Episode #98 - Free-rider Friday - June 2016

Ron’s Topics

Sighing for paradise to come - The Economist, June 4, 2016

• Our June 3 show, A Check for Everyone? The Basic Income Idea, discussed Charles Murray’s “The Plan”—to pay everyone from the age of 21 $10,000 per year.

• The Economist is against this idea, saying it’s “an answer to a problem that has not yet materialized.”

• Thomas Sowell and George Gilder are also against it.

• The oft-cited study by Oxford that 47% jobs are going to be automated is too gloomy.

• The Basic Income could encourage the first-world to shut off immigrants, or create second-class citizens if they allow immigration but don’t let them participate in a Basic Income program.

• The costs are too high, and the risk of tax avoidance/evasion is also troubling.

• It could also be alienating, socially corrosive, and create individuals with no purpose in their lives.

“How the FAA Shot down “Uber for Planes”, FEE, June 2, 2016, by Jared Meyer

• Jared Meyer is a Fellow at Manhattan Institute

• Boston to Martha’s Vineyard cost $70 using the Flytenow app (by comparison, $1,000 for a charter)

• FAA ruled Flytenow was a “common carrier, subject to the same regulations as major airlines

• Private pilots simply can’t comply with this many regulations

• Nothing new. It’s still legal to find people to share flights with on bulletin boards or telephone calls

• FAA worries an app will go beyond friends and acquaintances

• FAA said it’s permissible to advertise on Facebook if you had a few friends, but not a thousand

• Not possible to know legal from illegal

• Existing law, pilots can’t profit, only recoup costs

• Founders of Flytenow say it’s not Uber, it’s more like carpooling for aviation

• It’s legal in the EU

• Not rationally related to safety, as Captain Sully couldn’t share, so it has nothing to do with pilot qualifications or safety

• FAA was pressured by private charters and airlines

• Flytenow has filed a Petition for Certiorari to US Supreme Court

• Mark Sanford (R-SC) proposed an amendment to an FAA reauthorization bill, awaiting floor vote

• We shouldn’t have to ask for permission to innovation—permissionless innovation!

The Structure of Production: New Revised Edition, Mark Skousen, 2015

• Cato Podcast with Mark Skousen, George Gilder, Steve Forbes

• April 25, 2014, the Bureau of Economic Analysis (BEA) at the U.S. Department of Commerce announced a new data series as part of the U.S. national income accounts, and the BEA began reporting “Gross Output by Industry”

• Government now recognizes the critical importance of Gross Output (GO).

• GO measures spending throughout the entire production process, not just final output like Gross Domestic Product (GDP)

• GO measure total sales volume at all stages of production, includes all business-to-business (B2B) transactions that GDP leaves out

• In the third quarter of 2014, GO hit $31.3 trillion, almost twice the size of GDP, which was $17.6 trillion. GDP measures the “use” economy, GO measures the “make economy”

• GDP is comprised of consumer spending, government spending, investment, and net exports, with the first two of these being the biggest contributors

• GDP overemphasizes consumer and government spending as the driving force behind the economy because it ignores supply-side benefits of saving, business investment, and technological advances.

• GDP shows Household spending generates more than two-thirds of total economic output, latest U.S. data on GDP, $17.6 trillion, consumer spending $12 trillion (68%), government spending at $3.2 trillion (18%), Private investment $2.9 trillion (16%), (Net exports at -2 percent.)

• The GO statistic, by contrast, shows consumers less than 40 percent ($31.3 trillion), while spending by business is $16.6 trillion, more than 50 percent of economic activity

• Consumer spending is largely the effect, not the cause, of prosperity

• GO is over $23 trillion in 2014. GO is significantly more sensitive to the business cycle than GDP. In 2008–2009, nominal GDP fell only 2 percent, GO fell by 6 percent and B2B spending collapsed by 10 percent

• BEA’s measure of GO does not include all sales at the wholesale and retail level.

