Fixing the Problems with Universal Basic Income

TLDR; I added an income ceiling to go with the income floor

“Humans were still not only the cheapest robots around, but also, for many tasks, the only robots that could do the job. They were self-reproducing robots too. They showed up and worked generation after generation; give them 3000 calories a day and a few amenities, a little time off, and a strong jolt of fear, and you could work them at almost anything. Give them some ameliorative drugs and you had a working class, reified and coglike.”

― Kim Stanley Robinson, 2312

Massive, disruptive change is happening in the world economy. Up to to half of all current workers, both white and blue collar, could be driven into unemployment by technology. Automation, artificial intelligence, and machine learning are fueling a new industrial revolution.

Once again, as in the past when steam, fossil fuels and biotechnology upended lives and fortunes, workers are getting the short end of the stick — this time as robots come for our jobs. Unless, as science fiction writer Kim Stanley Robinson warns, we become the robots ourselves, first.

Instead of tinkering around the edges, several recent authors make a forceful case for a bold solution to our society’s growing levels of inequality and economic insecurity: a universal basic income (UBI). Andrew Stern and Lee Kravitz kicked off the current explosion of discussion around UBI in 2016 with Raising the Floor: How a Universal Basic Income Can Renew Our Economy and Rebuild the American Dream. Their volume, like Annie Lowrey’s new book, Give People Money: How a Universal Basic Income Would End Poverty, Revolutionize Work, and Remake the World, makes a clear argument for giving people money to lift them out of poverty and smooth out their experiences of dislocation as the economy changes around them.

It is the ‘activity-based’ progression of automation that causes the most disruption. Stern starts with the story of his journey up the ladders of labor to the helm of SEIU, and then into a five-year deep dive on the future of work. He describes how labor has become far more productive in the past several decades, but the wages of workers have stagnated. Pieces of what we do, not entire jobs, are more efficient because of the technologies of the fourth industrial revolution. Economist Thomas Piketty’s now-famous equation from his 2013 magnum opus, Capital, sums this up: Since 1979, r (the rate of return on capital) has been greater than g (the rate of economic growth), leading to more inequality.

Lowrey and Stern describe in detail how income inequality is rising, with wealth concentrating at the top. Full-time work with benefits and retirement is becoming rare, and the jobless ‘recovery’ that followed the 2008 financial crash has created low-wage jobs instead of good jobs.

Lots of people around the world live in extreme poverty, including 18.5 million Americans. Stern sums this up well: “Combine technological unemployment with the two great de-couplings (growth from income, and work from jobs), add a dash of globalization and income inequality, and you get a highly combustible brew.”

Stern and Lowrey delve deeply into all the reasons for a UBI of one formulation or another, and forcefully counter the arguments against it. The data is on their side: People are better off when they have the money to get out of poverty. They are more free. They make better decisions and choices. Their children and dependents have more opportunity.

Lowrey makes a strong case that:

“The system would falter and fail if confronted with vast inequality and tidal waves of joblessness. A basic income is the obvious policy to keep people afloat.”

She takes pains to bring in voices from across the political spectrum to support of this idea. After examining the problem from all sides, Lowrey concludes that UBI is the solution.

She continues, “What I came to believe is this: A UBI is an ethos as much as it is a technocratic policy proposal. It contains within it the principles of universality, unconditionality, inclusion, and simplicity, and it insists that every person is deserving of participation in the economy, freedom of choice, and a life without deprivation. Our governments can and should choose to provide those things, whether through a $1,000-a-month stipend or not.”

Stern comes to the much the same conclusion. A UBI, he argues, can fuel a new American Dream, in which “we’ll each have the freedom to choose and create the life we want for ourselves and our loved ones, according to our deepest values, without ever having to worry about our basic human needs for food, shelter, and security.”

The idea of a Universal Basic Income has been around at least since Ancient Rome, where every citizen over the age of ten received an annual allotment of grain. 500 years later, Caliph Abu Bakr provided a guaranteed income to all men, women, and children living under his rule. The idea surfaces once again in Tudor England, and in the revolutionary writings of Thomas Paine.

