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.
12 thoughts on “The Green New Deal And A Universal Basic Income”
This is doomed in so many ways (I say that as someone definitely interested in an UBI, and perhaps even a supporter of it).
> but few would argue we are doing enough
I think you’re wrong. I think many people would (in the sense of proportion of those-that-bother-to-even-think-about-it). Also, I’d guess your averages hide a lot.
> a permanent net loss of positions
A bit like when farming was mechanised. Or when spinning was. Oh, but this time is different… And who knows, maybe it is. But I’m dubious.
> primary premises of The Green New Deal is “Guaranteeing a job with…
I think this is a bad idea and it’s one of the reasons that I oppose the GND. But then I’m a small-govt person.
> endorsement by us for
You speak in the plural. Who is “us”?
> sovereign wealth fund
You don’t have a SWF because you don’t have a budget surplus, you have a (massive, by world standards) deficit. If you could raise extra income through magic free taxes, there would be pressure to (a) pay down the deficit; but also (see recent politics) to give out freebies and/or cut other taxes.
> it wouldn’t take long …. By 2030 we could have a nice nest egg built up
Sorry, but this is where you get delusional. Can you genuinely imagine a large nest egg building up, and your rapacious pols not raiding it for their own pet pork projects?
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Don’t be such a naive optimist, WMC. Something might go wrong, you know.
I hold out the example of the Social Security Trust Fund. It can be argued for both our points of view. The pols did raid it, but they replaced the cash with treasury bonds that they have (so far) honored in full.
I personally would feel more comfortable with providing a guarantee of an employment opportunity than a job, I suppose at the margin we could pay people for something resembling occupational therapy. Here I have tasked myself with trying to understand and explain feasibility. And it’s early days.
There is indeed ample historical precedent to foster optimism about the results of innovation regarding employment. I certainly hope it works out that way. I also understand those who fear that past performance is no guarantee of future results.
I’m sorry Tom, but if you humor Canoli, I’m out of here. He more than anyone else, damaged your last blog.
> more comfortable with providing a guarantee of
I don’t think that works. I think you’d find a lot of UBI supporters (e.g. me) wouldn’t xfer across to that.
Also: you have trolls! Isn’t that sweet?
Basing funding for a UBI component of the Green New Deal on oil and gas royalties would require perpetual oil and gas production. The GND pledges to end oil and gas production (and royalties).
This is where people get the idea that “climate action” is just an excuse to promote other political agendas.
Tom, if you want the blog to grow, nip the a*****e in the bud.
The unspoken assumption is that a dramatic increase in royalties charged would be an assist in lowering output. Their royalties would start the fund–RobotMasters Of The World would be taxed to continue it.
Martin and WMC, we’re all starting with a clean slate here. Relationships have been fraught over the past decade and all of us have sinned, me perhaps more than many. We start anew here.
Life is short. Forever, Marty
I’ll leave this here
Click to access en_ubi_full_report_2019.pdf
like stoat I was a UBI supporter, sort of.
but now I think that whatever your problem is the solution is a blockchain
Yes Tom, did I sound that mad.
The GND isn’t going anywhere. It pretends to solve a small problem and ignored bigger ones.
The weakest link in the greenhouse gas narrative is that there is no reason to think that sea level is rising at 4mm per year. Work backwards and look at the assumptions they have to make.
California actually has the greatest greenhouse effect per capita of all states and countries.
Let’s look at some of the assumptions behind the ngd , one by one.
Very well-written article! I personally support the idea of UBI and published a lengthy post on the topic yesterday (https://adambolandblog.com/2019/07/07/money-for-nothing/). Like you say, automation is already putting many people out of a job and that will only get worse in the coming decades.
Automation is not the only motivator for UBI though. Income inequality has risen dramatically in recent years (particularly in the US) and UBI would go a long way towards closing that gap if it is done right. I support taking the funding for UBI from a wealth or income tax on millionaires and billionaires (I’m from Ireland but I appreciate that some of you probably read that in the voice of Bernie Sanders).
Great piece again!