• Wholesale and retail trade figures are included in GO only as “net” or value added

• Skousen believes this is a serious omission, comprising more than $7 trillion dollars in business spending in 2014

• We need to include gross wholesale and retail trade figures. They are legitimate B2B transactions that deserve to be counted

• Skousen created his own aggregate statistic, Gross Domestic Expenditures (GDE), which includes gross sales at the wholesale and retail level and is therefore significantly larger

• GDE in 2014 is over $37.5 trillion, 25 percent higher than GO and 120 percent more than GDP.

• Consumer spending actually represents only about 31 percent of the U.S. economy using the GDE statistic

• The adoption of Gross Output is the most significant advance in national income accounting since World War II.

• GO is a reflection of Say’s law (supply creates demand), a supply-side statistic, while GDP is a symbol of Keynes’s law, a demand-side number

• Gross output [GO] is the natural measure of the production sector, while net output [GDP] is appropriate as a measure of welfare. Both are required in a complete system of accounts

$1B stakes on the menu The Economist, May 21, 2016

• Berkshire purchase $1 billion in Apple shares, disclosed May 16, 2016

• Buffett, 85, likes mature firms, ignorant about technology

• Investment in IBM has cost him

• Buffet made his purchase weeks after Carl Icahn, 80, sold a $5 billion stake in Apple

• “The sight of two octogenarians grappling over the firm’s fate does not enhance its aura as a temple of innovation”

• Apple stock is cheap trading at 11x earnings (29 for Alphabet and 72 for Facebook)

• Apple invested $1B in Didi Chuxing, China’s Uber to curry favor with China’s government

• It needs to do so with India!

• There was recently an Indian ministerial decision deeming Apple’s products are not “cutting-edge” that kyboshed plans to open Apple stores in the country

• There’s a law that states products made outside India have to be 30% sourced domestically, and Apple didn’t qualify for an exemption to this rule for being “state of the art” 

Ed’s Topics

New obsession: The Broadway play Hamilton

Russ Roberts EconTalk podcast where he discussed his decision-making process to attend the play even though the opportunity cost was thousands of dollars.

The song, The Room Where It Happens should be Hillary Clinton's campaign theme song.

We need a better capitalism or how a third way = third world

Brexit Vote?

It did pass, but we didn’t know it when we pre-recorded this show on 6/23/16.

Ron favored Brexit but predicted it would lose—time to eat crow! www.predict.org got it wrong, too, as did most of the polls.

Here’s an excellent recap by a historian of an interview Margaret Thatcher gave to Forbes back in 1992, which is prescient.

Episode #97 - VeraSage Laws Part II

First Segment

Ron and Ed discussed the upcoming Sage Summit, where Daniel Susskind will speak on his book, The Future of the Professions.

Click on this banner for preferred pricing to Sage Summit 2016.

Our show with Doug Sleeter from last week (#96) was very well received, so we interviewed Doug again, and went deeper on the topic of the Blockchain. This show will appear sometime in the coming months.

Ed has updated the Archive section of the website, along with the Live Events section for the speaking events we’ll both be doing in the coming months.

Our show on Basic Income from June 4th was posted on Ron’s LinkedIn Influencer blog, generating over 32,000 reads and 190 comments.

Finally, on June 7th, Ron attended a talk given at the Independent Institute by George Gilder on his recent book, The Scandal of Money. This is the follow-up book to Gilder’s Knowledge and Power, which posits an information theory of capitalism that is profound. Ron believes it is worthy of a Nobel Prize in economics. You can watch the entire talk, including audience Q&A here:

Quick Review VeraSage Laws, Part I

Our show from July 24, 2015 dealt with five VeraSage Laws:

1. Baker’s Law - Bad customers drive out good customers.

2. Kless’ First Law - He who liveth by the discount, shall ye also perish by the discount.

3. Kless’ Second Law - All measurements are judgments in disguise.

4. VeraSage Axiom - Ideas are always and everywhere more important than their mere execution.

5. VeraSage adoption of the Second Law of medicine - Prescription before diagnosis is malpractice (First Law of Medicine: Do No Harm).

