Basic Income Isn’t the Solution — It’s a Band-Aid on a Broken System
There are better ways to improve the lives of desperate people
Capitalism has failed.
In the United States, real wages have stagnated for four decades, 40 percent of adults can’t come up with $400 in an emergency, working hours are increasing, and people spend far more time at work than their peers in Germany, France, and the Scandinavian countries. Meanwhile, inequality has reached levels unseen since the 1920s, CEO pay has soared 997 percent since 1978, and the media can’t stop talking about a booming economy without realizing that its benefits are not trickling down to average people. That’s for good reason: it was never designed to.
It’s easy to cast the United States as the pariah — a place where things have gotten so bad that people from every other country look and shake their heads in collective dismay — but that misses the big picture. These problems are not exclusive to the United States, but are global in nature.
Unemployment rates remain shockingly high in parts of Europe, especially so in the countries bordering the Mediterranean, while real earnings in the United Kingdom have suffered their worst decline in more than 150 years and a decade of austerity has caused unmeasurable harm to public services and the people they’re supposed to help. These are just a few examples of a global system in crisis which is inflicting terrible pain on the most vulnerable people in society as its slips into decline.
Clearly, we need to address the failure of capitalism, and a new breed of tech enthusiasts have resurrected the concept of a universal basic income as the solution. But would such a policy be as beneficial as its promoters have led us to believe?
Probably not.
A Quintessentially American Policy
A few years ago, like a lot of people, I was beating the drums of a basic income. It seemed like the kind of big, ambitious idea we needed to address the flaws that have emerged in the modern capitalist system, especially with people still feeling the pain of the financial crash.
The benefits of basic income seemed endless, and indeed that was how many of its biggest supporters presented it. It would pull everyone out of poverty, provide compensation for unpaid care work, cover whatever expenses people were struggling to meet, allow them to refuse work and demand better conditions from their employer individually instead of with the backing of the union, and so much more.
In short, basic income was everything to everyone; it wasn’t just a good social policy, it was the ultimate solution to every social ill one might imagine. And once I realized that, I began to look at basic income much more skeptically.
Basic income is, at its core, a quintessentially American policy proposal. Neoliberalism has reached unrivaled dominance in the United States, decimating the welfare state and making people believe that the government is a useless entity that holds them back. Personal failures are explained exclusively in terms of individual actions, ignoring the marketization of social systems and privatization of public services that has hurt so many people.
Within this worldview, basic income is the perfect policy solution to growing poverty and social pain. Instead of relying on government service provision or some other collective solution, a basic income would see everyone get a sum of money that could then be spent as they see fit. This doesn’t challenge the flawed core of the capitalist system, but puts a bit more money in people’s pockets to spend on the things the government has failed to provide.
Under some proposals, basic income is positioned as part of a larger package of social programs which include Medicare for All and free college tuition, while others would slash the already meager US welfare state to the bone and institute a flat income tax in exchange for issuing everyone a cash payment that leaves them, at best, just above the poverty line.
Since the most vocal supporters of basic income will do almost anything to see the policy implemented, they present the slash-and-burn option as a legitimate proposal to try to win right-wing support, regardless of the consequences. Some were even charitable to Donald Trump after he was elected so as not to alienate his supporters if he came around to the idea.
Basic income might appeal to some American audiences because of their weak social safety net and the greater influence of neoliberal individualism, but it’s much more difficult to imagine that people in other advanced Western democracies who work fewer hours would be interested in a basic income that threatens their social safety nets.
Why Would Countries Abandon the Welfare State?
George Lakey compared the United States to the Nordic countries in his book Viking Economics. He described the social programs that exist in the Nordic social democracies and why such systems do not exist in the United States.
The United States operates a different economic model, which values insecurity. The model keeps unemployment high and sustains poverty and hunger. A family depends on a job that might disappear tomorrow; it lands in a feeble safety net; it has few prospects for finding another job as good or better. Small wonder that U.S. unions sometimes defend inefficient labor practices and outmoded organization of work, even though undermining productivity — whatever it takes to keep workers in jobs. In other words, compared with the high-productivity Nordic model, the U.S. insecurity approach creates an incentive to resist efficiency.
