The 2008 financial crisis spurred a lot of people to think about money and the economy differently. Through different streams of events separated by ten years, Satoshi Nakamoto created Bitcoin — the first trustless cash transfer system to solve the double-spending problem for digital currency using a peer-to-peer network — while Gisele Huff, a Nazi Holocaust survivor, founded the Gerald Huff Fund for Humanity in support of universal basic income (UBI). Nakamoto was attempting to solve for a banking system prone to collapse (and individuals at the mercy of it); Huff was attempting to solve for the problem of mass unemployment. Neither knows the other (that anyone knows of), yet their separate ideas form the basis of a new kind of economy, one that is less extractive and vulnerable to the vagaries of “trusted third parties”, a capitalism designed to prioritize people over profits, driven from the bottom up.
Today we are facing the crises both Nakamoto and Huff envisioned; as a matter of necessity, the coronavirus pandemic has brought new light to their ideas, previously dismissed by power establishment figures. Now, leaders in politics, religion, business and society are giving these ideas a deeper look. By most scientific accounts, even with the fastest possible vaccine availability, we’ll be living with the virus and its implications for another eighteen to thirty-six months (maybe longer), putting to rest the notion that there is any ‘getting back to normal’. We will get back to living and working, but what is ‘normal’ will be redefined in this new era of global pandemic-consciousness.
It’s a redefining we can — must — all take an active part in. During an Easter Mass conducted in an echoing St. Peter’s Basilica emptied by plague and the fear of it, Pope Frances urged listeners to reflect on life after the pandemic, and to free ourselves from “operating on automatic pilot, shake our sleepy consciences and allow a humanist and ecological conversion that puts human life and dignity at the centre.” Our civilization, the Pope adjured, must “downshift, take stock, and renew itself.”
Restructure, Rebuild…but first, Reset
The Pope is just one of many global leaders calling attention to the bright light the pandemic is shining on the state of things, and identifying universal basic income as a response.
“This may be the time to consider a universal basic wage…it would ensure and concretely achieve the ideal … of no worker without rights.”
.At minimum, we are faced with the need for a deeper debate about the perils of unfettered capitalism; at most, we are tasked with a rebuilding/resetting of the global economy itself, as some economists are proposing. If we are to have a capitalism that serves people first, we’re going to need to reset the system just as we did after it collapsed a hundred years ago, resulting in a New Deal — i.e. a massive infusion of state support for American workers and families in the form of aid, programs and protections. We are called upon for a reinvestment in our way of life on the scale of a Marshall Plan.
Former Democratic presidential candidate Andrew Yang has called this reinvestment “the Great Rebuild”, centering the economy around measures of our own well-being, physical and mental health, while making our societies more environmentally sustainable. To go back to the way things were is to continue to let the economy roll forward on the disproven capitalist assumption that what’s good for huge corporations will trickle down to us, leaving generations of workers and their families dropping from precarity to destitution.
Economist Richard Wolff suggests the time is right for an opposition party to rise, a political force against the brand of bi-partisan, corporate-centered capitalism economics we are living with. We need a new side, says Wolff — an a side that thinks it can do better than this constantly collapsing system, a side that can express political opposition to the status quo. But it may be that Nakamoto’s Bitcoin and the technologies it is built on, can create can play the same role/have the same impact of an opposition party.
Previously, we’ve had another collapse of capitalism on the scale of this crisis — in the early 1930s, Americans responded to the Great Depression by joining the opposition to capitalism by the millions, i.e. the labor unions. The AFL, the CIO, and the Communist Party put pressure on FDR for the big government intervention that had been missing from the Hoover administration — or face revolution. Their pressure mobilized the government: between 1934 and1941 it established Social Security and provided Americans for the first time with unemployment, disability, and pensions for old age. An unemployment compensation system and minimum wage protection for labor followed; there was also a Works Progress Administration that hired and paid more than 15 million unemployed people. To pay for all of this, FDR enacted so-called “soak the rich” tax increases on large corporations and wealthy individuals.
One hundred years after the Great Depression, today’s suddenly jobless workers find not innovative government programs but a means-tested $1200 for some (but not all) Americans, like a Hoover blanket (i.e. a newspaper) against the sudden winter of unemployment. We can do better than what the Republicans and Democrats in power are asking. Now, as then, we will have to take actions that are universal, re-balancing wealth and power downwards to the 99%, and not upwards, as the government response in 2008 did. Then, the Federal Reserve flooded the American economy with money, which didn’t go to producing goods and services and didn’t go to credit but instead went (essentially) into the stock market, which boomed as the price of stocks became completely unhinged from the economy. Is this the normal we want to return to?
Last year, billionaires paid less local, state and federal taxes — i.e. 23% of their income — than average Americans who paid 28%. Billions in unpaid taxes are stashed in overseas havens identified in the Paradise and Panama Papers, including the “new Switzerland of the world” South Dakota. An analysis of new federal data released by the AFL-CIO shows in 2018 the average S&P 500 CEO earned 287x more than their median employee. Is this the normal we want to return to?
