How shall we battle income inequality? According to Emmanuel Saez, of UC Berkeley, The top .1% took in as much as 188 times as the bottom 99%. This is a ghastly statistic that almost seems unbelievable. A large part of this income disparity has to do with automation. Cheaper labor equals larger profits. So when a corporation can find a way to cut costs they will. Whether that be lowering wages or turning to automation. This greed by corporations hurts workers within the private sector. Having to compete with machines by taking lowered or stifled wages make living comfortably extremely difficult and/or impossible.
According to the EPI (Economic Policy Institute) the incomes of the top .1% has gone up by 157% since 1979 while the bottom 90% has only grown by 22.2%. Which if just looking at the percentage for the bottom 90% looks great, however comparing it to the top .1% you can see just how outrageous it really is. In 1979 the average income for the bottom 90% was $29,608 while the top .1% earned $622,018. In 2017 on average the bottom 90% made $36,182 while the top .1% made $2,756,865. This ridiculous growth within nearly half a century has created more problems for the average U.S citizen.
When corporations find ways to cut costs through stifling wages creates a huge benefit for consumers. Lowered prices on goods and services allow for consumers to have a surplus of income. This is great from the consumer’s point of view, however from the worker’s point of view, the view from beneath the boot starts looking quite bleak. For the worker, stifled wages has made it quite difficult to live a comfortable life like the well off consumer.
Now A UBI (or a Universal Basic Income) would help redistribute the money from the very top to the very bottom. How does a UBI work? How a UBI works is that it gives every citizen within a country a certain amount of money for people under a certain wage line. This (in theory) would help those who are on the bottom survive and thrive in the ever growing economy. This extra income could be used for food, gas, public services, etc. This extra income would help those on the bottom more economically free to invest and better themselves while the job market changes. A UBI could be used to help put one through college or through a trade school. A UBI could be extremely useful for those on the bottom of the income ladder.
There are many ways to battle income inequality. Whether it be through a larger welfare state like the scandinavian countries or a UBI like Finland. Finland at this moment has a study on a UBI using a lottery and randomly selecting individuals to be apart of this trial. This trial has concluded and the results for the first year have been published. These results show that those who received the money have become less stressed, more confident in finding work, and healthier in life according to Finland’s Labour Institute for Economic Research.Now only the first half of the study has been published so nothing can be confirmed. With the second half of the research not being published until 2020 we have to look at what was published and the results aren’t the best results. Though they aren’t the worst results.
These findings show partially what was thought what a UBI would do. It did increase happiness. This could be for a multitude of reasons. It could be because they had a little more financial freedom, as in, they could pay bills they were worrying about, repay debts, eat healthier, etc. This is great in a democratic sense that these people were able to feel less hopeless and hopeful and confident for the future, but in a capitalistic sense it would be seen as a negative as the participants of the study’s job prospects didn’t really improve. According to Finland’s Labour Institute for Economic Research compared to the control group those who did receive money they worked on average .4 days more in 2017 and earned $24 less. This would show that nothing has changed in a capitalistic sense, but we also have to remember that this is just a one year chunk of a two year study. We won’t know until 2020 for the full results.
Now those who align their thinking among the right wing will say that income inequality isn’t necessarily a bad thing. Right wing ideology aligns itself among a hierarchy, while left wing ideology aligns itself among an egalitarian mode of thinking. Right wingers generally believe that billionaires are on top and those who are impoverished are on bottom is the correct way because of how hard those billionaires worked. However, this can easily be dismissed as those who have more money have a much easier time making money than those who have less. Fixing income inequality is scary for those on the right wing because those on the right wing tend to be richer, older, white men who would be affected by this. A UBI, no matter how scary it may be, does make it easier for those who are more impoverished and allow for more financial freedom to compound wealth. Although an egalitarian mode of thinking may clash with those who align their thinking to that of a capitalist mode of thinking it still is a benefit to fight income inequality because it would be beneficial to the market. From a simple supply and demand thinking we can see that if more people have more money to spend within a country’s market than the richest hoarding wealth then the market would be less active.
Fighting income inequality is a very difficult task within the United States. With many challenges to get past within the United States government we will be able to combat income inequality. A UBI would be the best way to do so as it would level the playing field and create a diverse market of an increased amount of consumers.
