The Critical Flaw in Universal Basic Income

In short: Capitalism will systematically extract whatever money you pump into the poor and re-concentrate it in the hands of the landlords.

Photo by Alexander Mils on Unsplash

Universal Basic Income (UBI) is a simple idea: pay everyone an income. For anyone who values human welfare it would seem to be a straight-forward and transparently good idea. Pay everyone enough to live, then everyone can afford to live, right? Not exactly.

While I agree with the goal of UBI, I can’t believe in its practical use as a tool to improve the lives of everyone struggling and suffering under the current system. I don’t think it will hurt anyone who is struggling financially, and it may still be something worth doing as a kind of short-term method of assistance, but it won’t and can’t do anything to change the fundamental reality of life for most people under capitalism.

The flaw is this: So long as essential products services are market-based — i.e. priced arbitrarily — whatever money you give to those in need will be rapidly concentrated into the hands of the few who are granted ownership of those essential products and services. The floating prices of necessities under capitalism means landlords of all types will simply demand more money once they know their customers have more money. For things like food, water, housing, heating, and healthcare, people have no choice but to pay whatever arbitrary price is set since they need these things to live.

Landlords will set the price as high as the possibly can. UBI will not and cannot change this. If rent was $500 when the tenants could just barely manage $500, it’ll be $1500 next year if the landlord knows they can now manage that thanks to their UBI. The people who need the money will lose it. They have to lose it. They have no way to forgo things like housing, so they will pay, and what they pay will be set by the landlord.

The market forces that maximize suffering will not cease to grind poor people into the dirt just because there’s more money pumped into the system. It is not so simple. Money itself is arbitrarily valued — it is fiat, worth whatever you can get for it, so having twice as much doesn’t mean anything if you must now pay twice as much to continue living.

The only way UBI will make a lasting difference is if the fundamental system of capitalism is changed. Just one essential change is to make necessities available on a per-need basis rather than as arbitrarily-priced goods in a market. This would need to be comprehensive enough that not a single life-giving product or service was market-based, since any necessity has the potential to erase the effects of UBI; if you need water, and Coca-Cola owns the water, they will demand whatever you can pay until you have nothing left. Only when the bottom two levels of Maslow’s hierarchy of needs are secure and insulated from the market will UBI mean anything as a tool against the misery of poverty. This is a much larger project than just writing some checks, but it is one change that must happen if poverty is to be well and truly alleviated.

It is good to seek to end poverty. The goals of UBI are good. The effects of UBI will not be bad for those who need help, and they’ll be negligible for those who don’t need help. I don’t oppose UBI. I just don’t think there’s much reason to push for it over other more basic changes that need to happen. UBI just can’t touch the mechanisms that create and maintain poverty. To do that we must recognize more fully the ways in which capitalism concentrates wealth and power while holding most people in bondage and privation.

My main example is very basic, but for a far more detailed explanation of how money under captialism is unavoidably concentrated while being siphoned away from the 99% — thus creating and perpetuating poverty — I suggest Thomas Piketty’s Capital in the 21st Century. We’re told not to be curious about money and especially not to question the fundamental function and merit of capitalism, but if you start to wonder how money works and how it accumulates it quickly becomes clear how deeply broken our system is. Sadly, UBI can do very little to address that brokenness.

Essayist, former scientist, trans woman. Striving for actionable methods of peaceful revolution — relationships, community, mutual aid, subsistence, science.

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