One of the main arguments made against keeping alive our welfare programs, and also against creating such wonderful things as job creation programs (like under FDR) and a universal basic income (UBI), is the claim that our government doesn’t have enough money to pay for them, or that to pay for them, the government would have to steal from hard-working people by raising their taxes. This is a very popular argument a lot of people firmly believe in. It is also completely and utterly wrong!
I have long wanted to show this in a simple way. The most simple way I came across sadly turned out to be based on unsubstantiated data but at the same time also revealed why the truth of the eminent affordability of financial security for all isn’t obvious to everybody. It went like this: I somewhere read that the top 1% of America have an average annual income of $3.9 million. So, if we averaged them out, we could simply have each of them pay the monthly $1,000 UBI to 99 of the 99-percenters plus once to themselves. This would amount to 100 times 12,000 a year, or 1.2 million a year. Subtracted from their annual $3.9 million, they would then still be getting $2.7 million, still an annual lottery win. We could divert another 1.2 million each to pay for a plethora of federal jobs programs, and they’d still be getting $1.5 million, still an annual lottery win that might enable them to bribe our politicians like they currently do. How about we diverted another 1.2 million to stock up the UBI to $2,000 a month? They’d still be getting $300,000 a year, still way more than most people earn (or can even save up in a lifetime) — possibly still too much, but more in line with the compensations our men and women in Congress make, and therefore perhaps no longer a political bribery risk.
When I tried to verify the $3.9 million average income of the 1-percenters, I couldn’t do so, however. The numbers I found were significantly smaller. And trying to track and average the different highest income groups (1%, 0.1%, 0.01%) became too complicated. I couldn’t help but wonder why I could not verify this statistic, when my intuitive understanding of our lopsided income distribution that I watched getting worse all my life seemed to make the $3.9 million annual income of the 1-percenters so very plausible to me. What with the fact that in my childhood most family households lived better than those of today while they had only a single income earner whereas today most have at least two income earners struggling to make ends meet… ?
It occurred to me that the reason behind this discrepancy might be the high degree of tax avoidance by the super-rich, such as revealed in recent data leaks – called the Panama Papers and Paradise Papers. So, if the incomes of the rich are so well hidden, how can we divine the true size of our economy and easily calculate the affordability of financial security for all?
Well, I came across another statistic. According to journalist Thom Hartmann, Robert Reich, the former Labor Secretary, calculated at one point that if the productivity increase of the last three decades were matched with the wage increase we saw from the Washington administration to the Reagan administration, the average family wouldn’t be making $44,500 a year right now; they’d be making $90,000!
If those numbers are accurate ($90,000 being there for the average working class family but $45,500 of that being diverted to the rich), then making $12,000 a year available for every adult (and maybe $6,000 for every child) by taking some of that stolen prosperity back and paying it out as a UBI should definitely be possible and still leave some money to be used for federal non-profit job programs — without even touching any other sources.
And this calculation doesn’t even take into account the overlap of our current social security and welfare being paid to the elderly and handicapped, much of which would become redundant and could therefore be merged into the UBI, reducing the actual cost of the UBI and making it no longer necessary for these people to apply on book-length forms for special benefits based on age or handicap and having to wait months or years until obstructive bureaucrats approve their applications. Snap, you are a citizen, and so you get your fair share paid to your bank or credit union account every month with no ifs or buts, wait times, or the threat of denial (currently even used as an instrument of punishing political dissent). A far more reliable situation, without stigma or strings attached. I am all for it, and the money – or, more importantly, the prosperity the money represents – is clearly there.
In all of this, we didn’t even take into account the fact that when needy – instead of rich – people get more money, they spend it. And when they spend it, some of it flows back to the government via sales taxes. And the economy is spurred on as more products and services get bought. This, in turn, gets more people employed to produce them (unless the products and services are exclusively produced by machines). And this leads to more payroll and income taxes being paid to the government. So, under the bottom line, the spending by the government into a UBI is significantly reduced by the automatic rise in tax revenues, without even raising tax rates on anyone.
And then there is the fact that we COULD, via taxes, claw back some or all UBI expenditure from those who are affluent enough not to need it if we so wished, maybe to raise the size of the UBI or fund job creation programs for municipal improvements, parenting, senior care, and all sorts of citizen assistance. Even with such taxing back some of it, the pay-out of the UBI to everyone would nevertheless be much less complicated (and therefore much cheaper) than our current social welfare administrations’ means- and needs- testing that not only creates horrible problems for many people (see above) but also large administrative overhead costs (an example for bullshit jobs). And then there is our unnecessarily oversized military spending much of it could be diverted to pay for better things like free college, for example. And free healthcare for all (paid for by our taxes) would pay for itself by being both better AND cheaper than our current expenditures collected via health insurances, hospital bills, doctor co-pays, and usury prices from unregulated drug prices. But I digress…
The main point is, the money (and therefore prosperity) for a UBI, a federal job guarantee, and anything else we can use to secure a livelihood for everybody, is there. The doubling of our economy’s productivity (and therefore our nation’s prosperity) which has occurred during my lifetime, all went to the top. We merely need to redirect it back to us. It will more than finance a sufficiently sized UBI, FJG, and anything else for a shared prosperity, since there is enough to go around.
