Berlin, 2016-09-15

How Criticism of Unconditional Basic Income stands on False Data

There are dozens of successful ways to implement a cumulative unconditional basic income, and thousands of ways to mess it up really bad. It's easy to write articles about any of those messed up scenarios and then claim there cannot be any good ones.

On 2016-06-13, David H. Freedman wrote an article on Technology Review by the catchy title Basic Income: A Sellout of the American Dream. Let us examine how his criticism of a UBI stands on incorrect data.

There’s little convincing evidence that large-scale technological unemployment is actually happening or will happen in the immediate future.

Incorrect. Check out what the World Economic Forum says on the topic: According to The Future of Jobs Report 2016 incredible reduction of jobs, in particular white collar jobs like middle managers and lawyers, is coming our way – while the two most needed new forms of occupation are 1. data analysts that can handle the enormous amount of surveillance data collected by automation industries and 2. social media marketers that know how to leverage such surveillance data to optimize sale efforts.

Both jobs of the future are ethically highly questionable. In fact they are in urgent need for regulation, and the number of vacancies are ridiculous compared to the jobs to be lost in coming years.

This is another moment in history in which there may be some diffuse anxieties about long-term unrest.

OXFAM found out that 62 people own the same as half of the world's population, and with each month the number of people at the top is shrinking. In a historic condition of greatest inequality ever seen in human society, no doubt the pitchforks could be coming. Even for the plutocrats it makes sense to contribute back, to have anyone to sell their goods to in the first place. Unfortunately, many popular UBI models focus on making the middle class pay, which indeed is a guarantee for long-term societal collapse.

Could it just be a way to give up on providing the wide access to decent jobs that has long been considered an essential element of a healthy society?

The idea that a healthy society needs "decent jobs" to the point of distributing wealth inefficiently in the desperate attempt to subsidize jobs where it does not make sense to have any, is bogus. It makes more sense to let citizen invent occupation freely, possibly without orientation on profit, but rather oriented on the world's currently greatest needs in politics and sustainability.

In a world headed for the dismantlement of the ecological foundations of human society we need more unpaid politicians than paid ones.

Add to that a deep skepticism that government is capable of solving significant problems.

Disbelief in government is frequently ideologically exaggerated, especially in the U.S., but regarding the distribution of subsidies for basic survival we have seen how the German Hartz-IV model indeed introduced large amounts of bureaucracy and little efficacy.

Existing safety-net programs could be expanded and tuned to eliminate poverty about as effectively but much less expensively…

The problem is, the bureaucracy to decide who deserves governmental subsidies over who doesn't, is huge. It is privacy-invading, demotivating and a formidable source of corruption either by engaging in undeclared work to keep on cashing in subsidies or in bureaucrats expecting bribes in order to hand out the subsidies in the first place. The latter behavior apparently has not been a problem in Germany, but it likely would be in many other countries, and maybe it is only a question of time and further growth of poverty also for Germany.

Add to that, the idea of bureaucracy not being expensive is provably absurd. In a proper cumulative UBI model there is no expense on bureaucracy, therefore the money is better invested: in the hands of citizen. Also, there is no incentive for undeclared labor.

…and they could continue to focus on providing jobs and the incentives to take them.

Again, the wrong focus on the idea that it makes sense to have a bureaucracy oriented on making humanity compete for a few remaining jobs.

Indeed, the idea of addressing joblessness with money instead of jobs is an ironic one …

Since jobs cannot be summoned out of the blue all of the time, either you legislate a way for ethical, non-business-oriented jobs to be properly rewarded, or you simply free citizen from the obligation of fighting for mere survival.

Only if a culture is created by which it is okay for a regular citizen to engage in non-profit activity, happiness will return to the population at large. Silicon Valley folks are probably also annoyed that everything they do always needs to make sense by some business plan. So a UBI would also liberate their creativity from the limitation of capitalism.

Well, there’s the fact that a universal basic income could add as much as $2 trillion in annual expenses to the U.S. budget.

That is not a fact, that is a staggering number that shows up if you do not consider any tax and redistribution reform as part of the model. A successful CUBI needs a suitable framework of reform that moves staples of financing from one point to another. No "extra" expenses are needed. The money exists, it is merely improperly distributed.

If automation, software, and services based on artificial intelligence do eliminate huge numbers of jobs someday, the same developments will probably give a tremendous boost to wealth creation and prosperity.

What is this, a re-mix of Ayn Rand's fallacious ideology by which individual egocentric pursuit for wealth and happiness would somehow magically trickle down to the rest of society? Consider that the whole super-rational thinking construct of Mrs Rand's ideology is based on that simple fallacious axiom as much as all the Reaganomics and New Economy that arguably evolved out of it.