Profiteering by opioid producer Purdue Pharma led to a nationwide crisis in addiction, death, and suicide, while the owners of the company raked in personal fortunes worth billions. There was a point when there were more opiate prescriptions in the state of Ohio than human beings in the state of Ohio. This doesn’t happen when government is too big or too small, it happens when government is no longer representative of the people, and is no longer acting as a countervailing force against the power of private interests. Capital gains taxed at a lower rate than income means the rich get richer while workers can never catch up. Is this the normal we want to return to?
Now, we’re undergoing a fundamental shift, from a manufacturing economy to a services and knowledge economy. Economists look at the historical record and point out that we’ve always had technology replacing human labor, and the economy always responds in ways that enable growth to continue. New markets get defined, and there are new jobs to take the place of the obsolete ones. Agriculture and manufacturing created all kinds of impacts on society, but no one has yet identified what people will shift to after knowledge and services, just like no one has identified what people will shift to after the pandemic recedes, reshaping the economy with up to 50% fewer jobs. This is not a normal we can return to.
It’s not just the US — inequality is a global crisis. In the past year we’ve witnessed massive protests in Chile, in Lebanon, Ethiopia and Iraq. In France, the Yellow Vest movement continues after more than a year. Universal basic income is the global solution that meets the demands of these disparate movements, all with radical inequality and historic unemployment at their core.
The Era of UBI
The Pope’s humanity-forward framing recognizes that UBI is not a panacea for inequality that has fissured society into a 1% that gains wealth during recessions and pandemics, and a 99% falling ever farther beneath the surface of sustainability. In his new podcast, Yang Speaks, Andrew poses what is the most important question of our times, one that puts the idea of UBI in the broader context in which it must be considered: What are we going to do to rebuild our country after the pandemic abates? How can we, how should we move forward with millions of jobs vanished overnight?
There is a clarion call for a restructure. As Ray Dahlio says in his socially distant TED Talk, there’s been a tremendous transfer of wealth from the production of stimulus money; the key now is can we restructure in a civil bipartisan way that increases the size of the pie and divides it well, rather than damage the economy because we don’t encourage productivity. But how productive can people who are existing at the lowest level of Maslow’s hierarchy be expected to be? Losing your job, ability to feed yourself and a family, and then your housing…how do people overcome these challenges in a market that has just eliminated thirty million jobs to be productive?
“We must create full-employment, or we must create incomes. People must be made consumers by one method or the other.”
~Dr. Martin Luther King Jr.
Pre-pandemic, it was not only inequality shutting millions out of the economy; technology is playing a role. Digital automation has already transformed communications, banking and travel industries. Trucking, retail, healthcare and food are next. Jobs as we knew them are disappearing at the same time that tens of millions of Americans face the unpaid labor of caring for an aging parent or relative — trends that will resume post-pandemic. According to Ray Kurzweil, America’s most accurate futurist, NONE of us will have to work within 30 years. We’re accustomed to thinking one must work for a living, but when work goes away — whether because of technology or pandemic — the problem of living remains. Without laborers earning capital, our economy will need to transform. Before the pandemic, experts predicted automation will take up to 40% of existing jobs in trucking, food service, and retail in the next five to ten years. This trend is likely to accelerate as America re-opens for business post-pandemic. Drones, robotics and automation don’t have to be tested for contagion. A study commissioned by UpWork/Freelancer’s Union found the majority of workers will be freelance by 2027, without predictable pay or benefits. Already, 47% of millennials are freelancers.
With universal basic income, these inevitabilities come with a built-in insurance against a massive economic fallout and the attendant negative social consequences such as homelessness and hunger. With a basic income, people can stay housed and seek healthcare with confidence, factors that further reduce negative impacts of pandemic and job automation. A basic income is best seen as an investment in social stability, protecting household health and public health.
Universal basic income is the most immediate means for keeping us productive consumers even in the face of sudden/catastrophic unemployment, regardless of the reason for that unemployment. The Great Depression threw millions of people out of work and made the economic fragility and inequalities of the 1920s painfully clear. America responded by rewriting the rules of work and business, and we can do so again, this time learning from mistakes of the past, avoiding the errors of the Hoover administration.
An illustrious fan club
Universal basic income is an idea promulgated by a long historical string of entrepreneurial thinkers as varied as Thomas Paine, Milton Friedman, Richard Nixon and Martin Luther King Jr. and as modern as Facebook co-founder Chris Hughes, Tesla’s Elon Musk and Andrew Yang, who brought the idea to a wider audience during his US presidential campaign.
Now, with a pandemic detonating the global economy, wiping out jobs infinitely faster than the Fourth Industrial Revolution’s AI and automation trends, a number of politicians are taking a serious look at UBI. With Finland releasing results of its two year basic income experience, already, other countries are responding.
Scotland’s First Minister Nicola Sturgeon said in response to the Finland experiment “The experience of the virus and the economic consequences of that have made me much, much more strongly of the view that it is an idea that’s time has come.”
