A UBI Is An Elite-Class Scheme To Get Other Taxpayers To Subsidize Their Workers’ Wages

Progressives Who Support A Universal Basic Income Have Been Suckered By This Elite-Class Scheme To Keep Wages Low

Gordon Johnson — GDJ On Pixabay

By David Grace (Amazon PageDavid Grace Website)

The Elite Class

There is always an Elite Class at the top of every society.

The members of the Elite Class are the people who have their society’s greatest wealth and power. Their fundamental motivation is to maintain and increase their wealth and power.

Let’s be very clear — they are not part of an organization. They aren’t a cabal. They don’t have meetings, but they mostly share similar ideas about how they want the world to work.

The Feudal Elite Class

From the Middle Ages through Seventeenth Century the European Elite Class was composed of Kings, Barons, Earls, Dukes and other members of landed nobility plus the highest-ranking Church officials.

The American Elite Class

The American Elite Class has been the mix of the wealthiest one-tenth of one percent of the population together with the senior executives of and the directors of the top one-thousand or so businesses.

The Elite Class’ Belief That They Are Entitled To A Pool Of Cheap Labor

The Elite Class has always believed that their estates and businesses were entitled to a pool of cheap, disposable, unskilled labor.

At their core, the members of the Elite Class believe that unskilled and low skilled workers DESERVE little more than enough food and shelter to keep them alive and working, that unskilled labor is of little “real” value and does not morally deserve any substantial compensation.

The members of the Elite Class view unskilled labor like any other natural resource — water, lumber, coal, iron ore — commodities to be acquired as cheaply as possible and exploited as much as possible for the benefit of their businesses, and abandoned when used up.

The Elite Class has always regarded these unskilled and low-skilled workers little differently than the way a farmer views his horses, oxen and mules — beasts of burden who exist for the benefit of the farmer, to be worked as hard as possible for as low a cost as possible, and discarded whenever they cease to produce enough to justify their upkeep.

This attitude is clear in the historical record of large industrial organizations’ vigorous resistance to any requirements that they install safety equipment for the protection of their workers; mine owners opposition to any regulations that would have reduced black-lung disease, and all large employers original opposition to legislation requiring them to pay the medical expenses, leastwise the lost wages, of workers who were injured on the job.

The Pool Of Cheap Labor

In the feudal era that pool of unskilled labor took the form of the nobility’s serfs.

In the American South in the eighteenth and nineteenth centuries that pool of cheap labor was initially the American plantation-owners’ slaves followed by the South’s segregated, black tenant farmers.

In the nineteenth and early twentieth centuries those cheap unskilled workers were the impoverished Chinese, Irish, Italian, Mexican and other immigrants transported to America from around the world to build and operate the Elite Class’s railroads, mines, mills and factories.

WW II Reduced The American Pool Of Cheap Labor

When American industrial workers became more expensive than the Elite Class thought they were worth, the Elite Class moved manufacturing to foreign countries where cheap, disposable human workers were still available.

The resulting American unemployment and poverty were unimportant to the Elite Class.

This is still the case. Carrier, a subsidiary of United Technologies that in 2015 reported $15.6 Billion in profits, announced in 2016 that it was firing 2,100 Indiana employees and moving their jobs to Monterrey, Mexico in order to “. . . maintain high levels of product quality at competitive prices and continue to serve the extremely price-sensitive marketplace. . . . This is strictly a business decision.”

This is reminiscent of the scene from The Godfather where Sollozzo the Turk excused the assassination attempt on Vito Corleone by telling Michael, “What happened to your father wasn’t personal. It was just business.”

New Strategies To Keep Wages Low

Today, the American Elite Class is facing a new challenge, a dwindling supply of cheap, disposable human workers, and they are now exploring new strategies to keep their labor costs low.

They’re looking at

  • prison labor,
  • expanded visa programs for foreign workers,
  • low-paid independent contractor schemes,
  • aggressive piecework compensation schemes, and
  • the implementation of a plan whereby the government, that is to say the middle class and upper-middle-class income-tax payers, will subsidize their workers’ costs of living thorough a Universal Basic Income.

