November 18, 2023

Universal Basic Income? Universal High Income?

With Woke Warriors reeling from reality, radical progressives are circling back to universal basic income (UBI) in their ceaseless attempt to collectivize America and other English-speaking paragons of free markets and free people. Implementing UBI, however, makes no more sense today than a year ago, or the 1970s, or the 1930s, or any previous epoch in which it (or its mutant offspring like “social insurance”) has reared its head. 

As cancel culture cancels itself, ESG retreats due to underperformance, and CRT melts under the critical gaze of Thomas Sowell’s Social Justice Fallacies, some radical progressives, including Fredrik DeBoer and Musa al-Gharbi, want to return focus to bread and butter economic issues. Time, then, to queue the UBI gaslighting that coauthor Aleksandra Przegalinska and I warned about in 2021 and last year. UBI may seem like a remote possibility at present but who among us saw lockdowns, mask mandates, and vaccine Duckspeak on the horizon in early 2020?

“Universal Basic Income Is Working — Even in Red States” proclaims Business Insider. Nonprofit Quarterly has also chimed in, rehashing a trio of articles asserting that UBI will create “a broader solidarity economy.” The traditionally conservative Claremont McKenna College recently hosted a staff writer (and author of a pro-UBI book) from The Atlantic. Crypto entrepreneurs, Forbes says, are developing a UBI of their own because apparently blockchains can create something out of nothing.

The Massachusetts legislature is currently considering a bill that would create yet another UBI “pilot” program by paying $1,000 a month to 100 people for 3 years. Not that more studies are needed once international “evidence” is adduced. Vice reports that Canada’s UBI trials were so “successful” that it will likely soon hold a national forum focused on implementation. Ireland will not be far behind, reports the Irish Times. The Wall Street Journal says that South Korea is also going to implement a UBI in order to “boost” its economy. 

Look for more such gaslighting if Ted Cruz’s Unwoke gains traction or the Woke agenda suffers additional setbacks a la Bud Light or Target. Not that there is anything inherently Woke about UBI. Libertarians still debate its potential costs and benefits — Bryan Caplan and Chris Freiman are currently doing so. Some of the giants of free market economics, including Milton Friedman and Friedrich Hayek, floated UBI-like proposals.

The devil with such policies is always in the design. Where would the money come from, existing program cuts, higher existing taxes, new taxes, and/or new money creation? Would a UBI simply displace the current hodge-podge of income transfers or add yet another layer? Including Social Security and Medicare? What, if anything, will prevent the government from cutting off UBI payments to individuals it deems unworthy, like convicted violent criminals? or suspected “white supremacists” or “vaccine deniers”?

None of the trial programs cited by progressives are universal, or basic, or permanent, the three defining characteristics of UBI. The sums involved are trivial, often donated rather than from taxes, and given to narrowly defined groups for a finite period. Studies of program effectiveness merely show that giving people money makes them better off, but we knew that already. 

An actual UBI would be distributed to all people (or perhaps just adults) until their death, and would cost at least five percent of GDP on net. That would be a dangerous experiment in collectivism with unknown, and until implemented unknowable effects on labor force participation, crime, birth rates, educational attainment, and residential patterns.

Progressives argue that Artificial Intelligence (AI) and other technological advances will render UBI “necessary” by making employment obsolete. One UBI proponent thinks humanity is headed toward “fully automated luxury communism” without explaining why robots will suddenly make collectivism work.

Elon Musk edges closer to the mark with his recent claim that humanity is headed for “universal high income” instead of UBI. Indeed, anyone conversant with economic history knows that humanity has already made great strides in poverty alleviation without a UBI and there is no reason that the trend will not persist to the extent that peace, easy taxes, and a tolerable administration of justice prevail. That means reducing the power of the state rather than extending it with UBI or other collectivist social experiments.

Commentators on Musk’s idea have been flummoxed by how “universal high income” would come about, but Przegalinska and I have already explained that stock ownership would be key. Governments should encourage widespread corporate ownership instead of erecting more barriers with regulations, including ESG mandates, that drive innovative companies into private equity instead of public ownership. Let the capital markets function and everyone can own a slice of the prosperity to come. If Musk is right and centuries-long trends continue, the slices won’t be equal, but they will be ample.