A Free Guaranteed Income — and Way, Way More Goodness

The Achilles heel of all proposals for a guaranteed income is how to fund it. Most of them minimize the necessary increase in taxation with a supposed decreased need for public expenditures for Welfare. In truth, none of them propose an income large enough to justify ending all programs for public assistance.

With this proposal, taxation — and public debt — would be eliminated along with unemployment and poverty, while total spending by government (federal, state, and local combined) would remain at the present per capita level forever. The minimum wage/income would be $15/hr.; $600/wk. (in the U.S.). Social Security (in the U.S.) would be eliminated. Sustainability would be enhanced.

Obviously, we are talking about something revolutionary. Yet, it is not radical. This approach builds on existing institutions, rather than tearing them down, to transform the functioning of the market-based economy. Even the central bank (in the U.S., the Fed) would still exist, though with truncated responsibilities. The key to this proposal is to make the guaranteed income the supply of money for the economy.

At this point I should probably let the reader know that I do have an M.A. in economics. Also, I have been working on this proposal — along with its relationship to justice — for decades. So, I have had the requisite training and plenty of time to take into account any potential pitfalls associated with this proposal. There is much more on all of this at www.ajustsolution.com.

the allotted income/supply of money

In this approach to a guaranteed income, which I refer to as the “allotted income,” that income would be supplied by a Monetary Agency that would be separate from and independent of both government and the banking system. The money for that income would be created as needed. Like the money at present, it would not be ‘backed’ by gold or anything else; unlike at present, the amount of it would be strictly limited (by demographics), as we’ll see below.

The allotted income would not be paid to everyone. It would be available for an unlimited number of people, but it would be paid to people in one of three categories. The first two of those categories are straightforward enough. The third of them will require somewhat more explanation.

Two of the categories of people being paid the allotted income would be retirees and adults too incapacitated to work (for whatever period of time). It would take the place of public programs such as, in the U.S., Social Security. [Since making payments to retirees and incapacitated adults is what it does, the Social Security Administration (and agencies like it in other nations) could be extracted from government to become the Monetary Agency.]

The allotted income would also become the minimum wage. As such, it would be paid by the Monetary Agency, not employers, as I will now explain.

At the time of the conversion to this system every position in the economy being paid the current minimum wage would instead be paid the allotted income. Initially, the amount it would be the amount of the current minimum wage. That minimum wage would be increased gradually (to prevent inflation) until it equaled the allotted income for retirees and adults too incapacitated to work. [Depending on a nation’s economic situation, the amount of the allotted income could be based on the median income, the average income, or the per capita GDP.]

Thereafter, employers could designate any position to be paid the allotted income. A person occupying such a position would have to decide whether or not to continue in it for that income. If not, someone else might accept that position for that income — or not. Over time, positions could, in terms of pay, rise out of and fall into that category. The same job might be minimum-wage in one labor market but not in another, or even in one company but not in another in the same labor market.

Employers would use benefits to compete for employees in the minimum-wage labor market. The minimum wage would always be the same for everyone being paid it, but benefits would presumably reflect local costs of living. The only restriction on benefits is that they would have to be ‘in-kind’, not in the form of money. In any event, conditions in local labor markets would determine benefits for minimum-wage employees.

Finally, it would be as easy as not to pay one parent (or legal guardian) in a household with at least one dependent child living there the allotted income to work in the home (without benefits). The parent/guardian would receive the same income regardless of the number of children in the household.

That home-employment option would be the biggest option to consider in adopting this approach to a guaranteed income. It would presumably considerably reduce the supply of labor available for work outside the home. It would especially be a boon to poorer nations with dreadful rates of unemployment.

eliminating unemployment

Still, the system as it has been described to this point would not absolutely, positively eliminate unemployment. There would still be a cost to employers associated with employing people. In a market-based economy, as long as that is the case there is a chance for some people who want to work to be unable to get a job.

Positively eliminating unemployment in a market-based economy requires the possibility of employment at zero cost to an employer. That would be possible with this proposed monetary system. It could be accomplished by having government be an employer of last resort.

I would think that should be local government. Anyone who was unable to find a job in the local economy could be hired to do something requiring no additional investment by government — perhaps picking up trash along the sides of roadways — while being paid the allotted income. That would cost the community nothing.

To keep the cost of such employment at zero, it would not include any benefits. That would also provide an incentive for people employed in such work (if more was needed) to continue to look for a job that did pay benefits of some kind.

One of the brutal realities of life as we have known it is that unemployed people have formed a ready reserve of labor on which employers could draw. This system of total employment would keep that reserve in place, but people without a job that included benefits would at least have a decent income while in that position.

funding government

Government — central, intermediate (if any), and local — would be funded by the Monetary Agency forever at the current per capita level. Government spending would thereby be determined by population, and only that. Money not spent by government would be returned to the Monetary Agency. (Funding government this way implies a permanent freeze on pay for all positions in government; as at present, any newly created position would have to be fit into the existing pay structure.)

While the details are beyond the scope of the present effort, to prevent inflation a mechanism would exist to return money regularly to the Monetary Agency (but, unlike taxation, not before it was available for spending or investment). If the amount of money collected by the Monetary Agency were sufficient to fund government, no additional money would be needed. If it collected less than was needed to fund government, it would simply create the necessary amount of money. Should there be a surplus of money collected, it would be retained by the Monetary Agency.

The money for all levels of government would go initially to the central government. Money not spent at that level would go to the next lower level of government, apportioned on the basis of population. If an intermediate level of government did exist (depending on the structure a nation’s government), the money not spent there would then go to local government.

The representatives at the higher level(s) of government would be aware that the less they spent there, the more there would be to send to the lower level(s), where the people who voted for them lived. Thus, there would be a ‘natural’ tendency to maximize the amount of money going to local government.


So, both the supply of money and the amount of money available for government to spend would be governed by demographics — and only that. It follows that demographics would govern total demand.

That would align total production (GDP) with population with no unemployment or poverty at any level of output. That scenario stands in contrast with the economy as we know it, in which output — with its consumption of resources and production of wastes —must always be maximized in order to maximize employment and total income (thus maximizing taxes).

Moreover, history shows that people tend to have fewer children, not more, when they have economic security. With most people being on a fixed income that would be sufficient for one or two children, but would not increase with the number of children, the existence of the allotted income would in turn encourage little or no increase in population.

Finally, this approach to a guaranteed income could be adopted by any nation, no matter how poor it might be. In that way even the poorest nations could become viable economic entities literally overnight without having to undergo the time-consuming and environmentally destructive process of ‘development’.

big finish

So, we have seen how this approach to having a (sufficient) guaranteed income that would not cost anyone anything is possible. It would eliminate unemployment, poverty, taxes, and public debt while enhancing sustainability. All of that would be accomplished within the context of a market-based economy with no limit on income or property.

It is crucially important that those outcomes do not depend on people acting any particular way. Rather, they are built into the structure of a revolutionary — but not radical — monetary system.

unaffiliated, non-ideological, unpaid, academically trained philosopher and political economist