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This study unpacks two mechanisms through which pay dispersion affects organizational innovation by examining the mediating roles of employee participation and voluntary turnover. We found that pay dispersion has an inverted U-shaped effect on employee participation, which in turn promotes organizational innovation. We also found that pay dispersion has a positive effect on employee voluntary turnover, which in turn impedes organizational innovation.

Theoretical contributions and implications

The ability to innovate faster and better—the foundation on which military, economic, and cultural power now rest—will determine the outcome of the great-power competition between the United States and China. For now, the United States remains in the lead. But China is catching up in many areas and has already surged ahead in others. To emerge victorious from this century-defining contest, business as usual will not do. Instead, the U.S. government will have to overcome its stultified bureaucratic impulses, create favorable conditions for innovation, and invest in the tools and talent needed to kick-start the virtuous cycle of technological advancement. It needs to commit itself to promoting innovation in the service of the country and in the service of democracy. At stake is nothing less than the future of free societies, open markets, democratic government, and the broader world order.

KNOWLEDGE IS POWER

A frenzy of highly skilled entrepreneurial risk-taking is benefiting the U.S. economy. The U.S. economy continues to produce billion-dollar unicorns—venture-backed privately owned start-ups with billion dollar valuations—at a substantially faster pace than Europe and with valuations that are substantially larger.42 From January 2014 to March 2016 alone,* the number of U.S. unicorns has grown from thirty-two to eighty-eight, despite eighteen companies exiting the list after going public, with a combined value growing from $75 billion to over $300 billion.43 Over the same period, European unicorns have grown from two to sixteen (less two public offerings), with $9 billion of combined value increasing to $35 billion.44 During a time when large European start-ups created $26 billion of addition value, the United States created $225 billion of additional value—almost ten times as much!

While it’s true that American consumers will benefit from a cure for cancer even if it’s discovered by a Chinese company, American workers benefit more when the successful innovators are also American. At the very least, company’s founders, investors, and workforce disproportionately spend their gains in the United States, which pumps up the demand for goods and services made by lesser-skilled Americans.

Climate change is widely acknowledged as the existential crisis of our time, a “code red for humanity,” in the words of United Nations Secretary-General Antonio Guterres. With the Senate’s passage of the Inflation Reduction Act on Sunday — in the middle of a summer that has brought record heat and innumerable weather-related disasters — it looks like the federal government will finally take some long overdue action on climate change.

This is positive, but insufficient, of course. Real, sustained progress on climate will require continued focus not just by federal and local governments but also by business — and crucially, philanthropy. Foundations, individual donors and the nonprofits they support can play a crucial role in pushing the other sectors to continue to act. They can also support work to mitigate climate change, foster greater adaptation to the reality of changing temperatures, as well as ensure that justice — and a recognition of the disproportionate impact of climate change on the most marginalized — is a crucial focus.

Wealth and philanthropic power is concentrating in fewer hands, posing an immense risk to the autonomy of the nonprofit sector — not to mention our democracy.

As we wrote in our 2022 Gilded Giving report, American charities are experiencing a transition from broad-based support across a wide range of donors to an increasing reliance on a small number of very wealthy individuals, a trend we call “top-heavy philanthropy.” Donors are diverting greater proportions of charitable dollars into wealth-warehousing vehicles such as private foundations and donor-advised funds instead of giving directly to working charities that serve immediate needs. Charitable giving is meant to benefit the common good, which is why taxpayers subsidize philanthropy. For every $1 dollar a billionaire donates to charity, taxpayers chip in up to 74 cents in lost tax revenue. Yet our current system lets our wealthiest opt out of paying taxes under the guise of charity while still preserving and controlling their wealth, which isn’t very generous at all.

