The article, here, opens by describing an employer calling a meeting of the 50 workers at his factory:

But rather than resorting to layoffs, Mr. Koppe asked half his employees to come in every other week. The government would make up roughly two-thirds of their lost wages out of a fund filled in good times through payroll deductions and company contributions.

…

The Europeans say they have no need for further stimulus right now because their social safety nets, derided in good times by free market disciples as sclerotic impediments to growth, are automatically providing the spending programs that the United States Congress has to legislate.

Europe’s extensive job protections and unemployment benefits are “bad in the upswing, because firms don’t dare to hire people, because then they are glued to them,” said Hans-Werner Sinn, president of the Ifo Institute for Economic Research in Munich. “In the downswing, it’s good if the people are glued to the companies. They keep their jobs. They keep their income. They keep consuming.”

European workers are “glued” to their companies. Those companies are constrained and dependent on their governments. That’s what makes European society and economies more stable than ours.

Citizen Dividends, in contrast, will provide greater freedom to workers and companies. Workers will have an absolute financial safety net regardless of economic conditions. Companies will be more able to innovate; they won’t be “glued” to workers or government.

European approaches are fairly static. The basic income alternative will be much more dynamic.

European approaches are bureaucratic and paternalistic. The basic income alternative is more minimalist and libertarian.

It’s during downturns that European approaches are especially attractive, and that’s illustrated in two more paragraphs from the Times article:

Indeed, to travel between the United States and Germany is to find two countries experiencing the economic slowdown completely differently. The severity of the downturn does not appear to have sunk in yet in for Germans. There was no real estate bubble here, and few people have a substantial portion of their savings or retirement accounts invested in the stock market. The unemployment rate has risen more than a percentage point, to 8.5 percent in February from 7.1 percent last November. But, significantly, the latest figure is still lower than it was just a year ago.

“In contrast to America, our social systems are not on the decline right now,” Mrs. Merkel said Sunday night in a widely watched interview on a television talk show. “Pensions are not cut, unemployment insurance is not reduced. On the contrary, we can register stable and, in some sectors, also rising expenditures, and this makes me hope that our social market economy will enable us to cope with this complicated situation.”

Basic income will protect us and liberate us at the same time, in the downturns and the upswings.

Steven Shafarman

Give us the money. We’ll stimulate economic activity by our spending. We’ll make mortgage payments, ending the foreclosure crisis. We’ll buy houses and strengthen housing markets. We’ll also save money, and thus help recapitalize banks. That’s the rapid, reliable, responsible way to end the recession — give the money to us.

A question people commonly ask when they first hear about Citizen Dividends is: How will we pay for it? Where will the money come from?

One possible answer — for the short-term, in any case — is on the front page of today’s Washington Post:

The central bank, effectively, will print more money to pay for the purchases.

Here’s the complete Post story.

In the longer term, we’ll pay for it by cutting government programs that become superfluous, starting with the bailouts and handouts to big corporations, including AIG and the banks. There will no longer be any rationale for corporate welfare to create jobs, because everyone will have an income for food and shelter while they find or create their own jobs. We’ll also be able to cut most individual welfare programs, federal, state, and local.

Indeed, the long-term is when we’ll really be grateful to have Citizen Dividends. Sooner or later our federal government is going to cut spending and start balancing its budget. That’ll be a lot easier politically when we’re united by Citizen Dividends. And it’ll be a lot more just, humane, and sustainable.

Steven Shafarman

Aid to small businesses is a step, potentially, though only a baby step, in the direction of a guaranteed basic income for all Americans.

A New York Times story about President Obama’s announcement is here and a 15-minute video is here.

A story in the Washington Post, here, includes the following paragraph:

“Small businesses are the heart of the American economy,” Obama said in announcing the measures. “They’re responsible for half of all private-sector jobs, and they created roughly 70 percent of all new jobs in the past decade.

That’s well known and documented. Our government should be helping small businesses, not big ones. Obama’s announcement made that point, though only indirectly, when he began his remarks by criticizing AIG and the harms and waste that have been caused recently by big companies and government support for big companies.

