UBI - Pie in the Sky

Old fallacies that were debunked years ago are resurrected and presented as new and profound truths. It is fascinating to watch left-wing media because whatever their disagreements, the one thing that is never open for discussion is the questioning of capitalism itself. One being circulated around as the panacea for poverty and all the accompanying social ills is the Universal Basic Income (UBI) or Citizen's Wage. According to some “visionaries” robots will soon take everyone’s job, and a universal basic income will become necessary. A UBI is an unconditional pay packet for everyone in the country. It replaces all existing benefits and is granted to people no matter their job, wealth or circumstance. It will not make you rich, but provide you with the means to survive. Such schemes were first suggested as far back as the 1930s and the ILP but actually goes as far back as the Speenhamland system in the Middle Ages. The first Muslim caliph, Abu Bakr (573-634 CE), who introduced a guaranteed minimum standard of income, granting each man, woman, and child ten dirhams annually; this was later increased to twenty dirhams. Thomas Paine advocated a citizen's dividend to all US citizens as compensation for "loss of his or her natural inheritance, by the introduction of the system of landed property" (Agrarian Justice, 1795). While Napoleon Bonaparte echoed Paine's sentiments and commented that 'man is entitled by birthright to a share of the Earth's produce sufficient to fill the needs of his existence'. Nevertheless, no country has actually implemented such a system nationally.

Recently some of those technocrat “philanthropists” from Silicon Valley are especially eager to extol the results of an UBI pilot project in Kenya. The project provides a guaranteed poverty-ending income for those who receive it. In 40 poor, remote villages, 6,000 adults are now receiving 75 cents (yes, cents) per day – or $22 per month for 12 years.  In poor developing countries, an UBI can mitigate expensive aid programs that fail to address the targeted population’s needs, and that are often undermined by corrupt regimes. But The Kenya UBI relies on M-Pesa, a for-profit mobile banking system that was built with the support of foreign aid, private companies, and the government – not well-meaning philanthropists. Even if an UBI succeeds in Kenya it is not a capitalist-friendly solution for the United States: it would be prohibitively expensive and it is doubtful it would not solve the problems that it is meant to address.

On the right UBI in some shape or form has now a solid base amongst its neo-liberal advocates (such as Hayek) who hope to use it to abolish the provision of any state provision of social services and just give every citizen a small equal cash handout instead. It is clear why the UBI concept is most popular on the libertarian right - a means to dismantle the Welfare State. UBI proposals are disingenuous distractions from such immediate problems as persistent poverty, especially for children and racial and ethnic minorities; stagnant real (inflation-adjusted) wages and incomes for most households; expanding income inequality; declining social mobility; inequalities in educational opportunities; and the income volatility that comes with erratic employment. In the US, where the official poverty line for an adult in 2016 was $12,700 per year. Each year, a $10,000 basic income for every American adult would cost more than $3 trillion, consuming more than three-quarters of the annual federal budget. This would require historically high taxes, and yet we rarely hear wealthy UBI advocates calling for their taxes to be raised. They are more likely to advocate cutting existing social-welfare spending, such as Social Security and other programs that benefit the bottom two-fifths of the population, including children.

Many Left proponents assume that if the government gives everybody, working or not, a regular income this is going to have no effect on wage levels? They seem to be assuming that this would be in addition to income from work whereas what is likely to happen is that it would exert a huge downward pressure on wages and that over time real wages would on average fall by the amount of the "basic" income. In other words, that it would be essentially a subsidy to employers. It would be "basic" in the sense of being a mimimum income that employers would top up to the level people needed to be able to reproduce and maintain their particular working skill. Don't they understand how their much-vaunted law of supply and demand works?

These radical supporters of a Universal Basic Income want to end capitalism while presupposing its continued existence. If people are free from any compulsion to work for a capitalist company, this would destroy the capitalist mode of production. This, after all, relies on the workers to produce the products which are turned into profits. It also relies on the exclusion of workers from these products so that they can become profits. However, at the same time, the same supporters also ask the same capitalist firms to produce the profits to pay for freedom from them in the form of a Universal Basic Income. They want both: the continued existence — for now — of the capitalist mode of production where the reproduction of each and everyone is subjugated to profit and the end of this subjugation by providing everyone with what they need. They want companies to make profits, which relies on and produces the poverty of workers, while at the same time ending mass poverty. They want to maintain the exclusion from social wealth through the institution of private property and end this exclusion by giving everyone enough money.