Spain’s Economy Minister Nadia Calvino says she plans on bringing in a form of universal basic income (UBI) “as soon as possible” to help families during the pandemic. She said the coalition government’s broader ambition is for the economic model to “stay forever” and become a “permanent instrument.”
Senators. Kamala Harris of California and Bernie Sanders of Vermont along with Ed Markey of Massachusetts have introduced a bill that would deliver $2,000 dollars to US residents including children until the Covid-19 pandemic has ended. US House Representative Rho Khanna has also pointed to UBI as the fastest and most effective means to alleviate the financial hardship of Americans sidelined by the pandemic.
Chair of the House Committee on Science, Space, and Technology Eddie Bernice Johnson has said basic income is an idea we need to entertain. With Chair of the Federal Reserve Jerome Powell himself suggesting that “direct fiscal support may be needed,” even House Speaker Nancy Pelosi is on record saying that a ‘a minimum income, a guaranteed income for people is perhaps worthy of attention now.’
Three Nobel winners in the economics field have been proponents of basic income (Prize Abhijit Banerjee, Esther Duflo and Sir Angus Deaton, Chess master and Human Rights Foundation Chairman Garry Kasparpv notes “Covid-19 is illustrating that some aspects of a UBI maybe be more necessary and workable than previously thought.”
While Yang is indisputably the poster boy of popularizing the concept (with many calling for presumptive Democratic presidential nominee Joe Biden to name Yang his Secretary of the Commerce), basic income is in fact a robust field of study. The Basic Income European Network was formed in 1986 (later changed to Basic Income Earth Network). Founded by Philippe Van Parijs, author of Basic income: A Radical Proposal for a Free Society and a Sane Economy, BIEN fosters evidenced-based research, debate, and critical engagement about basic income and related public policy. The University of Freiburg in Germany created The Basic Income Research Group as part of its Department of Economic Policy and Constitutional Economic Theory, where last year academics and political leaders presented perspective papers on the global implementation of basic income, including UBI in the Blockchain Age: Redefining Revolution, a white paper cum blueprint by nonprofit Democracy Earth Foundation on how to implement UBI globally utilizing digital wallets and a new currency.
There is broad support among voters for a UBI; a poll from Data for Progress and The Justice Collaborative Institute reports 66 percent of Americans prefer recurring payments that are not contingent upon any taxpayer status, an increase of more than twenty two percentage points in favor since January 2020. A 2019 Gallup-Northwestern Poll reports nearly eight in ten respondents favorable to UBI. Similarly, seventy-one percent of Europeans surveyed favor basic income. Facebook — whose CEO Mark Zuckerberg has called for UBI as a kind of engine of entrepreneurship the US should provide its citizens — is set to give a $1,000 to each of the company’s 45,000 employees worldwide to help them get through the coronavirus outbreak.
When economies slide into recession, the “multiplier effect” obtains: as people lose their jobs and businesses contracts, they spend less, other people then lose their jobs and their businesses contracts: income declines, money literally disappears from circulation, and the economy shrinks. Governments can help stop this process by creating money and injecting it into circulation. This is what happened in response to the 2008 financial crisis, the US and world governments created trillions of dollars worth of currency out of thin air and injected it into the economy in an effort to stimulate demand and reverse the multiplier effect. But as has been made clear since then: buying back government debt isn’t necessarily the best way to stimulate the economy, since the money goes mostly to people who are already rich, and they have very little incentive to invest that money when everyone else is losing income, drying up the so-called trickle down effect.
Distributing UBI is the most viable solution for stopping the multiplier effect where it starts — at the level of the individual — before it starts.
The environmental and community value of UBI
In a world that still desperately needs to prioritize climate action, UBI supports environmental sustainability. When farmers in the Amazon burn down trees it is not because they are climate deniers, it is because that is how they have historically participated in the economy — clearing forest for their crops. Farmers before them burned down trees, so they burn down trees — absent alternative income, this is how they earn a living. To stop, they need options that enable them to stop.
This is where we can see that strength of the UBI policy is about more than a fix for the coming unemployment driven by pandemic and the Fourth Industrial Revolution. It’s about laying the groundwork for strengthening communities at the local level. That’s where the bulk of its effects emerge — from universal application, and the overarching societal effects of reducing poverty; from simplifying governmental aid programs to increasing universality in cash transfers.
The Amazon is just one example where individuals in corporations are making decisions about resources whose extraction impacts the planetary ecosystem. Fracking is another example; deep water oil exploration is another; industrial meat processing is still another.
How will we pay for it?
“If they can get you asking the wrong questions, they don’t have to worry about answers.”
~Gravity’s Rainbow (Thomas Pynchon)
With US jobless claims reaching 33+ million in just the last eight weeks and set to soar by millions more when the numbers are updated, the soundness of basic income as an economic strategy and whether or not we can afford to deliver it are no longer the non-overlapping magisteria neoliberal corporate world would have us believe. Ben Bernake admitted the recent injection was simply a change on the ledger — in effect, creating money (an IOU) out of thin air. Economist Kenneth Gallbraith said it more bluntly when he told an interviewer, “What has been revealed is that you don’t need to pay for it; if you have to do it, you do it.” We knew this already, of course, in the readily apparent facts that the Bush tax cuts were not ‘paid for.’ The wars in Iraq and Afghanistan were not ‘paid for.’