Declining earnings have finally begun to curtail the buyback frenzy.25

As for the $2 trillion in cash being held tax-free overseas, according to the Wall Street Journal, over 75 percent of the money hoarded by some of our largest corporations is actually kept “at U.S. banks, held in U.S. dollars or parked in U.S. government and corporate securities.”26 Researcher Gabriel Zucman estimates that tax havens hide $7.6 trillion—remarkably, about eight percent of the world’s net financial wealth.27

However, a wealth tax would do nothing to help low-income earners while hurting the rest of the economy. Wealth taxes are difficult to administer and—more importantly—invariably reduce savings, investment, productivity, and economic growth.

A wealth tax imposes an annual tax based not on a person's income but on their net assets. For instance, the wealth tax advocated by Senator Bernie Sanders would impact only people who own more than $32 million of assets. Its rates would range from 1 percent at the bottom to 8% for wealth above $10 billion, and it would raise an estimated $4.4 trillion in ten years—more than the entire Biden plan.

Just as the ostensible simplicity of UBI obscures its harmful latent potential, the concept’s promised universality would likely be anything but. Presumably, eligibility for a universal basic income program would require official citizenship status, a distinction denied to tens of millions of undocumented immigrants, many of them poor, in the United States and abroad. Without concomitant changes to immigration legislation and policy, UBI could worsen the disadvantages that undocumented immigrants already face, enriching and empowering those with whom they already compete for jobs, housing, and social services. It’s difficult to imagine a factually realized universal basic income without attendant exclusions, the inflexible rules and language dictating who may or may not enroll in the program. No one can say where, exactly, the dividing line would fall, but it’s safe to assume that felons, who cannot vote under present law, would, alongside everyone else deemed unworthy, find themselves on the outside looking in. Meanwhile, those citizens lucky enough to gain access to the program would be submitting to governmental surveillance of untold invasiveness, where everything from purchase histories to biometric data could be used to determine eligibility.

The American government has an extensive history of denying its most vulnerable citizens access to the programs they need the most, so why would such a generous, plainly redistributive program be any exception? In all likelihood, a bill proposing a universal basic income would only pass as hodgepodge legislation, a bundle of counterposed policies that undercuts the original purpose it was drafted to serve, a UBI that bypasses the destitute to deliver funds to those who need them least. And when those inefficiencies result, wealthy private interests will be there to monetize them, to remake the social service in their own mercenary image.

Reforming the 2017 Law’s Costly and Regressive Corporate Provisions

The 2017 law’s permanent corporate provisions are heavily tilted in favor of large corporations and their shareholders, who are disproportionately wealthy. Cutting corporate taxes costs significant revenue, and evidence is sorely lacking that the benefits have trickled down. Executives, disproportionately wealthy corporate shareholders, and highly paid employees have reaped virtually all the economic gains from the corporate rate cuts, research suggests.[37]

One hotly debated idea, championed by Elizabeth Warren and Bernie Sanders, is introducing a “wealth tax” aimed at the richest citizens. The details of the plans from the two presidential hopefuls are different, but the basic idea is the same: The U.S. suffers from excessive inequality, and a wealth tax would reduce these disparities and raise revenue to be spent on health care, infrastructure and education.

Two recent debates at a conference at the Peterson Institute for International Economics offered a cautionary tale against wealth taxes. On the one side there were Emmanuel Saez and Gabriel Zucman, two economists at the University of California at Berkeley who have just published a book, “The Triumph of Injustice,” and are advising Warren on her tax plan. On the other, economists including Larry Summers and Gregory Mankiw of Harvard University who have scrutinized and criticized their work.

The great tragedy of the universal income debate is that the program could be implemented tomorrow and, despite all the possible complications outlined above, millions of lives would be radically, gloriously improved. If, for instance, 2018’s proposed $700 billion budget for military spending were distributed to the 45 million Americans living under the federal poverty line, each individual would receive an outlay of more than $15,500; for a low-income family of four, their annual income would nearly quadruple overnight. The positive effects of this influx cannot be quantified—such a windfall belongs foremost to the spirit—and it seems a national sickness that tax dollars are instead allocated on infinite war and imaginary walls. This is why the debate over universal basic income must be wrested away from the automators, the innovators, the bomb builders, and the billionaires. In the face of material poverty, they have delivered unto society the one thing we have in superabundance: Its fucking bullshit.

