Brittany Hunter: The Top Three Arguments against a Universal Basic Income

Every so often a new study is released, concluding that a universal basic income (UBI) is needed to fix this country’s welfare system. Most recently, the Roosevelt Institute claimed that switching to a UBI system could actually grow the economy by $2.5 trillion by the year 2025.

A welfare state by any other name is still a welfare state.

The study is full of hypothetical situations in which Americans receive a UBI of varying amounts. The research concludes that the higher the UBI, the more prosperous the economy. But like many UBI apologists, the study misses the major problems with such a system. Here are the three main ones:

1. It’s Expensive

Proponents claim that the UBI would be an efficient replacement for the country’s bloated welfare apparatus, and so would actually reduce overall costs.

Unfortunately, a welfare state by any other name is still a welfare state. And the UBI is just replacing one pricey system for another. And unlike the current welfare state, which has standards for determining who qualifies for certain aid, a UBI would be given to everyone. This would dramatically increase the pool of citizens receiving benefits from the state and inflict massive expenses across the board.

The Roosevelt Institute study posits two different ways to fund the UBI. But neither would benefit the national economy or the taxpayer. The study’s “positive” findings about economic stimulation are only applicable if the program is funded by increasing the federal deficit. So basically, in order to “grow” our economy, we must first plunge the American people even further into debt.

The second scenario presented in the report was a UBI funded through increased taxation. In this instance, the study found no net benefit to the overall national economy. In fact the report even went so far as to state:

When paying for the policy by increasing taxes on households rather than paying for the policy with debt, the policy is not expansionary. In effect, it is giving to households with one hand what it is taking away with the other. There is no net effect.”

There would be an effect, however, on the American taxpayer. When the Resolution Foundation, a think tank in the UK crunched the numbers to see what the cost would be to the taxpayer, they found that the amount paid would actually be much more than the amount received.

Commenting on the problems with the UBI as they related specifically for the UK, Robert Colvile writes:

…From the first pound you earned to the £43,001st, you’d pay a combined rate of income tax and National Insurance of around 35-40 per cent, after which the higher rate of tax would kick in as normal. In other words, to get that £3,692 from the Government, you’d pay thousands of pounds more.”

What this type of proposal really means is that a vast sum of people will be paying more in taxes than they already do. Colvile also notes that “In fact, it would represent a transfer of £120 billion of extra taxation into the welfare state – the equivalent of the entire budget of the NHS in England.”

If this is the case for the UK, it would most certainly be the case for the US.

This money has to come from somewhere. It will not appear out of thin air. And unfortunately, it is the American people who would be stuck with the bill for a grandiose UBI system.

When something comes easy, it is easily taken for granted. 

2. Incentives Work, Handouts Don’t

Incentives are a powerful force. And there is no greater incentive than financial security and holding a job is essential to that end. When something comes easy, it is easily taken for granted. And while it would be nice to believe otherwise, giving cash handouts to every American incentivizes them to try that much less.

By removing the financial incentive to work, the state is encouraging idleness, something contrary to the entrepreneurial spirit so deeply woven throughout our country’s history.  

During the Clinton era, the welfare state saw tremendous decreases. But that didn’t mean there were millions of Americans struggling to get by. Employment actually increased because individuals were incentivized to get jobs when there was no longer a guaranteed safety net.

Adopting a UBI would increase the state’s power rather than decrease it.

3. The Welfare State Isn’t Going Anywhere

As previously mentioned, there are always claims that a UBI could decrease, reform, or even abolish our welfare system. But no one seems to have any idea as to how this transition would actually look.

This is because there is no transitory plan in place. And any such plan that came to fruition would surely be political suicide since you run the risk of angering someone. And for politicians who rely on the support and approval of their constituents, this is sure to bring some unwanted criticisms.

Anyone in the policy realm knows that there is no better way to alienate older constituents than threatening to take away their Social Security benefits. In fact, even the mere mention of decreases usually causes rooms of senior citizens to fear for their well being. Even if there is an alternative plan presented to them, it does not calm the fears of what might happen during the transitionary period. It is for this reason that Social Security is often called the “third rail” of politics.

