Month: March 2014
The economy in any given location, can be likened to the dynamics of water. If the water in a river flows, then the river is healthy, life thrives in its waters and supports the surrounding terrestrial ecosystems.
Water evaporates from the Earth’s surface, transforms into clouds, travels with the wind, and lands in a new area where it can support life.
When water stagnates, it can become stale. Bacteria and disease start brooding and life stops thriving. Water, and more specifically flowing water – is an essential element and resource in sustaining life.
In our society, we have made the primary element that supports life: ‘money’. If you have money, you can eat, you can drink, you can live in a nice house, you can educate yourself, you can start new ventures, you can support a family, you can participate in leisure time. Money is used, and money is spent – and each expense in turn becomes a flow of income for someone else in society.
Money like water – can be stored for the future. Water-grabs in the form of excessive damming can threaten the vitality of an entire ecosystem: as water is held back, not enough water flows and the area that was once supported by its flow is now faced with a condition of lack, resulting in the degradation of the environment. Dams, when properly regulated and monitored, can be a beneficial factor in the environment. In the same way, we know that saving money can be beneficial to get us through a future ‘rainy day’. However, when we hog money, like water, we create averse conditions within the economic environment (=ecosystem) around us.
The Marginal Propensity to Consume, Save and the Multiplier Effect
Within the realm of economics, you may sometimes hear of the term ‘multiplier effect’ and ‘marginal propensity to consume’ or ‘marginal propensity to save’. Although these terms sound daunting, their meaning is actually very simple.
All these above-mentioned terms, relate to changes in the economy when an influx of income (and resulting spending) occurs.
Whenever we have money/an income, we will tend to save some of it and spend the rest. The amount we spend in contrast to how much we save for each unit of additional income, is our ‘marginal propensity to consume’ (MPC). If our MPC is 0.8, then this means that for every additional increase of income, we will spend 80% of it. In turn, the ratio of how much we save over how much we spend for each additional unit of income, is our ‘marginal propensity to save’ (MPS). If our MPC was 0.8, then our MPS is 0.2, which means we will save 20% of any additional income.
When you have little money, your propensity to save will be very low as money will primarily be spent on everyday needs. As your income goes up, your propensity to save will go up as you feel secure enough to ‘put something away’ and still be able to tend to your everyday needs. Once you’re well off, you will be more likely to save a higher portion of additional increments of income, leading to a lower marginal propensity to consume.
The multiplier effect, refers to an effect in the economy where an increase in spending will bring about a ripple effect which results in a greater amount of value as an outcome than the initial amount spent. In a way, one can look at it as ‘returns on an investment’. Here, we can go back to the example of the river, where additional flowing water in a river is not just ‘additional water’. It is also the drinking water for animals downstream whose presence is absolutely vital to the local biome [See ‘How Wolves Change Rivers’ to see how a change in a single variable can have a huge impact]. The same way, money spent in the economy is not just ‘some money spent’, but also the income of another human being who in turn can utilize this income to employ the services of someone else and again contribute to someone’s livelihood.
We can see from the following excerpt, that these propensities matter when it comes down to economic health and vitality:
“Wall Street banks handed out $26.7 billion in bonuses to their 165,200 employees last year. That amount would be enough to more than double the pay for all 1,085,000 Americans who work full-time at the current federal minimum wage of $7.25 per hour.
Purveyors of luxury goods always welcome the Wall Street bonus season, but a raise in the minimum wage would give America’s economy a much greater boost. To meet basic needs, low-wage workers tend to spend nearly every dollar they make. The wealthy can afford to squirrel away more of their earnings.
All those dollars low-wage workers spend create an economic ripple effect. Every extra dollar going into the pockets of low-wage workers, standard economic multiplier models tell us, adds about $1.21 to the national economy. Every extra dollar going into the pockets of a high-income American, by contrast, only adds about 39 cents to the GDP.”
This article nicely illustrates the power of money movement, and where this ‘current’ is the strongest.
By bringing Living Income Guaranteed into the economic picture, we can bring in a gush of fresh new water and transform our stagnant pool into a thriving flowing river. Besides fulfilling our moral duty towards our fellow men through securing each one’s Basic Human Rights, we also put into motion a new economic drive from which will sprout new opportunities of innovation and entrepreneurship.
