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Universal Basic Income Is A Universally Bad Idea. Let’s Stick With Universal Capitalism.

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Bad ideas just won’t die. Ronald Reagan’s goal was to “leave Marxism and Leninism on the ash heap of history.” But they keep coming back, albeit in different forms. Of today’s bad ideas—from net neutrality to open curriculum and living wages—the most dangerous is the universal basic income.

For twisted reasons, Silicon Valley, the embodiment of meritocracy and incentives, thinks universal basic income will be the next great economic force. Facebook co-founder Chris Hughes is helping to fund a UBI pilot program in Stockton, Calif. He even wrote a book about the idea—something about 1%-ers paying money via tax credits—hardly original.

He’s not alone. Barack Obama has recently expressed interest in the idea. So have Bill Gates, Richard Branson, Mark Zuckerberg, Elon Musk, Marc Benioff and others in Silicon Valley. Why? I figure it’s their misplaced guilt about patriarchal dominance over workers displaced by automation. That’s a triple crown of bad excuses.

A Universally Bad Idea

The enthusiasm seems infectious. In July, Chicago Alderman Ameya Pawar told the Intercept, “We need to start having a conversation about automation and a regulatory framework so that if jobs simply go away, what are we going to do with the workforce?” It wasn’t a long chat. This summer, Mr. Pawar introduced legislation for a pilot program that would give $500 a month to 1,000 families. Think of it as a new version of walking-around money. Never mind that Chicago can’t even afford to fund its public-employee pensions.

It sounds eerily similar to startup incubator Y Combinator’s Basic Income Project Proposal. It’s the harebrained idea of the organization’s president, Sam Altman. A thousand lucky folks would receive $1,000 a month for as long as five years. Another 2,000 would form a control group and might get $50 a month for their troubles.

What troubles? Well, University of Michigan researchers will be asking how they spend their time, if their political and social attitudes change, the effect on crime, and if their children do better on standardized tests. And there will be blood tests too: The study will “measure markers that serve as predictors of later disease as well as cortisol, an indicator of stress.” If $1,000 a month lowers your stress, shouldn’t everyone get $1,000 a month? Netflix and chill is cheaper.

Mr. Altman has almost sinister plans for UBI. Forget $1,000 a month. He told Spectacle “instead of getting a fixed fee, you get a percentage of the GDP every year.” Maybe everything should be owned by the state and divvied up? All he’s missing is five-year plans. Perhaps Mr. Altman dropped out of Stanford before taking economics—or history for that matter.

Not to be outdone, this summer the People’s Policy Project—Get it? Like the People’s Republic?—proposed an American Solidarity Fund. Every citizen over 17 would own a share of this sovereign-wealth fund. Slowly but surely, up to one-third of the assets of the U.S. economy would find their way into the fund. That’s $90 trillion for those keeping track at home. Then the investment returns from the fund would be paid out as, you guessed it, a universal basic dividend. This isn’t sliding a slippery slope toward socialism, it’s a trapdoor.

How would the fund get all those assets? Start with all government-owned land and buildings. Then add a 3% market-capitalization tax on public companies. Apple would owe $30 billion. Add a continuing 0.5% market-cap tax, a 5% levy on initial public offerings and 3% on mergers. Smells Marxian: “government owning the means of production.” So much for the ash heap. Then increase the death tax and get rid of every tax deduction. Heck, they better pay hefty universal basic lay-on-the-couch dividends because why would anyone ever go to work again? Companies would have minimal retained earnings to invest in the future, and workers wouldn’t keep much of their pay. The fund would shrink annually as the stock market imploded.

Progress is about incentives. The reason UBI will fail is the cycle of dependency built into it. It is a gateway drug to collectivism. Turning the U.S. into Venezuela is a universally bad idea.

Remember Mr. Pawar’s fear of automation? He’s in good company. At a February 1962 press conference, when President Kennedy was asked about a Labor Department estimate that 1.8 million jobs would be replaced by machines each year, he replied, “I regard it as the major domestic challenge, really, of the ’60s, to maintain full employment at a time when automation, of course, is replacing men.”

In February 1962 U.S. nonfarm payroll stood at 55.2 million. Fifty-six years and several major tax cuts later, jobs stand at 149.5 million. Call it basic and universal capitalism. Let’s stick with that, shall we?

