Has the Era Arrived Where "Those Who Don't Work Can Still Eat" Is the Norm!?
From ACIDHOUSE, INC., this is Tetsuya Ashida.
To make your way through life in a chaotic world, you need to keep absorbing new knowledge and thinking, and reading is indispensable for that.
However, it is often hard to carve out time for reading, it is unproductive to waste money and time on a mediocre book, and with so many titles published, you often don't know which one to read.
So I'll be sharing reviews and summaries of books I recommend here on the blog.
I'd be glad if they serve as opportunities for "new insights" and "deeper thinking" in your life.
A new kind of income: the digital basic income
This time, I'm covering "Digital Basic Income Will Make Japan a Tax-Free Nation!" (by Hideto Tomabechi).
Dr. Tomabechi holds a huge number of titles and can't be summed up in a word, but he has top-class knowledge, especially in functional brain science.
He is also known for creating the ability-development program TPIE together with the late Lou Tice, and "How to Build a Comfort Zone" and "Words Determine Your Life" are genuine bibles that you should read over and over and put into practice.
In other words, Dr. Tomabechi is a top-class guru (teacher) who produces people who "live the life they want".
Dr. Tomabechi has long been nurturing ideas and proposals regarding "basic income," which no small number of voices in society are calling for, and this book reveals the whole picture.
The book in a nutshell
- As a way to rescue Japan's economy amid the COVID crisis, regular payment of benefits (basic income) is effective.
- Specifically, the Bank of Japan would issue a digital half-life currency whose value decreases little by little on a regular basis.
- The government would no longer need to collect taxes from the people, and the revival of Japan as an economic power would no longer be a dream.
What is basic income?
The COVID outbreak and the government's response
In 2020, the world was thrown into chaos by the pandemic of the novel coronavirus infection.
Variants keep emerging one after another, and there is currently no sign of its fury subsiding.
In response to this situation, the government issued "states of emergency" and "priority measures to prevent the spread," making requests such as business suspensions, especially for restaurants serving alcohol.
As a result, many companies and businesses have suffered economic damage.
Economic impacts fall first on the economically vulnerable. Unemployment among non-regular workers, temp workers, and part-time workers has increased, and many people have fallen into financial hardship.
Since these people's economic footing was unstable to begin with, many don't have enough savings, and unemployment translates immediately into hardship.
After the government declared its first state of emergency in April 2020, the total unemployment rate rose sharply, and although a recovery trend was seen in 2021, it has risen again.
Also, the number of suicides in Japan rose year over year for the first time in 11 years—the first increase since 2009, after the Lehman shock. Suicides among women in particular increased significantly. Considering the high proportion of women in non-regular employment, economic hardship due to the COVID crisis can be said to be the cause.
Amid this, the government provided companies with the "Employment Adjustment Subsidy," a subsidy for continuing to employ workers, and provided individuals with the "Special Fixed-Amount Benefit," a uniform payment of 100,000 yen per person.
However, judging by the subsequent worsening of the unemployment rate and the number of suicides, it is hard to say this government spending was sufficient.
For individuals in particular, policies that fundamentally help the people, such as "exemptions" or "tax cuts," were not implemented.
The government's thinking assumed that once the 100,000-yen "Special Fixed-Amount Benefit" was paid, many people would immediately use it for "consumption," so that 100,000 yen would have an effect greater than 100,000 yen (the multiplier effect).
However, for groups whose income had not decreased much, there was nothing to use the money on even when they received it, and many people put it into savings. When money goes into savings rather than consumption, it basically has no effect on the economy.
The problem was that paying 100,000 yen only once wasn't enough in the first place for people whose income had fallen.
What is basic income?
If 100,000 yen wasn't enough, how much would have been enough?
Whatever amount you set, if it is paid only once, it will eventually run out as long as the COVID crisis drags on.
In other words, the solution is "regular payment of benefits (basic income)".
Basic income is a system in which the government unconditionally pays a fixed amount (for example, 100,000 yen a month) to all citizens on a regular basis.
The biggest point is that everyone receives the same amount regularly, regardless of how much income they have or whether they are employed.
If every citizen could receive 100,000 yen a month, the number of people who take their own lives because of financial hardship would surely decrease significantly.
It is said that with the development of AI and the spread of robots, we are heading into an era in which not every adult necessarily needs to work.
A quarter of today's occupations will be automatable in the near future, and it is highly likely that people not working (having AI work for them) will become the norm.
It is precisely in such an era that basic income becomes indispensable.