When we look to combat income inequality and unemployment with essentially giving people free money we can see the lunacy that comes from that surface explanation. How can just giving people money fix income inequality and unemployment? With a UBI a government is setting a ‘negative income’ for those beneath a certain income line. Capitalists will ask how the government would pay for this and the only answer would be taxing the rich. This will make many people upset and I can understand why. Many people on the right will see any profits as those executives income, but Adam Smith’s Labor Theory of Value would say that the income made by the worker for the company is the material expense and compensation for the work put in. Many other philosophers would disagree however.
Philosophers such as Karl Marx or Edmund Burke would disagree. Edmund Burke would say that the actual value comes from the consumer rather than the labor itself and that the price of a good was the same as the value of the good, while Marx tried to flip Smith’s Labor Theory of Value on capitalists by trying to portray it as an exploitation of workers as the only way business owners could make a profit is to squeeze profit out any way they could. In Kapital, Marx believed that the only way for the worker to earn their true value was to seize the means of production from the capitalists. This line of thinking would lead to a communist society where workers earn their true value and all own the means of production allow for a freer society, however a UBI would not necessarily fall under this system. Within a capitalistic society a UBI would be implemented sort of as a compromise between these two ideologies. A UBI would give the workers more value when it came to the development of goods and decrease income inequality between the different economic classes, while the capitalists still own the means of production and still make a profit, however at a much lower rate and at a more equal rate to the income of the workers. Marx would argue that this would still be exploitative for the worker. The surplus labor value that the worker would make in a given day would still be more money in the pockets of the business owners rather than the workers themselves, but I see it differently.
I come from more of a capitalistic household with a majority of my family on the right wing. I, however, fall on more of the left wing and see things more democratically and see a UBI as the best of both worlds without doing much to change the economic landscape entirely. Capitalism has many problems and a UBI would be a better way to fix capitalism without a violent revolution. Any peaceful solution is preferred over a violent overthrow of the capitalist machine thought process today.
Now am I saying that a UBI is the one answer to fix the issues within capitalism itself? No, but it is certainly the first step to changing the base ideology of our economy. The exploitation of workers within our economy is a serious issue and this all amounts within the income inequality in the United States. It’s just that trying to get a UBI into action within the U.S to combat income inequality will be extremely difficult. Lobbying has held back the advancement of a UBI within the U.S by making donations to candidates campaign fund. This in turn promotes the ideals of whoever is paying the lobbyists which is most likely the top 1% and the top .1%. It would be highly unlikely, but the ban of lobbying and PAC’s within the U.S would help in the progress of more democratic ideals such as a UBI. Without the influence of the richest people in the U.S in our representatives ear’s we would find it much easier to get radical change completed.
With any economic policy there will always be opposition. As long as any sentient being exists there will always be opposition and conflict. Opposition to a Universal Basic Income (UBI) is no different when it comes to the U.S political machine. Republicans will say its too expensive and that handouts don’t work, while the democrats won’t support it in fear of losing their base and the next election cycle. This system for the U.S political machine is a large problem for the everyone within the U.S. Republicans can get their bills and laws pushed through while democrats can’t get much done on a federal level. A UBI would be no different if it entered the congressional floor, but taking a look at the capitalistic arguments against a UBI one can see the flaws within their points.
One of the first arguments against a UBI is that it’s too expensive. This is true funding a UBI would require a raise in taxes and a rise in the U.S deficit, however this isn’t necessarily a bad thing. A raise in the U.S deficit can in many ways be beneficial. Many countries invest money and provide loans that make up the U.S deficit. Those countries want the best in the U.S as if the U.S defaults on these loans then the other countries will lose money on their investment. This is what keeps the U.S and many countries at peace and afloat. Most countries have invested within the debts of other countries. This encourages trade as a prosperous economy increases the purchasing power of that economies currency. This, in turn, increases the worth of the loan held by the foreign country. This enclosed system is one of the best ways of keeping peace. You wouldn’t want to attack a country that holds a lot of your loans. That would be a loss for you. So claiming that a UBI would be expensive is very true, but this does not mean that it wouldn’t be worth it for the betterment of humanity. This is the fundamental flaw within republican ideology. This tunnel vision on the idea of the individual is extremely toxic for anyone thats not in the upper middle class or beyond. You can’t pull yourself up by your bootstraps if you’re living paycheck to paycheck. It is unrealistic to believe that will ever be possible.
