UBI vs MMT 1: What Do Words Mean?

Ellis Winningham recently wrote a ten-part blog series examining Universal Basic Income (UBI) through the lens of Modern Monetary Theory (MMT). Here, I will respond to the first post in the series, entitled “Terms Matter.”

Raining Money

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Printing Money Cures the "Covid-19" Crash

What the soft-currency theory of the business cycle tells us about the current crisis and how to escape it.

There’s no doubt that the economic carnage that has rocked the world in the last week or so was triggered by a contraction in economic activity associated with Covid-19 and the efforts to contain it. But there’s also no doubt that this shock exposed underlying issues, setting off a cascade of chaos and fear through an economic system overloaded with private debt, especially in the business sector.

Money Photo by Pepi Stojanovski

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The Robots Are Not Coming

If you follow technology, you could be forgiven for believing that humanity is standing the precipice of a robot apocalypse. It’s only a matter of time before automation eliminates so many jobs that humans will simply no longer be “needed.” Right?

Five years back, YouTuber CGP Grey made this case in his popular Humans Need Not Apply video.

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Give Immigrants Money

People move to a new country if they expect their lives to improve. Robust infrastructure, favorable climate, and stable governance all contribute to a country’s appeal. Basic income takes this to the extreme. A country with basic income actually pays people to live there.

Immigrants Make America Great Photo by Nitish Meena

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Money Does Not Circulate

Money is a claim on goods and services in the same way that airline tickets are claims on seats. It is standard practice for airlines to overbook their flights — they sell more tickets than there are seats. They do this because they know that some passengers won’t show up.

Passport and Ticket Photo by Nicole Geri

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Poverty Is Optional

Basic income is commonly described as an amount of money that’s sufficient to ensure some pre-determined minimum standard of living. I have previously dismissed this characterization as inaccurate. But who am I to insist that the popular definition of basic income is wrong? Why should I not admit that this blog is about something slightly different?

Compass Photo by Andrea Sonda | Castelfranco Veneto, Italy

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Life Is Just a Game

Does humanity need to exist? No. If we disappeared, nobody would be around to notice. But since we’re here, why not make the most of it? The first step is to keep ourselves alive and healthy. We feel better when we’re not sick or dying. This might seem self-evident, but there’s a reason why dying feels bad: Without an aversion to death, humanity would not have survived. Things start to get interesting when we move past basic physical health.

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Inequality Is Not the Problem

When people ask me about whether basic income addresses inequality, I tend to punt on the question. I explain to them that basic income solves the problem of how to provide spending money to consumers. I remind them that there are important problems that basic income doesn’t solve. Specifically, basic income does not address inequality. It takes nothing from the rich. It merely gives the poor better access to the economy’s resources.

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There's Only One Way to Pay for a Basic Income

Basic income gives consumers money to spend. The only way to pay for a basic income is by having an economy that gives consumers something to buy with that money. If our economy can’t produce enough goods to match the level of consumer spending, then we end up with inflation. There. I just gave you the answer. You can now skip the rest of this blog post. You’re welcome. For some reason you’re still here.

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Andrew Yang: Almost Not Wrong

As I’ve previously mentioned, basic income proponents fundamentally understand that our economy has the resources to do better for humanity. Andrew Yang understands this. He also understands that the economy exists to serve the people. Yang is a candidate running for United States president in 2020. His campaign slogan is “Humanity First” and he’s running with basic income front and center on his platform. Two weeks ago, I had the privilege of seeing Andrew Yang speak at a town hall meeting campaign event in Henniker, New Hampshire.

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