Using Income-Tax Revenue To Subsidize Employers’ Labor Costs

When faced with increasing demands that workers receive a living wage, the Elite Class is beginning to realize that it can continue to pay starvation wages if it can sucker individual taxpayers into paying a material portion of their workers’ costs of living.

Unskilled and low-skilled workers’ housing costs can be subsidized with taxpayer-funded Section 8 housing; food costs subsidized with taxpayer-funded food stamps; medical costs paid with taxpayer-funded Medicaid plans, and workers’ cash needs supplemented with an income-tax-funded Universal Basic Income.

An Income-Tax-Funded Universal Basic Income Plan Keeps Wages Low

The higher the UBI payment, the lower the wages the Elite Class can get away with paying their unskilled and low-skilled workers.

Instead of having to pay a living wage which will reduce their companies’ profits, an income-tax-funded UBI will allow the Elite Class to continue to pay starvation wages.

Since this UBI will be funded by higher income taxes, not higher corporate or capital-gain taxes, it will be paid for by the middle and upper middle-class taxpayers and won’t cost the Elite Class a material amount of money because the bulk of their income is derived from sources excluded from the income tax.

The Elite Class Will Be Exempt From Paying Most Of The Cost For A UBI

Most of the money extremely rich people, the top one-half of one percent and above, receive comes from stock sales, real estate transactions, inheritance, and other types of income that are excluded from income taxes. Note that capital gains taxes start at ZERO percent and max out at twenty percent.

For the period of 2008 through 2012, when the U.S. corporate tax rate was 35%, a survey of 288 corporations, which included most of the profitable Fortune 500 corporations, found that they paid an average effective federal tax rate of only 19.4%.

Corporations are now taxed, at most, at 21%, so we have to wonder if the actual tax rate they will end up paying might be someplace around 12%.

Whether the real corporate tax rate is 21% or 12%, the overwhelming cost of a UBI will not be paid by corporate America nor by the members of the Elite Class. No, it will be funded by those whose principle income is derived from wages and salaries, that is by the members of the middle and upper middle class.

Progressives Supporting A UBI Have Been Suckered

So, here we have progressives who are

  • outraged at the wealth of the Elite Class,
  • outraged at America’s huge income disparity,
  • outraged at the tax structure favoring the Elite Class,
  • outraged at the poverty of almost half of Americans

and they’ve been suckered into supporting the Elite Class’ latest scheme to keep their profits high and keeping wages low — an income-tax-funded Universal Basic Income.

So Many Reasons Why A UBI Is A Terrible Idea

Not only will a UBI greatly benefit the corporations employing low-paid workers, it will be paid for by the salaries and wages of middle and upper-middle class Americans.

People Don’t Value What They Get For Free

Giving people free money instead money for work is not only bad for your society, in the long run it’s also terrible for the people who get the free money.

After you give Johnny whatever thing he asks you for, how long does it take before Johnny trashes it, loses it, doesn’t use it anymore, or wants a newer, fancier one?

“Easy Come, Easy Go” is an accurate description of human nature.

Welfare Disaster

Having a huge welfare class instead of a huge working class is a disaster for any society. Does anyone with a brain really think that a bigger welfare state is a good idea?

A UBI Is Inefficient

On top of that, taxing people who work, running that tax money through an expensive government bureaucracy which drains off a percentage of the dollars in overhead costs, and then writing checks to people with the explanation that they deserve free money, with the admonition, “Spend it wisely” is toxic to any society that tries it and, in my opinion, is incredibly foolish.

A UBI Fuels Class Hatred

If you’re working your ass off and paying a 35% or 40% federal income tax to fund UBI payments to “poor people” how are you going to view the recipients of those payments? You will see them as thieves and parasites.

If you’re limping along at a starvation wage job and getting a UBI that is barely enough with your wages to make it paycheck to paycheck, how are you going to view people with good jobs and high salaries and kids who can afford to get an education that you cannot give your children?

