A Conservative Revolutionary Economic Proposal: A Democratically Distributed Income

By Stephen Yearwood
Guest Columnist

Note: I won’t be summarizing what I have written in this series in Parts I-III as that pertains to this income. Most of the ‘high points’ will be related herein, but it would help if a reader has read II and III at least. 

A democratically distributed income (DDI) is one for which any—and potentially every—adult citizen could become eligible. It could be called the “allotted,” “standard,” or “basic” income (I have used those terms in writing about this proposal), but if any/every adult citizen can become eligible for it, the income is ‘democratically’ distributed, whatever its label. 

There could be many different ways of instituting such an income. The one I came up with is to create money as needed to fund the income. Should a nation actually adopt this proposal there are many details that would have to be resolved; here I want only to sketch the bare bones of the DDI in this proposal. 

That money could be created by the central bank (the Federal Reserve System, the “Fed’), but a new institution could be formed to administer the income. That would emphasize the independence of the income from both the central government and the banking system. (As will be seen, the Social Security Administration could be extracted from government to become the Administrator of the Currency.) 

It is of the utmost importance that whatever organization administered the currency, it would have only a purely administrative function. Regarding this income, the administrator of it would have no discretionary power whatsoever. It would simply, rotely, make payments to recipients of the income and receive whatever money got returned to it, with no say in determining how much money would be issued by it or returned to it. (As we’ll see in Part VI, money would get withdrawn from the economy and returned to the administrator of the currency—but not before it could be used for purchases/investment.) 

Creating that money would not involve debt—or taxes—in any way. Whatever amount of money were needed would simply be ‘printed’. 

The total of that money would be the supply of currency for the economy. At present, there is no limit on how much money, as currency, can be created. In this proposal the amount that would be created would be strictly limited: whatever amount were needed to make the payments to all recipients of the income. That would be a very large amount, but it could not be altered by any person, committee, or organization. 

The DDI would be (potentially) available for any adult citizen if it were paid to three groups of people. The first two are simple and easy: people of retirement age and adults unable to work. Determining eligibility and issuing payments to those two groups is, of course, what the SSA does. It would be silly, really, not to make it the Administrator of the Currency. Its other function would be obsolete. 

In this proposal the third group to be paid the DDI would be people employed in ‘minimum pay positions.’ They would not be paid by their employers, but would receive the DDI as pay. 

In a free labor market employers would find themselves using benefits (and general working conditions) to compete for people to fill those positions. Benefits could be any kind of good or service, as long as they were ‘in kind’: payment for them would go directly from the employer to the provider of them. Employers could designate any position to be a minimum-pay position; a person could choose to accept/stay in that position or not. Also, employees might request for their positions to be made ‘minimum-pay’ (for the increase in total compensation). 

To ensure no unemployment, government could provide jobs paying the minimum-pay DDI with no benefits.That would make those jobs essentially free to provide (with a strong incentive to get a job with benefits). 

The amount of the DDI is up for debate. 

For minimum-pay positions, consider a DDI of $10/hour ($400/week) for those positions. Employers that had been paying their employees that amount of money would have that amount of money available for benefits. So with the employer laying out the same amount of money, the total compensation of the employee could go from $20,800/year (plus whatever benefits they had already been getting, if any) to $41,600/year (plus whatever benefits they had already been getting, if any). 

The DDI would presumably be more for (all) retirees and adults unable to work, since they would not be getting benefits. The current maximum SSI, which is basically $40,000/year looks about right to me. 

The possibility in this proposal of funding government (all government, from local to national) without taxes/public debt is the topic of Part V.