5/23/2021 - Politics and Society

Universal Basic Income and Development

By Horacio Gustavo Ammaturo

Universal Basic Income and Development

Between January 21 and 24 of this year, the “World Economic Forum” took place in Monte de Davos, Switzerland. As expressed on its cover since 1970, the World Economic Forum is an International Organization for Public-Private Cooperation. Political leaders, academics and entrepreneurs from around the world gather with the claim to influence the agendas of big decisions. In fact, its main slogan is “A platform for impact”, as defined by Professor Klaus Schwab, founder of the Forum: “What we need now is a platform to integrate public and private initiatives into a common effort to achieve maximum impact.”

To understand a little more the importance of this organization in terms of influence and capacity to convene, the Annual Assembly brings together over 1000 executives of the largest invoicing companies in the world. In general, Member States are global companies of more than $5 billion of annual invoicing and to be part of this select and exclusive group pay between 60 000 and 500 000 Suizos francs per year, i.e. between 65,000 and 545.000 dollars. In the context of the product pandemic of the COVID-19 virus, the economic problem associated with health motivated the organizers and members of the Forum their inclusion in the agenda.

Some of the conclusions about leading decision makers and leaders, at least the last 50 years were:

I) The global economic system became extremely fragile even before the IOC-19 and that a great depression was on the horizon.

II) That the global economy privileged a profitable capitalism and not a free market capitalism, adding that since the 1980s there have been opportunities for the distribution of wealth to the owners of assets: physical, financial and intellectual, such as invention patents or computer platforms, to the detriment of labor participation, as one can appreciate in the following curve. III) That this distributive process decanted in a plutocracy that possesses obscene wealth, enormous economic and political power on the one hand, and on the other, the majority of the population, in a precarious situation, that survives unsafe, often carrying unsustainable debts.

IV) That financial debt levels, both public and private, reach maximum historical levels by exposing the collapse of the international banking system to a small recession, while, on the other hand, the conclusions of the Forum indicate that we will be facing a huge depression.

V) After the 2008 crisis experience trying to resolve public debts with fiscal austerity and cuts in public spending intensified inequalities by strengthening some giants.

VI) “That we are facing the greatest crisis of demand in modern history.”

As we initially said the meaning of the Forum is to integrate parts to generate impact on society, starting with the agendas of governments and large corporations. In this case, the proposal that is quenched to solve the described panorama is that of the Universal Basic Income, to such a point of defining this economic policy tool as essential more than desirable. The Universal Basic Income (RBU) is a form of social assistance in which all citizens of a country, or community receive from the government, without conditions and regularly an amount of money per month that complements what they perceive by their work or other welfare programs. The system aims to cover the entire population with safe income, in addition to the labor, social or economic circumstances of people, seeking to cover the basic personal monthly needs. Contrary to unemployment benefits that could result in precarious jobs in order not to lose them and thus promote the marginal economy, the RBU accumulates with the incomes from legal employment. So far, more words, less were conclusions and proposals from the 2020 World Economic Forum.

From these lines I add my considerations. The financing of income distribution policies, as described above, should come from a growing rate of the profit tax that generates a recurrence of the program's money when beneficiaries exceed a certain level of income. However, countries present very diverse political, social and economic circumstances and conditions. For example, we can highlight some aspects: the impossibility of distributing the wealth that is not. It is likely that many people who require tools like the RBU do not have economic resources to face such an ambitious programme. A new increase in the public debt of the Nations if it is necessary to resort to debt to finance the programme. The risk of inflation through monetary expansion when it is financed with emission. Operating costs to mass distribute money to millions of people simultaneously and register transactions. To contribute to the permanent concentration of supply and wealth, as the funds from the RBU will be mostly intended for the consumption of goods or services in mass, generally offered by large companies, “experts in imperfect markets”. Issues such as these could cause price increase in the products to which the RBU intends to give access. Promote access to the consumption of unhealthy goods or services, or generate consumption in trade or marginal suppliers, outside the tax and legal system of society. When the payment is easily convertible to money by the beneficiary, there is a risk that the assistance effort is intended for purposes other than those that originated the program, for example, drug use, alcohol, or because it does not acquire a weapon to delinquir.

The Forum of Davos carried out an excellent diagnosis of the chaotic situation in which is the largest socio-economic substrate in the world. Loss of participation in the generation of wealth of employment and economic concentration. Decreasing consumption. Destruction of the search for work and the ineludible role of States to resolve the issue. In suggesting a palliative alternative, RBU is one of the tools that will certainly be very effective in the short term, but, in my view, by the new technological realities and the modalities of consumption, over time would lose part of its effectiveness. Now, if we combine tools such as RBU with intelligent payment platforms, which guide the consumption of this share of citizens' income for the development of small and medium-sized enterprises, regional economies, strategic sectors of nations, which promote exports and replace imports, which are marketed through small proximity trades, we make RBU a very powerful development tool, which will quickly increase the base of beneficiaries contributing to the basic income system.

There are currently technological tools that generate a very low-cost, extremely safe and fast-deployment transactional and commercial ecosystem that would allow RBU the power to distribute development opportunities along with wealth. This way 1 + 1 is more than 2. In addition to the intentions that mobilized the 2020 Davos Forum that could be from a luminous extreme the awareness of the moral and ethical aspects of exclusion that generates economic concentration, or on a darker side, the greed to maintain or increase the purchasing power of consumers to improve the corporate results of some of the members who integrate it, welcome the inclusion of the agenda of those who decide the concept of RBU. Time will allow us to know what the real motives were.

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horacio gustavo ammaturo

Horacio Gustavo Ammaturo

I am Gustavo Ammaturo. I have a degree in Economics. CEO and Director of infrastructure, energy and telecommunications companies. Founder and mentor of Fintech, DeFi and software development companies. Blockchain Product Designer.

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