The concept of Universal Basic Income (UBI) has been around for decades. Recently, an article appeared (see link below) teasing the curiosity and interest of several folks who asked me to comment. The great, generally, challenge with the UBI concept is that it requires alignment in an either/or paradigm. Each with their own respective questions, do you maintain a structurally sound economic/banking policy, or do you embark on a complete departure course from them?
After all, regardless of what economic or theoretical approach one chooses, one must wrestle with a fundamental facet of any exchange of value; there must be a substantiable component of value in any bilateral exchange. I think of this and one of my books is titled the same, there must be equality between “Value Given, Value Received”. Without this fundamental component of equality, any economic cycle will ultimately fail. With this in mind, and understand that this topic really deserves a far deeper study than time and space afford in this medium, the following represents a simplified response.
Interestingly enough back in the 1980’s I wrote a position paper on this very topic playing out various scenarios where the concept might work and conversely where/why it won’t produce adverse effects.
A few thoughts follow:
- First a few definitions from the library of terms I developed to explain and enhance the various component I found integral to the thesis or premise of the topical task:
- Demand Capacity: Resources available to fulfill ones demands; ostensibly Value/Currency/Labor etc. one has immediately available to trade/leverage in exchange for the object of their demand(s) (food, housing, clothing, and various consumables).
- Organic Capacity for Demand: Enterprise which develop organizing productive resources to produce product/services being the object of “Demand Capacity”. This base-level productive capacity and specifically related to basic needs, e.g., food clothing and shelter where as “Expansive Capacity” addresses productive capacity that develops from evolutionary and progenerative kinetic forces, e.g. root cellars to ice-boxes to refrigerators to refrigerator-freezers and so on. In short, products you never knew you needed and/or couldn’t possibly do without until your perceptions of “demand” where altered.
- Market Access Yield: With all things Tangible (Physical) and/or Intangible (Intellectual) there is a perception of value both objective and subjective in terms and either positive or negative. In this case, we are asserting an implicit value associated with the concept of “access to” a “thing” more specifically, the implicit value (positive) of having access to a marketplace. It is integral to the ideal that proposes a question relating to whether or not there is or should be a cost to Enterprise(s) for having access to a Market. For example: McDonalds Corp charges various fees to a Party, a Franchisee, for the value of having access to both the concept, facilities, resources, branding, supply-chain, infrastructure and the Marketplace that support the McDonalds enterprise. “MAY”, as a specific and definable attribute, is the quantifiable value of the Franchise Fee associated with licensed access to a marketplace.
- Physiological-Sociological Economics (PSE): A term which identifies the practices and tendencies of how economic processes are altered and enterprise(s) conform, morph or orientate themselves in response to political interferences, inducements or preferences. The motive force is typically advantage-driven by nature and trend toward defeating the beneficial effects of Torsional Economic Tensions which would otherwise serve as a perfecting and refining cause. In practice this feature defeats all native, organic and normalized economic cycles and self-perfecting forces.
- Distributive Wealth: A vibrant and productive economy persists based on three fundamental principles: (1) Demand is always Local. (2) Demand Capacity and, (3) Free & Unimpeded diversity in Productive Capacity. The bi-product of these features is the creation of fungible wealth the net-aggregate of which filters back to both enrich and expand the scope/reach of the fundamental principles. It’s, in essence, the reciprocal process to the Cycle of Predation.
- Economic Equilibrium: A beneficial market-dynamic (component) of an economic infrastructure characterized by a driving force, in terms of both breadth and depth (bottom-up & top-down), of wealth-creating capacity and exchange.