Another talking points that those along the capitalistic thought process is that a UBI is a handout rather than an incentive. This a strawman plain and simple. A UBI is never meant to be a permanent solution for a permanent future. No one can predict how the future will turn out. This is impossible. If we look to what was predicted for today one hundred years ago everyone would laugh. A whale bus for underwater travel is ridiculous in the lense of today. If you look at a UBI in what studies have been conducted you can see that this isn’t enough money to live off of. The ideology behind a UBI is to allow for more economic freedom within a changing landscape with the rise of automation. Most participants in these studies anyway are also on welfare programs. To keep taxes lowered it would be logical to change where taxes are spent. Whether that be taking from the military and/or welfare programs a change in spending would be made. A UBI is a complex issue to just write off as a handout especially when it isn’t meant to be a handout. It is meant to allow for the economic freedom to better themselves. If you look at the trial in Canada that was cut due to regime change you can see just how little they were actually getting. Participants received $12,600 to live on in a year. Now yes you could live off of $12,600, but the life that you would have would be disingenuous. You would be just living above the poverty line. To maintain a healthy life would be impossible to achieve. This money is just a cushion. Not to live off of, but to allow for the creation of mistakes in economic ventures. The straw man built by those of the capitalistic mindset would be impossible given the current economic system.
The final point to be brought up is that welfare, as it is right now, isn’t going anywhere and this is the strongest of the three points. With automation on the rise the biggest challenge to solve is the older population. The older population will have a harder time adapting to the new economic landscape. Specialization training into fields such as computer science and many public service jobs are extremely difficult and mentally taxing. For a large part of the trucking business the truckers don’t have high school diplomas. This is a large obstacle to overcome and a UBI would not solve this. This isn’t what a UBI was meant for and these obstacles won’t be easy to defeat. This is what the future holds in store for us. These challenges will be the forefront of policy making in the given future. There are solutions to these problems however. One could be that we halt the technological advancement of mankind and this is unlikely. Doing so would require state violence and this would not be put up with. The most likely situation would be for some people would fall through the cracks while politicians try to figure out what to do to fix it.
With all these we can only see that one has any real merit. How to solve that problem will require great effort and sacrifice. Whether that be moving towards a more socialistic/communistic economic system or the halt of technological advancement we won’t know. Only the future can provide answers as we move towards further automation. Although a UBI isn’t a permanent fix it is a great step towards the imminent future. The sands of time stop for no one.
Saez, E. (2018). Striking It Richer: The Evolution of Top Incomes in the United States. Inequality in the 21st Century,39-42. https://eml.berkeley.edu/~saez/saez-UStopincomes-2017.pdf
Top 1.0 percent reaches highest wages ever-up 157 percent since 1979. (n.d.). Retrieved from https://www.epi.org/blog/top-1-0-percent-reaches-highest-wages-ever-up-157-percent-since-1979/
Preliminary results of the basic income experiment: Self-perceived wellbeing improved, during the first year no effects on employment – News archive for customers. (n.d.). Retrieved from https://www.kela.fi/web/en/news-archive/-/asset_publisher/lN08GY2nIrZo/content/preliminary-results-of-the-basic-income-experiment-self-perceived-wellbeing-improved-during-the-first-year-no-effects-on-employment
Smith, A. (2010). An inquiry into the nature and causes of the wealth of nations. Charleston, SC: Bibiobazaar.
Marx, K., & Engels, F. (1971). Capital by Karl Marx. Chicago: Encyclopaedia Britannica.
Hunter, B. (2017, September 08). The Top Three Arguments against a Universal Basic Income | Brittany Hunter. Retrieved from https://fee.org/articles/the-top-three-arguments-against-a-universal-basic-income/
Canada’s Ontario government cuts basic income project short. (2018, August 01). Retrieved from https://www.bbc.com/news/world-us-canada-45023510
Canada’s Ontario government cuts basic income project short. (2018, August 01). Retrieved from https://www.bbc.com/news/world-us-canada-45023510