Why We Need a Guaranteed Income. Soon.
A thought for Labor Day: In the not-too-distant future we might wait around for a package delivery, hurry off to class, grab a taxi downtown, meet the family for dinner, and then take the train home. All without being served by a single human being. No delivery person, no teacher, no cab driver, no food server, no train conductor.
Our jobs are disappearing. The benefits of a half-century of productivity, in which we and our parents all played a role, have largely accrued to the relatively few people who know how to make money by coordinating all the technological components, or by managing the money themselves.
1. Our Jobs Are Disappearing
The jobs that kept the middle class out of poverty -- education, construction, social services, customer service, transportation, administrative support -- have dramatically declined since the recession. Programmers and engineers and financial experts are still in demand. But nine of the ten fastest growing occupations don't require a college degree.
Today's tech and telecom companies build products that require less American workers, less middle-income workers, and less workers overall. But more big-salary workers. Netflix, for example, serves 57 million customers with less than 2,200 employees, who have an average salary of $180,000. Robert Reich notes that much of the photo processing once done by Kodak with 145,000 employees is now done by Instagram with 13 employees. Facebook's messaging application WhatsApp has 55 employees serving 450 million customers, and a CEO who's worth $6.8 billion, which would pay about 225,000 store workers $15 an hour for a year.
Robots are invading the workplace in a way that wouldn't have seemed possible a few years ago. Mass delivery, for example. Fedex is preparing for fleets of delivery drones manned by a few operators at work stations. Fortune and Money list a few others: automated sports reporting; online marketing; medical diagnosis; surgical procedures; paralegal research; financial retirement analysis.
Technology has begun to diminish the need for warehouse workers, bank tellers, cashiers, hotel staff, travel agents, chefs, traffic cops, bartenders, bellhops, maids, and even food servers. The driverless vehicle is on the horizon. Most stock trading is done by computer. Bridges can be built with 3-D printers. Even teachers and surgeons are at risk of being replaced. The Economist reminds us: "Robots don’t complain, or demand higher wages, or kill themselves."
But the robots better not learn to complain, because they could be reprogrammed into new versions of themselves.
2. Corporations Have Taken Our National Wealth
The majority (57 percent) of basic research, the essential startup work for products that don't yet yield profits, is paid for by our tax dollars. When ALL forms of research are included -- basic, applied, and developmental -- approximately 30 percent comes from public money. In 2009 universities were still receiving ten times more science & engineering funding from government than from industry.
All the technology in our phones and computers started with government research at the Defense Department, the National Science Foundation, the Census Bureau, and public universities. The Internet made possible the quadrillion-dollar trading capacity of the financial industry. Tax avoider Google is using some of its billions to buy technologies that were built by DARPA with our tax dollars.
Pharmaceutical companies wouldn't exist without the National Institutes of Health. As Ralph Nader notes, "The pharmaceutical industry receives billions of dollars in tax credits for doing research and development that it should be doing anyway." Big firms use intellectual property law (another gift from the taxpayers) to snatch up patents on any new money-making products, no matter how much government- and university-funded research went into it. An example is genetically engineered insulin, which due to patent protection cannot be made generically, and as a result can cost a patient up to $5,000 a year, about ten times more than a patent-expired version. Another example, as detailed by Sam Pizzigati, is the cost of new cancer drugs, which can reach $120,000 per year for many patients.
Following the lead of the pharmaceutical industry, Big Tech is now getting into the act. By 2011 Apple and Google were spending more on patent purchases and patent lawsuits than on research and development.
There's much more. The wealthiest individuals and corporations are the main beneficiaries of tax laws, tax breaks, property rights, zoning rules, patent and copyright provisions, trade pacts, antitrust legislation, and contract regulations. The largest companies benefit, despite their publicly voiced objections to regulatory agencies, from SBA and SEC guidelines that generally favor business, and from FDA and USDA quality control measures that minimize consumer complaints and product recalls.
Businesses rely on roads and seaports and airports to ship their products, the FAA and TSA and Coast Guard and Department of Transportation to safeguard them, a nationwide energy grid to power their factories, communications towers and satellites to conduct online business, the Department of Commerce to promote and safeguard global markets, the U.S. Navy to monitor shipping lanes, and FEMA to clean up after them. Thanks to the taxpayer-funded National Highway System, corporations like Fedex and United Parcel have access to markets across the country. Along with road construction come the water, electric, and telephone facilities needed to sustain big business.
The richest individuals and corporations are also the primary beneficiaries of the $60 billion spent on Homeland Security.
And they get free rein to pollute our homeland, at almost no cost. A century-and-a-half-old mining law allows companies to exploit the environment, pollute land and water, and escape public oversight, all while paying no royalties. As oil companies despoil our waterways, management writes off fines as a cost of doing business. Said BP's Laura Folse: "I personally have no concern about oil washing in from the offshore to the shoreline."
For international business, more advantages are enjoyed by multinational corporations through trade agreements like NAFTA, with international disputes resolved by the business-friendly World Bank, International Monetary Fund, and World Trade Organization. Federal judicial law protects our biggest companies from foreign infringement. The proposed Trans-Pacific Partnership would put governments around the world at the mercy of corporate decision-makers.
3. The Guaranteed Income is a Proven Concept
The concept of a Basic Income in the U.S. goes back to Thomas Paine, one of the driving forces for independence and inequality during the American Revolution. More recently, it's been supported by very non-liberal individuals like Fredrick Hayek, Milton Friedman, and Richard Nixon.
One of the earliest experiments with guaranteed incomes was the "Mincome" (minimum income) program conducted in the town of Dauphin, Manitoba during the 1970s. The results were never made clear, partly because of a change to a more conservative government, which put the program's records in storage, unevaluated. One census review, however, found that hospitalization rates dropped for the recipients of the basic income payments. Today in Canada, the mayors of two cities in right-leaning Alberta are considering a renewal of the guaranteed income concept.
Back in the U.S., the Alaska Permanent Fund has thrived for 35 years, even with anti-socialist conservatives in power. Texas has long employed a "Permanent School Fund" to distribute funds from mineral rights to the public education system. Wyoming has used a similar "Mineral Trust Fund" to help eliminate state income taxes. Nebraska distributes low-cost electricity from a publicly owned utility. Oregon has used the proceeds from wind energy to return hundreds of dollars to households. Vermont has proposed "Common Assets Trust" to raise money from taxes on pollution and pay dividends to residents.
A recent study of 18 European countries found "increasing employment commitment as social spending gets more generous" -- in other words, dividend payments encourage people to work harder, rather than the other way around. Now cities in the Netherlands are preparing similar experiments with such "basic income" payments. Citizens of Switzerland and Finland have voted in favor of basic incomes. Jeremy Corbyn, candidate for the UK Labour Party, has made "quantitative easing for people" part of his campaign, with plans for infrastructure, housing, and energy projects.
A program in Uganda followed young people who were given cash grants with twice the typical annual income. After two to four years most had invested their earnings in vocations, causing their earnings to rise by 40 percent or more, an outcome that generally lasted well beyond the four-year study period. Women overall earned more than men. As summarized by the authors of the study, "The grants are typically invested and yield high returns...even among poor, unemployed and relatively uneducated women."
The charity Give Directly, which has been highly rated by the charity research organization GiveWell, provided cash transfers to poor rural households in Kenya. Results showed increased spending on food, medical needs, and education, with very little used for alcohol and tobacco, and with similar outcomes for both males and females. According to the authors of the study, "Transfer recipients experience large increases in psychological well-being."
4. The Benefits Are Well-Documented
The Brooks World Poverty Institute found that money transfers to the poor are used primarily for basic needs. Basic Incomes have been shown to lead to reductions in crime and inequality and malnutrition and infant mortality. With less stress at home, children do better at school. And overall economic growth occurs.
These results showed up in the aforementioned Dauphin experiment in Canada, where both hospitalizations for mental illness and high school dropout rates declined. The same results were documented for the recipients of casino payouts in Cherokee, North Carolina.
Positive outcomes are seen around the world. In Namibia, a two-year program yielded remarkable results, reducing poverty from 76% to 16%, child malnutrition from 42% to 10%, and school dropout rates from 40% to almost zero. A Unicef-funded study in India recorded the same positive health effects, with particularly noticeable improvements among the disabled population.
5. It Can Be Funded -- If the Beneficiaries of American Wealth Give Something Back
- A Financial Speculation Tax. The logic for the tax is indisputable: (1) Financial industry speculation devastated middle-class homeowner wealth; (2) U.S. investors pay zero sales tax on their speculative transactions; and (3) The tax is easy to implement, and is very successful in other countries.
- A Carbon Tax. Every year, human activity dumps over 30 billion tons of CO2 into the air, most certainly contributing to the dramatic rise in global warming. Yet instead of demanding payment from the biggest polluters, we give them subsidies of over $5 trillion per year, more than the combined healthcare budget of all the nations in the world. The U.S. is also ranked near the bottom of the world in compensation for oil and gas extraction.
- Collecting from Tax Avoiders. Corporate tax avoidance costs us anywhere from $870 to $1,600 per family. Yet even though every hour worked by an IRS auditor uncovers over $9,000 in misreported tax dollars among large corporations, IRS staff has been cut back by one-third, and communities around the nation have been forced to rely on regressive property and sales taxes to make up the difference.
- Patent Reform. As noted above, corporations take out government-protected patents - for 20 years - on products developed with U.S. taxpayer dollars. Robert Reich sensibly calls for a shortening of the patent duration, or, instead, a fair return to U.S. citizens for the decades of research that have led to billions in profits.
Large corporations and the super-rich. Most of them have little incentive to care about average people. Perhaps they should consider the dangerously divided world they're leaving for their grandchildren.