It becomes possible to have a nice life and to enjoy the latest comfort and tech that science and creativity have to offer, whilst simultaneously making sure that everyone’s livelihood is guaranteed. The principle behind an economy like this is really a simple one: Give, as you would like to Receive.
By changing the money composition in the economy by a fraction, we can bring about tremendous changes. These changes in turn, will bring about their own effects. Even if one might not agree with a Living Income Guaranteed for political reasons, we cannot ignore the ample economic benefits that are coupled with its implementation; to name but just a few: economic growth and expansion, higher living standards, better skilled labor force, lower debt levels and better employment conditions. These in turn translate into social, cultural and psychological benefits such as lower crime rate, lower levels of stress, increased personal freedom, social cohesion, enhanced personal growth and development and overall happiness.
Let’s unleash the wave of economic, social, cultural and personal potential with Living Income Guaranteed.
As a new mother and while I was still in my pregnancy-phase, I spent a lot of time reading about all there is to know about babies. One of these topics is child safety.
By law one is not allowed to leave the hospital by car after you have given birth, unless you have the correct rear-facing baby car seat installed. I read all about the ‘why’s’ and ‘how’s’ and found myself being quite impressed with how they had taken physical science into consideration to make sure one would be traveling safely with one’s baby – because of course, we don’t want any babies to die!
But just as quickly as I found myself impressed with this legislation, the hypocrisy of such a legislation within having ‘child safety’ at its heart; hit me just as fast. At first glance, it gives the ruling structures of the day a caring glow, one that says “I care about your child’s safety and future”. Yet, this legislation is only relevant to the segment of the population that actually owns a car. In South Africa, a substantial segment of the population does not own a car, not because they’re environmentalists, but because they do not have the financial means to acquire one.
These women don’t leave the hospital by car, thoroughly checked by the nurse for a car seat. No, these women carry their babies for miles into rural areas or townships where child safety and well-being are problematic. Are these women asked: “Do you have the means necessary to provide adequate care to your baby?” What law, what legislation is looking after their well-being?
What significance does car seat legislation bear when basic considerations in society are missing towards the well-being and safety of children; and the ability of parents to provide this for them? This ability does not come forward from a mother’s love to her child, but from the mother’s financial capacity. This financial capacity is a necessity to enable the obtainment of those resources and services necessary to ensure a dignified life and upbringing for the child.
The importance of proper childcare is not a trivial matter – as the first years of a child’s life determine to the greatest extent that child’s future physical and mental well-being. These years cannot just receive a ‘do-over’ later and are difficult to remediate.
“The first five years are the most important in a child’s life. A number of critical physical, psychological, cognitive and emotional developmental milestones are rapidly achieved during this period. Indeed the first 1000 days- from pregnancy through a child’s second year of life have been identified as crucial. “Whether a child has experienced chronic nutritional deficiencies and frequent bouts of illness, early in life is best indicated by the infant’s growth, in length and the child’s growth in height. Day-to-day nutritional deficiencies over a period of time lead to diminished, or stunted growth. Once children are stunted, it is difficult for them to catch up in height later on …”*
It is apparent that to have the child’s best interest at heart, is to have proper support available from the beginning. How did car seat legislation come into being? It was noticed that a lot of children were dying in car accidents, which could have been prevented had they been seated differently. Still now, these legislations are updated from time to time according to the flow of information coming in regarding child mortality in car accidents and how they were seated.
So why have we not, after all this time, after witnessing over and over that countless people and children are living in less-than-adequate living conditions and the mortality rates connected to this – adjusted our legislation in such a way that these outcomes are minimized? Isn’t that the most logical step?
Are we not bound to address this issue the same way as we addressed the child safety during transport?
These deaths are preventable and as such it should be our duty to ensure that they are prevented. We get outraged when we read stories about children dying in hospitals, because not all measures were taken to ensure the child’s well-being – negligence it’s called.
We should be outraged about this as well, because it is large-scale negligence.
Providing a Living Income Guaranteed is a logical move forward to address child mortality stemming from any form of lack which could have been prevented if the necessary means had been present in a household.
This is the most pro-active approach within which we as a society can promote child safety and well-being.
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To read the Living Income Guaranteed proposal:
The Universal Declaration of Human Rights and Living Income Guaranteed – How does it all come together?
