UBI is a Poor Idea, Not an Idea that Helps the Poor (UBI#1)
Universal Basic Income (UBI) has become a solution to poverty that is supported by thinkers and activists on both the left and the right. Yet the most influential version of UBI was formulated by the neoliberal and monetarist economist Milton Friedman (Negative Income Tax). Is UBI one of those rare political ideas that everyone can agree with, at least on the level of basic values before one gets into details, like freedom or democracy? Or is something else going on?
In Welfare For Markets: A Global History of Basic Income (University of Chicago Press, 2023) Anton Jager and Daniel Zamora Vargas (henceforth JZV) argue that something else is going on. They avoid categorical statements of the type 'The left has sold out to the right on this one'. Rather they show that left thinkers have long been tempted by the idea, and that today's supporters are usually insistent that they are proposing a distinctly left wing version of the idea (what I will refer to below as 'high floor [or generous] UBI').
Nevertheless, JZV document two things clearly and concisely in their book: first, that the actual UBI type programs that have been experimented with over the past few decades serve the interests of capital rather than the poor (they are 'welfare for markets'); and second, that the increasing openness of left thinkers to UBI corresponds to a progressive loss of faith in the entire 'old left' social and political project. That loss of faith in the old has not yet led to a rethinking and reorganizing of a New Left that is sure of its analysis of the new 'post' social system we live in, nor is it sure of what it wants to replace it with, nor how.
My discussion of UBI is in two parts. Here in UBI#1, I will restate the defining features of any UBI policy as explained in the JZV book, and I will list reasons why it is indeed welfare for markets, an idea that serves capital at the expense of the poor. Later in UBI#2, I will draw on JZV's concise recapping of the history of shifts in left thinking since the end of World War Two to explain why so many on the left have come to support UBI. Doing this will beg a number of questions about current left-wing theory and practice on issues beyond just UBI, and the practical politics it has tended to lead to (what JZV call technocratic [left] populism).
MILTON FRIEDMAN INVENTS MODERN UBI
There are many versions of UBI, but they all share six defining features that make each version count as UBI.
-- FLOOR: Here is a definition of UBI: [Universal] Basic Income is a policy of establishing a money "income floor" by providing a cash transfer, a Basic Income Level money grant, to those who are deemed to be at an unacceptably low level of "extreme poverty".
--UNCONDITIONAL: There are no requirements of proving that you are looking for a job and willing to take a job when offered, nor that you will do some other type of service or activity while you remain (under)employed. You may also be employed and still qualify because your income is below whatever has been set as the minimum income floor.
-- INDIVIDUAL: The money is paid directly to the individual, nowadays it can be sent directly to an app on your smartphone or to your individual bank account. The payment does not go through a private or government agency (other than the UBI issuing one)
-- UNIVERSAL: All individuals who are presumed to need and want to work or operate a business in order to earn income are eligible. In theory, UBI is available to any working age citizen. It is presumed to result in all citizens having an income above the minimum income floor. It is unclear how governments actually figure out which individuals pool money to meet their "basic needs" that a minimum income is required to afford, and how that impacts how much they each/all get.
-- MONETARY: UBI is a transfer of cash.
-- NOT PUBLIC PR0VISION OF SPECIFIED GOODS AND SERVICES: A socialist welfare state approach provides public goods and services -- like free to the user, or low cost because subsidized, education, health, housing, food; like income for those who qualify because they are in particular situations (e.g. unemployment insurance, welfare cheque to single parent, pension, family allowance) and in some cases because they paid specific taxes as deductions from their wages cheque over many years. UBI is decidedly not this.
The most important selling point for UBI is that the State does not dictate to people what their needs are, nor does it insist that those needs are to be met through public provision. Nor does some paternalistic State bureaucracy get to say that the individual will only get the goods or services or income they need if they have proven that they have met this or that condition. UBI pays the Basic Income Floor Amount in cash, and the individual can go into the private market to meet whatever needs they decide are basic for them, and in whatever way they choose. UBI is paid to a consumer who buys what s/he needs as a consumer from a private supplier, from the Market.
I will not explain Milton Friedman's version of UBI, the Negative Income Tax, nor what led him to invent it at the time he did. You can Google it if you are curious (or read JZV). The unique features of his version are unimportant. His version is a perfect textbook version that has all six features just listed. The only really unique feature is that the cash would come to you at the time that you pay your annual income tax as a tax rebate. Most UBI systems in existence pay cash up front monthly or weekly or whenever (instead of through a once a year and after the fact income tax rebate, or negative tax).
