How To Fund A Universal Basic Income Fairly

A universal basic income (UBI) – an idea in which the government replaces all other forms of monetary assistance (welfare, social security, etc.) with yearly stipend – has enormous potential to radically transform our current unsustainable consumer economy based on individual ownership into a much more sustainable economy based on access if it is designed and funded carefully. Implementing a UBI would require a cultural shift in our attitudes towards work and money but in a world where money is access, the idea of granting everyone enough money to meet their basic needs has sound philosophical logic behind it.  However, all of this potential is highly dependent on the way a UBI is funded. A poorly conceived plan may wind up doing far more harm to a society already ravaged by class divisions and extreme inequality.

Properly conceived, a universal basic income could radically transform society.

Popular Criticisms Of A Universal Basic Income

The idea around a universal basic income is not a new idea. It has backers all across the political and economic spectrum. On the right, many people have rightly seen the potential in eliminating expensive bureaucratic government agencies and processes that exist primarily to determine eligibility for assistance programs. If everyone is eligible, the process is simplified greatly. On the left, people are recognizing the emerging “crisis of capitalism” in which the majority of people lose access to their purchasing power as most jobs are replaced by automation and robots. However, very few ideas actually consider how the UBI should be funded.

The reason why many people are opposed to the idea of a UBI is because most plans use income tax as the source of the revenue that would fund it. More often than not, earning an income requires incredibly hard work and sacrifice and the idea that some people might be given the same monetary reward without having to work at all seems unfair.  We begin to think “why should we have to give our lives to a job to earn money while others can live without giving anything?” The truth is the income tax really amounts to extortion – why should anyone else be entitled to the fruits of another’s labor? For this reason, funding a UBI through income tax is a terrible idea and will never get anywhere.

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Taxing one's labor is theft but taxing the use of resources that people did not create themselves is not.

We All Deserve Access To The Planet That Gave Birth To Us

Instead, to fund the UBI in a way that is fair, we need to create a new narrative based on a different understanding of the principles of private ownership that our economy is founded upon. When the Europeans first came to North America, they wanted to try to buy the land from the Native Americans. But the native tribes couldn’t understand the logic behind owning land. “How could anyone own the land?” they thought, “for they did not create it.”

The Native Americans saw land as the equivalent of both water and air. These are things that can’t belong to people. They believed all beings had a right to access these basic resources by virtue of the simple fact that they were born on this planet. The idea that because you owned land you had the right to exclude other people from occupying it was a radical idea to them. We need to realize that there are certain things that shouldn’t ever be able to be owned – things like air, water, and land – if that means giving some people the ability to exclude others from meeting their needs.

A properly constructed UBI would be based on the idea that the resources that weren’t created by human labor – the land, the airwaves, our public spaces, the skies, and even money itself – belong to everyone. And therefore, if you want exclusive access to any of these resources either to live or to start a business, you should have to compensate the rest of humanity for their reduced access. These economic “rents” already exist in the form of property taxes, licenses, and interest payments. But instead of sharing this wealth (that no human being created) with everyone, the wealthy elites appropriate it all to themselves. This is what must change.

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What right does anyone have to own that which they did not create?

Giving Everyone A Base Level Of Access

The UBI ought to be funded from these “rent” payments. Just how much would that be? In the United States, the value of all the land (just the land itself, not the buildings or roads which were made from human labor) is estimated to be valued at $23 trillion. A five percent “exclusivity fee” would generate $1.15 trillion annually. Interest paid on money loaned ought to be another public asset. After all, no individual gives money its value. The value of money comes from our collective willingness to believe that it has value. Nearly $4 trillion was paid in collective interest from US households, businesses, governments, and non-profits in 2015. Instead of this money flowing to the shareholders of private banks, it, too, should form the collective pool that the UBI is drawn from. Combining these revenue sources into a $5 trillion yearly fund would yield a net of $18,000 a year for every adult and $9,000 a year for every child in the United States.

To save money, some have proposed means testing the UBI by only giving it to those who make below a certain income. This, too, is a terrible idea. To avoid the disastrous social implications that have been applied to people on government assistance in the past, it is critical that the UBI be given to all, even those with well-off means. If the  wealthy choose to donate their UBI allotment to a cause of their choice, that should be their decision to make. The UBI is not earned the way additional money would be earned by trading one’s labor for it. Instead, the UBI should be considered to be every human being’s inheritance from the gifts and toils of all previous generations.

