Technology and innovation continue to increase productivity and GDP every year. The world population keeps growing, but jobs are are being replaced by robots and innovation. Income disparities have pushed half of the world’s wealth to less than 1 percent of the population. Recently, a new idea has taken hold that governments should provide a guaranteed monthly income to all citizens. Billionaires such as Mark Zuckerberg and Richard Branson have publicly supported the idea. Exact details of the universal basic income plans are sketchy. Most would provide a monthly check to those below a certain income threshold. Let’s examine the pros and cons to determine if this is a good idea.
Pros – Arguments For Universal Basic Income from Government
- It provides a living to workers displaced by automation. Jobs such as factory workers, cashiers, bank tellers, and fast food workers are already being replaced by automation. As technology improves, it will take fewer people to produce the same amount of goods and services. All the related jobs will disappear, leaving the workers without income.
- It evens out some of the income inequality in society. The bottom 50 percent of American workers earn only 6 percent of income. The top 1 percent owns half the wealth. A basic monthly income should help even that out.
- It frees up time for education & training. Many Americans remain trapped in unskilled, low-wage jobs simply because they don’t have the time and energy to expand their education. When you’re try to support a family and pay monthly bills, you often have to spend all your spare time working. A universal basic income will give people a chance to attend college or tech schools, or they’d be able to take advantage of the endless educational opportunities available on the web. The acquired skills would allow them to get a higher-paying job so they’d no longer need the basic income.
- It allows people to enjoy a greater quality of life and explore self-actualization. There is more to life than work and money. It be nice to be able to travel, read books, watch movies, write a novel, and do so many other bucket list items that work gets in the way of completing.
- It guarantees income for non-working parents. Stay-at-home parents work every bit as hard as paid employees but don’t receive the wages. Raising decent human beings is probably the most important job any of us can have, and most studies show kids become more healthy, happy, and productive adults if at least one parent is a regular at-home caregiver (as opposed to daycare or nannies).
- A regular income makes it easier to rent an apartment and borrow money for education, starting a business, etc. Banks use a formula of expected monthly income over expenses before granting a loan. A universal income therefore gives banks more security and makes them more likely to lend. Loans open the door for education, entrepreneurship, and other methods of getting out of poverty. The same income/expense formula is also used whenever you apply for an apartment or mortgage.
- People will have more time to volunteer for charity work. Most Americans would gladly donate more time for charitable work if their time and energy wasn’t drained on a weekly job. That benefits all of society. It’s likely that new charities would spring up every day as more people focus on improving the world rather than making a living.
Cons – Arguments Against Universal Basic Income from Government
- The country cannot afford it given the current & projected levels of debt and deficits. The U.S. national debt is already over $21 trillion as of May-2018 and is growing over $1 trillion per year. This is especially scary since politicians can NEVER be trusted to cut expenses, and there are limited ways to raise revenue without negatively impacting the economy. Paying a universal basic income to hundreds of millions could easily throw the economy into bankruptcy.
- It leads to laziness and lethargy. Humans are creatures of routine. Circadian rhythms and work schedules largely control the energy level of people. When you don’t work, your body and mind descend into a certain level of lethargy and laziness that are tough to get out of.
- It removes the motivation to acquire skills and training that would allow an American to get out of poverty. It sucks when you work hard on a job week after week but never seem to advance financially, especially when you’re trying to raise a family. This is a powerful motivator to drive Americans to expand their education and acquire skills that will pull them out of poverty.
- Not working prevents individuals from reaching their true potential and destroys their self-esteem. No amount of self-affirmations or psychological hocus pocus can build self esteem quite like accomplishments. Building a product, contributing to a company project, performing a valuable service, and so many other job accomplishments make you feel good about yourself. When you’re accomplishing nothing, your self-esteem slowly dwindles, making it more and more difficult to reach your true potential.
- Prices of many essential items would increase. If citizens have more nominal dollars to spend, it shifts the demand curve part of the supply/demand balance in economics to the right. In other words, if more people can afford to buy phones, food, cars, gas, etc., companies will simply charge more, as they can still sell all their items at a higher profit. The same pattern is seen in education and health care. As soon as government started providing large-scale funding, the demand curve shifted, so costs started exploding far faster than the average rate of inflation.
