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The California Basic Income Experiment

The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of this site. This site does not give financial, investment or medical advice.

The concept of basic income has been around for hundreds of years, although it was the great Major Douglas who really spelt it out. The Protestant work ethic may be necessary in a world where resources are scarce, but as machines perform more and more work, we should stop creating jobs for the sake of it, enjoy our leisure, and be paid to do so. Douglas called this idea Social Credit, which shouldn’t be confused with the system of social control currently being used in China. The enforced worldwide lockdowns have led to considerable hardship for many, but guess what, the sky hasn’t fallen, there is by and large no shortage of essential goods and services, only the purchasing power to acquire them. That problem too appeared to have been solved by the massive credit created by the world’s central banks. Now we  are being warned about inflation!

Obviously they can’t have it both ways, or maybe being politicians they can, at any rate, the lunatics who control California have at last come up with a good idea; last week the State passed legislation that will provide monthly cash payments to a small number of “qualified” individuals. Encouragingly, this attracted a certain amount of bipartisan support.

Sadly, the Guardian had to spoil the good news, reporting “$35m [will be] used for monthly cash payments to qualifying pregnant people and young adults who recently left foster care”.

Do these “pregnant people” include men?

The bad news is that these payments are to be funded by the taxpayer, in other words there will be even more public debt.

Naturally, the guys and gals at Fox News were not happy with this, one comparing it with socialism. No, Social Credit isn’t socialism. Let’s apply reductio ad absurdum. Imagine if not a world then a small, isolated, self-sufficient community of say 300 people: 100 men, 100 women, and 100 kids. The men produce the food and do the heavy work, the women do the household stuff, including the teaching. Now, someone invents or they import a machine that does all the farm work, all of it, a super robot or whatever, which means the work of the 100 men can be handled easily by 20.

In the real world, these men would be “unemployed”; let’s imagine they were a hundred dock workers – the types who used to be called stevedores. Now, goods are shipped in sealed containers, which are loaded and unloaded by men using forklift trucks and cranes. The conventional wisdom is that these men should retrain for new, perhaps more highly skilled jobs, and this is what happens a lot of the time, but what happens when we reach the point where almost all the essential work can be performed by machines? Do we create more work for the sake of it, out of some sort of misguided moral imperative, or do we allow people to enjoy their leisure?

Doing the latter will in effect create a few more jobs, learning to play a musical instrument, for example, but the world of work is already overstaffed as it is. Think about it, if for the next hundred years nobody published another novel or composed another song, if no one put on another new play or new non-fiction film, would the sky fall?

The California experiment is to be welcomed, but there are five big caveats. The first is that it must be extended to the entire population – including billionaires. People should be allowed to opt out for a quarter or a year at a time, and if there were a public register of opt-outs, a lot of people would. UBI should be funded by newly created debt-free money, not by taxation, or by money borrowed from the banks at interest. The minimum wage must be abolished. All UBI payments must be non-means tested; this is really important for those lower down the food chain who are unemployable as things stand, because some of them would be able to find very low paid work or do occasional odd jobs which would boost their income meaningfully. And, a big one for the lunatics, you can’t have UBI and open borders, unless your real aim is to destroy America. Unless?


The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of this site. This site does not give financial, investment or medical advice.

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Guillermo Calvo Mahé
July 20, 2021

Interesting article but flawed in its premises at the end, i.e., the requisite conditions. Universal guaranteed minimum income is essential, but it is not in lieu of vacations or sabbaticals. It is a reaction to the realization expressed that technological obsolesce applies to workers as well as technologies, that it is a reality, and that those affected will not just quit and die. Universal guaranteed minimum income is economically profitable to those who are not recipients but rather, producers, as it increases their customer base for goods and services, and the money circulates into their pockets as well. It reduces… Read more »

Helga I. Fellay
Helga I. Fellay
Reply to  Guillermo Calvo Mahé
July 20, 2021

We have always had a form of universal income already, only it was a bureaucratic nightmare costing the taxpayers $millions if not more to administer. For example, if someone lost his job, he had to file for unemployment to receive taxpayer money, single moms qualified for government child support, the very poor got food stamps, those who couldn’t afford health insurance had their health care paid for by the taxpayers, etc. etc. etc. This huge bureaucratic machine costing the taxpayers billions could be eliminated if everyone got a basic minimum income which would keep them alive. Those content with this,… Read more »

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