WHAT IS WRONG WITH UBI AS A SOLUTION TO POVERTY AND UN(DER)EMPLOYMENT
I hope that the way that I have presented perfect textbook UBI above will make it easy to see why so many people, regardless of their political persuasion, have found the idea of combatting poverty and unemployment with UBI an attractive one. Very few people want to see anyone starve and UBI seems to prevent that, at the very least. And it seems to maximize individual choice and minimize paternalistic bureaucracies that discipline the poor with all sorts of hurdles they have to leap in order to qualify for anything. This post is part one of a two-part article on UBI. In this post I will simply list many reasons why UBI is not a progressive idea in its theorized goals, nor in its actual consequences. In part two, I will examine the two main versions of UBI that could be considered left-wing UBI and argue that they are unworkable and/or unwinnable.
Part two of this article also gets to the main reason why I wrote it. Most of the left wing thinkers and activists who support UBI are well aware of the objections to UBI that I will list here in part one. Yet many of them are much more open to UBI than leftists would have been in say 1946 or 1956. In part two, I will draw on JZV's brilliantly concise history of key changes in left thinking in the past eighty or so years to explain why. My reason for doing so is similar to theirs. I will agree with JZV that most of those changes in thinking are well grounded as far as they go, but they do not go far enough.
We are something like half-way between an Old Left theory and an adequately complete New Left theory of what is wrong with our system and what the alternative to it is. We are half way between an Old Left Movement of movements, that was socialist or communist political parties with a mobilizable mass base of working people, and a New Left movement that is clear about who leads and how, and about who is mobilized on a mass level and how.
The JZV book is the second of three (so far) by Anton Jager, with and without others, that is about the same practical issue. Jager argues that the left today practices a problematic politics that he frames as Technocratic Populism. It is a politics of a left that is half-way between two chairs in our theory and in our movement practice. In part two, I will draw out some key questions related to this as part of a critique of some of the half-way assumptions that have led much of the left to make the mistake of supporting a neoliberalism enabling UBI.
What is wrong with UBI as a policy to combat poverty? Why should progressive people oppose UBI and counterpose something different? To answer these questions, I will look at each of the six features and argue that each contributes to a single overall outcome: a UBI policy weakens the leverage and power of labour in all phases of the labour market (i.e. whether looking for a [better] job or already in a job), and strengthens that of capital and individual employers. It is quite deliberately a substitute for a regulated labour market that is organized by the State and/or Labour to increase the relative power of the worker in the labour market. Stated positively, UBI contributes to the precarity of all workers, to the size and spread of a reserve army of labour that undermines the relative power of all workers, not just the poor.
--FLOOR:
** UBI is not a minimum wage. It is a sub-minimum wage. It is enough income to meet needs that are both basic and immediate, to be able to pay enough short-term bills to have food and shelter and thus keep alive and be available to take a job in future. It is income to get workers above the level of extreme poverty only. It is not income to get workers out of poverty, to eliminate poverty, to raise everyone to a minimum that is significantly above bare immediate 'live for another day' survival level. It does nothing to improve the situation of the worker by getting them a house or education or health or whatever that is above the level they are now (including not paying off their debts).
** UBI is charity for the extremely poor and is motivated by the same mix of charitable/humanitarian and 'keep the extremely poor from rioting and doing crimes' motives as old-style charity, except the cash comes from the State and taxpayers instead of from churches or philanthropic foundations or other private sources.
** UBI is a policy that intentionally changes the situation of workers below a specified immediately spendable cash income level. It does nothing to change the situation of capital or employers. Because UBI is only sub-minimum level income and because it only actually goes to a relatively small subgroup, it is not a policy of redistribution. It does not require any increase in taxes on corporations and rich individuals to finance.
Above all, UBI does not require laws and policies that create a regulated labour market. It does not weaken capital and individual employer relative leverage over workers (and their ability to pay lower wages) with labour laws that foster unionization, the right to strike and boycott, a system of collective bargaining, rights of all employees to certain conditions of work (non-discrimination in hiring and promotion and laying off, health and safety etc) and inspection by government regulators to endure these conditions and rights are met etc.
-- UNIVERSAL:
** UBI is available to anyone who is a worker, where worker means anyone who is not an owner of a business (means of production) and who has to get their income from a wage labour job. UBI provides 'top-up income' to all workers regardless of their current status in the labour market -- longer-term unemployed, shorter-term unemployed, underemployed/part-time, on call or otherwise being frequently hired on to and laid off from a job, a secure job but non-stable hours of guaranteed employment per week or month, gig economy work by an artist or other person directly winning contracts to supply their unique or specialized services to a buyer, an Uberized job that is supposedly self-employment, low-wage full-time stable employed.
