Tuesday, April 24, 2018

Income v Endowment

A significant part of our success in life is determined by the way we start. Our genetics, where we are born, who our parents are, the community that supports us in growing up, and the way the world embraces us when we become adults in our own right. We are shaped by our childhood, and yet it is fair to say that by the time you are 35ish, there is probably a time limit on the issues of the past? A point at which you have to stop blaming Mommy and Daddy, or the school bully.

One cousin of Universal Basic Income is a Universal Basic Endowment. In other models, this has been called National Youth Endowment, Universal Personal Capital Account, and a Stakeholder Grant. A once-off or staggered payment at age 21 to provide a financial floor for the opportunities we all get.

This could obviously be used to buy the equivalent of a UBI from a Life Insurance Company - an annuity. If allowed, a UBI could also be used as a way to borrow a lump sum up front. So, in many ways, they could be seen as equivalent.

The problem is 'me, today' and 'me, aged 21' are not exactly the same. We are related, through a storyline of good and bad decisions. We are related, on either side of life's random waves. Chances are that the decisions made at age 21 are much more heavily influenced by those first 21 years, than those we make later in life. I wouldn't let 21 year old me make decisions for me today. 

'Lifetime opportunities are determined only to a very limited extent by the endowment received at 21. They are powerfully affected by intellectual abilities, parental attention, school quality, social networks, and many other factors. On average, those young people who are already favoured along these various dimensions are precisely those who are most likely to make the best possible use of their endowment
Basic Income - A Radical Proposal for a Free Society and a Sane Economy
Philippe Van Parijs, Yannick Vanderborght

A lot to learn
Some of the characters at my 21st
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