Some Opponents of UBI Necessarily Believe the Racial Wealth Gap Is Good

A universal basic income (UBI) is a program where everyone receives an equal cash benefit each month in addition to the income they receive from the market. So, for example, you could imagine a situation where the government directly deposited $1,000 each month into each person’s bank account. That would be a UBI.

Some argue that the UBI is bad because it would discourage work. The argument is that getting income without having to work for it would make people work less or, in some cases, not work at all. This non-work would then cause all sorts of problems for the individuals, their families, and the society more generally.

But there is another way to get income without having to work for it. It is called capital income and people receive it because they own wealth (real estate, bonds, and stocks). Owners of wealth receive rents from the real estate they own, interest from the bonds they own, and dividends from the stock they own. The amount of money received from these non-work income sources was $4.8 trillion in 2015.

If getting income without having to work for it is bad, and wealth allows you to get income without having to work for it, then that means wealth is also bad. Or, more precisely, it means that wealth has a negative consequence, which is that it delivers its owners non-work income, which then causes all sorts of problems for the individuals, their families, and the society more generally.

If wealth is bad in this particular way, then that means having less wealth is better than having more wealth. This is because having less wealth means you receive less non-work income and are therefore less vulnerable to the toxic effects of receiving non-work income.

The racial wealth gap refers to a situation in the United States where Blacks and Latinos have far less wealth than Whites. Normally this is seen as bad for Blacks and Latinos. But if the argument above is correct, then that means the racial wealth gap is actually good for Blacks and Latinos because it ensures that they receive far less non-work income.

To summarize:

  1. UBI is bad because getting income without having to work for it reduces work activity.
  2. Ownership of wealth allows you to get income without having to work for it.
  3. It follows from (1) and (2) that wealth ownership is bad and owning less wealth is better than owning more wealth.
  4. The racial wealth gap ensures that Blacks and Latinos own less wealth than Whites.
  5. It follows from (3) and (4) that the racial wealth gap is good for Blacks and Latinos.

To be clear, I do not believe the conclusion of this argument. But this is because I reject the premise that getting income without having to work for it is bad. My point is only to say that if you believe Premise One above, then you necessarily believe the racial wealth gap is good. If you do not believe the racial wealth gap is good, then you should not believe Premise One.

  • Nicolai

    So… there is a logical gap at the very last step of the argument. At step 5, one concludes that the racial wealth gap is good for Blacks and Latinos, but that does not mean that the racial wealth gap is good overall (after all, it is bad for Whites).

    This is like, out here in the land of the sane, the racial wealth gap is good for Whites, but that does not mean that it is a good thing overall.

  • matt

    Good point. In fact, the argument (granting the controversial premise) doesn’t even establish that the racial wealth gap is good for blacks and Latinos. All that follows from the premise is that the fact that blacks and Latinos have a low absolute level of wealth on average is a good thing for blacks and Latinos. If the racial wealth gap existed at its current size but at a much higher absolute level, so that blacks and Latinos were extremely wealthy and whites were extremely extremely wealthy, blacks and Latinos would still be in bad shape (according to Premise One). So the racial wealth gap, considered on its own and granting Premise One, has no bearing on how well off blacks and Latinos are.

  • nord

    “there is a logical gap at the very last step of the argument. At step 5,
    one concludes that the racial wealth gap is good for Blacks and
    Latinos, but that does not mean that the racial wealth gap is good
    overall”

    I see no “logical gap”. The argument does not claim to conclude anything about what is good overall. Others claim that UBI is bad in one way for UBI-recipients. That is not a claim about overall badness. Matt’s argument simply takes that as starting point and shows that it leads to a surprising and hard to believe conclusion. To do so he need not make any overall good/bad claims.

  • Nicolai

    Here’s another point. It’s important to consider *why* somebody believes that the UBI discouraging work is bad. Most people probably never thought that through clearly, and hence have only vague notions that are easy for you to skewer, especially when it basically comes down to arguments about some fuzzy moral decay caused by a lack of work.

    I believe there is one real argument here: if the UBI is too high and discourages work too much, it becomes inflationary because the economy’s supply shrinks by too much. Whether that would really be a problem is an empirical matter, but it’s clear that there’s most likely some ceiling to how comfortable life on UBI-only income can possibly be. This is not exactly an argument against UBI, although it is an argument against certain forms of UBI, notably ones that are too generous. Precisely because it only argues against UBI that is too high, it cannot be used to argue against passive income from wealth (the number of people who are discouraged out of work by passive income of wealth is too low to be of concern overall, and ironically this is the case precisely because the distribution of wealth is so skewed and unjust).

  • nord

    “if the UBI is too high and discourages work too much, it becomes inflationary because the economy’s supply shrinks by too much.”

    As I interpret it Matt’s argument is about the concern that if A is getting income without having to work then that is actually bad for A in a certain way without also being bad for non-recipients B in the same certain way. I.e. the putative bad is not a general negative effect for all members of society. It is some bad that befalls only the workless income takers. It is unclear if your inflationary worry (the substance of which I won’t try to assess here) fits that description. Wouldn’t putative negative effects from the supposed inflation befall both the workless and the working?

  • Dan

    Interesting thought experiment. I’ve not been involved in this discussion, so please forgive my amateur take, but here are a couple thoughts:

    1. One can believe both that (a) work is inherently good (and thus discouraging work is therefore bad) and (b) UBI is still a net good policy. That describes my belief, in fact. I think the idle rich are harmed by their idleness (and thus their wealth); I don’t wish that harm on others. But, because of declining marginal utility, I also recognize that the first thousand dollars a person gets means miles more to them than the thousandth thousand dollars. And so it can still be a net good to give everyone $1000/month (or whatever), despite the real risk of disincentivizing work. Conversely, I suppose, I don’t believe in a confiscatory tax rate (or state seizure of the means of production, or whatever) because, while idle wealth is indeed bad, it’s not nearly as bad as removing the incentives to work that a system of private property provides.

    2. I also worry about the general idea Nicoloai is hinting at regarding inflationary pressure. Specifically, if everyone gets $1,000/mo., I’d have to think through what effect that would have on low-rent apartments and basic staples. I’m inclined to think that the prices would pretty naturally rise. I wonder if there are any natural experiments where this has been examined. Like, maybe, Alaska? With the natural resources bonus they get? Or certain Indian tribes maybe? (Like I said, I’m an amateur here… sorry).

    I could go on, but I’m new here, and probably out of my depth. Would be interested in your (and others’) thoughts. Thanks.

  • Phil Perspective

    Have you not noticed that rent is already prohibitively expensive in a lot of places? That it is impossible to live most anywhere on a minimum wage job salary?

  • nord

    Why do you believe that work is inherently good? If someone believes that their life goes well with less work then you appear to claim that you know better than them about how and when their life goes well because…. well, why precisely? What is the basis of your superior insight into when and how the lives of everyone else goes well? If it is only *your own* life you are talking about then you can of course yourself simple opt out of collecting the UBI money.

  • James Thompson (paintedjaguar)

    One real world experiment: https://en.wikipedia.org/wiki/Mincome

    As with most things, work has its place – in moderation.

  • My suspicion is Basic Income would have a democratizing effect: Rents and the quality of the apartments would go up in poor neighborhoods once renters had a sure means of paying, and rent would decline in richer neighborhoods as safety from desperate poor people became less of a factor in where to live.

  • Your premise is incorrect. I’m a professional trader/investor, and doing that really is a lot of work. I probably work harder than you do!

  • nord

    You confuse the distinction between (passive) ownership of capital and work that makes use of capital. Some investor activities are work. But we can separate the work and the passive component. An owner who inherited capital may, after only little initial work, arrange for others to work to increase that capital. All or almost all of that owners wealth increase then come as non work rent.