by Karl Widerquist | Jun 27, 2017 | Opinion, The Indepentarian
This article was originally published by OpenDemocracy, where it received more than 43,000 views as of July 20, 2017. It has also be republished by Moon Magazine. It is based on–but greatly extended from–an earlier article published by BIEN in May 2010 at basicincome.org.
I have a private basic income – a small, regular cash income without means test or work requirement. It’s probably large enough to meet my basic needs. And I got it thanks to privilege, nepotism, and two big lucky breaks.
My first big lucky break happened in 2009 when Georgetown University hired me as a philosophy professor on their campus in Qatar. Georgetown-Qatar, which is funded entirely by the Qatar government, has to pay an enormous premium to get faculty to agree to live and work in Qatar. If I had a home I might have considered comparing all available equity release plans to pay that premium but that wasn’t for me. I get paid three times as much as my wife. I teach half as many classes. She’s a full professor. I’m only an associate.
Qatar can pay more than US universities because of their own series of lucky breaks that put them in control of enormously valuable resources. Their position today comes largely from decisions made about a century ago, as the Ottoman Empire was breaking up. Britain and France arbitrarily drew lines on the map to create what became the states of the Middle East. They had no idea those lines would eventually give some of those states enormous amounts of oil and gas and leave others desperately poor.
The joy of options
I ‘earn’ my salary by doing a job few others are both willing and able to do. To some extent wages compensate for other disadvantages of the job. But this equalisation is only partial and more importantly, it only occurs among people with similar options.
fedee P/Flickr. CC (by-nc-nd)
I had better options than most people in the world. My white, American upper-middle class privilege gave me the opportunity to get the qualifications and the flexibility to take this job. For every highly paid professional ‘expat’ in Qatar like me there are maybe eight or ten extra-low paid ‘migrant labourers’, some of whom make as little as $200 a month. They live in dorms for years at a time, separated from their families. They are unfree to quit or to change employers. They are unfree to leave the country without their employers’ permission.
There is no combination of hard work and grit that could have put any one of these workers in my position from their starting point in life.
I see these workers often. They clean the toilets at my university. They bring me tea if I want it. They are, on average, several inches shorter than me thanks to childhood malnutrition, because human resource companies in Qatar have scoured the earth looking for the most vulnerable, cheapest labour. There is no combination of hard work and grit that could have put any one of these workers in my position from their starting point in life – nor is there a combination of bad choices that could conceivably put me in their position from my starting point. I’m paid partly because I’m willing to see unfree labourers up close rather than to stay home and consume the products of billions of workers like them without seeing them.
I do not ‘earn’ my salary in the sense of doing more useful work. I’m a competent professor, but I’m not outstanding. My work is no more valuable than the work other academics do – perhaps less because most of my students are already so wealthy they need education much less than the average person around the world.
I receive a high salary because I was lucky enough to be in the position to serve the whims of rentiers – that is, people who own resources and the stuff we make out of them. There are exceptions but on the whole, the highest paid people are those advantageously placed to serve the whims of wealthy people. Doctors who perform cosmetic surgery for rentiers make far more than doctors who treat malnourished children.
And the power of ownership
The real money isn’t in doing stuff for the people who own stuff. It’s in being one of the people who owns stuff. My chance to do that was my second big lucky break.
A few years before I left for Qatar, my brother returned to the Midwestern United States with a significant amount of money he’d saved while teaching English. With that money, he’d bought a couple houses, fixed them up, and rented them out. Although he made a very good rate of return, he had no more money to invest. He had less money because he was now teaching underprivileged children in a public school in South Bend, Indiana instead of teaching relatively wealthy people in Tokyo.
We were a perfect match. I had the money but not the time or skills. He had the time and skills but not the money. And as brothers we had a bond of trust. No one is going to give tens of thousands of dollars every year to some guy who owned a couple of houses and said he knew how to manage more, but I’d give it to my brother. Nepotism made my business possible.
South Bend is a fabulous place for small investors to get into real estate. Thanks to overbuilding 50 years ago, houses there are extremely cheap to buy, but not as cheap to rent. So, we needed less money to buy in and made a higher return than most real estate investors in most US cities.
There are no doubts about it, investing in real estate is a fantastic way to boost your income. Whether you want to sell your Palmdale house fast for cash or whether you are a first-time buyer, the real estate industry is booming, and now is the time to get involved in property investments. However, that being said, managing multiple properties at one time can be overwhelming, and adding inherited property can raise further points for consideration. With this in mind, if you are considering investing in real estate, it might be worthwhile researching a few different property management companies in your area. Above all, a property management company can take care of everything from finding tenants to advertising your property on social media. Accordingly, you can learn more about the benefits of working with a property management company by doing some research online.
