Tuesday, April 8, 2014

Unions and College Athletes – What Happens Next

On March 26, 2014 the Chicago office of the National Labor Relations Board (NLRB) ruled that the football players of Northwestern University are employees of the university not simply student-athletes, thus they have the ability to form a union and have the general protections afforded to all employees under federal law. While there are numerous hurdles left for college athletes to climb before officially having the ability to join a union long-term, this post will not deal with whether or not this ruling is legally valid and will survive NCAA appeal or the methodology behind their formation and operation of the future union(s), but will instead ask what steps a union should take to enrich the lives of college athletes.

The chief reason behind the desire of college athletes to unionize is that currently they have no effective power to participate in the decisions and operations of the NCAA governance on any level. For workers one of the major advantages of a union is it coordinates focus and awareness across and between participating parties. This focus is critical to creating scale power because workers in any industry have little power if only able to act on their own or in small groups. Unfortunately for college athletes this scale power critical for maximizing bargaining ability from this ruling is only limited to private universities in states with NLRBs that rule similarly to the Chicago office; public universities are governed by existing state law, so there will be other obstacles for unionization for these universities, especially due to the fact that 24 states have active right-to-work legislation restricting unionization. However, ignoring this concern for a moment what would college athletes require of universities with the new power to form a union?

The most public complaint/driving force used by Northwestern athletes is a concern regarding medical coverage. In 2005 the NCAA mandated that athletes must be covered by health insurance in some form with limited restrictions on the provider (basically the insurance could be from the university, individually purchased, from the athlete’s parents, etc.). In addition the NCAA operates a “catastrophic injury” insurance policy through the Mutual of Omaha when an injured athlete has medical costs that typically exceed $90,000 born from a single injury event (although it can be $75,000 for universities that participate in the NCAA Group Basic Accident Medical Program).

While many universities provide medical insurance to athletes as part of the scholarship, the chief problems with this structure is a lack of legal requirement (most do it out of a form of social responsibility), a lack of transparency and a lack of uniformity as various universities have various types of insurance coverage. Most athletes receive proper medical attention when injured, but these three above problems catalyze the probability of athletes entering a state of “medical limbo” with regards to their treatment. Not surprisingly these are the “horror” stories that major media periodically latches on to; however, the problem is that these types of stories are not unique to athletes, but afflict non-athletes as well, thus are not an inherent problem in the college system.

Clearly the current system of medical coverage does have its holes, but holes that are easily repaired especially in the face of new legal protections. Note that for football players it is difficult, despite the “certainty” of concussion proponents, to directly link participating in football to brain damage that occurs decades later. Understandably it is reasonable to suggest that there is an increased probability for future brain damage from playing football, but to suggest that any element of damage can be derived exclusively from playing football is incredibly difficult. Therefore, while it makes logical sense to extend medical coverage for college athletes beyond their playing days, this extension should have a valid time limit. There are two strategies for negotiation.

The first strategy would be to focus on a simple flat time period that would be applied to all athletes and extend beyond the individual’s playing career. For example a good time period appears to be five years, which is also used by the NFL. Therefore, suppose an athlete stops playing sports for University A on March 28, 2015 under such a system this individual would be covered by the university’s healthcare program until March 28, 2020 regardless of whether or not they are still a student. This strategy appears fair because it allows all athletes to have sufficient time to recover from all major physical and short-term mental injuries acquired while playing sports for a particular university.

However, some may view a flat rate as inappropriate because it treats all athletes as equal despite the amount of time these athletes may have actually participated in the given sport. Therefore, a second strategy would be to focus on an extension tied directly to the length of time a sport was played. For example one could create a system where an athlete is covered by the university’s healthcare program for an additional two years after the playing career is concluded for each year the individual played. So if an individual played ice hockey for two years and stopped playing on April 3, 2015 under such a system this individual would be covered until April 3, 2019. This system would operate on the mindset that the longer a person played the higher the probability of acquiring an longer-term injury, thus the longer an individual plays the longer that individual should have extended health coverage.

While the exact details of such a system would have to be developed through negotiation between the union and each particular university or possibly the NCAA directly, it stands to reason that this healthcare coverage would be secondary coverage in that it would fill any gaps in principle coverage that the individual receives from their employer. If the individual does not receive health insurance from their job then this university-affiliated coverage would apply. However, the time period on this coverage would be concurrent with any employer insurance. Basically if an individual stopped playing on June 30, 2015 got a job that provided health insurance on July 15, 2015 and was laid off on April 17, 2018 under a five year fixed time program their coverage with the university would still end on June 30, 2020 despite not using that coverage for almost 3 years due to the coverage provided by the job.

Obviously the university should cover an athlete in some way until the NCAA catastrophic policy would take over and this university coverage policy must be transparent to the point where potential recruits can actually see what is covered and what is not covered. Additionally there should be a minimum level of coverage mandated by the NCAA to ensure appropriate medical treatment. One could argue that this legal mandate is addressed by the 2010 American Care Act (ACA) and while true, the ACA may not be permanent due to the zeal of certain members of Congress to repeal it, thus the need for a separate required NCAA mandate. Finally another element could be negotiated would be healthcare substitution. Suppose an athlete wants more coverage than the university is willing to offer, the university could include an additional healthcare stipend at equal monetary value of the standard university healthcare coverage to help pay the athlete pay for the other more desired policy.

Staying in the medical area one raises the question could a union actually change the number of games and/or when those games are played in a particular sport? Over the last few decades the number of college games that various sports have scheduled has increased significantly due to increased travel options and most notably the expansion of incentive to play these games (television money). Clearly the probability of injury increases and the probability of academic success decreases when the number of games an individual plays increase; therefore, could a union attempt to actually reduce the number of games that their particular sport plays? While this idea may be an interesting one, success would be difficult simply because of the money involved with playing each game in these high value college sports.

The principle mission of colleges is to provide an advanced level of education that further prepares individuals to become productive members of society. Unfortunately that principle mission and being an athlete has come into some level of conflict in recent years with the added workload attributed to participating in college athletics. Due to the extensive practice, travel and game schedules the available academic options of athletes at a number of universities have been compromised. In some situations athletes have been confronted with the choice of majoring in subject x or playing sport y because of the inability to schedule and/or attend the required classes.

One of the chief elements driving this conflict is that despite a 1991 decree by the NCAA that limited the number of required countable athletically related activities (CARA) to four hours per day and twenty hours per week, almost all institutions have worked around those restrictions by allow coaches to organize “voluntary” practices. Of course the secret that is not a secret is these “voluntary” practices are not really voluntary; at least not for non-star players who if they do not attend typically find themselves with reduced playing time. It is through these “voluntary” practices and workouts along with travel time that the NLRB could cite an average workload for football players at Northwestern at 40-50 hours per week despite the 1991 limitation. This designation by the NLRB is somewhat controversial because some argue that participation in additional practices behooves the athlete because it enhances their playing ability, similar to non-athletes like musicians and actors, thus these practices should not be controversial relative to the 20 hour CARA limit. However, the controversy stems from the team organized nature of these activities versus the athletes simply putting in the work lifting weights, conditioning, etc. by their lonesome.

In addition to this extended workload for the average week the length of time over a calendar year that athletes have to invest is significant. For example for football players the regular season begins around Labor Day (typically on the preceding Thursday) and depending on the conference ends on the second Saturday or Sunday in December with bowl games starting anywhere from two weeks to six weeks later. During the off-season football players begin preparing for the coming season through an extensive conditional program that involves multiple practices per week that typically starting early in the morning. In general for most sports the conflict between educational opportunities can be broken down as such – during the regular season afternoon classes are off-limits because of practice and game priorities and during the off-season a selection of morning classes are off-limits because of practice and conditioning priorities. How is an individual supposed to pursue their academic and athletic dreams if these conflicts exist?

A union could address this conflict by using expanded legal protections for those who wish to treat “voluntary” practices as exactly that voluntary. Any changes in the playing status of an individual who only abides by the required practice hours would force the authority structure (typically the head coach) to explain the demotion, which would become significantly more difficult with a union behind the scenes protecting players. In addition to practice hours, unions could also address the “big brother” type system that most universities create to “help” athlete time management including types of classes taken, where one sits, how much study hall is attended, personal travel arrangements, where the athlete lives, acquisition of money from family members, etc. Additionally a union could organize “vacation” time for athletes that could be used during the off-season for recuperation purposes. Finally more flexibility could be added to the practice system in the off-season allowing athletes to attend either a morning or an afternoon conditioning session allowing greater class selection ability for their education.

Another popular idea for unions would be to establish new policy governing athletic scholarships. Skipping the period where athletic scholarships were controversial due to their non-academic and possibly non-amateur nature, the first “generation” of athletic scholarships covered four years and had sufficient certainty in that it was rather difficult to cancel the scholarship even if an athlete struggled with injury. Even when these four-year scholarships fell out of favor, early on in the one-year renewal system a university scholarship committee, not athletic directors or athletic coaches, made decisions regarding renewal. Unfortunately due to Proposition 39 in 1973 both four-year scholarships and scholarship committees became rare replaced by single year scholarships renewed year-by-year by the head coach. While Proposition 39 was later rescinded in 2011 allowing universities to offer multiple year scholarships once again, most universities have retained the one-year renewal model.

It may be too much and not appropriate to attempt to go back to the four year guaranteed athlete scholarship, but a union could ask for increased scholarship allowances for injured players as well as a return to scholarship committees, removing a significant element of power from head coaches to “encourage” athletes to devote more time to athletics. In addition the expansion of scholarships after the conclusion of a playing career based on the total time of performance could serve as a valuable tool for the acquisition of a degree. One example of this idea would be for every year an individual plays for a university team that individual would receive an additional half year scholarship, thus playing for four years would yield that individual an additional two years on a specialized scholarship not related directly to the athletic program. Clearly before any scholarship idea is administered it would have to be applied separately from other scholarships because it would not be appropriate to trade one scholarship from a financial need student to an athlete.

The ability to transfer between universities without eligibility penalty would also be a point of interest for negotiation. Currently the transfer rules are rather restrictive towards athletes. The biggest problem with transfer rules is the lack of uniformity. Too many rules depending on type of school, conference, and sport, but the chief component to almost all of the transfer rules, especially for those transfers between major programs (4-year schools), is that the athlete has to sit out at least one year and take a full class load for both semesters (not summer) to establish academic “residence” before he/she is able to play.

In addition these rules have been viewed as rather hypocritical in that coaches routinely breach their contracts to leave for another “better” university job while athletes do not have that same freedom. Realistically it would make more practical sense that an athlete should be allowed to transfer retaining all remaining eligibility at any point during the off-season with the ability to play immediately pursuant to their existing academic eligibility. The university the athlete is departing from should have no ability to prevent the transfer through legal means. However, similar to its current prohibition it would not be appropriate to allow athletes to transfer during their playing season.

Of course the elephant in the room regarding the potential new employee statues of college athletes is whether or not they should be paid in financial capital that is not simply earmarked for educational expenses. This blog has addressed this issue before in the following post [http://www.bastionofreason.blogspot.com/2011/03/paying-college-athletes.html] and a vast majority of the argument still holds up regardless of whether or not college athletes are regarded as employees or students. However, there is an interesting angle that exists within the gap between amateur and professional status.

One could make the argument that it is still possible for college athletes to be regarded legally as employees and retain their amateur status, although the importance of this distinction is somewhat foggy. Maintenance of amateur status could be achieved through requesting a form of stipend that could be used to cover college-based expenses outside the scope of the scholarship. Most scholarships cover tuition, room and board, and direct educational materials like books and software, but do not cover common “everyday” expenses like personal travel expenses, non-team associated food, and other miscellaneous expenses. The stipend should fill this gap with the exact amount negotiated based on a general uniformity across all universities with an effective cost of living adjustment based on where the university is located.

A secondary advantage for the NCAA as an organization to providing this stipend is that it could offer protection against anti-trust litigation. Some argue that capping scholarships at the cost of attendance constitutes unlawful restraints on commercial activity. While this argument is suspect because the NCAA is not a monopoly nor is it required for future employment in the NBA, there does exist the possibility that a court could rule against the NCAA on this issue. However, agreeing to stipend restrictions through a collective bargaining processes should offer sufficient non-statutory labor exemption protection from anti-trust litigation mitigating one avenue for players to sue in an attempt to acquire a form of revenue sharing.

While revenue sharing is unlikely and a stipend is uncertain, college athlete unions could negotiate a payment structure for athletes when the university or third parties make additional funds from direct usage of their likeness or name. The one significant drawback to this possibility is that this very issue is currently moving through the courts via the Ed O’Bannon trial and could come to a conclusion before the union issue has resolved. However, if the union issue is resolved before the Ed O’Bannon case then both sides may be in favor of negotiating a settlement structure on this issue.

Unfortunately lost in the controversy of the decision by the NLRB ruling is that despite the ability to form a union, college athletes at private universities may not have sufficient power to make any real changes. The chief problem is the issue of scarcity. The difference in skill level between the Top 50% and the Top 10% of college athletes is small and with customer loyalty at the college level firmly behind the university versus the athletes that participate for that university the power of a strike in effort to enforce demands is limited. Universities only have a limited amount of scholarships and there would be more than enough individuals of similar talent and willingness to play by the rules of the current system to fill in for any striking athletes. In fact university would more than likely just have to sweep through the intramurals to replace a vast majority of the initial scholarship talent.

These “replacement” athletes would not produce any significant loss of revenue for the university because most of the money acquired from college football and basketball involve television contracts with the affiliated conferences, thus as long as the university fields a team, no matter how bad, the university will receive a vast majority of their planned revenue. The real power of a strike be the negative precedence created by striking athletes and how it will negatively influence future recruitment, thereby potentially hurting the bottom-line of the university through the continuation of a poor quality product that could eventually lead to dismissal from the conference and loss of the television contracts. However, would the first group of striking athletes be willing to act as sacrificial lambs to accomplish this goal because if they transfer to another university the power is lost and they would more than likely not receive a renewal of their athletic scholarships in the aftermath?

Therefore, the real power of the NLRB ruling may actually be the basic legal protections that come with recognizing student-athletes as employees. Overall while most of the above changes should be made solely because it allows the athletes to genuinely be student-athletes and it is morally right, a new college athlete union structure may have to pick its battles if it wants to produce change beyond the basic protections of the law.