- Like all government programs, it will be packed with fraud and waste. Obamacare, Social Security, welfare, Medicare, Medicaid, food stamps, and most other government entitlements are packed with waste and fraud. As long as the government is handing out free money, there will always be immoral people who try to game the system and find ways to swindle taxpayer money. A universal basic income program would almost guarantee the same kind of fraud and abuse.
- People will take steps to stay under income requirements (e.g. working less or collecting wages in cash). It’s impractical politically to give a basic income to everyone including millionaires, especially with the current level of the U.S. budget deficit. There would almost definitely be an income threshold. Like all government benefits, certain Americans will take steps to stay under the income requirements. For example, they will work less or engage in more cash transactions that aren’t declared in income. These and other unintended consequences will have a negative effect on the economy and keep government spending on the entitlement high.
- People will engage in behavior that normally wouldn’t be tolerated by an employer (e.g. alcohol or drug abuse). Many employers require drug testing to maintain employment. On almost all jobs, if you’re drunk, high, or hungover, your employment would be in peril. Thus, a regular job prevents people from engaging in these potentially self-destructive behaviors too often. If income is guaranteed, these behaviors are more likely to increase.
- As with all government benefits, it will be impossible to politically take it away. Can you remember the last time a politician who proposed cutting Medicare, Medicaid, social security, etc. was re-elected, regardless of the unsustainability of a government program? Candidates have learned to not even try to take away an entitlement, even if it wasteful and doesn’t make any sense on a cost/benefit basis. A universal basic income would likely meet the same fate of being impossible to take away.
- Some people will have more kids simple to increase their universal income. It’s a sad fact in America that many people have more kids to increase their monthly government benefits. A basic income benefit would almost definitely invite additional instances.
- Producers and workers will get resentful of the people who live off their work, leading to an even more divisive society. Not everyone can sit at home and collect income. A certain segment of society has to build businesses, keep the factories running, produce essential services, grow the food, and do countless other tasks that keeps the country functioning. Those people doing all the work will only grow resentful of the able-bodied people who contribute nothing and live off their sweat and tears.
- It will offer another incentive for illegal immigrants to flood the country. Donald Trump was elected largely because illegal immigrants are flooding the country and consuming much of the government benefits that drive budget deficits. Another entitlement will only increase the incentive to hop the fences.
- Minimum wage jobs are already difficult to fill, and a universal income will destroy the incentive for Americans to take the jobs. In almost every medium-large city in America you see help-wanted signs at McDonald’s, Wal-Mart, and other unskilled positions that pay low wages. If people can make almost the same amount of money for doing nothing, why would they work 40 hours a week at a job they don’t like? A universal income is likely to lead to an explosion of open minimum-wage jobs that can’t be filled.
- Another entitlement would only reinforce the widespread belief that government should provide everything; thus, more entitlements would be demanded by voters. The millennial generation has grown up in the era where they expect everything to be free. Most people under the age of 25 already believe government should provide health care and education totally free of charge to them. If you add a monthly guaranteed income, where does it end? Remember that a government that provides all your support in effect has the power to control every aspect of your life. It’s a big reason communist governments inevitably lead to tyranny.
- Many businesses and wealthy individuals will likely leave the country. Large, international businesses can station their base of operations in any country. Wealthy individuals can move to several tax havens in the Caribbean and Central America. More entitlements lead to more taxes, and more taxes will only drive out these producers and investors to other countries. That means all the tax revenue derived from their income will travel with them.
- Many productive workers will simply quit their jobs, leaving more of an employee shortage. Many Americans are satisfied with their jobs. They go about their weeks as productive members of society. If they’re suddenly offered free income, they may simply choose to leave their jobs. Several Americans have built a savings that normally wouldn’t be enough to retire, but it would if they suddenly had a guaranteed monthly income. Consequently, the worker shortage would be more exasperated.
Universal basic income is a nice idea for distributing income with so much wealth distributed at the top, but it’s totally impractical and unsustainable. It would lead to far too many negative consequences for society. All able-bodied individuals should contribute their fair share to the world. It’s reasonable to have government benefits available for a very short-term basis to help through various tough times in life (such as government-forced unemployment), but the benefits should always be time-limited. No benefits should be long-term other than ones such as social security and Medicare which have specifically been paid for by individuals with taxes.
“The problem with socialism is that you eventually run out of other people’s money.” ― Margaret Thatcher
Written by: Joe Messerli
Last Modified: 7/11/2020