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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Busting Myths: Do Women Earn 23% Less Than Men For The Same Work?

Recently at the 2015 Oscars, Patricia Arquette used her acceptance speech for best supporting actress to explain the need for “wage equality” for women. She based her speech off the entirely too often quoted statistic that women earn 77% as much as men for the same work. There’s a funny thing about statistics though, if you remove all the variables and qualifying information, you can make them say anything you want, even something that is patently false.

There are a wide variety of factors contributing to the perceived gap in pay between men and women, and it would be worthwhile to look at a few. The first one has to do with occupational choice. According to the Federal Reserve Bank of St. Louis:

“Men are more likely to be lawyers, doctors and business executives, while women are more likely to be teachers, nurses and office clerks. This gender occupational segregation might be a primary factor behind the [gender] wage gap.”

While there’s nothing wrong with being a teacher, a nurse, or an office clerk (in fact these jobs are good, important, and helpful), the simple fact is that there are a great deal many more people qualified to work as a nurse or a school teacher than there are qualified to work as a doctor, a lawyer, or a high level executive. Given the higher demand relative to the available supply for these jobs, they tend to pay higher wages.

Another major factor contributing to the perceived gap in pay between men and women is the choices made by men and women when it comes to the option of payment either in cash, or in cash plus non-cash benefits. Research shows that women prefer a higher percentage of their compensation in non-cash benefits (like health insurance, paid parental-leave, etc.), which the people railing against a perceived gender wage gap totally ignore. The Federal Reserve Bank of St. Louis explains:

“Some researchers believe that it is not enough to compare wages of similar men and women. They argue that total compensation (wages together with benefits) must be compared. Women of child-bearing age may prefer jobs with a lower wage but with employer-paid parental leave, sick leave and child care to jobs with a higher wage but without such benefits… Economists Eric Solberg and Teresa Laughlin applied an index of total compensation, which accounts for both wages and benefits, to analyze how these benefits would affect the gender gap. They found a gender gap in wages of approximately 13 percent. But when they considered total compensation, the gender gap dropped to 3.6 percent.”

From this we can gather that any measure of earnings that excludes fringe and other non-cash benefits will produce misleading results as to the existence of any sort of wage gap caused by gender discrimination.

So, we can see that two major factors in compensation are occupational choice and qualification, and additionally the choice in type of compensation. Another major factor in total compensation, (even in cases where men and women work in the same general occupation) is the total number of hours worked. For any variety of reasons, women tend to prefer more flexible hours, and tend to work shorter hours than men. Flexible hours are a wonderful thing, however they do come at an economic cost, since hours of work in most occupations will be more valuable to the employer if they are worked on a more consistent and linear basis. A bird in the hand is worth more than two in the bush to most people, and so one can expect a higher rate of compensation if they are able to offer more labor, and more importantly, more consistent labor.

Ultimately the complaints of those rest not in economic statistics or an understanding of supply and demand, but rather in (whether consciously or not) Karl Marx’s labor theory of value. This heterodox theory has bled into the discussion of wages far too much, when the discussion should instead be focused on human choice. We all want what we want, when we want it. We all want to get what we want at the lowest cost possible for us, and we all make choices based off of our desires. Because of this truth, economic value is always ultimately subjective and dependent on personal preference of individuals. The economic value of work is always subjective, and dependent on a complex series of decisions of a larger mass of individuals, making it clear that myths such as “women earn 77% of the money men do for the same work” are silly, and not based in any honest economic analysis.

Once variables such as hours worked, occupational choice, and varying types of compensation are accounted for, there is no discernible gap in the wages which men and women earn for similar work. The difference in overall wages earned between men and women reflects a different series of choices and preferences when looking at each sex more broadly, and there is nothing wrong with people making these choices free of coercion. However, there is something very wrong with presenting half-truths and lies about complex economic issues, and there is something far worse in asking the state to fix the perceived problem with the use of violence. Trade is about using your given set of skills to improve your own station along with the station of others by means of free exchange, and when the state interferes, it ends up harming everyone, men and women alike.

Busting Myths: Can Jobs Be Stolen?