** The upside of this universality, the fact that it is available to anyone and everyone who has to sell their labour to an employer in order to earn income, is available to the entire working class, is that UBI is not just for the long-term unemployed. It is not a policy that aims to correct the presumed misbehaviour of a subgroup of society that is locked into a 'culture of poverty'.
** The downside is that Universal BI is a perfect match for a just-in-time globalized economy and for a maximally deregulated labour market where the deregulation impacts the level of precarity of workers in the full range of possible statuses listed above. UBI is a policy to provide the income floor for what Marxists call the 'reserve army of labour', all those workers and would-be or all of a sudden have-to-be workers who are under-employed or under-paid enough (in absolute terms and relative to their aspirations) that they are a threat to take the jobs and pay of other workers. UBI keeps the maximum number of people alive and well enough to be 'in the market' and ready to compete with other workers for what capital and employers have on offer. And it not only does this for workers who are seeking or already in the lowest wage and most precarious jobs, it also does it for temporarily underpaid or not working workers who are qualified to be in higher status and higher income jobs.
UNCONDITIONAL:
** The most persuasive selling point for UBI is that it is paid out without requiring the recipient to submit to the condition that they are actively looking for work and are willing to accept whatever job is offered to them. UBI maximizes individual choice, including the choice of whether or not to work (at a particular job on offer).
In this it is certainly different from both the socialist and liberal Keynesian welfare state idea that the State and Labour (working class parties and mass organizations) intervene in the economy to achieve full employment and opportunities to improve one's position in the labour market through organizing unions and collective bargaining. The logic of that approach is that the State and Labour create public goods and services, and the individual has corresponding obligations, including contributing their labour in a job. The working and middle classes rise as a collectivity by contributing as a collectivity. Or as Lenin once put it crudely, 'Those who do not work shall not eat'.
It should be noted that many real existing UBI regimes actually do attach conditions of looking for work or supervision of microcredit offered for microbusinesses. More important, the process of establishing what an individual's existing income is, in order to fix the amount of 'top-up', opens the door to all sorts of conditionality. UBI is a cash transfer method of providing consumer credit, and hence the individual's 'credit rating' in both narrow and wide senses can be the basis for conditionality. But I am critiquing perfect UBI here so I will restrict myself to that brief observation.
** The downside of not requiring the un(der)employed individual to seek or accept a job, is that the State will do nothing to help you individually to get a full-time wage labour job either. More importantly, the State will not intervene in the economy in order to reduce the unemployment level to as low a number as possible, will not work to achieve 'full employment' at least as much as it seeks to lower inflation. UBI is not just a post-socialist policy, but a post liberal Keynesian one too.
UBI is made necessary by, and provides justification for, not seeking or achieving full employment, and for actually making possible a higher rate of unemployment as 'natural'. Milton Friedman was very explicit about this. A policy that leaves job creation more or less entirely to the Market, to private business owners, will leave a sizeable number of people un(der)employed and poor. UBI is a fix that helps the free market to work, with a minimum of rioting and crime by the poor and un(der)employed.
INDIVIDUAL:
** UBI has all of the benefits of a policy that maximizes what Isaiah Berlin famously termed 'negative freedom', absence of external constraints on the individual's right to do whatever they choose. This is especially the case to the extent that the UBI is handed out without basing the 'top-up' on any knowledge about the individual beyond merely how much cash income they currently have. That kind of UBI might adjust the level of payout based on the number of persons in your household who are unable to work because of age or disability. But that kind of UBI would otherwise not care about what choices you and other (would be) income-earning adults in the household make about who works how much and who goes to school and when, hence who ends up being the primary breadwinner at any given time.
A UBI that is truly allocated to the individual abstracted from all of their concrete characteristics and circumstances other than existing income and number of dependents supports a wider range of family types or households and patterns of income earning and sharing within them.
** The downside of a truly individual UBI is that it does nothing to contribute to the 'positive freedom' of the individual. Positive freedom is freedom of the individual that is made possible by a society whose institutions and policies provide them with the resources and developed capacities and available choice opportunities to be truly equal first. Positive freedom is freedom made possible by equality of condition, by a society where structured inequalities and dominant cultural ideologies that socialize people to accept or foster inequalities are reduced.
A positive freedom seeking policy to combat poverty would start from recognizing that the concrete characteristics and circumstances of each individual make them unequal and in knowable ways. That might lead to some policies, like affirmative action in hiring and promotions, that change opportunities for particular types of individuals. It might include building more affordable but still high quality housing that is offered first to people based on their having a lower income.
But a left policy would mainly try to raise the floor -- in the sense of normal or average or typical, not 'keep the poorest alive and healthy and ready to work' -- for all individuals in society with various types of universally available and affordable or free to user healthcare, education, housing, food, natural environment etc. goods and services. The only way to do this is to adopt laws and policies that strengthen the power and leverage of labour relative to capital and individual employers in both the labour market and in the society in general.