Take a guess.

A UBI Is Hugely Expensive

A UBI of only $1,000/month to only the bottom one-third of American adults (about 74,000,000 people) would cost $1.8 trillion per year.

In 2020 the total income tax collected was about $1.6 trillion dollars, so the cost of this relatively modest UBI would exceed the total revenue collected from all income taxes in 2020 and funding it, together with funding the rest of the federal government’s operations, would require that the income tax be more than doubled.

A UBI Creates A Volatile Voting Block For Demagogues

The recipients of these UBI checks become a volatile voting block for whatever politician promised to increase their UBI payments.

“Vote for me and I’ll increase your UBI. Don’t vote for the other candidate because he/she is cut your UBI away.”

UBI Payments Make People Vulnerable To Gov’t Control

Trump adopted a rule that if you use any government services you will not be allowed to get a green card. It’s not a long jump from that to telling people who criticize the government in certain ways or participate in certain demonstrations that they will be investigated and that their UBI payments will be suspended during the one or two year investigation period.

That’s a good way for the government to control a large chunk of its citizens.

UBI Destroys People’s Self Worth

Work gives people a purpose and it gives them self respect. Give people money for not working and you leach away much of their feeling of usefulness, value, and self respect.

A UBI Is Unnecessary

More importantly, whatever few benefits a UBI might provide can be even better provided in other ways that are not funded by income taxes levied on the middle and upper-middle class for the primary benefit of the Elite Class’s corporate bottom line.

Alternatives To A UBI

Good-Paying, Useful Employment

Provide guaranteed living-wage jobs with medical insurance for everyone who is willing to work by subsidizing public-benefit, non-profit corporations what will provide low-cost child care, pre-school, elderly care, nursing home, hospice, transportation, street-cleaning, trash removal, and other public benefit services at a tiny fraction of the cost of a UBI.

Education & Training For Higher-Paying Jobs

The old line about the difference between giving a man a fish and teaching him to fish is still true. A UBI is giving a man a fish whereas using a fraction of the money that would fund a UBI to educate and train people for good jobs is teaching a man to fish.

A Realistic Minimum Wage

Make employers, not taxpayers, pay the living costs of their own workers with a living-wage minimum wage and employer-paid major medical insurance.

Funding The Alternatives To A UBI

How can you fund these alternatives to a UBI?

Tax as ordinary income the profits from the sale of shares of stock not purchased directly from the issuing company and the profits on the sale of shares of stock purchased pursuant to an executive stock option.

Tax corporate profits that exceed 25% of costs with a 99% excess profits tax.

Eliminate corporate tax loopholes.

Eliminate the income tax entirely and replace it with an annual flat tax of 2.5% of net wealth above $100,000 with payments capped at 25% of the taxpayer’s adjusted gross income with the unpaid balance of the tax becoming a lien on the assets and collected at the time of sale or the taxpayer’s death whichever comes first.

Progressives Have Missed The Obvious Alternative To A UBI

$12,000/year divided by a year’s labor, 2080 hours, = $5.77/hour. In other words you could almost replace the value of a $1,000/month UBI by increasing the wages of every full-time worker earning less than $9.23/hour to $15/hour which

  • Increases the worker’s self respect and control of their own money
  • Frees the worker’s income from Gov’t control
  • Eliminates a huge gov’t bureaucracy
  • Saves huge amounts of taxes
  • Forces businesses to pay their own costs of doing business

Don’t fall for the UBI’s scam claim that free tax money spent in a huge welfare scheme will help the poor.

Recognize that it’s an Elite Class welfare scheme to use income-tax money to enable them to continue to make higher profits by continuing to pay starvation wages.

— David Grace (Amazon PageDavid Grace Website)

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David Grace

David Grace

Graduate of Stanford University & U.C. Berkeley Law School. Author of 16 novels and over 400 Medium columns on Economics, Politics, Law, Humor & Satire.