What universal basic income is and why I support the idea

There’s an idea that’s been picking up steam in the circles I run in, and that is the idea of a universal basic income (UBI) for everyone. Essentially, everyone would get paid the same amount of money every month, at a minimum. Patrick Kulp published a post on Mashable yesterday with more information about UBI called “Could 2017 be the year people take universal basic income seriously?” I recommend you check it out if you want the full scoop on what UBI is and who else is supporting the idea.

I think UBI is a good idea for several reasons. The first reason is one that I hadn’t considered before prominent UBI proponent Scott Santens mentioned it in an interview on my podcast, which is that UBI is a way of decentralizing capitalism. The argument goes that by giving everyone a UBI, you increase the odds that people will start or invest in businesses, or at the very least engage in more saving or consumption – all activities that keep the engines of capitalism running smoothly (here, I mean capitalism in the broadest sense – individual property rights, free trade, investment and accumulation of capital, wage labor, etc). The goal of decentralizing capitalism can be achieved in many ways, but UBI seems to be a relatively straightforward way and one that is gaining momentum.

Another reason I support UBI is because it is so simple. Many welfare programs come with lots of fine print about who can apply and what they can spend the money on. This leads many people to fall through the cracks or fail to have their actual needs met. Unconditional, universal basic income would solve this problem and empower the people receiving the money to make the decisions about what is most important to them – not a far-removed bureaucrat. If we rolled the money from most if not all existing welfare programs into a UBI program, we would be able to massively simplify and streamline their administration, cutting down on costs, eliminating waste, and accomplishing a whole lot more good in the process.

The last reason I’ll discuss here today about why I support UBI is because I believe that one day most material production of goods and services will be fully automated, and perhaps even immaterial production as well thanks to artificial intelligence. This will eliminate a lot of jobs. Without jobs, where will the money come from to buy the things that robots are producing? A UBI will provide people with the money needed to maintain a basic standard of living, to continue purchasing basic necessities from automated industries. A UBI might not even be needed at all eventually, if people come to own all of the robots through collective or capitalist ownership models. But a UBI could help smooth the transition.

So where does the money come from to pay for a UBI? In most implementations or theories I’ve seen of UBI, it is the government who is cutting the check. The money would come from existing welfare programs, or from newly raised taxes. I personally don’t think either of these approaches is the best way to implement UBI long-term (for reasons I might expound upon in a future blog post, or the comment section if prodded), but if it’s the quickest path to implementation then as a first step I would support rolling over tax revenues currently allocated towards inefficient welfare programs into a UBI program.

I’d personally like to see UBI come right from companies, since that’s ultimately where tax money comes from anyways. Why have the government as a middleman? We could use software like Group Income to ensure that everyone pays in fairly, and everyone gets paid out fairly. Then everyone could have an extra $XXXX per month to spend (or not spend!) on whatever they thought was important.

UBI is one of those ideas that seems so crazy it might just work, and I’m happy to lend my support in whatever small way I can.

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4 thoughts on “What universal basic income is and why I support the idea

  1. Universal Basic Income is an idea that can’t work. There simply isn’t enough money to do it on a large scale. You say, “… everyone could have an extra $XXXX per month to spend …” so that implies a minimum of $12,000 per year. Multiply that times 240 million adults in the United States and you get $2.88 TRILLION per year, and that’s without factoring in the expense that goes along with distributing the funds. Annual spending on all social programs, the majority of it health care through Medicaid, is less than $1.2T. The entire federal budget has been less than $4T. You’re advocating getting rid of mostly subsidized health care (which people would have to pay for directly) and replacing it with a free money program that would cost over 75% of the ENTIRE federal budget. That’s not even remotely possible, even assuming it’s a good idea, which I’d argue it clearly isn’t. It simply will never happen and I’ve yet to see even an attempt at a reasonable plan for it.

    I like most of your other posts, primarily ones involving cryptocurrencies, but was disappointed when I got back to your post on Universal Basic Income. Please do some actual research. Crunch the numbers yourself. If you still think it’s workable then outline a detail oriented plan. Right now all you’ve done is get on the popular idea bandwagon for something that’s simply not possible.

