Critique #1: People Won’t Want to Work

The first is that “people won’t want to work.” This is sort of true: People won’t want to work at shit jobs, unless you pay them a lot to do it. Which is kind of obvious. I mean, if you have a decent job right now, how much of a raise would you want to accept having most of your job responsibilities switched to shoveling feces? I’m guessing you’d want a not-small one.

But then, why do people whose actual job is to shovel feces get paid so much less than you do?

The answer is simple: They get paid less because the only people taking that job are people who have no choice. You can make feces-shoveling a low-paying job if, and only if, people can be forced into it. And a universal basic income would break that.

The reason it breaks that is all about this curve, which roughly plots how good your life is as a function of how much money you have.

Basically, whenever something goes wrong in your life, how serious it is depends on whether you have enough money to cover dealing with it. For some things, no amount of money will help — if your spouse is killed in a car crash, if you are hit by a meteor. For other things, even a small amount of money makes a big difference; for example, a flat tire is an inconvenience if you can get it fixed, but a disaster if you can’t afford a cab and this makes you late to your shift job, which means you get fired.

The most important measure of your wealth, in a lot of ways, is how much of a shock it would take to cause the negative consequences to spiral out of control, and how often such a shock is likely to hit. If the cost of a flat tire is enough to cause a major disaster for you, you’re poor; shocks that big happen all the time. If the cost of a cancer diagnosis is catastrophic, you’re in an unstable middle class; that may or may not hit your family. If virtually nothing can destroy you financially, you’re rich. What this boils down to is the curve above. Money doesn’t, in fact, buy happiness: People’s reported life satisfaction levels out once you go above a certain not-too-high wealth threshold. But poverty can buy you one hell of a lot of misery. Specifically, it can put you in situations where you have to do something that will harm you badly in the long term in order to survive the short term.

In terms of the wider economy, someone who has to accept a long-term loss to survive the short term is in a very weak bargaining position — and that sort of weak bargaining position is exactly what breaks the free-market hypothesis that “trade makes everyone richer.”

To explain: If two people engage in free trade, swapping cheese for chalk or whatever, then by definition they both come out happier, because if they didn’t, they wouldn’t have engaged in that trade. This observation goes right to the core of why markets can work so well, and why they increase both the total wealth of society and the individual wealth of people in it.

But that statement has a very important “if” in it: that the trade is free. If two people have radically different negotiating leverage, that “if” ceases to work. One person can demand that the other person give up nearly anything, enriching themselves in the long term at the expense of another person, not to their mutual benefit. Worse, if wealth is a form of power (it always is), this can lead to the negotiating imbalance getting worse over time, creating a feedback loop that ends in absolute monarchy.

A universal basic income breaks this in a fundamental way, as does socialism in any form. Basically, if people have enough access to the necessities of life that they aren’t on the steep left edge of that curve, be that access in the form of cash payments or universal access to housing, health care, and so on, then nobody is going to take a shit job unless they are paid enough to make it worth it.

This would overturn the status hierarchy of our world very deeply. Right now, the hierarchy of jobs by how much wealth they get you is roughly:

Jobs where you can directly tap into existing large concentrations of wealth and take some for yourself. Jobs which are very supply-limited, so people who can do them are in high demand. “Ordinary” jobs, not in any other category. Terrible jobs, which people only take if they have no other choice.

With a universal basic income in play, suddenly a “terrible” job turns into a job limited by finding people willing to do it, and so suddenly you end up with:

Jobs where you can directly tap into existing large concentrations of wealth and take some for yourself. Jobs which are very supply-limited, either because not many people can do them or not many people are willing to do them, so people who can do them are in high demand. “Ordinary” jobs, not in any other category.

Basically, you could find sanitation workers getting paid more like professionals. Right now, if you’ve got a job in group #3 or #4, and you want a job in group #2, tough luck: There aren’t many people who can do them, and access to the training is often limited and expensive. Your best chance of getting a group #2 job is to start out with parents with a group #1 or #2 job. But in a post-universal basic income world, there are plenty of jobs that anyone could do in group #2. You want to be paid more? Sure, you just have to take on a nastier or harder job. You can make that trade if you want.

It’s much more meritocratic than the world we’re in right now, and pulling us away from the uneven-bargaining loophole in the free-market hypothesis means that far more exchanges satisfy the rule of “everyone profits.” So one would expect overall societal wealth to go up. (One would also expect overall wealth to go up because things like “people dying of preventable diseases” or “people not being able to work very well because it’s hard to get a good night’s sleep on the streets” are deadweight losses to everyone, decreases in productivity that have no compensating increase.)

So what this shows about the first critique of universal basic income is that it’s really far more complicated. It’s not that people won’t want to work; it’s that wages for jobs which had previously been very low might suddenly become very high, and so there’s going to be a reshuffling of job value.

Don’t underestimate the significance of this. A very robust finding in behavioral psychology is that people are overall okay with changes in wealth and power, unless those changes cause swaps in relative status between people. Suddenly moving from the top to the bottom, or even just down one rung, is a scary business. If we want to implement anything that looks like a universal basic income, we need to think very seriously about how people will deal with that.

Critique #2: We Can’t Afford It

An obvious critique is: “How would we pay for it?” This argument makes a lot of sense if you think about a basic income as a small perturbation of our current politics, but it falters if you zoom out for a moment. If you measure the net wealth of our society, it’s increasing rapidly. This is a graph of the U.S. net domestic product (GDP less capital depreciation, a good if rough measure of total wealth production per year) since 1930, courtesy of the Federal Reserve Bank of St. Louis: