income That Performs Like a Right,” and, comprehensively, “People for Tolerance, Unite!”