Let’s Get Rid of Wage Labor

I’m serious: make it illegal. But not before we have a universal basic income. A UBI will encourage self-employed or cooperative ventures freely chosen by those who engage in it. In the absence of a UBI, many of us have a job not because the activities associated with the job allow us to pursue our goals, but because the job comes with a salary and because this salary can buy the necessities of life. We then either pursue our goals during our leisure time, or convince ourselves that the goals of our jobs are somehow also our own goals (the burger-flipper telling himself that “making kids happy is all I want”).

A UBI has to cover the costs of the necessities of life: a decent place to live, sufficient food, clothing, basic healthcare (catastrophic healthcare costs would be paid for by a fund for which people are forced to buy insurance), transportation and some appliances, machines or utilities (a car, a washing machine, a fridge, a cell phone etc.). Because it covers the costs of necessities, a UBI liberates us to pursue the goals we set for our lives, goals which all too often get pushed aside by the urgencies of the daily struggle to survive, to have a decent house and to have some savings for when times get bad.

Would a UBI not be sufficient to allow people to pursue their goals? Why also prohibit wage labor? A UBI indeed loosens us from the system of wage labor – it provides a financial cushion that removes the risks inherent in abandoning a job and pursuing our “true destiny” – but it doesn’t go far enough. It gives us the freedom to turn down unattractive work but the pursuit of life’s goals often requires cooperation. Only the prohibition on wage labor makes cooperative ventures more common. A UBI by itself only pushes us towards more satisfying jobs and leaves some of the drawbacks of wage labor intact:

  • Wage labor means that the ownership of the means of production is in the hands of a minority. It’s this minority that determines the goals of labor, and they hire workers to achieve these goals. The workers themselves have no say in this and end up pursuing other people’s goals. Control is a distant dream for most if not all wage laborers. The owners have few incentives to organize production on a cooperative basis because cooperative labor would mean that they lose their right to unilaterally decide the goals of their organization; it would also mean sharing the proceeds of the organization with the workers.
  • Wage labor is inherently authoritarian rather than cooperative, not only with regard to the ultimate goals but also on the level of the means. People who generally detest authoritarian political structures nevertheless submit every morning of every working day to the authoritarian rules of their employers.

A prohibition of wage labor might look like a revolutionary proposal. What are some of the risks we take?

  • Do we have to expropriate the owners of the means of production? After all, it’s no use setting people free to engage in cooperative ventures if they can’t freely use the means of production. However, there’s little dispute about the undesirability of large scale expropriation. So what do we do? To some extent, cooperative ventures will produce their own means of production, and in an economy that is increasingly focused on services and the internet, the category of means of production loses some of its meaning. We can also look at how taxes on means of production would set some of them free for communal use.
  • The biggest risk, I think, is a reduction of economic activity. If that happens, we’re not going to have an economic basis large enough for the required level of taxation necessary to fund the UBI. However, I’m tempted to assume that people will want to be economically active and that the UBI combined with the end of wage income will set loose a lot of initiative and ambition, but all that is hard to predict. Maybe I’m being too optimistic. The “entrepreneurial” spirit in the common man may be lacking, or may have been destroyed by ages of wage dependence. Maybe most people just want to work for an income, no matter which kind of work, as long as they don’t have to take responsibility for their own freedom. Or maybe many of us will use the opportunity to do what we always wanted to do when we can no longer work for a wage and when we have the cushion of a UBI. The additional advantage that we can share the proceeds of cooperative ventures – proceeds which now go to the owners of the means of production – will make it even more exciting to do something.
  • If people can’t work for a wage, many of the “dirty jobs” may not get done anymore. I can list many activities – toilet cleaning, waste disposal, mining etc. – which probably won’t be organized in voluntary cooperative ventures if there’s no longer a possibility to pay people a wage to do them. But then perhaps we’ll be forced to clean up after ourselves. And perhaps automation will help as well. In any case, every rule has exceptions.

Indeed, we may have to settle for policies that discourage rather than prohibit wage labor, one sector at a time. However, if even this is deemed unrealistic or undesirable, then at least let us agree to make work more democratic. If privately owned large corporations continue to exist and dominate the market, and if therefore wage labor persists, then the employees should be given a larger say in how these corporations are run and what their ultimate purposes should be. Corporate democracy, combined with a UBI that allows people to change jobs easily, can make it more likely that people are able to pursue their goals. Which is what all this is about, after all.

More here.

A Would-Be Philosopher-King Offers His Optimal Tax Policy

If I had any real power I would tax you all in the following manner:

First, I’d impose a consumption tax such as a VAT on traded goods and services. The consumption tax will have to be progressive, for example by way of a 0% tax on food and other basic necessities and a rate close to 100% for luxuries. A consumption tax encourages savings and investment and does away with the disincentives of income and payroll taxes which it will replace (disincentives to work, earn and hire). It also puts a stop to wasteful conspicuous consumption and status competition, at least at the top end. The sharply decreasing marginal utility at high levels of consumption means that the tax can indeed be strongly progressive, with close to 100% rates at very high levels of consumption. Such a strongly progressive consumption tax will leave incentives in place: a $1 million dollar home motivates just as well as a $200 million home, because people mostly care about how they are doing relative to similar others and all similar others will be subject to the same taxes.

Second: add an inheritance or estate tax because the wealthy, who will save more as a consequence of the consumption tax, will die with larger estates than before. Inheritance is inherently unfair because undeserved. A tax on inheritance not only reduces this unfairness, but does so without distorting incentives. Most other types of taxes have disincentive effects: when an activity such as consumption, investment, employment or pollution is taxed, the activity becomes more expensive. Hence, people will to some extent disengage from the activity (consume less, hire less employees, invest less, pollute less) or find ways to reduce their tax burden (offshore profits or assets, fail to declare income etc.). Disengagement is good in the case of pollution and consumption, but not for investment and employment. An inheritance tax is one that doesn’t have disincentive effects. People will not die less when wealth and assets are taxed after death. This tax is therefore sustainable, in addition to being moral.

It’s a kind of wealth tax. Wealth taxes, including an inheritance tax, promote consumption and are in conflict with the stated aims of a consumption tax (see above). But in the case of inheritance tax that’s a reasonable price to pay. Other wealth taxes – with one exception (see below) – will have to go, precisely for this reason, as well as other reasons: wealth taxes are difficult (they are a percentage of the taxpayer’s calculated net worth – total assets including cash deposits, real estate holdings, investments, trusts and shares in businesses, minus debt – and this net worth is difficult to valuate and easy to offshore); and they raise liquidity problems (the taxpayer may have to sell part of her assets in order to pay the tax, which will increase the supply of assets and drive down their prices, making wealth creation less attractive and possibly undermining the wealth tax). So, although a wealth tax is perhaps a fair tax – wealth is more concentrated in the hands of a very small elite, compared to income – it’s not necessarily a good idea.

Third: add a land value tax. This is a wealth tax, but not really a real estate tax, because the largest part of the value of real estate is the value of the land, not the value of the buildings. It doesn’t cost much more to build a house in Manhattan than to build an identical one in the Midwest. The house in Manhattan is much more expensive because it’s on Manhattan land. A land tax is similar to an inheritance tax: no one built the land, so people will not have less land when it’s taxed. And because no one built it, no one can be said to deserve it. So no incentives arguments against a land tax, and a strong moral argument in favor of it. Just as with inheritance.

Fourth: add some pigovian taxes (taxes on carbon and other externalities such as pollution, congestion etc.).

Fifth: abolish all other taxes, including taxes on investment income or normal income, on corporate profits, on labor/employment etc.

This system yields our tax revenues. A tax system can be justified on different grounds, and I’ve already mentioned a few, namely fairness, incentives (incentives to consume less, to save and invest more, to avoid pollution…) and efficiency (ease of tax collection and tax calculation). But an important justification of a tax system is its general purpose. What do we want to do with the tax revenue? Apart from the obvious goals – public goods such as a police force, a judiciary, a national defense, infrastructure, some regulatory agencies, public education, healthcare etc. – my main concern is welfare, or social security as they say in Europe. And like an increasing number of people I want to propose that we use our tax revenues to fund a universal basic income system which will replace all or most of the existing government support measures such as unemployment benefits, pensions, food stamps etc. I’ve defended the UBI in more detail before so I won’t burden this already longish post any more than necessary.

Now tell me why I’m wrong.