Saturday, May 16, 2020

My Life on a GBI

When you think of someone whose life would be radically different under a Guaranteed Basic Income (GBI) program, what image springs to mind?  Is it a homeless person, or a single mother with children?  Is it an artist, or someone struggling to learn a new trade?  Here's a suggestion:  Why not think about the ways in which your own life might change?  That's what I've done for this post.

Background and Context

In my most active working years, I made reasonably good money and I saved most of it.  (I was never a great consumer.)  The result was that when I final bought a home, I paid off the mortgage in under 10 years.  I continued to save most of what I earned, but that income started dropping rapidly several years ago.  I now earn less than $10,000 annually, which means I have to rely on some of my savings to eat and pay property taxes and utilities.  I could probably afford to see theatre, eat out occasionally, and treat myself to some nice things, but I am reluctant to draw down on my savings any more than absolutely necessary, since those investments represent my future survival.  It also means that while I donate a very significant number of hours to charity and volunteer work, I do not contribute any cash to any worthy causes.  I don't stress about money, but nor do I take good care of myself financially.

Introducing a GBI

Let us assume that the federal government introduces a GBI program whereby every permanent resident receives a guaranteed basic income of, say, $1,000 per month, tax-free.  (A description of the general benefits, justifications, and responses to most common criticisms of GBI may be found in a previous post.)  A Universal Basic Income (UBI) would give this money to everyone - a GBI might have some system whereby those earning more than, say, $48,000 per year would have a relative amount of the GBI paid back at tax time.  It might thus make sense that anyone can opt in or out of the GBI at any time, no questions asked.

Speaking for myself, I could actually live on such a GBI - as in, pay all of the essential bills for my existing home and feed myself.  It would not be a wonderful life if I relied on the GBI alone, but it could work.  Now let's explore what would really change...

Perception of Money

Unfortunately, money in the present reality represents survival.  If I don't have money, I will be living a miserable existence on the street, with dire mental and physical health deficits.  With A GBI in place, that perception changes dramatically.  Money becomes something that I can use to improve my standard of living, or use as a tool of change, for myself or others.  The rewards of earning money go beyond survival, allowing me to let my motivation for earning entirely match the incentive of my expected outcome.

A GBI bestows a healthier perspective on money.

Investments

Because my investments have to fund my future, I can't presently take a chance on funding a friend's new business enterprise or select stocks and bonds based on things I believe in and choose to support.  No, I have to put my money into places that will leverage interest and economic growth - concepts that I generally despise.  A GBI, on the other hand, would mean that my future survival is not at risk.  I can keep a store of savings for my own rainy day, and put the rest into projects I believe in - investments that may or may not preserve the original amount.  Personally, I would be okay with that - if it meant that I wasn't putting my total well-being on the line.

A GBI allows me to invest in what I believe in.

Quality of Life

As I said in the introduction, I don't stress about money, but I don't have a good relationship with it either.  Generally speaking, I don't buy anything (except food).  I don't see shows, I don't buy clothing or coffees, I don't spend a dime online, I don't own a cell phone, and the financial aspect of anything is always a carefully considered factor.  While I would argue that you could still have a high quality of life under such circumstances, that won't be easy in today's world, and you will probably be missing out on a lot.

My default behaviour has always been to only spend money on discretionary items when I have money coming in.  Savings are not for such things.  A GBI would change that perspective, in that money would be coming in, so I would be more relaxed about spending it.  I would no longer feel I have to add to my savings, so if there was money left over from my monthly GBI, it could go out freely.

My quality of life would go up, even if my standard of living did not.

Gifts and Altruism

I am a strong believer in the power of gift economies.  (There's not enough space in one post to go into more about those - I'll cover this separately some time.)  Part of that paradigm is that gifts beget gifts.  There is an increased desire to pay it forward, especially when you are on the receiving end first.

Even though a basic income should (to my mind) be a legislated right for all, it could still very much feel like a gift.  Essentially, the community is saying: "You have a right to be here.  You have value.  And you shouldn't be compelled to work at something that we decide has value for us, in order for you to eat and live.  Your survival, just like this miraculous planet and all the beautiful things inhabiting it, is a gift."

Personally, since I can theoretically live as I do now (without a GBI), that monthly payment would unquestionably inspire me to give most of it away.

Perceiving a GBI as a gift, I would give more.

What about you?

There are lots of amazing ways that a Guaranteed Basic Income could completely alter your life - even if you don't live below the poverty line.  Having a safety net, even when you aren't currently in freefall, can give you the courage to take powerful and worthy risks in order to realize your full potential.  Perhaps my essay on Free Survival would inspire more ideas.  So tell us - how would a GBI change your life?

Monday, May 11, 2020

Money for Nothing

Readers of my work will know that the core of my studies is number-based values.  A key attribute of these values is the absence of any inherent concept of sufficiency - by definition, more is always worth more.  Money is the most obvious example of a number-based value, and in the case of our society, money is structured such that the more money one has, the faster one can accumulate even more of it.  In other words, significant wealth has a positive feedback loop.  The implication for some very fortunate people (in the absence of serious risk-taking) is a lifetime of potential near-guaranteed financial growth.  "Lifetime" is the operative word in this case - nature has its own way of limiting the amount of time one has to accumulate and wield financial wealth.

