July 26, 2018

Universal Basic Income: The Nanny State on Steroids

There is nothing remotely free about the transfer of costs from one group of Americans to another.

Nothing epitomizes the American Left’s intellectual dishonesty better than its use of the word “free” to accompany some government giveaway. Be it “free” college or “free” health care, there is nothing remotely free about the transfer of costs from one group of Americans to another.

Additional Democrat-sponsored wealth transfers are on the horizon. In Chicago, Alderman Ameya Pawar has proposed legislation that would provide 1,000 families with a universal basic income (UBI) of $500 per month. “Nearly 70 percent of Americans don’t have $1,000 in the bank for an emergency,” Pawar declared. “UBI could be an incredible benefit for people who are working and are having a tough time making ends meet or putting food on the table at the end of the month.”

UBI is not a new concept. As columnist Nathan Heller points out, magistrates from the English village of Speenhamland tried a version of it in 1795, spurred by a price rise in grain that was increasing poverty, even among the gainfully employed. By 1834, for a variety of reasons, “everyone agreed” the program had failed.

In modern day America, the bogey man is automation. Citing companies like Tesla, Amazon, and Uber, Pawar posited that many jobs sustaining middle-class employment will become obsolete, and that more unemployed Americans will fuel political polarization. “We have to start talking about race and class and geography, but also start talking about the future of work as it relates to automation. All of this stuff is intertwined,” Pawar asserts.

Pawar should also be talking about how a nearly bankrupt Illinois has the worst credit rating in the nation; its Democrat-led legislature has failed to address retirement-system debt that has skyrocketed to nearly $11,000 for every man, woman, and child in the state; and that Moody’s Investors Service stripped Chicago’s bonds of their investment-grade status — prior to the UBI giveaway Pawar envisions.

Regardless, Michael Munge, professor of political science, public policy, and economics at Duke University, also foresees chaos, insisting that “we stand on the verge of another wrenching economic revolution, where workers at all levels will once again feel desperately insecure.” He adds that it’s a revolution where “the poor and middle class have many tools to ‘negotiate’ redistribution at gunpoint.”

Tech titans are also on board. “We should explore ideas like universal basic income to make sure that everyone has a cushion to try new ideas,” stated Facebook CEO Mark Zuckerberg. Tesla founder Elon Musk concurred, tweeting that “will be necessary over time if AI [artificial intelligence] takes over most human jobs.”

Proponents also point to existing UBI programs as evidence of its potential for success. In Alaska, a state buoyed by oil wealth, eligible residents receive up to $2,000 per year from the Permanent Fund Dividend, and 81% of the recipients say it improves the quality of their lives. Stockton, California, is on the verge of launching a $10 million UBI project backed by Silicon Valley moguls that will pay 100 low-income residents $500 per month in a city that declared bankruptcy in 2012. In Brazil, “Programa Bolsa Familia” has reduced extreme poverty in that nation from 9.7% to 4.3% of the population after 10 years. And a village in Kenya where residents receive $22 a month over 12 years, courtesy of the GiveDirectly charity, is ostensibly disproving the biggest myth about UBI — as in people will stop working and spend the money on vices like alcohol drugs and gambling. “Anecdotal evidence and nearly all empirical research has shown that unconditional cash transfers help people help themselves,” columnist Chris Weller noted in 2017.

Not always. In April, the Finnish government decided to discontinue a UBI program initiated in 2017 that gave a random sample of 2,000 unemployed people aged 25 to 58 approximately $650 per month with no strings attached. Why was it ended? Finland finance minister Petteri Orpo insisted the program made people “passive.”

Bloomberg’s Leonid Bershidsky takes the onus off government sponsorship of UBIs and puts on the tech titans. Why? “Amazon didn’t pay any U.S. federal taxes last year, and it’s been good at minimizing tax payments in Europe, too,” he writes. And because tech companies are the entities working to eliminate routine jobs, there is “something to be said for getting tech billionaires … to put some of their assets into a fund that would finance large-scale UBI experiments in specific counties or even small states,” he adds.

Yet Bershidsky reveals the ultimate futility of such experiments: a “UBI fund” of $33 trillion — with an annual return of 5.9% interest, no less — would be required if the government paid every American $500 per month.

As of June 2017, the total net worth of all American households was $94.8 trillion. Moreover, the national debt is $21 trillion, due in large part to automatic spending generated by the nation’s already entrenched redistribution efforts known as Medicare and Social Security. Both programs are already approaching insolvency, and their unfunded liabilities raise the genuine national debt to nearly $100 trillion.

What about those disappearing jobs? “The U.S. labor market has kept pace with population growth, adding 80 million net jobs since computers started coming on the scene in the 1960s and more than 25 million since the Internet became mainstream in the 1990s,” columnist Oren Cass wrote in 2016. “Approximately 60 percent of the working-age population remains employed — slightly above the post-war average.”

What about the idea that UBI is superior to the myriad of existing welfare programs that are badly managed and inefficiently dispersed? There is some merit to that assertion, but unless UBI would replace them, (a heavy political lift at best), it would be unsustainable. Yet there is a far more important consideration, as in whether making giveaways more convenient and stigma-free ultimately undermines dignity and self-sufficiency.

It already has. “In the 1970s, the government ran four random control experiments across six states to try the negative income tax, a similar policy proposal [to UBI] that was popular at the time. In each test, the work disincentive effect was disastrous. For every $1,000 in added benefits to a family, there was an average reduction in $660 of wages from work,” columnist Mimi Teixeira reveals.

In other words, people who got checks either worked far less or stopped working altogether.

Our current moral climate (or lack thereof) suggests UBI would ultimately precipitate a future where working becomes no more or less “noble” than collecting a check. If there is a better disincentive for ambition, self-reliance, and risk-taking, one would be hard-pressed to imagine what it is. Americans skeptical of such a future would be wise to remember a past when most Americans exhausted every other possibility before taking government relief.

Yet that relief has become a multi-generational “lifestyle choice” in many American households.

Regardless, many Americans are enamored with having “a cushion to try new ideas.” The irony they would embrace the reality of a Nanny State-on-steroids serfdom for the illusion of freedom is apparently lost on them.

Pawar hopes that once Chicago implements UBI, “we’ll be able to hopefully scale it.” No doubt they will — until they run out of other peoples’ money to spend.

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