Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche

My Thoughts

A Basic Income Hack to Fix the Economy

Basic income is a hack for fixing the fundamental flaw of the modern capitalist economy.

To elaborate, modern capitalism generates vast amounts of wealth by harnessing technology. However, that wealth is unfairly and unevenly distributed. To make matters worse, a growing segment of the population has no access to that wealth.

For example, Amazon CEO Jeff Bezos’ estimated net worth is $165 billion, Quartz calculates. Meanwhile, Amazon’s lowest paid employees will make $30,000 a year with the company’s planned $15 an hour minimum wage.

“Of all forms of tyranny, the least attractive and the most vulgar is the tyranny of mere wealth, the tyranny of a plutocracy,” President Theodore Roosevelt (R-New York).

Why we need a basic income hack to fix the economy jobs are disappearing

Additionally, the average person’s method of accumulating wealth; jobs, is disappearing. To demonstrate, Amazon will hire 20,000 fewer temporary workers at its fulfillment centers for the 2018 holiday season Citi Analyst Mark May claims.

Amazon hired 120,000 temporary workers for the 2016 and 2017 holiday seasons, May tells CNBC. However, the Everything Store only plans to hire 100,000 temporary workers this year.

Amazon no longer needs those workers because of robots and automated systems in its fulfillment centers, May theorizes. Notably, 2018 will be the first year Amazon will hire fewer people for the holiday shopping frenzy.

We Need a Basic Income Hack because there will be no jobs for the poor

The Amazon job cuts are problematic because they will affect the poorest and most vulnerable members of our society.

Notably, Amazon Fulfillment Centers are among the few places that hire people without college or high school degrees. In addition, Amazon fulfillment is one of the few job opportunities for senior citizens with no retirement income.

I predict that many people will end up sleeping under bridges because of these job cuts. In fact, communities around Amazon Fulfillment Centers will probably see longer lines at food banks and homeless shelters. The lines will grow because people with no money will come to town looking for the Amazon job that no longer exists.

We will see the Amazon Fulfillment situation duplicated hundreds of times in coming years as more and more companies robotize. For example, America’s largest standalone grocer Kroger (NYSE: KR) is planning 20 robotic fulfillment centers with help from Britain’s Ocado Group PLC (LSE: OCDO).

Kroger and Ocado will build the first of those facilities  in Monroe, Ohio, in the heart of America’s Rust Belt. Thus, the nightmare scenarios of technological unemployment are coming true. The robots are killing tens of thousands of jobs before our eyes.

A Basic Income Hack to Fix the Economy

A hack is a popular tech industry slang term that Meriam-Webster describes as a “clever tip or technique for doing or improving something.” Hence, popular terms like “life hacks” and “productivity hacks.”

Therefore, basic income is an “economy hack” to fix problems like income inequality and technological unemployment. To explain, we could use an income tax to confiscate most of the wealth of billionaires like Bezos. Then we can distribute the funds directly to lower income and middle-class people.

Basic income is a hack because it is simple and efficient. No new bureaucracy is necessary because the existing Internal Revenue Service (IRS) will collect the tax. Moreover, the IRS could distribute the basic income to citizens in the form of a “tax credit.”

Kamala Harris’s Basic Income Hack to Fix the Economy

In fact, U.S. Senator Kamala Harris (D-California) is proposing legislation to do just that. Vox reports Harris’s LIFT the Middle Class Act offers $500 a month tax credits to families that make less than $100,000 a year.

The IRS can distribute basic income to bank accounts via electronic funds transfer or deposit it directly to digital wallets. The technology to disperse those funds already exists, and the government uses it every day.

For instance, the Social Security Administration distributes funds to 61.903 million Americans every month. Hence, distributing a basic income will be a simple matter for Uncle Sam.

Why Socialists hate the Basic Income Hack for Capitalism

A basic income hack makes sense because it will redistribute money without destroying the capitalist infrastructure that produces the wealth. Instead, of altering the means of production Harris will redirect the proceeds.

Thus, Harris is actually a conservative who is trying to preserve our capitalist economy. Not surprisingly, capitalism haters and socialists like Douglas Rushkoff hate basic income.

