Corona Daily 476: UBI: My Four Point Plan

There are two schools of the Universal Basic Income advocates. One wants to replace the existing social security with UBI. The other wants to retain all the current welfare measures and have UBI added on.

If social security were scrapped, financing UBI is easy. In the USA, by dismantling the current social security, 92% money needed for UBI (13000 $ a year) will be released. But this could make matters worse for many beneficiaries (maternal/disability). Switzerland rejected UBI because of this threat.

UBI as an incremental income stands a chance. It is more expensive, but beneficial for low-income countries with no social security. Following is my four-point plan.

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Start with 200 $ per annum: to every person in the world, to get the UBI ball rolling, to establish the principle. Americans looking for 13000 $ will be shocked at the 200 $ figure. But 200 $ per annum will overnight take entire Sub-Saharan Africa (more than 1 billion), and poorest Asian countries like Bangladesh, Nepal, Myanmar (more than 500 million) out of poverty. Remember it is 200 $ per head, so a family of five gets 1000 $, which is enough for survival in low-income countries.

The cost of paying 200 $ annually to everyone in the world is 7.8 billion x 200 $= 1.56 trillion $.

(To get a perspective, in 2009, G20 paid 9.6 trillion $ to rescue the financial sector, six times the above amount.)

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Moratorium on wars for 10 years: USA not engaging in a war would guarantee such a moratorium. Current military expenditure is at least 1.822 trillion $ per annum. Save and allocate 30% of this cost to UBI. = 546 billion $.

This is not a pipe dream. Costa Rica and Thailand reallocated military expenditure to social security. Costa Rica, in fact, abolished its army in 1948. Its constitution makes re-forming it illegal.   

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Start denuclearising the world: The pandemic has once again highlighted the utter uselessness of nuclear budgets. 190 states of the world have pledged in writing not to have nuclear weapons. Only 9 states have that white elephant in the name of deterrence. This undemocratic savagery must end. An estimated 70 billion $ are spent on nukes each year. Allocate 20% of that budget to UBI (and the rest to dismantling). = 14 billion $.

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Inheritance tax: Currently, the world’s 47 million $-millionaires hold a combined wealth of 160 trillion $. (44% of global wealth held by 0.6%). Their average age is above sixty, so by 2060 most of them will be dead. Charging 25% inheritance tax (net of exemptions) will produce 40 trillion dollars over the next forty years. = 1 trillion $ per annum.

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Cutting military expenditure (546 bn $), denuclearisation (14 bn $) and inheritance tax (1 trillion $) are able to finance paying 200 $ per annum to every citizen of the world, directly benefiting the poorest of the poor.  The four-point plan also triggers the building of infrastructure for cash transfers.

As to why any of this should or may happen just because of a small virus, I will answer tomorrow.

Ravi