UBI does not do that. It is a substitute for doing that. It is part of a general policy that promotes negative freedom instead of positive freedom.
MONETARY:
** UBI is based on the assumption that poverty is not a condition that is shared to varying degrees by the entire working class, an aspect of the general condition of being at the mercy of decisions about what products will be produced in what ways by whom and where and when that are the exclusive preserve of capital investors and individual employers to make. Poverty is assumed to be confined to an identifiable minority who are cash poor, and more precisely to a minority who only require a 'top-up' to the amount of cash that they have available to spend on immediate survival expenses, and even better only temporarily so. Or at least UBI assumes that the only aspect of being poor that should be directly addressed is a precisely quantifiable lack of immediately needed cash.
To repeat, UBI provides cash that is immediately spendable and is spendable on what the individual recipient chooses to spend it on. The upside of treating poverty as reducible to a problem faced by consumers that is fixed by receiving UBI is that there is no requirement to accept types and amounts of food or shelter or health services or education that are standardized lowest common denominator quality. The consumer is not required to accept the only model available, the beige or gray Model T that is the only model that the Equality of Condition Big Brother state produces. Negative freedom is more fun than positive freedom.
** But UBI does not do anything to address anything beyond that aspect of poverty that is the amount of immediately spendable cash available to you. Most of what it means to be impoverished or living in relative or absolute poverty has to do with things that you cannot change by having more immediately spendable cash.
Above all, it does nothing to change your situation as a producer, your leverage vis a vis capital and individual employers in the labour market and elsewhere. That can only be improved to the extent that the State intervenes in the economy on the side of labour to produce an extensive equality of condition fostering welfare state, and to regulate capital and private employers. It can only be improved to the extent that labour and all people disadvantaged by unequal social structures are able to take advantage of laws and policies that make it easier to organize and fight for both positive and negative freedom for all.
Money matters, but poverty is produced by qualitative differences between classes and other social groups. The biggest negatives about being poor are qualitative differences in such things as freedom and equality and democracy and quality of daily life. UBI does little or nothing to change the qualitative causes or the qualitative results.
NOT PUBLIC PROVISION:
** I have already made all the basic points related to this feature of UBI. The upside is the maximum of choice that you have as a consumer that is a buyer in the marketplace of private suppliers.
** The downside is that UBI does nothing for you as a producer and as a seller in the labour market. It does nothing to create equality of condition and positive freedom. Rather than UBI, we need policies that increase the power and leverage of Labour and other disadvantaged groups in the labour market and in the overall society.
MILTON FRIEDMAN WAS RIGHT: THERE IS NO FREE LUNCH IN A CAPITALIST ECONOMY
Where does that leave us? I hope that I have been fair in highlighting many of the reasons why many people, probably including you, find the idea of UBI attractive. In part two of this article I will go through some of the changes in left thinking that have occurred over the last eighty-plus years, changes that JZV sketch concisely and clearly, that have made so many of us feel that we can support UBI. We can do so because there is such a thing as a left-wing version of UBI. There is such a thing as what I will call 'High Floor UBI' or 'Generous UBI'.
This is wishful thinking. That kind of UBI does not exist anywhere. One can imagine UBI as one tool among others in a post-capitalist economy, but there are no post-capitalist economies anywhere, nor are we anywhere close to building one. As I have intimated above, and will discuss further in part two, UBI is an idea that needs to be evaluated as a policy within real existing economies, that may be post-industrial and post-Fordist and post all sorts of other things, but are definitely not post-capitalist.
The UBI policies that actually exist are part of the toolkit for a neoliberal economy that minimizes intervention by the State if it strengthens labour more than capital within the labour market. It is State and taxpayer funded charity that is cash or credit money and nothing else. It is set at the lowest level that one might imagine possible to select. That level is enough to meet very short term survival needs and nothing more. This 'charity level' UBI maintains the need and desire to seek work. It keeps as many people as possible alive and well to be a reserve army of labour available to undercut the leverage of other workers.
The Left should not be supporting UBI. We should be critiquing UBI and arguing for a set of policy ideas based on a positive freedom approach. That necessarily involves a left-leaning State that intervenes on the side of Labour, and above all mass campaigns and struggles waged by working people themselves.
In part two, I will show why there is no such thing as a left-wing version of UBI (with one partial exception that is arguable). Mostly, I will draw on JZV to identify the many shifts in Left thinking over the eighty years since World War Two that have led many on the left to entertain supporting UBI type social problem fixes.