Wednesday, March 26, 2014

Transparency in Medical Care

There is a concern that one of the principle reasons for why healthcare costs are so expensive and why the American Care Act (ACA) will have a limited influence on healthcare costs is that there is little direct information pertaining to prices for given services. This “blind” pricing creates an environment of uninformed consumption where individuals hope that they receive a competitive/fair price rather than know they got a competitive price. Therefore, some individuals believe that if hospitals and other medical institutions list their prices for given services consumers will be able to comparison shop using market forces and competition to lower prices. To this end a number of proponents for this form of transparency hope for the establishment of a procedure marketplace similar in design to existing online booking agents like Expedia, Travelocity, etc.

Note that a number of transparency sites already exist operated by various insurance companies. Some of these insurance companies, like Cigna and United Healthcare, have sites that are fairly effective at demonstrating to consumers differences in price between various hospitals for various procedures whereas others like Healthnet and Kaiser Permenente have sites that fair badly at accomplishing this goal.1 Unfortunately most people do not realize that these sites exist because few people actually use them. It stands to reason that the existence of these individual sites provides support for the creation of a centralized procedure marketplace. However, there are some important issues that must be addressed before this new procedure marketplace (PrMa) could be developed.

First, it is not accurate to compare medical services to consumer goods like pears or toilet paper. The principle distinction between these two categories is that there is a limited supply market for medical services, which involve inherent price modifiers. Basically there are only a limited number of physicians and surgeons that can perform a given examination or procedure. Therefore, even if hospital A offers a lower price on an angioplasty versus hospital B there are only so many angioplasties hospital A can perform, thus the influence of the lower price on business gained for hospital A and business lost for hospital B is conditional and limited; depending on the market size this limit may allow hospital B to avoid lowering their prices even in a transparent and competitive environment and yet retain the same number of patients/customers.

Another problem is that supporters of a PrMa appear to view it in the most simplistic manner possible where all parties pay for medical services out of their own pocket rather than utilize health insurance as a cost modifier. Clearly this presumption is inaccurate, especially after the passage of the ACA placing a mandate on health insurance coverage for all citizens of the United States. Therefore, any transparency in prices will need to include the reduced negotiated rates by given insurance providers as well as co-payments and deductibles for given plans in addition to clear information regarding hospitals that are in a given network. Even if transparency is created for these elements there still exists significant price inelasticity based on the factors tied to the insurance companies.

Extending on this above point is a major reason Expedia and similar sites work is because consumers can select any flight from any participating airline and the price shown is the price paid, there are no second party negotiations creating changes in that price. Airlines participate because there is typically a glut of supply (available seats) and selling a seat at a 20% discount is superior to not selling a seat at all and this sale is more efficient on Expedia and other similar sites. A PrMa site could not produce similar results because there is more complexity. Due to a limited number of surgeons and operating venues there is a supply-based limiting factor that heavily influences the ability to profit due to volume for healthcare providers. Therefore, hospitals are going to charge as much as they can in order to maximize profits. This limiting factor makes it difficult for insurance companies to undercut a competitor to increase customer number; this fact also ignores the ease of switching insurance companies.

This limiting factor creates an environment where health insurance companies do not have ultimate bargaining power with healthcare providers. There is a limit to how much of a “discount” health insurance companies can negotiate based on competing profit potential for both insurance companies and hospitals. Finally based on market segregation of health insurance there is little reason for health insurance companies to participate in such a website. Due to the limiting supply factor it stands to reason that they would be as likely to lose money as make money, thus there is no real reason for any to actually participate in such service unless required by law.

The problem is further complicated in that customers purchasing plane tickets have a greater level of flexibility increasing the value of the transparency. For example suppose a person wants to travel to Miami and one week later wants to travel to Stockholm. The lack of contract between different airlines allows this individual to purchase a ticket from carrier A for price x to travel to Miami and then purchase a ticket from carrier B for price y to travel to Stockholm. In a PrMa the consumer is tied to their insurance company. Person A cannot easily switch insurance companies even if another insurance company has negotiated a lower price on a particular surgery at hospital A. Basically this restriction limits most consumers to only comparing prices between different hospitals not different insurance companies. Even for those shopping for new health insurance policies have difficulties because of a lack of knowledge regarding what procedures they would need in the future.

Worse still there are significant legal questions associated with transparency laws that conflict with gag clauses, most favored nation/provider arguments and possible trade secrets. Gag clauses are the most concerning challenge disallowing the publication of provider-insurer contracts. Arguments on the grounds of trade secrets and most favored providers are usually fairly soft and are cited more for their ability to act as a litigation threat versus their legal viability; however, courts have become more corporation friendly in the past decade and could buy an argument regarding the way a price is negotiated between insurance company and healthcare provider as a form of trade secret as strange as it sound intuitively for revealing a final price would not reveal any negotiation strategy.

Other concerns are that such a pricing tool would only be applicable for preventative or chronic care versus acute/emergency conditions for individuals suffering from a stroke could hardly compare prices on the Internet or telephone on which hospital to be rushed to for lifesaving surgery. Also unlike airlines, prices for medical services are influenced by geographical cost of living because they are not as volume flexible. Therefore, it must be guaranteed that new competitive transparency does not lead to such a great price reduction that it hurts healthcare workers. Clearly due to their earned skill set physicians will have salary security, but nurses, medical technicians and other “more disposable” hospital personnel could be fired or receive a cut in salary in order to maintain hospital profits if prices drop significantly due to increased competition. This salary cut could damage the overall care in the hospital because cost of living for a given region would create an inherent price and salary floor creating staffing shortages.

One concern that may not be imperative to address is the alteration of hospital and insurance billing practices. Some individuals believe that hospital and insurance billing need to be changed to more specific invoice-like documents with less medical and/or technical jargon so consumers can easily identify what goods and services are charged at what prices. However, an itemized breakdown of price may not be necessary because consumers don’t care about what each individual item involved in a medical procedure costs, they only care about the total cost of the procedure. For example patients staying overnight for observation do not need to know how much hospital food, catheters and pain medication cost individually, just the total cost of spending the night.

However, there is an important consideration for multiple pricing in a transparent real-time marketplace. By necessity hospitals outsource certain responsibilities to other medical service providers (radiologists, anesthesiologists, etc.) where some of the large price tag procedures require multiple bills from these multiple service providers. Therefore, diligent maintenance of transparency will be required to track each time a specific provider changes the price for his/her/its services to ensure accuracy in the overall price.

Fortunately one of more easily solvable concerns is that prices need to be intertwined with quality of the service. There is a natural psychology for consumers to equate a lower price with lower quality, especially if the difference in price is hundreds to thousands of dollars. Therefore, safety records for hospitals will need to be referenced in addition to the price for their services otherwise individuals may be reluctant to select lower priced service options defeating the entire point of price transparency.

Another significant concern that is seemingly never considered by PrMa proponents is that these direct price comparison tools may actually increase costs instead of reducing them. The idea of transparency functions on a general principle of capitalism that businesses with a common product will compete against each other because it is generally thought that consumers should migrate to the lower priced good, quality being similar; however, what individuals typically forget about this principle is that a goal of modern capitalism is to maximize profits.

Current gag clauses between hospitals and insurance providers limit the information that insurance providers and hospitals have to maximize profits. For example suppose hospital A charges $1,000 for a service and hospital B charges $2,500 for a service. In the current environment this difference is not readily known even between hospitals. In most versions of the transparent environment desired by proponents this information would be available to all parties. What stops hospital A from raising their price on the particular service from $1,000 to $2,000 instead of hospital B lowering their price from $2,500 to $1,250? This possibility should be a serious concern for transparency proponents.

Currently it appears that a dream of creating an Expedia-like website for comparison of prices and quality of care for various medical procedures will be very difficult, if not impossible to achieve. A better option would be focusing on expanding the transparency procedure comparison websites that some health insurance companies have already set up. Creating state and federal statutes to expand the details, features and accuracy of these websites on an individual basis should effectively deal with large disparities in price between hospitals and other medical providers. The reason this strategy will work is that individuals cannot jump between insurance companies and their respective coverage easily and the ACA demands all individuals have health insurance or face a fine; after a few years this fine will be of sufficient size that almost all individuals will have health insurance. Therefore, if all insurance companies have effective price transparency websites, those run by Cigna and United Healthcare are a suitable start, then consumers who are already “locked-in” to company will have a website that will help them plan for more cost effective medical treatment. Overall transparency procedure proponents should focus on the creation and optimization of these individual websites and phone information tied to specific insurance companies due to their ease of establishment and greater effectiveness versus a broad all-encompassing system.

Citations –

1. http://www.pbgh.org/component/content/article/10/199-health-plan-shopping-services-evaluation

Wednesday, March 19, 2014

Early Departing Athletes and Education

There is widespread belief that the NBA and NCAA will work together in the near future to establish an age/experience floor for potential prospects where individuals who want to play in the NBA will need to attend at least two years of college or have some form of equivalent experience. This change would be an important element in establishing a meaningful methodology to attack the general perception of a lack of education among student athletes who leave college early to play professionally. In the current system a number of individuals focus on their NBA prospects through their adherence to the one-year minimum rule, but that “year” in college is really only about four-five months with only the first semester or first two quarters actually mattering because these individuals are only focused on maintaining their basketball eligibility. For these “one-and-done” players after eligibility is assured there is no further incentive to attend class and utilize the value of the scholarship.

A change in the minimum requirement from one year to two years forces these players to take classes seriously for at least one and half genuine years. This extra effort is especially important because for a vast majority of freshman, regardless of their athletic affiliations, the first year of college is much more general in the educational focus which limits the usefulness of that education without follow-up from the specificity of major study in sophomore, junior and senior years. Therefore, it could be argued that spending only a “year” in college is a generally meaningless 4-5 months that has little value to a “one-and-done”.

If the two-year minimum is established there still needs to be a focus applied to athletes to ensure that the educational opportunities they receive are suitable and targeted. Note that while the topic focuses on educational opportunities for student athletes in general, there will be additional attention paid to student athletes who leave college early before completing their degrees in an attempt to acquire employment as a professional athlete; therefore, this discussion primarily involves football and male basketball players. Finally it is important to acknowledge the fact that most student athletes, despite the stereotypes, actually complete school with a degree in a field that allows them to have a promising future career outside of playing sports.

One of the problems with a career as a professional athlete is that it has an inherently short lifespan. Very few athletes play beyond the age of 35 and those who do either play at a league minimum or on the waning years of a long-term contract that will be their last contract. Understand that there should be little sympathy for these individuals because league salary minimums in all four major sports (football, baseball, basketball and hockey) are considerably higher than a vast majority of jobs. However, with a career lasting only 5-15 years and 25-35+ years remaining before eligibility for Social Security, a majority of players will need to find secondary careers to fill this gap.

Facilitating the development of this second career can be difficult because these individuals have been competing in athletics for their prime adult professional development years and entry into a secondary career marketplace will typically result in competition with younger more experienced and prepared candidates. Due to the connections-based elements in the job market some of these athletes can parlay their fame into opportunity, but for most this strategy will not work. Therefore, colleges must create a new strategy for education that can help athletes manage these weaknesses when attempting to acquire a second career after their playing days are over.

With regards to this second career some individuals have argued that student-athletes should be allowed to major in their participating sport, i.e. football players should be allowed to major in “football”, basketball players in “basketball”, etc. Clearly this idea is not so ridiculous that it should be immediately dismissed out of hand with a sarcastic attitude that such a “degree” would be cookie-cutter and worthless. However, the problem with the various proposals that embody this idea is that the degree is not targeted. Society is continuously becoming more and more specialized and the idea behind this new type of “sports” major is too broad. Think about the nature of the job application process, when application-sorting software is “thinning the herd” is it going to select an application for the interview process if that individual majored in “basketball”?

Some could argue that the general failure of the “sports” major to attract the attention of employers and their resume software would be more indicative of negative stereotyping than lack of skill. While there would be some truth to this belief, the generality of the major itself would lead software and humans to draw their own negative conclusions regarding the efficacy of the major. Simply seeing a particular sport implies a focus on playing that sport not on other associated analytical intricacies. Proponents would argue that this is not correct, but even if the studied curriculum supports that position, there is still limited information regarding exactly what elements were studied. It is akin to comparing a major in medicine versus a major in radiology; one clearly defines the section of expertise where the other defines generality.

Unfortunately the weakest aspect of these proposals is that some of the proposed curriculum for a degree in “football” includes “labs” that are worth credit, but appear to be nothing more than simple practice sessions. Proponents would counter that performing arts majors typically receive credit for conducting practice sessions to hone their skills, so there should be little difference between those majors and this new “sport” major. While on its face this comparison may seem apt it runs into a philosophical problem regarding longevity. Most careers as a musician, actor, or even dancer can last decades while a career as a professional athlete typically lasts only five-ten years. This timeframe difference places a greater weight for value on practice for performance arts versus athletes.

Another concern regarding these “lab” sessions is that the failure rate for becoming a professional athlete is incredibly high even for those individuals who believe and have others who believe that they will be successful. Failure as a professional athlete would result in a career change, but the “lab” sessions acting as valid credits towards a major would be basically worthless to the individual due to their general player-only specificity. Therefore, it would be better if a more flexible study system were developed in place of these labs.

Also having such a specific major would compartmentalize athletes both among each other and among other non-student athletes, which could lead to problems. For example while everyone likes to believe in honest evaluation, among student athletes there have been numerous examples of favoritism within numerous universities, especially for football and male basketball players due to the money involved in those particular sports and general passion. Isolating numerous athletes in the same general academic regiment could increase the probability that standards become lax further reducing the usefulness of the degree. Additionally how many different specific sport majors are going to exist? Will female field hockey players have a “field hockey” major or will wrestlers have a “wrestling” major? What influence would this expansion have on resource utilization at a given university?

A final immediate concern with the idea of a “sport” major is that it seems unnecessary. In some context to a cynic it feels like a strategy to simply increase the probability of retaining eligibility for the student-athlete. Again the short length of career associated with a professional athlete limits the usefulness of such a major due to its generality; basically it is a major for the first five to ten years of an individual’s career with little value in the last twenty to thirty. Going forward with such a mindset is institutionally irresponsible. Instead creating a targeted program for athletes among already existing majors with an increased level of flexibility for appropriate specificity seems more appropriate to support the multiple phases of an athlete’s career as well as their mental growth.

