A powerful argument for Universal Basic Income.

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A powerful argument for Universal Basic Income.

Which is to say, 10% of all national income is paid out to the 1% as capital income. Let me reiterate: 1 in 10 dollars of income produced in this country is paid out to the richest 1% without them having to work for it.

The fact is that capitalist societies already dedicate a large portion of their economic outputs to paying out money to people who have not worked for it. The UBI does not invent passive income. It merely doles it out evenly to everyone in society, rather than in very concentrated amounts to the richest people in society.

HT Thomas Power

https://medium.com/@MattBruenig/the-ubi-already-exists-for-the-1-d3a49fad0580

13 comments

  1. too kind thank you Gideon

  2. Thomas Power really good article.

  3. I would have been more accurate to state that “UBI does not invest passive income.”

  4. Income from property you DID work for (in theory) is morally different than a governmentally structured redistribution. I am morally fine with capitalistic ownership and profit. I’m not morally fine with mandated collection and redistribution to others. These two are not equivalent.

  5. Gideon Rosenblatt Weren’t you surprised to hear President Obama (in his lecture on Mandela’s 100th birthday) talk about universal basic income? (I was!)

  6. Denis Labelle, looks very interesting. On deadline right now but will check it out later. Love his stuff. And yes, Meg Tufano, I was surprised at that.

    Jeremy Seifert, I wish I had more time right now to get into this, as I understand your point. With that said, I think there is a very serious question right now about how much value shareholders actually provide for the huge windfall they receive. They are not actual investors in businesses themselves, so much as speculators in property (much like a used car market). There is value that is generated in terms of market liquidity, but to me the 5% of GDP that shareholders receive in return is too steep a price.

  7. Gideon Rosenblatt And of course people inherit stock…

  8. Gideon Rosenblatt hm… with all due respect.. you’re saying that 5% of GDP is bad when it goes to those who invested money to gain that return, but it’d be okay if it were just handed out to a bunch of folks who had no input at all in its creation? That doesn’t seem to be a better solution…

    But on top of that, we need to think of the consequences of our policies and what behavior it would drive. Who would invest in companies at all if they knew their return would be confiscated? They either would find other ways to make wealth or go to more wealth-friendly nations, thereby depleting the whole system we’re discussing leveraging.

    I get what people are suggesting. And if our economy was a finite pie that didn’t ever grow, and had to be doled out in fixed proportions, I’d see more truth in the argument that inequality is bad. But at the end of the day, the pie can grow – and I’m of the opinion that that growth is the overall good we should seek –

    wealth can create more economic value for everyone, and yes, the truly wealthy keep getting richer, but so does everyone else – moreso than more redistributive schemes. The more we shave off of the profit, the more we dampen the engine that creates wealth for everyone.

  9. Jeremy Seifert, on deadline right now. Will try to come back to this later. Thanks for your comments.

  10. One previous means of this redistribution was through significant estate taxation. It functioned as a divisor separating the reward earned by the original investor from unearned rewards passed on to the investor’s successors. At that second tier, the tax essentially noted that the inheritors, having no role in the generation of the value, held no significantly superior position to anyone else and thus a portion was returned to the commons to serve the overall betterment of society. There’s some value in such a middle-ground compromise.

  11. Jeremy Seifert I sort of agree, but the idea of a national dividend, independent of some ubi ideal (which has other problems), is kind of appealing. There is a reason that the lion’s share of successful companies is in the US, we all share in making it such a place and can all share in it’s success. Replacing all capital income would be silly, but redistributing some of it has an appeal and an ethical basis. I, too, am unconvinced by arguments about how much the 1% make.

  12. Jeremy Seifert, here’s the point I’m making. We are not really investing in companies. We are investing in tokens that are traded around in an aftermarket, just like the market for used cars or second-hand comic books. When I buy shares of Amazon, the proceeds don’t go to Bezos and crew, but to some set of sellers out there who sold those shares. There is nothing wrong with that in principle, just like there is nothing wrong with you buying my 1999 red Subaru Forester.

    The problem is this: we think of these aftermarket buyers and sellers as actual investors in the company. But their money does not go into the company, just like you buying my Subaru doesn’t represent an investment in Subaru. What it does do is support the price for used Subarus, which indirectly helps the new car market. There is value in this aftermarket. It maintains market liquidity and it helps to assign a market value to the stock. Those are valuable functions.

    But they are not the same kind of thing as the kind of entrepreneurial risk-taking that comes from providing actual cash to a company to fund its start-up or growth needs. That kind of investment is real investment in the company — money that actually flows into the company and makes it possible to turn that money into market value. Those are the actual investors who are taking a risk and are playing a critical role in the venture.

    So why does all this really matter? Because in fooling ourselves into thinking that the aftermarket speculators (and I am one, btw) are actual investors in the firm. As such, we mistakenly view them as worthy of having the ultimate rights to the profits generated by the firm and that ends up being a lot of money.

    The Federal Reserve has a measure called “new net equity,” which takes the total inflow of money from investors in terms of IPOs and issues of new equity and then subtracts the total outflows from dividends and stock buybacks. When I first started digging into this, I assumed that since investors were ‘investing in’ companies, that number would be positive. But the truth is that, since the Reagan era, it has turned sharply negative. In other words, shareholders are pulling more money out of corporations than they put in. And not by just a little bit. In 2014 alone (the last time I looked at the records), dividends and stock buyback programs transferred more than $1 trillion of wealth from corporations to shareholders. Since the year 2000, this transfer has averaged 5.5 percent of U.S. GDP—every year. Between 1999 and the end of 2017, dividends and stock buybacks averaged 88 percent of operating earnings for the S&P 500.

    So, we are paying a shitload of money to shareholders and they aren’t really even real investors in the jobs-creating, economic-value-creating ways that we’ve been trained to believe. That is a very outdated understanding of the actual reality. They are mere speculators, trading in a used-car-like aftermarket. That market does provide some value, to be sure. Corporations couldn’t function without those liquidity and valuation services. But 5.5% of our GDP? I don’t think society is getting a very good deal on that investment.

    More here:

    http://www.the-vital-edge.com/stock-market-concentration-of-wealth/

    New Net Equity Flows:

    https://plus.google.com/photos/

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