“We need to import cheap labour?”
“But small business can no longer afford these ‘minimum’ wage levels.”
OK, let’s investigate.
We tax incomes, goods and services, and these taxes are passed on in prices. Some people consider we need even higher taxes in order to be able to fund increasingly essential government expenditure, but as we’re finding during the pandemic, the other side of public expenditure is that it generates jobs within the private sector, thereby paying for itself.
So, we don’t need higher levels of taxation, but business does need to support a universal income.
Well, if we were to take a peep at Table 61 in ABS Catalogue 5204, we’d see that our total commercial and industrial land values comprises 9% of all Australian land values. Looking after the other residential 91% is actually in the interest of businesses, because people will have more to spend.
And here’s the clincher. If we had a universal income, business wage costs would fall because they would only have to pay some amount additional to the universal income in order to retain or attract employees!
“Wow! OK, but a universal wage would be very inflationary!”
Not so! Not if you understand that inflation is not a function of ‘excess money’ nor of ‘excess demand’, because supply should rise to meet the demand, but of the deadweight losses from taxing labour and capital passed off in prices: and of land prices – even though land has no cost of production!
So, if governments don’t need to tax in order to be able to fund productive spending, and if taxes and land prices are the generators of inflation, we should be abolishing taxes and taxing land prices instead. What the classical economists called “ground rent”, or a ‘tax’ on land prices, can’t be passed on in prices as with taxes on labour and capital.
“OK. Didn’t the Henry Tax Review suggest something like that? But it didn’t recommend a universal income?”
That’s right, but it could have, because there’s plenty available, and it’s currently being expropriated by rent-grabbers. Take a look at this chart, and you’ll see the case for a universal income is a win/win for people and for businesses.
“Amazing! I clicked on the image and saved it, so I could study it in greater detail and at greater length, and you’ve convinced me. We need a universal income!”