In contrast to the insecurity of the American model, the Nordic welfare states — which Lakey calls “universal services states,” in reference to the free or nearly-free essential services that they provide — aim to protect their citizens from fluctuations in the market cycle to ensure they have happy, healthy lives.
In Norway, just to take one example, citizens have universal healthcare where doctors do house calls and the government pays for those living in rural areas to travel to cities if they need a procedure that can only be performed there. They have free education at every level — even post-secondary, which is also free for foreign students — and they have more autonomy in choosing the classes they wish to pursue than many of their North American peers.
When a family has a new child, including adoptive and same-sex parents, there are two parental leave schemes to choose from: fifty-six weeks at 80 percent pay, or forty-six at 100 percent pay. Parents are guaranteed their job will be waiting for them once they return, and many workplaces have free daycare — but where they don’t, the government provides affordable daycare for everyone. If a parent chooses to stay home with their child, the state will pay them as if it was their job, and every family gets an allowance until their child turns 18.
Norway sees full employment as an important goal, but that doesn’t mean it slashes workers’ rights to privilege corporations in order to achieve it. The United States is said to currently have full employment, but wages have barely budged and people are still struggling. Meanwhile, Norwegian workers are paid a living wage, entitled to 25 days of paid vacation each year, and banned from working more than nine hours a day or forty hours a week. There have been experiments in a couple of Nordic countries to reduce the workday from 8 to 6 hours, and flextime — where employees make their own schedule — is becoming more common.
OECD data shows that Norwegians work an average of 1,418 hours in a year, compared to the 1,790 hours worked by Americans. Lakey quotes a study by economist Sam Bowles, who found that “people in more unequal countries do the equivalent of two or three months’ extra work per year.” Inequality in the Nordic countries is quite low, while it continues to grow to unprecedented levels in the United States.
Treating workers fairly has further benefits, as workers in Norway are also much more productive than their American counterparts, producing 27.8% more per hour. When Max Chafkin, a senior writer for Inc. Magazine, visited Norway to examine its economic model and how it works for employers and employees, he found that
it takes more than perks to keep a worker motivated in Norway. In a country with low unemployment and generous unemployment benefits, a worker’s threat to quit is more credible than it is in the United States, giving workers more leverage over employers. And though Norway makes it easy to lay off workers in cases of [the firm’s] economic hardship, firing an employee for cause typically takes months, and employers generally end up paying at least three months’ severance.
Advocates of basic income claim it would give people the ability to refuse work or to demand better terms from their employers, but this has already been achieved in Norway thanks to strong unions, strict labor laws, and a commitment to low unemployment. The benefits that Norwegian workers receive were not granted to them by benevolent employers or politicians; they were won through collective action that was organized by their unions.
The proposed $1,000 a month that would be provided by a basic income isn’t enough for most workers, especially in urban centers, to withdraw their labor to demand better working conditions without the solidarity of their coworkers. Basic income also wouldn’t do anything to stop an employer from simply hiring someone else to replace the worker trying to make demands. Improved working conditions would still require a collective voice for workers — that’s a union — and it’s a fantasy to believe the same wouldn’t be necessary to implement a basic income in the first place.
Basic Income Would Require Collective Action
The rich have never made concessions to the working class without a fight, and after a concession was made they have always fought to reverse it. The major gains of the labor movement were won through collective struggle, and the same would be required for basic income.
Tech billionaires may have recently jumped on the basic income bandwagon, but it’s not because they really care about the plight of working people. Their technologies are aimed at automating jobs outright, and if that’s not possible, to decimate worker protections so people have no stability and are little more than an input in an algorithm. They’re only interested in the labor people have to sell, and what happens outside that transaction isn’t their concern.
However, some of them fear they’re contributing to a social crisis that will have personal repercussions, and support for a basic income comes from that desire for self-preservation. Popular basic income proposals would still leave urban dwellers in poverty once their jobs are automated or gig-ified, while rich tech bros buy homes in New Zealand and invest in Mars colonization so they have an escape route once the revolution reachers their safe haven in the South Pacific.
