By Steven J. Grisafi, PhD.
The possibility that secular stagnation is a permanent phenomenon has helped to contrive several proposals to remedy its effects. With the reluctance of national governments to implement fiscal policies to stimulate activities designed to grow the wealth of the people the onus of that objective has fallen upon central banks to employ whatever monetary policies a fiat currency affords them. That we truly do not yet fully understand the mechanisms through which a fiat currency operates hampers these efforts while simultaneously helping to concoct exotic policies such as the use of negative interest rates. Although a paucity of directed activity designed to increase the wealth of a people would be construed as a challenge for the economics profession, not all societal ills succumb to an improvement in the wealth, including its distribution, of a people. While I can accept some arguments in support of negative interest rates, and an eventual abolition of physical cash, as having some stimulative effect upon economic activity, I consider both proposals anathema to the human condition. As humans, we grow old and die. Time is precious. It has a significant price upon our longevity as creatures of this Earth. Negative interest rates attempt the impossible seeking to invert the arrow of time within the cosmos such that the growth of entropy is reversed. Cash represents freedom. Its elimination subjects all human beings to the accounting systems of governments regardless of their adversity toward a particular people. As such, we ought not dwell upon exotic proposals designed to empower monetary policy to overcome the dearth of effect fiscal policy. We need to think beyond the sphere of economic action when confronting societal ills even when economics plays some role in the malady. Societal ills require improvement of other aspects of the afflicted society and not solely those accessible to monetary policies. Affirming this, I advocate abandonment of such notions as negative interest rates, and the abolition of cash, with a motion towards societal improvement having effects beyond the realm of economics.
While it may appear to some to lay solely within the economic domain, I view the proposal of a Universal Basic Income as a remedy having effects beyond a desire to increase the wealth of a people. Unfortunately, this universality of such a proposal can obscure from the vision of societal planners consequences beyond its initial effects, which may not be wholly desirable. The proposition of Universe Basic Income is for the State to provide to all of its citizens (residents?), at the expense of the taxpayers, a money income sufficient for maintenance of the quality of life considered necessary for all persons within the society. Although such a proposal had been rejected by the people of Switzerland in a recent proposal, the people of other European nations still ponder this alternative societal structure. I am drawn to ponder this proposal because I remain convinced that our societies of Western Civilization have achieved a level of technological sophistication such that all goods and services required by the people can be provided by a small fraction of the people. The bulk of the people are redundant and would remain idle. The hope is that a Universal Basic Income provided to all persons within a closed society would increase the demand for goods and services within that society causing fewer persons within that society to be redundant. Perhaps that may be so, but it clearly suggests an ever increasing level of what would be considered as sufficient for the minimal quality of life within that society. But then such an increasing spiral is not wholly distinct from the fundamental need of fiat currencies to maintain a rising level of monetary depreciation, which we call inflation. The more significant rub lay in the observation that Western Civilization societies are not alone in this universe and none can be considered closed. The difficulty would then reside in bringing all other societies beyond Western Civilization to accept and maintain for their peoples the standards chosen by Western Society. Since such an imposition is too presumptuous, one would expect that there would need to be a compromise between Western and Non-Western Societies such that this compromise would be democratic. That it is to be made democratically means that it would be in proportion to the populations of the competing viewpoints. It is this need to be democratic which I believe postpones far into the future any plausible Universal Basic Income.
Assuming that a society could remain sufficiently closed such that its anticipated minimal level of subsistence is not overwhelmed by immigration from societies having a lower level of minimal subsistence, what would its people, who subside on the dole but are otherwise idle with no profitable activity, do with their lives? The answer to this question is simply that they would need to find something worthwhile to do with their time here of Earth. Some may find profitable activity that pays no wages but is worthwhile to both the individual and humanity. Others may do, as has always been the tendency in all walks of life, to turn to malfeasance and become a further burden upon society. The course of history shows that idle men often go to war. With this in mind, society”s planners ought seek to abolish not merely poverty but idleness as well. But if they knew how to do that then what would be the need for a Universal Basic Income? Society”s planners would then make profitable whatever activity they sought to use to abolish idleness. Unless such planners can develop within government fiscal policies a usage that makes profitable activity out of what would be the idleness of the people, then we ought strive to improve our deployment of fiat currency. This is not to suggest negative interest rates or the abolition of cash, but to develop an understanding that one cannot have as currency something that only has value because the government demands payment of it as taxes. Currency must have an intrinsic value. Such value need not be tangible. But it must emanate from some desire of a people to work for the currency regardless of the condition of their government. While I believe we are no where near that understanding, I see promise in the development of cryptocurrency with linkage to central bank fiat currency to transcend the ineffectiveness of governments to act.