Saturday, September 20, 2014

Why Not Just Mail Out Checks?

A friend writes:
Let's suppose that the United States could get a Universal Basic Income, but it had to trade a bunch of stuff for it. What would be important to keep after a UBI? 
Obviously, various income support could right out the door (food stamps, unemployment insurance). But would we be willing to trade labor regulations (minimum wage, union laws)? Public schools? Medicare? Curious as to your thoughts.
This sort of choice comes up all the time these days. Of course in practice it's a false choice: They take our parks and public insurance, and never send out those UBI checks. Or occasionally, as in New York, they give us our universal pre-K and parks and bike lanes, and we don't have to give up our meager income-support checks to get them.

Still, it's an interesting question. How should we answer it?

1. At least for an important current on the left, the goal isn't to distribute commodities more equally, but to liberate human life from the logic of the market. Or, a society that maximizes positive freedom and the development of people's capacities, as opposed to one that maximizes consumption of goods. From that point of view, diminishing the scope of the market -- incremental decommodification, as Naomi Klein used to say -- is the important thing, so we'd always reject this kind of trade. (Assuming it's on more or less "even" terms.)

2. Setting that aside. Shouldn't we have a presumption that the goods that are currently publicly supplied are subject to some kind of market failure? Presumably there's some reason why many governments provide insurance against old age and health costs, housing, education, police and fire services, and very few governments provide clothing or restaurant meals. Of course one wouldn't want to say the current mix of public-private provision is ideal. But one wouldn't want to say it carries no information, either.

3. There's a genuine value in institutions that pursue a public purpose, rather than profit. We can debate whether hospitals should be public, nonprofit or even private at the level of management, but presumably in the operating room we want our doctor thinking about what's most likely to make this surgery successful and not what's most likely to make him money. (And we don't think reputation costs are enough to guarantee those motives coincide -- so back to market failures as above.) In the same category, and close to many of our hearts, are professors and other teachers, who teach better when they're focused on just that, and not worrying about their paycheck.

4. Related to (3), how do we manage a system in which the public sector is disappearing? Seems to me the logical outcome of the UBI-and-let-markets-do-the-rest approach is stuff like this. Either you agree that intrinsic motivation is important, in which case you have to honestly ask in each particular case whether self-interest adds more than it detracts. Or you deny it, but then you're left with the problem of how to you assure the honesty of the people sending out the checks. (Not to mention all the zillion commercial transactions that happen every day.) DeLong somewhere calls neoliberalism a counsel of despair, which makes sense only once you've given up on the capacity of the state. But without minimal state capacity even neoliberalism doesn't work. If the nightwatchman won't do what's right because it is right, you can't have markets either. Better pledge yourself to a feudal lord. And if the nightwatchman will, then why not the doctor, teacher, etc.?

5. How confident are we that unfettered markets plus UBI is politically sustainable? Being a worker expecting a certain wage gives you some social power. Being a participant in a public institution gives you, arguably, some social power, an identity, it helps solve the collective action problem of the poor. (Which is the big problem in all of this.) But receiving your UBI check doesn't give you any power, any capacity to disrupt, it doesn't give you a sense of collective identity, it doesn't form a basis of collective action. My hypothesis is that the parents at the local public school are more able to act together -- they have the PTA, to begin with -- than the same number of voucher recipients are.


  1. Wait, are you for or against a UBI?

    A UBI is just a poverty income support that’s meant to consolidate and replace all the other poverty income supports and extend them to everyone. So it could makes sense to replace social security and food stamps and unemployment benefits and the Child Tax Credit and the Earned Income Credit etc., with the UBI. And the minimum wage, which doesn’t make too much sense except as a poverty income support. (Maybe unpaid intern jobs would start paying $4 an hour, which they legally can’t now.) Provided the UBI is indexed to inflation.

    It doesn’t make sense to “give up” Medicare or public schools or union laws or night watchmen because those aren’t really poverty income supports, and they cost a lot more than would be covered by bare-bones UBI.

    “Receiving your UBI check doesn’t give you any power, any capacity to disrupt, it doesn’t give you a sense of collective identity, it doesn’t form a basis of collective action.”

    Don’t UBI recipients have the power to vote for the politicians who enact UBI policies? I think rights of citizenship, which a UBI would become, are quite powerful at forming collective political commitments. Marxists are demonstrably wrong to insist that work-place centered class interests are the one effective basis for socio-political organization; history has shown that in fact class consciousness on the Marxian model is a weak and incoherent support for political commitment and action (and one that rarely exists in the first place). If you don’t think getting income support checks can support collective identity and collective action, I’d like to introduce you to the AARP.

    “Parents at the local public school are more able to act together—they have the PTA, to begin with—than the same number of voucher recipients are.”

