A guaranteed annual income for every American
IN CONTEXT #44, Summer 1996
©1996 by Context Institute
The $30,000 Solution
Robert Schutz, PhD
Box 1525, Santa Barbara, CA 93102
1996, 160 pp., $12.95
Review by Robert Swann
founder of the E.F. Schumacher Society
140 Jug End Road
Great Barrington, MA 01230
The guaranteed annual income is an idea that has been with us for a long
time. In these days of downsizing and unemployment, the imminent bankruptcy
of Social Security and Medicare, homelessness and violence among urban youth,
the time for this idea to become our national policy has come.
Few people know that we almost enacted the GAI, called the Family Assistance
Plan, in 1969. President Nixon was its strong proponent, it was passed by
the House, and blocked by the lack of a few Senate votes. The annual family
guarantee was $1,600 in the plan at that time, while Presidential candidate
George McGovern called for a more adequate $6,500.
Nixon and the Congress were spurred by the Watts riots of 1965, which struck
fear to the hearts of business and government, but in praising the act,
the President spoke to the fears of the people who would no longer have
the welfare worker breathing down their backs to see if they were cheating
on the eligibility requirements.
The trouble with all plans for a guaranteed annual income so far floated
is that they are minimal, inadequate, and the income is given to no one
as a matter of right, only as charity. Charity destroys the dignity of the
receiver while it makes the giver selfrighteous.
In "The $30,000 Solution," a new book by Robert Schutz, all of
these problems are solved, as well as a good many others. Schutz divides
income into two classes, as does the Internal Revenue Service: earned and
unearned. He would leave earned income to be received, as now, differently
according to skill, ability, and application. But he finds no justification
for giving most unearned income to a few who do nothing to earn it. He would
distribute unearned income equally to us all, as a matter of right. The
consequences of this division and of this right are enormous. Most of our
economic problems would be solved immediately by this simple act.
Take the problem of unemployment, for example, which would be completely
eliminated on two fronts at once. Some people would find $30,000 per year
enough for their needs, and would withdraw from the labor market. Anyone
who was downsized or dismissed or lost a job to automation would be able
to retrain and get another job of choice in a laborshort economy (such as
we had in World War II.) Meanwhile, they would never feel the pain, and
would be classified as "at leisure," the same as the rich.
Take the problems of homelessness and beggary, as other examples. Both would
be eliminated, as people could afford the rent or put up the down payment
and pay the mortgage on a home, without starving themselves or their children.
They would get all of this as a right.
Inflation would no longer plague the economy, as the money collected from
those who now receive more than $30,000 per person in unearned income was
transferred by the Internal Revenue Service to those who now receive less.
This would involve transfers estimated at up to $3 billion per year, well
within the capability of the IRS to service, and allow Congress to give
a directive: no inflation or deflation. If the agency subtracted 35 cents
per month from everyone's unearned income, this would amount to one billion
fewer dollars spent chasing a limited supply of goods and services. Thirtyfive
dollars reduction out of $2,500 per month, would be a hundred billion dollars
fewer to spend. This would not be felt by consumers, would calm any inflationary
tendency, and would help save the environment.
The farm problem would be solved without subsidies to big growers, the cities
would be rebuilt as community supporting neighborhoods, corporations would
become less offensive in their search the world over for resources and markets,
crime and despair would be reduced as people felt no need and other options
appeared more desirable, population would come down and with it our impact
on a beleaguered environment, education would he available to all to the
limit of potential, the arts and culture and invention would flourish as
These are obvious advantages to the plan. Schutz has given detailed calculations
to support the assertion that $30,000 per person is the correct figure for
unearned income for every citizen of the United States in 1990. He provides
answers to most fears and objections to the plan, and the rationale of democracy
insures that this time it will be adopted.
Decentralists will hail the plan because it facilitates the yearnings of
people to live and work in small communities, it defangs the power of corporations
to regulate and ruin our lives, it deemphasizes the pull of the large city
by encouraging small farms and businesses, and it will release time and
energy for people to participate in local affairs and government.
©1996 by Context Institute
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Last Updated 18 July 1996.
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