In fact, we already have a version of a UBI in the United States. The Alaska Permanent Fund has disbursed $55 billion of oil company revenue since 1976 to the residents of Alaska for the privilege of having their natural resources plundered.

This gets us to the first of several thorny questions about UBI. How can we pay for it?

It is somewhat surprising that while some proposals to raise the approximately three trillion dollars needed to provide $1,000 a month to everyone over eighteen in the United States zig left, these authors mostly zag right. Stern walls off Social Security and Medicare from plunder, but puts 126 other programs that help the poor on the chopping block. He does this, one presumes, in hopes of creating a political big tent that could pass some form of UBI in the next couple of years (not decades).

In her own sales pitch to the right, Lowrey argues that “Replacing the current American welfare state with a UBI would eliminate huge swaths of the government’s bureaucracy and reduce state interference in its citizens’ lives: Hello UBI, good-bye to the Departments of Health and Human Services and Housing and Urban Development, the Social Security Administration, a whole lot of state and local offices, and much of the Department of Agriculture.”

Whether or not these arguments are driven by hopes of political viability, as someone who grew up on AFDC and food stamps, I’d caution this elite chorus of UBI boosters to think twice about eliminating proven programs before something new (and better) is created.

In fact, I’d like to see a lot more conversations with poor people and workers about their big ideas, hopes and dreams before we use them as guinea pigs in economic experiments championed by Silicon Valley.

I do appreciate Stern’s willingness to think big and strategically about how to win a UBI: Raise $100 million for a 2020 presidential candidate who supports UBI in early and battleground states. Build a digital activist base of 10 million people. A five-million-person tax strike. These are real strategies for winning.

The second thorny question about UBI is a big one. How does a UBI deal with the racism, sexism, and structural oppression that are baked into capitalism?

Lowrey faces race square on: “Government policy explains why black families are more likely than white families to be impoverished. It has nudged black families into stingy and judgmental welfare programs rather than generous and invisible wealth-building programs.”

She describes poverty as a policy choice, and cites the examples of other high-income countries that have ended deprivation within their borders. “The issue is not that the United States cannot pull its people above the poverty line,” she says, “but that it does not want to.”

The truth is, as both Lowrey and Stern point out, every way an economy allocates resources and rewards is a choice. Who the economy serves is a choice. So is who is in and who is out.

“The safety net’s holes are not design flaws, but intentional features,” notes Lowrey. Lowrey also takes on gender, noting that global GDP would grow 11 percent if we stopped undervaluing women’s contributions to the economy.

Lowrey brings this point home. She declares, “Of course, as the United States built a safety net that excluded and punished black families, it created a wealth-building apparatus to buoy and enrich white ones.”

If you share these authors’ hope that a Universal Basic Income can reduce inequality in the United States, you could easily twist yourself in a Gordian knot trying to find a legislative compromise grounded in racial and gender justice that can also win. But maybe you don’t have to.

In his groundbreaking The Case for a Maximum Wage, Sam Pizzigati says, “Intense concentrations of wealth, political thinkers have long argued, undermine democratic governance.” The more wealth the wealthy amass, the more political power the wealthy gain.

Now we’re getting somewhere — to the heart of why the state takes on the role of managing social unrest. Throughout history, the state has protected powerful economic interests — everyone from the land barons and slave traders of the past to the polluters and profiteers of the present — from the pitchforks.

The fundamental problem, Pizzigati argues, may not be poverty, but the concentration of power in the hands of people who don’t want to solve poverty and its roots in racial and gender injustice.

We need, in short, to battle for economies that generate less inequality, not just for redistributive measures that aim to clean up the messes inequality creates. This redistribution has taken the inequality-generating economy as a given and essentially accepted that this economy will end up advantaging some and disadvantaging others.

So now we’re really getting to the heart of the matter, one close to every organizer’s heart. Power. And how we can keep income and wealth from concentrating in the first place.