This article first appeared at wsjonline on Oct 22, 2018.

Finland Set to End Its Two-Year Experiment with a Universal Basic Income

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American socialists have a love affair with praising the welfare systems of Nordic countries. Convinced that America is foolish not to follow in the footsteps of countries like Finland, Denmark, and Sweden, many claim that individuals in this country would be better off if our own government strengthened its welfare system.

One of the more popular proposals for expanding the welfare state is to implement what is known as a universal basic income (UBI). Under this type of system, individuals would be given monthly stipends from the government, instead of paying into welfare programs like we do currently. What the recipients do with this money, however, is up to them. Though it is hoped that this money will be used to pay for services once provided through government programs.

However, many proponents of the free market have been quick to warn that the UBI might not live up to all the hype. In fact, a recent study conducted by the Roosevelt Institute on the impacts of a UBI concluded that the implementation of this program did not yield positive effects, especially since the funds needed to pay for this program still come at a high cost to the taxpayer.

The study’s conclusions stated:

“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.”

However, while this gave us a grim look into some possible long-term effects of implementing a hypothetical UBI in the United States, Finland is about to wrap up their own real-life experiment.

Almost two years ago, Finland decided to scrap its own welfare system and replace it with a UBI. The experiment was only set to last for two years, at which point the government of Finland would analyze the results and reach a conclusion about the experiment as a whole.

Commenting on Finland’s experiment, The New York Times recently reported:

“For more than a year, Finland has been testing the proposition that the best way to lift economic fortunes may be the simplest: Hand out money without rules or restrictions on how people use it. The experiment with so-called universal basic income has captured global attention… Now, the experiment is ending. The Finnish government has opted not to continue financing it past this year, a reflection of public discomfort with the idea of dispensing government largess free of requirements that its recipients seek work. …the Finnish government’s decision to halt the experiment at the end of 2018 highlights a challenge to basic income’s very conception. Many people in Finland—and in other lands—chafe at the idea of handing out cash without requiring that people work. …Finland’s goals have been modest and pragmatic. The government hoped that basic income would send more people into the job market to revive a weak economy. …The basic income trial, which started at the beginning of 2017 and will continue until the end of this year, has given monthly stipends of 560 euros ($685) to a random sample of 2,000 unemployed people aged 25 to 58. Recipients have been free to do as they wished… The Finnish government was keen to see what people would do under such circumstances. The data is expected to be released next year, giving academics a chance to analyze what has come of the experiment.”

Prior to great UBI experiment, Finland’s welfare system was like that of other Nordic countries. Large portions of the people’s paychecks were taken by the government and then redistributed to the dozens of state-sponsored welfare programs. As can be expected, these programs became financially burdensome for Finland. In fact, one of the goals of the UBI experiment was to see if it could save money by reducing the need for many of the government’s programs.

While the results of the experiment are still pending, it is not likely that the Finland experiment will tell us anything different than we already know: The UBI doesn’t work. It’s too expensive and it completely negates the role incentives play in the job market. Even so, it will be interesting to see what the future of the Finnish welfare holds in the aftermath of the UBI experiment.

To understand more about why a universal basic income will never work, read more here. 

What Hayek Gets Wrong about the Universal Basic Income

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Market advocates usually tend to reject any sort of system that seeks to rob from one individual in order to give to another. Yet, when it comes to the welfare state, some who align themselves with free enterprise support the idea of a universal basic income (UBI).

It is believed by some that a UBI would be the best possible way to limit the welfare state without clinging to the more idealistically pure view that it should be abolished altogether. It is reasoned that since the government is likely to continue taking from us anyway, we may as well mitigate the costs by giving each individual a fixed amount of money each year.

This great libertarian divide on the issue of the UBI is not one that is exclusive to our modern day.

By providing each individual with the same amount of money, let’s say $10,000 a year as has been suggested by some, income is at least being equally distributed, it is argued. And without a labyrinth of other welfare programs, a UBI could actually decrease the welfare state.

And even though recent research and studies conducted on the matter have yielded results less than favorable to UBI champions, there are still those in the free market camp who continue to advocate for it.

But this great libertarian divide on the issue of the UBI is not one that is exclusive to our modern day. In fact, both Milton Friedman and F.A. Hayek showed support for this type of system in their own time. Hayek even dedicates much of his ninth chapter inThe Road to Serfdom to this topic as he discusses the always-timely debate between liberty and security.

Economic Security

Libertarians are especially guilty of using the Ben Franklin quote warning against hastily trading liberty for security as often as is humanly possible. In a post-9/11 world, this issue of liberty vs. security has become all-too applicable as young people have lived the majority of our lives in a world absent of our most precious civil liberties.

As the quote says:

Those who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety.”

But there is more to this liberty vs. security issue than just civil liberties. Though to be sure, all liberties are related to each other. But in true Hayek form, he uses the “Security and Freedom” chapter of his book to discuss the importance of economic liberty.

Hayek believes that there are essentially two types of economic security: limited and absolute.

“It will be well to contrast at the outset the two kinds of security: the limited one, which can be achieved for all, and which is therefore no privilege but a legitimate object of desire; and absolute security, which in a free society cannot be achieved for all and which ought not to be given as a privilege—except in a few special instances such as that of the judges, where complete independence is of paramount importance.”

But what he neglects to place on the table for consideration is the very real fact that no amount of security can ever be guaranteed in a society comprised of individual actors. True liberty will always be a risk because it acknowledges that you cannot guarantee security without first stripping people of their liberties and using force.

Instead, Hayek makes arguments in favor of “limited” economic security being compatible with free enterprise. “But there is no incompatibility in principle between the state’s providing greater security in this way and the preservation of individual freedom,” Hayek says very early on in this chapter.

He continues:

Nor is there any reason why the state should not assist the individuals in providing for those common hazards of life against which, because of their uncertainty, few individuals can make adequate provision.”

There are two problems with this statement. First, as discussed in previous liveblog entries, Hayek has already made the case that it is hard to restrain governments once it is given a little power. So this is a very slippery slope to descend.

It also neglects the very real fact that in order to supply individuals with their basic needs, money is required. And that money has to come from somewhere. Since the government itself provides no good or service that brings in profit, the money to fund such a program would have to come at the expense of the taxpayers. In other words, it involves theft at the hand of the government.

In fact, a recent study conducted on the impacts of a implementing a UBI within the US found that:

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.”

Hayek makes arguments in favor of “limited” economic security being compatible with free enterprise.

So not only does this type of system advocate institutionalized theft, it also claims to solve a problem that, in fact, it does not impact. Since this money needed to fund a UBI either comes from raising taxes on individuals or increasing the deficit, it is not saving anyone any money.

The Fear of Technological Progress

As part of his argument in favor of this type of system, Hayek addresses the fact that oftentimes, advancement in technology results in a loss of employment for many workers who are skilled in one very specific area. Since this progress has come at no fault of their own, Hayek argues that the government should ensure that they are not experiencing a loss of income.

We all know the tragic plight of the highly trained man whose hard-learned skill has suddenly lost its value because of some invention which greatly benefits the rest of society. The history of the last hundred years is full of instances of this kind, some of them affecting hundreds of thousands of people at a time.

He continues:

That anyone should suffer a great diminution of his income and bitter disappointment of all his hopes through no fault of his own, and despite hard work and exceptional skill, undoubtedly offends our sense of justice.”

This is all-too applicable in our modern climate when fear of automation has been used to advocate for a UBI. Big names in the tech world like Mark Zuckerberg and Bill Gates have both used the increased use of automation to say that now, more than ever, a universal basic income would be most needed.

Life has forward motion and is never static, never stuck in one place.

It is undeniable that automation will inevitably put some individuals out of work just as machines put laborers out of work during the industrial revolution. If automation proves itself to be more efficient and less expensive than human workers, it would be foolish for companies not to move towards this system.

But by creating a UBI as a safety net, the state is essentially incentivizing individuals to stay stagnant and abandon the endeavor of learning new skills that may help them create value in the workforce. Nothing in life is set in stone. What is here today might be gone tomorrow. No amount of false reassurance can avoid this fact.

Careers are no different. If your skills are not in demand because of technological advances, then one must learn a new skill and create value in a different sector. While technological progress does come with initial job displacement in certain sectors, there are still others sectors in need and new niches that have not yet been capitalized on. Whole new industries, sectors, job opportunities emerge, providing new hope to people who are seeking work, and, let us not forget, serving people as consumers who are seeking better lives.

Ensuring that no matter what happens, the government will provide for you diminishes the incentive to constantly expand your skills in order to create as much value as is possible. In fact, it is an illusion: life has forward motion and is never static, never stuck in one place.

But on this point, Hayek disagrees:

Although the results achieved will often be commensurate with efforts and intentions, this cannot always be true in any form of society. It will particularly not be true in the many instances where the usefulness of some trade or special skill is changed by circumstances which could not be foreseen.”

Most of life’s events are unforeseen. Life is, unfortunately, unfair and it is not the responsibility of others to remedy life’s unsavory moments. What we need most of all is the freedom to adapt, to evolve, to become something that is valued by others. This is precisely what is provided by the market economy, the most benevolent institution that exists on this earth.

The Problems

Hayek is by no means intellectually lacking in the area of economics. And while he mistakenly accepts the UBI as a reasonable free market solution to the welfare state, he is also aware of the problems that may arise under this system.

When a person’s income is guaranteed, he can neither be allowed to stay in his job merely because he likes it nor to choose what other work he would like to do. As it is not he who makes the gain or suffers the loss dependent on his moving or not moving, the choice must be made for him by those who control the distribution of the available income.”

Speaking to the point made above, Hayek addresses the fact that a UBI does come with the very real risk that an individual will have no incentive to improve their life. When needs are being met with or without any effort on your own part, the desire to improve one’s station in life becomes less important.

Ending this chapter Hayek states:

Some security is essential if freedom is to be preserved, because most men are willing to bear the risk which freedom inevitably involves only so long as that risk is not too great.

Though he is quick to add:

But while this is a truth of which we must never lose sight, nothing is more fatal than the present fashion among intellectual leaders of extolling security at the expense of freedom.”

In short, while economic security may be appealing to many and ease our minds, it does not come without a cost, and, in most instances, it is a loss to not only our economic freedom but freedom in general.

Automation Does Not Justify A Universal Basic Income

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Today’s most prominent tech and entrepreneurial leaders have been agitating for a Universal Basic Income (UBI) in what has become a growing movement. Richard Branson recently joined Mark Zuckerberg, Elon Musk, Bill Gates, and others by throwing his support behind this massive welfare program, citing, like the others, the fear of automation and technological unemployment.

In late summer, he said:

With the acceleration of [artificial intelligence] and other new technology… the world is changing fast. A lot of exciting new innovations are going to be created, which will generate a lot of opportunities and a lot of wealth, but there is a real danger it could also reduce the amount of jobs.

He continued:

This will make experimenting with ideas like basic income even more important in the years to come.

There are many reasons, both economic and philosophical, to be against the idea of a UBI.But since the UBI is often justified on the grounds that automation is a threat to American employment, it is important to debunk this myth separately.

The first portion of what Branson says is accurate. Our modern world is incredible. As automation advances, the consumer wins by gaining access to higher quality products and services.

We have all experienced the convenience of using a self-checkout station at the grocery store or ordering food from an automated kiosk. Some of us have even experienced the joy of having a delicious cupcake dispensed out of a “cupcake ATM.” Others, like myself, spend a fair portion of our time barking commands at our Google Homes or other personal assistants that we rely on to keep track of our daily schedules and news updates.

Our lives are automated now. They will only get more so with the passing of time. And that is a good thing.

As for opportunities and wealth, Branson is also correct.These technological advancements are creating whole new sectors providing more jobs and more opportunities for more human beings.

But unfortunately, while Branson does express this sentiment, the last portion of his statement seems completely contrary to the words that preceded it. Technological progress does not come at the catastrophic cost of human labor as he and others assert.

The Curse of the Machinery

In his 1946 classic, Economics in One Lesson, Henry Hazlitt spends an entire chapter discussing this phenomenon. “The Curse of the Machinery,” as he calls it, describes the hysteria that has always accompanied technological progress throughout history.

Wasting no time making his point, Hazlitt opens this chapter by saying:

The belief that machines cause unemployment, when held with any logical consistency, leads to preposterous conclusions. Not only must we be causing unemployment with every technological improve­ment we make today, but primitive man must have started causing it with the first efforts he made to save himself from needless toil and sweat.