Guestpost by Viktor Persson
The Living Income Guaranteed is based on human rights that have been drafted and agreed upon by members of the United Nations. Hence, it is not only a political proposal but also a legal proposal. It represents the means to fulfill the judicial obligations we have taken upon ourselves to fulfill as responsible guardians of this world and as the people of the United Nations.
The Universal Declaration of Human Rights (UDHR) is by many considered to be customary international law. This implies that the declaration on a general basis is accepted to be part of international law regardless of country or culture. Furthermore, the purpose of the declaration is to define the meaning of the words fundamental freedoms and human rights that can be found in the United Nations Charter article 1.3. The United Nations Charter is for the member states a legally binding document.
Article 1 UDHR states that all human beings are born free and equal in dignity and rights. This implies that all have an equal right to a dignified life which evidently is not possible without equal economic support and assistance. Herein the Living Income Guaranteed provides a practical method wherein each individual can engage with the resources they require to sustain a dignified life through the use of one’s Living Income. Herein, the Living Income Guaranteed safeguards this human right indirectly by assigning a Living Income to those who are without the means to provide for themselves, who can then use their Living Income tailored to their specific needs.
Article 3 UDHR states that all human beings have the right to life, liberty and security of person. What must be understood is that this cannot be realized unless there is an economic support structure that ensures all receive that which makes life possible. Life cannot exist without food, water, and housing and such resources are thus a right implicit within the right to life. The Living Income Guaranteed will create the necessary environment to allow the right of life to be realized and sustained.
Article 23 UDHR states that all human beings have the right to work, to free choice of employment, to just and favorable conditions of work and protection against unemployment. Moreover, it states that everyone has the right to equal pay for equal work and that everyone who works has the right to just and favorable remuneration ensuring for himself and his family an existence worthy of human dignity.
What becomes apparent in looking at the conditions of today’s world is that we have failed miserably in this promise. All too many people presently feel the hardship of unemployment without access to sufficient support which would allow them to change their situation. Additionally, we do not have the ability to freely choose our employment as our path has already been determined by the setting within which we are born into – where we are either born into wealth or not. This in turn impacts on all the decisions we make in life as well as what employment we decide to take on (willingly or unwillingly).
We have in today’s world utterly failed to deliver equal pay for equal work that is proven by the very existence of the corporative tactic of outsourcing production to third world countries. It is clear that in order to fulfill our obligations towards humanity as a whole we require a social economic structure that makes sure all have access to their basic needs wherein employment and right to have a living wage is one of them. The Living Income Guaranteed will yet again revive the economy and produce countless opportunities for employment. In addition, the Living Income Guaranteed will make sure that the salary is not allowed to be less than a minimum amount making sure that all can create a life for themselves that is dignified and enjoyable.
Article 25 UDHR states that everyone has the right to a standard of living adequate for the health and wellbeing of himself and of his family, including food, clothing, housing and medical care and necessary social services. What is clear is that without financial support, without a clear economic foundation, we cannot create an environment that provides and fosters a dignified standard of living.
The Living Income Guaranteed will guarantee that each human being can create for himself or herself a life that is dignified.
Article 26 UDHR states that everyone has the right to education. In our contemporary world this is not a reality. Even though many countries have a free and public educational system, there are severe discrepancies in terms of the effectiveness of the education given by schools that charge money in comparison to the public schools that do not. Thus those born in unfavorable conditions are disadvantaged and deprived of an effective education compared to their wealthy counterparts.
To create a truly supportive and effective education for all, we yet again require a financially stable structure. The Living Income Guaranteed will make sure that public education does not dumb children down, make them completely dysfunctional and unable to create something extraordinary out of their lives. Herein must be understood that a great education is not something that can be supplied only through a schooling system but that the parent is a primary teacher during the first years of the child’s life. Though, without a sustainable income the parent is not able to attend to his or hers responsibilities and thus the education of the child is forsaken in the name of survival. The Living Income Guaranteed will ensure that parents have the necessary time to educate and support their child to become the best that they can be.
We can conclude that we as humanity through the words written as a promise to coming generations in the Universal Declaration of Human Rights have not only an opportunity but also an obligation to realize a world wherein human beings can live a dignified life. Thus far we have failed to live up to our own words as we have not in a practical manner structured our economic system to support the implementation and actualization of human rights. The Living Income Guaranteed stands as the practical tool through which we will be able to make sure that human rights and a dignified life does not just remain a dream on paper but becomes a daily living experience for all human beings.