Basic income—just giving everyone a certain amount of money, is an idea with a lot to recommend it. In any society which isn’t willing to just let people suffer or die because they don’t have money, there is a “social welfare net” with a vast bureaucracy. Why not just give everyone enough money to live on, and wipe out most of that bureaucracy? If you’re going to give poor people money anyway, it’s more efficient, and vastly less humiliating.
There’s a great deal of controversy around the idea of technological unemployment (economists sneeringly dismiss the idea on aggregate as the “lump of labor” fallacy), but even if you don’t believe in it en-gross, changing technology does cause specific people, often large numbers of them, to lose their jobs, and many of them never work again, or if they do, work at terrible jobs. A basic income deals with this issue, at least somewhat, and, again, far more efficiently than welfare and unemployment insurance and so on. And if you believe that there will be widespread technological improvement as AI and robotics improve, this will mitigate against it.
In a demand based society; a consumer society, where the economy is based on large numbers of people buying things, a basic income makes sense. People with no (or too little) money, don’t spend it (obviously) and that’s bad for the economy. Every dollar you give a poor person gets spent; it immediately goes to someone else, and that means that even those who are well off have reason to be for a basic income: most of it is going to wind up in their hands, and if it doesn’t (because you have a basic income which goes to everyone, not just those below a certain income), well, they still get theirs.
One might point out that we’re moving away from a demand based society, however, at least in the West. More than all the productivity gains of the last business cycle in the US, for example, have gone to the top 10% (really the top 3%). Consumer inflation is flat, and in many countries verging on deflation, while the goods that the rich buy (investment art, Manhattan and London real-estate) are booming. Moving away from a broad-based demand society, such as we had in the post-war liberal era was mainly done because it benefited the rich, but it also solved another problem—increased demand fed into oil and other commodity prices, and as the 70s and early 80s showed, that lead to huge inflation and economic dislocation.
So basic income, at any level that would be equivalent to a living wage (aka. letting people live a decent life, not just barely scrape by), can be expected to spike inflation in various commodities, including oil. This is a problem, but it’s not a huge problem, because we finally have the technology which allows us to move off oil (not completely, but enough to mitigate the effect of demand increases), and because, hey, we’re flirting with deflation anyway.
The real problem with basic income has to do with who controls our economy—with the fact that we are sold what we need, by and large, by oligopolies. A few large companies control most industries, and effectively price set. (Broadband profits in the US are almost 100% a year.)
This is known as pricing power. When someone needs what you sell more than you need to sell it to them; when they have little choice but to pay what you ask, you can demand a premium. If something is scarce, either naturally or artificially, those who control it get more of the share of national income than otherwise. In a society whose economy is not controlled by oligopolies this is usually a good thing—prices go up, more people enter the industry, prices drop. That’s the what the economics textbooks tell you happens. But it doesn’t happen in an oligopolistic economy where the oligopolists control government and where barriers to entry are very high.
So those who are in an oligopolistic situation, whether telecom companies, health insurers, pharmaceutical companies or landlords, are generally able to set prices: you must have medicine, you must have shelter, and in a modern economy, try and get by without a phone and internet.
What this means is that increases in income, especially at the lower end, tend to be simply taken away by those who have what you must have. Everyone will know what the basic income is, and they will know who is surviving on just that, or just that plus a low-wage job. And they will raise prices so that money goes to them.
Basic income which does include either oligopoly busting or regulation (or having the government, oh, just provide broadband and/or housing itself) will help many people, to be sure. But in a not very long time, most of the gains will be eaten by those who have pricing power.
This, by the way, is far from a “socialist” theory. This comes out of bog-standard neo-classical economics. Non-competitive markets tend towards concentration of wealth, and those who have pricing power use it (they act in their own self-interest, precisely as economics says they will.) Markets are wonderful things. They are extremely efficient at allocating money. And they will do exactly what they are set up to do. In an oligopoly situation, with capture of government, they will allocate that money very quickly to the oligopolists.
So if you want basic income to work, you must also make capitalism work. You must create actual competitive markets, you must-trust bust, you must regulate and you must move, as government, to ensure that the important things people will spend that basic income on are not scarce—either naturally or artificially.