However, there are two exceptions to nature's mortality constraint: corporations and inheritances.  I have dealt with the endless growth potential of corporations, perhaps most interestingly in this musing on a theoretical corporate endgame.  On the other hand, the concept of inheriting wealth is a new exploration for me, but it should be a significant one.  By some estimates, 60% of the wealth in the United States is inherited, and in 2004 one half of the over $200 billion of inherited wealth was attributed to just the top 7% of the estates. (Those numbers have likely become even more concentrated since then.)  [Critics of these assumptions often point to the anecdotal evidence of the very wealthiest people.  For example, more than half of the world's billionaires are supposedly 'self-made'.  But on closer examination, these are (as we might well expect) anomalies - smart privileged men who managed to leverage the pre-existing infrastructure of the global internet to be the first to get their oligopolies out there.  Contrast this with the data gathered by researchers like Thomas Piketty, which included all incomes, not just a few outliers at the top.]

The first thing to note is that society has a long held precedent that the assets of parents should naturally(?) be passed on to their children after death.  There are several important historical differences at play when considering the applicability of that paradigm to the present day.  Lifespans used to be a lot shorter, and social structure was such that your birth lineage determined your social status and position for life.  As times have obviously changed, I began to wonder what moral justification could possibly be made for offspring to automatically claim their dead parents' assets.  I posed the question to several colleagues, and got a great deal of insightful feedback - possibly because they are of an age where (given today's lifespans) they are both recipients and architects of estate wealth management.

In regards to wealth, the briefest summation of this small survey of diverse and intriguing opinions from an astute and thoughtful circle would be:
  • A parent can say where they want their assets go (before and after death), but beyond that, a child does not have any moral claim to such wealth.
     
  • Parents have a valid biological imperative to offer their child every possible advantage in life.
While I recognize the biological impulses, I will go out on a limb and say that I believe the inheritance of massive wealth is a social injustice – power and assets being conveyed to another simple by nature of birth.  Extremely large inheritances perpetuate and are key to greatly expanding global wealth inequity, using principles with shaky moral foundations.

We already know that the children of wealthy parents start life with very significant advantages.  It also can’t be avoided that rich parents are in the position to give significant gifts of wealth to their kids if they choose.  I don’t believe that inheritance rights are the same thing.  Yes, of course, if society were able to limit wealth inheritance (say, by dramatically increasing estate taxes), the actual transfer could also be accomplished through gifting before death.  However, subtly perhaps, I don’t believe the two transfers are the same, and restricting the first would cause all of society to rethink the second.

One more set of figures might be useful:  A 2011 study by Edward Wolff and Maury Gittleman found that the wealthiest 1% of U.S. families had inherited an average of $2.7 million from their parents.  (447 times more than those with wealth less than $25,000 had inherited.)

So I challenged myself to come up with a theoretical proposal - not something that would ever likely be implemented under society's current paradigm.  Rather, it's an exercise in completing the thoughts surrounding my assertion.  If I'm going to question a global precedent, it is only fair that I eventually turn my mind to an alternative that would address the issues raised.  Here's one possibility:
Imagine, a system with no estate or inheritance taxes.  Instead, estates would only be permitted to bequeath a maximum of $1 million dollars in negotiable assets to any single entity or trust (not including for-profit corporations), and up to an additional $1 million in non-negotiable assets (that were non-negotiable assets at the time of death) to any offspring or dependents.  A higher amount could be willed to a charity or other public institution, subject to a review by a standard community board set-up for such reviews.

Any entitiy could also be granted right of first refusal on the purchase of specified assets at fair market value.

All surplus funds would be used by the community/public sector to pay for important programs like national healthcare and a Guaranteed Basic Income plan.  If this resulted in a surplus of public funds, income tax would be lowered accordingly for all citizens.

Note that, prior to their death, any parent would still be free to gift any asset to anyone, without restriction (although there might have to be some mechanism to review massive gifts transacted within, say, the same window that we use for requests of medically-assisted death when such a death is considered imminent).  Beating the 'deadline' by a day or two is obviously cheating!
By tossing this thought out there, I realize that there will be many who will find fault with the experiment.  And I look forward to hearing from them, so long as their criticism advances the philosophical and ethical objectives.  (To begin with the amounts are somewhat arbitrary but should convey the essential intent.  Feel free to comment.)

To those who would protest that such a system would be 'unfair',
...I challenge them to argue for the 'fairness' of the existing system.
To those who would protest that such a limitation would be meaningless if unlimited gifting before death were still allowed,
...I say: "Well then, what's the problem?"  Personally, as mentioned above, I believe that gifts in-person are NOT the same.  Such gifts carry social obligations and also remove wealth from the still-living parent.  Time would tell how that dynamic would play out. 
To those who protest that such a system could never be enforced - that there would be workarounds just as assuredly as there are billionaires with offshore accounts who pay no tax,
...I remind them that, for the sake of this exploration, let's assume that a society could exist where such a system could be realistic and pragmatic, and work from there.
Your thoughts?