2. Now then, off we go. Short version, as with every nascent premise, to forge its substantive relevance requires a refinement/proofing process. This proofing process is nothing more than a sequence of overcoming its defects through repeated testing and analysis; the ultimate goal being the achievement of success by resolving defects so that the risk of failure is dramatically reduced. The challenge with Economic missives is that far too often they are intellectually claustrophobic concepts that are rarely if ever tested. Instead what occurs is the alteration of the environment to suit a desired premise; I refer to this event or occurrence as “The false premise simulating reality.” The reality of this occurrence is absolute, and portions of its consequence are what I refer to as the “PSE” effect (see above). Milton Friedman is the only Economist worthy of esteem; too often he stirs the contempt of others simply because of two factors: oppositional ignorance and the fact that they are conflating their Theory with that of Native Economic (Free-Market) realties and because they are irrreconcilable they automatically believe it’s due to the error implicit in Native Economic realities.
3. Given the current Spiritual Level (our Common State of Consciousness) the practical realities of developing a UBI is wrought with contradictions, not theoretical mind you, but in reality. Until such time as man evolves to a higher state of Cognitive Spirituality where he no longer is bewildered by the concept of physical value and their numerous distinctions and looks only to the concept of yield as a means to satisfy basic needs there can be no uniformity in the concepts of value between and among the various (different) products and services available or the resources required to produce them. At this time, we recognize and are intoxicated by the allure of the lack of uniformity which is precisely why folks will spend a $1000 for an iPhone and not care that its built in China or Vietnam even though by doing so they are destroying the very economic engine that has the greatest potential for easing the burden of generating personal income by substitution in totality or proportionate by way of a UBI.
4. The former brings up additional conflicts in and with the UBI theory and I’ll try to keep these short:
- Folks, “Demand Capacity” is not uniform and until an evolution described above occurs this will not change and similarly, for the same reasons, neither will the attributes associated with “Organic Capacity for Demand” or “Expansive-Capacity for Demand” evolve to a uniform point of stasis.
- Banking System: At this point in our economic history it is impossible to separate Private Banking from the Trough of Government Fiscal Management; as it is, neither can exist without the other. Public funding of the Financial Sector is complete and the fiscal, social and economic burden is simply irreconcilable. Government needs the financial sector to mask the predatory practices that feed the fractional/fiat financial-banking system and the financial-banking system needs the government (FED) to feed them the monetary vehicle both sides recognize and insist is their privilege; yet another feature/attribute of the “PSE” effect. The inflationary effects of this organized leaching does not fit the economic modelling used in economic sciences and as such is one of the most inconspicuous defects in their UBI dream; the effects of current monetary policy on the entire economic sphere. No inflationary effect?!?! You can’t be serious. If none, then why the unfunded Federal Mandates of $145 Trillion and the acknowledged Federal Debt moving toward $20+ Trillion; need I say more! It is important to understand that the Federal Treasure is not required to charge interest for the money it creates so then why does the FED? Simple: The FED is not a Not-For-Profit Enterprise. Private Banking can exist and it should, but it needs to be wholly independent and survive in its own capacity. The FED should be abolished largely because it is out of control and is an added cost to the Government and the Public at large. The Treasury should assume the central banking role and issue currency based on the Productive Output of the Economy. Adjusted annually, expanding the currency in circulation only based on legitimate lending for the expansion of fungible productive capacity and exchange the essential component of “Economic Equilibrium” and the attributes associated with “Distributive Wealth.”
