Dec 27, 2013

Unconditional basic income: Rome wasn't built in a day

The Swiss basic income initiative indicates a universal basic income of 2,500 franc per month for every citizen, with some reduction for young people.

Many people are asking how Switzerland can afford 2,500 franc a month, or how USA can afford US$10,000 a year, or UK can afford £10,000.

One point we need to remember is that Rome wasn't built in a day. It takes time to accumulate common wealth in order to achieve a big sustainable dividend that can be distributed to everyone.

Alaska takes three decades to build up its Alaska Permanent Fund. It started with a dividend of about US$300 to $400, and it is paying a citizens dividend of about US$1000 to $2000 a year for each of its residents. Alaska is not fully committed to this Fund. Only a small portion of its oil wealth goes into the Fund, which explains the small dividend even after three decades.

Norway takes many years to build up its sovereign wealth fund. It's annual dividend is now worth about US$5000 per citizen. But it is not giving out any dividend.

For Singapore, the sovereign fund has been accumulating for five decades. It can afford a S$10,000 annual citizen dividend for each citizen. It is also not giving out any dividend.

The financial plan for an unconditional basic income should be long term, starting with a small amount, and growing annually. 

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