This extends far beyond basic income. A market economy; a capitalist economy, works to the benefit of the majority only when it is competitive and when scarcities are actively managed, ideally to remove them, and when they can’t be removed, to ensure that those who provide scare necessities, do not reap outsize profits which allow them to buy up the rest of the system, including government and civic society.
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Russ
It certainly wouldn’t be sufficient while society is still under corporate rule, and is almost certainly a moot point since people who claim to care about poverty, precariousness, and economic inequality are usually more interested in proposals that divide among ourselves rather than those that would help everyone who’s not rich.
But that doesn’t change the fact that a basic guaranteed income is one of those ideas (single payer is another) which:
1. Is not “radical” by any objective measure; indeed it’s moderate compared to the extremist Social Darwinism which currently rules. (That’s for the sensibilities of those who fear “radicalism” as such.)
2. Would be unifying rather than divisive, since it seeks to make a better world for everyone rather than singling out this or that group and then playing them off against the others.
Of course there’s no lack of corporate propagandists and incorrigibly divisive trolls who do all they can to slander ideas like this, but if enough people really wanted change for the better and would stick unconditionally with these goals and expressing the simple, true facts about them, such austerity-mongering lies could never hold up.
I guess the real problem is that most “political” people who claim to want, for example, a better health care system don’t really want any such thing, as was proven in 2009-11. Most of them really wanted only a certain pseudo-political tribal affirmation.
So an idea like Basic Income would stand or fall as a gauge of how many people really want a better world at all, and how many are simply lying when they say that.
Lisa
Well you can aleviate a lot of issues of you have a VAT/GST tax system. You simply vary the tax rate based on (say) scarce resources/energy content.
As for oligopolies you simply nationalise them (ideal) or slap price controls on them and/or add ‘super’ corporation taxes applying above a certain level of profit. We have varying tax rates for indivoduals, no reason not to have them for corporations too.
There are no technical reasons not to achieve this, just stupidity.
Mandos
There is radicalism, and then there is emotionally satisfying posturing that declares that ideas that are far outside what the real existing population currently expects as “not ‘radical’ by any objective measure”, as though there were an objective measure for radicalism!
junp
I have been pro basic income for some time now and think it is a policy that is over-due. I agree that there would need to be some controls on the oligopolists to avoid the big suck. There also needs to be a change to the narrative supporting free-market capitalism that if you are not successful you must be a lazy bum sucking on the government teat. Somehow the greed ethos needs to be dispelled.
So I am not holding my breath. My efforts are invested in building local community and economy built on the ethos of the commons.
Mandos
What there needs to be is a deep and fundamental change in the concept of “deserving” that seems to be held by the overwhelming majority of people. At some point there was a partial shift away from an overall belief in “station in life”/”birth” as the rightful source of well-being to one in which people believed that ill-fortune was principally the result of moral incontinence, construed broadly. That was progress, actually. The next necessary shift is to a moral order in which neither “station” nor “rectitude” (defined in terms of work) is needed to justify why someone ought to be able to avoid some of the sufferings of life.
Jeff Wegerson
” we finally have the technology which allows us to move off oil (not completely,…”
Needed fossil oils can be replaced with renewable oils, which are actually biological solar oils.
I agree that our problems are political, rather than economic or technological.
At some point, if you adjust capitalism too much then it becomes something else.
V. Arnold
This is premised on the assumption there is a choice; there isn’t.
My only question is; when are ya’ll going to understand all options are off the table for the rabble which is us.
No American citizen has any control over politics; you have no democracy.
Until one realizes that, you’re just playing childish games of actionless bullshit/rhetoric.
When and if, one can understand one’s true position; only then can there be a beginning of the road forward.
Until then, one is a lost child in the wilderness…
Russ
The divisive troll appears on Pavlovian cue, trying to prevent any change in attitudes by dissuading people from making the necessary effort toward that necessary goal. It’s called intentionally sowing defeatism, and I can’t imagine why people tolerate it in such a crisis.
Lisa (Legally Now)
Off topic but of relevant to just about every post here:
Self referential propaganda.
Where ‘someone’ leaks’/comments/etc something somewhere (could be a newspaper, tweet and so on) then they later quote it as a ‘source’ for their public statements.
