No, it’s not time for a basic income

The concept of a basic income has gotten a lot of traction among liberals and libertarians as a solution for placating the millions of unemployed in the wake of rising structural unemployment and obsolescence of old industries. A basic income would allow individuals to become self-sufficient without the bureaucracy and inefficiencies of traditional welfare, or so the theory goes. From Hawkins Venture:

It is the most efficient possible form of wealth redistribution because there is no bureaucratic overhead needed. More money reaches the poor directly.

It is more equitable than retirement plans, which transfer wealth from young to old.

It enables people to work on only what they want to.

It improves opportunities for individuals to use their Basic Income to get an education, start businesses, or make investments.

The amount of Basic Income could rise over time with productivity & automation growth.

It would enable resources spent on the current bureaucracy to work on other tasks beneficial to society.

It reduces the marginal tax rate for the poor, creating better incentives. Currently, the poorest receive a combination of unemployment, food stamps, and other government subsidies, which often go away if they take a job. Each of these issues create in effect high marginal tax rates. In extreme situations, it means people can go back to work and make less money than before. With basic income, there is more incentive to work, as everything you make is additive.

It should replace unemployment, which is pay to not work, which creates a perverse incentive.

It should replace minimum wages, which incentive employers to reduce jobs.

It reduces political corruption. There are fewer government bureaucrats and fewer spending levers to grant political favored groups favorable treatment.

What are probable benefits of Basic Income?

It would provide a more stable consumer purchasing base, stabilizing the economy.

It would reduce crime as a result of lower levels of desperation, particularly among the youth.

Nevertheless, the basic income isn’t viable for a couple reasons: it’s still wealth redistribution and it will only compound spending. There is no guarantee recipients would use their income for necessities like food, healthcare, and shelter, so if they blow it on drugs and alcohol, for example, it means tax payers would still be on the hook for everything else. As Mitt Romney said, there are 47% of Americans that don’t pay taxes. Why should working, hard-working people have to redistribute their wealth to the least productive so that they can be paid to do nothing, on top of existing entitlement programs?

Charles Murray has advocated a universal basic income of $10,000 for every person, and paying for it by ending Social Security, Medicare, Medicaid, virtually all transfer programs and certain tax breaks. This would be a good compromise, but is even less likely of ever being ratified than a basic income that would coexist with existing welfare programs, because as stated earlier, individuals would squander the money on frivolous things. The income would not be sufficient to launch most of the poor into the lower middle class. Even if the income could bring a family of four above the $23,550 poverty line—a figure that would cost trillions—it would still leave many Americans in effective destitution, particularly those living in expensive urban centres like New York City or San Francisco where the average monthly rent is now $3,000. Furthermore, under what statute does the government have to guarantee a middle class income; the only role of the government should be to help create economic conditions optimal for wealth creation, so that individuals can “pursue happiness”, but otherwise the government should intercede as little as possible.

Another option we have explored is paying individuals to engage in passive consumption, such uploading pictures to Facebook, clicking Google ads, tweeting, or streaming Netflix. Each verified social media action would be reimbursed with small monetary reward ranging from a few cents to a dollar, e.g., creating a Facebook profile would be worth $1, 5 cents per uploaded picture, 2 cents a tweet, etc. According to experts, these activities could be more economically valuable than overpaid and redundant traditional jobs, while boosting self-confidence and keeping the masses content. This would cost much less than a basic income and be less vulnerable to abuse. The program would be partially paid for by Facebook and Twitter in a partnership with the government, similar to product placement in TV shows, fast food restaurants, and movies; the rest of the money would, unfortunately, have to come from taxpayers, unless the partnership companies deem it worthwhile to front the entire cost. However, we believe our approach to the basic income is superior to existing proposals.

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