In an increasing number of countries the idea of a universal basic income is being discussed and is gaining momentum. In contrast to a minimal guaranteed income that is only given to those who have less than this amount in wages or other sources of income, the universal income is given to all citizens regardless of their wages or other income.
Andrew Yang has proposed such a scheme with the name of freedom dividend. The proposal could also be described as a flat tax reduction of $12,000 with the possibly that the resulting tax would be negative. For some, this way of describing the proposal, as an income tax reduction, coupled with the possibility of negative tax, or a tax payment made by the government to the citizen, might make it seem more agreeable.
The name freedom dividend, on the other hand, suggests a partial common sharing of the fruits of the earth and the economy, regardless of direct ownership of an individual of the specific means of production. The catholic teaching of the universal destination of good gives a perspective to see this proposal as realizing a form of justice in relation to the common good.
The responsibility of seeing that the goods of the earth can be enjoyed by those that need them is as such the state or mankind's responsibility, not that of an individual employee or businessman on his own. But because, for the most part of human history and in most cases, it was necessary for most persons to work in order to ensure that through man's labor and use of technology together the fruits would be enough for all, this requirement of justice became closely linked to the justice between employer and employee, under the title "living wage".
For an employer to be required, for the sake of justice, to consider more the wealth or neediness of the employee than the value of the work the employee should do is a major impediment to efficient exchange and valuation of labor. Such a system consequently significantly increases the cost of labor without a corresponding increase in productivity of labor.
Arguably, for all employers across the board to contribute 10-20% of labor costs to a pool that would be distributed to all independently of the work they performed, while likely increasing the price of labor in comparison to the present price, would end up being a more efficient way to ensure that the fruits of the earth and fruits of labor benefit all men, for whom the earth was created.
5 thoughts on “Universal Basic Income and the Universal Destination of Goods”
Obviously the proposal is well-intentioned. The question is whether it could work in practice. I think Yang's specific proposal in the USA could not, at least with his method of funding, which simply does not add up even as he presents it, much less as it would actually work.
But even taken more generally, such a practice causes a reduction in the value of money (prices would tend to increase at least a little) and a reduction in the marginal value of labor (for the person doing it, since they have other options, which is why the price of labor would increase, to continue to motivate people to do it). The risk is that those reduction would compound, leading to instability and possibly in the long run to economic collapse.
A safer proposal might be one that ties the amount distributed to everyone to some sort of measure like GDP, rather than to any particular comparison to the amount needed to live or to live well, such that if the country produces less, the amount is automatically less. This would, on the one hand, ensure that it could not lead to an economic collapse, even if it resulted in some reductions, and on the other hand, would mean that if the country became much richer, the amount could increase, theoretically to whatever people might hope it would be.
I agree that Yang's concrete proposal would not work well. And that a better method, indeed, would be to tie the distribution to a measure of productivity such as the GDP. I had considered using that method as an illustration, proposing a distribution of 10% of the GDP, but decided to begin with the theory and the concrete proposal.
10% of the GDP at present amounts to around $8100 per person per year, which is enough for a frugal person living carefully to survive (aside from expensive medical treatments), though a single person trying to live on this amount might need to be willing to share a room with someone else.
That would be, on the one hand, both large enough to at least scrape by (by western standard — to live very well by standards of some third world countries), and on the other hand, small enough that the danger of many people being then much less willing to work for pay is small, and small enough that it is not a extremely great tax on the owners of capital.
The possibility of such a system, being dependent upon enormous productivity, is relatively new in economic history. There is of course no guarantee that it would currently be sustainable. If many persons became less willing to work for pay, it would almost certainly decrease this overall productivity. With the percentage system it would, however, be self-correcting, as they would then receive less distributed, and would need to work more.
I think the piece missing from this conversation is the ability of automation and computing to increase productivity. In the past, if a company needed to sell 3x more units, they would have to hire more people. Now, it might be more cost effective for them to automate some of their assembly and then let go of staff. Profit goes up, but human well-being goes down.
If people become less willing to work for pay, companies will have to try to increase wages to pull people in. At a certain point either someone will decide that the wage is worth the job or the company will decide that automating the job would be more cost effective.
Thomas Paine supported a UBI because to live in a society meant that a person lost access to land and resources which were the common inheritance of the entire human race. In a similar way, Yang proposes that everyone in America has contributed in whatever unrecognized way to a society where automating away millions of jobs is possible, and people all have a right to the bounty.
One thing that UBI trials indicate is that more people will be able to start a small business because they have a financial fall back if things go wrong. Models and trials show that the economy grows while inflation remains the same. There is an ongoing trial in Kenya with very promising results. Every trial shows that the only demographics who work less after receiving UBI are new mothers and students. Most people want to work, it's an odd duck who can just pack up everything in their van and spend the rest of their life moving from national park to national park.
I do agree though that Yang's funding model is optimistic and would rely on expanding the national debt at least at first, though maybe it would become cost neutral eventually. I would rather have a system where the revenue of the three proposed taxes were distributed evenly among eligible citizens every month. This number would be closer to $700/mo, which as stated above is livable assuming no children or debts and a capacity to move to a low cost of living area.
Still, I'm voting for him in the primary because of the Democrats he's the one who actually understands the problems facing the country and is a true leader. If the country is presented with the choice between Trump and someone else, I'd rather the someone else be someone not dedicated to gutting middle America.