Universal Basic Income? Hmmm…

This thing called the Universal Basic Income (UBI) has attracted my attention recently, so I thought I’d write down a few thoughts—not as a scholarly article, but just as a way to point out a few facets on the subject I believe are good starting points for an argument against the idea. (There. I laid my cards on the table in the first paragraph.)

Most recently, as of January 4, 2018 (Are you kidding!? I thought getting old would take so much longer), the Finnish experiment is the focus of those interested in the topic. Their model would provide every household with a minimum income, regardless of what other income each person might earn. Thus, the program has two purposes: provide everyone with enough money to get by and remove the disincentive to work inherent in the conventional welfare model, which penalizes recipients who earn money by reducing or eliminating benefits as income grows, leaving them in some cases no better off if their earnings from work are modest.

Proponents of UBI see it as the only solution to automation’s replacement of human labor. Advocates claim the program can be paid for by two mechanisms: taxing the owners of robots and software who are presumed to be banking enormous profits off automation and by cutting existing social welfare programs that UBI would replace.  They also claim this proposal would make people think about the nature of life and work, that it would be a way to liberate them from the jobs they don’t like but need, a status which the program’s advocates equate with the indignity of slavery. (This is an example of redefining words for greater emotional impact, a favorite tactic of so-called social progressives.)

My objections stem from three avenues of thought: economic, social, and practical.

Let’s look at those jobs that people don’t like, but do for the money. For example, people primarily are employed in garbage collection not for the mental stimulation or pure joy of the activity, but for the money. They might prefer to do something else, but they have no option that to them is better than being a trash collector. (We assume in a society where people are at liberty to pursue that which, in their opinion, makes them better off than the next best alternative. Thus what they choose to do, all personal factors considered, is their best alternative.) For sake of argument, let's posit that a UBI enables all people employed as trash collectors to leave their jobs. Obviously, this is a job that needs to be done. What will happen in a free economy? The wage rates offered to trash collectors will rise until the available positions required to accomplish the job are filled. The price of the service will rise proportionately, negating some, admittedly small portion of the UBI. However, on a broader, realistic scale, for all necessary services that people find distasteful, the wage price will rise and the combined effect of all price rises will consume a not insignificant part of the UBI, necessitating an increase in the payment, resulting in an increase in disemployment in non-desirable jobs, resulting in an increase in wage rates, resulting in an increased price for those products and services, and on and on it goes.

Yes but, I know what you’re thinking; the impetus for UBI is the emergence of robots and other technology taking the jobs of humans. Proponents of UBI realize you can’t stop the march of technology, so we must create a safety net for those who are replaced by it. The original Luddites were only slightly less imaginative: rather than demanding free money, they simply smashed the machines they thought would take away their jobs. What most would consider economic progress, namely producing more with less, was somehow “evil.” If we take this to its logical conclusion, we would have to reject civilization altogether and return to the “noble savage” life of cavemen and jungle dwellers bereft of tools. Does anyone really want to return to the days of manual reaping of wheat and corn and cotton? Certainly, this would provide many more jobs, but who really wants to perform them or return to the days of completely manual labor? Let’s be realistic: If a machine can replace you, you're doing robot work. This is precisely why 90% of the population no longer have to work in the fields every day. The truth is, because of technology, the average man today lives vastly better than any medieval king.

Let’s look at the issue from another perspective. Admittedly, I have a problem giving more power to the government, to the state. There is no perfection on Earth and there are positive and negative effects of everything. In my humble opinion, allowing a government to acquire more power is always and everywhere a case of the cure being worse than the disease. The basic nature of government is a small group of people forcing a larger group of people within geographical boundaries to do what the government tells them under the threat of violence, being locked in a cage, and/or death. Power should be delegated to government in very, very small measures.

By accepting anything offered by government, including the mythical “free lunch,” one is less free in proportion to the extent of the “gift.” One becomes dependent on the whims of the ruling regime – which is of course precisely what the regime desires. Proponents of UBI claim the lack of concern for daily sustenance will free the individual to pursue more creative and desirable activities, as they will no longer be forced to deal with the drudgery of having to earn a living. The truth is, the exact opposite will happen. The state will acquire more power over its people; a greater level of dependency of the people on the government will result. In Orwellian fashion, greater dependency on the government is marketed as “freedom” by the proponents of UBI.

If a true UBI were put into effect, what we would find is that productive people would find it degrading and unproductive people would take advantage of it. UBI not only cannot solve the so-called equality problem, it would actually create even more social antagonism than exists today as even more resources would be diverted to the State. It’s axiomatic that the State cannot give what it does not first take from others. This is, in fact, the basic problem with a guaranteed minimum income. As with welfare in general, it is the government that is the guarantor, the giver. And before the government can give, it must first take from productive members of society. This is the immoral pedestal on which all government welfare stands.

The best case is that UBI will only slow down progress. Unearned income will be directed towards unproductive people, who for the most part will be encouraged to be even more unproductive.

The funny thing (not funny, ha-ha) is that Mark Zuckerberg and other multi-zillionaires have come out in favor of UBI. Endorsing a plan to hand out to individuals in a month what Mr. Z makes in fifteen minutes seems, I don't know, disingenuous? Pandering?

And as we see from countless examples, whatever individuals receive will not be sufficient. African Welfare recipients in Italy are demanding free cellphones, better food, and nicer free accommodations than that which the Italian people have already provided them. They are complaining about the “bad hygiene” in their free housing quarters and expect the Italians to do something about it. To voice their dissatisfaction with Italian welfare handouts they have set buildings on fire and blocked highways. Give an inch—they’ll take a foot. Give away muffin bottoms, they’ll demand the tops. No good deed goes unpunished.

