“Politics is not arithmetic.”
– Álvaro Cunhal, former Secretary-General, Partido Comunista Português
My friend, the semi-notorious Matt Bruenig, responded to my bit in Jacobin on Andrew Yang and Universal Basic Income (UBI) on his Peoples Policy Institute website, so here I return the favor. (An older piece is here.)
He leads off with a claim that there is five trillion in capital income available to pay for a three trillion UBI. There are two problems with this claim, one a matter in national income accounting, the other – much the more important one – in political economy.
The five trillion (line 9 in BEA Table 1.10) of Matt’s “Net Operating Surplus” includes the incomes of proprietors, much of which is implicitly labor income. If you run a candy store you record your net income as profit, even though it’s basically a wage. In the same vein, another component, rental income, is received by Uncle Joe who rents a house as well as by the Trumps. Some corporate profits and interest are received by workers as a return on their savings.
I note in passing that Matt characterizes capital income as passive income paid to those who do not have to work for it. This is not exactly right. Besides the candy store and Uncle Joe, if I save part of my wage and receive interest, dividends, or capital gains, the latter types of income are not quite benefits for which I did not have to work. And finally, a piece of that is tax already being paid, which can’t be paid again to finance a UBI.
I would grant that the bulk of the five trillion is received by the top quintile of the population, with a disproportionate, gross amount to the top tenth of a percent.
This is quibbling in light of the larger point, which is that financing a UBI is not a matter of arithmetic, but of political economy. The Federal budget includes about $4.4 trillion in spending. Diverting one-tenth of the cost of the UBI from other uses would be daunting. Three trillion? End of story. Carving it out of capital income? Ambitious goals deserve praise. But at some point ambition can give way to hallucination. Matt acknowledges this, saying “Liquidating the capitalist class will of course be difficult to pull off politically.” Ya think? When he says “pull off,” I think of the difficulty of pulling off a thirty-foot putt or winning a tango contest.
Matt wants to distinguish between political difficulty and “what is possible as a policy matter.” Policy requires arithmetic, but it is never reducible to arithmetic. It is only made possible by struggle. Power concedes nothing, notwithstanding the technocratic elegance of any proposal.
The distraction implied by UBI chatter is underlined by the primacy of other priorities on the Left, especially Medicare For All and the Green New Deal, neither of which individuals could buy on their own with a UBI check.
The way things look now (9/4/19), I’d say we have an excellent chance in 2020 for a President Sanders or Warren, and a conceivable opportunity to flip the Senate. In that scenario, we can look forward to non-trivial expansions of health insurance coverage and the green transformation of the economy. Liquidating the capitalist class is about as likely as that dude Andrew Yang being elected president.