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Universal Basic Income Is Silicon Valley’s Latest Scam

Linked by Paul Ciano on November 6, 2018

Douglas Rushkoff:

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.

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.

…an employee piped up with a surprising question: “What about UBI?”

Wait a minute, I thought. That’s my line.

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.

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.

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.

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.

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.

…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.

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.

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.

Wonderful episode.

Paul Ciano

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