Monday, December 22, 2014

The problems with a Universal Basic Income

In my previous post I settled upon the idea that the key element to dismantle the undesirable features of our (late) digital capitalism was instituting a state sanctioned revenue stream that would allow people to live free of the need to work, as proposed by the likes of Philppe Van Parijs. I have the gut feeling that just enabling a significant amount of the population to live, and live decently, without working (of course we are talking a life relatively free of luxuries, but well stuffed with the real necessities of life: clothing, food, shelter and some entertainment) may have dramatic consequences in everybody, substantially hollowing the system's core claim that life requires the continuous and unabashed pursuit of ever greater levels of production. Just having enough people leaving contented, meaningful lives without participating in "the rat race" and sacrificing 100% of their time to "keep up with the Joneses" would significantly ease the lives of those more inclined to compete and accumulate, as the level of consumption required to stand above the masses would substantially drop, and driving a Porsche to a 40,000 square feet McMansion while sporting an Armani suit and a Rolex watch to meet there a trophy wife that cheats on him and a couple mentored and tutored and helicopter parented (by salaried surrogates) offspring he barely knows may seem less of an achievement to brag about when other people can boast of getting by just fine without a) having to kiss any ass at all and b) having tons of spare time to devote to other pursuits, some of which may look more worthy of admiration the moment they are not tainted by the stigma of not paying enough for a living.

But of course I still have to refine that gut feeling and establish more firmly the relation between paying everybody the equivalent of a living wage and getting rid of the crazy drive to accumulate more wealth than your neighbor. That is work for another post, but before getting there I want to examine some common objections I've read, heard or thought myself about such an schema. In no particular order:

  • It would be inflationary (so the money the state distributed would in the end loose all its value, and people receiving it would end up as poor as before, and as in need of an additional source of revenue through work): it stands to reason that if the state decides to conjure a vast amount of money out of thin air to distribute equally between the population, and spends it on top of everything that it is actually spending (we will see that it would mean increasing its disbursements between 60% and 80%) with no equivalent increase in its receipts, all that additional money chasing the same amount of material goods would have a highly inflationary effect. We will be analyzing where the money may come from (either at the end of this post or on a separate one), but we can state that the way we see a UBI working, it should not suppose an additional burden on the state, it would essentially replace current expenditures, not add to them, so its inflationary effect would be null (another issue is to what extent, in a situation of liquidity trap, some moderate inflation, now and in the foreseeable future, would be a good thing for the economy... my own opinion is that to a great extent, but that is small potatoes compared with the possibility of changing the dominant reason and the whole socioeconomic system, so I won't pursue it further)

  • It would dis incentivize work: and that is supposed to be an objection? I am more than willing to agree that a society that pays all its citizens to do nothing (or does not link that payment to them doing something) will probably produce less than one which forces them to produce or else. My contention is that we are collectively producing much more than we a) need to live decent, meaningful, flourishing lives b) can afford if we want to leave to our descendants a planet as full of possibilities for their own flourishing as we enjoyed and c) maximizes each individual utility function. Only the third one requires some explanation, but it has been shown time and again that people enjoys more having more free time against having more income, having more social relations than having more recognition at work, and having a more pristine environment than having a bigger home or a bigger car... but to enable each individual to enjoy those "higher", more pleasurable goods they have to be saved from their own greed and need to flaunt their possession of markers of social status bigger and bolder that their immediate neighbor's... It made (limited) sense to force everybody to produce more when capitalism was born, in an environment of inter societal competition when letting the society beyond yours produce more in aggregate would translate sooner rather than later in military defeat, humiliation and a substantial lowering of your standard of living, being confined to the periphery or semi-periphery of the single world-system that was being formed (as Wallerstein analysis show). Even when the competition between capitalism and communism was at its full it could be (partly) defended, as communist societies who lost that material production race can attest, being forced to join the world-system in most unfavourable terms of which most still have not recovered. But now? what's the price of producing less (in aggregate) than your neighbor? a potential depreciation of your currency and some inflation if you want to import goods from him (assuming there still are different currencies, and we may have hit upon the root cause of Europe's integration woes, which will require a deeper look in a separate post)? big deal, you always can import less of his stuff, or substitute for it with local production.

