Free Money! -A Closer Look At Universal Basic Income
Universal Basic Income (UBI) poses an important, cost-effective alternative to minimum wages and welfare. UBI has increasingly been pondered by economists eyeing the implications of technology actually replacing labor (a topic itself up for debate) or simply looking to give workers a more fair slice of the pie. At first glance, UBI smacks of the same bleeding heart, neoliberal socialism that many conservatives remain rightfully skeptical of; the same skepticism that forced Sanders to explicitly address his ideas on democratic socialism during the nomination process, but before we let conservatives dismiss UBI altogether we should examine the proposals for how it might be implemented, see what seems reasonable, and weigh the possible consequences ourselves.
The earliest proposal for a basic income has been credited to Thomas Paine in Agrarian Justice, where he calls for a fixed payment of fifteen pounds for every (let’s be real, white) man and woman upon reaching the age of twenty-one, to be paid for with an estate tax. Honest business depends largely upon respect for each other’s private property but as a society we do put limits on how that property can be used. For example, I personally abhor the fascist practices I’ve seen many Homeowners Associations engage in but those who choose to live under their rules understand that collectively maintaining the neighborhood ensures higher property values for all.
We typically think of ownership in terms of someone’s ability to do whatever they want with their property but in business we have to distinguish between productive and non-productive ownership because the unchecked ownership of land quickly leads to rent-seeking, and in turn cronyism, dictatorship, income inequity; pretty much all of the terrible things that bring down the economy.
Finland has already begun experimenting with UBI with a pilot program offering 2000 unemployed men and women €560 (~$600) a month for two years, job or no job. Many citizens remain skeptical but as an American I’m extremely impressed with the experimental attitude of the councils funding these programs. Pilot programs sound like a better, more scientific way to explore effective solutions as opposed to the anecdotal, corporatist crap that passes for debate here in the States.
The council of Glasgow, Scotland recently commissioned a study to examine whether or not UBI could replace welfare. If we accept structural unemployment as a natural byproduct of doing business we can begin to see how irresponsible it would be to get rid of welfare altogether, but welfare certainly has issues of its own as well, mostly centering around how it decreasingly functions as unemployment insurance and increasingly acts like supplemental income and corporate welfare.
Last year, Swiss voters overwhelmingly rejected a measure to provide income for every citizen, adults and children. Seventy-eight percent voted against the measure; it probably didn’t help that the group backing the campaign proposed a generous £1,765 (~$2200) a month for adults and £445 ($550) for children. Opponents remain skeptical about the costs of the system and imagine many workers would leave their jobs and create an underclass of good-for-nothings; of course, we do quickly forget about the existing overclass of good-for-nothings created by rent-seekers and corporate welfare.
The most persistent argument I hear against UBI claims it would take away the incentive for people to work, assuming that everyone would use their basic income to cover essentials like food and housing. I’m reminded of a hippie-dippie girl I once met who spent nearly $200 a month in SNAP benefits on expensive water to supplement her holistic lifestyle. Yeah. But even if we forced people to use basic income for essentials, we still couldn’t say for sure whether or not comfort kills ambition. For some it may, for some it may not.
I have little doubt that implementing a UBI would cause a temporary decline in employment, but if basic income actually made people stop working altogether then we should also wonder why so many kids with ample trust funds bother going to college? Some will choose to live in squalor as many already do, but many will also jump at the chance to work on things that time and money currently prevent them from doing. Giving people a basic income could force companies into competition to create jobs that engage workers and provide them with real opportunity rather than just squeezing them into cookie-cutter jobs using cookie-cutter business methods. Corporations may take a hit, but localization will soar.
Another argument in this vein says that UBI would act as a price floor, and setting artificial price floors in the labor market makes markets in general less “free,” but as Pascal J points out here, the “freeness” of a market depends on a person’s ability to make selfish choices. Avoiding artificial price floors privileges the freedom of business owners to decide what workers produce for what kind of income over the freedom of individuals to decide what to produce with their labor and what kind of income they want to strive for. If my choices in the labor market force me to work continually to achieve basic subsistence then I don’t have nearly as much opportunity to find a better alternative than someone who can afford to not work for a time.
Providing basic income through an estate tax sounds attractive to those who believe that anyone fortunate enough to leave wealth to their kids probably owes a debt to society anyway, but the relationship between basic income and estate taxes does nothing to address the core issue of rent-seeking. Most proposals for UBI fail to address the core inequity caused by rent-seeking. Rent-seeking creates a range of issues within the economy and unfortunately we often discuss solutions that address the symptoms without tackling the heart of the problem.
In today’s society, rent-seeking figures most prominently into land ownership and the structure of corporate entities. Martin Farley offers a thoughtful proposal that connects UBI with a land-use tax, an interesting idea that tackles the land ownership aspect but ultimately fails to address corporate power structures as effectively as Employee Stock Ownership Plans, or to a lesser degree, Unconditional Loan Income.
UBI could be an effective replacement for welfare but given the bloated, ineffectual state of welfare that isn’t saying a lot. Some think it will take brave politicians selling tax hikes as social justice to fund UBI; I still think the real trick will be making the case that UBI won’t cause mass-laziness. In any case, evidence does suggest that unconditionally giving cash to the needy can be more effective than conditional, bureaucratic aid that so often smacks of colonial righteousness.
For too long we’ve fought over whether or not minimum wages are even a good idea; being against it might mean you’re a conservative and being for them might mean you’re liberal but caring enough to take a stance means that you recognize we have a problem to be solved. Minimum wage laws and basic income can do a lot of good for a lot of impoverished, disenfranchised individuals, but we must remain vigilant about the fact that those solutions do not entirely address the rent seeking forces at the heart of our economic woes.
If you support basic income, great; keep finding better ways to implement it. If not, that’s okay but I hope you’re working on an alternative and not engaged in dogmatic mudslinging. The poor won’t simply go away and none of the hot air exchanged while arguing will make them any warmer.
