“With less incentive for people to take on less pleasant work, less will be produced, and because of that there will be less to go around for everyone to enjoy.”
– Universal Basic Income, for and against
Three COVID stimulus checks, months of extra unemployment payments, and a new child tax scheme have only served to whet again the appetite of entitled Americans now calling for ongoing monthly payment of $2,000 for each adult, and $1,000 for each child, for not only the duration of the COVID downturn but for all future economic slumps. Unfortunately, a growing dependence on government largesse has bred a beggar nation fitted with catcher’s mitts on both hands.
Yet, even as attempts are made to justify a guaranteed income, the US employment market remains nearly 8 million jobs short of pre-COVID levels. Unemployment remains high, especially in states with long lockdowns and extended unemployment payments, while up to 40 percent of small businesses have seen their firms shuttered. Now, having acclimated to a jobless existence at home, many would prefer an income equivalent deposited into their bank accounts, rather than return to the drudgery of unhappy employment.
In the United States, 2020 presidential hopeful, Andrew Yang, campaigned on a $1,000 per month program to address future automation and Artificial Intelligence (AI), which some fear will negatively affect workers. A Universal Basic Income (UBI) is a guaranteed income for all citizens regardless of wealth or employment. Payments can be tendered either as a direct deposit or as a tax deduction depending on gross salary. UBIs are meant to provide financial security by meeting the basic needs for housing, food, clothing, and possibly healthcare. They are also marketed as a means of streamlining the current assortment of welfare programs into one neat little payment, seemingly slashing administrative costs.
Yet, the dirty little secret may just be that disparate welfare plans are working as intended. Perhaps the inability to escape welfare is a feature of the system and not a bug. Administered for over 50 years by various administrations, and yet no one has been able to implement a dollar-for-dollar reduction from welfare to incentivize people to work. Or to reduce the marginal tax rates for workers leaving welfare to make employment more appealing. To further disincentivize work, welfare programs already pay more than minimum wage in 35 states.
Touted as a means to remove the stigma of welfare dependence, a monthly income would also reduce the stress of a job loss, allow time for retraining for a new job, or simply indulge in one’s hobbies. A likely result of a UBI would be a growing tax on individuals who work in jobs that supply needed goods and services, in order to subsidize those who don’t. A decrease in the traditional workforce would also result in scarcity and higher prices, requiring regular increases in the amount of the UBI.
UBI would only be possible through the taxation of citizens or corporations. Overtaxing citizens would affect job choices and result in the loss of critical services if a worker felt they could not recover the cost of education and training. Americans already work nearly a third of the year to cover the cost of the current tax scheme. Many would be unwilling to part with even more of their earnings. Taxing corporations would immediately increase prices and reduce the amount of capital for the growth of existing and new companies. If the government was foolish enough to fund UBI by printing new money, the economy would suffer from inflation. Not to mention the unsustainable levels of debts and deficits already on the books.
While the idea of UBIs has been a centuries-old concept, several modern attempts to implement the program in various countries have failed. Both Canada and Finland experimented with potential plans in 2017 and 2018, only to end their trials quickly following botched results. Canada fell to high costs, while a lack of initiative in Finland ended their prospects. UBI is a notorious job killer, by creating a permanent deterrent to work.
In Antony Sammeroff’s 2018 book, “Universal Basic Income: For and Against”, Sammeroff lists the pros and cons of a universal basic income, noting that advocates come from both the left and the right. Attempting to answer the bigger question of why the welfare state has failed to reduce poverty, Sammeroff also looks into the problems that government interventions have caused to increase the cost of living and create a further need for assistance. Fears of automation and AI in the new economy are also driving irrational fears of the future. Past technological advances, automation, and women entering the workforce were all met with claims of job elimination. Yet, none of them materialized.
Current welfare programs have spent nearly $15 trillion over the past 50 years and have had little if any success in returning people to productive work. People in poverty and those with low incomes need to build their personal capital by increasing their skill sets for the rapidly changing economy. Increased proficiency and knowledge are the only viable means to a higher income. Redistribution, however it's applied, goes against everything we believe in as a country. You can have a UBI in America, but when you do, the America our founder foresaw, will cease to exist.
Comments