“But how will we pay for it” as the number one question suggests that the problem of how to think about basic income is a problem of understanding numbers and not philosophy. To be ‘against’ UBI is to be against the pull of gravity on the tides. UBI is not a political question but a statistical one; inequality hasn’t been this pronounced in nearly a century. It’s a problem that will not get better on its own, not when our tax code, as Bill Gates has said, has itself become the “new engine of inequality”.
Data has been called the ‘new oil’ but data is in fact far, far more valuable than oil; Apple makes almost three times what ExxonMobil does. Facebook and Google sold $150 billion in U.S. online ads last year; for comparison, all 45 oil producers combined earned less than $30 billion. That’s 5x more valuable just among two data firms, not even including Amazon or Apple — and Apple alone makes as much money daily as 2,500 US households make in one year. In fact, Apple, Amazon, Facebook, Alphabet, and Microsoft are together worth more than the entire economy of the UK. That’s a lot of value.
Andrew Yang’s four point plan to pay for the Freedom Dividend included a combination of current spending, a VAT, taxes and newly available revenues. But the true answer is — we’re already paying for it, we, the data providers, are simply not receiving full — or even partial — measure for our value, which is all going to the social media giants. That’s a lot of money, too -in the ten minutes it will take to read this post, Facebook will make ~$400k.
In the same way Alaskans accept that they are entitled to a dividend created from mining their state for oil, people are now starting to see as their lives are mined for their data. In the same way that the Alaska Permanent Fund Corporation collects the funds for the Alaskan legislature to distribute, the government could collect money from the companies who are collectively mining our data — Google, Facebook, Twitter, Instagram, Amazon — and distribute the dividend.
For this reason, universal basic income is perhaps a misnomer. Frances Coppola in her book How Central Banks Could Use digital Case to Deliver Universal Basic Income notes that universal basic income is more correctly considered a universal right that cannot be taken away, and not a tax-based debt, as “Government debt is ultimately paid from taxes, and people can and do vote to end welfare programs that take too many tax dollars.” If, as Gisele Huff noted in her October op-ed in USA Today, we think of UBI as based on the “dividends that accrue to Americans because of their everyday contributions as workers, consumers, caregivers and volunteers, not to mention the indispensable part they play in the extraordinary revenue that’s generated by Silicon Valley moguls” — a better term would be universal basic dividend.
There is much to be said for this framing. The global economy has evolved into something profoundly impressive. It is a remarkable feat, to be able to click a button today and receive what that represents either instantaneously to your device or via physical delivery tomorrow. Decades of investment by thousands of people are behind that simple click and amazing service. The roads, the communications infrastructure, the satellites, the security, the distribution systems — trucks, planes, trains, emergency services- — it all represents an almost immeasurable level of investment. Investment that really began at the founding of the country and continued through a couple hundred years and has now compounded enough to generate returns, or dividends.
There is an incipient political awakening to this realization. In Italy, the Basic Income Network (BIN) Italia has published a petition pleading for the Italian government and Parliament to immediately install an emergency basic income — as one commenter put it succinctly: “Suddenly there is plenty of money, so that can’t be the reason to reject the idea.” It is not a lack of funds, it is a lack of political will. Whose will? The will of the people who control the money, a fraction of a fraction of a percent of the population.
With the cost of re-inflating the system now once again more — a lot more — than $10 trillion of stimulus this time, experts (and history) indicate the cost will only be bigger next time. Paying out this money as dividends — universal basic income — breaks this spiraling cycle.
How will we implement it?
Historically, an efficient UBI distribution hasn’t been possible. Now that the pandemic is upon us, the greater question about basic income is not “if” but “how”. As discussed in The Case For People’s Quantitative Easing (Frances Coppola) delivering universal basic income has always been problematic — governments lack the up-to-date information on identities and addresses needed for physical delivery of money or pre-paid cards, gaps that are costly to fill with bureaucracy. Checks and bank transfers shut out the unbanked, leaving a gap for a new institution to step in, like a central bank, which could issue a digital currency as an efficient way of delivering a universal basic income.
Coppola proposes two ways for a central bank to deliver UBI. One would be for the central bank to put money into people’s bank accounts. To ensure this went to as many people as possible, governments would have to force banks to offer basic banking services to everyone, but even so some people would slip through the cracks, since you can’t really force people to have bank accounts, (and some people choose not to, for good reasons).
Another route would be to give everyone an account at the central bank. Because the central bank isn’t a retail payment agent this would require a gateway to payments networks. Rather than creating a gateway to the existing bank-dominated payments system — which raises problems for the unbanked — the central bank could create a digital currency and an associated wallet. The currency would be a stable coin, with a 1:1 peg to the U.S. dollar guaranteed by the central bank.