Yes, tech billionaires might see a threat down the road when people are so destitute from the automation and gig-ification they want to force on everyone that they’ll finally storm the gated communities, but that doesn’t mean they’re going to happily agree to a new program that has been estimated to require anywhere from $539 billion to $3.8 trillion in new government revenue on an annual basis.
Writing in Catalyst, Alex Gourevitch and Lucas Stanczyk observed that basic income advocates have the process of adopting a basic income fundamentally backwards: it wouldn’t grant workers power, but would require that power for its implementation.
A basic income high enough to provide workers with a genuine ability to exit the labor market would require expropriating today’s employers out of vast amounts of present and future potential business profits. Hence it should be understood that there is no chance of its passage until there is a working class with the social and political power already adequate to extract it.
A natural and fundamental questions arises from this: if basic income would require workers to have the power to demand such a large new social program, is a basic income that will be used to pay for rent, bills, health insurance, education, and other essentials whose prices keep rising faster than inflation and the profits from which go to the rich people who are already making off like bandits really a good demand to make?
The prices for these goods could just rise to capture the benefit that people would get from basic income because the fundamental problems of neoliberal capitalism and the delivery of services by profit-maximizing corporations remain unaddressed. But there are alternatives.
Demand Decommodified Services
Basic income is a band-aid on a broken system and there are better alternatives to help move us away from a system that thrives on insecurity and where our lives are governed by the decisions of corporations that want to maximize profits, not the social good. Neoliberalism extended the reach of the market into more spheres of social life, pushing for privatized services and more recently turning sharing into renting.
A truly radical demand would push back against market fundamentalism and demand that essential services and the necessities of life be decommodified so access to them doesn’t depend on the money in one’s bank account. They would be granted to all, recognizing that economic scarcity is increasingly a product of our refusal to distribute resources fairly, not because we lack enough for everyone to live a happy, healthy, and dignified life.
The first step, in the United States, would be to demand the universal services that are common in most other developed countries: universal healthcare, high-quality public education for all, and highly subsidized (if not free) childcare. But it could go much further.
Last year, a universal basic services (UBS) proposal was released to challenge the idea of a basic income. Instead of a payment to all citizens, UBS would entail a large-scale program to expand the public housing stock, allowing millions more people to escape the exploitative private housing and rental market; a food service to provide free food to millions of people, including free school lunches and more support for meals-on-wheels programs; making public transit free; and covering the cost of basic phone and internet services for everyone, recognizing the importance of connection in the modern world and the high prices that some people have to pay to access such services.
The four pillars of UBS are designed to decommodify large sections of the economy, reducing the financial pressure on the whole of society, but especially for those who need it most. These ideas are even common sense in some places. In Vienna, 62 percent of residents live in social housing, while municipalities across the United States are building public internet utilities to challenge the monopolies of major corporate providers. The British public is very supportive of the Labour Party’s plan to (re)nationalize water, rail companies, and the national postal service.
Expanding on the free transit plank, there’s also been a suggestion for universal basic mobility, which could have enormous environmental and social benefits by creating a transportation service that combines free transit with inexpensive (or even free) use of bikes and scooters. The initial proposal was presented as a partnership between cities and the companies providing micromobility services, but it wouldn’t be hard for cities to simply create their own dockless bike and scooter services, as they did previously with docked bikeshare.
Fix the System And You Don’t Need Basic Income
Capitalism is broken and adding a bit more money to people’s bank accounts isn’t going to fix it. The implementation of a basic income would require worker power to demand it, but when that power has been established, there are far better policies that workers could push for that would improve their lives.
Universal basic services and mobility would decommodify essential services to reduce the financial pressure of having to pay the rising prices demanded by greedy, profit-seeking billionaires and the increasingly monopolized corporations they control. This power would also allow people to demand better protections, and possibly even the challenge the fundamentally undemocratic nature of the economy where companies are the fiefdoms of their owners and executive teams and where workers no voice.
Any change to the status quo will require the collective power to put consequences behind the refusal of radical demands. Building that power will take time, but the process is already underway with resurgent left-wing movements in the United States and the United Kingdom. The opportunity to make radical demands doesn’t come often, and to waste it on a band aid instead of demanding a fundamental transformation would be a tragic waste.
