Re: Reforming the Language of Money

["Per Gunnar Berglund" <pgberglund@xxxxxxxxxxx>]

Henry Liu wrote:
> The math is actually quite simple.  A guaranteed income of $20,000 per
> capita for an economy of 259 million will cost $5 trillion per year.
> The US GDP is in excess of $9 trillion.  We don't know what the GNP is
> with factor income from abroad, possibly another $2 trillion.  But if
> income creates demand and demand creates supply, there will be a booming
> economy with a minimum guaranteed per capita income of $20K or $80K for
> a family of four.

Per says:
Some numbers as inputs for the discussion:

BEA NIPA reports a GDP of 9,872.9 billion dollars in 2000. Net income from
the rest of the world, however, is nowhere near the trillions you suggest
but a modest negative 12.1 billion dollars. I would add that one should
deduct also consumption of fixed capital (amounting to 1241.3 billion
dollars), which yields a Net National Product of 8619.5 billion dollars.

Guaranteed income has been discussed in Europe for some time. You may be
interested in some of the materials on the BIEN (Basic Income European
Network) website at http://www.econ.ucl.ac.be./etes/bien/bien.html .

Needless to say, your arithmetic gets complicated by all sorts of economic
feedback and incentive effects. I think you are right that a guaranteed
income involves big government and probably taxation on a European level. It
is likely that it would prop up aggregate demand and reduce supply compared
to the present situation, although it is virtually impossible to figure out
by how much. The effects would depend on the level of citizen remuneration,
and it seems to me that $20,000 per year is probably too high even for a
rich country like the United States.

Best,
Per

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Per Gunnar Berglund
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