What makes this chapter of Hazlitt’s book truly fascinating is his use of historical examples to support his point.

Workers during the Industrial Revolution may have never dreamed of a world where automation was integrated into the lives of average Americans. But they did fear a world in which labor-saving machines “threatened” to put them out of work.

In the stocking industry, for example, fear of machines was so intense, massive riots erupted as soon as workers were introduced to the new mechanical knitting machines known as, “stocking frames.” In the midst of all the chaos, new machines were destroyed, houses were burned, inventors were threatened, and peace was not restored until the military eventually intervened. These machine-wreckers were called “Luddites,” and thus a term was born.

During the Great Depression, a group known as the “Technocrats” was formed in direct opposition to new machinery. When the economy goes to hell, everyone is eager to point fingers. And according to Hazlitt, in 1932 the American “Technocrats” cast the blame in the direction of machinery.

“It is enough to say that the Technocrats returned to the error in all its native purity that machines permanently dis­place men—except that, in their ignorance, they presented this error as a new and revolutionary discovery of their own. It was simply one more illustration of Santayana’s aphorism that those who cannot remember the past are condemned to repeat it.”

Already, in 1932 those terrified of technology displacing workers thought themselves revolutionary in their discoveries. Yet, their fears were just a modern manifestation of an age-old fear. Likewise, those in Silicon Valley are misled to believe that automation will cause massive unemployment. But as Hazlitt says, “Not only should we have to regard all further technical progress as a calamity; we should have to re­gard all past technical progress with equal horror.”

And even though the fear of machinery has recurred throughout history, the reality has never seemed to turn out the way the scaremongers claimed it would.

The Market Corrects

In the case of the British stocking knitters, it is true that as many as 50,000 were left jobless in the wake of mechanical stocking frames. However, as Hazlitt points out, “But in so far as the rioters believed, as most of them undoubtedly did, that the machine was permanently displacing men, they were mistaken, for before the end of the nineteenth century the stocking industry was employing at least 100 men for every man it employed at the beginning of the century.”

Likewise, 27 years after the invention of the cotton-spinning machine, which was met with similar hostility as the mechanical stocking frame, the number of workers employed in the industry had grown from 7,900 to 320,000, a rate of 4,400 percent.

When innovation abolishes the need for labor in one specific sector, a period of displacement or correction may occur. But it is never long before new jobs are created elsewhere.

Hazlitt says:

This looks at first glance like a clear loss of employment. But the machine itself required labor to make it; so here, as one offset, are jobs that would not otherwise have existed… After the machine has produced economies sufficient to offset its cost, the clothing manufacturer has more profits than before…At this point, it may seem, labor has suffered a net loss of employment, while it is only the manufacturer, the capi­talist, who has gained. But it is precisely out of these extra profits that the subsequent social gains must come. The manufacturer must use these extra profits in at least one of three ways, and possi­bly he will use part of them in all three: (1) he will use the extra profits to expand his operations by buying more machines to make more coats; or (2) he will invest the extra profits in some other in­dustry; or (3) he will spend the extra profits on increasing his own consumption. Whichever of these three courses he takes, he will in­crease employment.

There are already examples of this happening presently. Uber, for example, may soon be significantly decreasing its need for human Uber drivers as self-driving cars become a reality. But that does not mean these drivers will be left destitute or jobless. Instead, Uber has simultaneously been expanding its delivery services. From flu shots, meals, and even puppies, Uber offers a variety of services that, at this point in time, still require human employees. If, in the future, drones are capable of replacing human delivery services, it will only be a matter of time before new opportunities become available on the market.

Progress does not come without an initial shake-up of traditional norms as the market adjusts to new technology, but this change should be embraced. As the stocking makers and cotton spinners have taught us, innovation should never be discouraged because with technological progress comes more opportunities for the human race.

And for those who may doubt that jobs do not need to be lost in the name of technology, many may be surprised to learn that despite the advanced weaponry available today, there are more blacksmiths now than at any other point in history.

The great minds of Silicon Valley need not worry, then. As long as innovation continues and markets are left relatively free, there will be no need to fear the mass displacement of employees as a result of automation.

Three Arguments against a Universal Basic Income

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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.

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 effective 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 of 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 percent, 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.

 

  1. 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.

 

  1. 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.

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.”

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