Additionally, trying to get individuals transitioned off of one welfare plan, and into the next requires, at least temporarily, the funding of both programs. A decision to enact a UBI would not magically abolish the American welfare system. America’s welfare programs have been around for so long, it would take time to unroot it. Too many people have become reliant on our welfare state to have it simply wiped out overnight.

And who is going to pay for the process in the meantime? Well, the American taxpayer of course.

“The state is that great fiction by which everyone tries to live at the expense of everyone else.”

If anything, incorporating a UBI in America would most likely result in an additional layer of the welfare being added on top of our existing programs. This would, in effect, increase the state’s power rather than decrease it. Governments are rarely keen on relinquishing their power, and there is great power in controlling the welfare of the citizenry. It is therefore highly unlikely that the welfare state as we know it today would simply cease to exist.

There Is No Welfare Utopia

Bastiat famously said, “The state is that great fiction by which everyone tries to live at the expense of everyone else.” This is exactly why any form of welfare state is bound to fail. You cannot take from one, give to another and expect everyone’s hardships to be solved.

The UBI creates the illusion of decreasing the welfare state when the facts of the matter all point to the contrary. Everyone would like to live in a society where no one wanted for anything and everyone was provided for. But we live in a society of individuals with individual aspirations and goals. Pretending that we can centrally plan a welfare system with so many distinct wants and needs is unrealistic and unobtainable.

Our current system cannot be maintained because it’s too expensive. Period. Already programs like Social Security are projected to run out of money within the next decade and there is no plan for how to approach this coming storm. Why would anyone think broader welfare state situation would be any different?

If we cannot financially maintain our current system, it would be an unwise to believe we could somehow afford a UBI. As Colvile says when comparing one welfare system with the other, “It’s old wine in new bottles – redistributive, seventies-style taxation under a trendy new branding.”

Brittany Hunter


Brittany Hunter

Brittany Hunter is an associate editor at FEE. Brittany studied political science at Utah Valley University with a minor in Constitutional studies.

This article was originally published on FEE.org. Read the original article.

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30 Responses to Brittany Hunter: The Top Three Arguments against a Universal Basic Income

  1. Andrew

    All “progressives” believe in UBI.

  2. Joe

    Article describes the world that was. The world to come will bear no resemblance to now. In particular, labor is now redundant and in it’s last death throws.

    If follows that something will be needed to provide for those whose labour is no longer required. What do you propose? Go out an get a job? Start a business? Who will buy your products?

    None of your polemics answer these questions it’s just more of the same to you.
    Go back and have another think.

  3. meher baba

    There is a progressive dream of a universal basic income, but I can imagine a version of the proposal which would have some appeal to my libertarian instincts.

    This version would involve the UBI as representing the maximum amount of assistance the state is willing to provide to an individual/family who doesn’t fulfill certain other criteria: eg, too old to work (this could be set as the age of 70), sole parenting or carer responsibilities or a serious disability.

    At the same time, all restrictions on the labour market would be abolished: awards, minimum wages, enterprise bargaining, the lot. All employee remuneration would be determined by the market and any sort of interference in that by trade unions or anyone else would be made illegal. In this totally free labour market, people on the UBI would be free to supplement their base income by any employment they could find. But it’s up to them: if they want to susbsist on the UBI, that’s ok. This means no more government expenditure on forcing people to look for work, trying to find jobs for them, etc.

    Parallel to these reforms, the government would abolish all government subsidisation of superannuation. All retirees would know they are guaranteed to receive the UBI when they turn 70, and they can supplement that with any savings they achieve in the interim (and, if they save enough, they can retire earlier).

    As I envisage it, this form of UBI puts a sort of upper limit on the amount of welfare assistance each citizen obtains from the government. It would also support a much more flexible labour market and eliminate the welfare state’s tendency to create poverty traps.

    What it wouldn’t do is to provide any additional assistance to those who choose not to work: indeed, I would see the base rate as significantly lower than the current adult rates of the dole.