It is important to note that these targeted programs will not be mandatory in any way; clearly it is the prerogative of any individual to study whatever he/she desires in college. However, for those individuals who do not have a strong opinion about what they want to do after their playing days are over a brief interview should be conducted with career counselors before enrollment to identify interests. The key issue in these targeted programs is to apply the experience and skills that athletes acquire during their playing days to ease the transition from primary career as a player to the secondary career as something else.

The first step to identifying these educational programs is to identify the most likely secondary career possibilities. While some caution may be prudent to avoid stereotyping regarding the intelligence of most athletes, the real nature of this identification is to focus on the interests of the athletes. Obviously one of the most popular secondary careers is broadcasting either on a national stage for an organization like NBC, ESPN or FOX or on a local level typically on radio broadcasts for the alma mater. Another common option is to move from player to coach or front office position for a particular sports organization. The third and last “common” secondary career is moving from player to agent using experience in the industry as a player and interactions with existing agents to create a credential basis.

In addition to these “common” secondary careers other possibilities for athletes include becoming a financial advisor or accountant to help other players manage their money successfully; also modern sports have embraced the inclusion of advanced statistical analysis to help make personnel decisions opening up numerous additional job opportunities in these analytical fields for sports organizations. Quality medical personnel are almost always in demand allowing former athletes to become medical trainers for various institutions, either high schools and colleges or a sports team, without the need to acquire medical degrees. Finally for a number of former athletes maintaining quality physical performance demands understanding nutrition and proper off-the-field exercise regimens, elements that can be used to transition into a secondary career as a personal trainer. Fortunately most colleges already offer coursework that grant the necessary skills to succeed in these fields. With this in mind it is appropriate for schools to properly guide student-athletes who are interested in them to the necessary course work to maximize success.

These secondary career strategies are easily established for those who stay in college and receive a degree; however, what does a university do about individuals who leave college early for the professional ranks before acquiring a degree? Clearly if these individuals want to maximize their success at the professional ranks they cannot continue to attend classes due to only a limited amount of time available to spend in class versus studying and practicing at the professional level. Therefore, if pursuit of a degree is postponed for typically at least five years, what is the strategy to initiate a return to this pursuit? One of the obvious problems with restarting study after a long layoff is the diminishment of knowledge over that layoff. Some educational critics cite this “loss of knowledge” as a reason for administering year-round school because of time off for just the three months of summer. Imagine what type of loss will occur over five or more years, one might think that an individual would have to start all over from the beginning. So what should be done?

There are two important elements to this “return to education” issue. The first element is what financial responsibilities do colleges have to former student-athletes who leave for the professional leagues early and then later want to return to continue their education? When a player leaves for the pros that individual foregoes any remaining eligibility to compete at the college/amateur level; therefore, any continuation of an athletic scholarship would be unlikely because there is no quid-pro-quo involved. However, a special academic scholarship could be created for returning former players if those players had certain grade point averages upon leaving the college treating this returning player similar to an academic scholarship received by an incoming high school student. Note that a grade point average floor is required for this new scholarship category because such a floor demonstrates that these former players were taking their studies seriously and actually acquiring knowledge for a secondary career instead of simply trying to maintain their eligibility.

Another possible strategy is to simply extend the athletic scholarship as a single sided element. Some would support this strategy because overall due to economy of scale universities have to invest only a very small amount of money per student and it could be argued that the player in question produced more than fair value during his/her playing days and this scholarship is simply balancing that budget.

The second element is how to prime the returning player for reentry into the educational environment. Unfortunately there is no easy means to accomplish this priming because these “new” incoming students have been away from a study heavy environment for years. It would be difficult to simply go back to square one and start over. One strategy would involve incorporating a pass-fail system for certain classes during the first semester back and then use a grading system for the second semester and beyond; this would create a gauged “stress” environment for the returning players ramping up the difficulty with time allowing for acclimatization to the study environment. However, one concern with this method is that students will not take the first semester seriously because it is pass-fail and thus will not develop the proper mindset for future classes when the grading system changes. The best option may be simply to develop course work so there are interactive elements that catalyze interest in the study portions of the work because of their necessity to succeed in the interactive portions. This design would also help students who are entering these particular fields from high school as well.

Another important element for this priming is to eliminate any stigma associated with age. Some individuals have trepidation about returning to college because at the age of 28+ they think that society feels it is strange that a person so “old” is still attempting to acquire a degree. Another negative rationality may be that returning to college because their playing career is over brands the individual as a failure. Neutralizing these negative elements chiefly involves creating a mindset where returning to college does not represent failure, but instead the pathway to secondary success because the time allotted for their first career has now ended and it is time to find success in another career.

The most important elements to addressing the concern with athletes and their education are course design and associated interest. The first important step is when an athlete enters the college environment to inform the individual of the probability that he will be able to retire after their playing career is over (very low) and identify their interests to gauge what field will produce a desired secondary career. Linking interest instead of simply focusing on keeping the athlete eligible will actually increase eligibility probability through increased engagement and work interest as well as increase skill acquisition. Clearly one of the critical duties of college is to further the development of quality individuals who will produce positive effects in society, thus course work to this end must be taught early; however, there must also be introductory courses for skills required to pursue the secondary career as well.

Overall the creation of a “sport” major for certain sports appears to be a needless strategy that has few benefits. The general gamble of such a degree is that an individual majoring in Basketball will be able to somehow use the major to significantly enhance his ability to make more money as a professional basketball player to the point where once the playing career ends that individual will have enough money to effectively retire from the workforce. This strategy is a gamble because if that does not happen due to bad luck, injury or just lack of ability then this individual will have acquired a major that is effectively worthless even more so than the stereotypical “sociology” or “general studies” degrees that are ridiculed by other parties. Some may counter that a “sports” major would allow secondary careers like the ones mentioned above, but the flaw with that argument is that there is no reason to establish a “sports” major because specialization majors for those types of careers already exist. Basically a “sports” major would be perceived, and due to the typically proposed “labs” taking credits and time, effectively be a dumb down version of those already existing majors. Therefore, instead of establishing a “sports” major, the goal of improving education among athletes should focus on better applying what colleges already offer to what interests student-athletes.

A Possible Strategy for Dealing with Stroke Damage

Interestingly despite the hype and fear attributed to cancer, stroke is the second leading cause of death in the developed world behind only heart disease and responsible for approximately 10% of deaths worldwide.1,2 There are two major types of stroke: ischemic and hemorrhagic. An ischemic stroke is due to a lack of blood flow largely born from a blockage (arterial embolism, thrombosis, etc.). A hemorrhagic stroke is due to a hemorrhage in the brain resulting in abnormal blood flow creating significant losses in most areas of the brain and overflows in others. Not surprisingly limiting blood flow to the brain can rapidly facilitate the loss of brain function due to cellular malfunction and death resulting in difficulty moving one or more parts of the body, trouble talking and hearing, visual difficulty, as well as other motor and cognitive breakdowns eventually leading to death.

Ischemic strokes are more common than hemorrhagic (approximately 80% to 20%) and have four major causes: 1) Thrombosis; 2) Venous thrombosis; 3) Embolism; 4) Systemic hypoperfusion.1,3 Thrombosis involves the obstruction of a blood vessel due to clot formation in the local region. Embolisms are obstructions, typically clots, fat globules or gas bubbles, that form elsewhere in the body that result in blocked blood flow in some other region away from the location of the obstruction. Systemic hypoperfusion is a general decrease in blood supply born from a psychological condition like shock. Due to the fatal outcomes associated with a stroke numerous methods have been developed to recognize its onset, occurrence and aftermath. The onset of most strokes involve face weakness, arm drift and abnormal speech as early symptoms.4

These symptoms only describe overt strokes; another type of stroke is covert where symptoms are relatively absent. Fortunately covert strokes typically result in less brain damage than overt strokes. However, despite the reduced permanent damage, covert strokes are much more common (5x more probable) and can result in significant mental problems like dementia and depression.5 Unfortunately the ongoing problem with strokes is that despite continuing advances in treatment and rehabilitation a vast majority of people who suffer from a stroke will have a permanent cognitive and/or motor impairment.

Some prevention methodologies have been proposed to reduce the probability of a stroke or reduce the damage that occurs during a stroke. Not surprisingly there is significant support for routine physical activity as a means to reduce the probability of an ischemic stroke.6-8 In fact meta-analysis suggests that the benefits of exercise are indiscriminate with regards to sex and that the most active individuals have a 25% reduced rate of stroke versus those who are least active.7

One rationality for why consistent exercise is able to achieve this result is the improvement of vascular function, which increases blood flow efficiency, reduces hypertension and limits infarct size.9,10 Another possibility may simply be that those who exercise the most have healthier lifestyles on a whole then those who do not exercise a lot; however, this rationality foregoes the general health benefits exercise brings. Unfortunately due to the nature of a stroke there is little one can do from a preventative standpoint beyond live a reasonably healthy life of no smoking, no to very moderate drinking, exercise and proper diet.

Some could argue that one should take anti-coagulants like warfarin or blood thinners like aspirin, but these pharmaceutical agents are more reactionary treatments intended to prevent repeat strokes or secondary short-term strokes (similar to aftershocks) versus reducing damage derived from principle strokes. Aspirin is especially used by individuals who have previously suffered myocardial infarctions or with high cardiovascular risk factors like atherosclerosis.5 Some also support the use of clopidogrel and dipyridamole to increase the probability of platelet flow to avoid platelet aggregation, which can lead to clot formation.5 However, there are some concerns that improper timing in treatment with anti-coagulation agents could create a net physiological detriment.11 After the event ischemic strokes are commonly treated with thrombolysis (i.e. clot busting drugs) or intra-arterial fibrinolysis (site injection through a catheter) whereas hemorrhagic strokes typically require neurosurgery due to the excessive bleeding.5

However, these reactionary methods are active methods for reducing damage born from a stroke, which are largely dependent on the existence of secondary available parties because the suffering individual is frequently rendered incapable of assisting him/herself. The development of a passive method to reduce damage without the need to take drugs would go a long way to increasing the probability for reducing damage from strokes, reducing long-term healthcare costs and increasing qualify of life. One possibility for a more passive “damage prevention” therapy revolves around neutralization of reactive oxygen species (ROS).

In the 80s it was theorized that oxidative stress induced damage from ROS was prevalent in the reperfusion stage of post-ischemic strokes and accounted for a significant amount of damage, especially because cells have a reduced capacity to neutralize ROS in ischemic stroke conditions.12-16 The origin of ROS in cerebral ischemia is derived from the events that occur during reoxygenation after spontaneous or thrombolytic reperfusion. The abnormally large and rapid influx of oxygen after the depravation of oxygen leads to accelerated enzymatic reactions, especially in the electron transport chain facilitating the creation of larger than normal concentrations of ROS.

In addition there is a slower build-up of natural antioxidants due to transcription and translation delays due to the lack of oxygen and other signaling molecules. Unfortunately there are still questions regarding the exact mechanisms of this injury, i.e. if it differs from oxidative damage born from ROS in other parts of the body, but the presence of peroxynitrite (ONOO-) and hydroxyl radicals (OH-) are considered important for significant ischemic damage due to their aggressive and indiscriminate damage potentials.17,18

If the ROS damage theory is correct then an obvious prevention strategy would be to increase antioxidant concentrations. However, increasing these concentrations on a dietary or pharmaceutical level has an immediate problem in that both types of antioxidants have difficulties passing the blood brain barrier, if they can at all. Another problem is that there are questions to the general effectiveness of significant antioxidant concentrations derived from pharmaceutical origins where consumption may actually endanger health rather than improve it due to restraints on the ability of cells to absorb these antioxidants.

Another concern with an antioxidant strategy is that while ROS are cytotoxic at large concentrations most also have important roles as signaling molecules that regulate various processes like cellular differentiation, proliferation and apoptosis or even protect against bacterial infections.19-21 Thus there is the possibility that increasing antioxidant concentration too much can neutralize these signaling operations and create negative biological outcomes. Therefore, an alternative strategy is required if antioxidants are going to be utilized to reduce ROS damage in strokes.

The best strategy seems to be providing a natural reactant molecule that will allow the body to facilitate increased natural antioxidant protection. One option for achieving this “on-site limited neutralization” strategy may be increasing gaseous biological hydrogen. Previous research has demonstrated that hydrogen can selectively reduce ONOO- and OH- and have a protective effect on cerebral, hepatic, intestinal, lung and myocardium I/R injury along with neonatal hypoxia ischemia and cerebral ischemia.22-27 This protective effect seems to depend on hydrogen concentrations of approximately 25 umol/L.22

The antioxidant effect of hydrogen also has various secondary advantages: 1) its high natural permeability allows it to penetrate biomembranes and diffuse into the cytosol, mitochondria and nucleus; 2) it appears to have a specific selectivity which targets highly reactive ROS leaving less active ROS to perform their necessary secondary messenger signaling functions; 3) a toxicity threshold that is so high that hydrogen is basically non-toxic at any realistic concentration.22

There are two major methods for increasing gaseous hydrogen concentration in the body. First, direct consumption typically achieved by consuming hydrogen-doped water or inhaling hydrogen gas. Hydrogen water is commonly created through electrolysis increasing free hydrogen concentration to anywhere from 0.6 mM to 0.8 mM whereas inhalation of hydrogen gas typically occurs in a 2% by volume hydrogen mixture.28 Basically the feed is designed to replace nitrogen with hydrogen maintaining oxygen concentration.

The second method for increasing biological hydrogen concentration utilizes bacteria in the intestinal system. Bacteria are able to produce excess amounts of hydrogen as a byproduct of fermentation. In most situations there is little to no biological influence from this hydrogen production due to the typical level of normal hydrogen concentrations.29 However, if an individual consumes certain foods fermentation levels can be increased dramatically producing a biologically relevant effect.

One of these key “hydrogen producing” foods is lactulose. Lactulose is a synthetic sugar comprised of one fructose and one galactose molecule and is commonly used in the treatment of constipation.30 The principle reasons for the hydrogen capacity of lactulose is its complex nature and it cannot be digested by the human digestive infrastructure. 20 grams of lactulose can increase exhaled hydrogen to a similar level as 300 ml hydrogen saline with a longer resident time in the body.2,30 While lactulose is relatively non-toxic from a direct consumption perspective there are some concerns that excessive and routine consumption can result in an increased probability for small intestinal bacterial overgrowth.

