Saturday, April 02, 2016

Progress or Paralysis

We are in a period when capitalism and the governments that represent its interests are increasing the rate of exploitation and reducing the level of social provision. That is not about to change and any redesign of income support systems such as the universal basic Income will be no panacea and the fight decent living standards will continue out of necessity.  Why are governments and political parties considering UBI more seriously? Fearing social unrest due to unemployment and inequality there are leading businessmen who share an enthusiasm for basic income policy. Citigroup chief economist Willem Buiter issued a report arguing for “a guaranteed minimum income for all, or an ambitious negative income tax … to support those left behind by technological advance.”

“Red Tories” see a basic income either as a way to a simplified streamlined welfare benefits system or that it should even replace the whole welfare state. Right-libertarian hero Milton Friedman advocated a version of the idea as long ago as the 1960s: a negative income tax, in which below a certain income level, people receive a stipend from the government instead of paying taxes. Richard Nixon wanted to implement such a plan. Sam Bowman of the British free-market Adam Smith Institute says: “The ideal welfare system is a basic income.” The right-wing Cato Institute published a series of essays discussing variations on the theme of a guaranteed income. If labour is weak, then the likelihood is that a basic income will be meagre and conditional and fore-shadow the full-scale privatisation of public services. While left-wing proponents believe a basic income will strengthen the hand of labour, right-wing proponents back it for exactly the opposite reason. A basic income is not only a subsidy to employers; it is a union-buster.  Libertarian economics commentator Steve Randy Waldman argues: “Supplementary incomes are a cleaner way of increasing labour bargaining power than unionization. Unionization forces collective bargaining, which leads to one-size-fits-all work rules and inflexible hiring, firing, and promotion policies, in addition to higher wages.” 

John Schmitt, a senior research associate with the progressive Center for Economic and Policy Research says, “My fear is that it’s possible for a coalition of completely well-intentioned and idealistic – with no negative connotation to that – people on the left to support what would be a very generous basic guaranteed income, in a coalition with significant elements on the right, including the libertarian right, that has basically the motivation that this will undermine existing social welfare institutions.”

Firstly, the very idea of a basic level of income is about establishing a floor and many proponents are determined to locate that floor in the basement. A low and inadequate social minimum seems to them a great way to drive people into deeper poverty. While even the best basic income policy only sets a floor below which poverty cannot fall, union militancy strengthens labour’s hand to demand ever-greater wages and better conditions.

On the issue of Universal Basic Income, Toby Sanger, draws attention to the Speenhamland System, a wage supplement arrangement put in place under the English Poor Laws between 1795-1834, and the role it played in driving down wages. Low wage paying employers could rely on the tax base to pay their workers’ wages and employers who had been paying higher wages were under an incentive to lower them in order to obtain the same benefit. In the present context of vastly expanding low wage precarious work, this danger is one that should not be underestimated. E.P. Thompson reported in The Making of the English Working Class that the Speenhamland system had “a single tendency: to destroy the last vestige of control by the labourer over his own wage or working life.”

The basic income scheme will be used to undermine social and public services, and to provide a subsidy to employers that will drive down wages and workers bargaining power.  A guaranteed income detracts from seeking fundamental solutions to the failure of our economic system and political systems to provide adequate reward and meaningful employment opportunities for all. There will be no capitalist road to socialism. There is only, as ever, the strength and determination of the organised workers movement. 

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