These laws spring from deeply held beliefs we have, based on empirical evidence, and have become part of our vocabulary. Peter Thiel, in his book Zero to One, offers one question he always asks before hiring someone: Tell me something you believe that defies conventional wisdom?

Some of these lies defy conventional wisdom, which tends to be far more conventional than actual wisdom.

Three More VeraSage Laws

1. Growth without profit is perilous.

We start with profitability, rather than revenue, because we are not interested in growth merely for the sake of growth—the ideology of the cancer cell. As many companies around the world have learned—some the hard way, such as the airlines, retailers, and automobile manufacturers—market share is not the open sesame to more profitability. We are interested in finding the right customer, at the right price, consistent with our purpose and values, even if that means frequently turning away customers.

Adopting this belief means you need to become much more selective about whom you do business with; even though that marginal business may be “profitable” by conventional accounting standards. Very often the most important costs—and benefits, for that matter—do not ever show up on a profit-and-loss statement. There is such a thing as good and bad profits. Accepting customers who are not a good fit for your firm—either because of their personality or their unwillingness to appreciate your value—has many deleterious effects, such as negatively affecting team member morale, and committing fixed capacity to customers for whom you simply cannot create value. Growth without profit is perilous.

2. Non-rival assets provide more leverage than rival assets.

Knowledge and Abundant ideas are what economists describe as non-rival assets—meaning more than one person can use it at a time.   Contrast this with traditional rival assets, such as a building or an airplane, which can only be used for one purpose at a time.   

If I give you the tie off my shirt, now you have it and I don’t; but when I give you an idea, now we both have it, can expand upon it, test it, and make it more valuable.   Ideas are subject to increasing, rather than diminishing, returns.

Economists have always struggled with how to explain economic growth.   Many of their models embody the physical fallacy, a world where traditional factors of production—land, labor, and capital—are rival resources, innovation and entrepreneurship are treated as unexplained luck, and ideas are ignored since they cannot be quantified.

Even Adam Smith, who did so much to falsify the physical fallacy, thought that only industrial work could be “productive.”   The work of a service provider, in contrast, “adds to the value of nothing.”   This is the hamburger-flipper argument of the eighteenth century.   

As usual, Thomas Sowell explains in Knowledge and Decisions the impact on a country’s standard of living between generating ideas and the physical act of carrying them out:

Many of the products that create a modern standard of living are only the physical incorporation of ideas—not only the ideas of an Edison or Ford but the ideas of innumerable anonymous people who figure out the design of supermarkets, the location of gasoline stations, and the million mundane things on which our material well-being depends.   It is those ideas that are crucial, not the physical act of carrying them out.   Societies which have more people carrying out physical acts and fewer people supplying ideas do not have higher standards of living.   Quite the contrary.   Yet the physical fallacy continues on, undaunted by this or any other evidence.

George Gilder has a wonderful way to sum up these concepts: Wealth = Knowledge, and Growth = Learning.

3. In the real world, debits don’t equal credits.

In any transaction, both the buyer and seller must believe they profit. However, when the transaction is booked on both sides, it’s booked at the same dollar value. However, transactions are not equal, they take place precisely because of the inequality of the perception of value.

Traditional accounting ignores the customer’s profit, which economists call the consumer surplus. This is why, in the real economic world, debits can’t equal credits.

The following is from Ron’s book, Mind Over Matter: Why Intellectual Capital is the Chief Source of Wealth:

But Ric, in the real world debits don’t equal credits. -Dan Morris, in an inspired moment at dinner with Ric Payne, founder of Principa, and Ron Baker

Goodwill is the word we use to label our ignorance. –Paul O’Byrne, chartered accountant, partner, O’Byrne and Kennedy; senior fellow, VeraSage Institute (RIP)

A lot of rules have been added since the Venetian monk Luca Pacioli published the first accounting textbook, Summa de arithmetica, geometrica, proportioni et proportionalita, in 1494, introducing double-entry bookkeeping. It was a creation for future accountants that was as big as the invention of zero for mathematicians.

