Relabeling Welfare

There are no free lunches in economics, only trade-offs. A job offer in a large city like New York or Chicago comes with certain benefits. Big city life means a bigger salary and access to bigger attractions like professional sports and theaters. But the trade-off comes from the higher cost of living, the distance (potentially) from home and more competition at work for prized slots. Not everyone prefers to live in a big city and ride public transport to get around. Many do though. It’s how we self-select in a free country.

The problem with a Universal Basic Income (UBI) is it trades dignity for cash. The trade-off would create more dependency and generational poverty. For a couple of reasons this is the worst idea for leveling out ‘inequality’. It seems proponents of cradle to grave welfare have dispatched with the term ‘welfare’ and the restrictions surrounding it. At least now the system has certain quotas like work requirements. ‘Welfare’ in the United States is a term associated with laziness, so wisely they dressed it up in clever language.

“Basic” suggests a right, and “Income” suggests something earned. Both are laughably misleading but designed to draw an emotional connection to the plan. Once people think of it as a right, it becomes impossible to take away.  

Since it is just theory now, I can only explain what I’ve read. Everyone is given certain a set amount of money every month. It might be $600 bucks or more, not enough probably to live on by itself but enough to discourage full time work. This stipend acts like a cushion for periods of unemployment or underemployment. Supposedly this frees up people to have enough cash for basic allowances.

Work is critical to the individual and society. It takes many forms, a few of which are labor intensive and a few of which are managerial or intellectual. Work doesn’t have to mean muddy boots and sore joints at the end of the day. But it should be tied to individual responsibility. The worker is responsible for himself or herself, and makes choices about the amount of hours they put in and the life they live. For a lot of Americans luxury cars and boats aren’t an option, nor a primary interest. Our salaries affect the type of house we buy, the neighborhood we live in and the vacations we take. No one can change that but the worker. If riches and high living is important, figure out how to get there. Start a company or buy and sell businesses. Go back to school and study something with higher average incomes. But the choice is up to the individual.

The worst argument in favor of the UBI is that it supposedly levels out inequality. This isn’t even remotely true. By “inequality” I guess they mean in purely financial terms. The wealthy keep getting richer and so on. This ignores the first principle of economic law, giving everyone the same thing only moves the baseline of poverty up. We need to think of money in relative terms. When everyone has a Porsche its value goes down.

 Think about the TV. When color televisions first hit the market (late fifties) very few could afford them. They weren’t manufactured in great number because demand wasn’t high, expensive as they were. By 1971 roughly half of American households had a color set. Simply, manufacturing got cheaper as did the price tag allowing middle class families to afford them.

Paying everyone a stipend from the federal budget increases the price of nearly everything else, to say nothing about the inflationary problems of adding layers of cash to economy. In short, money becomes worth less than before because there is so much of it in circulation.  

A slightly less moronic argument for UBI is that if done right it could replace other hefty federal payouts like Medicare and Medicaid. By giving the subsidy allotted for low income Americans in direct payouts the shift allows people to manage their own lives. Nonsense. Their support reflects a staggering ignorance about human behavior. People manage their lives when they earn money, not when they get handouts. Besides it requires federal bureaucrats to eliminate programs they directly benefit from. This never happens. Remember when Fanny Mae was supposed to be eliminated because of poor management? It’s still there. Remember when Obamacare was supposed to replace Medicaid for seniors? It’s still there. Exim Bank (Export/Import) was slated to be cut as well, guess what? Still there.

Since the big spend on welfare programs got going in the late sixties poverty has increased ever since. Extra spending on entitlements leads to the exact opposite of its intended purpose. It adds a layer of dependence for the next generation used to its regularity. The waste in human progress is the saddest part of the whole ordeal.

It’s also the hardest to undue. Even if the savings do manifest (highly unlikely) we have increased entitlement to an incomprehensible level. This is something policy wonks will never understand. Lives get wasted, not just money. The ones left behind in the economy are the ones who can’t, or won’t, do for themselves. Who can blame them? When no expects anything from you, why put in the effort?  

The UBI movement is gaining steam due to the supposed joblessness the tech boom is likely to create. Robots might replace a lot of the jobs we do now but trying to replace income with welfare is bad for people and societies. We can’t know the future but shifting technology has always lead to disappearing jobs. From agriculture to manufacturing, we’ve been here before. Almost no one worked in software before the 1980s. Fracking for natural gas wasn’t widely used until after the 1950s. Something always comes along.

This UBI is just the latest effort to create a dependent class from ‘experts’ who don’t care about the cost of human dignity. Yes, work is dignity. Work is essential for purpose and strong communities. Whatever the numbers are that will never change. It’s a first principle rooted in societal progress.

 The trade-offs aren’t worth it.