Its introduction is already being considered in the EU, and Germany has started a social experiment paying 1,200 euros (about 150,000 yen) a month for three years.
Advantages of introducing basic income
It is fair to all citizens. To win the public's support, being "fair" is very important.
For example, "GoTo Travel" benefits only people who travel or who work in the travel and tourism industries.
"GoTo Eat" benefits only people who eat out or who are involved in the restaurant industry.
Basic income doesn't directly increase the movement of people, so compared with the "GoTo campaigns" and the like, the risk of spreading COVID infections is lower.
You no longer have to do jobs you hate to earn a minimum income
The problem of exploitative "black" companies never goes away because employees have no choice but to keep working at them to maintain their livelihoods.
If basic income were introduced and you could at least maintain a minimum standard of living for the time being even after quitting, there would be no reason to keep working at a black company.
In addition, a decrease in suicides due to harsh labor can also be expected.
It becomes easier to take on risky work such as starting a business
In Japan today, due to the state's extreme fiscal austerity, budgets for risky work, academia, and basic research have been cut drastically compared with the past or with other countries.
This is also one of the reasons Japan has fallen behind in developing COVID vaccines and effective drugs.
Introducing basic income would create an environment in which researchers at universities and elsewhere can more easily devote themselves to research.
Japan is also said to be "a society that doesn't allow failure."
With basic income, a minimum standard of living is guaranteed even if you fail, so bold challenges become possible, and your motivation to try again after failing isn't lost.
It is more effective than welfare and similar programs
The take-up rate of public assistance (welfare) is very low.
Many people feel ashamed to receive it, and according to surveys, only about 30% of those who need it actually receive it.
With basic income, everyone receives it, so there is no need to feel ashamed, and since it is paid automatically in the first place, there isn't even a choice of whether to receive it.
The meaning of work changes
With basic income, working to earn a living itself becomes outdated.
People will work not to earn income for living, but to do what they want to do, or to do something useful for society.
Funding basic income
No country has yet formally introduced basic income as a national system.
Assuming 100,000 yen is paid to every citizen each month, Japan's population is about 125 million, so a budget of 2.5 trillion yen a month would be needed.
Annually, a budget of 150 trillion yen would be needed.
Japan's national budget is about 100 trillion yen a year, so 1.5 times that amount would be spent on basic income.
What deserves attention here is the "quantitative easing of a different dimension" that has been carried out continuously under Bank of Japan Governor Haruhiko Kuroda since the second Abe administration.
Quantitative easing by a central bank (the Bank of Japan) is called "QE (Quantitative Easing)."
Specifically, QE means the central bank buying bonds such as government bonds held by banks and others on the market.
The money paid when the Bank of Japan buys government bonds is deposited into the accounts (current accounts at the Bank of Japan) of the banks and others that sold those bonds.
The main purpose of the Bank of Japan's QE is to increase the total of the balance of BOJ current accounts and the currency circulating in society (the monetary base).
In theory, increasing this allows financial institutions to lend larger amounts, so more money can be borrowed, the money circulating in society increases, and an economic recovery can be expected.
With that aim, the Kuroda-led Bank of Japan continues its truly "different-dimension" QE.
On the other hand, because of the prolonged recession, many companies don't want to go so far as to borrow money for capital investment and the like, so bank lending isn't increasing.
In fact, contrary to the government's and the Bank of Japan's expectations, Japan's GDP has hardly grown.
From April 2020 to April 2021, the Bank of Japan increased the monetary base by about 120 trillion yen through QE, but this money remains in BOJ current accounts, sleeping almost unused.
Money that just stays deposited naturally has zero impact on the Japanese economy.
If private companies won't use this money, the only option is for the government to use it.
The point is that "QE has no funding source." QE is currency issued by the Bank of Japan.
Because the Bank of Japan has the "right to issue currency," it can issue currency out of nothing.
However, the Bank of Japan doesn't issue currency as it pleases; it can only issue it in the form of QE.
In other words, the Bank of Japan's purchases of government bonds and the like (buying operations, QE) are, in effect, the issuance of currency.
Basic income can be realized by using QE as the funding source, directing all of it to basic income, and distributing it to the people.
Rather than letting the currency issued through QE sleep in "BOJ current accounts," distributing it directly to the people and having them use it for consumption will surely stimulate the economy.
By stimulating private consumption, Japan's GDP can be expected to grow significantly.
The birth of a digital half-life currency
Revitalizing consumption with a half-life currency
The concrete method of basic income is for the Bank of Japan to issue a digital "half-life currency," distribute it (by transfer) to all citizens, and have them use it for consumption.
