Chapter 1: What is the main topic discussed in this episode?
Hello, everyone. My guest today is Scott Santens. And the reason I want to get him on the show is there is so much talk with the virus happening. But frankly, there's been a lot of talk about this for a long time related to an unconditional basic income, UBI. Scott's written extensively on this topic. He's an advocate with a crowdfunded...
Chapter 2: What is the significance of UBI in today's economic climate?
basic income currently. Those are board of directors at Fund for Humanity. And the senior policy advisor for Mike, who is running, he's a UBI advocate, running for the Senate seat in Kentucky that is currently held by Mitch McConnell. Scott, you ready to jump in and chat about this stuff?
Yeah, yeah. And that's Mike Breuer too, in case you were curious.
Mike Breuer. And I was going to say, spell the last name for us.
It's B-R-O-I-H-I-E-R Breuer.
And what are you excited about? I mean, you're in, again, you're in New Orleans. He's running in Kentucky. What's the connection?
His son was part of the Yang gang and introduced him to the idea of basic income through Yang's campaign. And Mike read Yang's book. And after reading that, he really understood how important the idea of basic income is. So he decided to make it a major part of his campaign. It was actually already running on a campaign of economic and social justice. So it really just fit.
What got you, let's backtrack a bit. And then I want to jump into news from today, which is we just saw essentially a $2,000 per person plus $2,000 per child, essentially stimulus proposed by a group of senators, Kamala Harris, Bernie Sanders, and Ed Markey from Massachusetts calling it the Monthly Economic Crisis Support Act. We'll jump into that in a second. But where did UBI start for you?
When did you really start writing and studying it?
Yeah, I came across this idea back in 2013, and this was before the Oxford report came out that many people now are familiar with as far as the report suggesting that perhaps half of all jobs would be automated in the next 20 years. So that got people talking a lot about the future of work. And at the time, there just was no discussion about this.
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Chapter 3: How did Scott Santens become an advocate for UBI?
Someone might go, okay, yeah, that's fine as maybe the initial seed, but Alphabet and Google in 2019 spent over a billion dollars of their own capital on their self-driving unit. Why should, you know, the counter argument to the one you just made are folks at Google saying, we're investing a lot. We haven't made a dollar on this yet. We're investing a lot.
When we do start turning profit, we deserve to make the money. We spent billions of dollars developing the technology.
Yeah, and there's nothing that says that they shouldn't earn the money. This is about percentages. So instead of, say, Google keeping 100% of their revenue, then perhaps it should be 90% or 95%. There's some percentage that we're saying that we are the ones that put up the original research. We're the ones who did the original investment. We should be seen as the original investors.
When you say we, you're talking about the American public and the money they pay into taxes that the government then subsidizes the early part of the technology related to self-driving cars.
Yeah, again, all research, because there's no profit in that research, it comes down to government or to pick that up. It used to be the case like back in the day, like say Bell Labs was a company that did a lot of its own R&D and that just doesn't exist anymore. If it's not profitable, people aren't going to do it.
So all this exploration into new technologies and new knowledge, that's really just government funded.
Let's keep going down this path. Let's say audiences listening right now, they're shaking their heads going, what Scott is saying makes sense. Automation is removing jobs. Productivity gains are going to those that control these companies. We're twice as productive as we were many, many years ago, but we're not working half as much and we can't buy twice as much. So something's wrong.
They're hearing you say there should be some credit back to American taxpayers for these technological innovations at, say, Google. is what you're essentially proposing here. What other, you know, 191 other countries around the world have done, which is, you know, some form of that tax, not on profits like taxes, Google pays, but actually on top line revenue.
Yeah. I think if that tax is a very effective way of, uh, of getting the revenue, um, coming from this in a way that both works and is effective and it's indirect. I mean, I like that you, with a VAT tax, the amount that you pay into it is the amount that you choose to pay into it. So it's based on your consumption.
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Chapter 4: What are the differences between UBI and stimulus checks?
We're all like finding things to do. There's a lot more like, you know, video game consoles are doing quite well. People are reading more, people are streaming more. people are engaging more like we're doing right now as far as using Zoom and these things.