  • It is morally wrong to pay people to do nothing with what is taken from hardworking citizens, it distributes resources that have been created with the effort of some individuals to the "undeserving poor" (well, and to the supposedly deserving rich): Desert is one of those things that seem to be very much in the eye of the beholder, as this line of critique is most likely to come from the ranks of the right, which typically see no problem in the system being highly slanted in favor of the already rich. In times of new rentiers ("trustafarians", hedge fund managers and their descendants, untalented start-up "entrepreneurs" whose sole merit was being in the right place at the right time, entertainers and athletes... the list goes on and on) it takes galls to make that claim, and it normally just denotes a subtler (and older) complain: if we gave money to the lower classes it will become awfully expensive to entice them to serve us! so this objection reveals more about those who voice it than about the system towards which it is directed. Indeed it would likely make domestic service dearer, by providing a plus of dignity to those that nowadays are forced to perform it, as they would have the choice to stay at home playing Call of Duty or watching Reality TV rather than going to the upper class mansions to clean their WC's and do their laundry, but I honestly can't see how that is a social evil

  • It is demeaning to people to give them handouts, it will rob their lives of meaning and purpose: not to be mistaken with the previous argument, this one opposes UBI on the grounds that it is bad for the receivers, not for the ones that will, regardless of it, keep on working and toiling and thus generating the wealth to be distributed. I confess that I am somewhat (surprisingly) partial to this line of reasoning, as indeed the main problem of humankind, since at least the XVIIIth Century, is to find meaning, not to find what to eat, or what to wear, or where to sleep (not that the last three have been universally solved, but for the vast majority they have, indeed), and in a scenario of growing secularization work has become the ultimate source of meaning, of social identity and of relationship building for many, if not most... However, we have to keep things in perspective here, and not forget who the main beneficiaries are likely to be, and how meaningful and fulfilling the jobs they are performing today are. I'm not proposing a Basic Income to improve the lot of University Professors, Middle Managers in large corporations, Management Consultants, Web Designers, Screenwriters, Orchestra Conductors and whatnot, most of whom would continue doing the work they like/ love regardless of any financial help from the state, albeit may be at a less frantic pace. We have to think about janitors, fast food chain employees, supermarket clerks, warehouse operators, bricklayers... Its not like the job they are doing (and that they would have the chance of keep on doing, only without having to compete for them with a hundred candidates as little qualified and as desperate as themselves, being thus able to negotiate in better terms) is that great, or that the alternative (being paid approximately the same, but without the drudgery) may be that condescending... Nothing that gives them additional freedom, additional choices and the possibility to develop additional capabilities can be
  • It is too expensive, we just can't afford it: I started thinking it would be easier to come up with the savings in all the rest of the services the government currently provides as to rob this particular argument of its strength (we are after all a very rich society -this applies to all first world economies, roughly Western Europe, USA, Canada, Japan, Korea, Australia and New Zealand-), but when I started looking at the numbers they did look daunting, and even made me think there is some merit to it. As this post is already too long I'll just leave it at that, and defer to my next one the calculation of how much implementing a UBI society-wide would cost, and where the money would come from. The take away points I'll leave you with are a) it can be done (the state is collecting, and already spending, more than enough to pay everybody a living wage) b) it requires a major rethinking of how a modern state operates (forsaking traditional ways of distributing money back to society, specially the money coveted by powerful interest groups, so it is both more democratic and more likely to be bitterly opposed by those groups) c) it can cover the basic necessities of life, but not many luxuries (so any accusation that it may corrupt the moral fibre of society turning every citizen in a decadent slob is probably overblown), so I guess most people would still choose to pursue some occupation that would bring in additional income (which is a good thing, as somebody has to keep paying the taxes that in the end fund the whole schema) and d) it has the potential to reverse current demographic trends, turning offspring back to assets and a way to a better, fuller life (not net liabilities, as they seem to be now for most)

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