October 21, 2013

Free money for everyone

The Swiss government is "disruptive" in entrepreneur-speak. That means that they reject the status quo and do things that would seem unimaginable. No, the Swiss government is not just unconventional in that the people have a say, though this is unique in the world. Just 100,000 signatures are required to force a referendum where every citizen gets to vote for a new law.

The current issue at hand is a guaranteed $2800 for every adult citizen of Switzerland. A negative income tax system is one in which people who earn under a certain level are given money from the government. Those making the another level of income pays nothing and those earning more must pay taxes. The vote that will be held in Switzerland is quite different in that it is $2800 for all citizens, rich or poor. I'm trying to wrap my head around what affect this will have on the Swiss currency and incentives for people to work. Where will the money come from?

It is clearly MUCH less expensive for a government to simply distribute money to all than it is for politicians to made their own determinations for what others need. Politicians spend and steal insane amounts of money in the process of tinkering with their own programs. They call it entitlement reform and pretend that they are making changes, but in reality, it's just political masterbation and theft. Governments choosing what amount goes to healthcare or the family food budget is preposterous. The most effective use of funds is for citizens to decide how own money is spent. This is the basis for the idea of simply giving money to everyone without prejudice.

The welfare trap is when individuals are no longer motivated to work when their government gives them free money. What's the point of working when you're already living a good life? Will the $2800 given to every citizen cause an exodus of low paid workers from their jobs? Will all of the laborers quit immediately when they are guaranteed a modest but comfortable life?

Will there be a hyperinflation making the $2800 worth far less than before the new charity to all policy. If the policy is enacted, where will the funds come from? Will current entitlement programs become obsolete and simply disappear? In that case, the extra $2800 to each Swiss adult may actually be a spending cut. I am at a loss as to what will happen if the new law is passed. What do you think?

Video: Basic Income, a new human right

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