Unfortunately, one could also make the argument that it was the last revolutionary idea to come from the accounting profession. As quoted in Intellectual Capital, David Wilson, CPA and partner at Ernst & Young:

“It has been 500 years since Pacioli published his seminal work on accounting and we have seen virtually no innovation in the practice of accounting—just more rules—none of which has  changed the framework of measurement.”

The balance sheet dates from 1868; the income statement from before World War II. Generally accepted accounting principles (GAAP) fits an industrial enterprise, not an intellectual one. Currently, GAAP measures the cost of everything, and knows the value of nothing. As Robert K. Elliott pointed out in an essay entitled “The Third Wave Breaks on the Shores of Accounting”:

 [GAAP] focuses on tangible assets, that is, the assets of the   industrial revolution. These include inventory and fixed assets: for example, coal, iron, and steam engines. And these  assets are stated at cost. Accordingly, we focus on costs, which is the production side, rather than the value created, which is the customer side.

The traditional accounting model is over 500 years old, and it is in bad shape. Financial statements presented in accordance with GAAP are based on a liquidation value of a business, essentially historical cost assets less liabilities—a heroic attempt to assign static value to a dynamic and going concern.

Even though intellectual capital is the main driver of wealth, you will look in vain to find it in the traditional GAAP statements—the balance sheet, income statement, and statement of cash flows. Increasingly, these statements are being referred to as the “three blind mice.”

Abraham Briloff, a professor of accounting at Baruch College and irritant to the auditing profession, contends that accounting statements are like bikinis: “What they show is interesting, but what they conceal is significant.”

According to Dr. Margaret Blair, in a study for the Brookings Institution, in 1978, 80 percent of a company’s value could be attributed to its tangible assets; by 1988, only 45 percent; in 1998, only 30 percent.

In effect, 70 to 80 percent of the average company’s value cannot be explained by traditional GAAP financial statements. Adding more arcane and picayune rules to GAAP, or converging existing GAAP with international accounting standards, will not solve this problem.

The accounting model is suffering from what philosophers call a deteriorating paradigm—the theory gets more and more complex to account for its lack of explanatory power.

In all fairness to accounting, it never was meant to predict value prospectively, only to record transactions retroactively. In effect, accounting can only measure exchanges after they have taken place.

This is why accounting can only record the “goodwill” of a business until after is has been sold. Accounting has no way to place a value on that goodwill until a transaction takes place. That is why our colleague Paul O’Byrne says goodwill is the name we give to our ignorance, since to value goodwill before a business is sold would require a theory, since theories are the only way to peer into the future.

The accounting profession proffers little help in achieving this objective, for a very fundamental reason: Accounting is not a theory. The best an accountant can do is to extrapolate the past into the future, and unless one believes that the future is going to be the same as the past, this technique is fraught with hazards.

Episode #96 - Interview with Doug Sleeter

This week Ron and Ed interview Doug Sleeter, founder of the Sleeter Group and self-professed blockchain-obsessed entrepreneur. 

Doug Sleeter (@dougsleeter) is a passionate leader of innovation and change in the small business accounting technology world. As a CPA firm veteran and former Apple Computer Evangelist, he has melded his two great passions (accounting and technology) to guide developers in the innovation of new products and to educate and lead accounting professionals who serve small businesses.

Doug has been named one of the “Top 25 Thought Leaders” by CPA Practice Advisor for several years, as well as one of Accounting Today’s “Top 100 Most Influential People in Accounting” from 2008 through 2015. He was recently awarded the Small Business Influencer Champion award. Doug is the founder of the Sleeter Group, an active member of the Accountex Leadership Council, author of numerous books, and writes regular columns for the Sleeter Report and CPA Practice Advisor. Doug and his family live in Pleasanton, CA.

Blockchain Definitions

Bill Gates observed that we overestimated technology’s short-term impact, and under-estimate its long-term impact.

