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Scarcity, Abundance and Universal Basic Income

Imagine living in a arid environment that cannot sustain many animals or vegetation. You’re in a small community that uses a mix of farming and harvesting for food resources. It’s also over 100 miles to get to any other village, by foot due to the bad terrain. In this environment, you all manage to get just enough food and water to keep everyone alive and relatively healthy given the circumstances. Yet in the last drought several people in the community died, luckily this year isn’t quite as bad.

Scarcity 

It likely goes without saying, but in these types of scarce environments, working together is imperative if everyone is to survive. Having just one rogue individual stealing or cheating others out of food could result in someone else starving to death. The balance of working together and simultaneously wanting to ensure one’s own survival can create an interesting economic dynamic.

In this environment, what would happen if one person staked a claim to the more fertile section of land, then kept others from getting the food unless they provide something in return? The fertile land owner would immediately have an extreme impact on the rest of the community. Since everyone would need the food that the fertile land creates, they can ultimately be controlled by that one person. Similarly, if there are no resources and an external entity comes into play and gives power to a single person or group, they ultimately end up in control of the entire group.

What this infers is that an extremely scarce environment can easily lead to an overly lopsided wealth distribution. Once someone owns a scarce resource, there are extremely limited ways to gain the advantage. There isn’t much to compete for and subsequently, traditional capitalistic principles won’t do as well as a more socialistic one. Assuming they are cut off from the rest of the world and don’t have an equal ability to access any resources like the internet.

Without some other resource to balance the power, the fertile land owner would have complete control. Laws of course could then be put in place, to require that the fertile land owner give a certain percentage of the resulting food, but how would we do that? Should we do that? If we could perfectly divide things only until resources became more abundant would that be reasonable?

Abundance 

In an abundant environment it’s much more difficult for a single person to take complete control of an entire resource. It can still happen of course, but it’s not like a scarce community. It makes sense that the more abundant the environment, the more capitalistic and privatized practices can and will stem economic growth more than in an environment without competition.

When things are abundant, having a job is the equivalent of maintaining a way of life, like living in an apartment, having a car or bike, having fashionable clothes and purchasing any food we can think of. Whereas when things are scarce everyone only works to literally survive. Any jobs that do exist in a scarce environment are essential, while any non-essential jobs are not paid well or at all. Art and fashion may always exist, but the resources used to obtain them will be completely different in a scarce environment.

In an abundant environment, we can work whatever jobs we want to pursue our own way of life. If we don’t like something, we can quit. Even if we end up homeless, there are ways to get back on our feet as long as we haven’t fell victim to addiction. At almost any time we could stop working our jobs and still find ways to survive. If we’re to have a framework for the economy however, wouldn’t we want it to be just as lucrative in any environment, scarce or abundant?

Competition and Cooperation

When we talk about capitalism most will think of competition and how it spurs growth. Something we often forget to understand is what it is we’re competing for and if that is the only way we can define capitalism. There is always going to be some form of competition no matter what society we’re living in. There are an infinite number of reasons to measure ourselves to each other and try to subsequently do better. It’s easy to see why it naturally is our go-to for how to run businesses and get profit.

From an economic perspective though, when it’s all about the profit, the resources, the power to continue to grow, it doesn’t hold up in scarce environments as we’ve alluded to. It’s like someone who can’t run trying to win a race with someone who can.¬†The problem that we really should understand is we can either stick to “capitalism” = “competition” and lose in scarce environments. Or understand more effectively that “capitalism” = “individual ownership”.

With individual ownership, we maintain the freedom to chose and generally not be subject to an all powerful conglomerate unless we chose to be. How does this solve our scarce environment issues? It doesn’t by itself, but what we have to realize is that if we give control to a “group” the individuals in that group can easily manipulate things just as if a single individual were to obtain all the resources. It ends up being very similar, but worse because the collective group has power over everyone by right (or law) and resources; whereas the individual only has power due to their resources.

What we have to ingrain into our minds when it comes to capitalism is that it should include cooperation. Just because we individually own things doesn’t mean we can’t and shouldn’t cooperate and have to only compete. In fact many businesses already do, we just downplay how often. We could argue that businesses cooperate just as much as they compete. The person who can’t run can cooperate with the one who can, they can both provide each other value in ways that promote growth without competition. But now that we’ve talked about scarcity, abundance, competition and cooperation, what does that have to do with “Universal Basic Income”?

UBI and Jobs

Firstly to ensure we’re all on the same page, we’re defining UBI as a stipend that is provided to everyone or at the least those who are below some economic threshold or considered poor. This stipend is generally thought of as being provided by the government and is there so that everyone can get food, shelter and maintain a decent way of life.

With the impending artificial intelligence revolution, the first thing many talk about is UBI. The argument is that we need a way to sustain those who can no longer sustain themselves, for those who have lost their jobs. For others, the idea that working for “wages” is a form of control that forces us to work many hours a week when we could be doing other things we would want to do.

Scarce Pros & Abundant Cons

In an abundant environment, UBI will generally feel like a nice thing that won’t have any noticeable issues. The influx of money that some didn’t initially have would even spur the economy for quite a while. It’s likely the reason in places like the US, even in a pandemic, real estate markets are doing great. It’s because the entire country received stipends. There are a few negative issues however that may be hard to prove, but conceptually easy to see:

  1. Whenever we give things to others, we are ultimately taking from someone or something. That means someone must be paying for it in some form. Who is that someone? Is it the government? What is it the government has and how is it getting what it has? Taxes. Tariffs. Control of certain resources. The government is ultimately created and funded by the people of course. Which means that everyone is paying for everyone else who cannot. Forced teamwork. Forced contributions. To save and improve lives yes, but is this the only way? No.
  2. All of the contributions everyone is pouring into UBI, also is equivalent to “hours of work”. If we get 2k a month, for some that’s the equivalent of 100 hours of work, for others more or less than 100 hours. But no matter what, that “free money” is also equivalent to work hours. If those free work hours aren’t producing anything, then ultimately someone is getting a short stick. Not only are we taking money from others, we are taking from the potential energy, potential production that could be re-introduced into the economy. This is how “trade” normally works, we give 100 dollars to someone, but get something in return. When we give with nothing in return, we are bleeding out economically and passing the short stick without really knowing who it’s getting passed to.
  3. Control, control, control. UBI is the equivalent of what was being subtly proposed at the start in our scarce environment. Dividing up resources by a community so everyone can eat and survive is ultimately UBI. This socialistic construct isn’t a curse word and has merit in a perfect world. However it’s not a perfect world, so why relinquish control to a conglomerate when we can individually cooperate? If whoever is controlling our stipend doesn’t like us then we’re screwed and completely at their mercy. First it’s the areas that “law abiding citizens” don’t tend to think about like felons, prostitutes, illegal immigrants, homeless, drug dealers and anyone else making money in ways that the government doesn’t approve of. Yet, what happens when the government does something we don’t like? Relinquishing control is not a good idea if we can help it. If it goes wrong, we certainly won’t get it back very easily.
  4. Fake capitalism. With UBI we’re cutting checks to everyone, so all that money ultimately goes back to various companies. Instead of letting the market adjust for hard times on its own, there’s no reason to make cost reductions, no reason to figure out better ways to provide to the customers, no reason to innovate. Instead of the prices tanking after millions lose their jobs, the prices stay the same, companies stay fat and nothing happens to the “economy”. The effects ultimately would be difficult to calculate and as such can easily be swept under the rug. If we artificially inflate the corporations when extreme job losses have occurred, when no one is working anymore, we’re at best just lining the pockets of the rich while at worst, we’re creating a economic bomb that a global economy could set off at any moment.

Bottom Line

There are a lot of movements pushing for UBI. Similarly, even during the pandemic, most political sides were ok with stipend / stimulus checks. Many say that it will give everyone the freedom they deserve. That by allowing everyone to live without worry about wages, we’d be free to create, to innovate to do things that we’ve never done before.

Personally, if I received a stipend, I most certainly would focus 100% on the things I want to do the most. Maybe we could hypothetically turn into a society that just solicited for help like the open source community. Would people then take jobs just for fun? Something that we can learn from open source however is that there’s an incentive to keep things open. General open source licenses make it so that credit is always given, so that derivative works have to also stay open source. It’s essentially promoting growth in the ecosystem.

With UBI, for it to be implemented without a lot of the negatives, we’d similarly need to make sure it promotes growth. Ultimately however, because of the control it would give to whoever controls the stipend, we’d have to be very careful. Time and again, governments with total authority fail its citizens.

While UBI is a possible utopia, it doesn’t seem like we are quite ready for it yet. If we could learn to not kill each other, to stop the wars and bickering between countries; if we could manage to not threaten civil war because a democratic vote didn’t go our way; if we could learn to work together globally on all fronts, then maybe we’d be ready for some UBI like thing. But until then, as long as the world is in the state it’s in, we should probably think twice, no three times before trying to implement UBI for everyone.

Thoughts?

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