What is the methodology behind how hydrogen is able to neutralize ROS? Past research supports increasing hydrogen concentrations leading to increases in HO-1, CAT and SOD all agents that are able to neutralize various ROS.31,32 However, after more detailed analysis hydrogen also seems to increase the expression of nuclear factor (erythroid-derived 2)-like 2 (Nrf2).16 Nrf2 is viewed as one of the principle pathways that governs the expression of molecules which act to neutralize oxidative stressors. Some believe that this activation is based on a form of hormesis where H2 is able to mitigate the effects of more toxic ROS species allowing overexpression of less toxic ROS, which leads to the activation of Nrf2 eventually neutralizing the lesser ROS species.22 In scenarios that lack sufficient H2 concentrations there is a higher probability of the more toxic ROS trigger cell damage and apoptosis limiting the future activation of the Nrf2 pathway leading to a cascade damage effect.

This hormesis process is thought to occur as followed. Under normal conditions Nrf2 is stored in the cytoplasm by Kelch like-ECH-associated protein (Keap1) and is tagged by Cullin 3 for ubiquitination resulting in a typical half-life of only 20 minutes. Under oxidative stress conditions it is thought that cysteine residues in Keap1 are disrupted dramatically reducing the probability of Cullin 3 tagging both through reducing binding efficiency and increasing Nrf2 mobility as disruption of Keap1 allows Nrf2 to translocate into the nucleus. Presence in the nucleus allows Nrf2 to form a heterodimer with small Maf protein and bind antioxidant response element (ARE) that activates numerous anti-oxidative genes initiating their transcription and translation.

However, hormesis is a somewhat controversial idea biologically. So others believe that hydrogen directly activates Nrf2-dependent genes like HO-1 and it is Nrf2 activation that results in the neutralization of ROS. This belief is supported by research where the protective effects of hydrogen were lost in Nrf2-deficient mice.31 While there exists the possibility that hydrogen can directly scavenge ROS the activation of Nrf2 appears to be the dominant method behind the correlation between increased hydrogen concentration and reduced ROS damage. However, the exact relationship between hydrogen, ROS neutralization and Nrf2 activation remains unclear. Despite the lack of specific details in this relationship, both the consumption of hydrogen doped saline/water and the consumption of lactulose increase hydrogen concentrations in vivo and also has neuroprotective effects with regards to strokes.27

Another possible mechanism for hydrogen-induced protection could involve not hydrogen directly, but the conversion of hydrogen to hydrogen sulfide (H2S). There is some evidence to suggest that H2S is a cytoprotective against oxidative stress in similar context to Nrf2,33-36 especially with regards to peroxynitrite (ONOOH/ONOO-) or hypochlorite (HOCL).37,38 While some believe that this antioxidant ability is derived from direct scavenging of oxidants due to its comparable reactivity to cysteine and glutathione,33,38,39 this belief does not seem accurate because the reaction between H2S and ROS is too slow41 and the H2S concentration is too low in vivo40,42 even despite the possibility of metallic catalyst availability.43 Therefore, H2S may interact with Nrf2 increasing expression rates and thereby increasing its protective effects against ROS. Of course one of the problems with theorizing about the role of H2S as an antioxidant is the lack of reliable methods to specifically measure H2S in vivo to tie H2S concentration increases to Nrf2 concentration increases.44,45

There is remaining uncertainty corresponding to increasing gaseous hydrogen concentration in the blood and its role in managing stroke damage, but studies in mice have demonstrated encouraging results regarding stroke induced damage reduction that should drive further study in humans.2,27 In fact some preliminary studies with lactulose has demonstrated reduced symptoms in Parkinson disease patients.27 With the general cost of lactulose or hydrogen doped water being very cheap if this method is applicable to reducing damage from strokes in a passive manner (just drink x amount of hydrogen doped water a day) millions of dollars can be saved in healthcare expenses as well as increasing the quality of life for numerous people. Overall while this hydrogen preventative theory is in its early stages of development, it would be in the best interest of official organizations like the American Stroke Association to investigate human applications of increasing hydrogen concentrations to reduce stroke damage.

Citations –

1. Donnan, G, et Al. “Stroke.” Lancet. 2008. 371:1612-1623.

2. Chen, X, et Al. “Lactulose: an effective preventive and therapeutic option for ischemic stroke by production of hydrogen.” Medical Gas Research. 2012. 2:3-7.

3. Sims, N, and Muyderman, H. “Mitochondria oxidative metabolism and cell death in stroke.” Biochim. Biophys. Acta. 2010. 1802:80-91.

4. Wikipedia Entry – Stroke.

5. Vermeer, S, Longstreth Jr., W, and Koudstall, P. “Silent brain infarcts: a systematic review.” Lancet Neurology. 2007. 6:611-619.

5. Goldstein, L, et Al. “Primary prevention of ischemic stroke: a guideline from the American Heart Association/American Stroke Association Stroke Council: cosponsored by the Atherosclerotic Peripheral Vascular Disease Interdisciplinary Working Group; Cardiovascular Nursing Council; Clinical Cardiology Council; Nutrition, Physical Activity, and Metabolism Council; and the Quality of Care and Outcomes Research Interdisciplinary Working Group. Circulation. 2006. 113:e873–e923.

6. Reimers, C, Knapp, G, and Reimers, A. “Exercise as stroke prophylaxis.” Deutsches Arzteblatt International. 2009. 106:715-721.

7. Middleton, L, et Al. “Physical activity in the prevention of ischemic stroke and improvement of outcome: a narrative review.” Neuroscience and Biobehavioral Reviews. 2013. 37:133-137.

8. Leung, F, et Al. “Exercise, vascular wall and cardiovascular diseases: an update (part 1). Sports Medicine. 2012. 38:1009-1024.

9. Yung, L, et Al. “Exercise, vascular wall and cardiovascular diseases: an update (part 2). Sports Medicine. 2009. 39:45-63.

10. Paciaroni, M, et Al. “Efficacy and safety of anticoagulant treatment in acute cardioembolic stroke: a meta-analysis of randomized controlled trials.” Stroke. 2007. 38:423-30.

11. Flamm, E, et Al. “Free radicals in cerebral ischemia.” Stroke. 1978. 9:445-447.

12. Chan, P. “Oxygen radicals in focal cerebral ischemia.” Brain Pathol. 1994. 4:59-65.

13. Ozkul, A, et Al. “Oxidative stress in acute ischemic stroke.” J. Clin. Neurosci. 2007. 14:1062-1066.

14. Nanetti, L, et Al. “Oxidative stress in ischaemic stroke. Eur. J. Clin. Invest. 2011. 41:1318-1322.

15. Shi, D, et Al. “Lactulose ameliorates cerebral ischemia-reperfusion injury in rats by inducing hydrogen by activating Nrf2 expression.” Free Radical Biology and Medicine. 2013. 65:731-741.

16. Chen, H, et Al. “Oxidative stress in ischemic brain damage: mechanisms of cell death and potential molecular targets for neuroprotection.” Antioxid. Redox Signaling. 2011. 14:1505–1517.

17. Chan, P.H. “Oxygen radicals in focal cerebral ischemia.” BrainPathol. 1994. 4:59–65.

18. Sauer, H, Wartenberg, M, and Hescheler, J. “Reactive oxygen species as intracellular
messengers during cell growth and differentiation.” Cell. Physiol. Biochem. 2001. 11:173–186.

19. Liu, H, et Al. “Redox-dependent transcriptional regulation.” Circ. Res. 2005. 97:967–974.

20. Winterbourn, C. “Biological reactivity and biomarkers of the neutrophil oxidant,
hypochlorous acid.” Toxicology. 2007. 181:223–227.

21. Ohsawa, I, et Al. “Hydrogen acts as a therapeutic antioxidant by selectively reducing cytotoxic oxygen radicals.” Nature Medicine. 2007. 13(6):688-707.

22. Fukuda, K, et Al. “Inhalation of hydrogen gas suppresses hepatic injury caused by ischemia/reperfusion through reducing oxidative stress.” Biochem. Biophys. Res. Commun. 2007. 361:670–674.

23. Zheng, X, et Al. “Hydrogen-rich saline protects against intestinal ischemia/reperfusion injury in rats.” Free Radic.Res. 2009. 43:478–484.

24. Zheng, J, et Al. “Saturated hydrogen saline protects the lung against oxygen toxicity.” Undersea Hyperbaric Med. 2010. 37:185–192.

25. Sun, Q, et Al. Hydrogen-rich saline protects myocardium against ischemia/reperfusion injury in rats. Exp. Biol.Med. 2009. 234:1212–1219.

26. Cai, J, et Al. “Neuroprotective effects of hydrogen saline in neo-natal hypoxia–ischemia rat model.” Brain Res. 2009. 1256:129–137.

27. Ito, M, et Al. “Drinking hydrogen water and intermittent hydrogen gas exposure, but not lactulose or continuous hydrogen gas exposure, prevent 6-hydorxydopamine-induced Parkinson’s disease in rats.” Medical Gas Research. 2012. 2:15-22.

27. Levitt, M. “Production and excretion of hydrogen gas in man.” New England Journal of Medicine. 1969. 281:122-127.

28. Voskuijl, W, et Al. “PEG 3350 (Transipeg) versus lactulose in the treatment of childhood functional constipation: a double blind, randomised, controlled, multicentre trial.” Gut. 2004. 53:1590-1594.

29. Kawamura, T, et Al. “Hydrogen gas reduces hyperoxic lung injury via the Nrf2 pathway in vivo.” Am. J. Physiol. Lung Cell Mol. Physiol.” 2013. 304:L646–L656.

30. Li, J, et Al. “Protective effects of hydrogen-rich saline in a rat model of permanent focal cerebral ischemia via reducing oxidative stress and inflammatory cytokines.” Brain Res. 2012. 1486:103–111.

31. Li, Qian, and Lancaster Jr, J. “Chemical foundations of hydrogen sulfide biology.” Nitric Oxide. 2013. 35:21-34.

32. Fu, Z, et Al. “Hydrogen sulfide protects rat lung from ischemia-reperfusion injury.” Life Sci. 2008. 82:1196-1202.

33. Jha, S, et Al. “Hydrogen sulfide attenuates hepatic ischemia-reperfusion injury: role of antioxidant and anti-apoptotic signaling.” Am. J. Physiol. Heart Circ. Physiol. 2008. 295:H801-H806.

34. Kimura, Y, Goto, Y, and Kimura, H. “Hydrogen sulfide increase glutathione production and suppresses oxidative stress in mitochondria.” Antioxid. Redox. Signal. 2010. 12:1-13.

35. Whiteman, M, et Al. “The novel neuromodulator hydrogen sulfide: an endogenous peroxynitrite scavenger?” J. Neurochem. 2004. 90:765-768.

36. Whiteman, M, et Al. “Hydrogen sulphide: a novel inhibitor of hypochlorous acid-mediated oxidative damage in the brain?” Biochem. Biophys. Res. Commun. 2005. 326:794-798.

37. Tapley, D, Buettner, G, and Shick, J. “Free radicals and chemiluminescence as products of the spontaneous oxidation of sulfide in seawater, and their biological implications.” Biol. Bull. 1999. 196:52-56.

38. Carballal, S, et Al. “Reactivity of hydrogen sulfide with peroxxynitrite and other oxidants of biological interest.” Free Radic. Biol. Med. 2011. 50:196-205.

39. Chen, K, and Morris, J. “Kinetics of oxidation of aqueous sulfide by O2.” Environ. Sci. Technol. 1972. 6:529-537.

40. Nagy, P, and Winterbourn, C. “Rapid reaction of hydrogen sulfide with the neutrophil oxidant hypochlorous acid to generate polysulfides.” Chem. Res. Toxicol. 2010. 23:1541-1543.

41. Baxter, C, and Van, R. “The oxidation of sulfide to thiosulfate by metalloprotein complexes and by ferritin.” Biochim. Biophys. Acta. 1958. 28:573-578.

42. Olson, K. “A practical look at the chemistry and biology of hydrogen sulfide.” Antioxid. Redox. Signal. 2012. 17:32-44.

43. Whiteman, M, et Al. “Emerging role of hydrogen sulfide in health and disease: critical appraisal of biomarkers and pharmacological tools.” Clin. Sci. (Lond). 2011. 121:459-488.

Wednesday, February 26, 2014

Global Warming Adaptation Funding Responsibility

One of the common refrains at various international climate conferences has been that because the developed world is responsible for a vast majority of the CO2 added to the atmosphere through industrial processes (i.e. neglecting deforestation and agriculture) they are principally responsible for global warming; therefore, due to this responsibility the developed world should be financially obligated to help other “developing” nations transition to a cleaner energy and transportation infrastructure. While it cannot be argued that the developed world is certainly responsible for a majority of the industrial CO2 added to the atmosphere, to make the argument that they should be obligated in any way financially to other parties due to blame for global warming is suspect. There are two important points that must be made for those individuals that are intent at assigning blame for the purposes of acquiring additional financial resources.

First, the idea of developed nations and developing nations as the single delineation point separating the world with regards to responsibility for global warming is inappropriate. Instead one should add a second division point within the developing nation pool that separates advanced developed nations from their slower developing counterparts. These advanced developing nations (ADN) include: China, India, Russia, South Africa, Brazil, Mexico, Saudi Arabia, Iran and Ukraine. ADNs have certainly contributed significant amounts of CO2 to the global warming problem for between 1990 and 2012 they contributed 46.4% of total global industrial CO2 emissions. Therefore, to presume that the global warming issue is entirely the fault of the developed world is irrational. Second, it could be argued that the ADNs should shoulder more of the blame for global warming than the developed nations because they focused on rapid energy infrastructure expansion versus global environmental stability, thus failing to learn from the actions of the developed world.

The ADN countries, especially China and India, did not have to resort to constructing of a massive number of coal and natural gas power plants to grow their economies, especially after the science of global warming was accepted by the mainstream scientific community in the late 1980s. These countries should have foreseen the future problems derived from following the developed nations down the CO2 rabbit hole and instead have constructed their energy infrastructure around nuclear and/or geothermal sources if a rapid buildup was desired. Realistically this poor planning has placed unnecessary and significant pressure on the global community to hasten CO2 mitigation and further increased the work required to do so both economically and politically. Supporting this unfortunate industrial path are CO2 emissions by specific developed and ADNs between 1990 and 2012 as shown in table 1.