It’s called universal basic income, and the idea is gaining ground here and in Europe, especially with Covid-19 hitting economies so hard. The government would pay every adult a certain amount of money every month, whether you work or not. Democratic party activists love the idea. So do some Republicans. The Pope came out in favor of the notion. A candidate for the Democratic presidential nomination,

Supporters of Democratic presidential candidate, entrepreneur Andrew Yang march outside of the Wells ... [+]GETTY IMAGES

“Momentum for universal basic income is growing,” the billionaire Richard Branson concluded in a recent podcast ad / blog post. Titled “Experimenting with Universal Basic Income,” Branson’s native advertisement frames itself around his meeting with “The Elders,” a bafflingly real super-team of global leaders whose ranks include Kofi Annan, Jimmy Carter, and the ghost of Nelson Mandela. At The Elders’ remote headquarters in Finland, Branson learns of the nascent UBI programs being implemented in cities across the Western world, as well as the ethical paragons who have already voiced support for basic income programs: “Mark Zuckerberg, Elon Musk, and senior Vatican members are among those who have raised the idea too.” Add to that list of illustrious names the likes of Slack’s Stewart Butterfield, Y Combinator’s Sam Altman, and failed New Republic steward Chris Hughes, and the support for UBI among Silicon Valley’s billionaire class becomes distressingly widespread. Today’s basic income programs are often pitched by the elite as measures to offset income losses from automation, yet their greatest advocates are the principal drivers and profiteers of the phenomenon. Why, fifty years after economists like Galbraith foresaw the divergence of productivity and wage growth, has this populist concept taken sudden hold of the elite? What has disrupted the disruptors? In 2016, another billionaire proffered a workable model for mobilizing populist forces to his own personal gain, conning millions of economically precarious Americans into supporting policies—tax breaks for corporatists, a hostile disregard for climate science, healthcare revocations positioned as reforms—that would profoundly worsen their quality of life. In his successful election bid, this billionaire proved both the transformative potential of simplistic rhetoric and the masses’ eagerness to accept vacuous assurances rather than confront uncomfortable realities. As defined by the American philosopher Harry Frankfurt, the word for this deceitful enterprise is bullshit. It’s bullshit in the rhetorical sense, as it persuades without any regard for truth, and it’s bullshit in the ethical sense, as it ruins people’s lives. The 2016 American presidential election was the high-water mark in bullshit artistry, a swindle on a national scale with apocalyptic global implications. Now, with universal basic income, the liberal-leaning billionaires have thrown their hats into the bullshit circus ring, ready to determine precisely how little will pacify the working class. Like Branson’s inane blog post, the liberal elite promotion of UBI is transparent self-interest posing as benevolence, a shadow play by the powerful for the disempowered. To call the billionaires on their bullshit: Universal basic income is a promise to make America great again. There will soon come a time, a bright, new future that doubles as a second dark age, when a majority of the world economy’s jobs will be either fully automated or altogether eliminated. Neither high-skilled nor low-skilled work will be spared from obliteration: Touch-screen stations will completely replace retail cashiers, as multilimbed robotic hydras perform brain surgeries. As the machines occupy an ever greater slice of the economy, the capital that they generate will flow into fewer and fewer pockets; namely, into those of the tech moguls currently advocating for a universal basic income. For them, exploratory UBI programs aren’t practice runs for a protosocialism that could counteract the woes of late capitalism. Rather, they are beta tests for deceptive public policy that could sustain late capitalism forever. The aim is pacification, not liberation. A universal basic income is, in the most cynical sense, a subtle kind of doomsday prep for the tech billionaire, a means to diffuse the revolutionary potential of the working class by supplying them with the absolute bare minimum, just enough to keep them almost happy, fat in the apps. An Alexa or a Home. Three Blue Apron meals a day. A Casper mattress in a tiny house. Why work when you have this basic heaven to gain?

