Is Universal Basic Income a “Handout”?

One of the common critiques of Universal Basic Income is “why should people be getting handouts?”

There are two ways to answer this – from a pragmatic or theoretical perspective.

From a pragmatic perspective, the “good” unquestionably outweighs the “bad. For one, we would end poverty which by itself would be enough to justify it. But beyond that, a UBI would drastically reduce financial insecurity , accommodate ever-increasing job losses due to automation, improve wages and working conditions, give people the freedom to work for themselves, reduce wealth inequality, reduce the gender pay gap, the list goes on.

But for those who insist on handouts being morally unsound in a theoretical sense, here’s my response:

First of all, we already give handouts. We already have “handouts” in the form of social security, medicare, free high school education, welfare, fire fighters, public roads/highways, stoplights, mass transit, etc. In the 2008/2009 recession we bailed out the banks to the tune of trillions of dollars, bailed out the big three automobile manufacturers, etc.

Now the most ardent ideologue might say “ok but we shouldn’t have any of that”.

Ok, so why are you entitled to anything then? What makes you entitled to police protection, consumer protection laws, an ambulance picking you up if you have a stroke on the sidewalk, or anything else that you take for granted? These are clearly “handouts”, in the sense of being entitlements, so what makes you entitled to them? If you respond “because that’s how it is”, that’s just begging the question.

Then one might say, “ok I like my consumer protection laws and public roads, but people shouldn’t get free money for doing nothing”.

Getting free money for doing nothing is practically the foundation of capitalism, and “passive income” is the holy grail. The wealthiest people don’t make their money through working, they make their money through owning things– whether that be businesses, financial assets, or real estate. A landlord who spends 2 years in a coma and wakes up to find out that their San Francisco duplex is now worth another $300k didn’t “work” for that $300k, the community likely did. If my stock portfolio goes up 25%, I didn’t “work” for that money, the employees of those corporations did and I reaped some of the gains. Trust fund babies and Donald Trump inheriting his father’s business and wealth didn’t “work” for it, he was born into it.

Banks receive interest on their bank reserves held at the Fed. Right now it’s 2.10%. There are $1.6 trillion in bank reserves at depository institutions, meaning the Fed hands out $33.6 billion to banks every year. This is free money.

You can also open a savings account and get a similar return, risk-free thanks to FDIC insurance. This is “free money”. If you inherit $10,000,000 and live off of that $210,000/yr in interest, you are not “working” for that money, you’re getting it for free. When it comes to lending money – usury used to be considered a sin, but now is considered good business.

If free money is cancer, then we should be taxing these freeloaders and all unearned income. We could start with a land value tax and carbon tax, and then jack up inheritence taxes and capital gains taxes.

Now naturally someone’s going to say “wait a second, these are voluntary transactions. You can’t tax my voluntary transactions to funnel that money to someone else”.

Regarding how we tax – anyone can have any opinion on how taxes should work. I’m not a fan of income taxes because they overly penalize labor, ie. the people who actually do the work and don’t constitute the top 0.1% who own as much wealth as the bottom 90%. A Land Value Tax would probably be the most theoretically defensible because it taxes land value gains generated by other people, the definition of unearned income.

But to call things “voluntary” is naive and simplistic. “Voluntary” under what constraints? If the system excludes us by law from the land and natural resources beneath our feet, and we have to sell ourselves into part-time slavery to get the money to pay for these resources blessed to us by the earth and excluded to us – then yes technically this is a voluntary transaction, but it doesn’t mean we were in any equitable position to bargain to begin with.

If you’re hanging off a cliff and I tell you I’ll save your life if you give me a million dollars, then technically that’s a voluntary transaction, but certainly not a fair transaction. If we play a game of Monopoly where you start off with $1 billion, that’s not a very fair game.

Something being “voluntary” doesn’t make sense without considering the context in which the transactions were made. The context of modern day society is that of a substantial portion of the population being excluded from ownership of society’s natural assets hoarded by the top 0.1%, and all the resulting power dynamics at play. The distribution of ownership was certainly not consented on in the first place, and thus it is not voluntary.

Let’s move on to money. What is money in the first place?

Money is a human construct created by the government (and private banks) to pay taxes, debts, and goods/services. The amount of money you have represents your entitlement to the fruits of other peoples’ labor.

The top 0.1% own as much as the bottom 90%. Do the top 0.1% really deserve 900 times what everyone else is entitled to? Are they adding 900 times more value to the world than the rest of us? If someone in the top 0.1% were to die tomorrow in a superyacht accident, would we all be 900 times worse off than if one of us laborers died in a factory-related accident?

Theoretically that one guy who died might be some Elon Musk type genius who gets us to colonize Mars and save the planet with renewable energy. Realistically it’s some 80 year old hedge fund manager who gambles rich peoples’ money in the stock market for a living, or some 85 year old landlord who bought a bunch of land when it was cheap and is now living well off of your rent.

So would the world be 900 times worse off if god forbid that hedge fund manager died instead of a plumber with an honest job? Of course not. In fact, in the hedge fund manager’s case nobody would even notice.

It follows that money isn’t being reasonably distributed according to societal contribution. Without money, you literally are not a participant in the market since you have no purchasing power. If we’re all shareholders of the land, its natural resources, and the country – why should we not have any stake in it?

Universal Basic Income isn’t anything radical, it’s simply a modest dividend to give every citizen some purchasing power, and their stake in the land we were all born onto that no one is more entitled to than anyone else. It’s your compensation for being excluded from the land and resources beneath your feet (unless you’re wealthy enough to own).

Having a minimal guaranteed income doesn’t necessarily make the game a fair one, but it evens out the playing field, and is certainly better than a game of Monopoly where you start out with $1 and no land while the top 0.1% starts out with $900 and hotels on all the land. Any reasonable person being proposed such a preposterous game should refuse if they have any sense of dignity.

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