Why a Universal Basic Income Won't Work in a Capitalist Society
by John Lawrence
In the 2008 financial crisis the central bank of the US, the Federal Reserve, bailed out the big banks with a policy of quantitative easing. That is it effectively printed money and gave it to the banks. It also kept interest rates near zero so the big banks could get all the money they wanted and lend it out at much higher interest rates to the middle class and the poor, thus creating a lot of debt which made banks and bankers rich. Salaries and bonuses related to the financial sector have never been higher while the US middle class and poor have never been mired in more student loan, credit card, car loan and mortgage loan debt.
Jeremy Corbyn, the British labor leader, has suggested quantitative easing for the middle class and poor which would amount to a Universal Basic Income (UBI). Since automation is replacing most of the good paying middle class jobs, it makes sense that, in order to keep the economy running, the Federal Reserve should just shovel some money to those in the 99% or 90%, at least, who have lost those good paying jobs.
But not so fast. First off the Federal Reserve is owned privately by the very banks who have profited from its policies. It is not a true central bank owned by the people. Second, the poor and middle class would spend their UBI on basic things like food, housing, clothes, education etc. This would not profit the big banks. It would take away from their profits because people would not be going into as much debt. Therefore, Wall Street would suffer. They only make money when people go into debt.
In a capitalist society such as the US, there is one alternative for the middle class and poor. In succinct terms it is "Join the Army." The military-industrial complex is huge and almost anybody can get in. They even train you and offer some other incentives. The military-industrial complex is one industry that is not competing with the big banks. So if you lose your good paying middle class job, there are plenty of jobs in the military. The USA trillion dollar defense budget sees to that. And there are plenty of enemies to go around and keep the military busy for years. The only threat is if peace broke out. Then the military-industrial complex and the whole US economy would collapse.