Chapter 5: How does automation impact job security and the economy?
And so all of this requires time. And if people are working 80 hours a week just to get by, then what are you consuming? Not only do you have not the money to consume more than just the basic needs if you are earning low wages, but also you have no time whatsoever and no inclination. You want to get home And you just eat, sleep, and start over again.
And you're not a consumer if that's all the time that you have.
So let's wrap. Let's go to present day, right, COVID. There's all kinds of different, starting with the CARE Act, $2 trillion CARE Act. You've got the federal balance sheet doubling. We have an amount of debt in the United States that's now just broke yesterday or the day before about $25 trillion compared to national GDP of $22 trillion historically. So almost a 108% debt to GDP ratio.
Part of the question that policymakers have been asking is, even if you stimulate and get businesses open, if consumers have been out of work, right? And a core piece of GDP, one of the four components to calculate GDP is obviously personal consumption. They're going to have no money to go personally consume. So how...
to what degree does that kind of angle impact the news we saw this morning from Kamala Harris, Bernie Sanders, and Ed Markey on the Monthly Economic Crisis Support Act to put a $2,000 check in the pockets of individuals?
Yeah, we are already in this deflationary cycle that is the direct result of this recession. And of course, we can't even call it a recession yet because of how we define recessions being like after the fact, after it's been going on for a while. But we are in a recession.
And part of the problem is that you'll see you close up some jobs because people, you know, for our own health, you don't want people gathering in those places and stuff. So there's a lot of jobs we eliminated. But then other jobs tried to keep going. But they were affected by the fact that people no longer had money to spend at those places. And then so those jobs closed.
And then those people's wages also were not able to spend elsewhere. So then more jobs closed. So we're already in this downward cycle. The only way to break that is to make sure that people get money to spend.
And so right now, as the economy is still closed, you can still help businesses stay alive and even do better and even need to hire more people in certain cases if you actually have enough customers. So I think like... you're seeing a lot of people do a takeout more than people did before. A lot of people would usually just go out to restaurants.
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Chapter 6: What are the potential benefits of implementing UBI?
No, it's because you're still excluding a bunch of stuff and it doesn't apply to, you know, it's not as simple as just saying it's the economy is 2.21 trillion and therefore 10% of that is, you know, 2.1. If you look at any estimate of value at a tax, it's always around $800 billion worth of U.S., And of course, people will vary that in various ways.
I believe it makes more sense to have a flat amount, but it's around $800 billion for a 10% VAT. And it's important then to go on to what are the savings and what are the effects on the actual economy. you know that people spending this money by putting the money in the hands of spenders is going to have a multiplier effect on the economy.
And that too is something that you can have estimates on. We know that something similar in Canada called the Canada Child Benefit, it kind of looks like a basic income for a lot of various families. So let's say if you're a single mother and you have two kids, you could be receiving $1,000 per month. And so for that particular situation, it looks very much like Andrew's freedom dividend.
But it goes to all households in Canada earning under a certain amount, in which case it goes to most Canadian families. Every dollar distributed actually increases GDP by $2. So you know that there's going to be a large economic growth impact from this, because
moving money from those you know the the those with the higher propensity you can consume are at the bottom of the income spectrum and those with the lowest are at the top those at the top are not spending on all these consumer goods that that drive the economy they're they're investing it they're they're saving it or But it's not going into all these products that generate all this.
So we know that there's going to be a large economic growth impact from this as well, which further increases tax revenue. But then the other thing, too, is the savings involved. So one of the impacts in the Delphine, Manitoba study in Canada in the 1970s was a reduced hospitalization rate of 8.5%. And through other studies, too, we know the Alaska dividend improves the birth weights of babies.
And that actually increases health of adults. We also know from the Canadian dividend, too, that it actually reduces obesity. And so we also know that... There's a lot of, you know, 80 to 90% of health outcomes are actually through the social determinants of health. It's determined by, you know, the environment.
