Monday, March 23, 2015

The Conservative Case for a UBI – what lies in front of us all

This weekend in the NYT Mark Bittman argued for the convenience of reconsidering a guaranteed income to avoid the pitfall of the growing inequality caused by increased automation and the unstoppable advance (as long as we don’t find the political will to stop it, that is) of globalization. He provided in his column a link to an old article In “The Atlantic” I was surprised not to have read back when it was published, in August of last year ( ). In an impressively complete review of the idea’s intellectual roots he unearths some unexpected early proponents, like Founding Father and Rights of Man author Thomas Paine, Austrian monetarist hero Friedrich Hayek and the inevitable Milton Friedman (although, as we clarified in our previous post Friedman advocated a negative income tax, which is pretty different from a universal income, whose universality consists precisely in being received by everybody, regardless of any other income he may perceive). Politically it was supposedly proposed by Richard Nixon (but defeated in Congress by those pesky Democrats for never well explained reasons… in a conservative narrative probably because it would have loosened the grip of the big nanny state in its citizens, taking away the discretion to decide who perceives what, on what terms) so its republican bona fides should be established without discussion.

Except they are most definitely not, and anybody willing to seriously propose to incorporate it in the political platform of any major party would be laughed out the room. In the case of the USA, we have already argued ad nauseam that they have shrunk their tax base so much in the last three decades that it has become truly unfeasible (to support the cost in a non inflationary way they would need to return the overall tax receipts of the state, as a percentage of the total economy, to levels not seen since the seventies), whilst for Europe it may be done in a fiscally neutral way, but it would require relinquishing state control over significant parts of the economy (mainly industrial and agricultural policies), and thus diminishing the resources the bureaucracy that currently controls the State (the heads of the Party system, which we may consider includes the top executives of the biggest corporations) can freely distribute to the well connected in exchange for their financial support.

So, again, even recognizing it eminently makes sense both from a liberal perspective (it is the surest and safest way to not just reduce, but entirely eliminate poverty and dependency) and from a conservative one (it reduces the power of the State over the citizenry, and can do so in a fiscally responsible manner, without adding to the deficit) I’m not holding my breath (I have written before that I do not expect to see it implemented in my lifetime, and may be in my sons’ lifetime either), and would consider advocating the idea a completely Quixotic task, were it not because I’ve come to believe it is the only hope to avoid the total collapse of the system in the next 20 years. How come? Because of the aggregated effect of shrinking demography, deceleration of productivity gains, increase in automation and globalization, which are going to keep demand so chronically depressed (regardless of how many Quantitative Easing, or any such financial wizardry the world’s central banks may bother to conjure, as the cases of Japan and increasingly Europe are making abundantly clear) that at some point even the plutocrats that are benefitting from the current societal organization are going to find themselves in the position of choosing between some redistribution or complete breakdown.

Not because the vast majority of people may realize they are given the crumbs of the opulent banquet the one percenters have been enjoying since the Reagan and Thatcher revolution of the eighties and thus may revolt, as wedge issues and identity politics seem to have taken care of that, and in the main Countries (USA, Britain, Germany, Japan and increasingly China) the masses seem to be enthralled enough by the promise of unending technological baubles to keep them entertained everywhere and all the time (although one may expect that the mere promise may not be enough at some point, and that the cheap simulacra of entertainment that the “society of spectacle” produces endlessly will have to be replaced by something more substantial at some point). Rather, because the soon shrinking market (in the advanced economies at least, with the possible exception of the USA, which may keep stealing the little demographic growth there still is in the world for a few more decades) is going to force the great quasi-monopolistic firms that lord over the economy to a fratricidal fight over ever diminishing returns, placing ever increasing demands on the State to protect their rents until they find in their interest to expand again their customer bases by redistributing the piles of money they will have accumulated, without knowing what else to do with them (there not being any promising, productive outlet for Capital, something we may be already witnessing, but to give it back to the wretched masses).

Before thinking about the probability of a scenario in which the big firms give their hard earned surplus back to the masses for lack of a better venue to spend it (so far their executives have proven to be really imaginative in finding new and ever more extravagant ways to work around that problem, with private islands coming in the wake of private jets as non negotiable perks for successful CEO’s) lets delve a bit in how the current scenario may play out, if current trends simply are left unchecked: if we just leave things as they stand (and keep on electing Republicans or Democrats in the USA, Christian-Democrats or Social-Democrats in Germany, Labour or Tories in UK, Liberal Democratic Party in Japan and of course Chinese Communist Party in China) a decade or two from now we will have an anemic recovery which, except for the very rich, is barely distinguishable from the previous recession (if we are still not downright in it); an unemployment rate that has barely budged, and that may even look like full employment because the percentage of the population actually looking for a job has kept shrinking; budget deficits and national debts that are high or very high according to their historical standards, and thus leave an ever shrinking leeway for whoever holds power to push for a fiscally expansive budget (as without productivity gains, austerity's only effect is to plunge Countries deeper in recession, eroding their receipts more than what it reduces their expenses); the attempts to reignite growth through “structural reforms” has only accomplished a further weakening of workers bargaining position, a further hollowing out of the middle classes and a further strengthening of the general feeling of squalor and precariousness that accompany a more flexible labor market, thus depressing individuals’ investment decisions (and acquisition of big ticket items); ageing populations impose ever growing strains on the State budgets, which can not resort even to the “weaponized Keynesianism” that kept them going for much of the 20th Century;  those same ageing populations can not research much, innovate much or create much, so kitchens, living rooms, office buildings, factories (may be with a tad more robots and a tad less workers), cars, TV shows, computer games and even fashion all look suspiciously alike what they look like today (of course, energy is still produced mainly by burning fossil fuels, the first fusion experimental reactor is under construction but not yet finished, animal and vegetal species are going extinct at the same alarming rate as today, without anybody feeling much alarmed any more –also not that different from today- while the Earth keeps on getting warmer by the year); in some Countries, half the young will never, in their whole life, have a stable job (or a job at all), but family support, occasional recreational drugs, the ever present thrill of social media presence and the fear of an ever more present surveillance state (and an ever more efficient police) will keep them in check while they wait for their parents to croak so they can inherit the house and keep on coasting.

Not very appealing, huh? Although if you compare it with the central centuries of the Middle Ages, when Mongols roamed Europe unimpeded, life expectancy was around 35, 90% of the population was illiterate, underfed and unfree it doesn’t sound so bad (and the experience of Japan since the eighties, being more advanced along that path than any other Country, makes it seem almost as a nice thing). But I do think we can do better, and probably so do the honchos that decide who they are going to shower with millions in the next election cycle… so it is to them towards who we have to turn, and understand how they see the world, and the most likely path in front of them, so we can influence them to turn things for the best, although of course that is the subject of another post.

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