Universal Basic Income?

Professor Wolff, In addition to the concept of Wage Subsidies, which are notable in that even Republicans like Marco Rubio have shown favor to them as policy solutions to modern capitalism's economic woes and inequalities, I was hoping you could discuss your views on a Universal Basic Income- once again in one of your videos such as Economic Update if possible- although an answer here would also still be appreciated. The idea of a Universal Basic Income seems most appealing in combination with a cut to the Minimum Wage- in that if appropriately balanced it would increase workers' standard of living (by raising incomes and depressing prices) while SIMULTANEOUSLY reducing the incentive for employers to automate or outsource jobs- thus generating increased employment and partially alleviating modern capitalism's income inequality crisis while also increasing economic efficiency by making the "true" cost of labor for an employer more similar to the market-based of labor, ultimately leading to better solutions for problems like manufacturing needed goods (for instance not making good in overseas factories when there are unemployed workers with the necessary skills right here in the United States- who would work for less than the Minimum Wage if their income were supplemented with a Universal Basic Income...) Please discuss this if possible- inclyding, ideally, the best way to pay for it. I would think that ideally a UBI would be best paid for with an increase to the Capital Gains Tax (stock prices and dividends would increase due to increased corporate profits if the Minimum Wage were eliminated, providing the larger tax-base to accommodate this), although I could always be mistaken...

Official response from submitted

Wage subsidies appeal to capitalists in so far as they enable them to pay lower wages. In capitalist societies, there would be endless political struggles (largely won by capitalists whose wealth buys parties, candidates etc.) over who pays the taxes to support wage subsidies. In the end, employed and thus non-subsidized wage workers would shoulder the taxes used to provide subsidized wage workers with those subsidies. This would set up the same social tensions that unemployment insurance and all other forms of welfare for the poor and/or unemployed....social tensions eventuating usually in a minimization of such subsidies etc.

Much the same set of problems beset UBI and for the same reasons.

UBI is now getting attention chiefly because a few savvy economists have pointed out that capitalism's endless production of the unemployed (its failure to provide jobs for the people in its societies) has rendered the irrational system vulnerable to the accumulating rage, anger, and anti-social potential of those it fails to employ etc. Thus for the last 150 years capitalism has provided palliative welfare payments to mitigate the antagonism of those disserved by capitalism. The savvy economists point out that the mass of confused welfare schemes and the mass of public employees administering them cost tax-payers more than what a UBI would entail. That is, UBI could be a cheaper way to solve capitalism's problem of an endless failure to employ.

This strikes me as an irrational "solution" to the system's irrational performance. A transition to a full-employment economy based on enterprises structured as democratic worker cooperatives could simultaneously solve these problems by providing meaningful work to all together with much less unequal incomes (determined and distributed democratically) and thus much less in the way of divisive social struggles over who pays what in taxes and all the other divisive social struggles over "redistributive welfare policies."

Its better to not distribute income and wealth unequally in the first place than to do so and then tear society apart fighting over redistribution.


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  • Blake Wondrasch
    commented 2017-04-11 00:31:43 -0400
    Catherine, after having read that article, I simply cannot abide by some of the assumptions which are made in it- and are completely flawed. Competition, and the pursuit of gain, are not merely artifacts of Capitalism- but inherent in the natural world. The authors of that article really could use a better education in the principles of natural selection, optimal foraging strategies, etc. I may be biased, as I am a Biologist in real life, but I believe a strong understanding of Biology is necessary to understand the economic system as much as any natural one. Without competition there can be no incentives for newer and better ways of doing things in the economy, just as without it there can be no benefit to newer and better organs and body-structures for a given biological niche. I am with Thomas Paine here in that a Universal Basic Income is a reasonable quid pro quo for accepting private property- but that some measure of private property is necessary for the basic functioning of the economy. Competition, inheritance of wealth, and private property naturally lead to exploitation and poverty for the masses- but the lack of any of these forces leads to gross inefficiency and economic stagnation. If you socialize childcare, there is no incentive for parents to go the extra mile to improve the care of their children in particular (one of the fundamental motives of society- and largely absent in socialized childcare as the benefits of extra effort are spread over ALL the children). If you socialize ALL factories, and wither away the wage system, there is little incentive for individual workers to work harder, smarter, faster, or improve their own skills. Collective ownership of SOME of the means of production, such as with worker’s co-ops, only functions well if some of the means of production still remain privatized. This is because the remaining privatized businesses will constantly seek to improve their efficiency and produce better goods more cheaply – and the drive to merely survive will force cooperative enterprises to innovate as well merely to survive and maintain their place in the economy. Meanwhile the existence of cooperative or publicly owned enterprises place pressure on private ones to provide better wages and working-conditions for their workers. The two types of enterprise need each other- without either one there is little competition either to increase efficiency and production (in an all-socialist scenario) or to improve worker wages and conditions (in am all-capitalist scenario, much like we have today). A HYBRID system may not be as emotionally appealing as a simple system offering simple solutions to complex problems like technological unemployment and worker poverty, but simple solutions are rarely the best ones. Capialist-socialist hybrid ststems, such as what the Nordic countries are working towards or reformists advocated in ages past, are the best solution to the complex economic problems facing society. Complex problems demand complex solutions, not simple ones.
  • Blake Wondrasch
    commented 2017-04-10 12:45:53 -0400
    Thanks Catherine. Although I don’t really consider myself a Marxist, I don’t really consider myself a Capitalist either. I believe both perspectives have inherent flaws, and need to be criticized from a variety of perspectives for society to come to understand them better, and improve on our current system. Thus why I consider what Professor Wolff is doing to be so important- because he’s advocating a set of views that are unorthodox in the context of the liberal capitalist “mainstream” in America. I may not agree with him on everything, but I believe the input of people like him to the discussion is important, necessary, and too often minimized or not present. I’ll take a look at that link soon.
  • Catherine Granicz
    commented 2017-04-10 11:33:51 -0400
    Blake, here’s an excellent article on UBI that may be of interest to you — from a Marxist organization. http://www.marxist.ca/analysis/economy/1173-universal-basic-income-utopian-dream-or-libertarian-nightmare.html
  • Catherine Granicz
    tagged this with Important 2017-04-10 11:33:51 -0400
  • Blake Wondrasch
    commented 2017-04-09 05:49:38 -0400
    Professor, that makes a lot of sense. But don’t the “savvy economists” at least have something of a point here- a UBI would be a more efficient welfare approach than the current “tangled mess” of welfare programs. And it would provide some unique benefits. Speaking as somebody who is currently unemployed despite my best efforts to obtain work, but highly-skilled, with a graduate degree (Master’s in Biology) and as an alumni of the Ivy League (Cornell), I would willingly volunteer in a pharmaceutical company to work on, for instance, anticancer drugs, for free- if only I could afford rent and transportation to live in the city of Boston instead of at home with family in the suburbs. I have no kids, no dependents of any sort, no disabilities, and made too little money in my last job for unemployment insurance to really be worth the risk of a stigma and discrimination that could make finding a future job more difficult- therefore I fall through the gap of conventional welfare schemes. But a UBI would at least allow me to be productively occupied (but unpaid) doing something appropriate for my skill and education level rather than being stuck at home and maybe getting stuck in a job flipping burgers or something… Anyways, worker co-ops and such are nice as an end-goak, but shouldn’t we try to achieve any progress that is possible, however small? A UBI and wage-subsidies would at least reduce unemployment and grow the GDP- which might provide SOME opportunity for workers to claw back a little more of the cornucopia produced by capitalism for themselves, even if most of the gains still only ended up in the hands of the very rich…
  • Richard Wolff
    responded with submitted 2017-04-08 10:58:59 -0400
  • Blake Wondrasch
    published this page in Ask Prof. Wolff 2017-04-08 07:49:25 -0400