I also benefited because the US tax structure is extremely favourable to business owners in general and landlords in particular. Capital gains are taxed far less than income, and people who don’t need their income are taxed less than people who do. My brother needs to live off of the salary our business pays him, and so he pays income tax on it. My wife and I don’t need the money we make from owning most of the business. We live off the salaries of our jobs, and reinvest virtually our entire share of the business. These reinvestments count as “losses,” and so officially we have never made any income or paid income taxes on our share of the business.
The business pays property taxes, but they average about $15 per house, per month – minuscule compared to the rent we make. Our business needs to maintain the houses, but the cost of maintenance is far less than we receive in rent. Eventually, I’ll take money out and pay income taxes on it, but that amount will probably always be a small portion of the returns to my share of the business. As long as my wife and I (or our heirs) keep reinvesting most of our profits, the vast majority of it will never be subject to income tax.
Making private basic incomes universal
My wife and I don’t have enough property income to put us in the one percent, and at our age, it probably won’t get there while we’re alive. But we could quit right now and be safely out of poverty with probably as much as the most generous basic income proposals on the table right now.
We have a basic income – a permanently growing basic income – not just for life, but forever. Because we own stuff we don’t need, our society rewards us with more and more stuff every year. We don’t have to do anything to get more every year. Our money works for us, so we don’t have to.
Because we own stuff we don’t need, our society rewards us with more and more stuff every year.
We don’t quit because employers have offered us jobs with good working conditions and pay that makes us significantly better off than living on our basic income alone. Most people in a similar position would do the same. If some people don’t work when a basic income becomes available, we should consider the possibility that employers aren’t paying high enough wages. My wife and I are not better humans than most of the world’s poor. Our lucky breaks make us different from the poor. And those same lucky breaks make us similar to most other people with money.
Just because I benefit from the unfairness of our economic system doesn’t make its rules any fairer. Those rules are not some natural feature of the universe. People made them. People can change them.
Why don’t we?
Obviously people who own stuff have a great deal of political power, but there’s more to it than that. Most people and policymakers do not understand the difference between rewarding people who do stuff and rewarding people who own stuff. Spending rewards production, but rewarding production is not the same as rewarding people who do things that make production happen. Everything humans produce is made from a combination of human effort and resources. Some spending rewards human efforts, but the biggest rewards go to the owners of resources and of the things we’ve made out of them in the past.
People like to think that owners are ‘entrepreneurs’ and ‘job creators’. To some extent this is true. Entrepreneurs are owners who put forth effort to increase the value of what they own, and often what they do is valuable. But there are three reasons entrepreneurship can’t justify the enormous inequalities in the world today.
1. For owners, work is optional. For everyone else, it’s mandatory. Owners do not have to be entrepreneurs. They don’t even have to be competent. They can hire competent people to manage their money for them. The amount of ‘entrepreneurship’ in my story was miniscule. It amounts to this. I lucked into money. My brother knew what to do with it. I gave it to him. For nothing more than that, I never need to work again. Neither will my successors. And unless they’re spendthrifts or exceedingly incompetent investors, they’ll have more than me, and their successors will have more than them.
2. Most owners aren’t really entrepreneurs. Economists have a saying, “the entrepreneur tends to become a rentier”. The reason is simple. The more money you make, the more it makes for you, and that part of your income will eventually outstrip the part from the things you actually do. As a human, you will eventually stop working, and so, you’ll stop getting money for doing stuff, but your stuff will keep on making money forever.
3. We can get entrepreneurship without the enormous rewards to ownership we have today. Rewards were smaller a half century ago, but there was just as much entrepreneurship. What can I possibly have done in the seven years that I’ve been accumulating stuff to justify rewarding me and my successors with a perpetually growing stream of work-free income? In short, nothing. I do not exaggerate. I’ve studied the market as an economist and as a political theorist. I’ve lived it as a wage earner and as a business owner. It’s not just me and my wife. It’s how the economy works.
Some people who read this story will probably accuse me of hypocrisy, saying something like, “If you’re an egalitarian, why are you rich?” If I wrote a similar description of the economy when I was poor, they’d accuse me of jealously, saying something like, “if you’re so smart, why aren’t you rich?” That’s the catch-22 for people who complain about the rules of our economic system. You’re either hypocritical or jealous. No one has the right amount of property to complain about the distribution of property.
I plan someday to use most of my money to do something good for others instead of just for myself. But it’s the system that needs to change. Individual owners giving away things at their whim will not fix the unfairness of the system. We need to change the rules.