    What are you basing that on? Are you suggesting that private schools are more insulated from parent pressure than public schools are? Vouchers simply give all parents the same financial leverage over schools that private-school parents already have.

    The UBI supports other forms of organizing and solidarity and social power and resistance to the market. With the UBI, workers will demand higher wages to bid them away from the couch. They will be more willing to risk union activism because they will be less afraid of being fired. And they will in general lead less commodified, less market-centered lives. Plenty of people will use the UBI to withdraw from paid labor entirely and spend their days combing beaches, writing bad poetry and tabling Marxist tracts. Isn’t that what you want?

  2. I do not like the idea of the UBI that much, for this reason:
    a) for the UBI to make sense, it should be at least 50%-70% of a "normal" income, otherwise recipients couldn't live on it, in which case it couldn't really replace social security or unemployment insurance.
    b) but since the UBI is universal, people who have a "normal" wage whould get their wage+UBI, so the minimun UBI (50% of normal income) would be equal to "normal" wages (NOTE: not to minimum wages, but to median ones).
    This is a really high sum and I don't think that it is politically realistic anymore than a bolshevik revolution.

    That said, I get that your question is: the UBI would be cool if it was in addition to present public services, but would it be good "instead" of public services?
    First of all, if we get an UBI instead of the public services the total value of the UBI will be more or less the same of the cost of the public services, and recipients will likely spend the UBI purchasing similar services from private businesses.
    For example, in Italy we have an NHS similar to the British one. The Italian state could fire all the doctors and nurses, sell all the hospitals, and distribute the saved money as UBI. At this point Italian citiziens would have to use the money to pay for health services from private businesses who arguably bought the same hospitals from the state, and hired the fired doctor and nurses.

    a) the private businesses will likely charge a profit over the cost of health services, while the government doesn't.
    b) since citiziens will need more or less health care depending on luck, the moment etc., the UBI would be too small for the needs of people who have really big health problems, thus likely this would create an insurance system similar to the American one (that generally is considered quite inefficient).

    Private businesses have competition, that forces them to be more responsive to customers' needs.

    So basically public services are better than the UBI in those fields where competition isn't working, or isn't working enough to counterct the disadvantage of the higer profits - that means, basically, all those markets where there is a natural monopoly, and those markets where customers are basically "captives" (like health services).

    Since the '80s, a lot of public services had been privatized, often in situations where there were obvious natural monopolies, thus creating a sort of "rentier capitalism". From this point of view, it would be smarter to increase public services at the expense of private businesses, just for the sake of efficiency.
    In fact I think that almost all public services are in sectors that tend to be natural monopolies.

    1. With regard to "de-commoditification" of life: In general I agree with Will Boisvert that an UBI would give workers more, not less, political power. However this is true only if said UBI is high enough and/or is in addition to public services. If the UBI is instead of public services, people could well end up losing more than they get from the UBI, so this would weaken worker position.
      In general though I disagree with the way you pose the problem of "de-commodification". I think that the general idea of "de-commodification" and the specific idea of increasing the wage share of total income, while they look like two very different things, in fact are the same thing.
      The point is that a capitalist economy doesn't maximize the consumption of good, but the profit share and wealth of the wealthowners. If really the market forced workers only to satisfy other people's need and desires, it would be great - in fact this is precisely the idea of free market enthusiasts. The problem is that the market also (and possibly mostly) is geared towards the reproduction of a hierarchical social order, with various layers of wealthowners on the top and managers and "high skilled" workers in the middle and everyone else at the bottom (these at the bottom are actually the "average joes" who get a median wage, those who get less are actually below the bottom and are a byproduct of the process of hierarchisation). The so-called "commoditification" of people really is just a problem because of this hierarchical system. But, if in some way (e.g. through a big UBI system) the basis of this hierarchisation are broken, then commoditification ceases to be a problem IMHO.

  3. Another interesting post, and some great comments as usual.

    Perhaps I'm missing something, but I imagine the introduction of UBI would almost immediately have the effect of enhancing the relative position of certain already-advantaged groups, like landlords and the distributors of essential commodities. Rents in particular would very quickly (what percentage of the bottom 20% has month-to-month leases?) adjust in proportion to the UBI amount being distributed.

    I wonder whether we should simply call shenanigans on the idea implicit in UBI that the governmental oversight needed to determine individual and familial assets is somehow fundamentally unmanageable. This is simply nonsense, no? UBI seems to me like a gateway drug to flat taxes, consumption taxes, and other more and more regressive schemes.

    -Airport Guy

    1. The point about rents is a good one. Here is a striking paper arguing that about half the apparent rise in the college wage premium between 1980 and 2000 was canceled out by the faster rise in housing costs in the metropolitan areas where college graduates are disproportionately likely to live.