Now we have seen heaps of this re the Ukraine (intelligence by tweet) but this is a classic example from MoA:
“The Human Rights Watch tweet includes another deception. It links to a February 24 piece by the NYT as if that piece would somehow confirm HRW`s claim. But that NYT piece is not a neutral report. The piece, headlined “Syria Dropped ‘Barrel Bombs’ Despite Ban, Report Says”, is solely about a HRW report about “barrel bombs” in Syria. The HRW tweet is in effect linking to its own claims disguised as a link to a reputable source.”
http://www.moonofalabama.org/2015/02/human-rights-watch-accuses-syria-of-barrel-bomb-damage-created-by-us-attacks.html#more
Looks like everyone is getting onto that “….we make our own reality…” thing now. Thing is I wonder, from the viewpoint of quantum physics, with all these ‘realities’ being created all over the place, what happens when the wave functions finally collapse? Do all the realities disappear into a twitterverse black hole? Just wondering.
Mandos
…or it’s disagreement with the so far almost entirely fruitless strategy followed by soi-disant progressives/leftists/whathaveyou to actually achieve any goals, furthered by an obsessive tendency to identify and excommunicate people who disagree even with minor tactical matters as “defeatists” challenging (allegedly) radical doctrine.
Xco
Expects? I’m sure they quite expect to get shafted given recent experience but that’s not really the right measure of radicalism in this context is it?
I sense a subtle equivocation from “would expect” to “would get behind” to “would approve of given the chance” here.
nihil obstet
What I’m understanding from this post is that the economy depends on a significant proportion of the people living at a barely scraping-by level. Regardless of the source of the income, wide prosperity will be siphoned off by the oligopolists. The same argument can be made about raising the minimum wage.
As the last paragraph says “This extends far beyond basic income.” I think it extends so far beyond basic income that tying the two together is misleading. The argument appears to be that improving the economic lives of the poor will simply hurt those with somewhat more money. We should address that problem. We should not simply say that we need a significant economic underclass because we have oligopoly, but hey, what can you do?
I think there are a lot of arguments for the basic income beyond simple efficiency.
Lisa
nihil: “…wide prosperity will be siphoned off by the oligopolists….”
That is a political choice. All economies are ‘political economies’.
There are a multitude of ways to deal with oligopolies. For example just after WW2 it was normal to nationalise those ‘natural monopolies’. You could do it by tax or regulations.
None of these are techncially difficult to do, it is simply a political choice, same as things like a NHS, or public housing and so on.
nihil obstet
@Lisa
Yes. The point is that I don’t think the fact that we are now suffering very bad political choices (oligopoly) means we should postpone arguments for good policies (basic income).
V. Arnold
…or it’s disagreement with the so far almost entirely fruitless strategy followed by soi-disant progressives/leftists/whathaveyou to actually achieve any goals, furthered by an obsessive tendency to identify and excommunicate people who disagree even with minor tactical matters as “defeatists” challenging (allegedly) radical doctrine.
~~~~~~~~~~~~~~~
Indeed. Change is the by word of the stuck/impotent. If one actually understood the word “change”.
Russ is stuck and follows rhetoric mistaking that for something, anything in his(?) pathetic little world.
I got the hell out 6 weeks after Iraq got murdered and have been observing America/Americans impotently railing against a monster they do not understand. Change?
Hell yeah, you are changing into a fascist inverted totalitarian existence and you evidence no power over anything.
So, no negative intent to Ian, but I find most blog discussions infantile when viewed against reality…
Dan Lynch
Well, you’ve got several things going on in this essay, Ian, as is your habit. I’ll hit them one at a time, in separate comments.
“Basic income, at any level that would be equivalent to a living wage (aka. letting people live a decent life, not just barely scrape by).”
There is no agreed upon definition of “decent life”. What it really means to most people is “keeping up with the Joneses.” If the Joneses are stone age hunter gatherers living in a teepee, then that’s a decent life, and chances are that you’d be perfectly content living in a teepee and gathering roots and berries as long as everyone else was living the same way.
But there is an official definition of the poverty threshold. I suggest that any basic income be set at the poverty threshold, not some arbitrary “decent life.”