    This type of UBI is probably still too expensive to consider seriously, but it would have some benefits.

  4. max

    Joe
    #2493787, posted on September 10, 2017 at 1:11 pm
    hey Joe you have Luddite mentality.

    the belief that machinery makes workers poorer.
    There is a fundamental rule of economics which should not be ignored: anything that can be done by a machine profitably should be done by a machine. Why is this true? Because human labor is by far the most versatile and mobile of all capital. People can learn new ways of serving customers. Old dogs really can learn new tricks. But, in order to get them to learn new tricks, they need to face reality, namely, that whatever they did before to earn a living can be done better and cheaper by machine. Old dogs can learn new tricks, but necessity is the mother of invention. Old dogs prefer doing old tricks. They prefer high income for doing their old tricks. But economic progress does not let us continue to make high income from old tricks whenever there are new tools available that will enable newcomers to do the same tricks, and do them even better, at a lower price.

    https://www.lewrockwell.com/2013/02/gary-north/the-luddites-among-us/

  5. max

    anyone who believe in “Universal Basic Income” believe in theft.

  6. Mak Siccar

    Great article that should be widely distributed, especially to our treacherous politicians. And a very tasty looking author to boot! Purr, purr, purr.

  7. Joe

    max:

    hey Joe you have Luddite mentality.

    the belief that machinery makes workers poorer.

    No I don’t. I can’t wait for the robots to take over all labour. However, I recognise that not everyone is capable of being a knowledge worker and that we as a society have a responsibility to provide for them as much as we do for the knowledge workers.

    Putting your head in the sand and waving your arms around with the notion that what happened in the past will happen in the future is no way to address the problem.

    Incentives don’t work if you don’t have the capacity to take advantage of them. So what’s left? You would perhaps prefer that those that don’t or cannot make a contribution to society be done away with? It’s been tried. It never ends well.

    We have to start a conversation on these topics. Perhaps universal income is not the way to go. But don’t just pan it on the basis of what has gone on in the past. We are moving into a future that has never been experienced before. Where mass employment is defunct and only a tiny number of knowledge workers will be required to work. What then?

  8. Up The Workers!

    Provided we could totally fund the idea from the bank accounts of George Soros, Fat Al Bore, the Clinton Crime Family, the Saudi Arabian Royal Family and Ravendra Pachauri, I reckon I’d be prepared to give it a go until their cash ran out.

  9. rickw

    UBI

    Robbery of those who work.

  10. John Constantine

    The next generation of artificial intelligence will be defined as the robots that replaced the knowledge workers.

    Tax the robots to pay the basic income.

    Just can’t tax them more than Chinese robots are taxed, or you are non competitive.

    Unless you have rationing and tariffs

  11. BoyfromTottenham

    Joe, you said ‘I can’t wait for the robots to take over all labour’. Hmm – so does that mean that the companies or organisations that own the robots can sack all the people that used to do the work now done by robots? If so, then the all former labourers will either be unemployed, or will have to retrain as ‘knowledge workers’. If not, then the employers will either go broke paying for unneeded labour as well as robots, or will have to restructure their businesses to find places for the former labourers who are retrained as ‘knowledge workers’. What were you assuming would happen if your wish came true?

  12. The cost of labour in a Model T Ford was much higher than the cost of labour in a 2017 model Ford. The cost has shifted to capital. Therefore, before any discussions about UBI, we have to discuss the taxation of capital.

    The great philospher Rod Serling once said “Imagine if you will, a society where robots did everything”. The owners of these robots would be the rich of the day, at which time we’d beat the shit out of all the robot owners, make them (the robots) community owned and all live happily ever after doing nothing but watching robot cricket and robot footy.
    Equality all around and communistic bliss. /sarc

  13. iampeter

    These don’t really sound like arguments against anything but more like grudging concessions that the welfare state is here to stay. Stuff like this is how the left wins by default pretty much.

    The only real argument that is needed IMO against UBI is that it is immoral.