  4. My opinion about "commodification" of workers is based on some personal experience, that I'm now going to tell (brace for the drama!):
    When I finished university (some years late) and finally entered the job market, Italy was already in bad shape economically (this happened some years before the GFC but Italy is in continuous economic decline since the '90s).
    I couldn't find a job for two years, in part because of the economic situation, in part because I was cueless on job searches (in hindsight I realize that I kept sending curricula to the wrong firms).
    While my family was reasonably well off, so they had no problems supporting a mooching son, this was psychologically very depressive: I had the distinct feeling that my life was going nowhere, and that I was useless. Why did I feel useless? Because it was obvious nobody needed my work, which means that nobody needed me, pretty much the definition of useless.
    After two years of unemployment I entered an EU sponsored training program, which led me to an internship. I spent one year in this internship, almost for free, hoping to be hired later. When the internship ended, I was offered a contract for 500€/month (the median italian wage is something around 1100-1300€/month, so I was offered something like half the median wage for a full time job). I refused the offer, and I was very offended by it. I remember that I had stopped smoking for 6 months, but that day going home I smoked something like 50 cigarettes in two hours. Mostly I felt insulted, because I was told again that I was valueless. Luckily a few days after this I landed another job, that finally took me to these famous 1200€/month.

    In all this story I never really suffered poverty, because as I said I could actually live at the expense of my mother for all the time, however this was very bad for my self esteem, to the point that I reached the conclusion that it is an actual part of the system, not a bug, that during job searches potential employers have to crush the self esteem of potential employees, and this is particularly true for low level positions.
    Why does it happen? Not because employers are evil, but just because the wage is negotiated at the point of hiring and it depends on the perception of the "value" of the employee, so the employer will try to lower the valuation and "devalue" the employee, while the employee will try to "overvalue" him/herself. In a situation where the economy is bad, employers have the strong hand and so the "devalue" effect wins; in a situation where workers have the strong hand the opposite will happen.
    However the situation where the workers have a strong hand is the situation where wages should grow faster than productivity, something that, according to Piketty, basically never happened since WW2 - thus evidently the devaluing effect usually wins.

    1. An example of this story is the idea of "low skill" workers. There are some jobs that pay very few and generally require few skills, so people who get these jobs are "low skill" workers and have a shitty pay because of their low skills (a clear example of devaluation).
      But first of all, we don't know that these workers have low skills, we only know that they couldn't get a job that require higher skills. Since there are a lot of workers in competition for jobs, some workers will be outcompeted and will be forced into jobs that require skills that are lower than the skills they actually have.
      In fact all workers in "low skill" jobs have presumably more skills than what they use on the jobs, so referring to these people as "low skilled" workers is clearly an excessive devaluation.
      Second, it is usually assumed that people who get a lot of money get it because of their skills, so these people will be overvalued and will believe they are the cause of everything that is good and beautiful in the world. Hence, myths about "job creators", "star CEOs" etc.. Obviously we have really no way to value these "skills", so we cannot know how much of this is skills and how much is the fact that "low skilled" workers are underpaid, and this extra money ends up as CEO's bonuses. However in the end the "low skill" worker will be told that s/he only has a "productivity" (read: value) that is 1/1000 of that of said CEO, and maybe that this productivity is 2/3 of that of his/her neighbour, and this judgment will be passed as a scientific or at least impartial judgment of Teh Market.

      Going back to "capitalism" and the "commodification" of workers: in all times of history, there were people that were devalued (slaves, serfs), and people that were overvalued (masters, nobles). But in the past, for example in the middle ages, there were weird theories that said that nobles were chosen by God (of course for God all people are equally important, some people were just more equally important than others).
      In the modern world, such clearly hipocrital theories are not accepted anymore, however the hierarchies that were previously ascribed to God are now reproduced by economic means, so that all work has in priciple the same dignity, however some people are told that they are unskilled and unproductive and are treated as shit while others are superproductive job creators.
      The capitalist system is, in fact, much less bad than other past systems (at least people aren't born serfs or slaves), but still is geared toward the enforcement of these social hierarchies - hence the "devaluation" of low level workers and the even worse devaluation of the unemployed, that is both economic and moral.
      In fact, for what I can understand, the bad news from Piketty is that the system is geared toward an INCREASING devaluation of low level workers, and perhaps an increasing unemployment (that is still a form of devaluation).
      This process lead to the situation where some (many) people are treated as the don't have value in themselves but only as tools for the economic system, hence the problem of "commodification" and "alienation". However the core point is not that these people had been commodified, but that first they have been devalued, and later commodified at a discount.
      So in the end I agree that the purpose of leftish politics isn't "isn't to distribute commodities more equally, but to liberate human life from the logic of the market", however the first point in this is that all people should be valued the same, and it is a bit hipocrital to say that Joe and Carl have the same value in the abstract, but Joe's times costs 5 times as Carl's time (or alternatively that Carl has to work 5 hours in order to pay 1hour of Joe's work)

  5. are you for or against a UBI?