“…. can be expected to spike inflation in various commodities, including oil.”
Yes and no. Excessive aggregate demand can be expected to cause inflation. All other things equal, increased deficit spending increases aggregate demand. A means-tested poverty threshold BIG would cost the US about $250 billion, an amount the economy could absorb without requiring new taxes to throttle aggregate demand.
But a universal BIG (UBI) would cost $2.5 trillion or so (depending on your definition of “decent life”), and that would be inflationary without new taxes to throttle aggregate demand.
There’s a 3rd kind of BI called social credit. It’s sometimes confused with the UBI, but the original advocates of social credit (C.H. Douglas, and later Abba Lerner) intended for the social credit amount to be just enough to keep the economy running at full employment, yet not enough to be inflationary. So it wouldn’t necessarily be enough to live on, and would vary from year to year, depending on the state of the economy.
Dan Lynch
“A few large companies control most industries, and effectively price set. ”
Agree, but monopoly pricing is a problem with or without a basic income, especially for housing.
The generally recognized solutions for monopolies:
— nationalize them
— regulate them as public utilities
— break them up
Dan Lynch
“Increased demand fed into oil and other commodity prices, and as the 70s and early 80s showed, that lead to huge inflation.”
True that there was inflation in the 70’s and early 80’s, but disagree that it was due to increased demand.
Inflation in my lifetime (I’m about the same age as you) has correlated to energy prices, not to any measure of demand.
OPEC raised the price of oil in the 70’s. OPEC was effectively busted by the 1976 Doha agreement with Kissenger, in which the Sauds agreed to moderate oil prices in exchange for the US military supporting the Saudi regime.
There was another bout of oil inflation when the Shah of Iran was deposed, but eventually the Sauds ramped up their production to bring the price back under their control.
Ian Welsh
Here’s a link to a page with polls on basic incomes.
http://www.basicincome.org/?s=poll
Pluralities and even majorities are not uncommon.
In other words, no, it’s not a radical idea unless your definition of radical is “what the population supports.”
If your idea of radical is anything the elites oppose, then, of course, it is radical.
Imagine advising the Commune or English parliamentarians that since their project hadn’t worked for centuries (let alone 15 years or so), they should give it up. As for feminists in the 19th century, shit, it took decades and decades to get the vote, and well over a century to get anything approaching equality. Give up, people, you haven’t succeeded in X years, therefore you can’t succeed. Instead what you should do is accept whatever scraps the elites will offer.
The ideological faction out of power’s job is not to say “this is as good as it gets”, it is to provide an alternative so that when the current system falls (passively, or with a push), they get their turn. There is more to providing an alternative than ideological work, there is organizing and so on, but the ideology matters and people who don’t think so are fools.
Even so, basic income is just an extension of other types of income support programs and has plurality or majority support in most countries. By that measure, it’s not particularly radical. And more to the point, like social security, once enacted it will be politically disastrous to try and reverse.
Mary McCurnin
$73,000 a year is poverty level in the Bay Area for a family of four. How do we level out that playing field?
Ian Welsh
Start with rent control and the government either building affordable housing or making developers do it (and yes, there are ways to force them to.)
This is a solved problem.
V. Arnold
Imagine advising the Commune or English parliamentarians that since their project hadn’t worked for centuries (let alone 15 years or so), they should give it up. As for feminists in the 19th century, shit, it took decades and decades to get the vote, and well over a century to get anything approaching equality. Give up, people, you haven’t succeeded in X years, therefore you can’t succeed. Instead what you should do is accept whatever scraps the elites will offer.
I don’t think anybody is suggesting giving up.
What I would suggest is recognising when it’s time to stop and, as you say, find an alternative.
But, that is not what I see happening. Stuck is what I see. And, as Sheldon Wolin and Chris Hedges say, the fight is against inverted totalitarianism. Understand that and possibly it will show the way forward. I’m not optimistic based on observations of the recent and distant past.
Stephen Stillwell
I’m considering the likely effects of an international banking regulation, that requires sovereign debt to be backed with Commons shares, with the interest payed on that debt distributed to the shareholders, and prudent restrictions to safeguard the capital.