Table 1: CO2 Emissions by Specific Countries between 1990 – 2012* (1)
* CO2 emission values in gigatons (billion tons);
Note: Developed World = USA, the 27 countries representing the EU, Japan, Australia and Canada;

While the developed world is responsible for a majority of the existing emissions, the problem is the change in emissions from 1990 to 2012. In 1990 the developed world was responsible for about 59.7% of direct global industrial CO2 emissions whereas in 2012 the developed world was responsible for only 41.2% of these CO2 emissions. Initially one may conclude such a change as understandable because the developing world became more modern and industrialized, thus an increase in industrial CO2 emissions would be expected. While true, the problem is not the change in the slope of the ratio, but the magnitude.

The total global emissions produced by the developed world have increased by only 0.44% between 1990 (11.19 gtons) and 2012 (11.24 gtons) thanks in large part to reductions by the EU, despite countries being added to its roster, whereas the global emissions produced by the ADNs have increased by 112.6% between 1990 (7.56 gtons) and 2012 (16.1 gtons) thanks in large part to increases of 292.8% and 198.5% in China and India respectively. Note that this increase is actually larger than the absolute percentage presented above because in 1990 the collapse of the Soviet Union lead to a large decrease in CO2 emissions that Russia has yet to recover (CO2 emissions were 27% lower in 2012 relative to 1990). If the ADNs learned from the developed world regarding the dangers of building an energy infrastructure on carbon, then their emissions certainly would have increased, but at both a pace and absolute value much lower than has actually happened.

Overall it is difficult to fault the developed nations for the Industrial Revolution. The idea behind the Industrial Revolution was to improve societal quality of life; however, with no “roadmap” to accomplishing such a task it is understandable that mistakes could be made, especially when the science behind and acceptance of global warming were not well regarded and those favoring it were in the very small minority. Therefore, CO2 emissions created by developed nations from the onset of the Industrial Revolution to the early 1980s can be regarded as “ignorant” emissions. The issue of blame becomes problematic for the ADNs because they observed how the developed nations expanded their economies and the quality of life of their citizenry, but also should have seen the eventual cost associated with the methodology of that advancement. It is akin to overcharging things on a credit card; sooner or later the bill will have to be paid.

Understand that the responsibility of those “ignorant” emissions should still be assigned to the developed nations, for the consequence of forging ahead into the unknown is a negative aspect of that unknown. However, the ADNs are at fault for not learning from those consequences. Their “ignorant” emissions are nearly non-existent because they knew the consequences associated with a fossil fuel heavy energy infrastructure forged by the developed world and accepted those consequences by mimicking the construction methodology during their own energy infrastructure advancement.

To this point ADNs cannot argue that there was sufficient uncertainty pertaining to the development and deployment of a large nuclear infrastructure because France, and to a lesser extent Sweden, created that very blueprint in the 70s. In addition Iceland created the blueprint for geothermal, thus the two major cost similar alternatives to coal and natural gas in the 80s had country-centralized examples of their widespread deployment. Note that solar and wind were incredibly unreasonable economically and technically at this time, and there is some legitimate argument that these characteristics still persist despite growing popularity, thus expecting ADNs to embark on a wind and/or solar centralized energy infrastructure would be unreasonable. However, there should have been no uncertainty regarding whether or not nuclear and geothermal were viable and cost effective sources of energy generation.

This behavior by the ADNs disqualifies them from making monetary demands from developed nations at international climate conferences to aid in the transition from a fossil fuel energy infrastructure to a non-fossil fuel energy infrastructure. They had the ability to guide that transition for much less money and refused to take the proper path in lieu of perceived faster economic growth. However, as alluded to above it is important to distinguish between the ADN and other nations like the Maldives, Bangladesh, etc. for they will bear great consequences from global warming and have contributed almost nothing to induce those consequences. Therefore, it is important to ensure that these countries receive sufficient funds from the rest of the global community to effectively adapt to global warming consequences. Overall although there should be little exchange of money between the developed world and ADNs, it is of the utmost importance for these two groups to cooperate in the goal of carbon emission mitigation to neutralize as many negative outcomes from global warming as possible.

Citations –

1. Oliver, JGJ, et Al. “Trends in global CO2 emissions; 2013 Report.” The Hague: PBL Netherlands Environmental Assessment Agency. 2013. Ispra: Joint Research Centre.

Wednesday, February 12, 2014

Living up to the promise of America by establishing a Guaranteed Basic Income

The birth of the United States was built on the concept of meritocracy where if an individual worked hard he/she could carve out a comfortable existence and if that individual worked smart he/she could become wealthy regardless of position of birth. This feature is one of the major reasons the United States rose from a fledgling nation into the most powerful nation in the world. Unfortunately the inherent nature of this meritocracy has been systematically diminished to the point where at least 46.2 million people (15% of the population) are currently living in poverty (a single individual less than 65 living on less than $12,119 per year or an individual 65 or older living on less than $11,173) in addition to 16.1 million children (21.9% of the demographic).1 However, on their face while these numbers are troubling understand that an individual does not simply move from “difficult life due to lack of financial resources” to “normal life with sufficient financial resources” if that individual earns $12,500 instead of $11,500; therefore, many more people suffer from a version of quasi-poverty that is not encompassed by simple statistics.

Some may attempt to explain this new reality by portraying modern individuals who are impoverished as lazy or not as smart as those in the past, but those holding this belief would be wrong. To even suggest that 15% of the population does not have an effective skill set that can benefit society is amazingly foolish. Instead certain individuals and groups, in order to consolidate money and with it power, have hijacked the structure of society. Sadly manipulating this meritocracy aspect of society has diminished the quality of the United States so far that now it typically only rests on the laurels and momentum of yesterday, remaining a world power solely due to the inability of other nations to take the title.

In the past education was the most reliable way for an individual to rise above his/her birth station and when augmented with hard work become wealthy. While education is still important, the certainty of its value has ebbed significantly because of higher secondary education costs paired with a reduced number of quality jobs that demand such an education due to technology advancement and company outsourcing in effort to increase profits. This reality has been exasperated by numerous high wealth individuals gaming the system and lobbying for legislation that helps them gain even more wealth limiting the amount that those below them can acquire. Poverty in the United States has become the equivalent of a lobster trap, much easier to fall into versus escaping.

Poverty among senior citizens was once rampant, but the creation of Social Security provided an effective strategy to manage it dramatically reducing senior citizen poverty. Unfortunately and somewhat peculiarly while Social Security manages senior citizen poverty, Americans under the age of 65 utilize a patchwork of programs including unemployment insurance, welfare, food stamps, housing allowances, training programs, etc that clearly have not done the job of reducing poverty. This inability to reduce poverty occurs in part because of the high entry costs into the job market for those with low sets of skills or those who have been unemployed for a significant period of time because typically these individuals cannot acquire jobs that have benefits and wages that of significant size in absolute terms or even relative to the benefits currently provided by government. Basically the effective marginal tax rate for taking these jobs is too high. Sadly most of these jobs also have very little room for advancement, thus they become what is commonly regarded as “dead-end jobs”.

Clearly for the United States to revive its superiority something needs to change with regards to how it treats its poor. The major reason why the poor struggle is not a lack of commitment, effort, gumption or intelligence, simply examining the lives of most working poor reveals these obvious conclusions, the chief problem is a lack of opportunity. This lack of opportunity is largely created by a lack of money. A pure no-strings monetary payment to individuals, commonly referred to as a guaranteed basic income (GBI) or simply basic income (BI), can reopen the door of opportunity for the poor allowing them to tap into their creativity and intelligence instead of burying it in a “dead-end job”. It is unclear exactly how many technological, societal and/or economic advances have not been made because a creative individual had to put food on the table versus cultivating a natural talent, but whatever the number it is higher than it should be.

The chief advantage of the BI is how it directly addresses the disadvantages of poverty. One of the problems with discussing poverty is that most of the discussion is conducted by individuals who have never experienced it. A number of people who are impoverished do not start that way, but instead experience a dynamic income shock that cannot be managed effectively due to a lack of savings. Most of these people have jobs, but the wages are so low that they are unable to save effectively because their funds go towards elements critical for survival. Eventually something goes wrong, the individual gets fired, gets sick, has a large single fixed negative monetary event like his car breaking down, etc. creating a financial hole.

While most are able to recover from this initial setback, similar events typically occur again and again deepening the hole ultimately leading the individual into poverty due to existing debt. Basically the individual never has the ability to climb out of the hole because his/her wages are not large enough to overcome these periodic unforeseen payment events, most of which are not the fault of the individual. This is the dynamic nature of poverty where in most situations it is a gradual descent, individuals initially falling then climbing up a little then falling a little more, versus a catastrophic fall. The incorporation of a BI would give these individuals an effective means to climb out of these dynamically formed holes.

One of the more popular advantages of a BI is that it would increase functional mobility allowing people to move to where specific jobs are available without fear and uncertainty. Any person in business would report that an important element for success is eliminating, or at least limiting, uncertainty; a BI would allow an individual the ability to think ahead and create a strategic plan without having to make risky assumptions. It would also allow people to work in jobs that positively influence society, but are not recognized as important by society, especially in terms of salary, like working at nursing homes, teaching special needs children, working as a lab tech trying to cure cancer, etc.

Another advantage of a BI is a possible reduction in criminal recidivism and initial criminal behavior. Most individuals who are not born rich can attest that the current job environment is one of the most difficult in U.S. history; however, for individuals who have some form of criminal record and are not celebrities the market is even more difficult. This difficulty creates a negative feedback loop where a number of individuals have no other recourse for survival than to commit more crimes creating a “revolving door” relationship with prisons. A BI would eliminate this negative feedback loop and if engaging in criminal activity could result in the loss of the BI it would reduce the probability that individuals who lack a criminal history become criminals out of financial necessity.

An indirect environmental and economical advantage of incorporating a BI is a dramatic reduction in homelessness, which will increases property and home values throughout the country. Additionally a consistent income will allow everyone the opportunity to eat and exercise properly as well as have general medical checkups, which will be one element in the puzzle to reducing medical costs among the poor and further reduce emergency room visits and crowding. In fact these outcomes have already been supported by past small scale BI experiments.2 This savings could even transfer over to reduced insurance premiums due to an overall healthier candidate pool.

However, despite all of these side advantages to a BI, including bolstering a social and moral sense of justice that is supposed to be defining characteristics of the U.S., the overall purpose of a national BI is to address the basic needs of an individual without requiring that individual to work. Therefore, it is important to establish an effective range of costs that a BI must encompass to achieve such a goal over simply establishing a BI at some arbitrary number like $6,000, $10,000, $15,000 or $25,000. So what are basic needs and how much would they cost?

Food and water costs are the most essential elements that must be included in the BI. While food is essential, gourmet food is not. Normally food stamp benefits average to approximately $2-$3 an individual a day.3 This amount is currently sufficient for survival, but no rational person can conclude that this amount allows an individual to optimize his/her potential or even remain reasonably healthy. Therefore, increasing this “amount per day” allotment for a BI is imperative.

Some estimate that for individuals at and below the poverty line 1/3 of their income should go towards food. Taking an income at the poverty line this “rule-of-thumb” would develop a food allotment at $10.49 - $11.07 per day. This value is ridiculously high in the context of reasonable health survival, which is the intent of a BI, thus this value cannot be utilized. Suppose the BI assumed food costs at $5 per day. Alone such a quota heavily restricts individuals from eating at restaurants that are not defined as “fast food” and it also slightly compromises the ability to consume significant quantities of daily meat. The biggest problem with this dollar amount is the consistent purchase and consumption of fresh fruits and vegetables. However, despite these restrictions $5 per day should be sufficient for proper health for individuals who have access to supermarkets and shop wisely making sure to take advantage of sales. At $5 a day the food portion of the BI would total $1,825 per year.

Clearly a BI needs to include shelter costs and essential elements within that shelter including heating and cooling. Note that some individuals use cheaper geothermal/solar heaters in their homes, but these are rare nationally leaving the chief method of heating as electric, natural gas, oil or propane furnaces. Among these heating mediums, both oil and propane are overpriced, so individuals with these types of centralized heating systems should instead utilize electrical space heaters for warmth. While natural gas can be price comparably to electricity, natural gas is not as price stable as electricity complicating the estimation and overall budgetary issue for a BI. Therefore, calculations for heating/cooling for a BI will utilize an electric furnace as standard.

For a standard 2,000 sq ft space in a climate encompassing the state of Indiana electric heating and cooling costs can be estimated at $2,332 for a year.4 Clearly there is some standard deviation in this number based on regional climate; an individual living in Western Washington State is going to have lower heating and cooling costs than someone living in North Dakota; also electricity prices vary depending on where one lives; however, the number above is regionally average enough to provide an accurate assessment for a fixed BI. While a 2,000 sq ft living space is nice, the purpose of the BI is to address a minimum healthy standard of living, thus it is not reasonable to expect an individual on the BI to live alone in a residence of 2,000 sq ft; 700 sq ft is a more appropriate space. While it may be questionable to make a direct proportional comparison between size occupancies, it is the strategy that will be used here. Based on this information the BI should assign $816 for yearly heating and cooling costs. Also most communities charge their residence for sewage, water and trash removal with a national average for these services totaling $900 in a given year ($75 a month).

Clearly not all individuals can live in environments where all necessary amenities (jobs and food) are within walking distance or have available public transportation, thus there must be a BI allotment for travel. Assuming that an individual travels 40 miles a day with a vehicle that gets an average of 30 mpg then using the national average gas price of $3.25 per gallon yields a BI travel allotment of approximately $1,580 per year.

One of the biggest questions is how the American Care Act (ACA) subsidy system would change in an environment with individuals receiving a BI. While this interaction is unknown, regardless of any influence there are certain preventative healthcare elements that could be viewed as necessary such as dental visits, basic medical check-ups and the occasional over the counter purchase of some regulated treatment for a random ailment. Based on current costs a medical allotment of $75 a month ($900 a year) should be a reasonable inclusion in any BI package.

The final and most complicated element of a BI is shelter. It is not the responsibility of a BI to allow an individual to reside in any city in any state in the country; however, it is reasonable that an individual should be able to select from numerous living environments and have the possibility to live alone, not be forced to live with roommates due solely to financial necessity. For the moment the more complicated nature of home ownership will be excluded from influencing a BI because owning a home should not be expected as a valid element in calculating what is necessary for survival, thus focus will only be placed on rental properties.