When each of us has a guaranteed basic income, lots of us will start small businesses. Starting a business, after all, being self-employed, is for many of us a core part of the American dream. If the Obama administration really wants to create jobs and promote economic growth, it will make it a lot easier for every would-be entrepreneur to start a small business. Basic income will do that.

The AIG bailout is a clear indicator of the underlying problem. Last September, when the financial system was freezing up, our government set out to save AIG, Citibank, Bank of America, and other big finance corporations. That reflected a knee-jerk assumption that big businesses are good, deserving respect and support. Big is good, many people seem to believe, and bigger much therefore be better. That’s wrong.

Suppose our government had not been afflicted by those assumptions, and not further biased by campaign contributions from the finance industry. (For evidence of the biases and assumptions, see Henry Paulson and Robert Rubin and so many other Wall Street officials in our government.) When the credit markets froze, instead of bailing out AIG, Citibank, Bank of America, et. al., our government could have loaned funds to community banks and credit unions arounds the country. Restore the credit and finance system from the ground up, rather than trying to do so from the top down.

Obama began his remarks by praising community banks. It would be great if he put those ideas more thoroughly into practice. Truly great if he goes even further and endorses the guaranteed basic income. One step at a time.

Steven Shafarman

A secure income is necessary for freedom. As Franklin Roosevelt said, “Necessitous men are not free men.” (In Roosevelt’s speech, that statement was in quotes, so I presume he’s quoting someone else, though I don’t know who. Any leads?)

Stronger democracy, too. With a guaranteed income independent of our jobs, wages, and such, every American will be able to participate more fully in the political and economic life of our nation. That’s what democracy is supposed to be.

If you’re interested in some economic history and theory, some context for our current situation, here’s an excellent 38 minute lecture by Richard Wolff, a professor of economics at UMass Amherst. Though he doesn’t talk about Citizen Dividends, he makes an excellent argument for it.

Steven Shafarman

Wielding his favorite weapon, colorful metaphors, he compares our financial system to the heart, money is blood, industries are muscles, and the whole system is congested and failing.

That’s the introduction, and it leads to griping about President Obama and the Republicans “playing politics as usual.” Obama’s too timid. Republicans are debating whether or not they want Obama to fail.

Friedman wants government to let some big companies fail, and he mentions AIG, Citigroup, and General Motors. He also thinks we need a much larger stimulus than has been proposed so far, on the order of several trillion dollars. To get there from here he proposes a Camp David summit: Obama, leading bankers and industrialists, leaders in the Democratic and Republican parties. They’ll go to the mountaintop and not come down till they have some answers.

It’s Friedman who’s being timid, his thinking congested by conventional notions. The leading bankers, industrialists, and politicians who got us into the current crisis are not able to see the way out, no matter how much time they spend talking to one another at Camp David, Davos, or through the New York Times. We need real visionary thinking from people like Thomas Jefferson, Thomas Paine, Martin Luther King Jr., Henry George, Peter Drucker, and Buckminster Fuller, each of whom endorsed some type of guaranteed income.

Stop worrying about the economy and the financial crisis. Start focusing more concretely on ordinary Americans. Instead of spending trillions of dollars to bail out the financial system, give the money equally to every adult citizen. The same amount for everyone.

If the amount is $1,000 a month for each adult, it would be $24,000 a year for a couple. That’s more than the official poverty level for a family of four, and would lift people out of poverty without the shame, stigma, stinginess, coercion, and complications that characterize current antipoverty programs. Plus, the main beneficiaries will be working and middle class Americans.

Each of us will have more money to spend. We’ll spend, stimulating economic activity and creating jobs. Each of us will have more money to save and invest. We’ll save, and our savings will help recapitalize banks. People will have money to make mortgage payments, reducing home foreclosures.

Each of us will have some secure income even if we lose our jobs. Everyone who’s unemployed will have some secure income, and therefore the ability to manage while they look for work or create jobs for themselves, perhaps starting their own businesses.

Ordinary Americans will have the money we need to solve most of our personal financial problems. Our spending, saving, investing, job-seeking, and job-creating activities will solve our national economic problems.

What do you think, Tom? How about discussing this idea in an upcoming column?

Steven Shafarman