What is the Point of Universal Basic Income?

Written by Oshan Jarow

This is an essay about Universal Basic Income (UBI) in the same way that arguing with your spouse over leaving dishes in the sink is really about the dishes. Sure, the dishes matter. But there are deeper, subliminal forces at play. Those are what really matter.

UBI spearheads a resurging utopian energy to ground economic policy in radical, pragmatic visions of a better world. UBI matters, but coaxing that renascent energy into bloom really matters. The conviction behind this essay is not that we need a UBI. Rather, we need a fitting policy framework to guide utopian energy back into mainstream economic thought.

In search of the right framework, we’ll detach UBI from its underlying utopian conviction as if removing the spearhead from its shaft. The full essay will scrutinize UBI every which way. We’ll create a taxonomy of alternatives, each contrasted against UBI to show productive differences in both their imagined futures, and means of realization. The result will be a landscape of possibilities, each suggesting their own mobilizing vision of the future. What matters is finding the right fit between spearhead and shaft, between policy frameworks and utopian projects of directing social evolution towards better lives.

Where Have Our Utopias Gone?

Over the past 50 years, we have progressively lost a coherent utopian vision to guide social evolution. Though Francis Fukuyama’s 1989 provocation that we’ve arrived at the end of history isn’t aging well, its echoes persist. They now inhabit our institutionalized economic mentality. Consider Fredric Jameson’s infamous quip: “It is easier to imagine the end of the world than to imagine the end of capitalism”.

These echoes aren’t waning, but amplifying. They inform Mark Fisher’s 2009 work on Capitalist Realism, and led authors Nick Srnicek and Alex Williams to ask in 2015: ““Where did the future go? … in this paralysis of the political imaginary, the future has been cancelled.” What happened?

The last coherent utopia grounding popular economic policy was John Maynard Keynes’ vision that an “objectionable capitalism” was the best way to achieve a post-scarcity society. The Keynesian hypothesis held that capital accumulation, compound interest, and gains in productivity would both create and distribute gains in leisure time. This process would shift the balance of life from compulsion and labor to play and freedom. Material needs would wither as central stimuli for human behavior.

Keynesian policies defining ‘the golden age of capitalism’ (1945 – 1971) were rooted in his vision of social transformation and transcendence of “the economic problem”:

“I draw the conclusion that…the economic problem may be solved, or be at least within sight of solution, within a hundred years. This means that the economic problem is not – if we look into the future – the permanent problem of the human race…Thus for the first time since his creation man will be faced with his real, his permanent problem – how to use his freedom from pressing economic cares…to live wisely and agreeably and well.”

This began crumbling in the 1970’s, during a crisis of surging inflation, unemployment, and stagnating wages amidst booming productivity. Through these cracks in Keynesian logic rose a new kind of economic common sense. In this new rising framework, capitalism evolved from an “objectionable” stage in social development to the end of economic history. Visions of socioeconomic transformation grew content to fiddle with loose ends of the existing system.

If the Keynesian hypothesis employed industrial logic in order to transcend industrial logic, this new economic framework detached that utopian endpoint of post-scarcity. Industrial logic became for itself. We’re left in a feedback loop between capital accumulation and technological innovation with no larger project of social transformation. Failing to fill this void left by Keynes’ lost utopia is what, Andre Gorz notes, keeps us imprisoned in an economic rut resembling the end of history:

“It means we must find a new utopia, for as long as we are the prisoners of the utopia collapsing around us, we will remain incapable of perceiving the potential for liberation offered by the changes happening now, or of turning them to our advantage by giving meaning to them.”

Utopian Revivals

If we’ve been living as prisoners of industrialism’s fallen utopia, a jailbreak mentality has been mobilizing at least since the 2008 financial crash. Our project is to discover the best means by which to remember the future. Among them, UBI teems with public intrigue. Given its capacity to mobilize and enchant public imagination, this essay will explore whether UBI is fit to progress from reverie to reality.