Average U.S. rental costs total approximately $819 per month, but this number has a significant standard deviation between the five most expensive rental states: Hawaii ($1,235), California ($1,118), New Jersey ($1,058), Maryland ($1,044) and Massachusetts ($987) and the five least expensive rental states: West Virginia ($532), South Dakota ($558), Arkansas ($601), Iowa ($607) and Montana ($613).5 Based on this standard deviation difference utilizing just the average may not be appropriate because of a smaller number high value states like Hawaii and California bumping up the average. Basically if $819 used for the BI instead of that average representing conditions where about half the states are below and half are above this housing allotment, the standard deviation value of the expensive states create a situation where 32 states are below the line and 18 are above it creating an allotment that is too high. Therefore, for the purpose of this analysis the BI will allot $750 a month for housing (26 below and 24 above). Also recall that these values represent averages not minimums, an individual could live in certain areas in expensive states like California or Hawaii, thus there is no state exclusion.

The following table summarizes the total cost of providing an appropriate BI package to a given individual:

Table 1 – Minimum Costs Associated with Healthy Living in U.S. Society

Food = $1,825
Heating, Cooling, Sewage, etc = $1,716
Travel = $1,580
Self Reliant Healthcare = $900
Housing = $9,000

Total = $15,021

There is a concern about the BI value calculated above in the context of building the economy. Proponents of the BI frequently cite that one of the important advantages of the BI is that individuals will be able to invest their time in endeavors that he/she are unable to because that time is needed to work in order to acquire money to survive. However, the above number could restrict this new financial freedom. The question is while from a living necessity standpoint Internet access is not a required element, for individuals who want to invest time in endeavors that they may want to later turn into a career will money have to be given for their occupational necessities? If so then at least another additional $500-600 will need to be added to the BI. Despite this concern this analysis will categorize personal at home Internet access as a luxury similar to television largely because most libraries have sufficient Internet access.

With a logically produced number to represent the BI, analysis pertaining to the viability of such a program can commence. In the rational idealist proposal the BI is given to all citizens of the U.S. regardless of age, income or other demographic similar to how Alaska’s Permanent Fund Dividend is given to Alaskan residents. Some would argue that a BI should be extended to all individuals living in the U.S. regardless of citizenry, but this idea politically is almost an immediate non-starter and is morally and practically questionable. Unfortunately this rational idealist position immediately runs into a problem regarding costs.

Taking current population data there are approximately 317.5 million individuals living in the United States. In 2011 it was estimated that there are approximately 11.7 million illegal aliens and an additional 28.7 million legal aliens (individuals who are legal residents, but not citizens or are on some form of visa),6 this value should still be reasonably accurate. After these eliminations the remaining population that would receive a BI is approximately 277.1 million. Taking the BI calculated above the federal government would be responsible for paying out approximately 4.16 trillion dollars to support this BI every year. Unfortunately in 2013 the revenue of the federal government totaled 2.774 trillion dollars and federal expenditures totaled 3.454 trillion dollars in 2013, this additional cost is not viable even with major changes to both revenue and spending streams. Note that this cost only eliminates the simplest BI, one with only a citizenry restriction; it does not eliminate the idea of a BI itself.

So what restrictions would be necessary and fair to create a cost structure that is viable? The first logical place to apply a restriction is on income. The purpose of a BI is to help support those individuals who have low to no incomes because for some reason they were unable to acquire sufficient opportunities to acquire wealth or failed in those opportunities. Assigning an appropriate income ceiling for eligibility is tricky because one must exclude a sufficient amount of individuals who do not need the BI. Based on the premise of the BI it stands to reason that eliminating 15% of the population, representative of the top 15% in total assets, would be an appropriate restriction. Assuming that 98% of this 15% are citizens that would eliminate slightly more than 40.7 million (277.1 million * 0.147) leaving approximately 236.4 million eligible for a BI.

Some critics may argue that this income cutoff is inappropriate because there is an income “cliff” that exists just above the cutoff similar to the welfare “trap” that currently exists. Basically suppose the income cutoff was $150,000 then an individual earning $149,800 would receive the $15,000 BI giving them additional disposal income whereas an individual making $150,050 dollars would not receive the $15,000 BI. While this criticism is valid it misses the point. Recall that the purpose of the BI is two-fold: eliminate poverty and increase economic growth by reducing market inefficiency by increasing the spending ratio of existing capital. If the income cutoff were $50,000 instead of $150,000 then this “cliff” issue would be a significantly greater matter in the efficiency and general nature of the BI. However, despite what some believe individuals making $150,050 a year are not poor or middle-class in any respect, remember the cutoff is at the top 15%, thus an increase of 10% in that pre-tax income for individuals in the bracket will not produce significant increases in spending efficiency in the whole marketplace. Also because the BI is based on individual earnings there is no penalty for a rich spouse further limiting any perceived unfairness.

The second restriction should be based on age. Children are less able to take advantage of the direct and indirect benefits associated with the BI. For example upward mobility for children is limited by their lack of skills and desired occupational goals. Additionally most travel options for children are limited to being chauffeured by parents, riding a bike or other self-powered wheeled device or moving on foot, thus any travel allotment is unnecessary. Overall age eligibility at 18 appears most viable because it is the age that society typically recognizes an individual as an adult. Based on general demographical information from the 2010 census this restriction would elimination another 28% of the population, but one must avoid double counting (counting non-citizens under the age of 18 twice once as non-citizens and again as under 18), thus a 1.1 to 1 birth ratio will be applied between non-citizens and citizens. After taking this step to avoid double counting the age restriction eliminates 76.5 million (instead of 88.9 million), thus leaving 159.9 million eligible for a BI.

A third restriction could be assigned regarding an individual’s criminal standing. There are two sub-restrictions that could comprise this criminal history restriction. First, any individual committing a violent felony would be ineligible for a BI for a number of years equal to the time served in prison for the given felony. Second, any individual committing two misdemeanors would be disqualified from the BI for the next calendar year following a two strikes and you’re out type scenario. Non-violent felonies or violent felonies that result in no jail time could count equal to two misdemeanors. It is unclear how many individuals this restriction would eliminate, but the general idea behind it is not financial conservation, but creating a greater moral and community standing for the BI itself. While the moral ramifications of what one does with a BI are typically not the concern of society, it is the concern of society when individuals would use a BI to directly engage in criminal activity. Note that under this scheme no individual would be penalized for previous transgressions, i.e. their criminal history before implementation of a BI would be irrelevant.

Estimating the number of individuals that would be eliminated by this condition is difficult because there is limited information regarding what could be termed “Jean Valjean” criminal activity, i.e. how many people commit crimes for the sole purpose of survival? What is also unknown is how many individuals will stop committing crimes when $15,000 is at stake? Most individuals would argue successfully that most inmates in U.S. prisons could be classified economically as middle class or lower. While some are clearly violent individuals who deserve to be in jail, others allow their boredom (lack of money for opportunities) to put them in situations and/or environments that result in a higher probability of committing low-grade misdemeanors that eventually land them in prison. Others would argue that a $15,000 BI would disincentivize small time drug dealing in urban environments because such behavior is commonly born from the lack of other legal means to acquire funds, thereby further reducing the prison population.

Unfortunately as stated above these possible behavioral changes and others are difficult to quantify, thus for the purposes of this analysis it will be estimated that of the current approximately 7 million individuals on parole7 that half of them (3.5 million), with an additional 1.5 million of the 2.267 million currently incarcerated,7 will fail to maintain a “clean nose” and thus fail to qualify for the BI. Finally about 5% of these individual are non-citizens who would not receive the BI anyways, thus based on these assumptions another 4.75 million individuals would be eliminated from the BI leaving the total number of individuals receiving the BI slightly more than 155 million costing a grand total of around $2.33 trillion.

2.33 trillion dollars is a lot of money, but is significantly less than the previous citizenry estimate of 4.16 trillion dollars and more importantly is low enough that it could still produce a viable BI methodology. However, this methodology will require changes to the current federal government revenue and spending strategies. For starters the most important point when investigating the incorporation of a BI is producing budgetary changes that will create a net gain, not simply create an equal substitution. Currently the federal government is running a deficit both yearly and overall with the overall actual national debt exceeding 16.7 trillion dollars (obviously a general guidepost number is used here because the debt increases daily). While certain individuals heavily overreact to the urgency in which the national debt needs to be addressed, only a fool would suggest that it be ignored completely largely because of lingering interest payments that will increase with time and make stabilizing a BI incredibly difficult. Therefore, incorporating a BI, especially one that will float in value from year to year, needs budgetary changes that will produce net revenue higher than the current budget.

One of the most common points made in favor of a BI is its simplicity and transparency allowing for the consolidation of government “safety net” programs eliminating their cost and associated bureaucracy. These programs include: unemployment insurance, general welfare, supplemental nutrition assistance program (SNAP a.k.a. food stamps), school meal programs, low-income housing assistance, home energy bill assistance, refundable portions of the Earned Income Tax Credit and Child Tax Credit, supplemental security income, etc. All of these programs together generally cost the federal government between $410 billion and $450 billion per year, thus completely eliminating them after the incorporation of a BI will result in equal savings.8,9

Inherently separate from the BI issue itself, additional funds can be cleared by reducing the budget assigned to the Defense Department. Currently their budget slightly exceeds $900 billion, which is estimated to fall to slightly over $800 billion over the next 5 years due to the conclusion of military operations in Afghanistan,9 but even if that $100 billion reduction is accurate $800 billion is still an inflated amount for what it buys and is necessity. Without cutting funding for veterans and current staff/soldiers, at least $300 billion could be removed from the Defense Department’s budget without any reduction in U.S. safety.

As discussed briefly above it is unclear how a BI and the ACA will interact. It is also unclear how a BI and Medicaid will interact. While there should be no interaction between BI and Medicare, Medicaid is built around helping the poor afford health insurance and may no longer be necessary in a BI environment. Currently the federal government spends approximately $324 billion on Medicaid8 and this value is projected to increase significantly in the future, in part due to the subsidies paid out through the ACA. There will have to be significant study regarding who would qualify for Medicaid in a BI active environment. The chief issue in this debate would be hospitalization because as mentioned above the BI will support preventative action; however, the major costs associated with healthcare in the U.S. with younger individuals are dynamic spontaneous events, which frequently require short-term hospitalization that can run into thousands of dollars in costs. For the purpose of this analysis no funds will be transferred from Medicaid to support the BI.

With the administration of a BI it stands to reason that portions of Social Security (SS) will be terminated for it is unreasonable to expect the government to fund a BI and continue to fund SS as it is currently structured. Note that expenditures in SS are broken down into four major categories: the old age and survivors insurance (OASI), disability insurance (DI), Medicare hospital insurance (HI; a.k.a. Medicare Part A) and Supplementary Medical Insurance (SMI; a.k.a. Medicare Part B & D). The OASI is the component most people associate with SS. With respect to establishing a BI it stands to reason that both the OASI and DI components would be eliminated with HI and SMI components remaining, but there could be some possible restructuring depending on how the BI compliments these Medicare programs. Overall the elimination of the OASI and DI programs will free up between $785 billion to $820 billion that can be utilized for a BI.8,10 Note that for now on references to SS will now only entail the OASI and DI, not the Medicare portions.

There are two important points that must be addressed about ceasing SS under a BI program. First, there is the question regarding whether or not a BI is a sufficient replacement for Social Security? Average SS payouts in 2011 ranged from $11,080 to $12,000 and have not changed much since whereas the BI will be almost exactly $15,000; therefore there should be no trouble for most senior citizens moving from their Social Security benefits to a BI. Note that this is a general average that does not include any special considerations for early retirement at reduced benefits or increased benefits from full payments. Clearly there will be a negative shift in benefits for some individuals, but a switch from SS to BI should not adversely affect a vast majority of SS recipients and not grievously affect any current SS recipients.

Second, recall that SS is funded by a tax, thus that tax will have to remain in place so funds can be diverted to the new BI system. However, up for discussion is whether or not the ceiling for this tax should be lifted. While the payroll tax of 12.4% is split evenly between employers and employees at 6.2% each with payment based on the wage of the employee, only a specific amount of that wage is taxed. In 2013 this ceiling was $113,700 meaning that all wages above this value are not subjected to the payroll tax. Due to the fact that the percentage of earnings has risen faster among the rich versus the middle class and the poor this ceiling exempts at least 14% of existing wages from the payroll tax.11

The origin of the ceiling is unclear. Originally SS was supposed to have a wage exemption for non-manual workers with monthly earnings of $250 or more. Therefore, from the beginning the general idea was to exempt richer individuals that held jobs in finance and management. During negotiations this exemption was replaced by the income ceiling because of valid concerns for the exemption creating unreliable coverage for beneficiaries due to monthly income fluctuations.12

One argument for “protecting” the income of the rich is that SS is really nothing but a government run savings program because history has demonstrated that many individuals are incapable of saving for their own retirement even if they have jobs. If this characterization is used then it makes sense that there should be a ceiling of sorts, which would symbolically designate those individuals who have significant amounts of money in that even if they mismanage it they should still have enough left to save for retirement. Also viewing SS through this lens should justify the ceiling because SS is not a progressive program (income transfer), but a savings account where each person gets out of it generally what they pay into it. Therefore, some would argue that eliminating the ceiling is not appropriate.

Unfortunately those who would argue this point, even if correct which is debatable, fail to acknowledge the changing economic environment with the dramatic expansion of wealth for the super rich, especially in correlation to the dramatically increased U.S. population. This change makes using past intentions inappropriate for such an income disparity in a nation with a population of 127 million is explainable on moralistic grounds whereas that same disparity in a nation with a population of 317+ million is not.

Previous estimates have concluded that at least $219 billion can be recovered from lifting the ceiling.13 Note that this estimate was produced in 2022 using IRS data that calculated approximately 1.77 trillion dollars in earnings that were above the current $90,000 dollar cap.13 The increase in the payroll ceiling ($113,700 in 2013) is tied to inflation and other small factors, but wages for the highest earners have increased the fastest among all earners and outpaced these changes; therefore, the ceiling increase has increased at a slower pace than wages for the highest earners. With this trend it stands to reason that a smaller ratio of earnings is falling under the ceiling. Also with the highest earners least affected by the Great Recession this $219 billion estimate should be regarded as a minimum amount that could be acquired by eliminating the payroll tax ceiling. Finally from a fairness standpoint eliminating the ceiling is much more appropriate than increasing the payroll tax percentage.