We don’t need to eliminate the market economy or property rights. We just need to realise that a lot of the income in the world today goes to the people who own resources and the stuff we’ve made out of them. Tax that unearned income and share it with everyone – a universal and unconditional basic income. The most common objection to basic income is that it’s supposedly wrong to give things to people who don’t work for it, when actually, the economy already gives billions of dollars of unearned income to people who are already wealthy. The problem is we don’t share it.
This article was originally published by OpenDemocracy, and it is based on an earlier version published by BIEN in May 2010 at basicincome.org.
by Karl Widerquist | Jun 11, 2017 | Opinion, The Indepentarian
Overview (details below)
June 15-18, 2017: New York, NY
June 20-21: Brussels, Belgium
June 27-29: Sheffield, United Kingdom
July 5-7: Stockholm, Sweden
July 9: Oslo, Norway
July 11: Haugesund, Norway
July 27-29: St. Louis, Missouri/O’Fallon, Illinois
August 15: Canberra, Australia
August 16: Sydney, Australia
August 17-18: Melbourne, Australia
August 31-September 1: Reykjavik, Iceland
September 25-27: Lisbon, Portugal
November 14: Doha, Qatar
So many conferences and seminars have agreed to let me give talks this summer and fall that I’m calling my usual working vacation a “Speaking Tour.” It’s (tentatively) 21 talks in 14 cities in 9 countries, which sounds like a lot, but it’s spaced out over 5 months interspersed with regular work at my job and/or vacation days.
I’ll discuss a variety of topics including the cost of Basic Income, why Basic Income is so important, a property theory I call Justice as the Pursuit of Accord, a criticism of influential political theories I call Prehistoric Myths in Modern Political Philosophy, the political economy of Basic Income trials, and more. It sounds like a lot, but it’s based on work I’ve done over the last ten years or so.
It’s a hectic schedule, but I feel extremely lucky to be able to do this. All of the travel is sponsored either by my university or by institutions. If my expenses are paid, and my boss gives me time off, I’m willing to travel a lot more than this.
Most of these events are open to the public and most of them are free. So, if you’re anywhere near any of these places, meet me there. Come, tell me where I got it wrong. I’m looking forward to discussing some issues.
Event details
June 15-18, 2017: New York, NY: “The 16th North American Basic Income Guarantee (NABIG) Congress”
- June 15: 4pm: Interview with “Income Outcome,” a feature documentary on UBI (prerecording)
- June 15: 6-8pm: Featured speaker, “Opening Panel of the NABIG Congress,” Roosevelt House, Hunter College
- June 17: 10:20-11:50am, Presenter, “The Cost of UBI: Back-of-the-Envelope Calculations,” Silberman School of Social Work, Hunter College
June 20-21: Brussels, Belgium: “Conference: Why Private Property? Politics of property and its alternatives”
June 27-29: Sheffield, United Kingdom: “Association of Social and Political Philosophy 2017 Annual Conference”
July 5-7: Stockholm, Sweden: “Economic Ethics Network Annual Conference” (invitation only) at the Institute for Futures Studies
July 9: Oslo, Norway: BIEN Norway
July 11: Haugesund, Norway: BIEN Norway
July 27-29: St. Louis, Missouri/O’Fallon, Illinois: “The 37th Conference of the Council of Georgist Organizations”
- June 29, 10:30-11:45: Featured speaker, “The People’s Endowment: Common Resources and Basic Income,” Hilton Garden Inn, O’Fallon, Illinois
August 15: Canberra, Australia: Basic Income Guarantee Australia events
- Morning: Featured speaker, workshop with MPs at Parliament House, details TBA
- Evening: Featured speaker, public event, details TBA
August 16: Sydney, Australia: Basic Income Guarantee Australia events
August 17-18: Melbourne, Australia: “Basic Income Guarantee Australia Workshop on Basic Income”
- August 17: evening: Public forum, events TBA
- August 18: Featured speaker, details TBA
August 31-September 1: Reykjavik, Iceland: “Nordic UBI Conference: Basic Income and the Nordic Welfare Model”
- September 1, 11:30am-12:10: Featured Speaker, “The Political Economy of Basic Income Trials,” Nordic House, Reykjavik
- September 1, 1:30-3pm, Panelist “Panel Discussion,” Nordic House, Reykjavik
September 25-27: Lisbon, Portugal, “17th BIEN Congress: Implementing a Basic Income”
- September 25: Presenter, “The Political Economy of Basic Income Trials,” Portuguese National Parliament, Lisbon, Portugal
November 14 (Date to be confirmed): Doha, Qatar: Faculty Seminar
by Karl Widerquist | Jun 1, 2017 | Opinion, The Indepentarian
In the process of cowriting a book about the upcoming Unconditional Basic Income Trials, I’ve been trying to come up with a list of the claims that tend appear in the debate. Below are two lists: first a list of supporters’ claims and then one of opponents’ claims. I gave each claim a name to make it easier to talk about them, but these names do not reflect any standard definition. I tried to order the claims in each list from the relatively more important or more common to the relatively less important or less common.
