How will this affect economic growth? What if there’s a recession? What about unemployment?
Basic income will boost economic growth, perhaps significantly, because everyone will have extra money to spend. Our demands will drive businesses to provide goods and services, and to create jobs — demand-driven growth, in contrast with current supply-side policies.
We’ll be able to prevent recessions, or end them rapidly and reliably, by increasing the basic income amount. Standard economic theory asserts that the correct policy response is to increase the money supply. Today, there are only two possibilities. The federal government can cut taxes and increase sending, fiscal policy; and the Federal Reserve can cut interest rates and prod banks to lend more actively, monetary policy. With both, the outcomes are indirect, delayed, and unreliable. Basic income is a third option, and the effects will be direct, immediate, and certain.
Unemployment will fall. When people use basic income to go back to school, start businesses, or be full-time parents, they won’t be counted as unemployed because the official rate only counts people who are actively looking for jobs. And those jobs will be available for other folks. Most important: everyone who’s unemployed will have a secure income, money for food, clothes, and shelter, the means to live with dignity and participate in society.
Economic conditions will be more stable, prices more predictable, business and consumer confidence higher.