Still another option would be to use the US Postal System to deliver UBI through a digital wallet and currency that post office customers set up at their local post office. The Post Office already provides efficient delivery of mail to households; registering for a digital wallet to receive universal basic income would be a natural extension service and opens a host of opportunities for related services and products.
“But digital wallets are too complicated…”
In our new digital era we communicate, shop and bank differently now that we have supercomputers in the palm of our hands. It makes sense that new forms of currency and interacting are going to transform the economy and our role in it.
Here’s what Satoshi Nakamoto knew: cryptocurrencies and distributed ledgers enable us to move to a new paradigm, one that doesn’t require society to borrow from wealthy individuals controlling the banks. We are bridging the biometric gap between physical and digital reality with facial recognition, voice recognition, pattern recognition, enabling the establishment of a secure digital ID and digital wallets. Distributed public ledgers, or blockchains, mean we can keep transparent ledgers more securely and more efficiently, and maintain integrity over time. Now we can distribute UBI directly and efficiently, using a digital currency and digital wallets.
A digital solution to UBI has been proposed before: Y Combinator founder Sam Altman suggested last year that cryptocurrency can provide the foundation for a global universal basic dividend. More recently, a project exploring blockchain-backed UBI called GoodDollar was launched, supported by investment platform eToro. Nonprofit Democracy Earth Foundation has a proposal for the technical implementation of a new currency for global distribution as a universal basic dividend. The global currency would be digital, time-unit based and limited in quantity by population, and would work in conjunction with the US dollar and other fiat currencies, and would be traded on distributed exchanges (like Uniswap and Stellar exchanges).
Whether we distribute UBI in digital form or through traditional channels, in the short term, distribution of a basic dividend keeps the global economy from crashing by preserving and even expanding the number of economic actors during a destabilizing event.
Longer term, the time-based currency that enables the simplified global distribution of a basic income/dividend is a scaffolding for enabling people to own their work, resulting in better and more competitive companies, freeing labor to move, stimulating entrepreneurship, and reflecting stay-at-home parents and caregivers as the economic actors they are.
What does a reset look like beyond UBI?
In his famous dialectic A Rap on Race, James Baldwin warned inequality has made the world “scarcely habitable for the conscious young…there is a tremendous, national, global, moral waste.”
A half century after Baldwin’s lament, self-described plutocrat Nick Hanauer’s TED Talk (viewed more than 2 million times) warned that rising economic inequality is not just “stupid and ultimately self-defeating but also just plain bad business. He is a plutocrat after Winner Take All author Anand Girardardhas’ own heart: he readily admits that his success is due less to smarts and more to birth, circumstance and timing. His prediction is similarly blunt: we must halt the rising inequality for a more inclusive capitalism…or watch the pitchforks coming.
We cannot continue to perpetuate uncritically an economic system that delivers instability and inequality. A strong democracy requires an economic system with democratization built-in. Our system reset should be about decentralizing power — what George Gilder termed in an interview “the Great Unbundling” — following the rule of Bell’s Law, which predicts that every ten years the rate of progress predicted by Moore’s Law produces a 100-fold rise in computer cost-effectiveness, giving rise to a new computer architecture. Bell’s Law predicted cryptography, decentralized public ledgers, mathematical hashes…the inventions which that will define the new information economy. Even money is being disaggregated and reinvented; soon we will all have digital wallets full of tokens for everything from voting in a school board election to the US presidential election, right down to the sale of our labor.
NASDAQ CEO Bob Greifeld calls himself “ a big believer in the ability of blockchain technology to effect fundamental change in the infrastructure of the financial service industry.” Futurist Don Tapscott sees crypto currencies and tokens as the future of money because “we believe that the economy works best when it works for everyone, and this new technology platform is an engine of inclusion.”
An economy that works for everyone cannot carry forward the pillars of the winners-take-all edifice. Let’s take a look at the historical support for elements in addition to UBI that would be key to a reset: debt, property ownership — including data — and workers owning their work.
When Senators Harris, Markey and Sanders introduced their UBI bill, it contained a provision worth noting: the bill grants married couples who file together $4,000 and $2,000 for each child up to three, per month, and blocks debt collectors from seizing payments. Let’s take a look at why they were so concerned with debt.
In the past two years there was an increase in the huge acceleration of debt, unmoored from GDP growth. The coronavirus will blow over; the bigger issue is that there are leveraged businesses not set up to withstand a shock like the one we are experiencing. In short, the virus is the pin pricking the debt bubble. Without the virus, the danger of the debt bubble is still our reality.
When the stock market is in danger of crashing, we pause it — trading was halted October 27, 2008 and again on March 12, 2020. If the debt bubble is in danger of exploding, why do we not similarly pause debt, or even cancel it, like the debt jubilees of the past — for example Germany’s “Economic Miracle” in 1948 when the Reichsmark was replaced with the Deutschemark and wiping out 90 percent of government and private debt, including eliminating mortgages and rents. According to “America could have another economic miracle by writing down the debts.” There’s a long precedent for it — the Jubilee Year of Leviticus 25 was based on Babylonian practice for over 2,000 years; it was used as a release valve for when debts accumulate exponentially. As Michael Hudson, a professor of economics and president of the Institute for the Study of Long-Term Economic Trends, puts it: “In order to prevent the economy from being distorted, you have to adjust simply say these debts won’t be paid.”
