|
|
Musings Report 2020-41 10-10-20 UBI: Nothing But a Subsidy to Lenders?
You are receiving this email because you are one of the subscribers/major contributors to www.oftwominds.com.
For those who are new to the Musings reports: they're a glimpse into my notebook, the unfiltered swamp where I organize future themes, sort through the dozens of stories and links submitted by readers, refine my own research and start connecting dots which appear later in the blog or in my books. As always, I hope the Musings spark new appraisals and insights. Thank you for supporting the site and for inviting me into your circle of correspondents.
Thank You, Patrons and Contributors!
Welcome new or returning patrons / subscribers Andrew R., Piotr P., Casey C., Brian M., John N., Garry M., Gregory H. and Duane J.O.-- thank you very much!
UBI: Nothing But a Subsidy to Lenders?
I received a very insightful and topical question from correspondent/patron Shawn which he kindly gave me permission to share:
"I'm noticing a distinct shift in US policymakers the last month or so. It seems they are embracing the stimulus strategy, given recent headlines in the last week. I also notice you are possibly forecasting UBI coming as a policy practice, along with requisite outcomes.
My question: Is the policy elite teeing up regular UBI at the request of the rentier class? If debtors with nothing left to extract cannot pay, then someone has to pay on behalf of the rentiers, hence UBI. It's not a gesture of generosity, but of calculated survival. Plus, it mitigates the social unrest that is erupting. They're protecting themselves by protecting their income streams.
One other question: how do you see the various power factions of the deep state advocating/opposing UBI, is it a tool that is being wielded to achieve strategic ends?"
Response to Question #1: I think you've nailed the core dynamic: UBI is essentially a debt-service subsidy to lenders and owners of debt that's being presented as a no-strings-attached monthly stipend.
But as I explain below, there will almost certainly be strings attached regarding defaulting on credit cards, student loans, auto loans, etc. Those who stopped making loan payments will find minimum payments deducted from their UBI stipend.
Without UBI, many marginal borrowers would default. With UBI, lenders are guaranteed that debtors will have enough income to pay their monthly debt payments.
We should also note that while "wealth taxes" are being discussed, there's no causal connection between UBI and higher tax revenues; nobody is proposing that UBI be paid in full by new taxes on the wealthy. The bill for UBI will be put on the nation's credit card (selling Treasury bonds to fund deficit spending) just like the stimulus programs.
This is another reason the Financial Aristocracy love UBI: they don't have to pay for it.
Lastly, we can also observe that even minimum payments work for lenders--in fact, just getting interest payments leaves the principal untouched, making the borrower a debt-serf for life.
I discussed these issues 18 months ago in While the Nation Fragments Socially, the Financial Aristocracy Rules Unimpeded (March 18, 2019):
"As for Universal Basic Income (UBI), the financial aristocracy is cheering loudly for UBI, which would enable debt-serfs to keep servicing their debts. (Is anyone so naive to think that UBI won't have a clause which enables the deduction of debt payments from the monthly stipend? Does anyone think the financial aristocracy is going to give $1,000 a month to debt-serfs and then let them default on their debt? Get real!)
So by all means demand Medicare for All and UBI: the aristocracy is heavily promoting expanding federal subsidies of its wealth and power. Just as the Roman elites favored distributing free bread to the disenfranchised masses and the staging of Netflix binge TV watching--oops, I mean circuses-- so too does America's aristocracy favor UBI, Medicare for All and a fragmented society in thrall to disunity."
As Shawn observes, UBI mitigates social unrest by giving everyone a cushion--even if that cushion may be cut in half by debt payments garnished by lenders.
Response to Question #2: This is an extremely interesting topic with no clear-cut answers, as Deep State factions do not identify themselves or their agendas or priorities.
Nonetheless we can make some educated guesses based on the topics being addressed in Deep State-milieu journals such as Foreign Affairs. As a long-time subscriber (decades), I'm very sensitive to shifts in the magazine's narratives and "what's important enough to be in this magazine."
I think one of the takeaways from the 2016 election was the complete indifference of at least one Deep State faction to so-called Flyover Country. This Deep State faction is primarily concerned with maintaining technological, economic and financial hegemony globally, and so its focus is on the sources of this hegemony on the Left and Right coasts. Rising wealth-income inequality was not an issue except to the degree it threatened Left-Right Coast centers of global dominance (Silicon Valley, NYC, D.C., the National Labs, etc.)
This faction viewed the bottom 90% with benign neglect because their role in American hegemony was limited to filling the ranks of the Armed Forces, national-defense related industries and providing agricultural surpluses. Until the election of Trump, this faction did not see the bottom 90% as a disruptive force.
The Deep State was accustomed to suppressing highly politicized individuals and small groups of dissenters as threats to the Imperial Project of war, but the neglected 90% becoming an apolitical threat via social disintegration is a novel situation. It seems they haven't yet fully grasped the nature of this new class-warfare / social-disintegration threat to national stability.
In response to this novel threat, there is a new awareness in at least one Deep State faction that rising inequality, poor health, corruption and injustice / unfairness pose a potentially existential threat to the stability of the nation and thus the Deep State itself.
This is reflected in the recent publication of articles in Foreign Affairs with titles such as:
How Poverty Ends; The Neoliberal Collapse; How to Fix American Healthcare; Inequality and the New Elite; Dirty Money: How Corruption Shapes the World (January 2020)
The Epidemic of Despair; (March 2020)
The Age of Magic Money: Can Endless Spending Prevent Economic Calamity?; Divided We Fall: What is Tearing America Apart?; After Capital: A Radical Agenda to Tame Inequality (July 2020)
A Grand Strategy of Resilience; The Fragile Republic (September 2020)
Such domestic-centric topics rarely if ever made it to the pages of Foreign Affairs until the last year or two. This reflects a growing awareness that civil disorder, poor health, systemic corruption and soaring inequality are potentially destabilizing dynamics and so they must be addressed.
The problem for the Deep State is there is no way to leave the existing status quo untouched and fix the sources of America's social disintegration because the existing status quo is the problem.
Are some Deep State factions viewing UBI as a strategically critical policy? I think the answer is "yes" based on the last two articles listed above. If the Republic is increasingly fragile, the nation's hegemony could implode if domestic disorder undermines civil society and the economy.
The article on strategic resilience is quite interesting because the author is saying domestic resilience is the foundation of America's strategic hegemony. I agree with this and my book Pathfinding Our Destiny is more or less saying the same thing.
I think we can conclude that at least one important faction in the Deep State is increasingly aware of the need to re-stabilize the domestic social order by addressing the sources of inequality, poor health, unfairness, declining social mobility and corruption.
To the degree that UBI helps limit the destructive consequences of extreme inequality, this faction likely sees UBI as essential to the nation's stability. It probably sees Medicare for All and infrastructure spending in a similar light, as essential "fixes" to domestic problems the Deep State ignored for decades.
What the Deep State factions appear to be overlooking is the potential threat posed by runaway inflation as all these programs increase incomes without boosting production of goods and services. Runaway inflation will be just as destabilizing as extreme wealth / income inequality.
The Deep State is also ignoring the systemic corruption that is now endemic and the inconvenient reality that healthcare, higher education, etc., are bankrupting the nation. My sense is the Deep State factions want "easy answers" such as UBI and Medicare for All that don't actually fix what's broken.
Fixing what's broken would require dismantling the entire class of insiders and power elites benefiting from maintaining the status quo exactly as it is. To the degree the Deep State insiders are members of this class, their self-interest encourages Band-Aid fixes such as UBI. But since Band-Aids won't cure the sources of social disorder, the Deep State will find UBI is a stop-gap, not a real fix.
At least one faction of the Deep State will have to face up to the need to radically reform the entire status quo. If the Deep State does nothing, a grand crisis will erupt without any resolution. If the Deep State forces reform on our corrupt status quo, that will also trigger a grand crisis, but at least there will be a roadmap to resolution. It won't be an easy choice for self-serving insiders to make.
Highlights of the Blog
Podcasts:
AxisOfEasy Salon #25: Tired: Anti-Copyright Wired: Post-Copyright
What Could Go Wrong? with Gordon T. Long, 43 min. video
Obsoleted Engineered Economic Relapse (1 hour) with Chuck Ochelli
posts:
Has Our Luck Finally Run Out? 10/9/20
A Hard Rain Is Going to Fall 10/8/20
What Could Go Wrong? Plenty 10/6/20
Corruption Is Now Our Way of Life 10/5/20
Best Thing That Happened To Me This Week
Found a promising treatment for the Lace Bug infestation on our three young avocado trees. Hope it works....
From Left Field
How is post-viral fatigue diagnosed?
Doctor at 'mask optional' clinic in Melbourne dies; tests positive for coronavirus post-mortem -- so much for being a hoax...
Opinion: Beware of covid-19 vaccine trials designed to succeed from the start (Washington Post, via Cheryl A.)
Covid-19: An open letter to the UK’s chief medical officers
COVID-vaccine results are on the way, and scientists' concerns are growing (nature.com, via Cheryl A.)
Researchers warn that vaccines could stumble on safety trials, be fast-tracked because of politics or fail to meet the public’s expectations.
COVID-19 is not a pandemic (Lancet) -- it's a syndemic....
Protective Effects of Polyphenols Present in Mediterranean Diet on Endothelial Dysfunction (via Daniel C.)
Inside a California Covid Revolt: Residents of Shasta County have taken resistance to Covid-19 restrictions to another level: "full-on anarchy."
How Three Prior Pandemics Triggered Massive Societal Shifts
What's Behind the Fed’s Project to Send Free Money to People Directly?
Covid 'Long Haulers' Ask Who Pays When Sickness Just Won't End
26 Movies Every Design Lover Should See (via Maoxian) -- this list feels very incomplete, but an interesting angle...
"Few things are harder to put up with than the annoyance of a good example." Mark Twain
Thanks for reading--
charles |
|
|
|
|
|