When dealing with issues such as immigration or unlicensed taxi services like Uber or Lyft, it’s not at all uncommon for people with full citizenship in a given country or a license to perform a given service to complain that their job has been stolen from them by someone who undercuts them on price. Be it an immigrant worker taking a job at a rate below minimum wage, or a ridesharing service driver operating without being government approved to offer the simple service of transporting someone from point A to point B, people who lose their jobs to this competition will be frustrated and upset over their job being “stolen”. While their frustration with losing their job is understandable, their moral indignation is not. Ultimately jobs are not property, and because they are not property they cannot be stolen.

A job is simply an agreement of exchange between two or more parties. For example, party A agrees to provide party B with X amount of widget Y in exchange for Z number of hours of labor. Now, where is the property here? There is an agreement for the exchange of certain properties, such as time, labor, and goods, but there is nothing in this agreement itself which is property, and so it cannot be owned by anybody.

By the same token, nobody really “creates a job.” They simply enter into an agreement to exchange one good or service for another. This is one of the problems of those who try to stifle competition from entering into their market. The taxi company that has gone through the bureaucratic channels to provide service with government licensing claims to have “created new jobs” for people willing to drive for a living, however they have not created anything, any more than I can create a house by acquiring a license as a construction contractor.

An agreement or contract can certainly be violated, but if my employer decides to terminate their agreement with me in order to pursue one along with someone else, they have not stolen anything from me any more than I would have stolen from them if I decided to leave one job to pursue another means of employment which I felt would be more beneficial to me. Theft can only occur by the means of fraud or force, and neither of these things happen when a party to a given trade decides to move on.

Jobs are not property, and since jobs are not property, it is impossible to steal them. Jobs are not creatable, they are simply agreements between two or more parties for exchange. If this were properly understood, everyone would prosper more. Rather than wringing their hands over losing customers to ridesharing services, larger taxi companies which formerly enjoyed government granted monopolies would actually improve the quality and quantity of service which they provide to customers. Persons banking on their citizenship as an assurance of job security would realize the need to provide better service to their customers, and proper, fair market competition would reign again. As always, more fair and open competition benefits everyone involved and ultimately leads to greater prosperity in terms of real property.

 

Why Chewing Gum Should Be Illegal

no chewing gums sign

The use of chewing gum has long been a controversial topic, and the debate over its merit and uses is not likely to end soon. While the pro chewing gum lobby currently holds the upper hand, it is of vital importance that the sale, purchase, and use of chewing gum should be made illegal at the federal level and in all fifty states. Here are five reason why chewing gum should be illegal:

1) Chewing gum can be extremely addictive. While some pro-gum lobbyists may claim that chewing gum has certain mental health benefits we all know that even if these benefits are real, the potential of becoming addicted to chewing gum is far more dangerous to make the possible benefits worthwhile. People would be liable to destroy their lives through incessant chewing of gum, and even if it didn’t wreak havoc on their personal health, their finances would suffer terrible.

2) Chewing gum is a gateway to any number of other bad habits. It always starts off with just one stick of Wrigley’s Doublemint, and degenerates into something worse. When the gum chewer runs out of his stash, he is liable to move onto trying to chew other things to satisfy his appetite, such as his fingernails, or (in some extreme cases) table legs. It doesn’t stop there though. Chewing gum with sugar in it can also lead to a dangerous sugar addiction, fed by candy, soda, and other foods, ultimately leading to horrific tooth decay, obesity, and even type 2 diabetes.

3) Chewing gum makes you rude and stupid. There’s a reason why chewing gum is often associated with rude and airheaded people. Chewing gum in public is extremely rude, and this one infraction leads to the degeneration of all other sorts of manners and common decency. We also can tell based off observing the flighty and unintelligent behavior of many gum chewers that there is a causal link between the two. Remember, correlation always equals causation, and that remains true in this scenario.

4) Chewing gum is bad for society. Even if gum chewers only chewed in the privacy of their own homes, their behavior still makes the rest of society confused and uncomfortable. If we cannot maintain the solidarity of society against gum chewing, how can we do more important things like fighting the war on obesity, or making sure that Burger King doesn’t run off to Canada?