Somebody has to lose when the debts can’t be paid. The question we face is who should lose ? Few Americans would disagree that in terms of justice, the banks should bear some or even most of the cost. The banks have made an enormous amount since they were bailed out in 2008 their net worth and their stocks have soared in value. The government can simply pay for the cost just as it pays for military expenditures, or for Social Security, or anything else. What makes it difficult is that the debts are owed to the banks, landlords, and private creditors — groups with a lot of political power.
Senator Bernie Sanders in a March 16th address to the nation issued a warning that we do not allow coronavirus impact on the economy to become another money making opportunity for corporate America or for Wall Street. (Galbraith warns of hedge funds buying up foreclosed houses at pennies on the dollar and wealth accreting faster than ever to the ultra wealthy.)
If we want a capitalism that is humanity forward, that prioritizes people over profits, a reset must focus on the basic needs of human survival, e.g. air, food, drink, shelter, clothing, warmth, sleep. In Maslow’s Hierarchy of needs, physiological are rated most important, the basis of being a functioning human, as all the other needs become secondary until these needs are met. Of these, shelter is arguably the most critical, as access to a secure shelter is a constant need to maintain physical health, safety and comfort. During the Great Depression, by 1933 approximately 1.5 million Americans became homeless; experts warn of a similar wave of “staggering and unprecedented” increases in homelessness, doubling or more, as a result of the pandemic. The pressure is already building: affordable-housing provider CommonBond Communities estimates 40% of its 6,000 tenants missed April rent.
They are the leading edge of what economist Guy Standing dubbed the precariat class, defined by the insecurity and instability of the work it performs, which is invariably low paying, temporary, without benefits and even dangerous, especially in pandemic times. Will it now be defined by its higher infection and death rates at the hands of the pandemic? Which economic participant should receive more consideration in a pandemic: a collector of income derived from a kind of monopoly, not from contributing real resources to production of housing? Or an essential worker, for example a nurse, or a 30-year veteran of one of the great midwestern meatpacking plants so key to the country’s food supply chain, making less than $12 an hour?
The precariat is, potentially, the democratic majority. Standing’s argument: if capitalism is to work for the many not the few, what’s needed is what Keynes called the “euthanasia of the rentier”. In his book The Corruption of Capitalism, Standing outlines how the institutional architecture of modern capitalism is geared to benefit rentiers, with policies such as tax breaks on mortgages and charitable donations acting in effect as subsidies for the rentier class. Standing’s Great Rebuilding, like Yang’s, includes basic income, but also the institution of democratic sovereign wealth funds to pool and redistribute rental income, reasoning (like Galbraith) that policies that rid the system of idle speculators who give nothing back enable a humans-first capitalism to flourish.
Most economists agree, removing economic rents does not have costs in terms of reduced output or efficiency. Given this, it would seem curbing rentierism reduces one of the biggest sources of rising inequality today, in that the economic impact of catastrophes like sudden enforced joblessness has more to do with what you already own than what you earn.
According to Maslow’s Hierarchy, once our physiological needs for shelter, food etc. are satisfied, the most important needs become security and safety, fulfilling our need for predictability and control in our lives (especially when it comes to employment, the main source of financial security). Today, new technologies provide workers with an opportunity to own their work, i.e. hold the digital keys to the full record and recompense of their labor.
Why should communities be bound by the decisions that companies make — decisions that impact the community and its members but not the company executives, board members of their families? Would you move your family next to a corporate farm with the charming practice of spraying liquified sewage from massive manure lagoons into the air, to be breathed by the children — your children — in the surrounding community?A system that prioritizes the most efficient profits is a system designed not to put people first.
Corporations are taking the profits that everyone helped to produce and distributing them in great executive pay packages, increases in share prices and even employee bonuses. All of thees avoid taxes and costs associated with being in the community.
The way the capitalist system is organized, decisions are made by a very few people who make decisions that replicate the system that put them in charge. Therefore we see the importance in ensuring the way organization are organized/behave cannot be antagonistic to democracy; the manner of organization has to have democracy built into its DNA — its bylaws and its governance and its distribution of shares.
With a net worth of $138b Amazon CEO Jeff Bezos has been the world’s richest person since 2017. During the pandemic he has grown his fortune by 20%, or $24 billion in just four months — he is projected to become earth’s first trillionaire Meanwhile, Amazon’s ~898,000 employees are front line actors in keeping the economy running while Americans mitigate the spread of coronavirus by sheltering in place and ordering online. Protests and strikes have broken out as employees try to reconcile their status as essential workers getting sick and even dying without hazard pay, bonus pay or even in many cases proper protective equipment. Following Ray Dahlio’s admonition to distribute wealth in a way that encourages productivity, that twenty-four billion ‘pandemic bonus’ distributed to the Amazon workforce would amount to $26,000 for each worker.
