Universal Basic Income, or UBI. This is the next great idea from the Bernie Sanders crowd. They literally want the government to pay people for nothing at all. Before you dismiss the idea for its ridiculousness, understand that this is a serious point of debate for the left, and that seriousness makes it a genuine danger to us all.
Understanding UBI
The term “universal basic income” can be obscure and even nebulous if you don’t scrutinize it. The motivation behind the idea is that income inequality is a major point of concern in modern society and guaranteeing a minimum income for all Americans could alleviate issues tied to income disparity.
These issues are especially concerning when you consider the threat of automation on many mid-level jobs. As with many progressive ideals, the concept of helping the poor sounds pleasant. When we peel back the surface layers, though, we see that this is the perfect storm of misunderstanding economics, politics, society and even arithmetic.
The first problem stems from the primary goal: reducing income inequality. This is a common misnomer, and it needs to be addressed now. Income inequality is in no way a problem for any society. Despite how liberal media will manipulate facts to convince you otherwise, the income of the wealthiest Americans is not related to the problems of lower income individuals.
The real enemy of modern society is poverty. It doesn’t matter how much less money you have than Warren Buffett or Bill Gates. What does matter is whether or not you have the basic necessities for life, liberty and the pursuit of happiness.
The reason this distinction is so important is because history has shown us with virtually countless examples that the methodologies that best combat poverty are those that create wealth across the board.
By the Numbers
We won’t stop our discussion with a claim that free-market economics are good for society. Instead, we’ll focus on real numbers. The first is a look at poverty reduction.
In the history of the world, the fastest decline in global poverty happened from 1990 to 2010. In that two-decade span, China completely rebuilt their economic policy and embraced foreign investors to promote free-market growth.
The result lifted more than 80 percent of the population from extreme poverty to middle class, and it was responsible for halving global poverty. More than 500 million Chinese citizens saw direct and fast benefits from that reform.
UBI is far more problematic than abandoning proven economic theory. It’s biggest flaw is that it ignores basic math. In the U.S., providing a flat $10,000 a year UBI to every citizen would cost $3 trillion a year. Considering the entire federal budget is $3.8 trillion, it’s easy to see that we can’t afford a UBI that would still leave 40 million Americans at poverty level incomes.
Speaking of 40 million Americans, that’s a safe estimate of how many working adults are out of the labor force right now. If we scaled back the UBI to benefit only unemployed adults, then it would still cost roughly $1.2 trillion to keep them above the poverty line. It’s obvious that America can’t afford any such program without considerable cherry picking in deciding who is eligible for assistance.
The other main component of arguments in favor of UBIs is protecting workers from the threat of automation. The idea is that increased automation will put people out of work, and they still need an income.
Again, it sounds reasonable until you actually compare facts. There is no question that Obama’s economy was underwhelming. During his tenure, roughly 5.6 million Americans lost their jobs to automation. Despite that, the Obama Administration saw a net gain of 10 million jobs in 8 years.
This means that an underperforming American economy had job growth that outpaced automation by three to one. In very obvious terms, creating jobs is the key to dealing with automation.
Social and Political Problems
Circling back to the problems with funding, the only way to implement a UBI program is to severely limit eligibility. The inevitable route, then, would be to base eligibility on socioeconomic conditions.
Again, this sounds nice at first, but we’ve already tried this with other programs, and it creates two clear problems. It promotes government sanctioned discrimination (such as when California schools lose funding for having too many white kids), and it fosters government dependence.
This has been at the heart of liberal governing strategy since FDR, and it has won them countless votes. Nevertheless, it seems counterproductive for a population that continually loses faith in their government to give it more power through economic dependence programs like a UBI.
You can always count on the progressives to promote an idea that is mathematically impossible and destructive for society. Before you throw up your hands in frustration, remember that this kind of thinking is exactly why they lose elections. Take a moment and be thankful that, at least for now, we have Trump ready to stand against the tyranny of entitlement.
~ Wealth Authority
