Tuesday, May 19, 2015

An open letter to Bernie Sanders

Mr. Sanders,

I support your candidacy for President, and believe in your desire to help workers and students and the real American economy, but wish to suggest policies that would better achieve those goals while gaining centrist support for your candidacy.

First a poor policy suggestion
Imposing a transaction tax on securities trades is a bad idea with no economic purpose.  Instead raise taxes on trading profits, such as reducing or eliminating the preferential treatment of capital gains and dividends.  A concession you can consider for the capitalist class is to allow better tax deductibility of investment losses.

The reason for these policy suggestions is that investment is still encouraged, and investors should still prefer investing to putting money under a mattress.  It still meets the political hot button of getting the financial sector to pay their fare share, and also has the potential to raise significantly more revenue than a financial transactions tax.

Basic income as the important policy recommendation
Basic income of $15k per year, $1250 per month, should be given to every adult citizen including billionaires, union members, students, working families, both members of families where 1 or 0 adults are working, seniors, the disabled, and the substance dependent homeless.

Charles Murray calculated that $10k per year could be given to every American by eliminating conditional programs that Americans can beg for.  The extra $5k comes from simply raising taxes. Because both poor and rich taxpayers also get $15k, if taxes were raised just a flat 10%, then working Americans who make under $150k per year would have a net tax (sum of financial transfers with government) decrease.  10% of GDP is $1.75T.

Payroll deductions should be eliminated and turned into an income tax increase.  This does not affect working people at all, but would affect those who earn income through other means than wages.  UBI will be providing landlords and financial traders with a safety net too, though, so they should be paying into it.

$15k UBI is enough to eliminate all other social programs.  Those who receive Social security or disability benefits greater than $15k could still receive the difference above the UBI amount.  This way no one loses any benefits by switching to UBI.

Basic income is right for Unions and other workers
The worst the economy is doing, the poorer bargaining conditions exist for low wage (usually not unionized) workers.  Bargaining innequality can cause them to be taken advantage of by employers.  If basic income causes some workers to refuse unfair work conditions, then that is a strong incentive for employers to offer better proposition than "take this job or starve, minion", and it significantly improves the opportunities for those that do want to work.

That same benefit exists for union members.  Some people inclined to be lazy is great for those who want to work, and better work propositions will also incentivize those more inclined to be lazy to accept the propositions.  Basic income means better jobs with better pay for anyone that wants them.

Traditional political promises of creating many union jobs seems like a bad idea because its creating a tax pool to reward the winners of those jobs, and there is necessarily some less than 100% useful necessity to those jobs since they need to be created.  So its a policy of wastefully creating a handful of winners which the general voting population should understand is just a different 1% or 2% or 5% than them, just as you try to appeal to those outside the top 1% of income earners.  UBI is for the 99% without deceiving them that they will all become unionized winners.

Basic income is right for Students.
With $15k per year, young people will have the opportunity to choose further education much more easily than through a predatory loan system.  Education costs so much because the sales job that any sized loan is worth the cost of education is a successful sales job.  If students can be convinced to pay $40k per year for education, why take less money from them?  Unlimited education loans are a bad idea because of this dynamic of just promoting a more aggressive sales effort to increase the customer's loan burden.

Young adults genuinely enjoy the opportunity of college, and we don't have to pay them more than those who join the labor force.  We simply need to provide them the means to improve their lives as best they see it.  They may choose unconventional educational paths that they see as more conducive to the innovations that society needs, and may well be correct.

Those who can learn will learn.  While your free college proposal idea is worth considering, with UBI, just an affordable college option is much more likely to be the right budget constrained option.

A basic income election platform is a winning general election platform

  • UBI is a tax cut for 95%+ of Americans
  • UBI improves the quality of jobs by removing desperation from the bargaining process.
  • UBI improves the quantity of jobs by redistributing money where it will be spent, and workers need to be hired to collect that spending.
  • UBI improves the dignity of the poor by giving them the freedom to improve their lives without benefits being taken away, and lets them help themselves far more cheaply and effectively than any expensive supervising bureaucracy ever could.  This is especially true of housing, where people can find more suitable and affordable housing options than expensive unpleasant ghettos.
  • UBI improves education and innovation by letting people develop themselves/ideas without the constraint of paying for their next meal.
  • UBI is the only solution that permanently solves the unfairness of a social security fund insolvency to those who were hoping to be paid after the fund will be insolvent.  All other options seem to be to pay current retirees everything that was promised to them, while cutting programs/benefits to the young.
  • UBI creates electoral funding reform by making special interest pork toxic to voters in that it directly affects how much UBI they all receive.  UBI effectively funds every government program by an equal contribution of every citizen.  So, special interest interest groups have less opportunity to lobby politicians.
Leveraging social media to win the general election
I would recommend engaging with grassroots economists for video/audio conversations where policy discussions can be had with people who are fundamentally sympathetic with your goals, even if they want to nudge you towards arguably more constructive paths.

I believe such interviews and discussions would provide a basis for those excited about your candidacy to promote it substantively.  While you should obviously accept mainstream media interview requests, I am skeptical that they will sympathetically engage in the policies that can improve America with you, as opposed to the horse race, and so the best mainstream media strategy is to treat them as the sideshow that they are.  In my opinion, it is a mistake to treat them as relevant and something that you need more than they need you, because giving them that power is just letting them decide what is a wasted vote in the horse race they are predicting.

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