Saving the Banks with a Basic Incrome

The banking and credit “crisis” is generating lots of news, including talk about nationalization. Here’s a front page article from the New York Times, a Times piece by columnist Paul Krugman, a CNBC story putting the possible cost at $4 trillion, and something from AlterNet by Joshua Holland that says we should just go ahead and nationalize them.

Let’s enact a basic income first. That will solve most of the problems.

Think about it. Give every adult citizen some amount, say $1,000 a month. People will spend, thereby promoting economic activity and creating jobs. (Yes, some of that spending will be for stuff made in China, but that’s a topic for another day.) People will also pay off mortgages, auto loans, credit card debt, and save some of the money, thereby giving banks more money to lend.

The conventional debates and commentary about the banks focuses almost entirely on the banks, the economy, “liquidity”, assuming that taking care of those issues will indirectly help ordinary people. The basic income approach says we should take care of ordinary people first, directly.

Basic income is the most rapid, reliable, and responsible way to end the recession.

For more evidence about the power of the basic income approach, think about this: If you had money to save or invest right now, where would you put it? There’s really no problem putting it in the big banks, of course, because deposits are federally insured and you’ll get your money back even if the bank fails. But a lot of us are angry at Citigroup, Bank of America, and other big banks, and we might prefer to put our money in credit unions and smaller banks, local banks – and those are the banks that lend money out in their communities.

That’s how, starting with a basic income, we can restore the integrity of the financial sector. We do it from the bottom up. That’ll be a lot more effective than the top-down approaches of either bailing out the big banks or nationalizing them.

Steven Shafarman

Tags: bank crisis, economic growth

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This entry was posted on Friday, January 30th, 2009 at 7:14 am and is filed under economic growth.
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