With Charles Hugh Smith & Gordon T Long
31 Minutes - 18 Slides
Charles Hugh Smith and Gordon T Long follow-up to their discussion last month of the puzzle of the falling US Civilian Labor Participation Rate. In this session they tackle the issues associated with "Universal Basic Income" which the public narrative has begun to 'offer up' as a solution.
"A Solution to Automation -- Universal Basic Income for all"
The conventional wisdom is that a guaranteed free-money check from the central state is the solution. This is nothing more that "A Redistribution Scheme: A new form of Subsistence Serfdom"
• It doesn't address how this enormously costly program will be paid.
• It is Understood that the "Wealthy" will pay for it!
• Runs aground on the reality that upper-middle class and top 5% already pay 93% of all federal income taxes; they actually can't afford more taxes.
• The top .01% who can afford to pay will continue to buy political protection of their income, and that's not going to change:
Declining Labor Participation Rate - The Status Quo has no solution!
• Declining work force will be unable to pay for the "pay as you go" social programs such as Social Security, Medicare and Medicaid.
• Declining labor force will also be unable to support more borrowing -- and the system requires more borrowing just to keep afloat.
• Decline of labor is the inevitable result of automation, which has only started eroding white-collar and managerial jobs.
The Reality: New technology creates far fewer jobs than it replaces/destroys
The Reality: Today's Tech Giants Are Creating Loads Of Wealth But Pitifully Few Jobs
Why Basic Income is not realistic or positive: http://www.oftwominds.com/blogdec15/basic-income12-15.html
-- Financially unsustainable,
-- A disaster for those getting the welfare check. They are essentially serfs, with no incentives or pathways to build capital.
For the Wealthiest - A Private Tax System That Saves Them Billions
-- ultimately, proponents of basic guaranteed income are relying on borrowing additional trillions of dollars to pay for the scheme. Not only is this financially unsustainable, it is immoral to load debt on future generations to pay for today's spending.
Why Firms Are Fleeing
-- as for expecting corporations to tax trillions more in higher taxes -- they're fleeing US taxes, and they are also buying political favors to avoid higher taxes. http://www.newyorker.com/magazine/2016/01/11/why-firms-are-fleeing
Understanding The Differences
1- The failed model of WELFARE-FOR-ALL - Communal Poverty
• The central-state welfare model
• Top-down, encouraging dependency and helplessness -- and resentment
2- The Social-Economic model of SHARED BENEFITS flowing from working productively together
• The community economy
• Bottom-up, encouraging accumulation of capital, skills, etc.
• Creating the goods and services that are scarce and needed within local communities requires new ways of thinking and organizing work
• Giving people money without getting any productive work is destructive to participants,
• Those who have to pay for the free-riders (the community) loses the labor of its residents.
• Our goal should be to provide meaningful work to people in their own communities, not give them subsistence welfare,
• Guaranteed income for all is just a new form of subsistence serfdom.
• Those looking to central state "solutions" such as basic guaranteed income are out of touch with the reality that real solutions come from below, in the entrepreneurial Main Street economy, not from above (central banks, politicians enacting new social programs, etc.)
... and much, much more in this 31 minute frank and open discussion..