    It’s immoral to seize wealth from some for the unearned benefit of others and no amount of semantics and branding is going to change that fact.

    And because luckily enough we can’t have contradictions in physical reality, the immoral is also the impractical which is why UBI will never work in practice.

    Property rights consistent with capitalism are the only moral system for humans to live among each other, which is why its the only system that will ever work or has ever worked in practice, which is why all welfare, in all forms needs to be abolished.

    That’s really all there ever was to it.

  14. Bela Bartok

    Iampeter, I like your argument on the morality of UBI.
    My concern – about using morality as the basis for rejecting ‘grand visions’ like UBI – is that the morality of the ‘old society’ is rapidly being subverted (usurped?) by the ‘new morality’ of the Left; my rights supervene yours, capital is theft, I have a right to your money (which you stole anyway because unfairness), enforced equality of outcomes etc.
    I totally agree UBI is immoral: but the definition of immoral is being challenged , and challenged good and hard, and the Left won’t relent until it’s destroyed and reshaped in their image.

  15. herodotus

    In Australia we’ve seen for years the UBI (Universal Booze Income) – for some, at least. Hasn’t improved outcomes as far as we can ascertain. Closed no gaps. Caused no assimilation. Helped in education? Prevented child abuse or domestic violence?

  16. Barry 1963

    It’s a matter of getting the balance right. Encourage work and enterprise, but help those in need. There’s no one formula, thus a targeted case management approach is best.

  17. Blind Freddie

    If it looks too good to be true, then let all the advocates throw all their worldly goods at governments and see how long it takes them to waste it or transfer to secret Swiss Accounts.
    In failed states, equality often means money is worthless, food comes directly from rubbish trips and hand me downs are the fashion of choice.
    Once the advocates divest themselves of their worldlly goods and it can be verified I suggest the other 95% of us should reserve judgement

  18. Anxiety about where your next dollar is coming from is the mother of invention. It leads to flexibility, acceptance of new ideas, and lots of hard work. It creates intolerance of stupidity and wastage.

    Complacency about your economic situation leads to inflexibility, rejection of innovation, and laziness. It leads to acceptance of stupidity as normal, and wastes valuable resources on smoke and mirrors. Then the people starve while the elite discuss the situation.

    Welfare is evil, it kills marginalised people with a sugar coated pill, it destroys civilisations in the name of compassion.

  19. Joe

    Boyfromtottenham:

    Joe, you said ‘I can’t wait for the robots to take over all labour’. Hmm – so does that mean that the companies or organisations that own the robots can sack all the people that used to do the work now done by robots?

    Yes

    If so, then the all former labourers will either be unemployed, or will have to retrain as ‘knowledge workers’.

    Put your finger on the problem exactly. Not everyone will be capable of being retrained and even if all could be retrained, the numbers of workers required will be tiny in comparison to those made redundant.

    If not, then the employers will either go broke paying for unneeded labour as well as robots, or will have to restructure their businesses to find places for the former labourers who are retrained as ‘knowledge workers’. What were you assuming would happen if your wish came true?

    I don’t know, but it’s going to happen regardless of what we wish. I would prefer that those surplus to societies need for knowledge workers would not be disadvantaged just because they are surplus.

    Look, ultimately, with AI and robotics, it may be possible to provide all anyone wants for free, after all, all costs associated with producing something can be reduced to labour and capital and if labour is free – what price capital?

  20. RobK

    UBI will greatly reduce the need for individuals to interact with each other for reasons of interdependency. The State interaction with individuals is counter to self-determination and should be kept to a minimum. If an individual becomes dependent on state UBI, what sort of individual is he compared to one who interacts with his community of individuals. The latter is far more resilient and is more protected from massive poor judgment from a central control.

  21. closeapproximation

    Give everyone 15k no conditions and 15k will become the new zero $.

