A guaranteed annual income for every American

IN CONTEXT #44, Summer 1996
©1996 by Context Institute

The $30,000 Solution

Robert Schutz, PhD
Fithian Press
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 never before.

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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