Turning Down Free Money

For whatever reason—perhaps to get our mind off our own political turmoil—it seems we pay more attention now to elections in other Western nations.  Most recently our attention was riveted on France, where perceived moderate candidate Emmanuel Macron bested the more right-wing candidate of the National Front Party, Marine Le Pen.   But I thought the initial round of voting (France has a runoff if no candidate wins a majority of the votes in the first round) produced a more interesting and—for someone who takes a strong interest in personal financial affairs—more satisfactory and remarkable outcome.

Benoit Hamon, a presidential hopeful from the left-wing of the French Socialist Party, was eliminated in early voting.  Hamon had championed the idea of paying every adult French citizen, whether employed or not, and regardless of economic status, a monthly stipend equivalent to about $800, no strings attached.

He argued that this would give recipients the freedom to try new things, presumably new business ventures, without the fear of being unable to pay for their basic needs.  He cited the mass movement to automation that is leaving fewer jobs for people as the justification for his bold proposal.  At a price tag of nearly $320 billion, Hamon proposed paying for it by taxing robots and “other measures”.  But the creative energy and economic power unleashed by the project would supposedly outweigh the expense and boost the national economy.

 I found several aspects of Hamon’s plan troubling.

 First, $800 a month doesn’t buy a lot these days and is certainly not enough to, say, start a restaurant.  Yes, it may pay a few bills; but launching a business usually takes a lot more money than that and a good deal many other things that must come together to realize that dream.  I just don’t see that amount of money making a difference.

 If you think of this payment as “free money”, think again.  It is a zero sum game.  Let’s take the one specific idea floated for funding the scheme: taxing robots.  Robots don’t earn money; they make (or save) their owners money, but they don’t collect a paycheck.  What Hamon really meant—but probably realized was political suicide to actually say—was that he would tax the owners or their businesses.  That would erase or drastically reduce the savings produced by automation and end up raising the price of the goods produced, eroding the value of people’s monthly stipend as they pay higher prices.  I’m sure it feels good to say “tax the robot” who took a worker’s job, but it’s more than a little disingenuous.

 Finally, handouts do not generate creativity or spawn fresh ideas.  Think of the many sad stories of lottery winners.  We envy them their luck, until we learn how many go on spending sprees or don’t plan wisely and end up bankrupt.  How many start a new business, a new charity, invest in their communities?  I believe most people still want to work, to show what they’ve done with their time and talents.  So-called free money robs them of that dignity.

That is where I found the first-round French presidential election results gratifying.  Only 6% of voters cast their ballot for Hamon.  The French turned down “free money”.  They are richer for doing so.

 Until next time,

 Roger

 “The Lord God took the man and put him in the Garden of Eden to work it and take care of it.” Genesis 2:15 NIV®*

*Scripture quotations taken from the Holy Bible, New International Version® NIV®

Copyright © 1973, 1978, 1984, 2011 by Biblica, Inc.™
Used by permission.  All rights reserved worldwide.