Unless you studied economics in college you likely didn’t encounter the idea of universal basic income (UBI) until Andrew Yang announced his candidacy for president last year. Americans experienced a taste of UBI a few months ago as the government dished out stimulus checks, no questions asked. I recently listened to a podcast with Albert Wenger of Union Square Ventures where he outlined a particularly persuasive argument for UBI. His viewpoint was so intriguing that I found myself writing this essay just to think more deeply about it. This essay is split into 3 parts:
- An argument for UBI
- Arguments against UBI
- Final thoughts
I will not dive into financial projections or economic analyses. I’ll save that for the economists.
The agricultural revolution
Around 12,000 years ago humans experienced the agricultural revolution. The ability to grow food rather than hunting and gathering meant increased sustenance production and massive population growth. This also meant that whoever owned the land owned the power. Land became the value-producing asset—land literally equated to riches. Throughout the middle ages serfdom was used by elite landowners to exercise power, delegate the responsibilities of owning land, create a class system, and explore extracurricular interests. The majority of inhabitants didn’t own land but were forced to work for a few powerful landowners.
Historian Gordon S. Woods noted: “In Europe, land was scarce in relation to people and therefore was expensive. Hence, unable to afford their own land to farm, Europeans were compelled to work for others, either by becoming laborers for landowners in the countryside or, more often, by migrating to the cities to engage in manufacturing goods in factories. In both cases since labor, because of its plentifulness, was cheap, the workers’ wages were low.”
The New World
In addition to the search for precious metals and religious freedom, the prospect of largely available land was a strong pull for European immigrants to the Americas. R. Kent Newmeyer wrote: “It would be difficult to overemphasize the importance of land greed in American history…Land was America’s most abundant and most sought-after resource. For the better part of two centuries, the vision of cheap land was the magnet that attracted millions of immigrants.”
Property rights drove the founders to revolution. “It is time,” wrote Thomas Jefferson in 1774, “for us to lay this matter before his majesty, and to declare that he has no right to grant lands of himself. From the nature and purpose of civil institutions, all the lands within the limits which any particular society has circumscribed around itself are assumed by that society, and subject to their allotment only…each individual may appropriate himself such lands as he finds vacant, and occupancy will give him a title.”
Acquiring land in Colonial America varied depending on your location but had one thing in common: it was cheap or free. In geographies heavily occupied by the Virginia Company one could purchase land very cheaply, own it through a military grant, or receive 50 acres free under headright. In New England, farmers would remove stones that plows would turn up and place them on the outskirts of their land to form walls. The early rule of thumb allowed any white man to claim his property by surrounding his desired plot with a stone wall waist-high. Diminishing supply and increasing demand caused land in the East to become more expensive, and expansion westward was fueled by the Homestead Act of 1862. This allowed most Americans to put in a claim for up to 160 free acres of federal land.
The Food and Agriculture Organization of the United Nations states that to support a North American or Western European diet (i.e. includes meat), one individual needs ~17 acres. Dozens of online blogs showcase people who can live off of 2-10 acres and support a family of up to 4 people. Therefore,160 acres not only allowed a family to produce what they needed-but gave the opportunity to profit off their extra land and efforts. With basic needs taken care of, every farmer could become an entrepreneur!
This is where I’d like to argue the first of many syllogisms:
- Land was made easily available to early Americans.
- Land provided to early Americans allowed them to meet their basic needs.
- Therefore, the ability to take care of one’s basic needs were made easily available to Americans.
The role of government
In a July 4, 1861 speech, Abraham Lincoln told the nation the purpose of America’s government was “to elevate the condition of men, to lift artificial burdens from all shoulders and to give everyone an unfettered start and a fair chance in the race of life.”
How did Lincoln accomplish such an audacious purpose? He followed through the next year with the Homestead Act.
Let’s make a slight change to the first syllogism:
- Land was made easily available to early Americans by the government.
- Land provided to early Americans allowed them to meet their basic needs.
- Therefore, the ability to take care of one’s basic needs were made easily available to Americans by the government.
The role of free land in America’s growth
While there are many characteristics that make America great, none is greater than the prospect of the American Dream. The term “American Dream” was coined by James Truslow Adams in his book “Epic of America”. In that book he writes, “life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement.”
While Adam’s book wasn’t written until 1931, the idea of equal opportunity being available to any and every American had been alive for a long time prior. The ideal and assumption that land, a value-producing asset, was made available to all (except most POC and women until the 19th century) meant that all could easily take care of their basic needs. Or, if they sought more out of life, they could take advantage of their needs being easily met and work on extracurricular activities, businesses, and research.
This sheds light into one of the many reasons America became so powerful. America was willing to provide an asset capable of value-production for a minimal cost to its residents: land. In return, some inhabitants would capitalize on their desire for greatness, work ethic, and strengths to develop companies, inventions, and processes that would change the world and make America the powerhouse that it is today.
Here we argue our second syllogism:
- America’s growth is due to its inhabitants creating additional value.
- Someone can create additional value only if their basic needs are taken care of.
- American’s growth is due to its inhabitants’ basic needs being taken care of.
The shift of power
The agricultural revolution meant that, in most cases, wealth was directly tied to land; the more land you owned, the more powerful and wealthy you were. However, the industrial revolution shifted power from landowners to innovators and those who held other assets. Land was no longer an equalizer, it was just one asset among many. Other assets now included access to raw materials, capital, facilities, patents and intellectual property, and data.
This is still true today. While land still holds value and will likely hold value forever, wealth is found in the ownership of assets. Some assets are depreciating like cars and consumer goods. Some assets are appreciating like stocks and ownership in businesses. A large majority of Americans trade their time for wealth in the form of hourly wages or a salary without having any equity or ownership of the asset or company they are contributing to.
The argument for Universal Basic Income
The purpose of universal basic income is to provide a society’s inhabitants with enough capital to take care of their basic needs such as food, water, and shelter. As we have shown above, this concept is not new! Universal Basic Land (my made up terminology) was what drew millions of immigrants to the early Americas and allowed them a starting point to build wealth and success.
Here we can state our third and final syllogism:
- Taking care of basic needs will make a country excel.
- UBI is a way to care for basic needs.
- UBI will make a country excel.
Making land available to early Americans meant that inhabitants could easily take care of their basic needs—any man who desired greatness had the opportunity to capitalize on his work ethic and intellect. UBI similarly provides for inhabitants’ basic needs and allows him or her additional time and money to spend investing in the economy, themselves, and their ideas.
A large majority of Americans trade their time for wealth in the form of hourly wages or a salary without having any equity or ownership of the asset or company they are contributing to. One might argue that this is a similarity to indentured servitude, as serfs also had no stake in the land they worked. UBI provides a way for many to escape ‘indentured servitude’ and succeed based upon their own merits. To echo Abraham Lincoln, we can argue that UBI can “elevate the condition of men, to lift artificial burdens from all shoulders and to give everyone an unfettered start and a fair chance in the race of life.”
Arguments against UBI
Argument 1 – free isn’t really ‘free’
This argument for UBI glances over the fact that, as I’m sure many of you thought from the beginning, that the land in America was not just created out of thin air, but stolen from indigenous peoples. Immigrants were able to grab a hold of their ‘free’ land through plundering and violence.
Similarly, the capital given to citizens via UBI doesn’t grow on trees; it needs to come from somewhere. Generally, it will be taken from the ultra-rich in the form of taxes. This idea is becoming more prevalent and widely accepted due to a widening wealth gap, increased conversations around privilege, and a greater understanding of America’s social mobility.
Argument 2 – land is not money
Land and money both have inherent value, but have different utilities. When land was given to immigrants, it had very little value in and of itself. The inhabitant was required to work by growing and tending to crops, raising animals, and protecting their fields in order to create value. Land was extremely cheap and didn’t hold much value; it was merely a tool used to create value.
On the other hand, money has immediate value that is easy to access; it can be immediately traded for a variety of goods and services.
Giving free land to Americans forced immigrants to work and create value. While an immigrant surely would be able to hunt-and-gather on their acreage, the likelihood that they would be able to support a family without utilizing farming practices was low. On the other hand, giving cash to someone means that they could spend it on many things that aren’t beneficial to them.
Argument 3 – teach a man to fish
“Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime.”
This popular quote is shown by UBI opponents to express that a basic income is just a government handout, one that would make its constituents dependent. As a counterargument, and to continue in line with this quote, I ask: Is teaching a man to fish enough? If a man knows how to fish, can he really feed himself for a lifetime? The answer is no.
In order to fish, you need a fishing rod, fishing line, a reel, bait and a hook, access to a lake or river with fish, and the proper licensing required by the county or state in which you are fishing. This can be expensive for a fisherman! Knowledge of fishing alone won’t feed someone, they need additional assets in order to survive. I suggest that we amend the original quote:
“Give a man a fish and you feed him for a day; teach a man to fish (and give him a fishing pole) and you feed him for a lifetime.”
Conclusion
A quick Google search for academic findings shows many research papers published by bright economists with no real consensus on UBI’s plausibility. I would love to see additional pilots held in both First World and Third World countries. While I believe the argument made above holds water, we won’t know the validity of UBI until it is actually put into practice.
Until then, there are certain stigmas towards government handouts that we need to address. Certainly some people will unfairly take advantage of government programs and not utilize funds in a positive manner. There will always be people who depend on being “given a fish”. However, I have seen quite the opposite during this COVID-19 pandemic. I have seen friends and acquaintances who have been laid off use this time (and their stimulus checks) to start new businesses, grow their knowledge and skills, and look for jobs that better align with their strengths and passions. These people are using the fact that they “don’t have to fish” or “can’t fish” right now to build value in other areas—other areas which I believe will net more “fish” for themselves and for their country than before. While we don’t see the fruits of their labor during this dark time, I believe we will see their impact in years to come.
Our country was built on strength, grit, tenacity, determination, and sacrifice. I believe those values still exist in the American people today. I no longer see UBI as free money—I see it as an investment into American ingenuity, innovation, and genius.
UBI is obviously not perfect, but neither is our republic. We might benefit from providing better access to opportunity the same way our forefathers provided access to land. UBI offers a more even playing field, helping us draw one step closer to “liberty and justice for all”.
Tanner Johnston 