Particular desires are universal, but universal desires are always particular

Particular desires are universal, but universal desires are always particular

Everyone has “selfish” wants, which are often very similar between individuals, creating demand for markets. For example, everyone wants food and shelter. Markets tend to satisfy those wants, at least to some degree, so people tend to appreciate markets.

However, everyone’s version of a “good society” is different. Most people are dissatisfied with how society is run now, but their visions of what a better future would look like, and how to get there, are often radically different. There is usually no “accretion of desire” like that which leads to the creation and political popularity of markets.

This situation is overturned, however, when markets fail or seem to fail. When markets are no longer meeting people’s desires, either because they stimulate desires far beyond what they can provide to the average person (i.e. when everyone starts wanting the “Hollywood” lifestyle), or in cases that markets actually fail on their own terms (falling price of labor relative to productive capacity, extreme inflation in ultra-inelastic markets where no substitute goods are available such as healthcare, etc.), then the political gravity that naturally favors markets has the potential to be upset.

The 20th century saw Communist movements take over the two largest countries in the world not because markets had failed on their own terms, but simply because they had been disrupted by war. In other words, an exogenous failure. Markets were not strong enough to avoid being destroyed in wartime. The 21st century might see something similar due to an endogenous failure of markets, due to advances in automation, monopoly capture of formerly free-market economies, etc.

I actually hope this does not happen because markets are incredible forces for good. But we who are on the pro-market side need to think about how we can give markets the appropriate political “armature” to survive both internal and external threats to their existence.

Should a Basic Income be conditional or unconditional?

Should a Basic Income be conditional or unconditional?

I think that at least initially a Basic Income should be conditional. There are several reasons that I take this stance:

1.) Political feasibility. The main problem BI advocates face is that on first glance the idea seems like “money to be lazy,” rather than what it really is, an efficient means to distribute productivity dividends within an economy. A BI program with a work requirement would be a lot more feasible politically than an unconditional basic income.

2.) Economic efficiency. An unconditional basic income would face the problem of people who wish to “drop out” of the economy for whatever reason, but who still have marketable skills, skills often acquired at public expense through public schools and/or subsidized student loans. The loss of the contribution that these skills make to the economy is an inefficiency that UBI cannot avoid.

3.) Social efficiency. We must consider what a work requirement in a Basic Income scheme would look like. Theoretically, Basic Income becomes feasible as increasing automation eliminates jobs and drives down wages. A work requirement would have two positive effects:

  • It would keep recipients in the labor force who do have marketable skills, but for whom the market price of those skills has dropped below that of a living wage
  • It would create a pool of available labor for social goods that the market cannot provide. A National Labor Pool (NLP) program, into which all BI recipients who are not full-time workers are enrolled, could be deployed for tasks such as disaster relief, city beautification, and, with proper screening, childcare services. All non-full-time BI recipients who claim that they are not able to find private employment would be subject to “call-up” by the NLP.

 

What constitutes a “full-time” worker could be subject to political debate and change over time. For example, mothers caring for young children could automatically be considered full-time workers. The number of hours per week needed to qualify as full-time would also be adjustable, and, ideally, decreased over time as technological progress obsoletes more and more human skill sets.

 

Universal programs are more robust than means-tested ones

Universal programs are more robust than means-tested ones

Means-tested programs always engender a set of perverse incentives. When government benefits are only available to the poor or the disabled, there is an incentive to stay poor (or pretend that you’re poor, by working off the books), or to pretend that you’re disabled (witness the massive abuse of the SSI system, which has become Welfare for White People in many areas.)

Universal programs, by being available to all, avoid these pitfalls. And they are more robust politically, too. Means-tested welfare programs will always carry with them a class-based and racial stigma that make them vulnerable to political attack. Universal programs largely avoid this. Witness the relative popularity of Social Security retirement benefits, as compared to, say, Food Stamps.

This is why recent proposals to turn Social Security into a means-tested program are dangerous. As a commenter to this article put it:

Republicans want means testing because this will make Social Security appear the same as welfare and make it easier to do away with. They can initially set the cut off high and then let inflation bring them down until only the poor receive payments. It is then easy to attack.”

Won’t a Basic Income just make people lazy?

Won’t a Basic Income just make people lazy?

A basic income will be just that, basic. It will be enough to pay for basic food, basic housing, basic clothes. It should not provide any of the luxuries or gadgets that people have become accustomed to, such as smartphones or sushi dinners. One of the first maxims of economics is that desire is limitless. People will always want the shiny new thing, and be willing to work for it.

A basic income should actually decrease “laziness,” since it will stop the widespread practice of people faking or exaggerating illness or injury to get on Disability.

The government is already printing money

The government is already printing money

People tend to be uncomfortable with the idea of “the government printing money,” and given some ugly incidents with hyperinflation in recent history, this is understandable. But opponentsĀ  should consider that when the Federal Reserve buys government bonds, it is essentially providing a way for the government to print money and lend it back to itself, with the banks taking a cut, a process that has been dubbed “stealth monetization.”

So in fact this dreaded money-printing is already going on, and has been for some time. Even when the country was technically on the Gold Standard, there wasn’t nearly enough gold to exchange for all the dollars in the economy at the set rate of exchange.

So the question then becomes, not should we print money, because we already are, but why are we giving the banks a cut of it for doing essentially nothing?

And why are we letting the banks, through the Fed, control how much money is printed and what it is bought with it?

The Fed is the legally deputized agent of Congress in charge of the currency. Its authority comes from Congress and can be returned to Congress.