Pizzigati explains, “Governments the rich dominate do good by the rich. They cut their taxes. They address their aggravations. They help them become richer.”

This is why simply raising taxes on the rich to pay for a UBI won’t work, at least not long-term. He says, “An approach to equity that rested on redistributing income and wealth from the top could not overcome, in the long term, the political power of the top.”

Within a generation of this kind of top-down redistribution of wealth, the rich would find a way to use their political power to knock their taxes back down and eliminate or cut the UBI, leaving the poor and workers much worse off.

British author George Monbiot provides this vivid touchstone for Pizzigati’s argument:

Political systems that were supposed to represent everyone now return governments of millionaires, financed by and acting on behalf of billionaires. To expect governments funded and appointed by this class to protect the biosphere and defend the poor is like expecting a lion to live on gazpacho.

Pizzigati’s slender but action-packed volume digs into how leveling society at both the top and the bottom could make a lasting impact on the income gap. “In any nation that linked minimum and maximum,” he says, “society’s richest would be able to increase their own personal income only if the incomes of society’s poorest increased first.”

Here’s how a maximum income works. Society sets a new income maximum as a multiple of the existing minimum wage. Any income above that multiple would face a tax set at 100 percent. Pizzigati explains, “Incomes above specific benchmarks — starting at 25 or 50 or 100 times the minimum wage — could be subject to strikingly higher tax rates than incomes below those ratios.”

Pizzigati explains how cities, states and countries across the globe have taken on the question of a maximum wage, including how public policy can reward people and companies that decide to do the right thing. “A predistributive approach to public policy,” he argues, “could also reward corporations with the most modest pay differentials between executives and workers. Governments could offer these firms lower tax rates. Or give them preferential treatment in the contract-bidding process. Steps like these would, over the long term, privilege enterprises with pay patterns that help narrow inequalities and place at a competitive disadvantage those enterprises that continue to compensate executives excessively.”

While these volumes argue passionately for the redress of income inequality, all three are underdeveloped in their analysis of how structural racism and sexism make people are poor in the first place, and in whose it is to keep people poor.

None of these books deals seriously with the question of how immigration would affect a UBI. Yes, this is a major wedge and hot button issue. It is also central to the economic future of the United States and the global economic system. Neither Lowrey or Stern even mention the idea of a maximum income, or the potential to level both up and down.

Stern, Lowrey and Pizzigati’s ideas might be better off together. Perhaps the path forward is to pull not from left or right, but from up and down. Universal basic income tied to a maximum income is something that could have broad populist appeal. If we follow Stern’s cue, taking on the rich could open the big tent enough to bring a durable majority together in a way this country hasn’t seen since the New Deal.

In his prescient novel Blue Mars, science fiction author Kim Stanley Robinson posits that any era’s economic system is the result of a “residual/emergent complex of overlapping paradigms,” composed of roughly equal parts of the dominant systems immediately adjacent to it in past and future.

If, as these authors argue, we are indeed moving into a fourth industrial revolution, we may want to open a path toward a more equitable future and start thinking about how we want to shape the fifth.

Books Discussed:

Lowrey, Annie. Give People Money: How a Universal Basic Income Would End Poverty, Revolutionize Work, and Remake the World. New York: Crown, 2018.

Stern, Andy with Kravitz, Lee. Raising the Floor: How a Universal Basic Income Can Renew Our Economy and Rebuild the American Dream. New York: Public Affairs, 2016.

Pizzigati, Sam. The Case for a Maximum Wage. Cambridge: Polity Press, 2018.

Not included in this review but worth mentioning are additional books on Universal Basic Income such as Malcolm Torrey’s Why We Need a Citizen’s Basic Income: The desirability and implementation of an unconventional income and Andrew Yang’s The War on Normal People: The Truth About America’s Disappearing Jobs and Why Universal Basic Income Is Our Future, both published in 2018.

First published in Social Policy Magazine, Fall 2018, Volume 48, Number 3.