The Problems of Funding Basic Income Programs

Tags: central bank currency debt economy gdp macroeconomics money taxation

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Proposal Essay for Basic Income



Introduction



This paper provides a proposal essay on the subject of basic income. The aim of the paper will be to show why basic income is not a good solution to the problem of stimulating the economy or of providing people with the necessary income needed to maintain their quality of life as consumers. The essay will focus on why basic income will not work and it will do so by examining the problems associated with increasing the money supply, taxation, and debt monetization, which are the three ways in which basic income can be funded.



The Steps of the Essay



The essay will begin with some background information on what is necessitated by the state in order for basic income to be functional—i.e., money or access to money. As basic income consists of the re-distribution of money to those in need, an analysis of where the money is to come from is required. In order to do this, it is first necessary to explain what money is and how it has value. The paper will thus explain how confidence is required of money in a system of exchange and how money must be viewed as a store of value to facilitate that exchange. This understanding of money is vital to the discussion of basic income as it helps to explain why the essence of basic income is opposed to the current monetary system and why it is inherently flawed as a concept in the first place, as it goes against what the meaning of money really is.



To expand on the idea of money, a brief review of how money was historically used will be next provided, and a comparison will be made of how money was utilized by societies prior to the introduction of the central bank with its fiat money printing presses, which produce bank notes out of thin air which are then loaned to the government at interest.

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In other words, money is created, the supply of money is increased, and the value of money is decreased every time more of it is printed. The main purpose of exploring the role of fiat money in the contemporary monetary system is to show why printing or adding to the supply of money devalues the currency and only leads to higher inflation, thus essentially defeating the purpose of basic income in the first place ((Van Lerven, 2016).



Aside from the generating the money for basic income out of thin air, which is not feasible as it only increases the prices of everything else, the other two methods of generating the money for basic income is through taxation or the sale of debt (Haitsma, Unalmis & de Haan, 2016). Neither is feasible either in the current….....

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References

Curran, E. (2018). Global debt hits record $233 trillion. Retrieved from https://www.bloomberg.com/news/articles/2018-01-05/global-debt-hits-record-233-trillion-but-debt-to-gdp-is-falling

Haitsma, R., Unalmis, D., & de Haan, J. (2016). The impact of the ECB's conventional and unconventional monetary policies on stock markets. Journal of Macroeconomics, 48, 101-116.

Schiller, B. (2017). A universal basic income would do wonders for the U.S. economy. Retrieved from https://www.fastcompany.com/40463533/a-universal-basic-income-would-do-wonders-for-the-u-s-economy

Van Lerven, F. (2016). Quantitative easing in the Eurozone: A one-year assessment. Intereconomics, 51(4), 237-242.

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