A Commons share valued at $1M could then be distributed to each adult human on the planet, for deposit in trust at local banks, without significant cost to anyone.
The debt created by loaning this newly recognized wealth would provide a global BI.
Each sovereign entity would need to make the interest payments on their debt, possibly raising taxes, but that would be required for a BI of any kind. This distances the taxing arguments from the BI arguments.
Practical example: A country with a population of 1 M, along with state, municipal, and some level of individual participation, could borrow a maximum of $1T (equivalent) against it’s citizens shares. With a debt, and a treasury of $1T, the country can develop a financial plan to increase revenue to cover the $12 B in annual interest payments. Just like any start-up.
Every one a millionaire, a capitalist, and a socialist.
Russ
V. Arnold,
Can you rewrite that comment when you’re sober? I’m having trouble deciphering your illiterate blather. The only part I caught is that you quit a long time ago and have since been nothing but a spitball shooter from the peanut gallery. Another worthless troll.
I’m the least “stuck” person I know. Come over to my site and you can read my plan. Start with my Syriza post. And if you want to continue with the moronic insults I can tell you what you really are without any longer disturbing someone else’s site. I clearly struck a chord with you trolls since Mandos kept sputtering about me in subsequent threads.
markfromireland
<conservative_glee>How I love the inherently fissiparous left and their hilarious and ever-reliable “purer and holier than thou” pissing contests.</conservative_glee>
mfi
Ian Welsh
Not quite sure what the problem with some people is here. This was a policy think piece.
V. Arnold
@ Russ
I’ve been commenting here for years. You don’t like my opinion? T.S.
This is Ian’s blog and I abide by what he says, not you.
You are a name calling, arrogant jerk. FU.
JustPlainDave
Write this down on your hands: “The nature of the political arena is such that objectively extremely radical policies can be successfully “sold” to the electorate, provided one’s methods are sufficiently patient and incremental.”
“Too radical for the electorate to accept” is about how one sells, not what one sells. Frog, boiling water, etc.
Monster from the Id
Mark, what kind of “conservative” are you?
I cheerfully admit that I have never been rich enough to travel outside of the USA, and so don’t understand the politics of Europe (and culturally-European offshore island nations) all that well, but–you seem to disapprove of plutocracy, else you wouldn’t hang around on this site. This confuses me, as where I come from, the foremost characteristic of our local conservatives is their devotion to plutocracy.
Ian Welsh
Folks, seriously, I’d appreciate it if you calm down. This wasn’t a piece that should be arousing huge emotions. Again, a policy think piece. The last week has seen a lot of ad-homs. You know the drill, attack the argument, not the people and remember that while we often disagree on strategy and tactics, most of us (not all) want basically the same things.
I know it’s hard not to swing back, and Lord knows, I’ve done my share. But try not to start it, and if someone does, try not to keep it going. You will have my gratitude.
V. Arnold
Ian
You have my apology, but I could not let that crap go unanswered.
I’m done with it and thank you for not deleting my post. It had to be answered.
Russ
I’m done, Ian. I’ll just finish by saying that anyone can look at my comment at the top of the thread and see how much it was only discussing the politics of the idea and didn’t mention anyone else, but how two trolls attacked it in personal terms, clearly because they saw themselves in the description of the slanderers.
Substantively, this is about far, far more than a “minor tactical difference”, as one of them put it. It’s about the abyss that gapes between the pro-corporate and anti-corporate world views.
Lisa
nihil: Sorry if I came across as disagreeing with you, I thought I was agreeing and expanding your (and others) points…my bad writing. Must .stop .writing .in. shorthand…..lol.
Pierre Marlais
Don’t expect governments to do anything for their citizens. And where do we start? A well-regulated economy to protect the commons and people? Or do we ensure everyone gets a decent life first? In every system, money flows up, and the best governments try to make the best circumstances for those not wealthy and powerful. You also have to get rid of debt-based money. Please visit this new educational website: “www.i-globals.org” to see how people can collectively create their own universal basic income thru a new digital currency. Start with the “Overview” page of this large site. Thanks and remember people have more power than they think and we can work outside the corrupt status quo. PM
Mandos
Ian,
I’m looking at the link, and I’m not getting the same interpretation of the texts there. Which article should I look at? What I see is, at least for the developed countries, a highly equivocal picture, where people are largely willing to consider a streamlining of existing social supports for the indigent, rather than endorsement of the idea that there is no one “undeserving” of a minimum quality of life regardless of how they comport themselves.