It had its day because it was fueled by technological developments, creating enough excess wealth to allow for the creation of even larger conditions of inequality than had brought the U.S. economy to the collapse in the Great Depression. Understandable how economists were motivated to believe this to be an achievement and a legitimate way of thinking — after all it provided the long-lasting excuse for inequality to thrive.

They even dared to sell it as a sustainable plan for the future. They made everyone believe to be a potential millionaire who just needs to figure out how to surf other people's waves — but isn't it obvious that you can only be on top by having others at the bottom?

The American Dream is based on that same fallacy. It is not okay for a few to live a dream while the others face misery and poverty. Technology could be bringing prosperity to all of humanity, but so far it has failed to achieve so exactly because of the fallacious promotion of egocentricity and the reluctance of letting the rest of us participate in the technological creation of wealth.

It should be totally obvious by now, seeing how the sudden rise of the cloud economy has made very very few people absurdly rich, that the creation of "wealth and prosperity", albeit indeed taking place, is very evidently bypassing the 99,9999% of humanity – reducing them to mere customers of devices that they paid for while they continue generating revenue to their masters by surveillance of their apparent owners.

Technological capitalism has by now developed traits of totalitarianism, exposing the fallacy of capitalism having anything to do with democracy. But that doesn't mean we should indulge in socialism or communism. We should in fact reject all ideologies that are rooted in fallacious axioms. That is why it is crucial for UBI to be based on facts and numbers, resisting the temptation to itself become an ideology.

Redistribution doesn't mean that there cannot be people more opulent than others. To paraphrase Nick Hanauer, capitalism needs a reasonable amount of inequality to thrive, just like a plant needs water: Not too little but also not too much. But what is wrong about an upper limit? Princeton researchers discovered that wealth above $75,000 a year does not augment personal happiness.

What if the richest people on Earth would only be allowed to be a thousand times richer than the poorest. Wouldn't such a simple rule immediately eliminate misery and poverty worldwide?

Update: The study that found that incomes over $75k does not produce additional happiness has been corrected recently. Increased income does correlate to increased happiness, but you have to use a logarithmic scale to see it. So on average earning $150k will only make you slightly happier than having $75k (0.5 on a 10-point scale), but earning $1.2m will make you significantly happier (2 on a 10-point scale). Of course this reinforces the point that having a society that pushes money to the wealthy decreases average happiness and a society that pushes money to the poor increases average happiness, but also shows that there is no magic point at which you have "enough". Thank you, Shane Kerr, for this insightful feedback!

“We have an economy that right now is creating hundreds of thousands of jobs per month,” says [Robert] Gordon.

Looks like incorrect numbers are all the rage, or we are living on different planets.

“Funding a basic income with that wealth makes perfect sense—but doing it now doesn’t,” says MIT’s [Erik] Brynjolfsson.

We might as well wait until the big data surveillance and manipulation economy has undermined democracy to the point that a politically peaceful change of direction is no longer possible and the choice remains between pitchforks and misery.

“While automation is replacing many jobs, it’s also creating new ones,” he says.

Even the World Economic Forum has proven that this is wrong. Maybe it is the new great spin. The computer scientist's (see photo) awfully needed excuse, or the sociological itch to always see the good in things, even when there is none. Compulsive optimism produces harsher damages than looking the truth in the eye and taking honest and real action. There is no creation of new jobs to speak of, let alone expecting them to make any sense, ethically. Admit that we've been too good at rationalizing jobs away, let's cheer and understand that the world cannot move forward without redistribution.

And for now, says Brynjolfsson, “we’re not rich enough to afford a basic income that will provide everyone with a decent standard of living without having to work.”

Sixty-two people own as much as half of humanity, but we're not rich enough. Stop supporting the idea that inequality of wealth is okay. It isn't. Injustice by inequality has to stop. Nobody has worked hard enough to legitimately own half of the planet.

The Swiss proposal, however, drew opposition from many conservatives, in part because it was intended to be added on top of existing programs.

That is incorrect. The Swiss referendum was about discussing any possible UBI models in the first place. The critics however framed it to be about some specific model of their choosing which was designed to be easy to criticize.

How much would a basic income cost? The simple answer is: a lot.

This wonderfully oversimplified answer is again based on the same false information suggested before. But the author is not satisfied in purporting this false information twice. It reappears a third time further below:

How much would it actually cost? The simple answer is: a lot.

Is the author on an agenda to hammer this false information into people's heads?

David H. Freedman’s most recent book is Wrong: Why Experts Keep Failing Us.

How ironic. Is Mr Freedman an expert on unconditional basic income, or just wrong?

Update: See also the follow-up story.

—lynX




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