Some proponents suggest that universal childcare must accompany a basic income if it is to succeed in unseating sexual divisions of work and care. However, the cost implications of providing both might be economically and politically unfeasible. Young, writing in the Canadian context, has supported the idea of a basic income alongside other essential features of a welfare state that improve the position of women.100 She argues that a focus on basic income as the key policy option to redistribute resources risks failing to focus on the problems of the market in terms of its ‘provision of services and its treatment of workers’.101 The focus of a basic income on the individual can foreclose a focus on structures that create and maintain inequality. Aside from these conceptual concerns with a basic income there are many practical concerns about the size and shape of a basic income and the possibility that achieving it results in policy losses for women or groups of women currently benefiting from more targeted measures. A final concern with the basic income debate is raised by feminists from the Global South who question whether a small payment will be sufficient to address extreme poverty and inequality; and whether women will be able to control this income at the household level or be in any way better placed to resist violence.102

Basic income as a form of universal and unconditional social assistance has significant appeal to many groups of women currently frustrated by punitive and patchy systems.110 It offers unencumbered access to income for unpaid carers and precarious workers, groups that are women dominated and face challenges under many social security systems. These groups may struggle to meet activation requirements such as job seeking while balancing caring obligations; and may also be burdened with responsibilities that are sometimes attached via conditions to cash transfers.111 These arguments suggest that in some contexts a basic income will enhance equality and rights to social protection by bringing poor women and carers into the social protection fold without additional demands being placed on them. 112 But this alone will not undo the structural disadvantage that these groups face and will not necessarily be transformative in altering the gendered responsibilities for care; nor will it necessarily remove all the barriers to, and within, the labour market facing women and carers. This suggests that a substantive gender equality approach could endorse a basic income if it offered more to women in a given society than already existed. But it would also require further social policy measures to redress the sexual division of labour at work and home. These changes are unlikely to flow automatically from a basic income where structural inequalities along gender lines are embedded in society. Other measures will be needed, whether through state provision, market regulation or norm realignments or combinations of these to spread caring in more gender equal ways. A basic income would need to sit alongside state support to realise other interdependent human rights including health care, housing, social services and worker rights, themselves developed in accordance with substantive gender equality.

A human rights approach that is attentive to gender suggests that a basic income is likely to assist women who are disproportionately poor and vulnerable in all societies. But on its own it will not address the complex and structural inequality that they face. A basic income will need to be accompanied by measures such as the provision of childcare and support for sole parents, alongside changes to the labour market and tax system. It will also have to be of adequate size to make a real difference to inequality. The form of a basic income, its likely impact and its desirability as a policy solution is contingent on the political and economic conditions of the particular country in which it is being considered and should be subject to democratic deliberation. Human rights principles informed by gender will help to ensure that any basic income proposal is carefully evaluated within the context of that country to advance rather than impede substantive gender equality.

A basic income in a society where women have more limited access to paid work and social security than men might advance equality and address gender disadvantage by empowering women financially. Since women tend to be disproportionately represented among the poor, this is a compelling equality argument for a basic income. However, the universality of a basic income, while attractive in principle, is itself indiscriminate in treating all people in the society alike. It could therefore be seen as a formal equality measure, inadequate in addressing the structural disadvantages facing women. Young observes that ‘the (neo-) liberal goods of economic liberty and formal equality resound strongly for women – but they are loaded freight and also function to justify much of modern economic and social relations that are deeply oppressive and unequal for women’. 108 As a formal equality measure designed by its universal nature to give everyone an equal sum, those who start off more disadvantaged may not see their position significantly altered, and existing hierarchies of power and privilege may not be shifted.