The important question for basic income, for single payer, etc, in terms of the “political mechanics” in the existing political system isn’t how much of the population you can get to support the issue in a yes/no question. It’s what they will vote for. I gather that if you quiz Republican voters on an issue-by-issue basis, they end up somewhat to the left of the candidates they support. But they don’t vote for e.g. Democrats, whose platform they might find in practice matches their own more closely.
The answer that some progressives seem to hold is that this is a pure matter of tribalism. I think that is far too easy. The right policy question to ask is, at least in the USA, is whether they would support a basic income for, you know, those people. No, I don’t just mean race, but the larger complex notion of the “undeserving”. And even if they do, what place it holds in their constellation of important issues, and yes, emotions.
I think that one thing the Syriza Saga has done, at least around here, is resurrected all the tactical/strategic arguments that came up in connection with the Obama victory — specifically, what the limitations are when one is trying to work within The System, and therefore, what constitutes a “betrayal” or merely an expected result of the parameters of the system. Of course, the problem is, the system is indeed constructed to limit the possible outcomes (in the case of Europe, explicitly so, you don’t have to read very far between the lines of the Maastricht criteria to see it), and the tactical debate is what is to be done to push or exceed the boundaries of the system in the manner that is most effective. Keeping in mind that it’s The System that has the guns, prints the money etc.
To me, up to this point, the outward appearance of a Syriza sell-out and a necessary Syriza tactical manoeuvre are going to look very similar. It’s ultimately a within-the-system party with the contradictory goals of making the system more humane while pushing the boundaries of what the system can accomplish. So it may well be the case that all such attempts (going to the overall discussion) are going to end in betrayal, but one should appreciate the accomplishment for what it is.
Mandos
Xco,
That of course is the fundamental question. I infer that your model of politics is that the people are actually just waiting for someone to seriously enact progressive policies, take courageous action, etc, regardless of what they actually vote for, and when someone finally does it, the public will fall into line, as it were. Otherwise, I have a hard time understanding what your objection is. Naturally, if that is the model you believe in, I don’t agree that that is how it would unfold, necessarily.
Xco
Earlier you pooh-poohed Obama comparisons while conceding that the Obama critics had been bourne out. Here you seem to validate those comparisons while rejecting the criticisms. Colour me confused.
I have no idea what you’re trying to say here. The linked poll showed plurality support for basic income, which puts it well outside of “radical” by any reasonable measure. “Radical” in the other sense of “hold out little hope for” is not really germane, as I said. Your response appears to be equivocating between the two yet again, and so I am not sure how to reply to it without simply repeating myself.
Mandos
I do no such thing. I only mention that the themes that brought out a great deal of bitter and passionate argument have been resurrected again. That to me is part of the problem: that every discussion of what happens when someone claiming some kind of progressive credential anywhere in the world is now measured against that backdrop, and only that backdrop.
Re the matter of basic income:
Please read my response to Ian on the interpretation of the polls for basic income. The web site itself suggests that, at least in developed countries, people may be taking it as a streamlining of existing social welfare supports rather than a generalized baseline economic right. The difference between the two is crucial. A recent tweet by David Graeber I’ve seen going around is that a great deal of bureaucracy is employed to make poor people feel bad about themselves (presumably, when receiving social services) — but to me the point of a basic income (or whatever you want to call it) is that we all have the right to a certain quality of life even if we haven’t jumped through the hoops of “deservingness”.
What I’d like to see is a poll that asks whether people are willing to see payments to go to people who can work, but don’t work and don’t intend to work at “productive employment” — the latter being mostly obsolete, even if we force everyone to do it.
Re the rest:
If you don’t know what I’m trying to say then I don’t know what you’re trying to say.
Mandos
Argh, correction:
that every discussion of what happens when someone claiming some kind of progressive credential anywhere in the world wins an election is now measured against that backdrop, and only that backdrop.