An Argument for UBI (Universal Base Income)
If you’ve been following United States Politics I’m sure you’ve heard or seen the proposed #FreedomDividend where Andrew Yang wants to pay $1000 per month to every United States citizen that is over age 18, legal and law abiding.
Below are more details explaining and answering any arguments.
1. A household with 2 adults gets $24K per year. This isn’t enough to retire but does encourage / enable people to pursue self reliant opportunities. The UBI acts as an Alternative to wage labor.
2. The quantitative easing enacted by the federal reserve of $4 trillion didn’t cause inflation.
3. Kuwait gave all citizens $4,000 per year and inflation was lower.
4. If a company raises their prices to get some of your UBI income, those who don’t raise their prices will get the business instead. Hence, the market will work it’s magic and inflationary pressure will not take hold. If all companies raise their prices, an opportunity will exist for a new company to enter the market and sell products at a lower, but still profitable, price point. Free market capitalism at its finest.
5. Demand for many items (milk, bread, soap, etc) will not increase. Hence, no Upward pressure on many prices (supply and demand will be in balance). The only items to realize an increase will typically involve non essential, luxury items.
6. No need to increase the minimum wage (which kills jobs) since the UBI is an effective $6 per hour “wage”. If a husband and wife combine their UBI that amounts to an effective $12 per hour wage increase.
7. Many millions of UBI recipients will save their money or invest in the stock market (1/3 of Alaskans save their oil dividend, 50% use it on regular bills, and 15% buy luxury items they typically couldn’t afford). Hence, the overall value of everyone’s stock holdings will increase and certain businesses will greatly benefit (new cars vs. used cars, etc..).
8. Over 2 million new jobs will be created as people are empowered to open small businesses or pursue their ideas. Imagine what a family of 4 adults (mom. Dad. 2 adult kids) could do with $48,000...every year. This would be in addition to their regular employment income (4 adults can’t survive on $48K). Worst case scenario these 4 lazy adults don’t work and spend their money in stores owned by the more ambitious. I’m not gonna complain.
9. Charitable contributions to churches, Red Cross, Jerry’s Kids, etc...will increase by billions...every year. However, Contributions to many of the needy and poor will likely decrease, as this demographic won’t need your assistance anymore.
10. The size of government (the nanny state) will decrease as people currently on welfare won’t get any more government aid (you can either get $12,000 per year or government aid, not both). This will save billions ($1 trillion?) every year. In addition, government employees who monitor the welfare programs will need to seek employment elsewhere.
11. The UBI will free people from living in areas with high costs (big cities) to areas where housing costs, for example, are more affordable.
12. People won’t appreciate the UBI invite since it wasn’t earned. They’ll “piss it away”. Easy come, easy go. However, the typical Alaskan, whereby every man woman and child gets $1,800 per year, shows this not to be the case. Alaskans getting this income have treated it similar to how they treat their earned income. The markets have not been “distorted” by this cash windfall.
Recent Comments
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I know that in Germany they subsidize families who have children and it has not affected the economy in an adverse manner. Quite the opposite I think.
The wealth of a nation has more measures than economic output. The real measure for me is how they take care of their citizens and the quality of life most have.
Some people would call this socialism, but it is not an all or nothing concept We have social security, we have welfare programs, we have the VA for vets, etc.
With the advances in technology, some major re-thinking has to be done. Robots and automation are making a lot of jobs obsolete. Truck drivers, production lines for all kinds of products, warehousing, and so many more jobs can be done better and more reliably by robots...
The changes mean also that there will be millions that will have to find another line of work, and if that is not possible, some means of a minimal level of sustenance provided to them.
This basic income idea is one that needs to be explored. There may be new jobs that are developed from the technology advances, but the displaced workers are not going to be able to retrain themselves (some will but many will not)...
The answer may be a tax on the companies that use robots that are replacing people...They would have less cost than having a person do the job, but their move to automate and the savings would then be split with workers (through government taxes)...
The time is now to try some new ways of thinking about society, jobs, and the role of Governments in making the world we live in a better place...
With the changes that are happening now, not only with technology but also climate change and even the expectations of people about what life is all about, if Governments do not think this through, mass unrest will take place...
Not so much for my kids, but the grandkids and the great grandchildren are the ones who are going to have to live with what we do or fo not do today...
A universal base income is not a brand new idea, but today it can be taken off the proverbial shelf, dusted off, perhaps add a few touches to it (for modern society) and tried.
Do it now or suffer the consequences later as millions more lose their jobs...I do not have a great deal of confidence in the regime that is in charge over there now in the USA, but I do think that change is coming...
Let's see...Good topic to discuss!
Cheers!
Dave : )
Times have changed.
Captain Kirk, did not carry a wallet.
Money is the measurement of value in the United States, and around the world.
The dollar per hour model is obsolete.
Even the people that do not work, will help to circulate money through the economy.
That's an amazing analysis. If it can be done, they should have made an info campaign on this. The negative analysis should be given a chance to explain their side. But I like it already. Thank you for a dose of economics lecture!
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It seems to me you have given UBI a lot of thought. Thanks for your effort and insight. Jeffrey