UCO vs UBI

UCO vs. UBI: Empowerment vs. Dependency

“If capital ownership is good for the rich, it is a thousand times better for the middle class and the poor.” – Louis O. Kelso

The details of Louis Kelso’s Universal Capital Ownership (UCO) are covered in the videos on the homepage, and under the Videos menu, as well as the Slideshow menu. With the UBI being much in the news, it is important to realize the critical differences between these two proposals to provide income to those displaced by automation. 

Universal Capital Ownership (UCO) is fundamentally different from the Universal Basic Income (UBI) currently championed by those who, perhaps inadvertently, favor a disempowered population. 

Rather than faceless bureaucrats determining income levels as in a UBI, UCO shareholders have significant input in choosing investments, voting on company direction, or even serving on boards. Or you can leave investment choice in the hands of financial advisers; whichever you prefer. Mix it up, or change it, you own it.

Power is decentralized, leaving the individual free to pursue their own priorities and self-development, without political interference in their peaceful activities by those looking to control others. 

UCO does not just empower individuals, it provides a critical link to community. From trust-fund recipients to welfare cases, many suffer a “crisis of meaning” born from the passivity inherent in economic detachment. A UBI risks making this social debilitation endemic. 

Conversely, with UCO, citizens are active participants in the larger economy, fostering a sense of belonging and a vested interest in governance. The “learned helplessness” of the welfare state is reversed. 

Widespread access to investment capital handles fund distribution in tandem with the actual production of marketable goods and services. It is asset-backed money. This tends against today’s inflationary money creation process, which chips away at the income and savings of those without much in the way of physical assets.

The Safety Net: A Bridge to Ownership

In the unlikely event that a citizen’s vetted investments fail significantly and they remain unemployed due to automation, a limited UBI concept or Restricted Basic Income (RBI) can serve as a last resort—but only in a way that minimizes political interference.

The Negative Income Tax (NIT) proposed by Milton Friedman is the ideal mechanism for this small sector of the economy. This process respects privacy and is harder to manipulate because it is tied directly to income tax procedures. A citizen simply files their return, and the “refund” is disbursed in monthly installments to cover the basics and a bit of discretionary spending so people can still attend social functions.

The NIT is highly efficient, requiring no new bureaucracy. Existing tax agencies can administer it through normal procedures. 

While Friedman was at times strategic in his communications with binary economist Norm Kurland to protect his status, he was correct that the tax burden for such a system would be lower than that of today’s myriad social programs. Crucially, this guaranteed income is temporary under binary economics; each year, new interest-free loans for investment become available, literally pushing people out of the welfare cycle and back into active ownership. 

Growth, Sustainability in a Moral Future

Those concerned about “limits to growth” often have a stunted view of progress. Economic growth can—and should—comprise increases in quality rather than just quantity. This can be such things as more green space, low-impact digital education, or even extraterrestrial ventures. Additionally, doing more with less is a hallmark of much of progress. 

Additionally, UCO loans can be tilted toward sustainability, with Genuine Progress Indicators (GPI) used during an interest-free loan vetting process. 

Furthermore, eliminating compounding interest from productive property loans removes the “churn and burn” of resources required to pay off ever-increasing debt. Much of the work today constitutes “busywork”, that produces nothing of what most people would consider real wealth, but is required to generate the money flows to service the debt.

The compounding interest problem goes much deeper. A contrived shortage of money for all to pay their debts and interest, especially when rates jump, has a terrible effect on public morality. In a macabre game of “musical chairs” not obtaining enough of a shrinking money supply to pay debts and interest doesn’t just mean losing a game—it can mean losing your home. Morality and ethics is an unaffordable luxury for many in such times, especially if they have dependents. 

Financial expert and ex-banker Bernard Lietaer related how this compounding interest dynamic creates a scarcity mentality that drives hoarding. Beyond Greed and Scarcity was the apt title of Lietaer’s book on this. He suggested local or complimentary currencies to handle the shortfall, but as society increasingly automates, this solution can only go part way. They can still function to reduced longer transport of some goods and services, act as an education tool around the concept of money and promote local community, but binary economics is the necessary overall remedy. 

The Concentration of Power Problem

“Power tends to corrupt; absolute power corrupts absolutely.” — Lord Acton

Under UBI, power is centralized in a small governing body, inviting corruption. Political parties can promise “raises” to win elections regardless of whether the real economy justifies the increase. This leads to inflation, where the increase is not really an increase in terms of purchasing power. People who have put aside money for a rainy day watch their savings dwindle. 

Inflation also drives an increased concentration of wealth, as those with less physical assets transfer more of their income to those with more physical and productive assets. 

