Basic Income, Shareholder Value, Health Care, Taxes

I was reading up on Michael Tubbs, the former Stockton Mayor who started a basic income pilot. I was curious why he didn’t win reelection. Here was the story I found.

He has started a larger group of Mayors championing a basic income. That is a great legacy of his career so far.  

In other basic income pilot news, Sam Altman’s Y-combinator is still working on their basic income pilots. And Sam Altman has written a very thought provoking piece on basic income. He proposes this income be funded by the following – “We could do something called the American Equity Fund. The American Equity Fund would be capitalized by taxing companies above a certain valuation 2.5% of their market value each year, payable in shares transferred to the fund, and by taxing 2.5% of the value of all privately-held land, payable in dollars.” 

This year Apple is spending $90 billion in share buybacks, which is about 4% worth of their company value when valued at $2.17 trillion dollars.

As far as how profitable other companies are, the answer is “very profitable”. 

“We already have American tax payers supporting companies, first banks and GM  in 2008 and now airlines in 2020 when they might go bankrupt, or when they do. But the American People aren’t getting paid back for their support. 

So I think it’s only fair for taxpayers to get a substantial piece of the upside in return for bailing out these companies. And in the process, bailing out their shareholders, who would be left with nothing if the companies failed.

Yes, this is the same point I made last week about a taxpayer bailout of Boeing.

But it’s a point that we should keep in mind every time we see companies line up at the bailout trough. If many of these companies hadn’t spent lots of money to buy back their own stock to prop up its price, they wouldn’t need anywhere near as much money as they need now.

That’s especially true of these four airlines. Almost seven out of every eight dollars the four airlines sent Wall Street from 2015 through 2019–$39.1 billion out of $44.7 billion — went for share buybacks. The rest went for dividends, according to my calculations based on the companies’ Securities & Exchange Commission filings.” – Washington Post

We need to move to a system that focus on humans, not the economy and profits. 

This would be something similar to human centered capitalism, as promoted by Andrew Yang. 

We already have some institutions that their sole driver is not profit. Credit unions supposedly have their owners, who are also their users, needs as a priority, instead of just profit. 

Vanguard is a company that both serves it’s owners and it’s users.

If we increased the base of each companies shareholders to include everyone, there would be more incentive to “help everyone” instead of “maximize profits”.

While researching this I stumbled upon this series of articles about Stakeholder value. It is quite interesting. Here are some top comments, but I suggest reading it for yourself. 

“The most successful firms today are those that pursue what Peter Drucker long ago saw to be “true North” for a corporation: “there is only one valid purpose of a corporation: to create a customer”. Generating fresh value for customers is the foundation the basis for generating benefits for all the stakeholders.” – Forbes

Finally, another thing that would help small business and entrepreneurs everywhere, as well as helping people stay health is Universal health care in the USA.

“You know what would really help me as a business owner? Universal health care. The money we pay to subsidize employee health care is astronomical and grows every year. I’ll happily pay higher taxes to cut out health insurance companies that make $40 billion a year in profit.” – Dan Price CEO

Admittedly this is a fairly loosely held together narrative of ideas I’ve been thinking about lately, but I hope by sharing them it gets other people thinking about them too.

Working From Home, UBI, $600 Unemployment

I have seen complaints from Republicans about how the $600/week unemployment benefit has worked out. There are many complaints that it is too much and is disincentivizing people to go back to work. I agree, to some extent. If you give people incentives to not go back to work, they obviously won’t go back! But we should consider if there is a better alternative. $2,400 month (4 weeks) for people is a lot, on top of any other planned unemployment benefits. As I recall Andrew Yang was proposing $1,000 month for people as a basic income. There was huge push back on “How would you pay for that?” despite Yang having a very clear way to pay for it. (see picture below). 

$2,400/month is 2.4x the $1,000 proposed. Why was it so much? My understanding is it was set at $600/week to get “the average” worker too 100% of their pre-layoff income. I am unclear why that was a goal. I think there could be a little personal liability to try to cover a little of your lost earnings when there is a mess like we are in. But what I really want to point out is the PPP cost $669 billion of which most went to workers (per the law) and a bit was available to cover utilities etc. 

Why didn’t we just let people be laid off and collect unemployment, give businesses a much smaller lifeline (25% of $669 billion to cover utilities etc) and let the rest be used for a UBI to some extent. I don’t even care if I was personally left out of the UBI. Give it some arbitrary cut off of $50k or less a year 2019 income. That would have been $500 billion dollars for 4 months. 

$500 billion could have provided a UBI of $1,000/month for 125 million people for 4 months. In 2018 there were only 150 million people working full time so that is nearly the full amount of people! Why did we have to use the PPP, serve less people and make people continue to be tied to their work? We are so obsessed with tying people to a job, it is insane. 

““You’re turning the business into a pass-through for the federal government,” said Joe Walsh, who owns Clean Green Maine, a cleaning service in Portland, Maine with 35 employees. “You’re doing very little to actually help the business.” – Chicago Tribute

It is almost as crazy as the feeling for employers that they “Need to get employees back to the office asap”. Many people have been working from home for 4 months.  If people have been successfully working from home for 4 months, what is the rush to get them “back to the office”? I understand some people need to be in the office. Personally my job has some interaction with manufacturing so I am in the office every day now. But many of my colleagues are successfully working from home. I don’t see a reason to “rush them back”. It seems to me the only reason to do that is because of some deeply ingrained mistrust of employees from the very upper echelons of business that if employees are not being watched like hawks they will be screwing off. Some companies are getting it, like Square, which seems to be transitioning to fully work from home permanently

Another thing I don’t get is how Republicans, “the media” and many essential workers are angry at people who are unemployed and receiving $600/week. On a very surface level it makes sense, you see someone “getting paid to do nothing” while you are a hard working essential person. Think “I am paying for that lazy loser.” Etc. But realistically, most of the laid off people would be happy to have continued to keep working, or at least being able to provide for their families, if possible. There is an odd set of circumstances that some people are laid off adn some aren’t. But the “essential vs unemployed” fight is a fight between THE SAME GROUP OF PEOPLE! Or at least they were part of the same group of people until right before some of them lost their jobs. It is crazy to me that the “essential” people so quickly turned their anger towards the people who are getting money from the government program that it is likely they could have received money from too except for a specific set of circumstances. That person receiving $600 has no impact on your life. You are not receiving less because of that, except for the fact that you all are not demanding a UBI! 

I will share a meme (below) to try to get the point across. Not that I hold anything personally against Jeff Bezos (although many people do). But it’s trying to make a point. 

So, anyone who is working a job currently, please stop being mad at the unemployed people who got $600/week for a few months. Start being mad at the government for a shitty response. Then start writing your senators and House of Representatives and asking why a Basic Income is still not being considered, for ALL!