Here we go. This has been brewing for a while. The other day I talked a bit about how much a billion dollars is. That was at the end of a longish and semi-cranky
blog, so you might not have got that far. To sum up, think of it this way. A million seconds is less than 12 days. A billion
seconds is 32 years. Or this, a million dollars in $100 bills would a
little over a metre high. You could get it into a medium sized suitcase
and carry it around. A billion dollars would about 1 Km high.
Out of 36 million Canadians, only just under 400,000 (almost exactly
1%!) have a net worth more than $1million American dollars (the global
standard) and for most of them, most of it is in one asset, their house.
Such a person is considered wealthy. A pile of cash 1 meter high, and
you're wealthy. (I know people in that situation, and they describe
themselves as well off.) Remember a billion dollars is a pile 1 Km high.
Now consider Ken Thompson's share of wealth is 41 piles that high. A
suitcase vs 41 piles of cash taller than the Burj Kalifa. There are about 40 to 50 other Canadians with at least one pile that big. The other 35.6
million Canadians are struggling to fill the average purse.
Some don't even have the purse. The people at the poor end of the spectrum actually have a negative net worth. They owe money, probably to credit cards. Probably other places as well. Or they've fall into the cracks of society and are homeless. Any money they get from whatever source probably gets spent before the day is out. Lots of people would snort, "yeah, it gets spent on drugs!"
Maybe so. And if you carried around the pain that many of these people carry, you'd probably be taking drugs too, but that's not the topic for today. It's like the weather, people talk about it but nobody really does anything about it. Sure, there's some window dressing, but look around, the homeless shelters are full. There is a waiting list for affordable housing. We need to face up to the fact that what we called "normal" produced lots of homeless people, and a very few extraordinarily wealthy people.
Some say the poor deserve what is happening to them due to their moral and personal failings, and thus we need not spend money helping them. People that think that are vultures.
Getting a home through affordable housing is held out as a reward if people can clean up their other problems. Except that's backwards. Without the stability of a home; a safe place to sleep, to keep what possessions you might have, access to clean drinking water and a functional washroom, it's next to impossible to fix the other problems. Except nobody wants to build any amount of affordable housing. Nobody wants such units near them. NIMBY. Sometimes even the homeless don't want to move in because they don't see it as safe. Think how bad that must be. There are lots of smart people around, surely we must be able to do better.
One of the solutions proposed to fix that problem is a universal basic income. Right wing zealots and rich people hate even the mention of that. Give people money!! They just spend it on drugs. Where will it come from? If you give people money they won't work. They try to shut down the discussion, which to me is a sure sign their arguments are weak. We should at least have the discussion, like grown-ups can do. Right?
I've heard some of 'people won't work' just lately, in response to the various relief programs the Canadian government is offering. Some industries are having trouble getting workers because they pay less than what the relief money is, and if you start a job the relief stops.
Think about that a moment. The relief pay comes out to about $12.50 an hour, assuming a full time work week. Taxes have to be paid on that. And the jobs on offer pay less than that. Something seems wrong there. Could this be one of the features of the "normal" economic system, keep workers so poor, so desperate, they have no alternative but to take such low paying work? And it's rarely full time. They have to string together several part time jobs, which makes it even more complicated.
One of the first things the new Alberta government did was roll back the minimum wage, and made the system more complicated for all involved. The restaurant industry was particularly vocal about demanding that, and we all know Kenney is eager to pay back the favours so as to incur bigger ones owed to him for his future plans.
Why does the restaurant industry (although there are others) depend on subsidies paid by the poorest workers? The industry pays for building rent, the utilities, the cost of food and other supplies. But it doesn't want to pay for labour, though it all comes out in the wash. Pay the labour more, and they can afford to eat out. Henry Ford showed that to be true when he paid his assembly line workers more than the going rate. If all the restaurants are paying the same minimum wage, there is no competitive advantage between shops.
So what happens if there is a UBI, and lets say it's priced at the same amount as the CERB, at $500 a week. The devil is in the details. What, exactly, happens if the person takes a job? Right now the various benefit structures punish people for taking a job. A UBI needs a more nuanced approach.
Some people might well lay about and smoke dope all day. That's certainly the view of those at the top of the pyramid, because one of their core beliefs is that they earned their money, all of it, through being thrifty, innovative, hard working, and all that other good stuff. It can get pretty deep. Bah! The Thompson guy I mentioned earlier? He inherited it. So do many others at the top of the heap. His grandfather was a hustler and put together the beginnings of the empire. This guy just shuffles money around. He would say he's creating value, but only economists and shareholders see it. We all see, and can value the work done by a cook in a restaurant, or a grocery store clerk.