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Everyone deserves the ability to meet their needs without having to be controlled.

It Is Far Cheaper To Feed The World Than It Is To Bomb It

But the true economic efficiency resulting from this form of a UBI comes much later. Today, enormous amounts of money are spent at both the collective and individual levels on various form of security.  A typical response to the theft of a $30,000 car might be to put the thief in jail for 5 years at a total cost of $250,000. Wouldn’t it have been cheaper just to ensure that everyone had access to a car? The implementation of a UBI would likely spawn the creation of an entirely new $5 trillion a year “life services” market that would create unprecedented levels of access for the average person. In a society in which everyone has the ability to meet their basic needs, crime would be dramatically reduced. The main cause of crime and international conflict is scarcity. When people (and any animal really) can meet their needs, they are less likely to harm each other. Today, the US spends $39 billion a year on prisons, $350 billion a year on security, and $1100 billion a year on military. It isn’t hard to imagine that these expenditures could be drastically reduced in a world where people no longer had conflict over meeting their basic needs.

Intuitively, I think we all know that it is far cheaper to feed the world than it is to bomb it. But our stories around private property, money, wealth, ownership, and access must evolve before we will have access to the tools that can solve the economic crises we face today. In our society, money is the fuel of creation. The rich know this very well. Given enough money, you can pay just about anyone to do just about anything. A universal basic income gives everyone the chance to find their place in this world. It will be important to educate people that the UBI is a gift that is given to them by the previous generations of human beings who toiled and sacrificed their blood, sweat, tears, and lives while they endured the growing pains of industrial civilization. Only by sharing in the fruits of our collective success will be able to continue evolving human society sustainably far into the future.

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Could life on earth one day be like an amusement park with unlimited access for all?

A properly constructed UBI would be based on the idea that the resources that weren’t created by human labor - the land, the airwaves, our public spaces, the skies, and even money itself - belong to everyone.
Chris Agnos

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Comments

6
  • Duke

    Check out Creative Currency Octaves mentioned in this post, it could game change UBI: https://www.scribd.com/doc/311186187/CurrentSea-X-Change

    Reply
  • Edward Helldane

    Those wealthy enough not to need it should be able to A: keep their UBI (privately); B: donate their UBI to a non-profit cause of their choice, and claim that donation on their taxes; C: refuse it outright; or D: take it but return it with their taxes, to be paid out as a UBI the next year (effectively refusing it, but earning interest on their money in the interim)–they’d owe taxes for the interest payout, but obviously not the UBI itself.

    There should also be the option for people to receive their UBI in: one lump sum, monthly intervals, or biweekly. For budgeting purposes. And also to refuse the UBI at the beginning of the year, but then reverse that decision and start receiving it going forward, should the party decide to (they wouldn’t get past payment though).

    Personally, I’d take it at the beginning of the year, to earn interest off it, or invest it in business. And if I was wealthy enough to retire comfortably, I’d donate basically every extra dime I came across to the welfare of others; in one way or another.

    Reply
    • Chris Agnos

      I agree with your ideas and admire your values.

      Reply
      • Gordon Palmer

        Chris, you state “The main cause of crime and international conflict is scarcity. When people (and any animal really) can meet their needs, they are less likely to harm each other”. So, about ISIS for instance, who believe everyone should follow their religion. I doubt very much if UBI would stop their desire for world domination as their needs are not materialistic.
        Would it have stopped Hitler? What about the Mafia or Triads?

        Reply
        • Chris Agnos

          But who would be following ISIS if they had other ways of providing for themselves?

          Reply
  • benjamin weenen

    If you tax land, the problems with banking would resolve itself anyway. So forget banking/transactions taxes, they are a bad idea.

    However, a BI funded out from the scarcity value of natural resources, primarily valuable locations, is a good idea as it allows the market to allocate those resources at optimal efficiency. Therefore unlike taxes on produced factors this reduces costs.

    As would a tax on CO2 for the same reasons.

    Without any other changes to the tax/welfare system, a BI funded from a Land Value Tax would yield an equal share of around $5000. That would rise as other taxes and benefits were replaced.

    Remember, the Basic Income is just that. It’s a back stop, not a means to a living in itself.

    http://markwadsworth.blogspot.co.uk/2016/09/politics-of-citizens-income-paid-from.html

    Reply

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