Strangely, Rushkoff was one of the first people to describe basic income as a hack. Bizarrely Rushkoff turned against basic income when he realized that wealthy capitalists support the notion.

Instead, Rushkoff promotes pipe dreams as alternative currencies, employee-owned businesses, and cooperatives. Not surprisingly, Rushkoff does not say how his alternatives will work.

Conveniently, Rushkoff ignores the ugly history of cooperatives under Communism. A good example of this history is the 1930s Soviet Cooperatives where millions of Ukrainians starved to death.

A Basic Income Hack to Prevent Revolution and Violence

I think the basic income hack is an excellent means of preventing revolution and violence in America. My prediction is that technological unemployment will trigger violence if we do not take radical action to correct its effects.

The basic income hack is the easiest, cheapest, and most effective means of addressing technological unemployment. Other potential solutions like a jobs guarantee, reeducation, and unionization will only help small numbers of people.

Moreover, those basic income alternatives will be expensive, inefficient, and destructive. For example, Democrats favorite alternative the jobs guarantee will hurt the economy by diverting untold billions of dollars to the bureaucracy.

Sorry Democrats Unions and a Jobs Guarantee will not fix the Economy

Instead of productive workers the jobs guarantee will create millions of bureaucrats who add nothing to the economy. For instance, a typical jobs-guarantee position will be shelving books at the public library or raking leaves in the park.

Thus a jobs guarantee will saddle the United States with a massive and wasteful bureaucracy like that of the Soviet Union. Eventually the jobs guarantee bureaucracy will run out of money and collapse like the USSR did.

Unionization will only benefit those who have jobs and effective representation. In fact, unionization will speed up technological unemployment by increasing the cost of hiring and deploying workers.

Conversely, unionization will increase the benefits of robotization by increasing the cost of using humans. Under those conditions, robot salespeople will be the main beneficiaries from the unions.

Additionally, the history of unions is bloody and filled with riots, shootouts, massacres, and bombing. A new union movement will generate violence and turn the public against workers.

How a Basic Income Hack will grow the economy

A basic income hack will be an effective means of redistributing wealth to the largest number of people possible without violence or increased government. Hence, socialists and many Democrats will hate the idea.

Surprisingly, a basic income hack will encourage economic growth. To elaborate, basic income will put more money in the pockets of average people who will spend it. Moreover, those people will spend that money in their money.

Instead of being wasted by billionaires, philanthropists, politicians, and bureaucrats, real people will spend the money in the real world. For instance, a single-mother could use her basic income payment to buy a new car. Obviously, the new car will create jobs and spread wealth through the mother’s community.

Under the present system, a billionaire will waste that money on a pet project; like a private rocket ship, or a philosophy professorship at a university. Under Democrats’ jobs guarantee the money will go to create government “jobs” for union members likely to vote Democratic.

Hence, a basic income hack is the most efficient and beneficial use of modern wealth. In addition, it is solution most likely to encourage more economic growth.

How I think a Basic Income Hack should work

My proposal for a basic income hack is a $500 a month tax credit for every citizen or legal resident of the United States with an individual income under $60,000 a year.

Importantly, I would distribute this income to everybody who meets the income requirements regardless of age or marital status. Thus senior citizens, children, and women who make less than their husbands will receive the basic income. However, the children’s basic income will go to their parents’ bank accounts.

To fund the basic income hack I will increase the income tax. In detail, I propose raising the income tax on individuals that make more than $1 million a year to 25%, 50% for those who make over $10 million a year, 60% for those who make over $50 million a year, 70% for those who make over $100 million a year, 80% for those who make over $1 billion a year, and $90% for those make over $50 billion a year.

Moreover, I will distribute half the income tax proceeds to fund basic income, and the other half to fund the federal government. Hence, the middle class will have a strong incentive to support both the tax system and the capitalist economy because they will profit from them.

Capitalism’s greatest challenge is that many people are not profiting from it. The basic income hack can change that by enabling most people to profit from capitalism.

A basic income hack is necessary if capitalism is to survive.  I think capitalism is doomed, without radical solutions like the basic income hack.