    I'm just trying to think through the issues.

    Before you can pick for or against, you need to ask, is this on top of all our existing forms of social insurance? (In which case, I'm for it.) Or is it replacing some of them, in which case it matters which ones. It might not make sense to you or me to think of UBI as a replacement for Medicare, but some versions propose exactly that -- especially when it's claimed that a non-trivial grant could be paid for by consolidating existing programs. So the devil really is in the details.

    If you don’t think getting income support checks can support collective identity and collective action, I’d like to introduce you to the AARP.

    Right, that's kind of my point. Income support that is tied to a particular status -- like being a retiree -- may facilitate collective action better than universal payments. not a decisive argument, but one to think about.

    Vouchers simply give all parents the same financial leverage over schools that private-school parents already have.

    It's a tradeoff. An exit option is a form of leverage, for sure. But it also discourages investing in the institution you are already part of, including building connections with other people who are part of it too. Do people get more power from the ability to leave and go elsewhere, or from bring part of a tight community that exists precisely because leaving is hard? I don't think there is a general answer -- the best we can do is to think more systematically about the conditions when one is true, and the conditions when the other is.

    Again, I'm not taking a side in this debate. I'm just trying to think it through.

    1. Watering down you associationism doesn’t make it more compelling. First it was occupational and institutional association that makes for powerful affinity. Now it’s just being old and getting a letter from AARP that constitutes a socio-politically binding association.

      What you’re implying is that people will fight for their social security checks because it is a caste marker of their age cohort and AARP peer-group, but will not fight for their UBI check simply because they like money and need it to live.

      I also think you’re missing the point that association is as much an imagined ideological relationship as a social one. Framing UBI as a basic right of citizenship that all Americans are entitled to makes it part of an ideological association that can be much more powerful than the social associations of occupation and class and institution that you prioritize. Indeed, that, rather than group association, is the main reason for Social Security’s strength: “I’m an American, I paid for it, it’s my right!” That’s an exceptionally powerful appeal for mobilizing political commitment.

      Marxian sociology is all about the expectation that someday thick social class associations will triumph over the capitalist’s appeal to self-interest and ideology. So far that’s proven a forlorn hope.

  6. "But receiving your UBI check doesn't give you any power, any capacity to disrupt, it doesn't give you a sense of collective identity, it doesn't form a basis of collective action."

    Generally agree -- UBI doesn't result in the kind of collective/association power that unions deliver. But:

    I think just giving more money to poorer people *will* give them more political power. Money is power.

    And as SRW points out, by delivering significant benefits well into the middle class, UBI could help heal the gaping gash of political division between the poor and the middle class that means-tested programs give rise to, a divide that arguably cripples the larger group's shared interests and voice.

    1. I agree with all this. The thing is, the questions look very different if we are thinking about the merits of the UBI holding all other forms of social insurance constant, vs. the UBI as a replacement for (some) existing forms of social insurance. It seems to me that the existing conversation is mostly the latter.

      I agree with SRW's criticisms of means-test programs. But that leave to be discussed the relative merits of universal cash grants vs. universal public services.

  7. My impression is that exciting, cutting edge, work gets done really well under state control. It is the mundane, day to day stuff that needs a free market in order for it to get the attention it deserves. The USSR got lots of olympic gold medals and put the first man into orbit. For me the Concord supersonic passenger jet is an example of what a comand economy provides. The state run British and French aeronautical industry focused on providing supersonic flight for the ultra-wealthy whilst the US system gave the world the Boeing 747 -cheap flights for the "little people". Similarly here in the UK our NHS service goes all out to provide cutting edge treatments whilst at the same time neglecting the basic logistics needed for ensuring timely mundane cancer treatments etc. Obviously the free market only provides well for those with money to spend, BUT if people do have money to spend (eg the UBI) then it provides well. Obviously monopolies and such like can derail the free market and prevent it from working but that is something that can be addressed as and when it happens.

    1. I dunno. Seems like you could just as easily argue the opposite. The biggest single thing modern states do is retirement insurance, which is about as mundane and day to day as it gets. Not to mention infrastructure and basic services of various kinds. Whereas the iPhone, say, seems pretty exciting and cutting edge.

      There may not be much to say at this level of abstraction. Need to get down to cases.