- It is, nonetheless, possible to create a Benefit similar to the UBI concept within our current time line and short of totally homogenizing the global human population into some sort of diminutive dystopian state of existence where “currency” is nothing short of an electronic entry/keystroke where value is scheduled, adjusted and manipulated at will. However, not without understanding the points/issues made above and addressing the inherent conflicts, with the current system, that exist. Inseparable to this potential is an area of critical importance which is a fundamental reattachment to economic realities, the key of which are as follows: (1) the accumulation/creation of debt is not the same as wealth; at best it is a zero-sum gain. (2) Inflation in a fiat/fractional banking system is a necessity despite what you may read, believe or are told; it is how this system survives and it precisely way you have boom and bust cycles. (3) Wealth, true wealth creation is a function of an economic cycle that is net positive in productive capacity; there are no substitutes. (4) Gold/precious metals, regardless of what you may think, have only the value associated with them that the market assumes there to be (think about this); its scarcity does not necessarily equate to intrinsic or “bankable” value for either banking or as a support for currency value and for one primary reason: It’s value is highly manipulable. Do you know that the Gold market is managed by the London-based Bullion Market (owned primarily by 3 major banks)? Did you know that the market trading is based solely on Derivatives leverage approximately at 100:1 and on “leased gold”? If gold was truly valued based on unmanipulated forces using the current currency valuation gold would be trading in the $120k-$135k per ounce range; no inflation???!!!! Really!!! (5) The Global Financial Markets are now so intertwined and electronically manipulated that entire segments of the market can be electronically simulated (to protect against natural forces that would otherwise cause them to self-destruct) all the while these events are undetectable from any regulatory entity. Right now, the global derivative market (using BIAS numbers) is in the $940 Quadrillion range and as recently as 2013 was at $1,250 Quadrillion – by the way, that One Thousand Twelve-Hundred and Fifty Trillion Dollars at a time when the global GDP was a mere $71 Trillion; oh, by the way in case I didn’t mention it, there is NO INFLATION!!! Riiiiiiiiiiiight!
- Continuing the conversation of how it is possible to create a UBI requires a total re-thinking of the economic system and how we value the concepts associated with what becomes, you guessed it, value. In short, to establish a UBI system that is sustainable you must understand that if it is at all achievable it can only occur thru distribution of “Excess Wealth” and I don’t mean by Taxes; government is not a “Wealth Creator”, but continues on as a “Wealth Consumer.” It could become a “Wealth Creator” if it were to change course and operate as a “service provider” charging for services it provides and begin to charge market-rate for “access” – you’re going to want to remember this word – to resources such as coal, crude oil, natural gas, minerals, timber, technologies it develops under the auspices of government funded programs it manages on behalf of the Citizens of the United States. This “Wealth”, lost and latent revenues in the Billions and perhaps Trillions of Dollars per year that could otherwise be used for Public Infrastructure Improvements/Enhancements/Expansions I refer to as the “Public Bullion.” A UBI could be funded in part from Public Bullion resources however, I believe there is an undiscovered resource and thus completely untapped that must be developed and I refer to this resource as the “Market Access Yield” (see above for definition). Briefly put: There is a cost associated with developing and maintaining a marketplace such as one we should think of as the United States of America. It includes the implicit value associated with its product – it’s ability to consume its product – but also the infrastructure that defines the physical attributes of that marketplace. I believe the untapped value of this marketplace is an unconscionable act of piracy. I believe that if you want access to operate within that marketplace you should pay a price for the privilege of doing so and why, because there is an implicit value for access to that marketplace and there is a cost associated with maintaining it. It’s true, you did not build the business, but I provided you an infrastructure for you to operate within it and extract value from it. Think of it; what area of an Individuals life is there not a price associated with access to the fulfillment of a demand you want filled? Even your Physical Body has a price; air, food and shelter. NO, taxes on income is merely a funding mechanism from which the Government selectively applies or appropriates for itself, funds that it preferentially disperses which, I might add, it does with incredibly painful inefficiency.
In closing, it is far too easy to explain away the fundamentals of truth when the ravaging of factual elements are tossed overboard on the basis that since they don’t conform to the simulation of a false premise attempting to establish a new reality.
It’s not only professing ones ignorance, it is also demonstrating ones unwillingness to be functionally engaged in the process of faithful discrimination and so unworthy of our Perfect Spirit Being Human; we’re far more capable than to stumble about being stupidly lost in our ignoble human arrogance.
The fact that a viable economic system begins to fail is not a signal that it is flawed, but more likely that it is being asked to perform a function that it was never designed or intended to perform. Sort of like stuffing coins in to an empty soda machine and then wondering why nothing comes out and standing there claiming that you “keep pushing the buttons” is merely an idiotic defiance over your failure to grasp that the stinking machine is empty! Again, it’s NOT BROKEN, IT’S EMPTY!
Well “MP”, there’s my response. Pass along if you want to lose some friends.
Curtis C. Greco, Founder