How to frame a UBI public policy for successfully passing a new law

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3. Part III Counter Arguments To The Criticisms of UBI

"Cost is an obvious consideration. The most quoted schemes today would, according calculations from Commerce Department data, cost the federal government between $2 and 4 trillion a year, amounting to a 50% increase in current federal outlays or more than 10% of last year’s gross domestic product (GDP)" (15)

The proposed FRDA Act would not be funded by the Federal Government. The first source of funding for FRDA will be the interest payment on the National Debt. This would be an operating expense of the Federal Reserve which is a for-profit private corporation.

The second source of funding for FRDA will be new money created by the Federal Reserve. This new money would be a new form of money supply issued by the Federal Reserve which is often labeled "helicopter money". (16) There are a number of criticisms often made with regards to economic stimulus based on helicopter money especially with regards to inflation:

"So-called 'monetisation' risks fueling inflation and undermining economic discipline. It should be used only as a last resort. " (17)

The way the FRDA Act is proposed deploying helicopter money does not have to be the first method. The first source is the preferred source because it causes increases economic activity without the associated inflation caused by the printing of too much money. "As of February 10, 2021, there was $2.05 trillion worth of Federal Reserve notes in circulation." (18) Helicopter money can be deployed only as last resort to address the most dire economic circumstances. But having the FRDA Act in place will allow the Federal Reserve to act swiftly deploying helicopter money to where it will be most effective. Also when helicopter money is required, the Federal Reserve will be able to act quickly which will help reduce the overall amount of helicopter money needed, and thereby, reduce the overall effects on inflation.

"Giving people cash will cause them to work less, hurt the economy, and deprive them of the meaning that work provides in life." (19)

The typical stimulus amounts proposed in the FRDA Act are not enough where people would be able to choose to stop working. But if the amounts were enough then so what. A FRDA dividend check is not free. Consuming products and services is hard work. Think of people receiving a FRDA dividend check as being on the Federal Reserve's payroll (a private corporation). The people receiving FRDA dividend checks are being paid to consume products and services, and therefore, are actually working to serve company shareholders.

"Automation and globalization are indeed restructuring work, eliminating certain types of jobs and increasing inequality. But rather than build a system where a large fraction of the population receives handouts, we should be adopting measures to encourage the creation of 'middle-class' jobs with good pay, while strengthening our ailing social safety net. UBI does none of this." (20)

The FRDA Act I am proposing is specifically designed to encourage the creation of "middle-class" jobs. Companies are not going to hire workers unless customers are buying products and services. The FRDA dividend check will allow consumers to purchase more products and services for the purposes of jump-starting the economy. The best way for our government to have the resources it needs for tackling social problems is by having a solid 3% or more GDP growth consistently year after year.

Speaking of automation, globalization, and the restructuring of work, I watched an interesting Ted talk by Hans Rosling titled, "New insights on poverty." (21) Hans has spent a lifetime studying and presenting statistics for poverty and public health. In his talk, Hans shows how the economies of the world have evolved over time eliminating disease and overpopulation. He also outlines a table titled, "The dimensions of development" as a response to social problems. In the not too distant future, there's a good chance we will have 100% factory automation, self-driving trucks, and 3D printed housing construction. The coming extreme automation will undoubtedly eliminate the need for millions of good paying jobs. Extreme automation will allow factories to quickly scale-up or scale-down capacity to fit any level of market demand all without having any inventory. Just like with farming, the number of people required for producing traditional goods and services may become dramatically reduced. Hans gives an encouraging solution for how to cope with these job losses as nation's economies evolve. The idea is as economies become more advanced and sophisticated, in order to have economic growth, products and services would place a bigger emphasis on "culture". Markets and economic activities would become more organized around culture and supporting culture as an end in itself. Towards the end of the talk Hans gives an amazing demonstration supporting his way of thinking.

"Universal basic income would be great if it wasn’t all going to end up in your boss’s pocket." (22)

The proposed FRDA Act is designed to do one thing. Allow the Federal Reserve to have a new and effective tool for controlling the stability of our economy. What I am proposing will not directly solve any social problems our society is facing. Lobbyists enticing politicians to pass laws creating cartels and monopolies in exchange for campaign financing is a much bigger problem. The debate over whether the federal government has a role to play in managing free-markets is beyond the scope of the FRDA Act. Addressing government privatization resulting in the highest possible costs to the tax payer, mediocre quality, and the hiring of cheapest possible workers for the sake of profit is outside the scope of the FRDA Act. But, achieving a steady 3% GDP growth target per year will certainly give our politicians a better opportunity for addressing our social problems than having the current year after year economic stagnation.

Based on history, I admit the FRDA Act I am proposing, just by itself alone, will most likely increase wealth inequality:

"The top 1% US income share in 1992 — which Andersen cites as the start of the good times — was 13.5%, according to the World Top Income Data Base. When Bill Clinton left office in 2000, the share had risen to 16.5%. Actually, high-end inequality rose more during the Clinton presidency, 3.01 percentage points, than during the Bush presidency, 1.4 percentage points. Goes to show you that if all the boats are rising — unlike today — no one cares how the yachts are doing." (23)

I think this statement, "no one cares how the yachts are doing," accurately characterizes how people felt about wealth inequality in the late 1990s. Addressing wealth inequality, along with other social problems, is more a question of political will. The FRDA Act's main purpose is for controlling GDP growth and economic velocity independent from political influence.

The language I am using for the FRDA Act has a better chance of achieving a successful legislative result. This is because of how it is worded and what is being proposed is in everyone's self-interests regardless of political wills.

In conclusion, it's time to give the Federal Reserve an accelerator pedal for the economy independent of political influence. No public policy is perfect. Hopefully, enough people will like Freda as much as I do.