    1. Hi Adam, thanks for reading and commenting. “$XXXX” is intentionally all Xs because it’s just a placeholder for whatever number actually makes sense. Maybe it’s $100. Maybe it’s $1000. I don’t pretend I know what’s best.

      Your comment does not take into account state and local tax revenues. It also ignores that I said levying new taxes could also pay for UBI, and that my preference is not actually even paying for UBI with taxes but rather having companies fund UBI directly without government as a middleman.

      UBI is by no means perfect – is anything? – but it seems like a good thing to me since it is relatively simple and empowers people to help themselves without gov’t dictating what’s best for them.

      1. I meant to submit my response as a reply here, but accidentally submitted it as a new comment and unfortunately have no way to correct it. Anyone looking for my response can see it with the other comments.

  2. Thank you for allowing my comment to be posted, John. That’s earned a lot of respect from me. All too often, public comment systems prefer not to accept criticism.

    Fair enough regarding the Xs, but I think the common standard is one X per number since they act as a placeholder.

    At $100 a month, in a developed country, the plan wouldn’t meet a person’s basic needs or keep them above the poverty line. That’s a very different idea, a very low partial basic income. That is possible, but still probably not going to realistically happen, for example, in the United States at around $24B a year just in payouts. Typically, people talk of values somewhere between $12,000 and $24,000 per year, which are simply impossible. I’ll focus on $12,000 per year for the remainder of my comment. That’s just about the amount of the poverty line in the United States and is at the low end of numbers that Universal Basic Income supporters have thrown around when talking about an actual, national plan.

    For the fiscal year 2017, state revenue in the United States was $1.7T, and local revenue was $1.4T. All of that is already being spent, so you’d have to find other large things to cut. These types of cuts have very few, very limited examples of ever happening, and would obviously disadvantage groups currently relying on whatever is cut. Additionally, while taking from state and local revenue along with federal revenue would make the burden of a modest, $12,000 a year plan take about 40% of all federal, state, and local government revenue, rather than about 75% if only federal revenue is used, coordination on getting all of the states in the United States to go along with it would be an effort never before seen, and would be viewed by many as an overstepping of federal authority. If it could be managed politically, then it would be barely possible, but it would nevertheless be redirecting current spending in a huge way for all parts of government and there would be many losers.

    I won’t get into the immigration results that might be seen if only some states participated, or the immigration results that might be seen at the country level, but that’s a concern too.

    Raising taxes is never popular, especially at the rates required for a $12,000 a year plan, so I didn’t address it in my first comment. Any tax rate that you select would have to be raised substantially to cover the burden of a Universal Basic Income plan that keeps people out of poverty. For example, individual income tax rates would need to be increased by an average of 4x if the money is going to come from there. The current highest tax brackets would go over 100% if increased 4x, so it would disproportionately hurt the lower tax brackets, and going after other tax sources as well as individual income tax doesn’t help much. That’s obviously not workable.

    Having companies fund it is a tax increase, nothing more nothing less, that’s just what it is. Corporate taxes are currently around $350B per year. You would have to increase this by over 8x just to have a hope of funding a Universal Basic Income plan that keeps people above the poverty line. An 8x increase would raise the average corporate tax rate far above 100%, which is, of course, mathematically impossible.

    With celebrities ranging from Elon Musk to Mark Zuckerberg getting up on stage and loudly proclaiming that Universal Basic Income is an “inevitability”, I can understand why it’s an idea that many people think makes sense. But people need to ask themselves, why aren’t the Elon Musk’s and Mark Zuckerberg’s of the world showing real numbers and real plans? I’d argue it’s either they haven’t cared to think about it, or they want to do it through inflation. Both possibilities are probably equally dangerous.

    I’m not debating whether Universal Basic Income is perfect. Like you said, nothing is. I’m simply pointing out that it’s not possible to do a national Universal Basic Income plan approaching, at, and certainly not above, the poverty line. Symbolic values like $100 a month are economically bearable, but wouldn’t substitute the existing social programs and likely might not draw enough interest among politicians to push it through.

    Thank you for your time and keep up your writing. Like I said in my earlier comment, I like most of your other posts, particularly the cryptocurrency ones and the well done, “America Was Never Actually That Great” post.

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