5) Making gum chewing illegal is good for the economy. All the money that people spend on gum could be spent on more important and useful things, like cell phones, or coffee. Even if that money doesn’t immediately flow back into the economy, think of all the jobs that could be created and maintained in the prison system if chewing gum were illegal. Even though we know making things illegal is a sure way to keep 99% of the population from doing them, the other 1% will keep on, and when they are inevitably caught, they can be shipped off to prison. If chewing gum were legal, there would less prisoners, and there would be less jobs for prison guards.

By locking up these immoral, stupid gum chewers, we can ensure that they don’t harm society, that they don’t pick up other bad habits, and that their rudeness and stupidity will only affect their fellow gum chewers, all while providing a living for prison guards, and the police that bring the gum chewers to justice. If it means a loss of freedom for the gum chewer, so be it. The greater good is always worth it, plus we know that this will ultimately help gum chewers and dealers to turn their lives around towards more productive pursuits, like alcohol consumption.

Disclaimer: This piece is poorly written satire. It is not the conviction of the author that the state should legislate what people may or may not put in their bodies. This post is used to point out the flaws in the logic of those in favor of legislating the medical or recreational use of drugs.

The FDA Does It Again

ROP_Roots_Newman-Cigar-600

The FDA is getting ready to shut down J.C. Newman Cigar Company, a 119 year old family tobacco business. Why? Because they sell premium cigars for less than $10. Oh, and also because they’re not willing to pay a massive “fee” and spend thousands of hours having an inept organization regulate their product. Because, you know, if bad or unsafe products manage to get on the market people will buy them regardless of the poor return they get on their investment. Just like people always do. Does the FDA know what they’re doing in inspecting and regulating cigars? Of course not. Why would you need to actually be good at your job when you can use weapons and imprisonment to force people to subsidize it? The fact that the state thinks they actually need (or have the right to) regulate the sale of tobacco or any other product is silly. The fact that they have no clue how to successfully perform this “necessary” regulation just adds to the insanity of the situation. But hey, at least they’re doing it for the children, and if they don’t like it, well they can just move their business to Somalia.

Uber and Lyft: They Took Our Jobs!

“We are not attempting to curtail commerce. What we want is if they are going to do business here they have to follow the rules.” After reading this quote and the accompanying story, I fired up my trusty rusty statist translator, and this is what came out:

“We’re not attempting to curtail commerce, but if you don’t give us money and get our permission to freely trade services for currency, we will use force to either imprison or extort more money from you.”

Jokes aside, this is a very real problem. The state, and taxi drivers whose monopoly on this portion of transportation has been maintained by the state are attempting to forcefully stop competition from entering the taxi marketplace. This is not free market enterprise, this is coercive force regulating the market. The city of Memphis (and a number of other municipalities around the country) are attempting to squash the competition that these startups are providing to the market. The existent rules Memphis officials are so desperate to maintain do not exist to promote safety, they exist to ensure the city gets its cut of the pie, and continues to receive the support of taxi drivers who have taken advantage of a system that allows them a legal monopoly on the market.

Uber and Lyft are not doing any wrong or otherwise harming anyone by not having a state license to operate. Funny enough, the controversy with Uber and Lyft is actually a solid analogy for the immigration controversy as well. The problem is not people entering a marketplace without a license. There is no transcendent moral law that requires everyone have a license to do their job (which is what U.S. citizenship ultimately boils down to, a license to seek employment in the country and a requirement to pay taxes on the goods earned from that employment).

The problem in this situation is that the state believes they can require someone to have a license to work, and that they believe they are entitled to a share of the profits of that person’s labor. Get rid of the forceful and unethical state regulations of the marketplace, and allow the best businesses (and best individual workers, wherever they may be from) to freely compete for a share of the available demand. This is the solution to the ongoing controversy surrounding Uber, Lyft, or any similar ride sharing services. Deregulate, decentralize, and stop creating and enforcing laws that artificially slant the market one way or the other. In the absence of state favors to compete for, services will begin to compete for a share of the market by better serving consumers. Everyone (except the state) wins.