Although it will be demonstrated later that a BI will not stimulate any significant disincentive to work, another possible change in the payroll tax that could aid workers is change the weight of the tax burden. For example it may help low wage jobs at large corporations if instead of a 50/50 split of the payroll tax the percentage was modified to approximate 33/67 split between the worker and the company (the worker pays 4.2% and the company pays 8.2% of the existing 12.4% tax). This strategy may also limit the illogically high wages and bonuses paid out to CEOs and upper management at higher value corporations. There are some who would portray this strategy as bad for business under the belief that all taxes are bad for business. However, in a consumer driven economy it stands to reason that most, if not all, negatives produced by this change in tax policy would be offset by the positives of increased spending by consumers due to increased revenue both from the BI and from a smaller payroll tax.

Another change to the tax code involves reverting the long-term capital gains tax back to its progressive mirror in the past where capital gains and income were treated identically. Note that a “capital gain” is defined as an increase in the price of a financial asset between when it is purchased and when it is sold where such assets include stock, real estate, collectibles, precious metals, etc, versus a dividend which is a portion of company profits that are paid to shareholders. There are two types capital gains based on the length of time the investment was held before sale: short-term and long-term. Currently short-term capital gains, investments held for a year or less, are taxed at a rate identical to the holder’s income rate whereas long-term capital gains were once similar before being reduced to 0% for the lower two brackets and 15% for all other brackets as part of the Economic Growth and Tax Relief Reconciliation Act of 2001 (popularly known as the Bush tax cuts). This rate remained constant until 2012-2013 when the rate for the highest bracket was raised to 20%.14 Note that there are certain exemptions on certain types of capital gains like collectables and some types of property that are calculated differently.

Some argue that increasing the capital gains tax is not appropriate because it discourages investment, thus reducing the growth probability of the overall economy. Basically a lower capital gains tax encourages investment and creates jobs leading to greater economic growth. However, this argument is old hat because no statistical significant correlation has been demonstrated between economic growth and capital gains tax rates between 1950 and 2011.15 In fact there is greater evidence of a negative correlation between capital gains tax rate reduction and rates of saving and investment than a positive one.16,17 Basically there appears to be no legitimate empirical evidence supporting an argument to maintain a low capital gains tax relative to associated income tax only soft theory and weak anecdotal evidence that does not hold up under empirical scrutiny. The sole point of keeping the long-term capital gains tax lower than income taxes is to provide a tax shelter for individuals who want to neglect their responsibilities as citizens.

Another problem with maintaining non-income equivalent capital gains tax rates is that a vast majority of rich people are able to use certain tax loophole tricks to portray income as capital gains, thus most of the highest 1% actually pay an effective tax rate that is typically 50% less than the rate they would pay if all of their earnings were income like most middle class and poor individuals. For example in 2007 the richest 400 U.S. taxpayers paid an effective rate of just 16.6 percent, far below the 35% rate (under the Bush tax cuts) that they should have paid if their earnings were income.18 In addition to increasing the long-term capital gains tax government must close the “stepped-up basis” rule governing property bequeathed to heirs, which is another common tax dodge by the rich that costs the government hundreds of millions to billions of dollars. Of course if this loophole is closed then there must be appropriate association with the estate tax to avoid any type of double taxation.

Another common argument against increasing the long-term capital gains tax is to encourage individuals to actually sell their assets, basically to avoid what some call the “lock-in” incentive. This argument is nonsensical because no rational individual will fail to sell an asset once it reaches the appropriate value relative to the psychological conditions of the owner and the environmental conditions of the economy that induce sale. If an individual never sells assets due to fear of getting taxed then said individual would never receive any actual benefit from the asset.

This logic suffers from the same flaw as those who claim that people avoid working hard and making lots of money because of high tax rates. So an individual would rather make a gross of $30,000 a year paying about $4,054 in taxes yielding a net of $25,946 a year than make a gross of $80,000 paying about $15,929 in taxes yielding a net of $64,071 a year? Such rationality is completely foolish and unsupported by basic human psychology, existing empirical evidence and general logic. The idea of “lock-in” is just a boogieman that people use to manipulate the situation to get their way, thus it should not be given any credence. There is also evidence that supports the non-existence of “lock-in” in long-term trading.19

Overall increasing the capital gains tax and closing all of the associated loopholes are important steps for increasing government revenue because as discussed above the more money an individual makes the higher likelihood that a higher percentage of that money comes from capital gains not from a wage. Therefore, a low long-term capital gains tax creates market inefficiencies by further enhancing the funneling of money to the wealthiest individuals while similarly removing money from the consumer marketplace. The CBO estimates that more than 90% of the benefits of reduced tax rates on capital gains and dividends will go to households in the highest income quintile with 70% of that going to households in the top percentile.20 Establishing a higher capital gains tax and using those funds to support a BI dramatically reduces those inefficiencies and should be supported by any legitimate capitalist. Overall changing the long-term capital gains tax to the fair and appropriate values reflecting income similarity would increase federal revenues between $134 and $161 billion per year.20

Another strategy to increase revenue is to simplify the tax code by eliminating all of the different filling methods sans single and head of household. The general reasoning behind other methods like joint and married filling separately have become outdated and merely complicate filling in addition to providing unnecessary benefits, especially in an environment with a BI. In addition the elimination of the standard deduction and personal exemption should also help streamline the tax code and increase revenue that can then be more efficiently transferred to the BI program. Finally as mentioned earlier establishing a BI would limit the usefulness of the Earned Income Tax Credit, thus allowing for its elimination. In the recent past it was estimated that making these changes could increase federal revenues by $304 billion ($60 billion from limiting filing options, $99 billion from eliminating the standard deduction and $145 billion from eliminating the personal exemption).13

While these above eliminations are straightforward and make sense, important study should be reserved to identify if eliminating other tax exemptions like “Interest on public-purpose State and local bonds”, “Step-up basis of capital gains at death”, “Capital gains on home sales” “Accelerated depreciation of machinery and equipment” “Employer contributions for medical insurance premiums and care” and/or “Interest on life insurance savings” would be appropriate. Depending on the conclusions reached the elimination of these tax deductions and others could increase federal revenues between $247.85 billion to $740.810 billion.13

Another means to increase revenue for a BI is apply a financial transaction tax (FTT) to stock purchase and/or sale. A stock-based FTT is easy to implement and adds no significant bureaucracy or cost structure to the existing tax system thereby maximizing the net revenue acquired from such a system. In addition to its general simplicity FTTs are currently administered without issue in 40 countries including 16 G20 nations as well as the U.S. itself. While the FTT was larger when it was initially administered between 1916 and 1966, the U.S. currently still incorporates a 0.0034% tax on stock transactions that funds the Security Exchange Commission.

There are two major types of FTT: those based on a flat rate per stock action and those based on a percentage of stock value. The first type involves incorporating a flat additional fee whenever a stock is sold. This fee is not influenced by the value of the stock at sale. For example if a 50 cent FTT existed and an individual purchased 1,000 shares of stock A at $50.00 and then later sold all of those shares at $57.00 that individual would make a gross of $7,000 and have to pay $500 in FTT fees.

Percentage of stock value is exactly as it sounds. Returning to the above example for a 0.05% FTT (a typically value) the individual would make a gross of $7,000 and have to pay $3.50 in FTT tax. Not surprisingly the higher the value and volume of stock the more tax is collected via the second type of FTT versus the first. Typically the second option is favored by a vast majority of individuals because it has the potential to raise significantly more revenue and primarily focuses on individuals that buy and sell stocks at large volume and value (i.e. focuses more on rich traders rather than middle class traders).

An FTT could be applied to other financial transactions as well like bonds, futures, options and swaps. While there is some hope that an FTT could also reduce high frequency trading, which is thought to have a negative influence on market stability, any reduction would be born from a general reduction in trading period because there is no time variance in the tax. Truly reducing high frequency trading would involve incorporating a FTT that was initially high and reduced in size depending on how long the stock is held; i.e. for stocks sold less than 24 hours after purchase the FTT would be 5% versus for stocks sold at least one week after purchase the FTT would be 0.05%. Overall a 2008 report conducted by the G20 concluded that a global FTT could result in an additional $176.9 to $353.8 billion in annual revenue for the U.S.21 This analysis should still be regarded as valid because the U.S. stock market has recovered the value lost from the Great Recession.

Some proponents of the BI would argue that creating an additional surcharge tax on the rich or increasing the highest bracket of the income tax rate should occur for further funding. While understandable this line of thinking may be inappropriate on the same prescript of fairness and morality that one would argue for the BI. A progressive tax system on both the income and capital gains level is appropriate and fair to ensure maintenance of market efficiency, but gouging the rich at rates that exceed 50% solely because they are rich in some name of “public welfare” is questionable. One could argue that the rich have been gaming the system for so long in their favor that applying a surcharge rate over a fixed period of time, not indefinitely, would be justified in correcting the imbalance created by the subversion of the progressive tax system. However, in this particular analysis no such surcharge will be included.

The overall changes in revenue and spending streams proposed above produce the following result shown in table 2 (note that when appropriate certain values were rounded).

Table 2 – Increases in Federal Revenue due to Changes in Revenue and Spending


Eliminating Existing Welfare Programs = $410 billion to $450 billion
Decreasing Defense Budget = $300 billion
Ending SS Retirement and Disability Payments = $785 billion to $820 billion
Eliminating Payroll Ceiling = $219 billion
Increasing Capital Gains Tax to Mirror Income Tax = $134 billion to $161 billion
Eliminating various filing elements = $304 billion
Elimination of various tax loopholes = $248 billion to $741 billion
Addition of a Financial Transaction Tax = $177 billion to $354 billion

Total Monetary Gain = $2.57 trillion to $3.35 trillion

With the total cost of a restricted BI estimated above at approximately $2.33 trillion, the proposed changes cover this cost at minimum estimation clearing an additional 10%, which meets the secondary objective of a positive increase in the balance sheet versus a near equal substitution. The maximum estimation easily exceeds cost clearing an additional 50%. Note that these estimations attempted to be as conservative as possible relative to the real world, thus it is more likely that more money can be made/saved versus less if these elements were put into practice. Therefore, cost of the currently proposed BI should not be an issue.

Eligibility for the BI can be confirmed through filing an individual tax return. Some have argued that the BI should be electronically deposited into each individual’s bank account, but such a strategy seems na├»ve due to the threat of cyber crime and the questionable belief that everyone thinks that all individuals in society have a bank account and Internet access, which is obviously not the case. Therefore, a check similar to a tax refund sent by mail seems to be the most fair and all-encompassing strategy. Individuals without bank accounts could then use this check to create one with a stable foothold. Later if security concerns are managed the system could move from paper check to electronic deposit. For individuals without a permanent residence they could petition that the check to be delivered to certain federal buildings like post offices where identification would be confirmed through SSNs and/or valid photo identification. Note that this described proposal is not a negative tax that correlates with tax obligations, but is an additional payment based on the above eligibility restrictions. Negative tax methodologies are typically more difficult to administer because of more “moving” parts.

An additional question is whether to distribute the BI on a monthly basis or in one lump sum. A lump sum payment has the power of scale advantage allowing individuals to act immediately on their ideas. For example suppose an individual wants to become a chef, the purchase of a van for a catering service can be made immediately with a lump sum payment versus waiting four to six months if payments are made monthly. Homeless individuals could immediately search for and acquire places of residence with a lump sum payment (deal with security deposits and first month rent) versus waiting multiple months. Also one check over multiple checks will limit overhead costs before any type of transfer to an electrical system, if one even occurs.

However, the disadvantage of a lump sum payment is that it can result in a greater chance of a negative impulse purchase that could result in a financial setback for the individual. Some individuals, especially those living paycheck to paycheck, may not know how to manage “large” sums of money at one time. Overall one could argue that the important question on this issue is does government have a responsibility to place individuals in low risk decision-making environments? Perhaps it would be in the best interest of all parties for government to provide instruction (maybe via pamphlet) regarding budgeting and proper money management with each check.

Outside of cost, the only significant detraction that can be brought against a BI is that it will create a disincentive for poorer individuals receiving the BI to seek work. Not surprisingly this is the same criticism that is used of current welfare programs that created the “force” people to seek work mindset that largely drove welfare reform in 1996 as well as some strange concerns about the ACA; work disincentive arguments involving the ACA are strange because one cannot feed, cloth and shelter oneself on healthcare subsidies. Unfortunately for opponents of a BI this criticism is unfounded on at least two levels.

In the late 1960s and 70s both the United States and Canada embarked on various small-scale experiments with negative income taxes (a program very similar to the BI proposed here). Hum and Simpson along with Levine and Widerquist have conducted analyses of the conclusions drawn from these experiments and overall very little statistically significant disincentive to work was seen in any of the experiments.22-24 In addition none of the disincentive resulted from individuals simply staying at home and eating bon-bons on the couch while watching television.

Some of the change in work response involved individuals taking more time to look for work; basically instead of taking the first job available due to financial necessity individuals looked for a job that better fit their educational background and general interest. Other changes involved reducing work hours from generally larger than average amounts like 60 hours to 50 hours because the additional money from those hours was no longer worth the opportunity costs, clearly something no rational person would find inappropriate. Even if this behavior was problematic in the past in the current economy workers are fighting for every paid hour they can get, thus the environment eliminates this result as a potential problem.

The demographics that had the greatest influence on the “disincentive” were young individuals who normally expanded their education versus working and secondary earners (mostly females with young children). Note that while female reentered the workforce less quickly one could take it as a sign of the times in that in the late 60s early 70s it was more difficult for females to acquire work, thus frequently requiring numerous attempts to get a job. Also one could argue that these changes actually helped the economy by increasing the quality of available human capital, i.e. better rested and educated work candidates.

An important distinction that must be made in the disincentive to work discussion is with regards to the definition of what exactly is a job? One could argue that a job is a task/role that an individual engages in to produce a positive benefit for society. If that is the case then income derived from the task is not relevant to its validity as a job; or is it that if one does not receive some form of monetary capital from performing an action then it is not a job? If the latter is the case then what is the difference between an individual who works with disadvantaged children helping them gain the skills to better interact with society and gets paid $20,000 versus one who does the exact same thing and gets paid nothing? As stated above almost all individuals want to engage in positive tasks both to enhance the meaning of their existence and to avoid boredom, thus individuals will not simply sit on the couch in a BI program. In fact because the BI only covers need it is unlikely that individuals who do not have another means of income will have the funds to partake in leisure activities even the mundane ones like watching television.

