Busting Myths: Will Universal Basic Income Help Everyone?

 

The idea of adopting a universal basic income has become progressively more popular over the last few years. The idea is utterly simple (though models vary): Have the government send every adult citizen a check for a pre-set amount each month. The stated goal of adopting a universal basic income is to eliminate poverty, the assumption being that if the government sends every adult $10,000/year that everyone who was formerly made total yearly earnings below the poverty line would now be above it. While this system seems like it would be beneficial in theory, it would be an unmitigated disaster, like any other wealth redistribution system.

While a universal basic income program sounds to be both helpful and humanitarian on its face, it would lead to serious problems, first and foremost because it would disincentivize labor. Some view this as a good thing, holding that it will both allow for people to survive as jobs are phased out by technological advancements, and also that it will allow more entrepreneurial types to take bigger risks thanks to this assured basic income. This thinking has two major flaws: Firstly, jobs are not eliminated by technology, but instead the needs for labor are simply changed by new technology. When the automobile first began to be produced, the market demand for buggy repair certainly fell, but no market opportunities were eliminated, instead new demand arose for both the production and maintenance of automobiles. This has been the same throughout history, and always will be, technological advances do not harm the market, they simply change it (and often allow for greater productivity, and higher standards of living). Second, the money required to fund such a program which could have been used to invest in entrepreneurial endeavors will have been funneled out of the market and redistributed in such a way as to limit the investment capital available to reward good ideas. Good ideas are wonderful, but they require capital (in the form of labor, time, and currency) to be brought to fruition no matter how good they may be.

Proponents of the universal basic income argue that not only would it allow for more entrepreneurial endeavors, but that it would also eliminate poverty altogether. The idea goes like this: “The poverty line is $11,000. If we give everyone a total of $11,001.00 each year, nobody will live below the poverty line anymore.” This argument, either ignorantly or intentionally, ignores the fact that whether or not someone is wealthy or poor is always relative. There’s a joke about an economist who was asked “How’s your wife?”. He responded “Compared to what?. It’s a silly, terrible pun, but it gets the point across. The people with the smallest income in any given economy will always have a hard time, and raising the floor of the economy artificially by giving everyone a check doesn’t bring anyone out of poverty, it simply adds a few zeroes to everyone’s income.

Raising the floor of an economy doesn’t lead to greater wealth, either in the short-term or the long-term, it simply puts more people at floor level. The laws of supply and demand still rule supreme over economics, so when you add a few thousand dollars to everyone’s income, prices for goods and services will rise in response, since demand will either remain steady or even rise while supply remains the same. Economic improvement is always a product of raising the ceiling of the economy, rather than raising the floor. Prosperity is caused by advances in production, and through those advances raising the total supply of a given good or service relative to the demand, making it more readily available to everyone. Just as you can’t make a blanket longer by cutting a chunk off one end and sewing it onto the other, you can’t make everyone wealthier simply by ensuring they all receive the same minimum amount.

Another argument goes that a universal basic income program would “pay for itself”, which is  plainly silly.  The claim is that if a universal basic income were put in place, that every other government welfare program could be eliminated because people would no longer need or want them. As has been shown earlier though, universal basic income would not provide the kind of prosperity to ensure nobody would rely on other government programs. On top of that issue, it would cost at least $2 trillion to give each working age adult in America a basic income that would put them over the current poverty line. Governments do not have anything which they did not first take, and thus any government program must be funded by plundered wealth. This is both ineffective and immoral. It is inefficient because it interferes with the regular forces of the market and private charity by adding in an additional layer of government bureaucracy, an unnecessary and unhelpful middle man. It is immoral because it violates the property rights of individuals. The right to life is the most basic of all human rights, but the right to use and dispose of one’s property in any manner he sees fit is the necessary corollary to that right, and without this right it becomes impossible to sustain one’s life. Though a universal basic income may have a good end in mind (eliminating poverty) to achieve that end through immoral means is thoroughly unacceptable.

The universal basic income is a nice idea in theory, but if applied in the real world, it would be a complete and utter failure. Universal basic income would disincentivize labor across the board by eliminating a certain portion of the felt need to work for everyone. It would do nothing to eliminate poverty because it would only raise the floor of the economy rather than raising the ceiling, and it would need to be funded through immoral means, depriving people of the rights to use their property however they may see fit. Though this program sounds to be helpful on its face, when examined further we find that it lacks the ability to accomplish what it sets out to do, and does so in a less than desirable way. The only way for prosperity to be advanced for everyone  is through the means of free trade, which motivates inventiveness, labor, and service for one another. Attempts to get around this simple fact will come and go, and take many different forms, but ultimately universal basic income will fail like all the rest if it is implemented.

 

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