  22. max

    rise of the machines is an economically illiterate meme that refuses to die.

    the rise of productivity decreased the prices but also freed resources for consumers. Resources which can be spent somewhere else in the economy.

    everything is going to be cheaper and service jobs are going to buy more than before.

    well if robots can do all jobs we would be in Eden — no more scarcity –everything is free and abundant.

    of course, you need to get government bureaucrats out of the way to get there faster.

  23. rickw

    If so, then the all former labourers will either be unemployed, or will have to retrain as ‘knowledge workers’.

    You do realise that you can buy 30 year old used industrial robots on eBay?

    My point is that none of this is particularly new. The really only significant advances in typical industrial robotics applications is use of optical sensors to better closed the feedback loop and the compactness and power of the electronics.

  24. iampeter

    the rise of productivity decreased the prices but also freed resources for consumers. Resources which can be spent somewhere else in the economy.

    everything is going to be cheaper and service jobs are going to buy more than before.

    Yep exactly.

    All they are doing is making the same age-old Luddite, anti-technology argument.

  25. Rococo Liberal

    The UBI is like Marxism. One is a system designed to do away with welfare by giving everyonwelfare. The other is a system designed to do away with governments by making the State the whole purpose of being.
    Both are as idiotic as the other.

  26. Driftforge

    UBI has the same source as LVT – Progress and Poverty, Henry George, ~1890. It’s a good read.

    What you have to realise is that both solutions proceed from the basis of simplifications made to suit the limited technology of the day.

    LVT makes the simplification that the owner of land is presumed not to contribute to the value of land. There are clear cases where this is false – such as a farmer improving the quality of their soil – and which result in a double payment to the state. Moreover LVT makes the devious presumption that all contributions to the value of others land are made by the state – i.e the state will collect additional taxation because a school has been added to the area, regardless of whether that school is publicly funded, or privately. Resulting in a complete repression of private investment in the public good.

    UBI makes the simplification that all men sacrifice equally in value that monopolies in land may be held. Which again, is rather daft on the face of it. Self-evidently, the more capable a person is, the more value they – and society – lose because they lack the rights to value land. Furthermore, the rationale behind the LVT/UBI combination was the observation that access to land reduced the incidence of poverty. Yet if you transform the ‘access to land’ to ‘access to the value of land’ by using a UBI, you eliminate the very thing that George noted was critical to the reduction of poverty – access to land.

    Here’s the crazy thing – it is immensely simple now to go back to the basics presented by George in his book and construct a system of land value taxation that fulfils all that George set out to achieve, without suffering from the effects of the simplifications that had to be made at the time for the system to be a) workable and b) comprehensible.

    Such a system would be markedly better than the taxation – welfare system we currently have. All that has to be managed well is the transition – which is expensive but not hard.

    You just have to reject the leftist frame. No two men are created equal.

  27. Mundi

    Can’t believe the nonsense in this thread and robots…..

    95% of jobs were in agriculture not even 200 years ago. Now it’s under 5%. Do we have 90% unemployment? Of course not.

    AI robots would do what the first and second industrial revolution did: gigantically grow the economy and living standards

  28. PeteD

    UBI at least gives a basis for understanding whether a system is spending logically or not.
    For example, the Federal Budget includes $37 billion of spending on Families with Children.

    The Census counted 5.7 million people in Australia between the age of 0 and 19.

    So the government ends up spending about $6,500 per Child/Year in these categories.

    If they instead implemented a UBI of $5,000 per child, and then allowed families to make their own decisions about how to use Goverment Funds (whether on ChildCare or other items), there would be a substantial reduction in the disincentives to work, and a better overall outcome in many situations, despite the perversity of such a generous provision.

  29. If you’re genuinely concerned about the welfare state, Brittany Hunter, let’s look at existing taxes. They carry combined deadweight greater than $2.00 for every dollar of tax raised. http://thedepression.org.au/why-economies-are-failing/ If we were to slash these drastically, and put a concomitant charge on economic rent (which carry zero excess burden!), a non-inflationary UBI would be available to everyone: even to those leeches who currently capture the greater part of our economic rent/unearned income. (BTW, what are rent-seekers if not the worst kind of ‘welfare recipients’!)

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