The Blockchain has been labeled “The Trust Protocol,” by Don and Alex Tapscott. Other labels include, the World Wide Ledger of value, and a public (distributed) ledger, or distributed (decentralized) database.

The Economist labeled Blockchain “The Trust Machine”—trust the math, not the people (“in math we trust”).

Either way, Blockchain is a Meta Technology—that is, it affects other technologies. It is not a process improvement technology—it is a disruptive technology.

It could track anything to do with following (ATOMIC): Assets, Trust, Ownership, Money, Identity, Contracts.

For example, it could record birth and death certificates, marriage licenses, deeds and titles of ownership, educational degrees, financial accounts, medical & criminal records, insurance claims, voting rolls, provenance of food, and anything else that can be expressed in code.

The World’s first blockchain-recorded wedding took place at Walt Disney World, Florida, in August 2014.

More Accountable institutions

“We’re quite confident,” said Marc Andreessen in an interview with The Washington Post, “that when we’re sitting here in 20 years, we’ll be talking about [blockchain technology] the way we talk about the Internet today.”

Blockchain holds institutions more accountable for their actions. Imagine if you could track each dollar you gave to the Red Cross from its starting point on your smart phone to the person it benefited.

Triple Entry Accounting?

George Gilder thinks the blockchain is the eighth layer of the Internet—a trust and transactions layer.

Today, companies record a debit and credit with each transaction—two entries, hence double-entry accounting. They could easily add a third entry to the World Wide Ledger, instantly accessible to those who need to see it—the company’s shareholders, auditors, or regulators.

Foreign Repatriations

The largest flow of funds into the developing world is not foreign aid or direct foreign investment. Rather, remittance money repatriated to poor countries from their diasporas living abroad.

Abra and other companies are building payment networks using the blockchain.

In effect, this turns every user into a teller.

Wiring money via Bitcoin (or other cryptocurrency) takes approximately one hour vs. a week—at a cost of 2% versus 7%--compared to, say Western Union.  It takes less time to ship an anvil to China than to wire money there!

Dead Capital

In The Mystery of Capital, economist Hernando de Soto posits that $10 trillion of dead capital is inaccessible to the poor (now estimated to be $20 trilliion).

The poor don’t lack capital but rather the ability to monetize it.

Blockchain holds the potential to bring five billion people into the global economy, change the relationship between the state and citizens—a powerful new platform for global prosperity and a guarantor of individual rights.

Future, diffusion, growth of blockchain?

Some say healthcare will be the area where blockchain technology expands most rapidly.

In 2014, there were approximately 18.5 million software developers. As of 2016, 5,000 of those work in cryptocurrency and blockchain.

Matthew Roszak, co-founder, Bloq (the Red Hat of Blockchain):

Think of blockchain technology adoption as a freight train. The train may look like it’s moving slowly right now, however there’s an incredible amount of momentum building given the       financial and intellectual capital jumping on board—the momentum and innovation will continue to unfold at a significant pace.

Micah Winkelspecht, CEO of Gem, the nation’s first blockchain solution providers:

In the future, people won’t talk about blockchains any more than they now talk about the lower level architecture that makes the Internet work. We’ll just use them every day without thinking       about it. Their presence will be ubiquitous.

The philosopher Alfred North Whitehead said “Civilization advances by extending the number of operations we can perform without thinking about them.”

Blockchain Revolution: How the Technology Behind Bitcoin Is Changing Money, Business, and the World

$19.23

By Don Tapscott, Alex Tapscott

Buy on Amazon

Books and Other Resources

The Business Blockchain: Promise, practice, and application of the next internet technology, William Mougayar, 2016

Blockchain Revolution: How the Technology Behind Bitcoin Is Changing Money, Business, and the World, by Don Tapscott, Alex Tapscott, 2016

Magazine, yBitcoin + Blockchain, www.ybitcoin.com

Doug mentioned www.coinbase.com for Bitcoin, and Ed uses www.Xapo.com.