One important limitation of the past studies is that the participants were aware that the BI payments were part of a temporary experiment. Therefore, acknowledgement of this short-term viability may have influenced behavior. One possible negative outcome is that these individuals did not permanently leave work because they knew that the BI payments would end after a set period of time and they did not want to lose their means of financial support after that point. However, while such a mindset is possible for the reasons stated above it probably was not a significant influencing factor in their employment behavior.

Realistically one could expect some disincentive to work from a BI only in the low-income (minimum wage) jobs; for example it is incredibly unlikely that an individual leaves a $50,000 a year job simply because they are now receiving $15,000 a year from the government. Also from a logical perspective general human behavior and ambition reduces the viability of any disincentive to work because of the new growth potential created by the BI. The reason for this rationality is that the BI will supplement the low wage allowing individuals in these positions to save creating what could be regarded as a “dream” fund. After an intermediate time using both the low wage and parts of the BI to build the “dream” fund the individual could leave the low-wage job using those saved funds to drive their change of career.

Ironically this departure is not a bad thing because when the departing individual seeks to advance their career in some form it will create a job opening giving a younger individual, more than likely a teenager who is not eligible for the BI, an opportunity to start his/her “dream” fund. With the advancement of technology and the overzealous attitude of business to outsource certain jobs, the number of qualified job openings is the limiting factor for the general occupational marketplace versus available labor as the limiting factor like it was in the 50-80s; therefore, this behavior would actually drive the economy in a positive fashion versus the current environment.

To expand on the above point, in the past (50s and 60s) the qualified laborer was the limiting factor for most occupations. Basically if an individual had the proper qualifications he could get almost any job that fit those qualifications. However, in the current environment the number of available job openings is the limiting factor, thus numerous people even though they have the proper qualifications to work in field x their probability of doing so is low because of fewer openings in the field. Looking at this concept numerically in the past there would be 500 job openings and 473 people available to fill them. In such an environment disincentive to work could be a problem because the labor pool is the limiting factor. Now there are 400 job openings and 1,187 people available to fill them. In this environment disincentive to work is not a problem because not enough of these candidates will remove themselves from the job market to create a labor pool shortage. Overall there is no logical or empirical backing to oppose a BI on the grounds of it producing societal significant disincentive to work.

Another possible question is what are the moral obligations of society regarding how the BI money is utilized and the outcome of that utilization. Basically some would object to the BI because it would be handing over money to individuals who would use it for various vices like alcohol and inappropriate drugs. However, it would be hypocritical to morally judge the decision-making of these individuals for few people judge the moral choices made by various corporations regarding how they spend money allocated from government tax breaks. Overall it stands to reason that some individuals would spend BI money to feed certain negative habits, but most would not and to invalidate the morality of a program based on the actions of a very small percentage of the affected population would be inappropriate. Or do objectors on these limited moral grounds believe that gun ownership should be heavily restricted on all U.S. citizens because of the poor choices made by a select few?

The other question regarding utilization is how to manage those individuals who squander their BI and are left without capital? Are these individuals left to their own devices or should another strategy be incorporated? It is difficult to argue in favor of secondary assistance when the purpose of the BI is clear and its funding will require the elimination of the existing federal safety nets. Therefore, there are two options: one have individuals accept responsibility for their actions in how they spend their BI and if spent improperly deny any additional governmental assistance or two have states provide some level of temporary support for residents. The chief problem with the second option is that individuals may be unjustifiably risky with their BI if they realize that there is a secondary safety net that can protect them. Therefore, unfortunately those individuals who squander the BI should have no general secondary safety net.

Some would ask what would society do about the lost jobs stemming from the proposed cuts to the military, the welfare system and some other government. Of course jobs would be lost because that is how a consumer based economic system operates, when spending and/or need in a particular field decreases the size and structure of organizations providing goods and services to that particular field decreases. It is completely irrational to continue spending money on elements in an environment that are either unnecessary or redundant. Jobs that exist in such an environment based on this irrational spending can be regarded as purely inefficient government subsidized jobs because the defense contractor or government agency that employs person A in that particular job is creating inefficiency in the transaction by siphoning off a portion of the money for itself which then leaves the economy versus that money going directly to the employee.

Any free-market capitalist should be in favor of eliminating such inefficient transactions. For any argument of sympathy for these individuals losing their jobs, why is it that these individuals, most who have had significant yearly salaries and should have large savings accounts, receive sympathy yet there is no sympathy towards thousands of lower paid, but more essential teachers and/or police officers when they are fired? Yes, it will be problematic for those who lose their jobs, but is it better to provide an anti-poverty subsidy for the country or to subsidize a very small number of individuals? The correct answer is rather obvious.

One of the unforeseen concerns from the experiments in the 60s and 70s was that families receiving the BI seemed to have higher dissolution (separation and divorce) rates. The initial analysis of the results showed that black families had a 57% higher divorce rate and white families had a 53% higher rate.25,26 Interestingly enough this outcome may have been the principle reason that a BI was not incorporated in some manner during the Carter administration as strong previous backers, like Senator Moynihan, ended their support because of these supposed increases in marriage instability.

Interestingly further more stringent analysis of this dissolution data in 1990 identified statistical errors that hurt the credibility of these dissolution conclusions.27 Other studies have reported no increase in dissolution rates in separate studies.2 Overall there is still some question regarding the validity of this increase, thus it should not be viewed as an obstacle for incorporating a BI. One thing to note is that some of the increase may have been a positive thing because the BI would increase the probability for abused spouses to leave the relationship, an action that would commonly result in a divorce, but a divorce that no rational individual should oppose.

A secondary side issue is how will charitable giving change in a BI environment? There appear to be two principle motives behind charitable giving: a compassionate action for helping individuals who need assistance (with some having an ulterior motive of demonstrating their superiority to those individuals through that assistance) and a tax write-off. When a BI is administered it stands to reason that there will be less giving inspired by the first motivation because the need to help individuals who have been dealt a negative hand in life will be significantly reduced. Giving inspired by the second motivation will depend on how the tax code changes to encompass the BI; it makes sense to expect the elimination of most of the charitable deductions, thus significantly reducing tax write-off motivations for charitable giving.

Overall it is important to note that the BI will more than likely shift charitable giving from domestic action to international action for as the less fortunate in the U.S. will have a new BI to help them become more productive members of society, individuals in other countries will not have this benefit and some will still require aid because of their circumstance. Therefore, most domestic-based general need charities will see a loss in donations damaging their infrastructure while international-based general need charities should see an increase in donations. It is unclear what will happen to specific target charities like the “Make a Wish” foundation, which does not support general needs, but specific single events.

One concern opponents might have against a BI is there could be a dramatic “rush to citizenship” by legal residents. Some critics may view this behavior as disingenuous because these individuals did not care to become citizens until the BI was administered. It is difficult to argue against this attitude because such action would characterize an individual as someone who only cares about the money provided by a BI. Such a rush of new eligible individuals in the initial stage of the BI could also create a destabilizing influence because of estimations made on the BI receiving population. Therefore, one option to address this behavior would be to initiate a waiting period of two years before one was eligible to receive the BI for any legal resident becoming a citizen after official passage of any legislation that establishes a BI.

Another advantage to establishing a BI is a slight spin-off of the ability of the individual to establish their own business in that groups of middle-income individuals can start their own businesses together instead of relying on venture capitalists and other investors. While most high value investors do bring useful tools and experience, especially connections, to certain investments they also demand an understandable higher return on their investment, which directs more money away from the standard consumer economy creating market inefficiencies. Middle-class investment groups supported by the BI will keep more of this money in the consumer marketplace, which should accelerate economic growth. These groups would also increase credit flow from lending institutions due to increased confidence in repayment. Finally a federal BI can further support economic growth by allowing states to reduce their welfare programs allowing diversion of those funds to build new or reconstruct existing infrastructure or increase salaries for state employees.

One of the lingering issues is what role children should have in the BI. Earlier one of the restrictions for the proposed BI was an age limit eliminating children from receiving any funds, a condition that is in contrast to most BI proposals which award children some funds. The chief concern with giving funds directly to children is that their parents or primary caregivers will have to manage the money and could misappropriate those funds. Another concern would be individuals having children for the purpose of collecting additional capital from government for those children and in order to maximize those returns these “parents” would neglect those children. However, this is only a minor concern because the number of individuals undertaking this strategy should be small.

Realistically if one wanted to include children one strategy would be to pay each child $2,000 per year until the age of 18 when he/she becomes eligible for the BI. This $2,000 would not be given in direct cash form, but instead be placed in a trust for the child so that upon turning the age of 18 that individual would receive a check equal to the given amount (i.e. for anyone born after the incorporation of such a system within the BI would receive $34,000; upon turning 18 they would receive the full BI). If this strategy were incorporated it would add an additional $153 billion per year to the total cost (76.5 million * $2,000).

Overall there are numerous potential advantages provided by a BI, elimination of hunger and poverty, increased economic mobility/freedom, increased economic efficiency, increased economic growth, increased societal creativity, increased societal physical, mental and emotional well-being, reduce criminal activity, etc,. Against all of these advantages there are only three arguments that can be made against the BI. The first opposition is the overall cost of the program and is far and away the most relevant. While the cost of the BI is substantial it has been demonstrated above that if the government is willing to make intelligent and appropriate changes in its spending and revenue streams the costs can be managed rather easily. Even the proposed increases in revenue do not involve unfair and unreasonable tax increases for the wealthy. In fact one could successfully argue that the increases are fair and should be administered with or without a BI.

The second opposition is the belief that establishing a BI will provide a significant disincentive for individuals to work, so much so that gaps will appear in the workforce due to labor shortages creating economic inefficiency and reducing economic growth. However, as demonstrated above this belief is misinformed based more on the blind hope of individuals who do not want a BI versus valid empirical evidence and logic. Maintaining this opposition is foolish for a BI is not a policy that involves “paying people not to work” despite the lies its opponents wish to continually repeat.

The final opposition is the most unfortunate one, based on the belief of unfairness. Basically there are individuals who believe that individuals who would benefit from a BI do not deserve it because they are poor due to their own choices, thus it is not fair for society to “punish” the successful to help the unsuccessful. The moral problem with this belief is obvious and the logical problem is that it assumes that every individual is born under similar circumstance and success is entirely dependent on the choices and actions of an individual. Of course no rational person would agree with this assumption; people are born into radically different circumstances for example some may have poor parents, some rich parents, some one parent, some soon after birth no parents, so in one vein is society to say that the current generation is to bear the mistakes of their past generations? If so, then how is it fair that the “meritocracy” these individuals envision in the U.S. is defined not by the skills of the current individual, but that of their lineage? The simple reality is that anyone who opposes a BI on the notion that in general poor people deserve to be poor then that individual is a selfish, delusional, irrational fool.

The BI should been supported across political spectrums in that Democrats should support it because it addresses poverty in an effective and decisive manner, Republicans should support it because it significantly limits existing market and government operating inefficiencies making the general system more fair and more in line with objectives of capitalism and Libertarians should support a BI because it shrinks the overall size of government and it greatly enhances individual freedom and opportunity. All parties should support a BI because it reduces the influence of past generations on the present limiting the importance of uneven resource distribution created by predecessors, thus creating a more fair playing field where an individual’s success is more dependent on his/her actions not on the actions made by their parents and other parties of the past.

Finally the administration of a BI should not be taken as the first step to entirely privatized world where government stops providing medical, educational, research funding, etc. services. Once again the point of the BI is two-fold: eliminate poverty and increase economic growth by reducing market inefficiency by increasing the spending ratio of existing capital. No one should take it as an invitation to strip government of any power on the notion of “the private market does it better” because despite what some want to believe the private sector and public/government sector need each other to ensure their optimal function and efficiency.

Overall there is little reason to object to a BI as long as it is operated transparently and is cost effective for a BI benefits everyone in society even if some individuals may not immediately realize it.

Citations –

1. “Information on Poverty and Income Statistics: A Summary of 2012 Current Population Survey Data.” ASPE Human Services Policy Staff. September 12, 2012. http://aspe.hhs.gov/hsp/12/povertyandincomeest/ib.shtml

2. Forget, E. “The town with no poverty: using health administration data to revisit outcomes of a Canadian guaranteed annual income field experiment.” 2011. http://public.econ.duke.edu/~erw/197/forget-cea%20(2).pdf

3. Take the Challenge: Living on a Food Stamp Budget. A Toolkit for Members of Congress. 2007. http://frac.org/wp-content/uploads/2009/09/fsc_toolkit.pdf

4. Annual Heating and Cooling Cost Comparison Worksheet. Calculated by Jasper County Rural Electric Membership Corporation. http://www.jasperremc.com/downloads/energyadvisor/GEOTHERMAL%20&%20ASHP/7%2008%20%20h&c%20fuel%20cost%20comp.pdf

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6. “A nation of immigrants: a portrait of the 40 million, including 11 million unauthorized.” Pew Hispanic Center. January 29, 2013. http://www.pewhispanic.org/files/2013/01/statistical_portrait_final_jan_29.pdf

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14. Agresti, J. “Tax Facts.” Just Facts, October 15, 2012. Revised 04/05/2013. http://www.justfacts.com/taxes.asp

15. Greelye, B. “Low capital gains taxes may not help the economy.” Business week. October 03, 2012. http://www.businessweek.com/articles/2012-10-03/low-capital-gains-taxes-may-not-help-the-economy

16. Huang, C, and Marr, C. “Raising today’s low capital gains tax rates could promote economic efficiency and fairness, while helping reduce deficits.” Center on Budget and Policy Priorities. 2012.

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18. Internal Revenue Service, The 400 Individual Income Tax Returns Reporting the Highest Adjusted Gross Incomes Each Year, 1992-2007 (Department of the Treasury, 2007), available at http://www.irs.gov/pub/irs-soi/07intop400.pdf.

19. Burman, L, and Randolph, W. “Measuring Permanent Responses to Capital Gains Tax Changes in Panel Data.” American Economic Review. 1994. September:794-809.

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21. Baker, D, et Al. “The potential revenue from financial transactions taxes.” Political Economy Research Institute and Center for Economic and Policy Research. December 2009. http://www.peri.umass.edu/fileadmin/pdf/working_papers/working_papers_201-250/WP212.pdf

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23. Robert A. Levine et al., “Looking Back at the Negative Income Tax Experiments from 30 Years on,” in The Ethics and Economics of the Basic Income Guarantee, ed. Michael Anthony Lewis, Steven Pressman and Karl Widerquist (New York: Ashgate, 2004), 95-109.

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