UBI, or Universal Basic Income, is an idea that’s been around a long time. Economic demigod, and a hero of mine, Milton Friedman proposed a version of it in the 1970s. As of late, Dem candidate for president Andrew Yang is advocating the proposal. As such, it’s now part of the debate.
Now far be it from me to disagree with a legit genius like Uncle Miltie. But his idea, and Yang’s, has one basic flaw. They think it will replace welfare. I think, after Congress and the welfare lobby got their hands on it, it would add to welfare because it’s money for nothing.
The concept is to give every adult American a basic cash payment of, let’s say, $800 a month. No strings attached. You don’t have to earn it. You just spend it. That way, supporters say, you could do away with the whole welfare bureaucracy. Wouldn’t need it to administer something that simple. Also, it would take pressure off people to find a job and, with the reduced tension, focus on employment with more personal stability. After a certain point of income, perhaps $60,000, you’d stop receiving it. Though some people want to make the payment to all, regardless of means. Easy, right? Just cut a check.
Well, one of the main issues with welfare policy today is that it acts as a disincentive to work by subsidizing a subsistence level income some are willing to tolerate. How would UBI act otherwise and maybe more so? Like today, entire generations, as with Aid to Families with Dependent Children, would simply stay on the dole. And, that ain’t workin’.
Granted, it would remove the current practice of penalizing families who stay together because a single parent on welfare gets more benefits than an intact family. That’s excellent. However, some folks will have to produce the list of payees, cut the payments, and properly distribute all the free money.
Those people are called bureaucrats.
But before we see any savings anyway, pressure groups will get to their elected officials and say that the transition to UBI will be too harsh. So, they’ll want to institute it gradually while keeping current welfare payments. The transition will stretch into forever (as few will easily give up benefits they already have), thus making UBI another income transfer scheme meant to bribe voters into feeling warm and fuzzy about the feds, exactly like the Earned Income Credit.
With 2,000 of their unemployed, the Finns recently tried something similar and soon abandoned it. They gave them €560 a month, about $627 in U.S. dollars, instead of unemployment benefits. They got to keep any other money they had and didn’t have to look for a job. There was no reporting requirement at all. After a year, Professor Heikki Hiiloamo of the University of Helsinki concluded the “effects on the labor market were minimal” and “the results were disappointing.” Oh sure, the recipients were happier, free cash will do that to you, but not any better off or more likely employed than in previous programs. That was limited to only 2,000 unemployed Scandies. Imagine the spendthrift fun if our multigenerational welfare recipients got in on the act, especially after Dem poverty pimps had their say?
Experiments are going on all over this country with welfare-to-work programs. This administration is supporting them. Good stuff. Better that than another federal boondoggle that encourages lethargy and stifles initiative.
Finally, the worst thing about UBI? You don’t even get (with apologies to Dire Straits) your chicks for free.