Spending More to Spend Less

Imagine you’re an engineer in the engineering department of a car company. Right now your department spends $100 on each engine and $80 on each transmission, for a total of $180. You discover that by redesigning some components, you can entirely remove the need for a transmission by spending an extra $30 on the engine.

In other words, you discover you could spend $30 more to spend $80 less, ending up $50 ahead with a better product. It only requires you spend the extra money in one area to save money overall, in a way that would also increase overall quality.

What would you do with this knowledge?

What if you suggested this idea to your boss and were told that because spending less money on every part always results in a lower total cost, and that anyone with an elementary understanding of math should know this, that spending more on the engine is a terrible idea because spending more can’t possibly equate to spending less?

What if you felt so strongly about this idea, that you then went directly to the CEO? What if the CEO then told you he had signed a piece of paper that said he would never raise the cost of anything? And so his hands are tied?

What would you think of your company and its management?

Now imagine you work in the sales department of a company. You and your team will be sent to another city to make some very important deals. Your company’s travel department sets everything up for you and your team at the lowest cost possible. It’s actually very good at this and has won multiple accolades from your CEO for minimizing costs. In this case, they save a total of $5,000.

Thanks to these savings, you and your team arrive at the airport at midnight. After a 14-hour flight requiring three different planes, you arrive at your destination with no time to spare. Completely exhausted and worn out, you and your team make $15,000 in sales. These sales numbers represent failure. As an additional result, your company will now need to downsize.

Meanwhile, in a parallel universe, you don’t even have a travel department (which saves even more than $5,000), and because your tickets were booked with a modicum of forethought, you and your team arrive fully rested and make $1 million in sales. As an additional result, not only does no one get fired, everyone gets a raise.

Which makes more sense?

System A: The one with the parts working against each other, each trying to maximize performance independent of each other?

System B: The one where everyone benefits, including the CEO for running a successful company instead of a failing one?

The United States, as a country, by any conceivable measure, is not the company existing in the parallel universe… but it can be.

Remember the engineer’s engine? The one we could spend more on to almost entirely eliminate the need for a transmission? We can do that.

But it’ll require a closer look at our transmission…

The Transmission of the United States

The following is a short list of our shared expenditures as a society. On the left is the total cost and on the right is the cost per American citizen.

As a society, we are now spending more than $10.2 trillion dollars or $34,448 per citizen every year

There exists overlap between some expenditures, but the above also represents only a partial list of all the money we are already spending.

So how can we spend less on this transmission?

Election Reform

Our use of first-past-the-post (FPTP) elections leads directly to our broken two-party system where new voices and proportional representation is actively prevented. As long as we keep this system in place, our democracy will suffer and a great many of our voices will remain unheard, making it exceedingly difficult to enact all/any needed changes. This needs to change.

What we chiefly need is the ability to rank candidates, so that we can all actually choose the candidates we most want to win, instead of those we think have the greatest chance to win. That ability alone is the difference between our making a choice, and it being made for us.

CGP Grey has done an entire series of videos about the problems with FPTP and much better methods, so if you’d like to learn more, those videos are really the best place to start.

Do we really want to continue not having a functioning democracy?

Access to Health Care

A system of universal health care — the kind that basically everyone else in the world has adopted except us — would save us thousands of dollars per citizen. If designed like Switzerland, it could save us $832 billion. If designed like Germany: $1.2 trillion, Canada: $1.3 trillion, or like New Zealand or the UK: $1.7 trillion in savings — every year.

It’s safe to say that not having a system of truly universal health care, is akin to burning trillion dollar piles of money.

Do we really want to keep doing this?

Access to Education

A system of universal education — the kind that we originally pioneered and then let others surpass us with their own — would drastically reduce the amount we spend on educating ourselves, while drastically increasing the amount of people educated. College is now free in Germany as it is in other nations as well. Meanwhile, in the US, outstanding college loans now exceed $1.2 trillion.