Episode #95 - A Check for Everyone? The Basic Income Idea

According to Wikipedia, an unconditional basic income (also called basic income, basic income guarantee, universal basic income, universal demogrant, or citizen’s income) is a form of social security system in which all citizens or residents of a country regularly receive an unconditional sum of money, either from a government or some other public institution, in addition to any income received from elsewhere.

In Our Hands : A Plan To Replace The Welfare State

$18.01

By Charles Murray

Buy on Amazon

Milton Friedman called it a Negative Income Tax, and Charles Murray dubbed it “the Plan” in his 2006 book, In Our Hands: A Plan to Replace the Welfare State. Murray posits, “Imagine that the United States were to scrap all its income transfer programs—including Social Security, Medicare, and all forms of welfare — and give every America age twenty-one and older $10,000 a year for life.”

Some Definitions

A Basic Income Guarantee would be means-tested, meaning you’d lose some of it after reaching certain income levels.

A Universal Basic Income would not be means-tested, and needs to “sufficient” in order to live on.

The Earned Income Tax Credit is subject to certain qualifications (having children, married or single) and is refundable on the personal income tax return, subject to being phased out as income rises.

The Negative Income Tax is also means-tested, and is what Milton Friedman proposed in his books, Capitalism and Freedom and Free to Choose.

The FiveThirtyEight Article

We’d like to give a shout out to Landon Loveall (@landonloveall) for sending along this article, and suggesting this show topic.

“Basic Income. A Check for Everyone: What Would Happen If We Just Gave People Money?,” by Andrew Flowers, April 25, 2016, FiveThirtyEight.

On June 5, Switzerland will hold a referendum on a basic income that would provide 2500 Swiss Francs per month to each individual over 21 ($1700/mo, $20,400 USD).

The article says that this is the “most audacious social policy experiment” in modern history.” Really? I would suggest so was the USSR, China, Cuba, North Korea, etc.

The article points out that we simply don’t have data on how this proposal would work, or what would happen. We shouldn’t let anecdotes run ahead of facts, as happened with the microfinance movement.

History

Thomas Paine in a 1797 essay, proposed to provide 15 pounds sterling to everyone from the age of 21.

Martin Luther King in his 1967 book, Where Do We Go From Here: Chaos or Community? endorsed a guaranteed income.

Milton Friedman supported the Negative Income Tax from the 1950s, while president Richard Nixon proposed a guaranteed income type plan that passed in the House and stalled in the Senate.

Friedman’s plan in 1978 would have provided a family of four with $3,600 per year ($13,200 in today’s dollars).

Matt Zwolinski, Philosophy professor at University San Diego, is a prominent libertarian advocate, “There’s something objectionable about paternalism: treating adults as children who need to have their decisions made for them.”

But isn’t government providing an allowance to all “its children” the essence of paternalism?

The Empirical Evidence

The United States has ran four experiments on providing a basic income between 1968-1980. These studies took place in NJ, PA, IA, NC, IN, Seattle, and Denver. There was also a famous one in Manitoba, Canada (1974-79).

These studies did report a modest 5-7% decrease in work, and even more for secondary earners. So it appears that one of the strongest arguments against providing a basic income—that people won’t work—doesn’t hold.

But it bears repeating that these studies were a very limited sample size, were not randomized, and didn’t provide a “basic income” (i.e., sufficient to live on).

Yet the social scientists claimed, “We learned an enormous amount.”

Our question: about what? Studying poverty? What will we do with that learning—spread more poverty?

The only antidote to poverty is wealth creation, and that seems to missing from this entire discussion.

The US Government spends almost $1 trillion per year on a patchwork of welfare programs: SNAP, TANF, CHIP, EITC, WIC, SSDI, etc.

The article does point out that for any experiment to be valid is must meet four requirements: Universal, Randomized, long term, and basic (sufficient to live on). No experiment to date has yet to meet all four requirements, limiting the conclusions we can draw.

Interestingly, the political lexicon is starting to change from “basic income” to “Trust experiments” or “Citizen’s wage.” Isn’t a wage earned?

