For Universal Basic Income (UBI) to work, the state would have to control the prices of universal basic needs, otherwise the capitalist class would raise prices to absorb it. But state-provided goods & services and state-imposed prices are antithetical to our current hyper-privatized, hyper-financialized neoliberal capitalism.
Adam Simpson: […] You write about rent as it relates to land. […] I’ve seen, for instance, Thomas Paine associated with ground rent and its obvious inequality, the notion that someone has a right to a piece of land that obviously no one can really “own.” He argues for distributing that to everyone in the form of a universal basic income. That seems to be a popular idea now, particularly in Silicon Valley as well as other places. I wanted to know your perspective on universal basic income.
Michael Hudson: I think it’s a misnomer. There’s no problem with giving more people enough income to live. Even archaic societies operated on the mutual-aid principle. There’s a lot of pressure for the Federal Reserve to create a trillion dollars by giving everybody an extra $500. Why are they willing to do that? Because most people would use the $500 to pay the banks – so the banks wouldn’t have to lose money and default as a result of their reckless and unproductive lending. The problem’s not only income, but what people have to spend it on. Paine didn’t talk about universal income, he talked about everybody should have the right to a place to live, a means of their own self-support. That’s independent from income. Once you economize and financialize it, you put in a distortion.
You don’t want to give people income to buy what really should be public goods and services outside of the market. You don’t want to give people more income simply to pay monopolistic public utilities for extortionate charges for water, sewer, electricity, cable TV and education. These are things that should be removed from the marketplace, not giving people the income to buy overpriced and monopolized real estate and infrastructure services that should be public in the first place.
Adam Simpson: I completely agree. That’s my criticism of this ongoing universal basic income debate. It might be a good idea if we solve a lot of other things first. One of them being financial parasites, because in my mind people talk about a trickle-down economy. I get a sense right now that we have what more or less amounts to a trickle-up economy. At the end of the day the rich are going to get theirs. The idea of providing universal basic income or a stimulus, eventually it’s going to work their way up to the top of the system.
Michael Hudson: The key to any such analysis is circular flow. If you give people income, what do they spend it on? As I said, people have to spend 75% of their income on things other than the goods and services they produce. You don’t want to give them services to bloat this [Finance, Insurance, and Real Estate (FIRE)] sector that is sucking income upward to the 5%. You don’t want to give more people income just to pay higher rents and bank loans to the 5% at the top. You want to do the opposite.
I’m not sure that it would help unless you have a plan to keep businesses and landlords from gauging their customers and tenants.
I mean I’m all for hanging landlords
Ancient problems require ancient solutions
I see people say this a lot and it seems like a math error to me. That’s like saying all forms of wealth redistribution have this flaw.
For Universal Basic Income (UBI) to work, the state would have to control the prices of universal basic needs, otherwise the capitalist class would raise prices to absorb it. But state-provided goods & services and state-imposed prices are antithetical to our current hyper-privatized, hyper-financialized neoliberal capitalism.
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