“Without us working, what are you going to do? You’ll have no money. We have the power. We make money for you. Never forget that.”
~Chris Smalls, former Amazon employee
Why isn’t it an option for workers to vote on this distribution? After all, Jeff Bezos isn’t the one doing the work — it’s an army of workers plus an army of consumers, without which there is no Amazon. If the workers and the consumers realize their power, the power of Amazon can be reduced to what it should be: the enabler to worker power, the rise of community power.
The new labor movements are coming
Economics writer Paul Mason (Postcapitalism and A Clear Bright Future: A Radical Defense of the Human Being) predicts we are headed for years of a heavily state-backed economy, with the government directing the private sector and ensuring everyone has enough to live on, much as it did in the era of the New Deal. Not unrelatedly, economist Richard D. Wolff suggests we’re at another historic inflection point for a moment for widespread labor strikes, that we are entering a cycle of organized labor power — not unlike the labor action in Detroit that drove the landmark National Labor Relations Act of 1935, which protected the right of workers to organize into unions, to collectively bargain and to go on strike.
But with potentially 40% of the disappeared jobs not returning, they will likely be striking not for jobs but for universal basic income. That’s the bet of longtime labor leader Andy Stern, a former president of the two-million-member Service Employees International Union. Stern had identified UBI as the right response to technological unemployment — something the pandemic is mimicking in a kind of warp speed fast forward. Stern has identified technological unemployment and the gig-ification of jobs as factors that will permanently marginalize the role of collective bargaining. In response, his focus has made a strategic turn to UBI to prepare for a disempowered working class.
Before the advent of key new technologies, the only agency people have had to reset the economy is the government. Three times in a seventy-five year period we’ve been forced to extricate ourselves by fundamentally admitting that a private enterprise economy got us into a state of collapse, telling the entire capitalist system to stop, don’t collect, don’t pay, and then re-organizing so that producing food and basic society could continue. But while government policy is the most powerful tool in the toolbox for minimizing the societal damage of the economic fallout of the pandemic, today we have new technologies that addresses the crises created by the old; distributed public ledgers offer a way to decentralize power and disintermediate banking, so that citizens can control their most fundamental assets — their money, their work, their data and even their vote — without the need for trusted intermediaries, like banks, that too often turn out to be not worthy of that title.
Cooperatively owned corporations: the decentralized future of organized labor
In a recent talk on how the COVID-19 crisis is reshaping our economy, Wolff predicted that post-pandemic, many lawsuits will be waiting in the wings. Without the actions of lawsuits and labor strikes, corporations will continue to make decisions based on the bottom line of profitability i.e. the measuring stick for success and CEO performance pay. As the economy begins to recover from the impact of the coronavirus shutdown, we’ll see an acceleration of the expected impacts of the fourth industrial revolution. If a company can do the same or more with fewer employees, they will prioritize efficiency over saving jobs. The market is anything but free, with the most adaptable business succeeding — instead, we see corporations are getting bailed out, again and again. Boeing has received billions — a company that has admitted to being unsafe, contributing to the crash deaths of 300+ people is bailed out, while half the American working class gets (delayed) checks for $1200.
There is no doubt we benefit as a society from what Boeing does, but its role as a job creator is a collective capability, not impacted by the presence of absence of any individual. Protecting it as an entity that creates jobs and airplanes does not have to take the form of bailing out a private corporation and enriching executives and shareholders; there are other options not just possible but preferable. Maybe employees would do a better job making executive pay decisions than Boeing has — maybe there should be a version of Boeing that doesn’t pay its fired CEO more than $60 million, a version that lets workers own their work.
Similarly, maybe we can have the utility offered by Facebook without having our most private selves profiled and sold to advertisers and stolen by hackers. Maybe we can have our gmail account without Google looking over our shoulders suggesting things we could buy — maybe the utility that is email can be provided by the Post Office, like snail mail delivery, both guaranteed and protected by the government as a right.
So how do we turn companies into pillars of their communities, instead of pillagers of their communities? By turning company workers into owners of their work; using distributed public ledgers applications like Aragon, a people-first capitalism is enabled by reorganizing ownership into a partnership between capital owners and labor. This creates a trickle-up economy in the local communities from which businesses draw their workers, ameliorating the threat of sudden job loss by the fiat of nonresident owners seizing the future dividends of worker contributions.
Reorganizing a company to distribute ownership recorded in real time, for all time, in a distributed public ledger means the largest private companies in the world can become cooperatively owned without any other changes. As economist Wolff acknowledges, any large corporation such as GE or Facebook will still have their large armies of people doing an immense number of things, just “not for the benefit of private corporations, but for the benefit of themselves as members of their community.”
