Australia’s Shift to a Booming Circular Economy Underpinned by a UBI

Photo by Jon Tyson on Unsplash

The photo is emblematic of our current system. It does not have to be this way. We can ensure everyone has their basic needs met, while the work is done to produce all the goods and services we collectively require — without taking anything from anyone, or destroying our environment.

The fact is, we cannot solve poverty by impoverishing our environment, upon which all life depends.

The answer to both human lack and environmental destruction is to shift to a ‘circular economy’ (See here for a definition).

For this to happen, two conditions are essential:

  1. Local automated supply chains using locally sourced and recycled materials and renewable energy, where we import electrons as ‘world best’ designs, rather than atoms as products. 3D printing, new materials, Artificial Intelligence, robotics and virtualization of many goods and services will enable us to achieve this vision in the next 30 years - if we set it as our goal.
  2. Money in the hands of people to buy the goods and services that the supply chain is capable of producing. Without money people are invisible to the market, so the market can never respond to their needs. This is bad for them, bad for business, and ultimately bad for society.

This paper suggests how Australia can solve the second condition, without limiting the first.

The start of the third decade of the 21st Century has shown how adaptable people really are: changing patterns of behaviour in days, and patterns of work in weeks; all while overturning economic practice in mere months. Where once austerity was the norm, advanced economies have been flooded with money. Instead of it simply going to ‘banks’, it has gone to many (but not all) people who need it to survive. The result has been a softening of the turmoil that would have once engulfed us as a result of a global pandemic.

Yet we can do even better, knowing that the boundaries of ‘what is possible’ have been shifted.

Here’s how

The solution is simple: a Universal Basic Income (UBI)

A UBI is a set amount of money paid to every adult citizen, permanent resident, and refugee living in the community, every week — to meet their basic needs

While we want to make the radical changes from the start, we recognise that the sudden payment of $500/week (current poverty line) to all adults may cause abrupt changes in behaviour that could be destabilizing. This could then result in the UBI being blamed (rather than its abrupt implementation); which could result in it being terminated, or changed in ways that limit its universality, and/or unconditionality, and/or amount.

To avoid this, we are also proposing:

To Eliminate Potential Negative Impacts

To avoid extra administration the recoveries would be made via: group tax for employees, the GST system for self-employed, and their annual return for those earning a passive income.

Managing the Net Amount of new money injected into the Real Economy

At $500/week/adult, the total UBI could amount to an injection of $520 billion per year. In a $2 trillion economy this would be unsustainable. Hence the decision to target the net benefits to zero/low income earners.

There are also other offsets which are estimated in the table below:

The residual amount of new money injected into Australia’s $2 trillion economy should not be destabilizing. However, by taking a gradual approach, we don’t have to guess. We can see what happens as the amount is increased and take action to mitigate any demand inflation if it appears.

The beauty of a flat amount UBI combined with a flat % tax on spending is that it creates a ‘progressive’ system, with most of the net benefit flowing to those on zero and low incomes — though everyone is treated the same!

Given the UBI is to meet basic/survival needs, it should always take precedence over other modes of injecting money into the economy.

But every person’s needs are different. How to tell the machines what you want made to meet your needs? Money is the way.

By giving each person the same base amount (a UBI), it ensures each person cannot take more than their fair share; without dictating what goods and services that share should comprise.

Once, you’ve spent it, you cannot take more… until you get the next week’s payment.

To keep the money circulating, it is collected by the machines and returned to the issuing Authority to be reissued the next week.

However, as everyone spends, there will be people inventing new machines and new ways to provide new goods and services, as well as entertainment and art and craft and other services and sport, including in the virtual world, that only a person can provide. People will spend some of their UBI on these new goods and services. The most successful will earn the most money.

The extra money will represent the extra value they have contributed to society, which will entitle them to take out more than the basics… as they spend their earnings.

Despite all having the same base, some people (with effort, talent, and luck) will climb the pyramid.

By removing the main cause of systemic poverty (a lack of money to express your basic needs), a UBI will enable an explosion of human creativity, as machines do our dirty work.

One thing it will not do is bring everyone to the same level.

It will simply provide a floor to stand on, not a ceiling to achievement

A UBI is not a ‘Silver Bullet’

The more universal low cost services provided, the lower the UBI can be.

Also, as automation continues, we will need to implement a shorter working week, as well as explore ways to better share the work that remains, and share the productivity that results — to give everyone a better work-life balance within a thriving society.

Note: If you are supportive of the approach outlined, to help promote discussion, please click on the ‘hand’ icon below to add some ‘claps’, and also use the buttons to forward this article to other people you know who may be interested. Regardless, thank you for reading all the way through :)

Once was a Seeker