Transparent Trojan Horse – Part 2

In Part 1, we confronted the uncomfortable reality that unequal societies like ours do not, unfortunately, fix themselves gradually or peacefully. Instead, conditions ossify and then worsen, until one of the Four Horsemen of violent upheaval comes galloping along to level the socioeconomic landscape. So at the very moment when we need maximum flexibility to confront the looming spectres of climate change, ecological devastation, and the implosion of American-style capitalism, we are faced with seemingly-intractable barriers to meaningful change.

So what to do? Where do we point our energies, our activisms, and our politics? If the walls that protect the powerful and, more importantly, power itself, are so high and impenetrable, are we wasting our time mobilizing for things like universal heath care, free college, free day care, constitutional amendments de-personalizing corporations, etc.?

Well, yes and no. The long list of progressive causes and sentiments is undoubtedly noble. But progressive policies are always embedded in a framework of redistributive confrontation, and thus run smack into the strongest reality of the system itself: its immunity to change. Again, to bring Walter Scheidel’s quasi-tautology back to mind, the very existence of massive inequality is itself the testament to the system’s breadth, complexity, and long-standing ability to deflect or absorb reform.

In short, we’re not going to go through or over the walls that protect asymmetric power. Instead, we will need to be invited into the inner camp, in broad daylight, openly smuggling in something that has the potential to bring down the system from the inside. We need something that the establishment, or at least a good part of it, will see as a wonderful gift. This will be something that the powerful acknowledge as a slight threat, but which they also believe can be easily co-opted for the extension of their dominance. But the friendly invader will prove them wrong. Because once loosed, this thing will quickly spread, kudzu-like, giving rise to multiple channels of meaningful change. What is this potential table-turner?

The Transparent Trojan Horse – Universal Basic Income

At this point, most people will have heard something about UBI or, as it is sometimes known, BIG (basic income guarantee). Andrew Yang is currently making UBI, branded as a “Freedom Dividend,” the centerpiece of his 2020 presidential run. It is an old idea, originally floated in America by none other than Thomas Paine. It is an idea that both liberals and conservatives have supported, for different ideological reasons. Milton Friedman and Charles Murray see it as a replacement for all other government “entitlements.” Martin Luther King, Jr., toward the end of his life, pivoted to UBI as the best hope for completing the Civil Rights Movement, something that would give it true economic teeth. Andy Stern, the former head of the Service Employees International Union, changed his mind on the realistic possibility of re-invigorating labor unions as an engine of change, opting instead for UBI as a better option.

But whatever its particular flavor, the general idea behind UBI is this: every adult citizen would receive money from the government, usually in the neighborhood of $1000 a month. It would not be means-tested, so millionaires and billionaires would also get it. And while not replacing all other social insurance programs, it would eventually eliminate the need for programs like unemployment insurance, food stamps, and potentially Social Security. The exact details do not need to be belabored at this point. Suffice it to say that it has the potential, because it is universal (and digital), to be logistically simple, with limited need for bureaucratic scaffolding.

For our discussion here, the most important thing is that UBI is something that the powerful should welcome with open arms. Wait, what? Why would the Establishment, which is so resistant to universal healthcare, living wages, and free college, give the green light to free money for everyone, including the rich and the lazy? Isn’t UBI the most liberal of all liberal fantasies, the most entitled of all entitlements? Why would any mainstream politician or business leader get behind such a ridiculous thing?

Well, there certainly would be ample resistance to UBI, especially amongst Conservatives and some financial companies. After all, much of the finance industry thrives on money being kept artificially scarce, so that it can be lent back to impoverished workers at interest. But a large portion of the establishment should actually be whole-heartedly in favor of UBI. Any business that actually sells things to people, as opposed to lending money, should be 100% behind any scheme that puts more money into consumers’ hands. This is the battle that has to be won inside the halls of power. Businesses that sell things have to shout down the businesses that lend money. It will obviously be a tough fight, but it can be won, and the tides of public opinion are actually turning, ever so slightly, in the direction of implementing a UBI. After all, Alaska already does it (at a smaller scale). So there’s that.

But the really interesting part is the potential for UBI to change the entire landscape of our economics and politics, once it is implemented. First of all, it would be fast. Despite the massive price tag (more on that later) and sheer breadth of the program, it would actually be fairly easy, bureaucratically, to get in place. And once in place, money would flow quickly, directly to people for immediate spending. Almost overnight, you’re looking at a massive increase in consumer demand, as well as an unprecedented platform for improving the mental, physical, and economic health of regular people.