In this new era, data is the oil that drives the engine of the economy. We should not only get paid for the value of our data, we should hold the keys to all of our data — including our vote — just like we hold the keys to a car or a house. Blockchain, crypto and mobile technologies now enable a decentralized internet architecture that replaces the ‘Like’ that Mark Zuckerberg owns (as well as the click that Google owns, and the heart that Twitter owns) with a token that the user owns. Imagine every click that you make on social media, or in a search engine browser, is a click that you own and cannot be accessed without your permission. Imagine being able to verify your vote was counted.
Perhaps most importantly, imagine controlling the most personal data of all — your healthcare data. Imagine a world where the default understanding of data mining and data usage becomes: If you are going to benefit you need to pay me in some way. It’s not impossible; Facebook and Google profiting off your data is not the way things are ‘meant to be’. Our lawmakers have failed to keep up with 1) representing people over corporations and 2) the changing technologies of the times, giving private companies unprecedented control over our data and influence in the political process.
There can be no return to a normal that served so few while the many suffered an ever more precarious future. The old ways aren’t serving us anymore; when that happens, the old way of life passes into new ways. Workers in the 1930s threatened revolution, and got a New Deal that shifted power to workers, who organized in historic numbers. We can do the same today, but with even more success. There are new factors to consider — factors so new, that nothing has prepared us for how different things are going to be. As in the industrial revolution, we will experience a seismic shift in the way things are done; the possibility of future pandemics, AI and automation are redefining the parameters of human work, and technologies like distributed public ledgers enable decentralization of control from institutions to individuals, who can now be enabled to claim their rights not only to the universal basic income but give them direct control of their money, work and home — without intermediaries.
The Pope called for us to recognize that “we are the indispensable builders of this change that can no longer be put off.” More prosaically, Andrew Yang suggests “It will take all of us working together to bring the wave crashing down on Washington and rewrite the rules of our economy and society to work for us”. The key here is working together; there are many movements, from #Occupy to #CancelRent, Extinction Rebellion, Humanity Forward, and of course The People for Bernie Sanders. As a friend recently remarked to me in an almost comical understatement, organizing is hard. It requires dedication, focus, collaboration, resources. Most of all it requires emotion; feeling the fire of the cause and spreading that fire to others.
Regardless of who is elected President in the 2020 election, we’ve had a foretaste of the future; the job contraction of the digital and automation revolutions currently underway and that make basic income inevitable is a matter of time, not philosophy. Data is more valuable than oil is a matter of fact, not speculation. That our data is so valuable we should not only be paid for it but should own and control it, ourselves, is a matter of decentralization technologies that have only recently made this possible. These technologies also make it possible to distribute UBI very efficiently even on a global scale, the first step in a truly humans-first economy that serves the earth and all of its inhabitants, as any sustainable system must; they also offer us a way to organize and signal our elected officials with our priorities for a reset economy. That our current system of capitalism is allowed to simply operate in a vacuum of scientific knowledge has led us to the brink of extinction by climate; this pandemic may offer us the last opportunity to transition away from a system that leaves us so susceptible to collapse.
As Warren Buffet notes, a country as rich as the US, with more than $60,000 GDP per capita, someone who works 40 hours per week a couple of kids should have a decent life and not need a second job — not leaving people isn’t going to hurt the country’s growth. “You’d think we would hold ourselves to a higher standard taking care of our fellow man,” Buffet laments.
The main learning of the current crisis is how untenable it is to continue to let runaway capitalism reward less than 1% of the population with 80% of all wealth and 100% of the new wealth, collecting up all the dividends of our economic infrastructure, while a majority of the population lives in economic precarity, hoping an event like a pandemic does not occur. If basic income were already in place, the economic impact of the coronavirus would be limited. But with a large plurality of Americans living paycheck to paycheck, and with those paychecks suspended for the indefinite future, the reverberations of the virus in the economy will be dramatic and long-lasting, even if we get back to work in the earliest predicted timeframe of just three to four months. We need a radical agenda in response to the radical shifts in the climate and the economy — the two of which are closely related. The stakes could not be higher: succeed, and history will remember our era as a turning point that saved the world as we know it, reversing a certain course of climate and economic destruction.
- Income Movement website
- The Gerald Huff Fund For Humanity website
- Who Really Stands To Win From Universal Basic Income by Nathan Heller, New Yorker July 2018,
- The Politics of a Guaranteed Income: The Nixon Administration and the Family Assistance Plan by Daniel Patrick Moynihan (Random House) 1973
- Give People Money: How a Universal Basic Income Would End Poverty, Revolutionize Work, and Remake the World by Annie Lowery (Crown) 2018
- Raising the Floor: How a Universal Basic Income Can Renew Our Economy and Rebuild the American Dream by Andy Stern (Public Affairs) 2016
- “Basic Income: A Radical Proposal for a Free Society and a Sane Economy” by Philippe Van Parijs and Yannick Vanderborght (Harvard University Press) 2017
- “Fair Shot: Rethinking Inequality and How We Earn” by Chris Hughes (St. Martin’s) 2018
- Basic income: A Radical Proposal for a Free Society and a Sane Economy by Philippe Van Parijs
- Postcapitalism and A Clear Bright Future: A Radical Defense of the Human Being by Paul Mason (Allen Lane) 2019