How are people to prosper while saddled with school loan debts? How is the economy to thrive, with so much money spent repaying the loans we require to hopefully secure a job? What’s the point of spending the time and money to get a middle-wage job, if the amount taken to cover the loans is then equivalent to having a low-wage job? How is anyone to function as a consumer — the Alpha and the Omega of the economy — if their paychecks go only to basic needs and school loans and not to purchasing the goods and services of others?

It’s safe to say that also not having a system of truly universal education, is again akin to burning trillion dollar piles of money.

Do we really want to keep doing this as well?

Decriminalization

Simply reclassifying what constitutes crime would immediately reduce crime. We spend half as much money fighting drugs as we do buying them, and by just ending prohibition on drugs as we did on alcohol — a more dangerous drug — we could raise revenue and improve lives instead of wasting revenue and systematically destroying them.

We could stop spending about $40,000 per year on the 20% of our prison population of 2.2 million convicted of drug crimes, and instead raise over $70 billion in new revenue. We could save even more money by also avoiding the imprisonment of those convicted of many other non-violent crimes.

Doesn’t this make more sense too, to not fill up our prisons with non-violent offenders?

Patent and Copyright Reform

The granting of temporary protections for creative works was never meant to function as anything but a head start. They were certainly never meant to be permanent, which is what they effectively now are. By overprotecting and creating too many barriers, these systems no longer foster innovation, but effectively hamper it.

Because of this, some economists now believe it shouldn’t just be reformed, but abolished entirely:

“The historical and international evidence suggests that while weak patent systems may mildly increase innovation with limited side effects, strong patent systems retard innovation with many negative side effects…” “Why use band-aids to staunch a major wound? Economists fought for decades — ultimately with considerable success — to reduce restrictions on international trade. A similar approach, albeit less slow, should be adopted to phase out patents.”

It can be argued that everything we do is actually a remix of something already known. By enriching the public domain instead of keeping ideas from it, we can accelerate the creation of new remixes that propel us all forward.

Intellectual property creates artificial scarcity. It is the opposite of creating abundance. Do we really wish to actively choose scarcity over abundance?

Homes for the Homeless

In Colorado it was estimated that the cost to the taxpayer for each homeless individual was $43,240. Just housing them instead costs $16,813. In Florida the cost of homelessness was estimated at $31,065 per taxpayer, while just housing them would cost $10,051. In Utah, the cost of homelessness was estimated at $16,670 per taxpayer, while just housing them would cost $11,000.

We know it saves more money to just provide homes, than to let people be homeless.

However, we also know that “cash payments increase the welfare of recipients to a greater degree than do transfers-in-kind of equal cash value.” And it is this knowledge, that leads us to possibly the single most effective change of all, affecting the greatest number of our wasteful and counterproductive expenditures.

We can just start giving everyone money.

This is how we can stop fiddling with our transmission and instead improve our entire engine — Universal Basic Income.

The Improved Engine of the United States

A basic income guarantee is how we can spend more on our engine to spend less on our transmission.

How much more?

Why not start at just above the poverty line with a monthly income of $1,000 for adult citizens and $300 for youth citizens? This would cost an estimated $3 trillion, but the total savings it stands to introduce in reducing the more than $10 trillion we already spend, along with the social and economic growth fostered as a result, are almost incalculable in value.

The Engine Improvement That Pays for Itself

Canada did a study to determine how much money could be saved on adults by spending just $1 on them when they’re young. They concluded $1 would save $3 to $9.

What does this mean for basic income?

It means that tomorrow if we started just providing $300 a month as a youth citizen allowance, we would not have to spend $900 to $2,700 a month on everyone as adults as the costs of crime and medical care.

This also means that when kids became adults, a basic income as high as $2,700 per month would cost not a penny more than we already spend, but without all the crime and poor health. So why not start a universal allowance for our children immediately, and consider their basic incomes as adults entirely paid in full?

No more poverty. Less crime. Better health. Higher productivity. Accelerated economy. Expanded democracy. More happiness. Even greater intelligence. These are measures of a functioning system working for everyone. This is the systemic production of fewer red beads.

It’s also just what the doctor prescribes…