Thursday, 10 August 2017

The Problems of a Universal Basic Income

In recent posts I have had two regular commenter's make comments in support of a Universal Basic Income (UBI), here how modern liberalism works and here returning to full employment. Now these Gentlemen normally have interesting thoughts to impart so I do not want anyone to think I am singling them out for criticism, but I think I need to make a few points regarding the idea of a Universal Basic Income.

Most people think of the idea as being about proving unlimited free time and spending money. However the reality would be quite different. I will divide my thoughts into three broad areas:


We don't have to travel to the future to see the problems with this idea, in fact we already have many of the problems, today they are simply smaller in size. The UBI is basically the modern Welfare State but with everyone included. Today most people still work for a living, but under a UBI it is assumed that these people will still get the UBI, otherwise it isn't really Universal or Basic. However there are two major economic problems.

1. The UBI is the base price upon which everything is worked out. In other words the UBI is the basic wage and everyone gets it. If everyone is paid the same wage then everyone is poor. In theory people can be paid more for working or for being a veteran for example. To pay for that the UBI has to be smaller and when there is an increase in the UBI everyone gets richer on exactly the same day, so in reality no one is richer.

2. The Welfare State is a form of Socialism, there are two problems with Socialism. Now the first may be fixed by technology and that is that failure is rewarded and success is punished. This model leads to economic collapse, at least in theory an Automated economy might be able to side step this issue. But it cannot avoid the second problem, it costs an astonishing amount of money!

Let me give you an example.

There are 350,000,000 people in the United States x 365 days in the year x a $1 a day increase to the UBI = $127,750,000,000 (127.75 Billion dollars).

Thats an astonishing amount of money and it wouldn't make anyone happier or richer!

Biological (natural selection and attraction)
With or without a UBI people are biological creatures, we need air, water, food, shelter and we want someone to love and who loves us. In other words we want to attract a mate. Men are attracted to a womens looks. Women are attracted to a mans status. When men and women have exactly the same income and therefore the exact same social status, what are women supposed to be attracted to? How would a man attract a mate when he has nothing to offer?

You can already see this, successful women cannot find long term partners and unsuccessful men cannot find partners. And even though both groups are lonely, they are simply not attracted to each other. If the aim of the UBI is to make people miserable it will be a great success.

Social (what do you do with unlimited time and no future?)
Having unlimited time when your 20 can be great, at 30 it can still be good but at 40 you want something of substance in your life. A UBI will not provide that because it cannot provide it. People think of what they would do with unlimited time and they think about how they will write a symphony or a novel, or paint some great piece of art. We have had mass unemployment for 40 years now and how many symphonies, great novels or great works of art do you remember being produced?

I'm not saying that nothing will ever be produced, the Author of Harry Potter was unemployed. How often will that happen? I'll tell you, not often.

How will people maintain marriages with nothing to look forward too. Poor people don't go on holidays.

In a world in which everyone got a UBI and there was 80% unemployment, you have a world ghetto, a Brazilian favela everywhere. High crime, high promiscuity, high levels of neglect, drug and alcohol abuse. A life of unending poverty and with nothing but death to look forward to. People think that they will struggle and make it out, but most people are average, for most people there will be no escape.

Is that really the world we want?

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1 comment:

  1. At the outset if automation and digitisation are such wonderful things I agree let’s start to explore ways of taxing it instead of humans to ultimately underwrite the considerable impost of a UBI. In relation to studies undertaken on the US tax system the conclusion was it would cost no more than 30 cents in the dollar, and it could be a lot less, after eliminating all the current concessional tax transfers.
    But I agree the kudos associated with having a good position is an important consideration so that enshrined in any UBI it needs to be regarded as a supplement and not a substitute for employment by ordinary people. Of course it’s going to take a very long time and lot of imagination to expand our service type employment sufficient to arrest the declines and instigate employment growth. That should be an ongoing responsibility for governments and its institutions. In fact, once this has been restored then one could look to reducing its rate.
    In the overall scheme of things one would need to incorporate a new system of tax on automated services and instead institute a system of tax charges credits to incentivise employment. E.g. to eliminate payroll tax and provide an imputed credit to service industries employers and so forth. This would give impetus for positions in an expanded services sector by subsidising the current high cost of labour. There is a huge amount of work and community tasks that need to be done to take up the slack given sufficient impetus.