Universal Basic Income: A Sensible Solution (Part I) / by Jennifer Chan


This post is inspired by Matt Bruenig, one of my favourite policy wonks, and very much reiterates his position on this issue.

A UBI program is where all citizens receive an equal cash benefit each month, in addition to income (most likely wages) they receive from the private market. Theoretically, the monthly payment would be high enough to cover basic necessities of life, so that workers are not dependent on the private market in order to survive.

I find that there are two primary counterarguments to UBI:

(1)  No “handouts”: It’s not fair to earn income without working for it
(2)  It will lead to meaningless, unproductivity, resentment and social and economic chaos

Here is my response.

We first need to distinguish between “work-income” and “non-work income.” In other words, income from your labour (wages) and passive income (income received elsewhere). 

Passive income most commonly exists in the form of capital income, which comes from owning wealth. If you own bonds, dividend stocks, rental properties, a pension fund, or money that sits in a high-interest savings account, you are receiving non-work income from the accumulation of wealth. 

If we apply the argument that non-work income is bad, critics of UBI must therefore also oppose investing in the stock market, renting out their property for money, and owning other forms of wealth. 

There is also no evidence that accumulating non-work income destroys the economy. In fact, recent data shows the opposite. According to a report dated September 25, 2017 by Thomas Pikkety, Emmanuel Saez and Gabriel Zucman, capital income makes up roughly 30% of the U.S. national income. A THIRD OF THE COUNTRY'S PROFITS COME FROM NON-WORK INCOME. Pikkety, Saez and Zucman also conclude that “all of the 2000-2014 growth of average national income per adult owes to the rise of capital income: labor income per adult (0.6% a year on average over this period of time) has grown by 0.1% per year, while capital income has grown by 2.2%.”

Another important note is that most Americans (bottom 90%) own little capital income – less than 20%. It has increased over time, however, due to the rise of pension funds, which in 2014 made up 36% of household wealth. But as we move up the socioeconomic ladder, the share of capital income per household sharply increases. The top 1% earners receive over half of their income from non-work income, with that share increasing to two-thirds for the top 0.1%. Clearly, the elite have no problem dividing work from income.

UBI necessarily destroys compulsory selling of labour-power to the private market. From a feminist perspective, this is extremely important because unpaid emotional labour continues to remain unaddressed. An extensive UBI program can resolve some of this issue.

Without mandatory labour, UBI provides freedom to pursue meaningful work on a person's own terms. Everyone can work whenever they want, however they want. How would you spend your day if survival was no longer a concern? Creating art, volunteering, or working a fulfilling job that carries minimal economic gain, are all forms of work that facilitate the well-being of both individuals and society.

People just don’t quit “work.” An example is billionaire Elon Musk. After he sold his first companies Zip2 and X.Com/Paypal, he could have just sat on his couch for the rest of his life. Now he's building electric cars, attempting to populate Mars, and designing an underground tunnel network (Hyperloop). You can also say the same about billionaires Zhou Qunfei, Abigail Johnson, and Warren Buffett.

I don't want to belabour the point but, quite simply, passive income has been in existence for decades without opposition. Implementing a national program that facilitates equal distribution of passive income should not be such a difficult concept to grasp. My suspicion is that opponents of UBI are not so much against non-work income, but are just ambivalent towards wealth inequality. If that’s the case, we have a much bigger problem.