A half-life currency is a currency whose value decreases little by little on a regular basis, so that, for example, after one year its value (or amount) is halved.
"Half-life" is the period it takes for a radioactive substance to decrease its quantity (radiation dose) by half.
Applying that image to currency, you decide on a half-life of, say, "one year," and halve the currency's value every year.
For example, if you received "10,000 yen,"
- the next day it would be "9,981 yen,"
- the day after that it would decrease to "9,962 yen,"
- one month later "9,428 yen,"
- six months later "7,091 yen,"
- and one year later "5,000 yen."
Because it is done with digital currency, there is no particular technical problem, and it could be done right now.
The aim is to make the holder think, "If I don't use it quickly, I'll lose out."
Since it is a currency whose value decreases little by little every day or every week, the sooner you use it, the more you gain.
Since the distributed currency's purpose is to be used for consumption, exchanging it for "wealth-storing" assets such as legal tender like yen and dollars, securities, or precious metals is prohibited.
Basically, it can be used for consumables that can't be stored as wealth, food, daily necessities, clothing, utility bills for lifelines (electricity, gas, water, etc.), rent for rental housing, and also services such as travel and theme parks.
In this way, private consumption increases, the Japanese economy is stimulated, deflation is overcome, and GDP grows.
Where does the reduced half-life currency go?
Technically, the "half-life currency" that decreases from citizens' wallets could simply be made to disappear.
However, rather than just making it disappear, it would be automatically sent to the central bank and then paid into the national treasury in the form of "payments to the national treasury."
Then, from the wallets, half of the amount distributed as basic income would be recovered by the central bank in one year, and three-quarters of the first year's amount in two years, and paid into the national treasury.
This movement of money being "recovered" is, in effect, similar to "paying taxes."
The people get money distributed to them by the government, but if they don't use it quickly, part of it will be taken as tax.
We pay "consumption tax" when we consume, but this is like a fine on consumption.
Recovering the "half-life currency" can be called the complete opposite idea of this "consumption tax."
Unlike the consumption tax you pay when you consume, it can be called a tax on "not consuming."
Reality has already proven that raising the consumption tax rate reduces the amount of "consumption" across the Japanese economy as a whole.
By contrast, introducing basic income using a "half-life currency" creates a "fine for not consuming," so consumption is revitalized whether people like it or not.
Moreover, since this "fine for not consuming" is effectively equivalent to a tax, the national treasury is also enriched.
Consumption tax doesn't go into the treasury unless consumers consume, but recovery of the "half-life currency" happens automatically, so it isn't affected by the people's economic activity or economic trends.
Japan becomes a tax-free nation
A tax-free nation realized through the half-life currency
With basic income using a digital half-life currency, its face value halves in one year.
The important point is that the reduced portion of money is automatically sent to the central bank.
The returned half-life currency would be made to stop halving once it returns to the central bank, and then paid to the government (the national treasury).
In other words, the returned half-life currency becomes no different from taxes, and can be incorporated as revenue in the general account budget.
After that, you just draw up a concrete budget as now and carry out government spending (expenditures) accordingly.
Japan's tax revenue in fiscal 2020 was a record high of 60.8 trillion yen.
Assuming the amount of basic income issued as digital half-life currency is 300 trillion yen, 150 trillion yen returns to the national treasury after one year.
In addition, from the second year onward, revenue from the first year's 150 trillion yen and revenue from newly issued digital half-life currency basic income are added together, making the amount even larger.
Japan's national budget, the general account budget for fiscal 2021, is 106.6 trillion yen.
A primary balance (basic fiscal balance) surplus would be achieved in no time.
In other words, the government would no longer need to collect any more taxes from the people.
The revival of Japan as an economic power
Many people think that "basic income destroys the will to work."
No matter how much money there is, if productive capacity falls, the economy itself becomes weak.
However, by combining basic income using a digital half-life currency with the realization of a tax-free nation, it is thought that the will to work is likely to increase.
That's because if a tax-free nation is realized, progressive taxation disappears too.
Then high-income earners, who until now thought "even if I earn a lot, most of it will be taken in taxes anyway," will find that "the more I earn, the more my take-home pay increases."
Naturally, the will to work will rise more than ever before.
With basic income using a digital half-life currency, and the realization of a tax-free nation through its introduction, you could say the revival of Japan as an economic power is no longer a dream.
Bonus
Dr. Tomabechi also mentions basic income on Tokyo MX TV's "Barairo Dandy" (Mondays), where he appears as a regular.
You might also want to watch this and think about the "new capitalist society" in the true sense.