Universal Basic Income (UBI) has been all the talk recently with the likes of Mark Zuckerberg, Bill Gates, Elon Musk, Hillary Clinton and former president Barack Obama voicing their gleaming support. At first glance, this proposal seems like a refreshingly simple alternative to the United States’ current welfare program. In reality, the “U” in UBI turns out to be the most damning aspect of this proposal. Here are 4 reasons why UBI is a terrible idea.
For the purpose of demonstrating my point, let’s assume a UBI of $30,000 a year has been implemented.
1. UBI will cause massive inflation
Individuals pay others for goods and services. A young entrepreneur might use the money he or she earned through voluntary market interaction to hire a programmer to develop an app. What’s different about the government paying an income? The money the government has, and is able to give, has either been collected though taxation or printed by the Federal Reserve. Unless the government raises taxes considerably, the money will be printed and the money supply will increase exponentially as a result.
Imagine everyone having $30,000 extra in their pockets when I snap my fingers. What’s bound to happen? Long term, the market will adjust to treat $30,000 as our current $0. Eventually, your UBI will be worth nothing, and politicians will call to raise it: $45,000 for everyone. Soon enough, $45,000 will be worthless, and so on.
2. UBI will destroy the incentive for business entrepreneurship
Starting a business is a risk. What makes it worth it for most people? The reward. If you’re being taxed 90% of your income to subsidize UBI, what’s the point of doing that work at all? Plenty of people are passionate about their work or their innovative idea, but no one can deny the sleepless nights it takes to successfully launch a business or invent a new product. If the result of that immense effort would be the same thing you started with, you’d rather not strain yourself. This country's industriousness would surely suffer, and innovation in any field would be rare, if not totally nonexistent.
3. UBI will reduce your income significantly
With a guaranteed income, the market value of labor decreases. Everyone’s secondary income (other than the UBI) will decrease in nominal terms. In other words, your job will pay less. On top of this, the value of the dollar will have decreased in real terms (inflation.) Counter-intuitive as it may seem, economics proves that everyone would be considerably poorer with UBI. You will make less money, and what you do make will be worth less.
4. UBI will allow the government to exercise more control over your life
It isn't hard to imagine people becoming dependent on their UBI. What would stop the government from putting conditions on UBI eligibility?
“UBI will only be distributed to those who...” fill in the blank.
UBI could be leveraged as a means for the government to enforce it's will. Perhaps in the present day you believe all laws are just, but we can't neglect what might happen in the future, and what a population dependent on a government paycheck could mean for our children one day.
...but it’s better than our current system, right?
Wrong. UBI is simpler than our current system, which wastes a large portion of the money dedicated to “welfare” on administrative costs and bureaucracy. However, simplicity is the UBI system's only redeeming attribute. UBI is fundamentally worse than our current welfare system for all of the reasons stated above. It would end up hurting the poor, and, staying true to the “U” for “universal,” it would hurt everyone else, too.