The average rent for a one bedroom apartment is $1,405 a month, or $16,860 a year. Twenty percent (20%) of Americans declared income of less than that last year. America does some of the things needed to compensate for that–food stamps, HUD allowances, etc.–but few would argue we are doing enough.
The nature of work is set to change fairly dramatically over the next few decades, with AI, robotics and other forms of automation quite likely to take on the jobs that people are doing now. And although the care and feeding of these new systems will create new jobs, in all likelihood there will be a permanent net loss of positions, especially for lower income workers.
One of the primary premises of The Green New Deal is “Guaranteeing a job with a family-sustaining wage, adequate family and medical leave, paid vacations, and retirement security to all people of the United States.”
It’s not hard to see the tension between current reality and the hopes of the GND’s supporters. The Green New Deal would not only have to handle current income deficiencies, but take on any new issues introduced by technological progress. One innovative possibility is introducing a Universal Basic Income (UBI), which would disburse a check to all Americans to help deal with low income and job disruption. (That link goes to Andrew Yang’s campaign website, which explains it well and in detail–but it does not imply an endorsement by us for his candidacy.)
One possibility which backers of the GND don’t seem to have explored in depth is a sovereign wealth fund, which could be managed like the Social Security Trust Fund (or perhaps a bit more aggressively), with returns from the fund being distributed to all citizens.
81 countries currently have more than $5 trillion in sovereign wealth funds. Famously, Norway has invested the royalties from their copious holdings of oil in a sovereign wealth fund that is now worth over $1 trillion. It was started only in 1990–they’ve done pretty well with theirs.
The U.S. pumps 10 times as much oil out of the ground as Norway, but only charges a 12.5% royalty. If that royalty was increased and the entire royalty was set up as sovereign wealth fund, it wouldn’t take long before it would make a material difference in the lives of Americans. In 2018 total federal revenues from oil and gas royalties were about $9 billion. By 2030 we could have a nice nest egg built up and could start using it to good effect.
Of course, contributions to a sovereign wealth fund don’t have to be limited to oil and gas royalties–especially at the beginning, even some general tax revenues could be used to top it up. Certainly it would not be ridiculous to ask some of the companies benefiting from the economic disruption their innovations are wreaking on our economy to contribute.
A universal basic income in practice has been rather modest, with most pilot programs distributing between $500 and $1,000 a month. But it’s clear that a realistic UBI would have to be larger to offset income losses on the scale economists and futurologists are foreseeing. Perhaps means testing would be appropriate. Perhaps general tax revenues should bear part of the burden.
But like planting a tree, the best time for starting a sovereign wealth fund was 20 years ago. But the second best time is today.