Obama Announces Support for Universal Basic Income - Here's How to Ensure It Decreases Economic Inequality
While speaking in South Africa on Tuesday in one of his first major speeches since he left the White House, former President Barack Obama endorsed the idea of introducing a universal basic income.
“Artificial intelligence is here, and it is accelerating. … And that is going to make the job of giving everybody work that is meaningful tougher,” Obama said during his speech at the 16th Nelson Mandela Annual Lecture. “And the pace of change is going to require us to do more fundamental reimagining of our social and political arrangements. … So, we’re going to have to consider new ways of thinking about these problems, like a universal income.”
While income is just one of the questions that needs to be addressed by the social upheaval that an automated non-human workforce will cause, it’s one of the most important. The proposal to implement a Universal Basic Income (UBI) has generated a lot of discussion among policy makers and economists in recent years, concerning its practicality, feasibility and merit.
In many ways, South Africa was a very appropriate place for President Obama to issue his support for UBI since according to some measurements, the African nation is one of the most economically unequal countries on earth.
It is a country where 10 percent of the population earns around 55-60 percent of all income, compared to only 20-35 percent in developed economies. And new tax data reveals that 10 percent of the South African population owns at least 90-95 percent of all assets. This portion is much higher than in developed economies, where the richest 10 percent own “only” around 50-75 percent of all assets.
Serious efforts to reduce economic inequality should be at least partially measured by a willingness to redistribute wealth taking a comprehensive approach—redistributing not only income flows, but also the system that allocates them, including access to power, opportunities and capital.
According to a new study titled the “World Inequality Report” published by the World Inequality Lab, between 1980 and 2016, the world has experienced a rise in income and wealth inequality due to a combination of factors including large privatizations, regressive tax systems, and public debt—all of these the results of governments passing laws and ruling on behalf of money power interests, in addition to living through a chapter of wealth concentration through an ongoing business information technology revolution.
For some economists, introducing a UBI can serve as a safeguard to remedy the excesses of unfair political economies that create societies with massive income inequality.
However, it is important to note that there are a variety of UBI proposals, many of which are poverty alleviation schemes masquerading as radical proposals to disrupt wealth accumulation structures, such as tax law, copyright, patent laws, property ownership and the global financial system.
In order to limit the power of capital and its perpetuation, it requires a commitment to redistribution, which could include a universal basic income scheme as one approach in the toolkit.
Yet, some UBI proposals, which are promoted as a simple solution to eliminate global income discrepancies, conveniently fail to address the disproportionate capital accumulation patterns among the world’s wealthiest individuals.
Instead of considering ways that digital technology might allow for a more responsible application of labor and resources, Silicon Valley supports a UBI system as a way to pursue values such as growth, efficiency and profit.
“It is not surprising to find there is strong sentiment among the venture capitalists of Silicon Valley to also support basic minimum income proposals. They know their technologies are putting people out of work by the millions and that those millions will not form a market for their products if they have no income,” David Harvey writes in his recent book Marx, Capital, and the Madness of Economic Reason.
In light of this, it’s pretty easy to distinguish the intentions behind UBI proposals out there, based on whether or not they include aggressive proposals to reform existing institutions, legal frameworks and values that facilitate wealth and income concentration.
The global debate around UBI has gained visibility at the same time that a range of proposals advanced by French author and economist Thomas Piketty, who advocates for a globally coordinated effort to impose taxes on wealth, have gained increased visibility.
Piketty, the author of the 2013 critically acclaimed book Capital in the 21st Century, argues that lawmakers who are serious about solving the problem of uneven wealth distribution may consider measures such as the implementation of higher inheritance taxes and raising income tax rates on the rich.
How to Finance UBI?
One of the key areas of contention within the UBI debate is how to financially implement it.
Economists supportive of radical UBI proposals contend that such initiatives should be complemented by a series of tax measures that impose significant levies on the income, inheritance, capital gains, property, and additional assets belonging to the wealthiest segment of the population.
Basic humanitarian morality dictates that wealthier citizens should be held morally and legally accountable to pay for both their own basic income and a large portion of the guaranteed basic income of the working class (or what we may soon call in the future the “formerly working class”).
Economic inequality has been legitimized and granted a protective shield by the ancient fallacy employed by defenders of wealth concentration who argue that wealth is somehow individually earned and therefore should be individually owned.
Some analysts believe that an additional measure to finance a UBI proposal could include a mandatory tax or public dividend drawn from the net revenue generated by all large privately owned and publicly traded corporations.
One model worth studying in this light is the approach of the state of Alaska, which in 1976 formed the state-owned Alaska Permanent Fund (APF). The APF generates money through investing in financial assets as well as collecting returns on the capital gains from oil on public lands, which is then allocated as a dividend to state residents.
UBI, Social Welfare or Both?
Another point of difference among the proponents of a UBI system is over whether to pay for a UBI by diverting money spent on existing welfare programs or by raising taxes on the wealthy. These two options are not mutually exclusive, and even the introduction of an either/or conversation undermines the existing fundamental structures of a functioning welfare state, because it reduces the problems of inequality simply to funds, rather than the complicated web of social problems that attend hardened unequal social structures. A UBI policy by itself cannot achieve the intended outcome of eliminating economic inequalities and uneven wealth distribution. UBI proposals should be designed within the larger social safety net structure.
No More Half-Measures
Humanity cannot afford, literally and figuratively, any more cynical neoliberal proposals to solve the problems of mass inequality—suspicion is warranted of any UBI proposal that isn’t situated in a larger program to reshape the foundations of wealth inequality.
Any UBI proposal that doesn’t include economic measures that address the foundations of wealth inequality warrants scrutiny.
This article was produced by Local Peace Economy, a project of the Independent Media Institute.