I think most people want to contribute to society, or at the least do something that makes them feel good about themselves. Maybe that's clay bunny making, or maybe it's taking some time to create a new art form. A UBI would enable them to do so, in many ways that are not currently compensated because the work isn't valued. Most artistic work falls into that category, and yet shuffling money around is. Maybe some would choose to arrange their lives so they can live on that $26K a year or so. Other's would want to top that up because they want to earn a bit more. Maybe a part time job doing work they value gets them where they want to be. Maybe what is now called volunteer work would help satisfy that urge, and produce something useful to society.
Is that such a bad thing if people want to work less, when the jobs on offer are not rewarding? Maybe we need to push employers to make jobs more rewarding, either monetarily, or changing the actual work to be more rewarding as a thing. Maybe offer more flexibility. Lets see some innovation there!
If everybody gets it, then we can arrange the tax structure to claw it back from those above a certain income. I'm not sure what the appropriate number would be. If everybody gets it, we ought to be able to dismantle the EI program and welfare at the very least, and maybe GIS and OAS. How about the child tax benefit? Should a kid get paid the UBI starting from birth? Put into a trust fund perhaps? Imagine that, half in trust to the kid's education, half to the parent to provide support? That would kill the predatory post-secondary loan industry and amen to that. What other government programs that provide some benefit could be rolled into the UBI and simplify our system? I'm sure there must be some. Maybe tie getting the UBI to voting. The right wingers say people should work for welfare. Maybe we define that work to be becoming informed voters. The right sure wouldn't like that. Just throwing out ideas.
I don't know what the current cost of all the programs that would be replaced by a UBI adds up to, so we understand what the actual net new cost of the UBI is. But I think it's at least worth putting some proposals on the table and costing them out. Maybe it will turn out like the Australian proposals to leave the monarchy and create some form of republican government. The leave was an easy majority, but they couldn't land on a specific proposal, so the status quo remained. At least that status quo is functional, but it should be clear that the 'normal' economy is not.
When you give money to a rich person, what happens? People carrying around a million dollars in their medium sized suitcase are not likely to particularly notice $25K a year. It isn't likely to make a material difference in their lives. In fact it might mess up their tax planning if they take it. They money is likely to go into some investments. (Hmmm, RSP and TFSA, how would a UBI affect them?)
But for poorer people, that's a big deal. Much of it will go right back into the economy, demonstrating the velocity of money and producing more economic activity. Maybe the UBI will have an inflationary effect and balance out the payment. Let's oil up a bunch of economists, chain them together in a cage, and have them fight it out to see who wins. Once the dust settles the CERB payments ought to give us some data to work with.
But I hear the wails, where does it come from? In the short term, the same place as all the other government money. (And no, once again, the federal government is not a household economy. The two are not particularly comparable. Governments can, and do, take on debt that is paid back over generations. Borrowing money now is cheap, and it isn't getting any more expensive in the foreseeable future.)
In the longer term, revenue will come from taxes on the increased economic activity. The GST takes a nibble of every transaction, though they cancel out along the way, and are only actually paid by the final consumer. Maybe we need a transaction tax, payable on amounts over $1000. Just throwing out a number. I mentioned a wealth tax in that cranky rant the other day. That would add billions to the Canadian government revenue, and not impact the wealthy at all in any real sense.
You've heard me tell this joke. Three guys meet, an investment banker, a trade union worker, and a white collar worker. While the other two of them are introducing themselves, the banker takes 11 of the dozen doughnuts provided for the meeting, and swills most of the coffee. When they sit down, the banker tells the white collar guy, "watch out for that trade union guy, he's going to steal your doughnut."
In our 'normal' economy the banker has somehow convinced the white collar worker that he is like the banker, but down on his luck, and the tax policies that give the banker a haircut will affect the white collar guy. As if changing the inheritance laws to affect multi-multi-millionaires will ever affect the average white collar worker. Yet many get incensed by the change somehow thinking it might apply to them. They ought to be cheering.
The virus has changed everything. Our economy is upended. Rather than just blindly put it back together the way it was, to continue benefiting just a few people, we ought to look at putting it back together so it works for everyone.
Of the Day
Michelle
Celina
Flowers
From yesterday morning, out while it was still raining. Which reminds me, Fish Creek is flooding in places. Don't go there.
Driftwood