The worst deficiency, by far, is that a UBI can be weaponized—income can be cut off for those who do not comply with state mandates. Already, the World Economic Forum (WEF) has an article on their website promoting UBI and suggesting restrictions for such things as vaccine status, effectively redefining “universal” into a recipe for tyranny. The concept is actually a Restricted Basic Income (RBI), and is easier to interfere with than the long established income tax procedures of the Negative Income Tax. 

The corrupted thinking that follows the concentration of power, from the historical observations of great thinkers such as Aristotle, Kant, Acton and many more, has since been validated by neuroscience. 

UC Berkeley psychologist Dacher Keltner’s “approach/inhibition theory of power” is probably the most cited empirical framework in this literature: power reliably increases approach-oriented behavior (risk-taking, reward-seeking, disinhibited action) while reducing the vigilance and self-monitoring that ordinarily checks it — his lab found this shows up in everything from cruder table manners to a worse read on other people’s emotions. 

There’s also a “dual-hormone” body of work (Robert Josephs, Pranjal Mehta, and others) showing that high testosterone paired with low cortisol predicts more dominant, risk-tolerant behavior, and that acquiring power itself raises testosterone in a feedback loop — power granted, then power-seeking hormones elevated, then more power-seeking behavior in a vicious circle. Aggression and violence can scale up to epic levels when populations are subjected to propaganda and join in with what clincal psychologist Mattias Desmet termed ‘mass formation psychosis’. History is replete with such warfare and other tragedies.

Award-winning neuroscientist Nayef Al-Rodhan points out “[p]ower, especially absolute and unchecked power, is intoxicating. Its effects occur at the cellular and neurochemical level. They are manifested behaviorally in a variety of ways, ranging from heightened cognitive functions to lack of inhibition, poor judgment, extreme narcissism, perverted behavior, and gruesome cruelty….It is important to remember that power, like all human emotions, is neurochemically mediated and that unchecked power can create irrational, addicted and destructive impulses.” 

Neuroscientist Sukhvinder Obhi (McMaster University) traced the degradation of “mirror neurons”. He conducted experiments using Transcranial Magnetic Stimulation (TMS). He discovered that when individuals are primed to feel powerful, a specific neural process called motor resonance is severely impaired. Motor resonance is the bedrock of empathy. It correlates with how our brain mirrors the actions and feelings of others. A brain flooded with power stops mirroring. The powerful person physically loses the neurological capacity to read social cues or empathize with subordinates.  

The reward loop also kicks in. Power activates the brain’s dopaminergic reward system in a similar manner as cocaine or nicotine. It provides a massive hit of dopamine, which increases confidence, lowers risk aversion, and creates a craving for more control. 

Neurologists like David Owen have argued that prolonged exposure to high power causes functional brain changes that mirror dopaminergic reward system. The power-holder experiences a diminished capacity for self-reflection, a heightened expectation of reward, a severe underestimation of risk, and a complete detachment from the reality of those around them. This was not a neuroimaging finding but a clinical/behavioral taxonomy he and psychiatrist Jonathan Davidson built through a rigorous historical-behavioral pattern with a proposed neurological substrate. 

The overall throughline is that concentrated, unchecked power produces a fairly consistent, cross-disciplinary signature (dramatically reduced empathy, escalating risk tolerance, reward-seeking, and significant loss of self-monitoring). “Power tends to corrupt and absolute power corrupts absolutely” holds up well across independent lines of evidence (TMS, hormone studies, historical case-coding).

We also have the historical lessons of history, in the USSR, Nazi Germany, Pol Pot’s Cambodia and Communist, now Fascist China (it has private property, free markets now, but still a human rights abusing, authoritarian government). The Canadian and response of other Western countries to covid provided less extreme examples of governments abusing their power. 

The Easy Way Out Leads Back In for Complex Adaptive Systems (CAS)

In conclusion, the ‘easy fixes’ by those proposing a centrally controlled UBI and feudal technocratic structures will lead to the classic systems science dynamic of “the easy way out, usually leads back in”. Symptoms, rather than root causes are addressed. The symptom of a citizenry short of money is partially addressed, while ignoring the deeper needs of people, to have agency and productive community connects. 

Widespread direct ownership by we, the people; along with education on how to exercise your control and monitor those serving the public is the way forward. It promotes the necessary true diversity and creativity necessary for meeting the informational demands of the future.

It is time for what futurist Alvin Toffler termed the first truly human civilization in history. The tools are here, from the works of many. They are not covered by our obsolete educational and legacy media institutions. The internet is here to remedy that. The only missing element is you.