In the US, there is a federal minimum wage, which sets the minimum wage for people who work for an employer that has over a number of employees. In some countries, the minimum wage is as low as $2 a day. People in these countries work and live in poverty, without having access to the vital essentials. This blog talks about why the world needs a global minimum income.
Could something like bitcoin be used to create a global minimum income for the human race?
Richard Russell, Cross-Functional Alignment Expert — ex-Amazon & Google employee says,
“It’s not possible to generate more bitcoins than the system allows, so there’s a total supply of 21 million bitcoins. To get them requires either mining (cost: electricity + computing power) or buying them (cost: real assets). Hence, if you were to distribute them to “the human race”, it would cost you a lot to get them. Gold has similar qualities in this sense — you can’t just create more gold.
“But suppose one were to do that with something we can easily create more of. Say $US. The US Government could print more of them, and distribute them evenly around the 0world, say $10 per person per day. That’s $70bn/day, or about $25trn/year. This is in the order of 20–50x the amounts released for Quantitative Easing, and if one were to do it permanently, the total amount of money released would dwarf any QE program.
“The end result would be inflation. Printing money (creating bitcoin) doesn’t increase the wealth of the world, as it creates nothing worthwhile. Actual value is created by work. The value of a currency is how much work you can buy for a currency unit. If you gave everyone $10/day, then you value the output of a person who isn’t doing anything, has access to no resources, and has no real market, at $10/day. The value of the work that someone with modern tools, first-world resources, and a global market can produce, would be (as it is now) many orders of magnitude more than this….”
What is the global minimum tax?
In late 2017, the Republican Congress’s big tax overhaul law lowered the U.S. corporate rate for multinationals to 21% from 35%, and it created a minimum tax on U.S. companies’ foreign income of at least 10.5%.
The idea of a global minimum rate is to ensure that big multinationals pay a certain amount of tax no matter how they shift their profits from one country to another.
“Together we can use a global minimum tax to make sure the global economy thrives based on a more level playing field in the taxation of multinational corporations, and spurs innovation, growth and prosperity,” Yellen said in her first major speech since becoming Treasury secretary and reported by Politico.
What is the global minimum income?
What happens when there is no global minimum income?
A universal basic income could work to grow the economy by putting money in the hands of people who will spend it. Economists estimate that a universal basic income of 12,000 dollars a year could grow the United States economy, for example, by more than 2 trillion dollars a year.
According to The Balance, Universal basic income is a program where every citizen receives a flat monthly payment, regardless of whether they’re working and earning an income or not. Different programs outline who exactly receives the income — some state that all citizens would get it regardless of what they make, while other programs may only give it to those who fall below the poverty line.
In 1967, Martin Luther King Jr. said a guaranteed income would abolish poverty.2 That means reducing income inequality as well.
Economist Milton Friedman proposed a negative income tax. The poor would receive a tax credit if their income fell below a minimum level. It would be equivalent to the tax payment for the families earning above the minimum level.3
In 2018, Facebook co-founder Chris Hughes outlined his plan in his book “Fair Shot.”4 He argued that U.S. workers, students, and caregivers making $50,000 or less a year should receive a guaranteed income of $500 a month.
If there is no global minimum income, what would happen to the world? What would be the consequences of not having a global minimum income?
Basic income is not a single idea but a family of closely related ideas, which go by an assortment of names: universal basic income, unconditional basic income, social dividend, guaranteed annual income, citizen’s income, negative income tax, etc. But the core motivation — to address social ills by just giving people money — has a long history.
Thomas Paine, the intellectual founding father and pamphleteer, outlined a plan in his 1797 essay “Agrarian Justice” to create a national fund making payments of 15 pounds sterling to each adult over 21 years old.
In the 1960s, basic income became intertwined with the civil rights movement and the War on Poverty. Martin Luther King, Jr. was a fan. In his 1967 book “Where Do We Go From Here: Chaos or Community?” King wrote: “I am now convinced that the simplest approach will prove to be the most effective — the solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.”
Even right-wingers grew to embrace the idea. Libertarian economist Milton Friedman began to advocate for a negative income tax, whereby those earning below a certain threshold would get money from the government instead of paying taxes. At the end of the ’60s, President Richard Nixon’s plan for a partial basic income passed the House of Representatives before stalling in the Senate. No longer a proposal of bleeding-heart lefties, basic income was endorsed by a slew of notable economists (including several who went on to nab Nobel Prizes).
The global minimum tax is a tax that is paid by every person, no matter where they live in the world. The goal of this tax is to make sure that no one has an unfair advantage over the other and it also supports poorer countries by giving them a bigger piece of the pie.