Carl B. Latro

A new political party was launched in New Zealand today, called The Opportunities Party. It's been founded by Gareth Morgan, who's very well known in NZ for his economic opinions and such.

No policies have been announced yet, but it's a good bet a basic income and a flat tax will be one of them, given Morgan was one of the writers of "The Big Kahuna", which you can read about here...

It's early days yet, but I suspect the party will gain enough traction to get the 5% or more needed to get into parliament. This seems a reasonable assumption, given 25% of Switzerland's voters gave a yes to a basic income in their referendum. It's become a popular idea globally in the last few years. Couple that with both NZ's Greens and Labour parties liking the idea, (despite Labour rejecting it as a policy), and it's just possible it might be tried in NZ.

Here's Gareth Morgan announcing the party...

Details, such as they are, can be found here...

http://www.odt.co.nz/news/politics/376999/labour-considers-universal-basic-income-policy

I doubt it'll become policy though, and even if it did, I'm sure it'd be a stuffed-up policy - because Labour Party.

Arguments against can be read here...

http://www.stuff.co.nz/manawatu-standard/opinion/78080602/debate-on-universal-basic-income-is-too-radical

"The obvious problem is the cost. A serious UBI would almost certainly consume most existing state revenues. Some would argue the answer would be to fund it through massive tax hikes. The trouble is that you can only do that so much before government revenue actually decreases as the productive sector disintegrates under the weight of ever increasing taxation."

This is in fact a big unknown, as we have no way of knowing how people actually will behave under a UBI. Let's assume for instance that the UBI is set at the current minimum wage and the minimum wage is halved when it's introduced. Under that scenario, those on the minimum wage would have their income increase by a half (before tax), while businesses paying the minimum wage will have their wages bill halved. Given results like that, it means trying to model how an economy will behave under a UBI is probably a fruitless exercise.

"Then there's what could be called the 'Goldilocks' issue. Set the payments too low, and people simply wouldn't stand for the difficulties that would then befall seniors, single mothers and everyone else who would effectively see their income cut by the move. Set the UBI too high, and why would people bother getting out bed in the morning? In practice, it would almost certainly be impossible to strike the right balance."

As if it couldn't be adjusted. In fact it should be adjusted regularly, with quarterly seeming to be about right. (The suggestion the UBI should be an annual payment is absurd. Fortnightly seems the sensible period.) How should it be calculated? I'd suggest two methods. One based on the cost of living and the other on a percentage of the country's total income, the payment being the greater of the two. This would mean it'd rise when times are good but never go unacceptably low when times are bad.