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Bible Studies
Written by Jim Jordal   
Friday, 30 November 2007


By Jim Jordal

Last week we identified several major failures of today's unrestrained capitalism. Due at least partially to these failures some 15 percent of the U.S. population lives below the poverty level (defined as less than $19,800 annual income for a family of four), and many more exist in destitution, even though above the poverty level. The precarious position of such a large share of our people ought to capture the attention of reform minded American economists, politicians, and social justice advocates. Most, however, remain aloof from the problem because it sounds too radical for their sensibilities. One, however, has responded with what in the U.S. is usually termed a Guaranteed Annual Income (GAI), or in Canada a Basic Income Grant (BIG), a universal basic income, or a demogrant.

The idea of income redistribution through fixed government monetary grants to large groups of eligible citizens is not a new idea. During the depths of the Great Depression in 1933 a retired California physician named Francis Townsend proposed a similar plan in an extended "Letter to the Editor" of a Long Beach (Calif.) newspaper. The Townsend Plan, as it became known, provided that the government pay each retired American over the age of 60 a sum of $200 monthly (a living wage in those days), with the provision that the recipient withdraw from the labor force immediately, and that the money be spent in the U.S. within 30 days. His theory was that the billions of dollars paid out would immediately be spent, thus restarting the collapsed spending/income cycle that had resulted in depression. But the concept was never adopted due primarily to fear over its $20 billion annual cost, and argument over how to fund the program (Townsend advocated a 2 percent tax on all business transactions). However, the plan resulted in some 4 million persons joining 10,000 discussion groups around the nation, and put pressure on government to begin considering such legislation. The burgeoning social movement organized around the plan led ultimately to the attention of President Franklin Delano Roosevelt, and eventually influenced passage of the Social Security Act in 1935

The idea has come around again in a new book by well-known libertarian researcher Charles Murray. Entitled In Our Hands: A Plan to Replace the Welfare State, the book offers Murray's plan for a $10,000 yearly grant by the federal government paid to all American citizens over the age of 21and not in jail. This grant would serve to dismantle the welfare state by replacing all other governmental transfers such as Social Security, Medicare, Medicaid, and so on, and would sometime during the next decade cost less than what we are now spending for welfare programs.

All one would have to do to get the grant would be upon turning 21 to show his high tech national identity card (unfakeable, and now being developed) to a bank, which would then open an account and notify the government of the account holder and an account number. Future payouts would occur electronically each month into the account--no account, no grant.

Murray also suggests that perhaps $3000 of this be mandated for health insurance, and that the grant amount be progressively taxed up to a limit of $5,000 for persons making over $50,000 yearly. It would be funded the same way transfer payments are now funded--from general revenues, by borrowing, or by creation of some new form of fund raising.

The concept of a national dividend (I like the term because it doesn't imply a gift, but a rightful sharing of profits) is that a stockholder, or part owner, receives a share of the profits of an ongoing, successful business. If the entire United States is a successful venture earning profits, then why should not everyone who has helped create this success share in the financial returns? From the high-flying CEO to the lowest manual worker; from richest to poorest, from best educated to uneducated; does not everyone by either producing or consuming help fuel the American dream? Then why is it that only some share in the success of the undertaking?

That's what a national dividend would do. Because you are an adult American citizen and not in jail, you would receive a small share in America's wealth. What's unreasonable or unworkable about that?

Obviously, there are innumerable details to work out before such a plan could become politically acceptable to a majority of voters and legislators. Some of the issues would be how to resist fraud, what to do about persons who waste their grant, how to continue some form of "safety net" for those persons falling through the cracks, how to avoid a national sense of entitlement that could become very destructive to work incentives, and especially how to finance the plan. But none of these are impossible, only difficult. It's the present system that's impossible!

Actually, the Guaranteed Annual Income plan only rephrases what God originated for His people almost 3,000 years ago at Jubilee. We'll discuss this next week.

Last Updated ( Friday, 30 November 2007 )