The second, also very important, point I wish to make, is that taxes are not the best way to undo the looting we suffer. We can raise the taxes on the rich, but before long they will bribe politicians to roll back those tax raises and even tax them lower than we working folks are taxed. That’s exactly what happened after FDR raised the taxes on them. Now they usually pay LOWER tax rates than you and me, or hide their gains in tax havens, or both. To prevent this warping of the system, we need to not balance finances via taxes AFTER the lopsided wealth and income distribution. Rather we need to forestall the lopsided wealth and income distribution, so that (A) balancing via taxes becomes unnecessary, and (B) the rich don’t have the means to bribe our politicians before the tax man arrives.
That’s pretty logical, isn’t it? And the way to do this is to reassign the assets which represent our nation’s wealth and are almost exclusively held by the rich. Why does half of our nationwide income go to the super-rich? Not because they do half of the work. No! They receive all that money because they hold in their possession the alleged ownership of more than 90% of our country! In fact, our Dystopian wealth distribution is so outrageously lopsided that in 2010 a mere 0.1% (one tenth of the top one percent!) of U.S. families were reported to own as much wealth as the bottom 90% (many of whom have more debt than assets, in fact). This, in turn, leads to our gross income inequality because the income of the rich doesn’t derive from their work but from their possession of these assets, which is to say it derives from our work. It is the missing half of our incomes that should be twice as much as they currently are if the income reflecting the rise in our productivity since the Reagan years had not all gone to the top.
That’s where the money to pay for a UBI is. Asset ownership is the trick by which the money flow is diverted to the rich. So, a better alternative to taxation is to reclaim these assets which assign almost all our nation’s wealth to the top 1% thus making them our feudal lords who “own” our country whereas we only exist to toil for them like feudal serfs owning nothing. These assets direct more than half of our GDP to the rich (more than half because, before the Reagan years, they also were already skimming off our earnings, just not as much). Putting these reclaimed assets into a public fund, is the best way to finance a UBI and similar measures, because this approach simultaneously unmakes the wealth inequality that is used to create our current income inequality in the first place, the income inequality being the difference between our earned income and their unearned dividend income.
By having the assets in a public fund we all co-own, we can get our stolen earned income back by collecting the dividends ourselves, and we can make this transition without a bloody revolution by mechanisms such as claiming stocks and other shares (a.k.a. assets) in return for bank bailouts and corporate subsidies, and by replacing the currently about-to-be-repealed estate tax with an estate confiscation when estates clearly exceed the size of family homes and family businesses. I am for the passing on of family homes, family farms, and the like. But business empires like the Hilton’s, Walton’s, Koch’s, or Trump’s shouldn’t go to their heirs who didn’t build these empires. That’s just plain wrong. Let’s remember that these unearned business empires are used to bribe our democracy out of existence. So, it is not just a matter of economic justice to give us all our fair cut of our economy; it is also a necessity for reclaiming our democracy!
Here, in case you are interested, is the video clip containing Thom Hartmann’s statement mentioned above:
(Note: if the video linked above gets deleted, you may search the Internet for the title: “Caller: People Need to Take Care of Themselves!”)
I haven’t managed to find Robert Reich’s calculation on the Net, but here is an article by him which presents essentially the same contemplation as mentioned above: The Truth About the American Economy
Note: And the final scoop: if automation replaces us all with robots and artificial intelligence some day (much of it likely to happen in the next few decades), then the logically ethical way to handle that would be to pay all of us the machine’s earnings because the machines don’t get paid wages for their work. In this scenario, none of us would have to work for an income anymore, because machines would be doing all the work. Production would stay the same or even rise further, since the machines don’t need most of what they produce, tend to outproduce us, and we can always add some more machines. A UBI would then be the only way to get money to everyone so we could still have our own choice of what to consume, rather than being given food stamps, rent stamps, phone minute stamps or other such rigid rations. If we don’t make the necessary changes to our current system, then all of us, except for the few company owners, will be pushed beyond the margins of society, unable to get what the machines produce. Hardly a good thing.
Dirk Droll is the Publisher and Senior Editor of Beanstock’s World.
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