Advocates also claim that innovation would flourish since this would free the tinkerer-in-the-garage and poet to pursue their dreams.

The appeal of this is idea is very Utopian—and a utopia is an imagined place or state of things in which everything is perfect, and exists nowhere.

Charles Murray’s Plan

There’s probably no better thought out plan than Charles Murray’s, as detailed in his short book, In Our Hands: A Plan to Replace the Welfare State, published in 2006.

Murray posits, “Imagine that the United States were to scrap all its income transfer programs—including Social Security, Medicare, and all forms of welfare—and give every America age twenty-one and older $10,000 a year for life.” [$11,868 in 2016 dollars, from the age of 21 to death.

The Framework

• Constitutional Amendment—this is required to dismantle the programs that we now have, and make sure they aren’t reintroduced.

• Universal Passport at birth.

• A bank account (ABA routing number; no bank, no grant).

• Reimbursement schedule: at $25,000-$50K earned income, 20% tax on amount above $25,000, to a maximum of $5,000 reimbursment. For example, if you earned $40,000, you’d be required to reimburse $3,750 (40,000 – 25,000 x 25%).

• Eligibility. Regardless marital status or living arrangements.

• Changes. Link increases to median income growth, productivity, or an inflation indes.

• Tax revenues. Murray assumes revenue neutrality—that is, the government raises the same level of tax revenues.

• Programs to be eliminated: Social Security, Medicare, Medicaid, welfare programs, social service, agricultural subsidies, corporate welfare, student loans, and scholarships. Students could use future grants as collateral for loans.

• Leaves state funded education, transportation infrastructure, and even the Postal Service.

• Immigrants, incarcerated criminals are not eligible.

• You must buy health insurance at 21. (approximately $3,000 per year).

• Privatize health insurance, repeal employer tax deduction, and repeal medical licensing laws, and enact tort reform.

In 2002, the population of 21 year-old and older was 202.3 million. In 2011, Murray calculates we would be breakeven with what spend now (by 2005 we were at $7,000/yr for everyone 21+).

Murray points out that if stock market doesn’t grow 4%/yr, the government can’t pay for all its promises now.

Murray argues The Plan would end “involuntary poverty”—that is, for people who do right and are still poor.

What About Work Incentives?

Murray points out most people who stay out of the labor force with the grant will be the same as who don’t work today. More likely, people will work fewer hours, not fewer people working. Murray believes the net decrease will be acceptable to our economy.

Purpose

How to live meaningful lives in the age of plenty and security.

Murray also wants to revitalize institutions that lead to satisfying lives, especially marriage, mobility, changing jobs to vocations.

Mark Twain

Don’t go around saying the world owes you a living; the world owes you nothing, it was here first.

Well, Mark Twain never said it. But in 1880, an essay by Robert J. Burdette (a popular humorist) titled “Advice to a Young Man,” ran in an Iowa newspaper:

No, my son, the world does not owe you a living. The world does not need you, just yet; you need the world… But don’t fall into the common error of supposing that the world owes you a living. It doesn’t owe you anything of the kind. The world isn’t responsible for your being. It didn’t send for you; it never asked you to come here, and in no sense is it obliged to support you now that you are here…

When you hear a man say that the world owes him a living, and he is going to have it, make up your mind that he is just making himself a good excuse for stealing a living. The world doesn’t owe any men anything son. It will give you anything you earn…

Ed and I believe, on pragmatic grounds, Murray’s Plan is better than what we have now, and we could support it, if it was accompanied by a constitutional amendments repealing the existing infrastructure.

With cryptocurrencies and the blockchain it could be much easier to manage.

What’s interesting is to think about the Bootleggers and Baptists coalitions that will form both for and against this idea, with the public sector unions being the major opponent (like public school teachers against vouchers for education).

The August 2014 edition CATO Unbound (online debate forum) was dedicated to the Universal Basic Income. Click the image below to access it.

We would love to hear your thoughts on the Basic Income idea!

Just Because