WHAT do governments do when finances get out of hand?
How do they solve issues quickly so that they are re-elected?
Survival is the number one game in politics, so when your interest bill on borrowings gets to where it is in Australia today, at $5 million per day, clearly something needs to be done to get back on a positive economic cycle.
With predictions that artificial intelligence (AI) is going to create massive unemployment for basic jobs that now employ many people, the question for government is: ‘What do they do about that in a meaningful way?’.
“Universal Basic Income” or UBI is being suggested as one remedy to solve this issue.
UBI is a regular, obligation-free payment to everyone, delivered by the government.
These wonderful whiz-bang ideas for solving difficult issues are now being widely suggested in a number of economies around the world that are struggling for ideas on what to do should unemployment reign supreme when AI arrives in full.
It is said that governments are wonderful distributors of wealth but in reality, they have few ideas as to how to create sufficient wealth to provide these handouts.
Excessive taxation on the few that remain in sustainable jobs provides their easy answer, plus the fact that elected terms for government are short, so they kick the can down the hill to the next election and leave solving the issue to the next administration.
UBI is being suggested as working in a similar fashion to the Covid welfare schemes such as JobSeeker, rather than being referred to as “the dole”.
Some 2.2 million people were supported under that arrangement which required governments to heavily borrow, print or create debt so that these funds could be accessed.
That debt alone reached $88.9 billion and the calculation for a UBI payment is some $240 billion per year.
Now some years later, governments are still struggling to repay those Covid borrowings, hence Australia has a daily interest bill of eye-watering level plus deficit budgets predicted for the next ten years with still no intent to eliminate or repay those borrowings.
It’s an uncomfortable reality to be considered.
By John BLACKBOURN
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