If you're very stressed out, if you're in an impoverished environment, then, you know, you're going to get diseases at higher rates of things like, you know, diabetes, cardiac disease, even cancer. A lot of this comes from these poor environments. So if you make sure that people are lifted out of these poor environments and you don't experience that stress and insecurity and instability,
then we can save a lot of money that we're otherwise spending on healthcare. So that's one of those things where people say, oh, let's have universal healthcare. It's like, great, but do we want to have an approach where we're like saying, okay, let's not develop a vaccine for polio. Let's just have iron lungs for all.
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Chapter 7: What future implications does UBI have for society and the economy?
That's the gross cost. But it's important to understand that the net cost, because a UBI is a very unique program in that people are essentially spending money to receive money. And that is unlike any other program. If you're spending for healthcare, then you're spending money, but you're getting healthcare back. And so the cost of that is the cost.
But if you're spending $10, let's say you go into a store and there's a $10 bill on sale that you can buy. then you spend $10 on it. Then are you $10 richer? Are you $10 poorer? It nets out to zero. You essentially bought your own $10 for the same of not doing anything. And so when you look at UBI too, there's this, you can look at it as a slope
where there's a threshold point where someone is essentially paying $12,000 to receive $12,000. And in which case that cost is zero. They're paying for their own. And anyone spending more than $12,000 for their $12,000 is again, spending for their own. And then on the other side of that line, people are net receivers.
They're spending, let's say, if you're spending $6,000 to receive $12,000, then that's $6,000.
Scott, sorry, what do you mean by that? Spending $6,000 on what?
$6,000 is increased taxes to receive the $12,000. So whatever the tax regime put in place, whatever you're doing to make the basic income possible, you have to subtract out what people are receiving from what they're paying to get it. And if you looked at the 10% value-added tax and Andrew Yang's freedom dividend, then the threshold point
depending on expenditure details, and also if you assume that the full 10% of the VAT is even passed on to the consumer, then if you're spending $120,000 on goods and services every year, and 100% of that is going towards VAT goods and services, and the full cost is put on, then you are essentially paying $12,000 in VAT for your $12,000 in basic income. And that's where the net is.
So those spending more than $120,000 on that goods and services are net payers. And those spending less than $120,000 on goods and services are net receivers.
Yep.
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Chapter 8: How can UBI be funded in the current economic system?
I mean, what it comes down to is us, ultimately. These politicians, they do what they do because they either fear that they're going to lose their jobs or they can feel entirely safe and they don't need to worry about their jobs at all.
What matters to the politicians is when suddenly their phones light up and they're getting all kinds of constituents calling them and they're saying, like, why aren't you supporting this? Or... They're even saying, oh, thank you so much for supporting us, although usually it's the anger thing.
But they have to feel that they need to actually support something, and they will get fired if they go against something. So that's what it comes down to is if these ā we can expect, because it is highly partisan, our government has become hugely partisan, that we are going to do this left versus right, Republicans versus Democrats plan, da-da-da.
But if people are suffering and they get pissed off at these politicians on both sides for not making this happen, then that's what stuff happens. Even the reason Nancy Pelosi, I think, is talking even ā she changed her tune. She originally was not for this stuff, and we actually helped push the ā a group of us, the Yang Gang income movement ā
basic income supporters, we led an initiative to actually contact your representatives when we knew that they were already considering the details of the next plan. And suddenly, we were pushing that heavy on Friday. And that Friday night is when Nancy Pelosi on Bill Maher for the first time talked about guaranteed income as a possibility, something that they were looking at.
And then she said it again a couple days later. And I am... I am absolutely convinced that she's changed the way she was speaking about this because she had enough people reached and then people talking to her about that they were reached. That's just that, oh, wait, there's a lot of support for this.
And so I think it comes down to Republicans will want to go against this because it's a Democratic led initiative and they'll want to put their own twist on it. Either they'll either go against it or they'll want to change it up. But it really depends, again, on Republican voters calling up them and saying, look, this is important. Free to support. Don't go against this.
They're already getting it. They're getting they're getting a twelve hundred dollar stimulus. I mean, they're getting a check.
It was just a one-time check, you know?
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