George Rebane

[This is the addended transcript of my regular KVMR commentary broadcast on 20 May 2015.]

Listeners of these commentaries may recall that I support redistribution of wealth.  This line drew gasps from the Nevada County Republican Central Committee when several years ago I dropped it into one of the talks I was invited to give.  But after explaining why such a program was necessary, most begrudgingly agreed that there was really no practical alternative given the rapidly growing need over the next 15-20 years.  The problem with such a proposal is that we have redistributed wealth for over forty years, and it is clear that the way we have been doing it hasn’t worked.

Today we are spending about $1T of federal and state revenues annually on 126 separate federal anti-poverty programs in addition to myriads of similar state programs, many of them overlapping and all having little effect on reducing poverty or helping people out of poverty.  More than one out of three, or over 126 million, Americans receive benefits from such programs.  And of these we have 46M people, the highest number ever, receiving food stamps.  Over the last decades more than $20T has been spent to fight poverty, all with dismal results.

The money for this has come from working taxpayers and massive borrowing.  But therein lies the problem – of working age Americans, today fewer than two out of three people work or are looking for work.  And of those who found jobs during this anemic economic recovery, many are part time workers, and many more work in low paying service jobs and still need assistance.  Today’s government quoted 5.5% unemployment rate sends a fraudulent feel-good message.  The real jobless rate is still north of 10%, and unfortunately it will be rising in the coming years because of something we have discussed before called systemic unemployment (more here).

Accelerating automation and off-shoring continue to reduce America’s jobs.  Ever smarter robots and computers are doing more human work at an alarming rate.  The result is that no matter how much we may plan to spend on education, for most unemployed Americans education will not help.  So what is the solution for people who simply have no ability to earn enough to support themselves?  Today the most often cited answer is a Guaranteed National Income or GNI.

Economists of all stripes have anticipated and recommended a GNI as the final solution to systemic unemployment.  From the Right we have agreement from greats like nobelists F.A. Hayek and Milton Freedman; from the Left economists Paul Samuelson and Kenneth Galbraith have weighed in on the need for some form of GNI.  Even prominent sociologists and political scientists like the conservative Charles Murray have stated the need for funding Americans who cannot work.

There have been many studies about implementing GNI that include universal grants, negative income tax, and direct wage supplements for those able to earn a part of their income.  But all these studies have raised more disturbing questions about the feasibility of any of these plans.  All detailed looks at putting in place an adequate GNI conclude that it will be very expensive, costing even more than the current dysfunctional welfare programs.

Responding to these findings, liberal promoters say that, all the unanswered questions about cost and work incentives aside, we should go ahead and try a new federal GNI just based on good intentions.  Conservatives counsel caution, and say that we should “pursue incremental steps: consoli¬date existing welfare programs, move from in-kind to cash benefits, increase transparency, and gather addi¬tional data.”  They also recommend that the states should fashion and manage their own GNI programs to serve as 'laboratories' trying different alternatives from which the best could be copied by others. (more here)

How will it shake out? – no one yet knows.  But it’s safe to say that sooner or later we will wind up with a guaranteed national income that will either fiscally sink us, or give us time to figure out how humans will survive with super-intelligent machines that are smarter than we.

My name is Rebane, and I also expand on this and related themes on georgerebane.com where the transcript of this commentary is posted with relevant links, and where such issues are debated extensively.  However my views are not necessarily shared by KVMR.  Thank you for listening.

[Addendum]  Mercatus Center general director and economist Tyler Cowen (Average is Over, 2013) writes in the NYT (‘Don’t be so Sure the Economy Will Return to Normal’) about his trepidations over the state of the nation, systemic unemployment, and fiscal recovery.  I have the privilege of knowing Dr Cowen for the last several years, and have had several private conversations with him about these items of great mutual interest.  He is one of the most knowledgeable and reasonable people I have met.  Please consider the need for and advent of the GNI in light of his thoughts about our future.