BILLIONAIRE PHILANTHROPY: A GOOD THING?

https://www.amazon.com/DECONSTRUCTING-ENIGMA-AMERICAN-PLUTOCRACY-NEOLIBERAL/dp/1976746515

Above is the link to purchase Deconstructing the Enigma of American Plutocracy on Amazon. Below is Chapter Ten: Billionaire Philanthropy and Rebutting the Neoliberal Apologia. Enjoy!

 

Charity is a cold thing. If a rich man wants to help the poor, he should pay his taxes gladly, not dole out money at a whim.

– Clement Attlee

You cannot just wait for private philanthropy to fix the problem, you know I think that private philanthropy is perfectly fine when it comes in addition to taxation, but when it comes instead of taxation, it is difficult to organize society. [i]

– Thomas Piketty

Credit: Forbes.com

At this point a skeptic might think that I have developed an argument that money is the root of all evil and would like to pursue it its logical completion. Well, essentially I am, with some caveats and some nuances explored here. Money may not be the root of all evil, but it certainly accounts for a lot. In fact, in a comprehensive study[i] by Paul K. Riff of the University of California at Berkeley found that the wealthy are more unethical that the poor, have more narcissistic personally tendencies, and have greater psychological sense of entitlement. Whether these characteristics helped them achieve their wealth, or wealth changed them as they acquired it is an open question, but the causal factors don’t matter much. The wealthy tend to be – to put it bluntly – assholes. (Billionaire philanthropy would seem to support Adam Smith’s tentative postulation that individual selfishness serves the greater good, but for reasons given below, I do not think that is the case.)

[i] Piff, Paul K., “Wealth and the Inflated Self,” Personality and Social Psychology Bulletin, August 10,2013, Vol. 40:1, pp. 34-42.

Be that as it may, obviously the world economy operates on money, and the history of commerce makes for a fascinating study. Historians and economists have written some very good books on the subject, but alas it is beyond this book. Let me give some specific form to the skeptic’s objection to criticism of wealth concentration: What about Bill Gates, Warren Buffet, the Walton family, Mark Zuckerberg, and many more billionaire philanthropists who have pledged to give away large portions (or all) of their wealth for the human good? What about liberal billionaires like George Soros whose foundations support progressive causes? Some of these people even support, after all, UBI, while others do not. These are serious questions. My answer is this: I applaud their efforts and some of their projects have helped many people, and they often accomplish more harm than good. Not of course harm to direct beneficiaries, but rather to the idea of the social compact between governments and the governed. There is a better way more compatible with democratic institutions and not reliant on on-again off-again vacillations of the wealth class’s charitable intent.

There are legitimate criticisms of billionaire philanthropy in individual case studies. For example, the Walton Family Foundation’s charitable giving appears to be mostly a tax dodge, and the infinitesimally small portion of their wealth has gone to the arts and the environment, doing very little if anything to help the poor.[iii] Meanwhile, their employees are so underpaid that taxpayers must supplement their incomes by the tune of $6.3 billion annually for public assistance programs.[iv] Some criticisms focus of billionaire philanthropy just being good public relations[v] predicated on the optics of income and wealth inequality being so bad. Surely, there must be some truth to that. Others are critical because quite a lot of charitable giving seems to be going to, arguably, the “wrong” places and in paltry amounts: according to the National Philanthropic Foundation, in 2016 a very large plurality (32 percent) of charitable contributions went to religion, and charitably giving only rose one-third as fast as the stock market.[vi]  In fairness, though, one might also consider a 2012 study which found that there are also illegitimate criticisms of rich philanthropists, such as it is only a tax dodge, or they don’t deserve praise because they’re still unspeakably rich.[vii] What is one to make of all this? Let us suspend disbelief about the nature of the human condition for the moment and assume for the purpose of argument that these philanthropists have only the best of intentions of society in mind, there is no nefarious counter-narrative for their actions, and they really do want to do good.

The first objection is simply to ask the question: Why is charity necessary? In an equality-based functioning socio-political system it wouldn’t be necessary at all. This question can be viewed as hopelessly naïve, an admission that utopia is achievable against my assertion that it is not, especially given my arguments about the deprivations of human nature and psychology that evolution has bestowed upon us. But the question does not require this radicalization. I would be happy to concede that charity has a place in society, and even happier to concede that it would be necessary to alleviate the worst of human suffering in any economic system one might imagine. The problem is that when we applaud billionaire philanthropy, are we not also validating an economic system which allows individuals to accumulate vast wealth at the expense of the less fortunate but no less worthy members of society? Consider that the four wealthiest American families own as much as 40 percent of the entire US population.[viii] Is the value billionaires have contributed to society commensurate with their wealth? Ideologues will argue that it is: with great risks come great rewards. In making that claim, though, what does that then say about the ordinary citizen who works very hard, perhaps at Wal-Mart trying to support a family, perhaps somewhere else, but still lives below the poverty line? After all, a series of studies collected by Bloomberg Businessweek, demonstrated fairly conclusively that an enormous factor in wealth accumulation is simply attributable to luck and the happenstance of one’s birth.[ix] (This is one area where intuition appears to have a solid base in reality: Would Donald Trump have become a billionaire if he had been born into a poor family in rural Appalachia?) Meanwhile, workers’ incomes may be so low that they don’t pay an income tax, and they are forced to take public assistance payed for by the middle class. In the case of Wal-Mart, the Walton family apparently finds it acceptable to pass the burden of poverty wages on to the middle class as they enjoy special tax breaks not available them.

At some point one must decide either that we as a society are all in this together, or we are all just individuals competing in a reality show. The billionaire class implicitly recognize that we are all in this together; if they didn’t they would hardly bother with charitable giving. Or in the alternative, they recognize that the capitalist system is unsustainable without some form of wealth redistribution. Be that as it may, the minimum wage – and the idea of raising it to a living wage – enjoys broad popular support.[x] But establishing a maximum wage is political taboo, despite the fact that at one time we had a de facto maximum wage with a top marginal tax rate of 90 percent.[xi] This seems odd. Would Bill Gates have not founded Microsoft if he knew that his maximum personal wealth would be capped at, let’s say, one billion dollars? Of course risk taking and innovation are partially products of the will to accumulate riches. But is there not a point at which the returns diminish? Would one’s lifestyle improve much if one accumulated two billion dollars instead of merely one billion? How many yachts, airplanes and mansions – and charitable foundations – are enough? These are not questions that capitalist neoliberals take seriously, much less ask. It is outside of their ideological comprehension. But these are the questions that we should all be asking.

Billionaire philanthropy is also undemocratic. In the abstract, in democratic societies people vote on issues indirectly through their vote for politicians who have stands on those issues. The public policy issues that they collectively agree upon become law (again, in the abstract). When billionaires decide what is important according to their fancy, and therefore where their money goes, they indirectly subvert democratic institutions. Perhaps their judgment is better than that of the mob. Perhaps it isn’t. Take, for example, the Bill & Melinda Gates Foundation, which according to its website, had a foundation trust endowment of $ 40.3 billion in 2016.[xii] Much of this money goes to support health, education and agricultural projects in developing countries, and much of that in Africa. In Tanzania alone, the Foundation spent $300 million in 2017.[xiii] The Foundation is making progress in improving human health in many other impoverished countries as well. The goals are laudable and the successes are measurable. But one has to wonder, if given a choice, if a US politician’s platform included distributing a $300 million budget surplus to the poor in the United States, or using it for college and trade school subsidies, or to stabilize the health insurance market, or to be invested in clean energy technologies, or any number of other things, how voters would respond. There are poor and needy in America too. It seems that, at least in this particular case, billionaires – in addition to all of the other perks – may substitute their own priorities over others. It is, after all, their right.

One of the strangest books I have read recently is Matthew Bishop’s and Michael Green’s 2009 Philanthrocapitalism: How the Rich Can Save the World. It was a broad book, and well-researched. But something about it made me uneasy, it seemed to be a little too rosy – an advocacy piece shrouded in a protective journalistic clamshell veneer, not seriously discussing the downsides of billionaire philanthropy. Notably, it didn’t directly address what I think is an important question: Doesn’t billionaire philanthropy perpetuate the myth the endemic problems of society can only be solved by the rich and the powerful? I felt a similar unease in watching Robert Reich’s excellent documentary “Saving Capitalism,” based on his book of the same name. It is rich with policy prescriptions to reverse growing wealth inequality – re-growing the strength of trade unions, increasing taxes on the wealthy, among many other things which would undoubtedly help – but largely ignores the fundamental flaws of capitalism itself. I suppose one cannot blame professor Reich: he spent many years in government as Secretary of Labor, and he was good at his job (remember the Clinton surplus) so one might expect that he would be a supporter of capitalism. But until we are to seriously look at its structural flaws, I fear that we constantly patching holes and replacing parts when what it really needs is a complete overhaul. Reich would like to return to the halcyon days of the post-war boom, or perhaps the Clinton 90s, but technology has changed the rules of the game. It is difficult to argue, given the history available to us, that these snapshots in time are not in fact anomalies.

There is a further objection, and one that is in many ways more troubling. Billionaire philanthropy can be nefarious too. Enter the Koch brothers. Their philanthropy, unlike the Walton family’s, is not primarily a public relations tool or tax avoidance scheme. Nor, like Gates’ philanthropic projects, is it well-intentioned. Much of the Koch’s money is funneled into philanthropic endeavors that are baldly self-serving and dangerous.

But before we go there, we should take a slight digression and look as the now-famous “Powell Memo” or “Powell Manifesto” of August 23, 1971.[xiv] Lewis Powell, who was months later to become an Associate Justice of the Supreme Court of the United States, was working at the U.S. Chamber of Commerce when he penned the memo to his boss, who was the Chairman of the Education Committee. The late 1960s and early 1970s was a turbulent time in America, and one of the many sources of that turbulence was the general dissatisfaction with the outcomes of capitalism for workers – low wages, anti-unionism, dangerous consumer products brought to the attention of the public by Ralph Nader, among others, and a growing sentiment towards more socialist policies. Powell’s deeply cynical and somewhat paranoid memorandum was a call to arms for the business community to fight back in an organized and disciplined way, through the funding of conservative think tanks, the media, congressional lobbying efforts, and among other things, invading academia with a conservative counter-balance in order to attack what was perceived as a liberal, neo-Marxist bias within the academy. Apparently it worked, and the following decade ushered in an aggressive pushback by the business community resulting in the creation of a plethora of new conservative pro-business causes and academic appointments,[xv] as well as the expanding role of the U.S. Chamber of Commerce. Oddly, Powell didn’t perceive that this general dissatisfaction with capitalism and big business was a general response to its abuses, but was rather purely political ideology at work. I don’t know how one can account for this glaring mistake from a bright person, but the corporate community took Powell’s admonitions to heart, and there is no better example of this than the Koch brothers.

Their lobbying efforts, support of conservative think tanks, and political contributions are well known. And yes, they support public television, the United Negro College fund, as well as other non-political causes such as medical research. Nonetheless, The Kochs were apparently shocked at a 2010 exposé in the New Yorker by Jane May which painted them in, shall we say, a less than flattering light.[xvi] They developed a rapid response public relations team and a new website, KochFacts.com as a counter narrative, focusing on their giving. But you can support medical research and have your name put on hospital wings all you want; the fact remains that the Kochs are partisan ideologues of the first order and were avid supporters of the now-defunct Tea Party movement,[xvii] marshalling an army of the credulous and undereducated to crusade against their own interests. They are also smart, and their most insidious attack with money has been on higher education and research.

Colleges and Universities in the United States have long been bastions of liberal and progressive thinking. (I touched upon some reasons for this in Chapter 3.) Graduates become leaders in many areas of both private and public endeavors, including of course politics. It would make natural sense that the Kochs would want to spread their influence to the university campus as well as a counterweight, and that is precisely what they’ve done, with of course as many strings attached as possible. In partnership with the Center for Public Integrity, David Levinthal of The Atlantic produced a piece of investigative journalism that shed much light on the Kochs’ ambitions in shaping young minds and developing scholarship toward neoliberal free market principles.[xviii] The findings are troubling.

Koch foundation’s spending on college campuses increased from $12.7 million at 163 institutions in 2012 to $19.3 million at 210 campuses in 2013. As Levinthal writes, “A review of hundreds of private documents, emails, and audio recordings—along with interviews with more than 75 college officials, professors, students, and others—indicate the Koch brothers’ spending on higher education is now a critical part of their broader campaign to infuse politics and government with free-market principles.”[xix] Of course many wealthy donors are patrons of universities, so there is nothing automatically untoward about this fact, unless such donors interfere with academic freedom. Levinthal recounts that back in 2007, a large donation to Florida State University came with some strings antithetical to the concept of academic freedom: “Teachings must align with the libertarian economic philosophy of Charles Koch, the Charles Koch Foundation would maintain partial control over faculty hiring and the chairman of the school’s economics department—a prominent economic theorist—must stay in place for another three years despite his plans to step down.”[xx] While Florida State ultimately rejected the request, the Kochs continue to donate and ties with the university remain close. The lion’s share of Koch funding in 2013 was received by Virginia’s George Mason University[xxi] and its Mercatus Center – a libertarian-leaning free market research center which a former director described as housing the “largest collection” of “free market faculty” in the world.[xxii] Not surprisingly, the research taking place at the Mercatus Center is noticed by Congress, and used to support movements to end the Affordable Care Act and cut taxes for the wealthy.[xxiii] Many other examples abound of the Kochs aggressively asserting their neoliberal libertarian ideology on college campuses.

Again, the Kochs are entitled to their views, but they should not be entitled to interfere with academic research to suit their ideological goals consistent with their conglomerate’s bottom line. It is inimical to the very idea of a marketplace of ideas.[1] And just when you think it can’t get worse with the Kochs, it does. Readers may be familiar with Project Veritas, a 501(c)(3) nonprofit run by an unscrupulous (even by Koch standards) character named James O’Keefe. His mission is ostensibly to discredit institutions he views as progressive or left-leaning with sting operations, and has a long history of failures in this regard.[xxiv] O’Keefe gets millions of funding from Donors Trust and Donors Capital Fund, which in turn are funded by billionaires, including – you guessed it – the Koch brothers.[xxv]

As to the Bill & Melinda Gates Foundation, I remain somewhat ambivalent. There is something troubling about the fact that, first, individuals can accumulate such vast, almost obscene, wealth, and second, that it is entirely up to them to decide what is in the best interests of societies and what charitable causes to spend it on, or as the case may be, not spend it at all. If we lived in a just society, one that was not rigged in favor of the rich, these moral and ethical quandaries would not be presented for us to ponder. The fact that they exist, and continue to be debated, points to the fact that there is a very real foundational problem to the neoliberally-led political economy in America.

The quote at the outset of this chapter from Thomas Piketty comes from a BBC Newsnight interview with Evan Davies, roughly 18 months after the release of his book. Piketty goes on to say that

 

[i]f you want to do philanthropic giving I think it’s important that you don’t keep control…we have to be serious about what’s public interest and what’s private interest. In many countries in order to all this philanthropic giving to a public interest charity then you must lose any control right…it would be much more convincing if he [Bill Gates] gave away power.

I think we’re being very naïve if we think about the idea that now we don’t need taxation and that we don’t need the government, we just need to wait for the billionaires to give some of their wealth away.[xxvi]

 

The emphasis on the word power in the first paragraph above is Piketty´s. He goes on to talk about how nice it must be for billionaires to have people coming to them with projects to help humanity, and how good it must make them feel to become involved in the planning and implementation of such projects. Piketty is more than a brilliant economist: he is also an intuitive amateur psychologist. One has to wonder how the proportion of hubris, power, and psychological satisfaction plays out in the minds of billionaires who cannot bear to relinquish control of their wealth.  If philanthropy were to replace taxation, Piketty notes, it would also end democracy. At this stage in history I am not aware of anyone seriously arguing that it should, but keep your ears open. Given the history of neoliberalism, I wouldn’t be surprised if someone at a libertarian think tank, whose salary is paid by the Kochs, is mulling the idea over. One could accuse me of hyperbole here, but I plead not guilty. A single example, in my view, is sufficient to make the point that democracy – to the extent that it still exists in any meaningful way – is in danger of complete sublimation to the whims of billionaires.

Keith A. Spencer of Salon wrote an interesting piece recently about how the wealthy scions of Silicon Valley have kept the SETI Institute (Search for Extraterrestrial Intelligence) operating through their charitable contributions.[xxvii] In the fever pitch of neoliberal ideology in the 1990s, where Bill Clinton declared that “the era of big government is over,” the NASA appropriations bill was stripped of SETI funding. Now, you may or may not think that SETI is a good idea, or that it is a proper use of taxpayer dollars – there are good arguments on both sides of that particular debate. But in terms of the underlying principle, do we really want science and research to be funded at the impulses of billionaires? And it isn’t only SETI – enormous areas of what were formerly public domain, such as the arts, social safety nets, prisons, public education, and infrastructure development, just to name a few, have been sold off to private interests with a profit motive, or altogether abandoned to sink or swim depending on the fancies of philanthropists. We are rapidly approaching the perihelion where the public interest will be protected and advanced by only two sources of power: for-profit enterprises or benevolent billionaires. Anything that cannot be monetized and does not attract the interest of the wealthy, will simply die. That, I submit, would not be a good society in which to live.

 

A Refutation of Neoliberalism’s Apologia

Obviously there are arguments in favor of neoliberalism, quite a lot of them. I undertook the task of reading as many as a could for a full week. Something about the three dozen or so papers I read – journal articles, op-eds, long form essays and pieces in the popular press – struck me as odd. They seldom began with vociferous advocacy of the neoliberal view. Almost all of the authors seemed to think that a very long introductory throat-clearing was required. This usually took the form of an intellectual history of economic thought, an unnecessary and pained pointing-out of neoliberalism’s nascent beginnings in classical liberalism, followed not by neoliberalism’s accomplishments, but by a defense of it from critics. It was usually not until the very end, sometimes the final paragraph, that most writers got around to extolling the successes of neoliberalism. When they did, I found four recurring points of advocacy, which roughly follow the following lines. First, the defenders of neoliberalism make the claim that critics of neoliberalism have nothing to offer other than criticism. Second, that communists saw the light in the late 1980s and early1990s and committed apostasy in favor of the neoliberal world view, so it must be right. Third, there will be winners and losers in any economic system, and the winners under the neoliberal model far outweigh the small number of losers. Finally, neoliberalism produces great wealth, which is then voluntarily redistributed by beneficent philanthropists.

As to the first point that critics have nothing better to offer, I offer Chapter Eight. As to the last point about philanthropists, see above. The second point is simply a non sequitur: it does not follow that because the Soviet Eastern Block and the Chinese threw in the economic towel, they did so because they were finally convinced of the superiority of neoliberal economics. Indeed, there were many reasons that these and other countries abandoned their national political ideologies: a very expensive arms race and military spending, a yearning for liberal freedoms unrelated to economics, a recognition that communism was wasteful, regressive and inefficient, and also, of course, that capitalism leads to material wealth. That, I have never denied, but rather only questioned: Creates material wealth for whom? And that’s only the beginning – the geopolitical complications in the early 1990s consisted of a complicated amalgam of competing strategic and economic interests, led by strong personalities. But let us say that the Soviets and the Chinese, did in fact embrace capitalism because of its superiority. That wouldn’t prove in any way that neoliberalism is the best system for the most people, but only that it is better than communism – the setting of a very low bar.Obviously there are arguments in favor of neoliberalism, quite a lot of them. I undertook the task of reading as many as a could for a full week. Something about the three dozen or so papers I read – journal articles, op-eds, long form essays and pieces in the popular press – struck me as odd. They seldom began with vociferous advocacy of the neoliberal view. Almost all of the authors seemed to think that a very long introductory throat-clearing was required. This usually took the form of an intellectual history of economic thought, an unnecessary and pained pointing-out of neoliberalism’s nascent beginnings in classical liberalism, followed not by neoliberalism’s accomplishments, but by a defense of it from critics. It was usually not until the very end, sometimes the final paragraph, that most writers got around to extolling the successes of neoliberalism. When they did, I found four recurring points of advocacy, which roughly follow the following lines. First, the defenders of neoliberalism make the claim that critics of neoliberalism have nothing to offer other than criticism. Second, that communists saw the light in the late 1980s and early1990s and committed apostasy in favor of the neoliberal world view, so it must be right. Third, there will be winners and losers in any economic system, and the winners under the neoliberal model far outweigh the small number of losers. Finally, neoliberalism produces great wealth, which is then voluntarily redistributed by beneficent philanthropists.

The third objection is the only serious one – that neoliberal economic systems create more winners than losers. If this is true, then I have wasted a book. After all, I have been going on and on about how the best public policy is the one that benefits the most people while hurting the fewest. Obviously this book concerns the effects of hyper-capitalism on the population of the United States. In previous chapters I have already laid out my best argument that neoliberalism benefits the fewest while harming the most – there is no question in my mind that that is the case. But I’m willing to take a more expansive view; after all, we all share the same planet, and an American life is no more valuable than a Bangladeshi or Indian one.

So let’s take a not-so-simple metric: the amount of people living in extreme poverty as defined by the World Bank on a 30-year timescale. I say not-so-simple because the World Bank defines extreme poverty as people living on less than $1.90 a day, which is a developing nation standard applied equally to developed countries. An American living on $1.91 a day would not be included as living in extreme poverty. But let’s not niggle. The World Bank estimates that in 1990, 37.1 percent of the world’s population lived in extreme poverty, and only 9.6 percent in 2015, accounting for a 74.1 percent reduction in just 25 years, despite population growth.[xxviii] Way to go hyper-capitalism! Perhaps a rising tide really does raise all ships. Notwithstanding the fact that making even $2.00 per day would mean you were still quite poor, it’s an impressive statistic. But wait. If we use the US Census Bureau threshold for poverty in the US (about $33 per day), it would account for 13.5 percent of the population in 1990, and 12.7 percent in 2016[xxix] – hardly a change at all, and significantly higher than the world extreme poverty average of 9.6 percent.

What are we to make of this? One conclusion could be that neoliberalism and its corollary of outsourcing to cheaper labor locals, is good for developing nations and bad for developed ones. That seems like a reasonable conclusion, given that developing countries are receiving increasing balance of trade for both manufacturing and service from the United States. Then again, these trends are perhaps not the result of neoliberalism at all: Had we stuck to a Keynesian restrained capitalist model, or a more overtly socialist one, would the world reduction of poverty have been significantly different? If it were true, we also have another problem: as developing economies improve and head down the same path as the US, global businesses operating within them will feel increasing pressure to reduce costs as well. Simply put, there is no endgame – it’s a race to eventual collapse.

There is of course a more fundamental macroeconomic flaw in neoliberal theology that is seldom mentioned by its apologists: it is supposed to be about growth, but its results are increasing wealth and income inequality. At some point wealth will become so unequal, it will make sustaining further growth impossible. The International Monetary Fund acknowledged this in 2016:

 

[S]ince both openness and austerity are associated with increasing income inequality, this distributional effect sets up an adverse feedback loop. The increase in inequality engendered by financial openness and austerity might itself undercut growth, the very thing that the neoliberal agenda is intent on boosting. There is now strong evidence that inequality can significantly lower both the level and the durability of growth. ­

The evidence of the economic damage from inequality suggests that policymakers should be more open to redistribution than they are. Of course, apart from redistribution, policies could be designed to mitigate some of the impacts in advance—for instance, through increased spending on education and training, which expands equality of opportunity (so-called predistribution policies). And fiscal consolidation strategies—when they are needed—could be designed to minimize the adverse impact on low-income groups. But in some cases, the untoward distributional consequences will have to be remedied after they occur by using taxes and government spending to redistribute income. Fortunately, the fear that such policies will themselves necessarily hurt growth is unfounded.­[xxx]

 

Though couched in neutral academic language, this is a startling admission from the IMF.

Neoliberalism, if it is to be sustainable requires not just redistribution of wealth for people who have been harmed by it, but also pre-distribution of wealth by people who will be harmed by it before the actual harm takes place. Let’s think about that for a moment. If neoliberalism is supposed to, as it claims, be good for everyone because expanding economies lift everyone up, why would redistribution be necessary? There is a larger point, too: if it is such a superior economic model, as its advocates claim, why would it need so many patches to keep in from self-implosion? Like religion, it is riddled with self-contradictions, inconsistencies, and claims of the miraculous, that it cannot be distinguished from religious dogmas themselves. Nor can neoliberalism’s wonkiest advocates be distinguished from our average preachers, priests, Imams, rabbis, shamans, and new age faith healers. The emperor has no clothes.

[1] For a detailed description of the Koch’s involvement in and support of radical right wing economic causes, see Nancy MacLean’s 2017 book Democracy in Chains: The Deep History of the Radical Right’s Plan for America. Much of her research involved uncovering archival correspondence between GMU neoliberal economists such as James M. Buchanan and the Kochs. Some of the conversations are chilling and involve destroying Social Security and re-segregating schools. Not surprisingly MacLean’s scholarship has been vigorously attacked, by libertarians.

[i] BBC Newsnight interview, available at https://www.youtube.com/watch?v=X6frECZhxJA

[ii] Piff, Paul K., “Wealth and the Inflated Self,” Personality and Social Psychology Bulletin, August 10,2013, Vol. 40:1, pp. 34-42.

[iii] O’Connor, Clare, “Report: Wal-Mart’s Billionaire Walton’s Give Almost None of Own Cash to Foundation,” Forbes, June 31, 2014, available at https://www.forbes.com/sites/clareoconnor/2014/06/03/report-walmarts-billionaire-waltons-give-almost-none-of-own-cash-to-family-foundation/#6c96e5df7d52.

[iv] Report: “Wal-Mart on tax day: how taxpayers subsidize America’s biggest employer and richest family,” Americans For Tax Fairness, April 2014, available at https://americansfortaxfairness.org/files/Walmart-on-Tax-Day-Americans-for-Tax-Fairness-1.pdf.

[v] See, e.g., “McElwee, Sean, “Bargain for billionaires: why philanthropy is more about PR than progress,” Salon, February 10, 2014, available at https://www.salon.com/2014/02/10/bargain_for_billionaires_why_philanthropy_is_more_about_p_r_than_progress/.

[vi] Charitable Giving Statistics, the National Philanthropic Trust, available at https://www.nptrust.org/philanthropic-resources/charitable-giving-statistics/.

[vii] See, e.g., MacAskill, William, “5 criticisms of billionaire mega-philanthropy, debunked,” Quartz, December 4, 2015, available at https://qz.com/564805/5-criticisms-of-billionaire-mega-philanthropy-debunked/.

[viii] Galka, Mark, “America’s 4 Richest Families Own as Much as the Bottom 40%,” Huffpost, February 24, 2016, available at https://www.huffingtonpost.com/max-galka/americas-4-richest-families-own-as-much-as-the-bottom-40_b_9259942.html.

[ix] Kenny, Charles, “How Did the World’s Rich Get That Way? Luck,” Bloomberg Business Week, April 222, 2013, available at https://www.bloomberg.com/news/articles/2013-04-22/how-did-the-worlds-rich-get-that-way-luck.

[x] Desilver, Drew, “5 facts about the minimum wage,” January 4, 2017, Pew Research Center, available at http://www.pewresearch.org/fact-tank/2017/01/04/5-facts-about-the-minimum-wage/.

[xi] See, e.g., Yglesias, Mathew, “The case for a maximum wage,” Vox, August 6, 2014, available at https://www.vox.com/2014/8/6/5964369/maximum-wage.

[xii] Bill & Melinda Gates Foundation, Foundation Fact Sheet, available at https://www.gatesfoundation.org/Who-We-Are/General-Information/Foundation-Factsheet.

[xiii] Ng’wanaki, Fumbuka, “Gates Foundation to spend $300 million in Tanzania in 2017,” Reuters, August 13, 2017, available at https://www.reuters.com/article/us-tanzania-health/gates-foundation-to-spend-over-300-million-in-tanzania-in-2017-idUSKCN1AT0IF.

[xiv] Available in pdf format at http://dy00k1db5oznd.cloudfront.net/wp-content/uploads/2012/09/Lewis-Powell-Memo.pdf..

[xv] See, e.g., Hacker, Jacob S. and Pierson, Paul, Winner-Take-All Politics: How Washington Made the Rich Richer – And Turned Its Back on the Middle Class, New York: Simon & Schuster (2010).

[xvi] See, e.g., Mayer, Jane, “Covert Operations,” The New Yorker, August 30, 2010, available at https://www.newyorker.com/magazine/2010/08/30/covert-operations.

[xvii] See, e.g., Nesbit, Jeff, “The Secret Origins of the Tea Party,” Time, available at http://time.com/secret-origins-of-the-tea-party/. For a fuller account, see, e.g., Nesbit, Jeff, Poison Tea: How Big Tobacco Invented the Tea Party and Captured the GOP, St. Martin’s Press (2016).

[xviii] Levinthal, Dave, “Spreading the Free-Market Gospel,” The Atlantic, October 30, 2015, available at https://www.theatlantic.com/education/archive/2015/10/spreading-the-free-market-gospel/413239/.

[xix] Ibid.

[xx] Ibid., see also, e.g., Levinthal, Dave, “Koch foundation proposal to college: Teach our curriculum, get millions,” The Center For Public Integrity, September 12, 2014, available at https://www.publicintegrity.org/2014/09/12/15495/koch-foundation-proposal-college-teach-our-curriculum-get-millions.

[xxi] See, e.g., “How colleges used Koch money in 2013,” The Center for Public Integrity, available at https://www.publicintegrity.org/2015/10/30/18673/how-colleges-use-koch-money.

[xxii] Id., at note 14.

[xxiii] Ibid.

[xxiv] See, e.g., Weiss, Brennan, “The 33-year-old who tried to trick the Washington Post with a fake sexual harassment story has a long history of sting operations backfiring,” Business Insider, November 28, 2017, available at http://www.businessinsider.com/james-okeefe-project-veritas-sting-fails-2017-11.

[xxv] Kotch, Alex, “The Secret Right-Wing Donors Behind James O’Keefe’s Vile Project Veritas, Alternet, November 29, 2017, available at https://www.alternet.org/news-amp-politics/secret-right-wing-donors-behind-james-okeefes-vile-project-veritas?akid=16421.1932697.ROW5Ij&rd=1&src=newsletter1085805&t=22.

[xxvi] Ibid., at note 1.

[xxvii] Spencer, Keith A., “The new hobby of the super-rich: Alien hunting,” Salon, November 26, 2017, available at https://www.salon.com/2017/11/26/the-new-hobby-of-the-super-rich-hunting-aliens.

[xxviii] Cruz, Marcio, et al., “Ending Extreme Poverty and Sharing Prosperity: Progress and Policies,” World Bank Group, Policy Research Institute, October 2015, DRN/15/13, available in pdf format at http://pubdocs.worldbank.org/en/109701443800596288/PRN03Oct2015TwinGoals.pdf.

[xxix] Statista, “Poverty rate in the United States from 1990 to 2016,” available at https://www.statista.com/statistics/200463/us-poverty-rate-since-1990/.

[xxx] Ostry, Jonathan D., et al., “Neoliberalism: Oversold?” International Monetary Fund, June 2016, Vol.53, No.2, available at http://www.imf.org/external/pubs/ft/fandd/2016/06/ostry.htm.

 

 

At the Crossroads: Universal Basic Income, Revolution, or the Slow Fade into Oblivion?

If we can solve the problem of wealth inequality, America’s decline is not a foregone conclusion

Glen Olives Thompson

With the cascade of problems we face as a nation – arguably more than at any other time in history – I often ask myself a simple question: If we could change one major crisis that would have a positive domino effect on other problems, and that has at least a puncher’s chance at some bipartisan support, what would it be?

The great destroyer of world civilizations has traditionally been wealth inequality (another being natural resource depletion, and not surprisingly the two are closely related). Walter Scheidel in his new book The Great Leveler: Violence and the History of Inequality from the Stone Age to the Twenty-First Century, argues convincingly that calamities and mass violence (by way of war, revolution, natural catastrophe, implosion of the state, or disease) are the only forces that have reversed this general trend toward inequality. When the playing field is leveled though, inequality resumes its slow creep towards unsustainability until the next crisis erupts.

The historical evidence for this thesis is well documented by Scheidel, but I argue that peaceful and prosperous transitions to more equitable societies are not out of the question either.

During the deepest and darkest hours of the Great Depression, during the long interregnum before FDR’s inauguration when inequality was at its apogee in America, we were balancing on the cusp of both violent revolution and ecological disaster, with many calling for the new President to assume a dictatorial role and declare martial law. Instead Roosevelt (with notable political support from both sides of the isle) implemented the New Deal with radical new ideas for a capitalist welfare state. Disaster was avoided, socioeconomic safety nets that we now take for granted put into place, and a half century Risorgimento took root, dramatically reducing wealth inequality. The three billion trees planted by the FDR’s “tree army” also set down roots. The Civilian Conservation Corps employed 3 million men and also developed 800 state parks, protected 20 million acres from erosion, and cleared 125,000 miles of trails.[i] These monumental achievements were accomplished wholly absent a profit motive, and it is hard to imagine how a profit could have been made through private industry doing the same thing. The nation was saved what very well could have been a crisis of epic proportions – a premature end to the great American experiment of democracy and capitalism.

And yet we once again find ourselves in a disturbingly similar situation, only that in many respects it is much worse.

Despite positive economic growth and full employment, the middle class continues its slow march of the cliff of neoliberal economic policy into a cold and sunless sea. As this graph from a working paper authored by Thomas Piketty, et al., indicates, income for the wealthiest .0001 percent of Americans soared 636

Source: Chicago Booth, Thomas Piketty, et al.

percent in the last 34 years, while the bottom 50 percent saw zero gains.  A demographic that was once the backbone of America – working class white men – is killing itself softly with opioids and alcohol, or not so softly with self-inflicted pistol rounds through the roofs of their mouths. Higher education shackles young graduates with debt. Our infrastructure is crumbling. Our (the world’s) environment is degrading to a point of no return. A revivified war on drugs that will refill our private for profit prisons for people accused of possessing certain plants, and a concerted roll back of established civil rights policies will foment further discontent among minorities. Our President is a cognitively compromised laughingstock of the world, a perfect case study for the Dunning-Kruger effect.

People are nervous, unhappy, agitated, lashing out. Hate crimes are on the rise, and it’s becoming increasingly common to publicly berate (or kill) people for speaking a language other than English, or looking not quite white enough.

Yes, that’s the overall pulse of the nation — lashing out. And lashing out also means electing an obvious moron and purblind, preening real estate broker pretending to be a potentate, who promised everything at the cost of nothing, but most of all to shake things up in Washington. Well, he’s done that. And the chickens have come home to roost. The people who voted for Trump were hopelessly ignorant, misguided, racist, mentally ill, and misdirecting their animosities by shadowboxing ghost villains for problems they had nothing to do with, or some combination of the above. Sorry, but fuck them. They will suffer more than anyone in post-apocalyptic America while Trump laughs himself into the foggy retirement of senility, farting through silk pajamas poolside at Mar-a-Lago with a non-alcoholic Pabst Blue Ribbon at arm’s reach.

But enough with schadenfreude (not unlike crack cocaine, it gives an intense high but fades quickly).

Yes, lashing out, but it’s not just the ocean of unwashed and undereducated illiterati, marooned in a recursive cycle of poverty, in a perpetual winter of discontent, victims of the happenstance of their birth. The Left is having its fun too: protests, sit ins, marches, pussy hats, unprecedented fund raising for progressive candidates. And the state of America’s malaise is making liberal late night satirists millions.

Everybody is pulling their hair out in the final stages of a Nietzsche-like insanity, or aimlessly wondering around Borges’ “Library of Babel,” trying to decode ancient conservative wisdom that is nothing more than gibberish, reminding me of the last stanza of Donald Hall’s poem, “The Times are Propitious”:

But from A.D. 300, for a millennium, every daughter knew less than her mother, every son less than his father. Now, as we dispute over the exact moment when we engaged this autobahn downward again – hurtling in a tinny Cadillac fueled by idleness, greed and superstitions – our great-grandfathers (the ones who could read and write) drape themselves white to hear our diminished chicken-cackle language in the parliament of fools.[ii]

We’re in a bad way, to be sure, but what to do? As luck would have it, everybody seems to have an answer; we’re spoiled for choices. Paul Ryan believes that the nostrum of cutting taxes for the richest of us will unleash a “trickle down”

Credit: slayerment.com

economic boom, the incoming tide raising all ships, despite the fact that this has never actually happened when tried. (So much for unrequited love affairs with Ayn Rand.) Mick Mulvaney thinks that feeding hungry children doesn’t show results. Betsy DeVos thinks that private for profit charter schools and private for profit private universities are good ideas, despite their historic failures. The Trump administration thinks that any eventual infrastructure spending should be farmed out to the more efficient private sector by way of government contracts and public-private partnerships, and that social welfare programs only make people dependent and lazy, paying homage to the shibboleth that the only thing that can save us from ourselves is laisse faire capitalism (preferably in its most radical hyper-capitalist form) and neoliberal economic policy.

Of course only Ben Carson can reach the upper limits of asinine unintelligibility normally claimed as the untrammeled terrain of his boss, by positing that being poor is just a state of mind. (I make the controversial claim that neither hunger, nor violent crime, nor lack of access to education nor employment opportunities, much less adequate housing, are mental states.)

The man responsible for running the Environmental Protection Agency, Scott Pruitt, still won’t contradict Trump’s assertion that climate change is a hoax, and not surprisingly he doesn’t want to spend any money trying to combat it. The list of bad ideas is long and ghoulish, as are the “solutions,” but if you’re a liberal, you should poor yourself another Boulevardier before reading further.

Yes, the Trump administration is doing its best to turn a once flourishing democracy into a third world kakistrocracy/kleptoracy/plutocracy trifecta of bad government. But as it turns out, liberals can be pretty stupid too. People who think that vaccines cause autism? Mostly liberals. GMO’s cause cancer? Mostly liberals. It’s perfectly acceptable to exclude (viz. censor) people from speaking at your university because you disagree with their ideas? Exclusively liberals. It’s racist to celebrate Cinco de Mayo if you’re white? Exclusively liberals.

But while liberal sociopolitical ideas are often captious in the extreme, they are not largely calved from the umbilicus of ideology; indeed, liberals tend to be more pragmatic on policy positions, often building special interest coalitions, and rely heavily on social science data. Conservatives lend their fealty almost exclusively on ideological purity and “common sense,” (despite the fact that common sense policy solutions are almost always completely wrong) and deride their fellow conservative travelers who deviate even slightly from the party line. Any conservative leaning toward reasonableness is cock-blocked by the alt-right guardians of the holy conservative ideological virgin of cupidity. Their policies are palliative salves to soothe the wounds of a failed idea in order to save an idealized halcyon Norman Rockwell America from an ever changing world, but they are no cures.

Credit: Democraticunderground.org

Which brings me to the central problem of increasing wealth inequality in America. One thing that both liberal and conservative leaders have largely agreed upon for the last three and a half decades is neoliberal economic policy and its cognate of globalism – the idea that the tide of unfettered markets, free trade, low taxes for “job creators” and a minimalist welfare state – will benefit all participants within the political economy. Despite being cloaked in the raiment of academic language by the likes of one of its founders, Milton Friedman (among others), it isn’t science; it’s simply blind troth in a failed dogma. It’s intuitive, I’ll give it that (which is perhaps why so many poor conservatives have until recently supported it) but it has no basis in reality, which is why it isn’t even good enough to be labelled social pseudoscience. Not surprisingly, it has never worked. It didn’t work in the Gilded Age. It didn’t work when Reagan tried it, or Bush the Smarter, or Clinton, or Bush the Dumber, or Obama. Nothing trickled down. It never even dribbled. The middle class continued its downward trajectory on the autobahn of idiocy through Republican and Democrat presidents alike, and the rich simply moved their money overseas or lobbied for loopholes to avoid paying taxes instead of creating jobs; after all, the wealthy may be myopic assholes, but they’re not dumb (or at least not most of them). Thomas Piketty’s meticulously researched work showed us that the richest 1 percent of households in the US received less than a tenth of all income in the 1980s, compared to more than a fifth in the 2013. Professor Steven Pressman of Colorado State University has mined the comparative economic data from 9 countries, and has made some startling conclusions. Namely, during the same time, the middle class in socialist counties such as Norway and France, routinely derided by Conservatives as stagnant remnants of “old Europe,” have been steadily gaining ground.

Simply put, we made a mistake. We were almost compelled to, because the argument was so irresistible, so intuitive, so elegant. Of course it’s also compelling that the Earth is the center of the universe and the sun revolves around us, after all we can see the sun rise and set every day, but we know this not to be true, and have no trouble rejecting geocentrism because it is so easily divorced from political dogma.

The best economists and public policy experts get it. Joseph Stiglitz gets it, as does Robert Reich, Paul Krugman, Bernie Sanders, among others. Conservative political and business leaders by and large do not, nor do most of the 1 percent. They, presumably, have been gavaged the fiction of the free market for so long that it has become part of their permanent mental furniture. Or they just don’t care and have bought into the get-what-you-can-when-can-by-any-means-you-can ethos, the world be damned.

Whether it’s the former or the latter, it doesn’t really matter. It’s the perfect policy prescription for creating a failed civilization. We know that neoliberalism is sending the middle class the way of the Dodo, while the poor are already living a daily reality devoid of the hope in a better future. But the real life policy implications are not limited to economics.

Often the privatization of formerly public services means raising prices to consumers while providing poorer services – as long as a profit is made, and they have a very powerful bipartisan lobby.

As Anis Shivani wrote recently:

Neoliberalism believes that markets are self-sufficient unto themselves, that they do not need regulation, and that they are the best guarantors of human welfare. Everything that promotes the market, i.e., privatization, deregulation, mobility of finance and capital, abandonment of government-provided social welfare, and the reconception of human beings as human capital, needs to be encouraged, while everything that supposedly diminishes the market, i.e., government services, regulation, restrictions on finance and capital, and conceptualization of human beings in transcendent terms, is to be discouraged.

One way to sum up neoliberalism is to say that everything—everything—is to be made over in the image of the market, including the state, civil society, and of course human beings. Democracy becomes reinterpreted as the market, and politics succumbs to neoliberal economic theory, so we are speaking of the end of democratic politics as we have known it for two and a half centuries. As the market becomes an abstraction, so does democracy, but the real playing field is somewhere else, in the realm of actual economic exchange—which is not, however, the market. We may say that all exchange takes place on the neoliberal surface.

Shivani goes on to recite examples of neoliberalism’s insidious results:

And this explains why the 1990s saw the simultaneous and absolutely parallel rise, under the Clintons, of both neoliberal globalization and various regimes of neoliberal disciplining, such as the shaming and exclusion of former welfare recipients (every able-bodied person should be able to find work, therefore under TANF welfare was converted to a performance management system designed to enroll everyone in the workforce, even if it meant below-subsistence wages or the loss of parental responsibilities, all of it couched in the jargon of marketplace incentives).

The actual cost to the state of the AFDC program was minimal, but its symbolism was incalculable. The end of welfare went hand in hand with the disciplinary “crime bill” pushed by the Clintons, leading to an epidemic of mass incarceration. Neoliberalism, unlike classical liberalism, does not permit a fluidity of self-expression as an occasional participant in the market, and posits prison as the only available alternative for anyone not willing to conceive of themselves as being present fully and always in the market.

Shivani’s depiction of neoliberalism might seem a bit too Orwellian, but when one takes a very close look at the economic lives of average Americans, it turns out to be pretty much spot-on, if not even slightly understated, especially if you consider that increasingly, even active participants in the economic life of the country don’t have it much better. Because of neoliberalism and its natural corollary effects of corporatism, hyper-capitalism and the worship of efficiency, wage growth has been decoupled from economic growth, meaning that the long term trend is for the economy to continue to grow while wages continue to fall, adding millions more people to the ranks of the dystopiate underclass: people who are no longer employable or needed by the economy, or if needed only marginally so, a precariat population surviving hand-to-mouth, or in the case of private prison labor, reduced to peonage.

The exponential growth of technology, especially automation and artificial intelligence (47 percent of current occupations will be gone in 20 years according to the now-famous Oxford study), is accelerating the problem into a full blown and very real civilizational crisis. Remaining jobs are increasingly being crowdsourced to contractors on a per-project basis, saving corporations billions of dollars in labor costs.

There is no colorable argument that the current economic policy of the country could possibly result in the reversal of the incontrovertible trend of growing wealth inequality, notwithstanding the “chicken-cackle” ruminations of Ryan and Mulvaney. Been there and done that, and that dog just won’t hunt.

In 1930 John Maynard Keynes predicted that advances in productivity would continue to such an extent that in 100 years most of humanity would no longer have to work.[iii] I suspect that he was right, leaving us, though, with a troubling question: What are all of these idle or semi-idle people to do to sustain themselves, to live meaningful lives, to prosper within an economic system that does not need them, and indeed sees them as a burden rather than a resource? What products can people purchase who have no money? How will companies sell their products? Envision of world of super-managers, who supervise the assignment of tasks to machines or, decreasingly, to a few lucky humans. It’s difficult to envision this world as a good one, a just one, or a world in which life is worth living. I worry for my children.

Weary of being ignored by a global hyper-capitalist economic system that has promised everything and produced nothing for its average population, political populism is on the rise across the globe – from Trump in America, Duterte in the Philippines, to Britain’s Brexit vote. If history is any guide, things will get worse by an order of magnitude before serious change occurs. History is whispering in our collective ears, but it seems few are listening.

You Say You Want a Revolution? What About Universal Basic Income Instead?

The Republican party is the party of corporate America, and has been for a century. But its power using simple slogans, platitudes and tropes – the effective application of mass corporate advertising for political purposes – to convince the poor and middle class to vote against their own interests, and the purchasing of politicians like so much chattel, cannot last forever. At some point even the dumbest of the dumb will call bullshit on this longest of long cons.

Assuming this will happen (an assumption that is not wholly justifiable), how might we reverse course absent revolution or simple collapse of the state into The Hunger Games writ large? It seems apparent that there only two options. One would be the dismantling, the reverse engineering, of neoliberalism and the global economic system, a triumph of the Luddites, and also a pipe dream. Absent a physical world calamity such as plague, meteor strike, or the increasingly likely collapse of the global ecosystem, this will never happen, for reasons that hardly need articulating: world economic collapse, resistance-to-the-death by world plutocracies, impracticality, chaos. A cure worse than the malady. The preferred option, the option that could lead to unprecedented human flourishing, prosperity, and happiness, would require no more than letting hyper-neoliberal capitalism turn its swag on, and scrapping most of what we know as the welfare state, transitioning to a form of Universal Basic Income (UBI).

The economic and ideological objections from the Right are both easily anticipated and easily refuted. They principle economic objection is that we simply can’t afford to just give people money. The principle ideological objection is that it would rob people of motivation, promoting a culture of sloth, inefficiency, and idleness, killing the human spirit and robbing our civilization of innovation that only the competition of tooth and claw can provide.

The latter objection is the easiest to dispose of, as it is largely based on myth, which is in turn based on political and economic ideology, which almost always bound to be wrong because it a false representation of reality – the map is not the territory, as they say. The belief against all evidence that man’s natural state, when given minimally sufficient resources to survive, is idleness, is perhaps one of the biggest frauds ever perpetuated on the citizenry of the planet, hardly good enough to be classified as a myth. Even a cursory look at history amply demonstrates this: the vast majority of people born into comfort are not satisfied with their patrimony, but rather strive forward into public service, business, academics, the military, or any other number of productive ventures. Why should the poor be any different? As it turns out, they are not. A notable 2015 Berkeley study found 56 percent of working families were dependent on some form of state and/or federal public assistance. Why are these “welfare dependent” slackers working? Because idleness is uncomfortable and boring (and corporate lobbyists like artificially low wages so taxpayers can pick up the tab for the real costs of labor). If it were in our nature, we would have never gotten off the African savanna. Yet the plutocrats who openly despise the poor complain that either they are to blame for not having the discipline to update their skills or decry that there are not enough work programs for them to take advantage of. But they conveniently ignore two important facts. First, many of them have certain cognitive limitations that cannot be overcome through education, through no fault of their own: not everyone is capable of writing code or operating on brains, no matter what educational opportunities are afforded them. Second, what good is it to update one’s skills if those skills are no longer, or will no longer, be of any economic use to anyone?

An illustration by way of another thought experiment may be in order. Suppose that you were guaranteed a basic tax free income for life. Not enough to afford vacations or new cars, but enough for food, housing, and health care – enough for a minimally dignified life just above the poverty line. Would you simply quit your job if you had one, and content yourself spending your days in your Barcalounger, watching basic cable? I don’t think you would. I know that I would not, and I believe that neither would most people. You would keep your job, or go back to school, or start a business, or do volunteer work, or write that book that’s always been on your mind, or any other number of productive endeavors. Of course one can find lazy, unambitious people within any socioeconomic class, but they are the exceptions, not the rules. Thus, UBI could lead to the flourishing of the human potential, and a win-win for corporatocracy, which would have a guaranteed continuation of consumers to purchase its products and services.

Now to the former objection that we couldn’t afford UBI and it would bankrupt the treasury. A simple look at the numbers dispenses this assumption in rather short order. According to the conservative discoverthenetworks.org, an organization that claims to be “a guide to the political left,” as of 2012, spending on means-tested welfare spending (which doesn’t include programs that workers pay into such as social security and workers compensation among many others), comes to $956 billion per year. This is administered through an enormous (and expensive) bureaucracy, consisting of no less than 80 welfare programs, providing for an average distribution of some $9,500 per family annually among some 100 million people. Why not scrap this bloated bureaucracy altogether and move to UBI? Make no mistake, it would be more expensive, though one must consider what we’d be getting for our money; namely, socioeconomic stability and a continuation of the laissez faire quasi-socialist economic hybrid model we currently operate under, but one that benefits all Americans, not only her wealthiest.

Support for UBI has come from surprisingly diverse political persuasions. Friedman, Friedrich Hayek, Richard Nixon, George McGovern, Martin Luther King, Jr., the conservative Heritage Foundation, and many of the Silicon Valley cognoscenti have endorsed the idea, as have some prominent liberals, although it doesn’t have a prominent spokesperson in either party, undoubtedly because it is not a natural ideological fit for either. Liberals who oppose it are suspicious that Libertarian-leaning conservatives like it, and they’re naturally inclined toward big government paternalism. Conservatives who oppose it do so based almost entirely on ideological reasons – the no free lunch, personal responsibility crowd. But wouldn’t a reduction of welfare state bureaucracy and a dramatic simplification of social welfare programs be a good thing to entice conservative support? Moreover, with regard to the personal responsibility issue, there could be no more whining from the poor about the unfairness of the economic system: spend your money on food and rent, or box wine and meth as you like, but don’t complain that is isn’t enough.

The Devil is, as always, in the details. Some think people from top income brackets should be excluded because, after all, they don’t need it. In my view this would be a mistake. It would only feed the ideologues the ammunition of “I don’t rely on the government, I rely on myself” poppycock. I wish it were a world where we wouldn’t have to anticipate arguments and objections based on ideology, but we must live in the world we have, not the one we wish we had.

The Closing of the Wealth Gap, Bottom Up

There is little question that a real system of UBI would reduce economic inequality. It would also be expensive, some estimates going as high as $3 trillion per year, largely by raising taxes on the rich. There could be no hiding the fact that this would be wealth redistribution. But so what? We already have wealth redistribution, as Piketty and his colleagues have demonstrated, from the working poor to the rich. More importantly, most studies conclude that it would be a boon to the economy through increased spending (this obviously would help wealthy corporations as well as wealthy individual shareholders), increase entrepreneurship, eliminate poverty, and among other positive things, improve health and education, especially among children.

There are other ways to close the income gap from the bottom up as well, such as dramatically raising the minimum wage, which the best studies conclude would benefit the economy without reducing employment. It would also be less expensive – even revenue neutral – but it would not have nearly the comprehensive impact on the economy and society as a whole. Increased automation and out/crowd sourcing naturally results in fewer minimum wage jobs.

Which brings us full circle, back to the ultimate question of how more income and wealth equality, and almost by definition resulting in an expanding rather than retracting middle class, would affect the other major problems America faces. Because there are no studies on point, this of course requires some thoughtful speculation about what would happen if and when we return to the perihelion of prosperity.

Nervous, unhappy, agitated, lashing out. The angst of the precariat is palpable. What if that pressure was released? The following conclusions are, I think, self-evident. In this economically stable world envisioned with UBI, non-college educating working class whites would be less inclined to blame immigrants and minorities for their own perceived and real lack of opportunities. People would be inclined to embrace alternative clean energy instead of making it the bogey man of progress. Hope is the real tide raising all ships, not economic the legerdemain of hyper-capitalism, and the body politic would begin looking to the future as it once did, and not to the imagined past. Race relations would improve, and its roots in tribalism would diminish with the leveling of the playing field. With the lower economic risk of seeking further education or investing in a business, it is hard to imagine individual flourishing not taking place. Other scapegoats for lack of opportunity would fall like brittle trees as well, namely financial and environmental regulation. Conspiracy theories would be less attractive (what’s there to conspire about?). Citizens would be more inclined to vote for leaders really interested in public service and not puppet populists with shit for brains.

UBI would not be a panacea, and it would not lead to utopia, but it very well may keep us from a full blown dystopia, and a violent revolution, going out with a bang, or a whimper, as you please. In short, it would give us some breathing room, allow us the relief that comes from a sense of stability, and with it, the ability to engage in clear thinking, unmolested by our darkest fears.

Civilizations that do not evolve, that rely on the old ways, the old ideologies and dogmas that made them great while resisting change, are gone. Just ask the Sumerians, the Egyptians, the Romans. If it is inevitable that we learn from history that we do not learn from history, as Hegel postulated, then we might as well consign ourselves to being fodder for future generations of archeologists. I’m not quite ready, though.

I like data. Much of the section above is devoid of data because good data on the effects of UBI don’t exist. My armchair musings are not my fault, but rather the fault of the danger of UBI to conservative governments. Forty years ago in Dauphin, Manitoba, the then liberal Canadian government experimented with UBI. When a conservative administration took power, the experiment was ended and the data archived. Only recently have the 1,800 boxes of records began to be studied by social scientists, and the results are striking. People receiving UBI didn’t stop working, hospitalizations for mental health issues dropped precipitously, and people started businesses or went back to school. Currently, five governments from around the world are experimenting with UBI on small population samples. I’ll go out on a limb and predict that when analysis of the data comes in, it will be overwhelmingly positive, both in terms of the socioeconomic wellbeing of the recipients, the cost to taxpayers, and the overall economy. Stay tuned.

But make no mistake, a reversal of the national course of growing wealth inequality will resolve itself eventually even if we do nothing. Professor Scheidel has convincingly shown us that. If human caused global climate disruption does not thin the herd sufficiently, something else will. But we need not rely on natural disasters, plagues or revolutions. We’ve done it before with policy changes, and we can do it again. A big idea is required. An idea that both has a chance at bipartisan support, and to serve as platform for other progressive reforms. The alternative of going down the same road we are on, in that tinny Cadillac into the parliament of fools, chicken-cackling as we deliquesce into oblivion, seems a poorer option.

In short, opposition to UBI is an ideological problem, not an economic one. Adopting it would require a paradigm shift in political thinking, or better yet an abandonment of political ideology altogether. And for that reason I am not hopeful.

***

[i] Alter, Jonathan, The Defining Moment: FDR’s Hundred Days and the Triumph of Hope (New York: Simon & Schuster), 2006, p. 299.

[ii] Hall, Donald, The Museum of Clear Ideas (New York: Houghton Mifflin), 1993, p. 62.

 [iii] Keynes, John Maynard, Essays in Persuasion, New York: W.W. Norton & Co. (1963), pp. 358-73.

We Can’t Un-Ring the Bell: Sanders’ Ideas are Here to Stay

To dream the impossible dream.

Sanders

To convince poor, undereducated, socially conservative white males to stop voting against their own interests, to spark in them the temerity to question the lie of laissez-faire corporatism to which they have been so long been gavaged that it has become a part of their mental furniture.

To ignite that single sickly synapse toward a single simple thought: What if the GOP pandering, sloganeering Orwellian economic doublespeak somehow wasn’t true? The horror.

We’ve all seen the Facebook posts from our conservative friends: the problem with socialism is eventually you run out of other people’s money; taxing the job producers will make us all poor; if you vote left you’re not thinking right; I’d rather be a conservative nut job than a liberal with no nuts and no job, ad nauseam. Empty platitudes passed off as wisdom.

But the hard seed of truth may have finally germinated. Whether it will be choked out by the weeds of failed economic ideology remains to be seen, but I doubt it.

Many conservatives are now openly wondering whether or not free market capitalism in its uniquely American form is really a good thing for the working man and woman. And one need not tread too deep into the thistles of economic theory or read Krugman and Reich, or for that matter Piketty. Growing wealth inequality, growing income inequality, the evaporating middle class, and our political transmogrification from a representative democracy into a plutocracy, is all over us, palpable like an infected boil turning necrotic, no longer confined to a remote academic debate or a partisan pundit’s table. No longer sequestered, no longer able to hide behind the anecdotal stories of bootstrap entrepreneurs moving from yokeldom to yachtsdom. Those happily-propagated myths are mostly a century old, and reality has caught up. We’re living in the world of Augie March. And we know it.

We see it in our neighbor’s faces, the forced smiles and tired-distant stares of people half-engaged in banal small talk about the weather, but really preoccupied with credit card bills, of making the rent payment, of getting kids into college, and increasingly often, food on the table. People who have voted Republican their whole lives and are now reassessing Reaganesque coming-of-age political dogmas. People who hated Bill Clinton for staining a dress are now uneasily waxing nostalgic about the no-deficit upwardly-mobile Clinton economy, before crowdsourcing and the replacement of humans by robots.

The power of conservative rhetoric and outright sophistry may have met its limit, the convincing right wing legerdemain finally encountering a wall constructed from the concrete of empirical fact and the rebar of personal experience. You can only for so long tell people that the earth is flat before they start wondering why it appears, at the very least, curved. The sad thing is that this took so long, that things had to get so bad, that telling wasn’t enough, showing wasn’t enough, that actually experiencing dystopia up close and personal was needed. It took working two jobs and still qualifying for SNAP to convince us of the truth that book learning could not.

Are these wishful musings of a progressive? Perhaps. But Bernie Sanders is leading Hillary Clinton in recent New Hampshire polling, and closing the gap in other states as well. That’s not surprising. Nor is it surprising that Sanders has grown increasingly popular among the conservative punditry, undoubtedly for ulterior motives having to do with Hillary, and the misguided belief that he couldn’t win the general election. What is surprising, however, is that Sanders is beginning to poach conservative votes. So far the evidence is mostly spotty, but one might expect that to change if the current trajectory continues.

Few now think that our trickle-down economic model (either by design or chance, take your pick) is working for the middle class and the poor. The conservative argument that if you just free the market from regulation, let it turn its swag on, and lower taxes for the “job creators” then all would be right with the world. This perfidious view has had a century to take root, to prove itself, and it has failed, demonstrably. Wall Street capitalism has been touted by the right and, at the very least, tolerated by the neoliberal left, but the evidence is in, and in hillbilly vernacular, “That dog just won’t hunt.”

The common view is that Sanders’ populism is the left’s version of Trump’s, and that both will fade. The chance of that happening seems small. The rise of Sanders and Trump, and their apparent staying power, are here to get used to, for very different reasons.

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Trump’s populism is of the basest kind: the roots derive nourishment from the self-serving cognitive biases of tribalism and hyper-nationalism. Foisting our anxiety upon the great unwashed underclass for our self-made troubles, packaging fear as policy, is an easy sell. It requires little thought and no analysis. Sanders’ populism, however, feeds not upon the empty calories of shameless pseudo-dangers and hectoring, but rather hard facts; facts that are easily demonstrable in everyday American life.

Horse-race political pundits may dismiss both Sanders and Trump, but keep in mind that they’re wrong most of the time.

True, money is king in American politics. But don’t count-out reason just yet. I’m sanguine by nature. If Bernie Sanders does not become our next president, so be it. He’s already changed the debate. And he’s not done it by way of hyperbole or the cult of personality or Ben Carson-like fumfering barely-intelligible outworn slogans. He’s done it by reasoned argument. He’s done it by pointing out what should have been obvious. He has opinions and ideas to be sure, but unlike his opponents’, they are based on verifiable fact, and not psychologically comforting mythology.

The “class warfare” meme of Fox News is waning. Socialism still carries an underserved stigma, still carries with it an unnatural conflation with communism, still triggers an negative emotional response with conservatives, but it  is no longer tantamount to the F-word (France). What most conservatives don’t realize, of course, is that we’re already a quasi-socialist country. The social security system, for example, is overtly socialist: if you receive more than you paid into the Social Security Trust fund, which you likely will, you’re a socialist. If you pay property taxes but don’t have kids enrolled in your local public school, you’re a socialist. The list of socialist programs is long and obvious. And the rich, along with corporations, like the system the way it is. They take advantage of not only special tax breaks, loopholes, and subsidies, but also the working poor: public assistance for the laboring classes lets corporations get away with paying a lower than living wage. On the backs of taxpayers.

If a paradigm shift is to occur in our body politics’ collective thinking about economic policy, now is the time. Putting off the inevitable by electing a “safe” candidate will surely result in our further, perhaps endemic, decline as a nation, as a civilization.

And that sea change is already happening. There is a growing grassroots movement, led by Sanders and Elizabeth Warren, among others, challenging the obvious: trickle-down economics doesn’t work for the poor and middle class, in fact, money doesn’t trick down at all, it concentrates at the top, and when top earners make more, it actually slows the economy. What we need is a trickle-up model, where actual living wages are paid to workers, who then spend that money within the economy, creating more demand, and more jobs. Suffering, always having had a voice, is finally being heard.

 

© 2015 by Glen Olives.