The idea is not new, but lately, the Universal Basic Income or UBI has been gaining traction.
Many are looking for ways to alleviate debt-ridden nations from the confines that have become their welfare state, and they believe the UBI is the path forward. And despite the lack of any real evidence that suggests the policy has any chance of success, that isn’t stopping legislators in Finland.
Beginning this year, roughly 2,000 unemployed individuals in Finland will be part of a pilot program that will provide each with a monthly income of €560 ($581.48). The funds will be deducted from any other benefits each is already receiving, and they will be able to continue collecting this income even if they find a job and irrelevant of any other income they might have.
Olli Kangas, Research Director of KELA, which is the government agency that has been created specifically to administer this new program and research its effectiveness, says he doesn’t know what to expect when it comes to market behavior. Kangas said, “Will this lead them to boldly experiment with different kinds of jobs? Or, as some critics claim, make them lazier with the knowledge of getting a basic income without doing anything?”
The main argument for a universal basic income appears to be predicated on the premise that automation is quickly making workers irrelevant. It is the notion that without some income support, the average person will fall deeper and deeper into poverty as work options diminish. The writers at Futurism are of this belief and contend that the while the developing world is most at risk of automation, the developed world “isn’t much better off.”
It doesn’t take much thought to understand the fallacy involved in this line of thinking. Not only does history contradict the notion that innovation creates unemployment, but it also fails as a coherent argument by itself.
Since workers are also consumers, any drop in worker income would be correlated with a related drop in consumption. This is understood by those who favor a UBI, but it certainly is no justification for such a program since any drop in consumption diminishes the necessity for further innovation thereby making robot labor costlier as human labor becomes more attractive.
Now, the Finnish experiment is said to last two years with the sample pool set to increase next year so as to provide researchers with a greater understanding of the overall results. Interestingly, it doesn’t appear that the researchers are expecting a drop in working incomes as a result of the UBI. They appear to be mostly concerned with behavioral patterns as it relates to the kind of work that the subjects will seek with a guaranteed income.
It seems unreasonable to assume that you can separate the two concepts. Suffice to say that if one is comfortable with a specific standard of living, and values working less more so than increasing their income, it would be highly likely that the individual would then seek a position with less responsibility, thus a lower wage, that corresponds with their ability to satisfy their lifestyle with the UBI.
But of course, the argument for universal basic income isn’t really a logical argument anyway, now is it?
The argument is based purely on a historical fallacy that innovation creates unemployment and a plethora of emotions that range from allowing one to live out their dream to simply making people more comfortable in their poverty. And those who spread fear that robots will eventually replace humans have only that age-old adage to hold onto, “but this time it’s different.”
Aside from the fact that the math is questionable at best, we should expect price inflation for essential goods given the added consumption, and it makes absolutely zero sense to provide people with sufficient means with a guaranteed subsidy, there is no reason to believe that a UBI will replace other entitlement programs.
There will never be a sufficient amount of money redistributed from the productive to satisfy the needs of the less productive.
Soon after implementation, many will find the UBI to simply not be enough, specifically, if it comes in lieu of other entitlements like money for food or government subsidies for housing. It wouldn’t be long before there were calls to reintroduce such programs, or at the very least, raise the UBI for select people below a specific income threshold. And that would only lead to further calls to remove the subsidies from those who don’t actually need it. Before you know it, you are simply back to a welfare program.
Redistributive policies have a long history of failure throughout the world. There simply is no reason to believe that UBI is the exception to this rule. As a matter of fact, there is every reason to believe that the UBI will be far worse in its application since it comes with a far heavier price tag than any other redistribution plan before it.
And if we’re honest with ourselves, when has any government plan led to mass prosperity? When has any government plan achieved its objective in reducing poverty?
There are many reasons why we should question the validity of a universal basic income, and this article would be a way to long if I were to list them all. As always, we should seek means that make us freer, not more dependent upon government, especially when it comes to our basic sustenance. There are no magic wands any government can waive to make us all rich.
Prosperity comes from individuals engaging with one another in open exchange and providing value to others.
Empowering the individual by limiting intrusion into what would otherwise be a free exchange is how real prosperity emerges, not government handouts, irrelevant of how well-intentioned or well-packaged.