Jacqueline O’Reilly and Anca Gheaus are less optimistic about the positive contributions of basic income to the feminist cause. Gheaus proposes that in order to judge to what extent a policy promotes gender justice, we should assess whether the costs of engaging in a lifestyle characterised by gender symmetry would be smaller than or equal to the costs of engaging in a gender asymmetrical lifestyle. She argues that basic income will raise the costs of gender-symmetric lifestyles. Rather than giving equal support to home- and career-centred women and accepting their preferences at face value, we should “aim to ensure that preferences (of all individuals) are formed under just circumstances” (2008, p. 4). One such deeply unjust circumstance is the devaluation of care; therefore, in the world as it is, a basic income would be an obstacle to gender justice. O’Reilly adds further critical notes to the effects of a basic income when implemented in the real world. She surveys the gender effects of existing social policies and concludes that she is “sceptical that BI could radically address all the causes of gender inequality” (2008, p. 2). The feminist struggle requires a clear spelling out of what kind of gender equality we want and an acknowledgement of the complexity of the multiple dimensions of gender equality. So what can we conclude from this wide array of views? I would suggest that an in-depth feminist case for or against basic income requires considerable additional information other than just the claim that an unconditional basic income will be provided as a citizenship right. First, we need to be more specific about the level of basic income, since different levels of basic income may plausibly have different effects on the gendered distributions of income, labour market participation, and the intra-household divisions of caregiving. Second, we also need information on whether or not child care provisions and provisions for others who are dependent on family care would remain intact or would be expanded in the basic income society, and on what other measures will be implemented to create the flexibility that employed carers need. Third, empirical information about the likely effects on the well-being and the material standard of living of various groups (children, women, men, employed and unemployed adults, employed and nonemployed carers, single parents, dual parents, and so forth) needs to be collected. If we argue as several contributors to this debate do that a basic income would need to be complemented with other measures that redistribute care and unpaid work between women and men, we need to know more precisely what these measures are, their effectiveness, and their public and private costs. These feminist discussions do need to be integrated into the mainstream basic income debate. After all, once a basic income is implemented it may be too late to notice that it adversely affects the gender division of labour and thus women’s position in society, or too late to notice that there is no money left to spend on the merit goods of special importance to women and children. To my mind, the main merit of this debate in Basic Income Studies is that it provides evidence of the consolidation of the conflicting feminist views about basic income proposals when analysed at a general level. Therefore, I believe that it is time to move to a second stage of feminist analyses that needs to focus more on the details of the entire package deal of a basic income society, in an empirically grounded fashion.

A consumption tax would also hurt small businesses disproportionately. Big businesses have systems in place to deal with new government compliance, like tax collection, and they always pass along expense increases to customers. Small businesses will be harmed because: We aren't always able to pass along cost increases, even a mandated VAT. New tax compliance and remittance will be prohibitively expensive. The sticker price of a national sales tax will take time for consumers to adjust to, which will hurt small businesses more. The only way we should consider any kind of a consumption tax is if it completely replaces the federal income tax, which would require repealing the 16th Amendment. Good luck with that because in the 227 years since the Constitution was ratified, only one amendment has ever been repealed - and that was to end prohibition.

Another challenge would be the impact on businesses. While the VAT system is designed to be neutral to businesses, transitioning to a new tax system would bring some challenges. Since VAT is applied at every stage of the supply chain, VAT would place a more significant burden on some businesses than sales tax, as it requires them to collect and remit VAT correctly, keep detailed records, and comply with all the potential VAT obligations (VAT registrations, VAT reporting, new types of tax returns, etc.). Small businesses, in particular, may need help to adjust to the new system, which could lead to increased administrative costs and reduced profitability.

Introducing VAT would likely mean higher tax rates for the final consumers than the current sales tax system, as VAT is generally applied at a higher rate than sales tax. Furthermore, VAT is levied at each production stage, which may increase costs for businesses and, in turn, lead to higher consumer prices.