In 2016, I was invited to Uber’s headquarters (then in San Francisco) to talk about the failings of the digital economy and what could be done about it. Silicon Valley firms are the only corporations I know that ask for private talks for free. They don’t even cover cab fare. Like Google and Facebook, Uber figures that the chance to address their developers and executives offers intellectuals the rare privilege of influencing the digital future or, maybe more crassly, getting their books mentioned on the company blog.
For authors of business how-to books, it makes perfect sense. Who wouldn’t want to brag that Google is taking their business advice? For me, it was a little different. Throwing Rocks at the Google Bus was about the inequity embedded in the digital economy: how the growth of digital startups was draining the real economy and making it harder for people to participate in creating value, make any money, or keep up with rising rents.
I took the gig. I figured it was my chance to let my audience know, in no uncertain terms, that Uber was among the worst offenders, destroying the existing taxi market not through creative destruction but via destructive destruction. They were using the power of their capital to undercut everyone, extract everything, and establish a scorched-earth monopoly. I went on quite a tirade.
To my surprise, the audience seemed to share my concerns. They’re not idiots, and the negative effects of their operations were visible everywhere they looked. Then an employee piped up with a surprising question: “What about UBI?”
Wait a minute, I thought. That’s my line.
Up until that moment, I had been an ardent supporter of universal basic income (UBI), that is, government cash payments to people whose employment would no longer be required in a digital economy. Contrary to expectations, UBI doesn’t make people lazy. Study after study shows that the added security actually enables people to take greater risks, become more entrepreneurial, or dedicate more time and energy to improving their communities.
So what’s not to like?
Shouldn’t we applaud the developers at Uber — as well as other prominent Silicon Valley titans like Facebook co-founder Chris Hughes, bond investor Bill Gross, and Y Combinator’s Sam Altman — for coming to their senses and proposing we provide money for the masses to spend? Maybe not. Because to them, UBI is really just a way for them to keep doing business as usual.
Uber’s business plan, like that of so many other digital unicorns, is based on extracting all the value from the markets it enters. This ultimately means squeezing employees, customers, and suppliers alike in the name of continued growth. When people eventually become too poor to continue working as drivers or paying for rides, UBI supplies the required cash infusion for the business to keep operating.
When it’s looked at the way a software developer would, it’s clear that UBI is really little more than a patch to a program that’s fundamentally flawed.
The real purpose of digital capitalism is to extract value from the economy and deliver it to those at the top. If consumers find a way to retain some of that value for themselves, the thinking goes, you’re doing something wrong or “leaving money on the table.”
Back in the 1500s, residents of various colonized islands developed a good business making rope and selling it to visiting ships owned by the Dutch East India Company. Sensing an opportunity, the executives of what was then the most powerful corporation the world had ever seen obtained a charter from the king to be the exclusive manufacturer of rope on the islands. Then they hired the displaced workers to do the job they’d done before. The company still spent money on rope — paying wages now instead of purchasing the rope outright — but it also controlled the trade, the means of production, and the market itself.
Walmart perfected the softer version of this model in the 20th century. Move into a town, undercut the local merchants by selling items below cost, and put everyone else out of business. Then, as sole retailer and sole employer, set the prices and wages you want. So what if your workers have to go on welfare and food stamps.
Now, digital companies are accomplishing the same thing, only faster and more completely. Instead of merely rewriting the law like colonial corporations did or utilizing the power of capital like retail conglomerates do, digital companies are using code. Amazon’s control over the retail market and increasingly the production of the goods it sells, has created an automated wealth-extraction platform that the slave drivers who ran the Dutch East India Company couldn’t have even imagined.
Of course, it all comes at a price: Digital monopolists drain all their markets at once and more completely than their analog predecessors. Soon, consumers simply can’t consume enough to keep the revenues flowing in. Even the prospect of stockpiling everyone’s data, like Facebook or Google do, begins to lose its allure if none of the people behind the data have any money to spend.
To the rescue comes UBI. The policy was once thought of as a way of taking extreme poverty off the table. In this new incarnation, however, it merely serves as a way to keep the wealthiest people (and their loyal vassals, the software developers) entrenched at the very top of the economic operating system. Because of course, the cash doled out to citizens by the government will inevitably flow to them.
Think of it: The government prints more money or perhaps — god forbid — it taxes some corporate profits, then it showers the cash down on the people so they can continue to spend. As a result, more and more capital accumulates at the top. And with that capital comes more power to dictate the terms governing human existence.
Meanwhile, UBI also obviates the need for people to consider true alternatives to living lives as passive consumers. Solutions like platform cooperatives, alternative currencies, favor banks, or employee-owned businesses, which actually threaten the status quo under which extractive monopolies have thrived, will seem unnecessary. Why bother signing up for the revolution if our bellies are full? Or just full enough?
Under the guise of compassion, UBI really just turns us from stakeholders or even citizens to mere consumers. Once the ability to create or exchange value is stripped from us, all we can do with every consumptive act is deliver more power to people who can finally, without any exaggeration, be called our corporate overlords.
No, income is nothing but a booby prize. If we’re going to get a handout, we should demand not an allowance but assets. That’s right: an ownership stake.
The wealth gap in the United States has less to do with the difference between people’s salaries than their assets. For instance, African-American families earn a little more than half the salary, on average, that white American families do. But that doesn’t account for the massive wealth gap between whites and blacks. More important to this disparity is the fact that the median wealth of white households in America is 20 times that of African-American households. Even African-Americans with decent income tend to lack the assets required to participate in savings accounts, business investments, or the stock market.
So even if an African-American child who has grown up poor gets free admission to college, they will still likely lag behind due to a lack of assets. After all, those assets are what make it possible for a white classmate to take a “gap” year to gain experience before hitting the job market or take an unpaid internship or have access to a nice apartment in Williamsburg to live in while knocking out that first young adult novel on spec, touring with a band, opening a fair trade coffee bar, or running around to hackathons. No amount of short-term entitlements substitute for real assets because once the money is spent, it’s gone — straight to the very people who already enjoy an excessive asset advantage.
Had Andrew Johnson not overturned the original reconstruction proposal for freed slaves to be given 40 acres and a mule as reparation, instead of simply allowing them to earn wage labor on former slaveowners’ lands, we might be looking at a vastly less divided America today.
Likewise, if Silicon Valley’s UBI fans really wanted to repair the economic operating system, they should be looking not to universal basic income but universal basic assets, first proposed by Institute for the Future’s Marina Gorbis. As she points out, in Denmark — where people have public access to a great portion of the nation’s resources — a person born into a poor family is just as likely to end up as wealthy as peers born into a wealthier household.
To venture capitalists seeking to guarantee their fortunes for generations, such economic equality sounds like a nightmare and unending, unnerving disruption. Why create a monopoly just to give others the opportunity to break it or, worse, turn all these painstakingly privatized assets back into a public commons?
The answer, perhaps counterintuitively, is because all those assets are actually of diminishing value to the few ultra-wealthy capitalists who have accumulated them. Return on assets for American corporations has been steadily declining for the last 75 years. It’s like a form of corporate obesity.The rich have been great at taking all the assets off the table but really bad at deploying them. They’re so bad at investing or building or doing anything that puts money back into the system that they are asking governments to do this for them — even though the corporations are the ones holding all the real assets.
Like any programmer, the people running our digital companies embrace any hack or kluge capable of keeping the program running. They don’t see the economic operating system beneath their programs, and so they are not in a position to challenge its embedded biases much less rewrite that code.
As appealing as it may sound, UBI is nothing more than a way for corporations to increase their power over us, all under the pretense of putting us on the payroll. It’s the candy that a creep offers a kid to get into the car or the raise a sleazy employer gives a staff member who they’ve sexually harassed. It’s hush money.
If the good folks of Uber or any other extractive digital enterprise really want to reprogram the economy to everyone’s advantage and guarantee a sustainable supply of wealthy customers for themselves, they should start by tweaking their own operating systems. Instead of asking the government to make up the difference for unlivable wages, what about making one’s workers the owners of the company? Instead of kicking over additional, say, 10% in tax for a government UBI fund, how about offering a 10% stake in the company to the people who supply the labor? Or another 10% to the towns and cities who supply the roads and traffic signals? Not just a kickback or tax but a stake.
Whether its proponents are cynical or simply naive, UBI is not the patch we need. A weekly handout doesn’t promote economic equality — much less empowerment. The only meaningful change we can make to the economic operating system is to distribute ownership, control, and governance of the real world to the people who live in it.
You can’t be serious… because the money will end up in the hands of corporations we shouldn’t have UBI? Yer a freakin idiot if you really believe that. Of course the money will end up with corporations, they supply the stuff we need to buy! What else would people spend the money on? You’re going to take your UBI and put it in the market? No, people will first pay necessities and then spend on what for them is a luxury. You want to snatch UBI away from granny because Duke energy gets rich because she can turn the heat up some? Dude, quit doing so much writing and get out there and do some living.
Agreed. A ubi within the current equation of Capitalism is akin to adding fuel to a fire; a ubi would accelerate an already exponential collapse of our ecology. Also agree that the prescription for a viable and desirable alternative includes recapturing of the commons and the production thereof to benefit all. We’ve a proposal using this approach: Common-Planet.org
This is not really an argument against UBI, but it is true that UBI alone is not enough.
UBI coupled with a simplified high flat income tax to fund it is still the best way to add negative feedback to counter the “it takes money to make money” positive feedback that makes the rich richer and the poor poorer.
However, we also need things like national medical services and disability insurance to share health and accident risks fairly.
We also really need some way to deal with company competition, cooperation, colusion, and monopolies in markets.
The objective and result of successful competition is a monopoly. How do we prevent that from happening to keep the efficiencies of competition? What if the industry really is more efficient as a monopoly (and i belive things like Uber are)? Should they be nationalised? What about global monopolies?
These are hard questions too, but they are not the questions that UBI is the answer to.
It’s an interesting line of reasoning. It falls foul of the redistribution causes havoc rule. I’d make a law which went as follows. Each company on the stock exchange has to split their shares so that it’s possible to buy a single share for less than £100. Then I’d automate a deduction from wages which automatically gets invested (this is the same as your pension). This would end up with real asset ownership by the proletariat
Interesting argument, but I’m not sure I agree. If people on UBI still want to work, as has been largely demonstrated, then why should it “[obviate] the need for people to consider true alternatives to living lives as passive consumers”? To me, it’s frequently the other way round. Keeping people in constant uncertainty; draining their energy either with unsatisfying work or with endless hoops to jump through to qualify for benefits: those are the things that keep people in hopelessness and prevent them from considering true alternatives. You seem to have a model in your mind of a kind of rational revolutionary … “let me see now, this situation is intolerable therefore I will revolt” … which favours people having unencumbered leisure of unemployment.
What’s the historical or cultural evidence that people behave the way you seem to imply?
Having disagreed with your arguments, I’d like to broadly agree with your conclusions: we should in any case be giving genuine controlling stakes to everyone, distributing power, and after the distribution of power will follow more equal distribution of money. But how is that going to happen? Benevolent companies, just doing what they ethically “should” be doing?
Yes, I absolutely agree, we (that’s us, you and me, those who find themselves with the privilege of some time and resource to think) should be doing what we can to encourage and support people to start their own worker-owned enterprises, and to make them out-compete their shareholder-owned competitors. But what better start for that than UBI? What better, in fact, than to accept a UBI under the kind of pretence that you suggest is in the interests of the stakeholders in the status quo, and use it for exactly the opposing ends?
How is UBA really different from shareholding?
I completely agree: the problem is wealth inequality and not income inequality. That is, if the problem you are trying to solve is inequality. If the problem you are trying to solve is sustainability of the economic system, UBI will suffice, in economic terms. Both will possibly fail in environmental and resource terms.
Leaving the last part out, UBI may have been proposed to counter inequality, but has likely been considered for implementation because of excessive and spreading indebtedness and the prospect of secular stagnation. As usual, those making the decisions will likely not consider as feasible or desirable overturning the system.
In my opinion, the source of having value entrenched in assets, which is remote trade among strangers, cannot be managed by wishing for “taking back” public ownership of assets: the power to decide increasingly resides with those controlling remote commerce (or you wait for suitable historical circumstances and, even if achieved, it could later revert to the former or some other oligarchy). The answer cannot be “negative”, as in “taking back” ownership, control etc; it has to be “positive”, as in “building” something new: e.g., establishing public infrastructure for remote commerce…
There is a far superior proposal, with ASPECTS of BI. The establishment politicians know of it, and have been working furiously for over 2 years to HIDE IT from the public and see which inferior proposal we might accept, keeping us desperate and working for crap wages.