To say that a claim appears on the supporters’ or opponents’ lists is not to say that all supporters or all opponents agree on it. In fact, some of the claims contradict each other, which is to be expected, because different people support or oppose UBI for diverse reason. They might have little in common but their support or opposition to one policy proposal.
Supporters have claimed:
- The freedom claim: UBI gives people greater freedom by giving them more effective power over their own lives.
- The poverty claim: UBI (usually in combination with other policies) can eliminate poverty.
- The anti-exploitation claim: UBI reduces exploitation in employment by giving all workers the power to refuse exploitive working conditions.
- The welfare claim: UBI raises the welfare of net-recipients (by eliminating destitution, reducing poverty, increasing incomes of people near poverty, reducing inequality, and other effects) and many net-contributors (by removing the fear of destitution, improving their bargaining position in the market, and so on). To the welfare claim we could add many supporting claims, that UBI is good for physical and mental health, that it decreases homeless and malnutrition, that it decreases infant mortality, and so on.
- The increased-worker-income claim: UBI increases in the income of workers directly by acting as a wage subsidy for lower-income workers and indirectly by creating market conditions likely to increase wages.
- The better-working-conditions claim: UBI improves working conditions for many workers both by giving them the flexibility to move more attractive sectors and by creating market conditions likely to give employers incentive to improve working conditions.
- The affordability claim: UBI at the desired level is affordable. (Most UBI proposals call for one high enough to eliminate official poverty or to raise incomes to 150% of the officially poverty level. Some call for meeting basic needs or to enable social participation and to secure a life in dignity. Some simply call for the highest sustainable UBI regardless of what that might be.)
- The economic equality claim: UBI increases economic equality both by direct redistribution to lower income people and by creating market conditions where workers can command higher wages and better working conditions. (The taxes used to support it can also be formulated to increase equality.)
- The social equality claim: UBI increases social equality by reducing social isolation of people with very low incomes, by reducing the stigmatization of people who benefit from redistributive programs, by reducing housing segregation, and by other means.
- The poverty-trap claim: UBI encourages people on benefits to reenter the labor force in greater numbers than a conditional system, by ensuring they are always better off earning more private income than earning less.
- The anti-ghettoization claim: UBI reduces (both personal and social) costs linked to high concentrations of poverty both by reducing housing segregation and by significantly raising average incomes in those communities.
- The cost-effectiveness claim: UBI is relatively more cost-effective than traditional, conditional welfare policies (in achieving goals such as increasing equality, raising welfare levels of recipients, and so on).
- The reduced-capture claim: UBI’s benefits are less likely to be captured by others (such as employers, landlords, and bureaucrats) than conditional welfare state policies.
- The bureaucracy claim: UBI reduces the overhead cost associated with income support.
- The labor-productivity claim: UBI increases labor productivity both by encouraging employers to substitute skilled for unskilled workers and by improving workers’ ability to enhance their skills and search for higher-productivity jobs.
- The productive non-labor claim: UBI allows people to do more unpaid work (such as care work and volunteering), some of which is more productive (or socially valuable) than many forms of paid labor.
- The politically-enabled-proletarian claim: UBI—by freeing low-wage workers from long hours and low pay—makes them a greater force for progressive social change on all other issues.
- The acceptable-labor-supply-effect claim(s): if UBI causes a reduction in labor supply, it will be within acceptable levels, and/or if UBI causes a greater-than-desirable labor-supply reduction, it can be at least partially counteracted by other policies to increase labor supply or the demand for higher-wage employees.
- The macro-stimulus claim: UBI, in combination with the taxes that support it, helps improve economic growth and reduce unemployment by helping to stimulate and stabilize aggregate demand.
- The “degrowth” claim: UBI helps economies move away from overconsumption and overexploitation of resources.
- Greater respect for people in need: UBI and other universal programs treat everyone with respect while many conditional programs treat virtually all recipients as suspected cheats, even if they fit almost anyone’s definition of the most truly needy.
- The increased-overall-redistribution claim: UBI results in greater overall redistribution to the poor, because universal policies foster greater feelings of solidarity and support once in place
Opponents have claimed:
- The reciprocity claim: UBI allows people to share in the benefits of social production without contributing their labor.
- The exploitation claim: a tax-financed UBI redistributes income from workers to people who do not work, thereby exploiting workers.
- The harm-to-workers claim: the taxes needed to support UBI financially harm workers, all things considered.
- The unacceptable-labor-supply-effect claim(s): UBI causes an unacceptably large reduction in labor supply that is not easily counteracted by other policies.
- The self-destruction claim: UBI increases self-destructive behavior in recipients.
- The meaninglessness claim: UBI makes it possible for people to live lives that they will eventually find meaningless because paid labor is a central source life meaning.
- The capture claim: many of the benefits of UBI will go to someone other than the recipients, perhaps because employers reduce wages, because landlords increase rents in low-income areas, because bureaucrats create overhead costs, etc.
- The inflation claim: UBI causes inflation that is not easily counteracted by other policies.
- The migration claim: UBI encourages immigration and/or migration into areas with UBI.
- The unaffordability claim: UBI at the proposed level is prohibitively expensive.
- The negative, relative cost-effectiveness claim: UBI is more expensive than other programs that can achieve similar goals.
- The gender-role reinforcement claim: UBI helps maintain traditional gender roles by making it easier for women to remain out of the paid labor force while performing unpaid care work and other traditional women’s roles.
- The macro-deterrent claim: UBI decreases economic growth by enabling reduced labor market participation and increasing costs.
- The shut-door claim: UBI creates political pressure to restrict immigration and migration.
- The bought-off-proletarian claim: UBI—by providing a minimal level of contentment for workers—reduces their effectiveness as a force to challenge the deeper inequalities and other social inequities in society.
- The consumerism claim: UBI leads to even more environmental destruction because of increased consumption.
- The decreased-overall-redistribution claim: UBI is (politically and/or economically) feasible only at such a low level and only accompanied by so many other social programs that it will leave low-income people worse off than traditional, conditional social policies.
- The strategy-to-cut-redistribution claim: factions in government will use UBI as an excuse to cut other programs, then cut in a strategy that will lead to much less overall redistribution.
I compiled this list from general knowledge accumulated over years of reading about the UBI debate. It is bound to be incomplete. Many more claims (of various levels of relevance, certainty, and testability) are undoubtedly circulating in the academic and nonacademic literature on UBI. But I hope it captures a significant range of what is being said. This list is enough to demonstrate the difficulty of designing a trial and communicating its results in a way that successfully raises the level of debate over these claims. Some are things that can’t be tested. Some are things that can only be tested indirectly, partially, or inconclusively. Few if any of these claims can be directed tested with any accuracy in a trial.
I’m interested to know how comprehensive people think it is. Did I include all the relevant claims you can think of? Did I overblow any claims that don’t deserve to be on the list?
A stock image used to evoke a mental connect with the word “experiment”
by Karl Widerquist | May 26, 2017 | Opinion, The Indepentarian
I just completed some simple, “back-of-the-envelope” estimates the net cost of a UBI set at about the official poverty line: $12,000 per adult and $6,000 per child with a 50% “marginal tax rate.” They are in a paper entitled, “the Cost of Basic Income: Back-of-the-Envelope Calculations.” It’s currently under peer-review at an academic journal and available in un-reviewed form on my website.
Here are some of its most important findings:
- The net cost—the real cost—of a roughly poverty-level UBI is $539 billion per year, less than 16% of its often-mentioned but not-very-meaningful gross cost ($4.15 trillion), less than 25% of the cost of current U.S. entitlement spending, less than 15% of overall federal spending, and about 2.95% of Gross Domestic Product (GDP)
- This $539 billion UBI would drop the official poverty rate from 13.5% to 0%, lifting 43.1 million people (including about 14.5 million children) out of poverty.
- This UBI will be a net financial benefit to most families with incomes up to $55,000, making it an effective wage subsidy (or tax cut) for tens of millions of working families.
- The average net beneficiary of this UBI is a family of about two people making about $27,000 per year. The family’s net benefit from the UBI would be nearly $9,000 raising their income to almost $36,000.
- Lowering the marginal tax rate to 35% would spread the benefits of the UBI program to more of the middle class while increasing the cost to $901 billion.
- The cost of a UBI of $20,000 per adult and $10,000 per child is $1.816 trillion per year, less than 85% of total entitlement spending, less than 45% of total federal spending, and less than 10% of GDP.
-Karl Widerquist, Begun in New Orleans, completed at Cru Coffee House, Beaufort, North Carolina, May 21, 2017
