I think there are basically two models of financial independence. Individual and Collective.
In post number two I said the collective model was about diverting wealth investment into social uses, decreasing the number of hours you need to work to pay for an enjoyable life.
A policy along these lines that has got really popular recently is the idea of a Universal Basic Income (UBS, also known as a Citizens’ Income). I’ve even heard a FIer talk about their individual savings efforts as their attempt to provide themselves a UBI.
I’ve been a fan of the citizens’ income since I read about Thomas Paine when I was studying the French Revolution at school.
Reading up on Tom took me down a rabbit hole of ideas because he wrote this pamphlet called Agrarian Justice where he basically argues that we should tax land owners who had appropriated common land and use that to pay everyone a sum of money, because it’s natural wealth that belongs to everyone. Hard to argue with.
Land ownership is still pretty contentious around the world. But the idea of the commons is now mostly understood in reference to technology and data, rather than patches of land that livestock graze on.
Similarly, Universal Basic Income is mostly considered a good idea by people who are worried about how we can fairly share wealth when jobs get automated out of existence.
So, I quite like the idea of a basic income. But I think it’s worth us considering it as only one possible tactic to help get everyone to FI, instead of the whole goal.
Here are my reservations in the context of financial independence.
For me, the lesson of FI isn’t just about how much money you have, it’s about actively changing your lifestyle so that you don’t equate buying commodities with more happiness; a UBI doesn’t make that change happen.
Similarly, we can speculate that over time – given access to a stable source of income other than through wage labour – people will start choosing to prioritise control over their own time above waged work.
But that feels pretty uncertain to me when you consider that the big companies will (presumably) still have quite a lot of economic power and will be pretty interested in convincing us that our extra money is best spent on commodities (bad for the planet, and bad for us in my opinion – maybe more on that later).
Then there’s the welfare state angle.
Universal Basic Income is a maximised version of a policy that is more generally called ‘cashing out’ – where you swap a service or institution (like a disability support service or council housing) for a cash payment (like Disability Allowance/Personal Independence Payment or Housing Benefit).
Many proponents of UBS want to make the payment one big replacement for the welfare state. More left wing advocates want it on top of the welfare state. Either way, there’s a bit of a history of phasing out direct services for cash and then that cash being reduced much more rapidly than the services would have been; it’s easier to erode cash housing payments over time than it is to just knock down council houses one by one.
So, I think it’s worth pausing before jumping on the UBS bandwagon, which as a simple idea of giving everyone cash payments runs the risk of greasing the wheels of already existing capitalism rather than really transforming it.
From a financial independence point of view, I think we’re better off fighting for universal services that reduce the need for a large pot of FI money (free healthcare, education, transport, books, tool libraries) combined with more equal workplaces (cooperatives, workers on boards, campaigns for better working hours regulations) that make selling your labour less painful.
To put it a different way, imagine how much further even a very modest basic income would go in most European countries compared to perhaps a larger one in the USA, where much of it will go directly into the hands of the healthcare companies, colleges, and car suppliers.
My conditions for supporting UBI as a means to FI for everyone would be:
- can we make sure the amount rises along with the amount of wealth being created? the point is to at least compete with private wealth
- is it independent of other public services? we should still value public services and democratic ways of running the economy for their own sake
- are we reducing the power of companies to persuade us to spend our disposable income on commodities, and if not how are we considering the damage that is done by an economy predicated on continuous production of things we don’t need for the profit of a minority?