Sawicky Concedes the Point

Max Sawicky claimed that the US could not finance a $10,000 payment to every adult and implored everyone to “do the math,” which for him just meant comparing the $3.2 trillion aggregate sum to the current $4.4 trillion federal budget.

I pointed out that the net operating surplus, a broad measure of capital’s share, is $5 trillion, meaning that in a socialist economy where capital’s share was available to everyone rather than a small fraction of society, we absolutely could fund such a payment.

Sawicky now claims that “financing a UBI is not a matter of arithmetic, but of political economy,” going from “do the math” to “politics is not arithmetic” once I did the math.

Of course I say in my initial piece that obviously it’ll be a political challenge to liquidate the capitalist class, but that we should at least acknowledge the actual reality of what such a thing would allow.

Sawicky’s piece also contains a bit of “quibbling,” as he calls it, about how much of the net operating surplus is available. Remember the net operating surplus is $5 trillion and the UBI he discusses is $3.2 trillion, meaning that there is plenty of room even if you decide to downwardly adjust it. And of course, not mentioned in either of our pieces is that the “net” in “net operating surplus” means net of depreciation, i.e. capital’s gross income has already been reduced by very uncertain guesses of how much the capital stock depreciates each year.

But his quibbles deserve an answer.

1. Net operating surplus includes the surplus of owner-operated businesses like the Trump Organization, some of which is really labor income not capital income. This is true and it is impossible to disentangle that. But even if you assume (heroically in my view) that fully 70% of this income is really labor income, that still leaves you with an operating surplus of $3.84 trillion.
2. Net operating surplus includes the imputed rents of owner-occupied dwellings, like Bill Gates’s mansion. This is true, but irrelevant. The imputed rent of owner-occupied dwellings is absolutely operating surplus. In a society where the housing stock was socialized, that amount would be available for a social dividend.
3. Net operating surplus includes “not just the income pocketed by capital owners but also the funds they reinvest in their businesses.” Of course, funds for investment come from a lot of places, not just out of capital’s share. The accounts tell us how much profit is undistributed ($461 billion) but it does not tell us how much of that is reinvested. Even if you assume 100% of it is reinvested and subtract $461 billion from the $3.84 trillion from (1) above, that gets you to $3.38 trillion, which is still higher than the $3.2 trillion needed.

So even if you make these generous adjustments, which all go in one direction, it still is true that the UBI already exists in the form of the net operating surplus, but is just very unevenly distributed. Sawicky of course realizes all of this, which is why he calls these quibbles.

And to re-emphasize here, this is all based on an assumption that we only use the net operating surplus. It makes no mention of the country’s super-low tax level and large unnecessary spending that leftists would also get rid of, e.g. the $700 billion military budget. The idea that we can’t possibly commit a little under 20 percent of our net national income to a social dividend is of course absurd.

The reason I keep bringing this up is not because I think a social dividend is the most important issue. I’ve been saying forever that the welfare state is the most important issue. But the chief distributive interest of socialists qua socialism is the question of what to do with the operating surplus, which socialists correctly believe is massive and unfairly distributed. We should be careful, in our effort to backfill post-hoc arguments to strengthen group identity, that we not glide into believing that the money isn’t there when it absolutely is.

Politics might not be arithmetic. But policy possibility is arithmetic. And the numbers easily add up.