What makes UBI so unique is that it is not funneled through the systems of business and employment. Almost every other policy program, liberal or conservative, is geared toward either long-term, gradual ‘improvement’ of people, to make them more attractive to businesses as employees, or toward improving the conditions for businesses themselves, so that they will hire more people. There are obviously exceptions. Universal health care is something that is viewed by liberals as a fundamental right (although even there, some of the arguments emphasize that it would free up businesses to pay their employees more by not being saddled with health care costs). But in general, our mainstream policy proposals are all designed to work within the long timeline of bettering our selves and our business climate, with the individual career as the magical, moral linchpin.

UBI isn’t like that. UBI cuts the slow, business-climate piece out of the equation, and just gives money to people. That money then flows immediately into the market place, sending all of the appropriate signals for production and consumption. There is no waiting for our workers to get more ‘productive,’ or for our corporate tax policies to bring all of those jobs ‘back’ from somewhere, or for deregulation to magically make businesses build a million new factories with high-wage jobs for all. None of those things are going to happen anyway, and UBI just cuts out all the bullshit and gives people what they need: cash.

What is Work For?

If we can get the UBI Transparent Trojan Horse inside the ramparts of power, there are some even-more-important ideological shifts that needs to happen, changes in public philosophy that would not be possible without UBI paving the way. One part of this shift is a change to a Modern Money Theory understanding of taxation, government spending, and money itself. And the other crucial piece is wholesale change in our understanding of what work is for, and how it relates to money, government, and economic production.

Let’s take the latter topic first: labor. As some of my earlier posts highlight (here, here), the most fundamental socioeconomic fact of our age is the irreversible decline of labor value. And we are absolutely unwilling to talk about it, at least in mainstream discourse. I won’t hash out everything again here. You can check out my earlier posts, as well as the crucial works by James Livingston, Tim Dunlop, Martin Ford, and Andrew Yang. Long story short is that deep-rooted trends in technology, business management, finance, international trade, supply-chain logistics, and legal infrastructure have consistently eroded the economic value of human skill and labor, over the last four decades. And those trends will not be reversed, meaning that work can no longer bear the economic, social, and moral weight with which it has been freighted since Martin Luther’s idea of a worldly “calling” spawned the Protestant Work Ethic.

For a society like ours, which thrives on work as its core organizational principle, this is bad news. As Tim Dunlop puts it best, in “Why The Future is Workless”:

“Postwork is first and foremost built on the idea of challenging the concept of a work ethic, that form of silent coercion that normalizes and lionizes the work for its own sake. The work ethic is the golden thread that connects and integrates the worldview of the left and the right and allows them to merge, however antagonistically, in the eternal neoliberal present. A long as all sides of politics bow down before the concept of work and insist that all reward must be predicated on the contribution we make to society via a paying job, we will continue to create societies of massive inequality that use work not just as a way of creating wealth but of controlling populations in the interests of an increasingly detached elite. In a society where full-time jobs that can support human thriving across a lifetime are increasingly scarce, and where a diminishing fraction of the workforce can create all that we need in order to live, the demand to work is little more than a demand to control. It is driven less by any rational need to produce stuff than by an ingrained fear that people freed from the demands of a job will become unmanageable. Ungovernable. The work ethic – where work is understood primarily as a paying job – in a world without work, or with less work than there are people, is nothing but a tool of oppression.”    

Put another way, when the economic value of labor declines, the meaning of money itself is fundamentally changed. If work is less valuable to the production process, then there is no need to compel full employment by keeping money artificially scarce. Labor compelled by artificial money-scarcity is only needed if the natural world, in which all economies are embedded, is seen as a hard, withholding, punishing place. That is not our situation any more. In fact, it is now almost precisely opposite: human economic systems have become abundantly powerful, and it is the natural world that has been shoved to its knees. In our current context, continued emphasis on maximum work, maximum production, and maximum economic growth is beyond crazy. It is suicidal.

UBI is the best hope for an immediate challenge to the work ethic. Once a functioning UBI is in place, it will quickly become evident that giving people money is not a moral or economic disaster. All of the studies on limited basic income schemes have consistently shown these outcomes: people may work a little bit less, mostly to spend more time with their families; people’s mental and physical health improves dramatically; people feel freer to take entrepreneurial risks on new businesses; people tend to quit more degrading jobs, in favor of more volunteering, more charity-work, and instead assume part-time positions that might pay less but are more morally or spiritually rewarding. And while it might seem plausible that giving free money to people would just make them waste it all on frivolous consumption, the reality is that people use the money wisely, to pay down debt, create college funds for their children, make improvements to their homes, and to generally improve their overall economic health.

UBI would enable a pivot from the moral primacy of work to that of consumption. As James Livington compellingly argues in “Against Thrift,” a blind devotion to maximum work is not actually frugal or conservative, if the main economic manifestation of that devotion is the accrual of more money at the very top of the system. And an open commitment to the moral value of consumption is not intrinsically wasteful or environmentally-harmful. He stresses that consumption is an immediate, empowering, and profoundly equalizing force, that can be leveraged for progressive, just, and sustainable ends.

UBI would demonstrate that moral superiority of consumption, as all of the evidence from limited trials indicates. I am convinced that people would not become lazy, over consuming, decadent assholes. Rather, I believe that these things would happen: people would begin repopulating the abandoned and semi-abandoned rural areas, small towns, and small cities, because of the long-term economic security afforded by UBI; the coastal areas and overheated cities would thus begin to thin out a bit, taking some of the inflationary pressures off of these sprawling conurbations; communities would have substantially-boosted economic resources to begin rebuilding critical infrastructure, but in ways that are less transportation-centric, since spending power would be more territorially-dispersed; overall employment would go down, but in a positive way, since there would be no desperate need for people to earn money in whatever way possible; younger people, who are already used to collective activity by necessity, would begin constructing much different physical and social realities than the traditional nuclear family, suburban sprawl shitscapes that currently dominate.

In a best-case scenario, UBI would allow a wholesale move away from seeing everything through the lens of business and employment. The federal government would cease to be just an economic midwife, where its only true mission is to make the business climate as friendly as possible, in the hopes that the public good will happen as a benign afterthought. Instead, by de-sacralizing work and putting money into regular people’s hands, the government would transform its primary mission into one of directly improving the lives of its citizens. The marketplace would then be the receptacle of that expanded public well-being, instead of being its conduit.

What is Money?

The other major transition that UBI would open up, and the most important one, involves our understanding of what money has become in a world where labor does not need to be compelled, and where continued emphasis on economic growth will squeeze the last breaths our of our strangling planet. It is here that Modern Money Theory needs to take center stage. Without Modern Money Theory, UBI will be self-sabotaging, because there will always be the nagging question: “how do we pay for it?”

The basic ideas behind MMT are shockingly simple, yet head-swimmingly profound. The easiest way in is to start with the conventional description of the federal budget, spending, and taxes. The perception amongst both regular people and our most-powerful politicians alike is that the federal government is just like a household. It can’t spend what it doesn’t take in. In the case of a household (or a business, or local government, or even state government), money must first come in the door if you want to spend it. People work for their salaries, businesses have to sell stuff, and local governments have to levy taxes to pay for services. You can run some debt for a while, but you eventually have to balance your checkbook, pay down your loans, and keep the books in the black. So the federal government must be the same, right? Wrong. A thousand times wrong.

Individuals, households, businesses, and local/state governments are all currency users. They do not create the money by which they run their economic affairs, so they need to have some semblance of balance in their financial inflows and outflows. The federal governmentby contrast, is the currency issuer (for countries that have their own currency). Money is created by the government to accomplish various purposes within its sphere of power. As such, there is no way for a government to ‘run out of money.’ A country that issues its own currency can thus never ‘go broke.’ It can always afford to spend whatever is needed, on whatever is needed, in its own currency. All hard limits limits on federal spending and ‘debt’ are arbitrary and self-imposed.

Well, wait a minute. What about the national debt? I thought we were $22 trillion in hock to China, and our children and grandchildren are going to have to eat twigs for 100 years to pay it all back? And what about our budget deficits, where we’re recklessly spending more than we take in via taxes, like a teenager with their parents’ credit card (Venmo?) while they’re out of town? Certainly we can’t just keep spending! The chickens are coming back at some point, right?

Not really. The ‘national debt’ is simply the result of a political choice in how to run our economy. It represents money that has been spent by the government, but not taxed back as yet (see here for a good quick capsule). And then, the federal government sells treasury bills to enmesh a wide array of business, financial and international entities into our currency. The national debt is all denominated in US dollars, and it all sits in interest-bearing accounts at the Fed. If China decides to suddenly pull all of their money out (which it couldn’t really do suddenly, as instruments mature at different times), it just gets moved to non-interest bearing accounts, also at the Fed, also denominated in US dollars. China can’t cash in their treasury bills to get gold, or Chinese yuan, or pork bellies. Yes, they have a ton of US dollars, but they will then have to buy stuff that is for sale in US dollars.

And here is the one that will really blow your mind. Taxes paid to the federal government don’t actually ‘pay’ for anything. At lower political levels, yes, taxes pay for things, because local and state governments are, as we remember, currency users. As the currency issuer, the federal government doesn’t need tax money to pay for things. If federal taxes were needed to pay for things, wouldn’t our country have puffed into ash by now, since we have only had budget surpluses in four of the last fifty years? We haven’t so something else must be ‘paying’ for stuff.

Then what are federal taxes for? If they don’t really pay for anything, why do we have them at all? Well, the first answer is that taxes drive the currency itself, establishing the economic boundaries of our national system. If individuals and businesses did not need to pay taxes in US dollars, then the currency itself would quickly become useless. Powerful private entities would begin using their leverage to demand payment in Google Dollars, or Apple Dollars, or 99 Restaurant Dollars. Without a need for US dollars to pay taxes, a panoply of private scrip would emerge, and political entities would begin to totter. Taxes, however, basically coerce participation in the federal economy, which then establishes the solid, unified political entity we call a nation. Secondly, federal taxes are used to heat or cool the economy, keeping inflation under control and stabilizing the currency. Ideally, federal taxes are countercyclical, increasing in booms and decreasing in crunches. And finally, taxes can be used to accomplish certain sociopolitical goals, which can be progressive or conservative. Taxes can be used to redistribute wealth, to discourage pollution, to create regional and national infrastructure, to reward maximum financial speculation, etc. But in no sense is the federal government bound by the same rules that dictate how Auntie Celia balances her checkbook at the end of every month. Taxes are not needed first in order for the government to spend afterward.

Another way to think about it is this. Our current establishment portrays the economy and money as independent, mystical entities that must be assuaged, so that the fickle Invisible Hand will bring its alchemical touch to the hard-working and the virtuous. In this scheme, all we have to do is just leave the economic system alone, to allow abstract things like growth and productivity to happen to us. The ideal role of government is to simply be a midwife to the business process. Even the most progressive politicians, who want the most activist government policies possible, still see the overall program as something that will jump start the independent economic engines of growth.

But Modern Money Theory demonstrates that there is nothing mystical about money. It is a political entity through and through, from the moment of its inception. It just so happens that, unfortunately, the monetary power of the US government is currently being used to fulfill the desires of a fairly small subset of American citizens. Government policy rewards speculation, rent-seeking, inequality, labor devaluation, etc. MMT demystifies the realms of money and federal spending, and opens up a whole new way of seeing exactly how the mechanics of our currency could be turned to different political ends.

Breathless Ending

OK, we’ve traversed a lot of ground. So here’s the quick recap:

  • The 3-headed monster of climate change, ecological collapse and imploding American-style capitalism is salivating just outside our door
  • Rapid and significant social change is desperately needed to address these crises
  • Unfortunately, unequal societies like ours do not fix themselves, without massive and violent upheavals
  • To prevent such a situation, Universal Basic Income must be injected into our sociopolitical system right away, in full view of the gatekeepers of power
  • Once established, UBI would quickly bring an end to the fetishistic work ethic and the antiquated money-scarcity model
  • Two crucial spinoffs would be enabled by UBI: Modern Money Theory, which would allow us to take political control of our currency for the common good, and a reengineering of the world of work, to allow non-labor-centric models of citizenship and personhood to flower
  • Armed with these new tools, and with the popular economic might that UBI spawns, we would finally be able to tackle our most pressing problems of all: how to reconnect with our neighbors, with our natural world, and with our own psyches
  • If we can somehow pull this off (hopefully within a wider global collaboration), then the next successful societies should look like this: decentralized but compact; physically sedentary but digitally globetrotting; less formalized labor but more hard work at worthwhile things; less lonely and more connected; open-minded but fiercely loyal to local community and tradition; scientifically curious but newly-open to a spiritual understanding of our place in the world.

May it come to pass, I hope.

WORKS TO CHECK OUT:

Dunlop, Tim. Why the Future is Workless

Ford, Martin. Rise of the Robots

Livingston, James. Against Thrift

Livingston, James. No More Work

Lowrey, Annie. Give People Money

Mason, Paul. PostCapitalism

Scheidel, Walter, The Great Leveler

Stern, Andy. Raising the Floor

Yang, Andrew. The War on Normal People

 

(Cover art courtesy of Steve Gaul – visit http://www.SGaulArt.com)

 

 

 

Transparent Trojan Horse – Part 1

The trouble with the eagerness to make a world is that, because the world is already made, what is there must first be destroyed.  –  Paul Shepard, ‘Nature & Madness’

Modern industrial societies have three fundamental features: they are stupendously successful, stupendously destructive, and stupendously unequal. It is the last facet, inequality, which prevents any meaningful action to mitigate the destruction or redefine success.

Inequality, like many other social ills, is often described as “systemic.” But what does that actually mean? Usually, I think, people are trying to say that systemic problems are deeply-entrenched, historically long-tailed and not easily solved by quick fixes and platitudes. Exactly so, kind of. There is also an implication that there are a lot of people to blame for systemic woes: people not just of the present, but of the recent and distant past.

But a more helpful interpretation of systemic inequality is this: it is actually no one’s fault. In this sense, ‘systemic’ means the accretion of decades, even centuries, of wide-ranging changes in the material world, broadly considered. Social reality and social change are not the accumulated sands of individual actions, which can be swept away with the robed sleeves of justice and progress. A huge systemic thing like inequality is the product of long, multi-channelled evolution in technology, finance, international trade law, corporate organization, mass communication, supply-chain logistics, legal contours of ownership, etc.

Unfortunately, this hefty, depersonalized understanding of inequality also means something else: it is immune to change, except of the catastrophic sort. In his recent and vital book, The Great Leveler, Walter Scheidel, a historian at Stanford, had the unenviable task of reminding us that highly unequal societies do not, in fact, fix themselves gradually. Instead, they are always done in by one of more of the Four Horsemen of violent leveling: mass mobilization warfare, transformative revolution, state failure, and lethal pandemics.

And it makes sense that unequal societies don’t fix themselves in an orderly fashion. The same powerful forces that have created the inequality in the first place are still there, guarding the gates against any and all benign efforts at change. It’s really a reverse-Panglossian tautology: if gradual change could have happened, it would have happened already. The continued and worsening existence of inequality is itself the confirmation of its intractability.

So that’s where we are. Modern industrial societies around the world, regardless of their particular political stripe, are becoming more rigidly unequal, at the exact time when we desperately need monumental change to confront another raiding party of galloping collapse agents: global climate change, mass species extinction, and capitalism’s self-immolation. In a recent piece, Umair Haque describes it thusly:

“We have just one decade left. Just one decade in my estimation, to begin undoing those three existential threats. They aren’t existential threats in the cartoon sense — “the end of humanity!”. They’re existential threats in a real one, a genuinely dangerous one. They will take a world of peace and progress with them. They will reduce human civilization to charred ashes. They will lead to a new Dark Age.”

Is there any escape from Scheidel’s bind? Is there any way to not have our national experiment come to another violent inflection point? How can we overcome the defensive forces that have created our predicament in the first place, the inequality that prevents us from tackling the much larger issues of ecological and socioeconomic collapse?

Solutions to big problems like this are normally conceived to be the stuff of politics and governance, which, in our current situation, is a pretty grim prospect. As highlighted in previous blog posts, our political machinery is extremely successful at just a few things: maintaining power for the who already have it, providing ideological cover for the lack of help for regular people, and perpetuating a comfortable kabuki set for partisan blame-mongering, which conveniently kicks the can down the road, as we wait for the future to bring promised things that will never arrive.

What politics cannot do, as the US has already found out (and as everyone else will soon), is consistently and aggressively redistribute massive wealth and income from the top to the bottom. This is just not going to happen. Again, looking through our reverse-Pangloss glasses, we can see that the massive power imbalances are still there; and the powerful will always find economic, ideological, legal, and political stratagems to keep the fortress intact. There will be no overcoming of, or sneaking past, the guardians of privileged inertia.

Instead, what is needed is a mortal threat to the system that is somehow embraced by the powerful as a boon. Something that will be welcomed inside the ramparts, but which will then quickly bring them down. And this Something needs to be delivered in full sunlight.

(Cover art courtesy of Steve Gaul – visit http://www.SGaulArt.com)