I’ve spent the past four years studying UBI discourse. I’ve inhabited every position along the spectrum, from starry-eyed supporter enthralled to its promises, to disillusioned skeptic, dismissing UBI as a well-intentioned, though imprudent lurch for utopia, like a child’s thoughtless grasping for a toy shining nearby.

Now, I don’t know. I’m coming at this project curious as to where we’ll wind up. Two questions will guide us:

  1. What is the point(s) of UBI?

  2. Is UBI the best way to achieve its goals?

Taken together, these questions will create a taxonomy of motivations for UBI, and a cross-examination of how it compares against similarly minded policy options. To constructively ask whether UBI is the best way to achieve its goals, we’ll have to be specific. How much will it cost? How could we pay for it? What are the policy alternatives, and how much do they cost? What are the long-term risks of UBI?

The kinds of futures UBI might herald balance upon a razor’s edge. It’s as likely to pave a ‘capitalist road to communism’ as it is to aggregate and entrench class warfare. The direction UBI designs for will depend on the nuances of its implementation.

As we tour through UBI’s many possible forms, our aim is to catalogue the design features of a UBI that optimizes for democratic and meaningful freedoms for all. We’ll use this optimized form of UBI – constrained by the funding strategies we detail – to compare against the many alternatives. This comparison is where we’ll draw what conclusions we can on finding the right fit.

What’s to Come

The full 15,000 word essay will survey UBI discourse in four sections:

  1. Why UBI?

  2. Why not UBI?

  3. How to afford UBI?

  4. Alternatives to UBI?

But we aren’t here to write a mere summary. An in-depth study of UBI is not so much our purpose as the precondition for where this essay intends to go.

In particular, two theoretical contributions will take shape. First, we’ll explore Thomas Piketty, Emmanuel Saez, and Gabriel Zucman’s (PSZ) recent work on progressive taxation as a policy framework for renewing Keynes’ vision of post-scarcity.

But there are many routes to post-scarcity. To create productive tension, we’ll contrast PSZ’s approach with Glen Weyl’s Radical Markets approach. Both strategies pursue the same goal: redesign the capital system to redistribute wealth, fund public goods, and establish social dividends. But Radical Markets takes a different approach. Where PSZ apply higher progressive taxes on capital to fund their objectives, Radical Markets proposes a new form of taxation, Henry George’s land value tax with a twist, which lowers taxes on capital while still funding their shared goals. The emergent question is this: are we suffering from too many markets, or too few? Is our 21st century utopia a vision of decommodification, or a proliferation of radically redesigned markets?

Though I can hardly offer a full picture of our UBI survey, I’d like to share a few points from each section. If you find my overview lacking, please reach out and let me know what’s missing.

  1. Why UBI?

Motivations for UBI will be organized into: automation, poverty, inequality, and post-scarcity.

Regarding the robots, UBI is less compelling when framed as a shield against job loss than as a tool to design a more democratic distribution of the gains from automated productivity.

American poverty in the 21st century is an artifact of policy choices. While a negative income tax (NIT) appears a direct, affordable antidote for poverty, UBI has advantages. It manages to avoid poverty traps, minimizes requisite administration and bureaucracy to administer benefits, and doesn’t institutionalize class differences.

But poverty is only the visible, tail end of deeper structural inequalities throughout the economy. Framing UBI as a remedy for poverty is to tacitly accept inequities between labor and capital still present farther up the income distribution. An adequate UBI can serve to reduce these power imbalances by bolstering labor’s bargaining power.

But a most salient motivation for UBI is how it revitalizes the economic pursuit of meaningful freedoms for all. Here, we’ll explore the link between PSZ’s progressive taxation and Keynes’ post-scarcity.

