The Subversion of Property Rights




Introduction


Government is not a producer. Its beneficence is subsidized by the citizens its actions ostensibly benefit. Whatever government gives it must first have taken. This taking is not a volitional act; government’s commands have the force of law behind them (which a citizen ignores at his own peril). His objections of conscience mean nothing when government seizes, by means of direct taxation, the wealth he has labored to accumulate and puts it so some end with which he fundamentally disagrees. The problems of direct taxation are therefore twofold: they run roughshod over the individual’s right of conscience (potentially forcing him to fund that to which he is morally opposed) and they undermine private property rights. Direct taxation is an act of assertion; it is government staking claim to the income the individual has worked to secure, suggesting the individual only has a right to monies that, by his own labor, becomes his private property after he has satisfied the government’s demands.



UBI reinforces the notion that legal income is rightfully subject to governmental control. There are no means of assessment by which the funds for UBI can be raised that do not undermine the right of private individuals to their earned property.


The Economic Case for Universal Basic Income


Universal basic income is that rarest of political concepts: a proposal that enjoys support from both left and right. That the idea has support on the political left is hardly surprising: the idea that government is better placed to manage and distribute resources for the good of its people than are private actors is among the most fundamental tenets of left-wing beliefs. But that those on the right, who fundamentally distrust government’s ability to do good, support UBI is more noteworthy.


But it is precisely because a universal basic income promises to reduce government that the policy sings a siren song for those on the right. In 2017, the United States federal government spent $4 trillion on welfare programs, a figure that amounts to 31% of the nation’s gross domestic product. Approximately a quarter of the budget (24%) for that fiscal year was spent on Social Security alone. And this is to say nothing of welfare programs administered at the state level. In 2016, 22% of states’ direct general spending, or $638 billion, was spent on welfare programs; roughly 96% of this went to operational costs (payments to providers such as Medicare).


The trend for government spending on human services (a term applied to the variety of welfare programs government provides) goes almost exclusively in one direction: up. A Pew Research study of data from the Office of Management and Budget shows welfare spending as a percentage of GDP has grown from approximately 1% during WWII to 15.5% as of 2017:


No wonder universal basic income is so seductive to those on the right; it promises to replace a vast network of regulatory agencies engaged in costly projects that, constitutionally speaking, are far outside the bounds of their authoritative mandate. A single cash payment, dispersed equitably to citizens without consideration of their circumstances. Traditional welfare programs enhance the discretionary programs of bureaucrats, giving them authority to determine whose privations are worthy of government-sponsored amelioration and whose fail to meet the measure. It is impossible to have rule of law when government is empowered to rate the needs of its citizens and use self-determined metrics to dole out support to people whose plight it has decided to champion. UBI, as libertarian advocate of the policy Michael Tanner writes, ostensibly puts an end to this unseemly system of patrimony:


“UBI is far less paternalistic than traditional welfare, which often treats the poor like 10-year-olds receiving an allowance. Rather than provide them with cash — which is what poor people actually need — we dole out a variety of specialized benefits, such as food, housing and health care. Government decides how the poor should budget and spend their money — not the poor themselves.”


The Philosophical Underpinnings of a Universal Basic Income


There are undoubtedly economic advantages to UBI, particularly when taken as an alternative to the all-consuming-behemoth that is the contemporary welfare state. But there is a tradeoff involved. Assuming UBI could be implemented in the way scholars like Tanner imagine, and assuming it, like Social Security, does not morph over time into a perennially under-funded political football that politicians (whose desire for short-term popularity) created and the long-term crisis is now coming to a head (and the policy solution necessarily involves further impingement of personal liberty).


At its heart, UBI reflects an age-old societal perplexity: whether to prize liberty or security.



As automation increasingly warps the stuff of traditional economic ground, the question of whether enough work exists to financially secure the average citizen becomes increasingly exigent. UBI is not fundamentally an issue of welfare looters and hangers-on to the federal teat, but the latest iteration of very traditional populist fears. Once, Midwest agrarian yeoman asked whether the Industrial Revolution was poised to obliterate their way of life. Now, the grandchildren of that era ask whether automation poses the same threat to their livelihoods.


This question is met by an affirmative “aye” by those who see the need for universal basic income. And, problematically for individuals who feel they ought to have the freedom to put their property to whatever ends they deem most useful, central authority is engrained in this answer. Universal basic income suggests that, left to its own devices, private markets—and particularly the individuals whose actions animate markets—will not be able to adjust for innovation. Government must step in and correct the flaws in the system, exercising its ostensibly superior judgment. This is a denigrating and paternalistic attitude. It is also necessarily restrictive. As F. A. Hayek noted in The Road to Serfdom:

Within the market system, security can be granted to particular groups only by the kind of planning known as restrictionism (which includes, however, almost all of the planning which is actually practiced!). “Control”, i.e., limitation of output so that prices will secure an “adequate” return, is the only way in which in a market economy producers can be guaranteed a certain income. But this necessarily involves a reduction of opportunities open to others.

Hayek is correct. And a universal basic income fundamentally rejects the market system, instead preferring to allow centralized authority to seek an answer in regulation. The control operative here is not direct. The egalitarianism on which universal basic income rests does not pose a direct threat to industry in that government is not seeking to place caps on the productive output of certain industries, a measure that might be used to boost job security.


Rather, the reduction of opportunities comes from the threat universal basic income poses to private income. Business thrives when individuals invest in them. But this kind of spending comes second to the need to put food on the table and pay the electric bill. Aggressive taxations limits investment, not payment for the necessities associated with day-to-day survival. This is true for individuals and for businesses.


The reduction of opportunities that comes from a universal basic income comes in the cash handout government would give to subsidize the lifestyles of its citizens. A guaranteed income is often painted as a measure freeing for individuals: by providing a regular flow of cash, the government provides security that not only alleviates fears associated with basic survival but makes the pursuit endeavors possible. In fact, the exact opposite is true.


A universal income, existing at a state or local level, would almost inevitably be assessed by direct taxation, presumably on income, as this would preserve the current administrative structure of government. And income taxation is a direct attack on the productive capacity of individuals. In assessing income tax, government is laying claim to a portion of what individuals, through their productive efforts, have earned. Not only is government asserting its right to private property, effectively rendering it the property of the government and not the individual who has earned it, but it is, by seizing wealth, limiting the resources individuals possess, which in turn limits the endeavors they might pursue.


Universal basic income is, at best, a tradeoff in productivity. An individual might receive a cash payout that allows them to fund some pet project, but they have also paid into the fund from which this money is disbursed, thus limiting their liquidity. This stricture is a cap not on essential personal spending but on creative endeavors. The fact that this stricture upon the individual’s productive capacity is applied equitably, because universal basic income is supposedly gifted to all citizens in equal measure, does not make it any less pernicious.


Conclusion


The charge that UBI would be an improvement upon the welfare state, as it currently exists, only has merits on its face. Yes, it is easier to keep track of a single cash payment distributed equitably to the citizenry than it is to keep track of Social Security payouts, Medicare benefits and the myriad other subsidies, and tax credits associated with welfare programs. But it is no easier to keep track of where the money that funds universal basic income is than it is to keep track of what agencies one’s income taxes ultimately fund. Economists like Milton Friedman, who advocated a negative income tax—a type of cash subsidy for the poor that differs from a universal basic income only in that its distribution would progressively favor lower income-earners rather than be distributed equitably—in Capitalism and Freedom, argued that such policies should be favored because of their transparency. “[A negative income tax] makes explicit the cost borne by society,” Friedman wrote.


This is correct in one sense: the true cost of this kind of welfare is much more transparent than is the miasma of government spending on human services. But the costs are not borne by the nebulous entity of ‘society.’ They are borne by private individuals whose wealth is seized by government in the form of direct taxation. This is true regardless of whether one favors a negative income tax or a universal basic income. Ultimately, private wealth must be seized in order for government to distribute it. This reinforces the idea that private property is something that government has the right to manage. And this effect is deleterious to the sovereignty of the individual. It flies in the face of protections, such as the Fourth Amendment, that protects property as something sovereign to the individual.



The concept of rights presupposes an individual who can own them. Property is fundamental to liberty. Any law that erodes property rights is deleterious to liberty. A universal basic income requires the seizure and subsequent redistribution of private wealth. Any economic good it might do cannot be offset by the wound done to the philosophical underpinnings of individual freedom.


Matthew Zink (Communism)

vs.

Katherine Revello (Classic Liberalism)


While I don’t take issue with Katherine’s general argument and conclusion (I’m also not in favor of UBI) I do have several bones to pick with specific points raised in her article.


Direct taxation is an act of assertion; it is government staking claim to the income the individual has worked to secure, suggesting the individual only has a right to monies that, by his own labor, becomes his private property after he has satisfied the government’s demands.

For proponents of UBI (as well as those raised by those on the far left) this argument takes a very different form that can’t be so easily discounted. In many debates I’ve witnessed between classic liberals/libertarians vs liberals they often seem to be talking past each other on this issue, and I believe it boils down to an issue of language and example. You would find few reasonable leftists who don’t agree that individuals who work hard should not be rewarded for their labour and innovations. The disagree, I find, stems from outliers.


When the left is talking about taxing the rich they are usually referring to those uber rich folks who didn’t “earn” their right to be there. The heirs of fortunes and even those who built their fortunes on the backs of working class folks whilst exploiting government programs like welfare like the Waltons (of Walmart fame) raking in 180 billion dollars combined while the company they run or profit from costs the taxpayers 6.2 billion a year in public assistance for their employees, not to mention tax breaks and other incentives the company receives).

https://www.forbes.com/sites/clareoconnor/2014/04/15/report-walmart-workers-cost-taxpayers-6-2-billion-in-public-assistance/


No wonder universal basic income is so seductive to those on the right; it promises to replace a vast network of regulatory agencies engaged in costly projects that, constitutionally speaking, are far outside the bounds of their authoritative mandate.


I’m not so sure that a program like UBI would be outside the bounds of a constitutional mandate. After all section Article I, Section 8, Clause 1 of the constitution states that:


“The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States.”


I don’t think it would be a hard argument to win that a program such as UBI can easily be covered under the “general welfare” portion of this clause since, especially compared to other government programs, that’s exactly what it is.


UBI is not fundamentally an issue of welfare looters and hangers-on to the federal teat, but the latest iteration of very traditional populist fears. Once, Midwest agrarian yeoman asked whether the Industrial Revolution was poised to obliterate their way of life. Now, the grandchildren of that era ask whether automation poses the same threat to their livelihoods.

I fully appreciate that the oncoming automation revolution seems similar to other feared revolutions in the past, but I can’t help but feel there’s something different about this one looming on the horizon. It seems like it’s going to be such a massive shock to the economy, whereas previous examples of similar threats to people’s livelihoods were more spaced out and the economy and society as a whole had time to adjust. The increasingly breakneck speed of innovation, this time, may be too fast for us to keep up with.


And a universal basic income fundamentally rejects the market system, instead preferring to allow centralized authority to seek an answer in regulation.

I don’t quite see it that way. I see UBI as a continuation fo the market system, as, I argued in my own article ‘UBI: Capitalism’s Last Hurrah’. I believe, with ample evidence, that without UBI there is a grave risk to the entire capitalist economic system breaking down through the stress of massive unemployment leading to social unrest. I could be wrong, I hope I’m wrong, but the warning signs are definitely there.


A guaranteed income is often painted as a measure freeing for individuals: by providing a regular flow of cash, the government provides security that not only alleviates fears associated with basic survival but makes the pursuit endeavors possible. In fact, the exact opposite is true.

I couldn’t agree more.


The costs are not borne by the nebulous entity of ‘society.’ They are borne by private individuals whose wealth is seized by government in the form of direct taxation.

I believe most proponents of UBI are focusing on taxation of corporations like Amazon (as opposed to individuals) that rely on automation to fuel ever expanding profits.


And this effect is deleterious to the sovereignty of the individual. It flies in the face of protections, such as the Fourth Amendment, that protects property as something sovereign to the individual.

What would be more deleterious to the sovereignty of the individual, what you state or the inability to get a job and contribute to society because automation has replaced millions of jobs and the economy couldn’t replace them fast enough?


Adam Buick (Socialism)

vs.

Katherine Revello (Classical Liberalism)


I want to take up a point of theory in Katherine Revello’s introduction to her contribution, even if it is rather tangential to the basic income proposal as such.


Stating that individuals have a right to the whole money income earned by their labour, she writes of taxation therefore being “the government staking a claim to the income the individual has worked to secure” and that this undermines “the right of private individuals to their property, i.e. their wealth.”


This is John Locke’s 17th century defence of private property (in opposition to the then dominant Christian doctrine that God had given the Earth to everyone to enjoy in common) on the ground that what a person mixes their labour with is by right theirs, their private property that can be exchanged for money. This assumes a society, and an economic system, made up of independent, self-employed artisans and farmers each producing a particular commodity for sale on a market (i.e. for exchange, via money, for the products of other independent producers). Such an economic system has never existed. It certainly didn’t in the England of Locke’s day, though what existed in parts of New England and Pennsylvania in colonial America at that time was a bit nearer to it.


Such a system implies that there are no hired labourers, no wage workers; but there were, and there are. Far from saying that they were entitled to the product of their labour, Locke explicitly argued that employers were entitled to the product of the labour of their servants. This was a fatal flaw in his defence of private ownership, which became even more glaring as the capitalist system of production for profit developed, expanding the number of wage workers (including from the ranks of the self-employed artisans and farmers), so that today the income of most people who work is derived from a wage paid by an employer.


At the same time, employers have ceased to be private individuals with servants and have become corporations as government-created fictitious individuals. Today, we are living in a society made up of corporations, large and small, employing wage workers to produce wealth and aiming to make a profit by selling what these employees produce. It makes hash of Locke, and Ms. Revello’s, theory.


It is still the case today that, in Katherine’s words, “Government is not a producer. (...) Whatever government gives it must first have taken.” But the property-owners of today are no longer those of Locke’s theory. They are the fictitious corporate individuals whose wealth is derived from the labour of those they employ. Those whose actual labour has produced wealth have already been deprived of a part of it by their employer, as profit. In fact, as far as they are concerned, there is not much the government can take from them. In order to recreate their ability to work they need to have a given standard of living. If taxes, whether direct or indirect, increase the cost of this, then this increase will tend to be passed on to their employers as higher money wages.


How does Universal Basic Income come into this? It means that it would indeed ultimately have to be financed by taxes that fall on, or are ultimately passed on to, corporations. The cost of “benefits” and “welfare” (surely inappropriate words to describe the situation of those involved) has to be paid out of taxes. UBI is just one proposal to help capitalism cope with people who, for one reason or another, have no income from employment.


There is one other implication of Locke’s theory: In the evolved conditions since his day, it makes a case for socialism. Given that production today is the collective effort of all those who work (if work is the entitlement to wealth) then the entire workforce is collectively entitled to what it produces. If that happened, there would be no question of money incomes, whether wages or government hand-outs or “basic income”.


The socialist principle of “from each according to their abilities, to each according to their needs” would quite naturally come into its own.

© 2018 by Zink Publishing Inc.

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