Zuckerberg says he wants to see that “everyone has a cushion to try new ideas.” This may be the proof that he’s throwing his hat into the ring for political office, because he’s making a political statement here, not describing reality. Furthermore, he apparently has no understanding of human nature. My assertion is, and I’d be glad to be proved wrong, is that the great majority of people will spend their UBI and their resultant free time reading Us Magazine and watching re-runs of Friends, rather than pursuing entrepreneurship of any kind. If people don’t have to produce, perhaps they’re going to become even more robotic than they are today. Will the average person turn his mind to great art and philosophy and literature? That’s doubtful, based on what’s happened so far with welfare.

UBI is, in fact, nothing more than the steady march of socialism. Since the collapse of the Soviet system, most economists have stopped making economic arguments in favor of socialism, realizing they are no longer credible. Instead, they are now making moral and cultural arguments in favor of collectivism.

Although most economists admit socialism will make us poorer, the argument is that it is “morally superior” to the free market system. One might want to ponder the victims of the Chinese Cultural Revolution in this context – when the protection of individual rights is abandoned in favor of vague and pious notions of the “collective good”, things often tend to get very ugly very quickly.

Saudi Arabia basically has a UBI, and it’s a social and political time bomb. Since Johnson’s Great Society programs of the ’60s, you can get free food, free schooling, free housing, and free medical care through scores of welfare programs. All those programs have accomplished is to cement their “beneficiaries” to the bottom of society. It’s a matter of psychology even more than economics. Unearned material goods doesn’t just destroy most poor people, it destroys most rich people. In general, have large inheritances, in and of the inheritance itself, made the heirs of the rich better or happier people? The legions of miserable lottery winners are cliché.

We are already well on the way to a socialist society. We currently have these social safety net programs and more:

  • The elderly have Social Security and Medicare.
  • The elderly poor have access to the Elderly Nutrition Program and the Commodity Supplemental Food Program (CSFP).
  • The disabled have Supplemental Security Income (SSI) and are also eligible for Social Security and Medicare.
  • Medicaid
  • Supplemental Nutrition Assistance Program
  • Section 8 housing vouchers
  • Temporary Assistance to Needy Families (TANF)
  • Low Income Home Energy Assistance Program (LIHEAP)
  • Subsidized phone service
  • Community health centers
  • Public housing
  • Family planning programs
  • School breakfast and lunch programs
  • Earned Income Tax Credit (EITC)
  • Additional Child Tax Credit (ACTC)
  • American Opportunity Tax Credit (AOTC)
  • The unemployed have free federal job training programs
  • Those who get laid off from their jobs have unemployment compensation
  • Low-income pregnant women and new mothers have Healthy Start and the Women, Infants, and Children Program (WIC).
  • Low-income students have Pell Grants
  • All students have access to federal student loans
  • Farmers have farm subsidies
  • Refugees have assistance programs
  • Homeowners have low-cost federal flood insurance
  • All parents can send their children to public schools at no cost

And when production is diverted from further wealth creation and given over to consumption, that’s likely a misallocation of capital. The same basic argument could have been made with every labor-saving device that’s ever been invented—the plow, the loom, the steam engine and countless others.

 

No one has a right to anything just because he or she exists. This is true for health care, housing, and any portion of the wealth created by others. Free will charity can provide for sick people, but the sick have no rightful claim on the services or products of others. Charity can provide housing for the poor, but the poor have no rightful claim on the property of others. Charity can provide cash relief to the poor, but the poor have no rightful claim to the income of others in the form of UBI or any other redistribution system. If “society”—whoever that’s supposed to be—were to push for any values, equality should not be among them. Equality only exists before the law. People are unique, and therefore naturally unequal.

If there is equality in one thing, it is that you and I and everybody else have infinite desires. If you have one exotic sports car you might want another and another and yet another because they’re fun to collect. If you have a summer beach house, maybe you want a winter ski lodge. Desires are infinite. Everybody wants more, so in reality there’s no natural state of unemployment for anyone of normal intelligence and physical capacity. (How we help others is a matter for another article.) To paraphrase the captain in Cool Hand Luke, “What we have here, is a failure of imagination.” The people who manually spun thread in the sweatshops of Elizabethan England couldn’t imagine that there was a better way to make a living. Luddites who destroyed other labor-saving machinery of the industrial revolution couldn’t imagine that the creative intelligence of humans could come up with other ways of creating value so that they would not have to endure their back-breaking, sweat-filled, dangerous, life-shortening daily routine.

Today, some people see automated order takers at McDonald's spelling the end of the possibility of millions of people earning a living. Seems those same people claim that those same counter people don’t earn enough to provide a basic lifestyle in Manhattan and demand McDonald's raise the minimum wage to $20 an hour or more.

Tens of thousands of jobs of the past are no longer in existence. The buggy whip industry is a thing of history. People only have to use their imagination and take advantage of new opportunities. Those opportunities require some education and retraining, but the nature of humankind is the ability to adapt through our innate intelligence.

For more on this line of reasoning, see Money and Work Unchained by Charles Hugh Smith.


I have left the nine-to-five cubicle existence of Office Space and struck out in a new direction that affords me more income and more freedom than I could possibly have had any other way that I could imagine. If you’re serious about making sure you don’t have to endure downsizing and reduction due to redundancy or off-shoring your job, you might want to check out this program. I highly recommend it.

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