  1. Why Not UBI?

Our exploration of UBI critiques will center around four main criticisms (with plenty of excursions to further concerns):

  1. An affordable UBI is inadequate, while an adequate UBI is unaffordable

  2. A UBI is a redistributive band-aid; we’d do better to focus on pre-distributive solutions that operate closer to the source of inequalities UBI aims to address

  3. A strong UBI would corrupt the division of labor. Making participation in gainful employment functionally optional threatens to unravel the entire system of collective production that sustains society as we know it.

  4. The free rider problem: those who forego additional work and live off their UBI would effectively be living off the earned income of someone else’s work. Do we owe one another the financial freedom to receive tax-funded income without participating in the employment system?

These critiques will open a few vital areas of discussion. We’ll need an assessment of UBI’s cost, in both gross and net terms. We’ll need to ask what constitutes an “adequate” UBI. We’ll need to explore the differences between a UBI conceived as a floor below which nobody can fall, and a ceiling above which no further welfare is necessary. Is UBI the final solution to the ails of free-market capitalism, or the beginning of a broad constellation of reforms to reconstruct economic incentives?

  1. How to Pay for UBI?

This section will detail an assemblage of revenue-raising strategies. We’ll gather projected revenues, as well as explore their Laffer Effects – how each policy affects the overall tax base and economic vitality. These policies will include:

  • Progressive marginal tax rates

  • Capital gains taxes

  • Wealth tax

  • Corporate tax

  • VAT tax

  • National income tax

  • Land value tax

  • Financial transaction tax

  • Greenhouse gas emission tax

  • Eliminate housing deduction

  • Reduce defense departments budget

  • Reducing tax evasion/havens

  • Folding existing programs

Having already detailed the potential cost of UBI, we’ll get a clearer picture of how large a policy bundle is required to sustainably fund an adequate UBI.

The means of funding UBI determine so much of its long-term impact. Each funding method carries a different set of properties, a unique host of alchemical interactions with socioeconomic incentives. Some promise to ’twist’ capitalist logic and pave a road to communism. Others may pit the minority class whose tax increases exceed their UBI against net recipients, fomenting class warfare and hierarchical resentment like never before.

Only by bringing the utmost scrutiny to the many possible funding sources for UBI can yearnings for economic emancipation become anything other than wishful vapors.

  1. UBI Alternatives

Alternatives to UBI are legion, and present strong cases against UBI. We will detail alternative policies that speak to the same progressive impetus for economic emancipation through different means. These will include:

  • NIT

  • Universal basic services (UBS)

  • Universal job guarantee

  • Co-determination

  • Shorter work weeks without decreasing wages

  • Sovereign wealth funds

  • ‘The old fashioned way’: investing in worker productivity, vocational training, expanding competitive markets

  • The Three Reforms: universal healthcare, mass transit, and affordable housing.

  • Glen Weyl’s COST & social dividend model

Each alternative generates some form of contrast with UBI that illuminates productive differences. These comparisons will create a map of the possible directions we might take as we resume the march of economic history.

If we’ve suffered from a scarcity of utopias, we now have the means to imagine an abundance. Any thorough consideration of UBI must evaluate it alongside its many alternatives.

Where To?

Concluding our descent into numbers, policies, and details, we can resurface the thread of economic emancipation with a stronger grasp on the present possibilities. We can give meaning to the many changes happening now by grounding utopian yearnings in concrete policy frameworks.

A homogenous, universalized utopia is a relic of old ways of thinking. 21st century utopias must not only respect and tolerate, but incentivize and design for diversity and differentiation. But these resurgent, differentiated utopias share a common thread. They seek to dispel the end-of-history illusion and let 1,000 futures bloom.

We have material and technological means like never before, and UBI signals the return of an immaterial yearning for something better. Keynes predicted that traces of post-scarcity may begin to emerge by 2030. It’s not too late.

About the Write of Passage Fellowship

This article was written by Oshan Jarow as part of the Write of Passage Fellowship. It’s a short version of a 10,000-word essay I’ll be writing on this topic in the next few months.

We’d love to hear from you. If you have feedback, you can find the author on Twitter.

Here is the list of essays we’re writing as a group: