Will Universal Basic Income (UBI) Eradicate Poverty?
There is an old saying that goes like this: ‘The road to hell is paved with good intentions’ and this is why I want to talk about the concept of universal basic income today. This idea has been around for a long time but seems to be getting some traction of late as we have heard that Autonomy think tank will be conducting a social experiment in universal basic income (UBI) in two regions of England in the next two years. Autonomy will pick 15 people over 30 from Jarrow in South Tyneside and 15 from east Finchley in London and pay them £1600 (pre tax) per month for two years with no strings attached. It sounds great if you are one of these lucky Group of 30 or G30! It is like being left a trust fund by a rich uncle you didn’t even know.
So, before we look into why I think UBI is a bad idea, I want to look at the moral side of this concept. Even though Autonomy and its leftist and socialist donors will be providing the funds for this social experiment, I would speculate that this is a stepping stone to reforming the Welfare State which will mean that you, the taxpayer, would eventually fund UBI. We all know that there are universal laws that apply to any culture and one of them is the one concerning theft. One of the ten commandments says: ‘Thou shalt not steal’. What does that have to do with UBI? I’d say it is not just UBI that is immoral but also the concept that the State should take from Peter to pay Paul. If the State or government is supposed to protect the individual, certainly it should be protecting the individual’s private property and not steal it. Government can only spend by taxing, and taxing you in order to pay someone else for doing nothing does not seem fair to me.
Now we will go over some of the arguments made by those pushing the idea of UBI. I would say it is very similar to those arguments made by the proponents of the welfare state and universal credit but it differs somewhat as there are no strings attached in that eventually almost every adult would get “free” cash from the government. I do understand that there are those who might need help and that the welfare state provides a safety net, but as I alluded to earlier, good intentions don’t always lead to good results. The proponents of UBI say that the extra cash would help many become entrepreneurs and start businesses, create specialised communities or focus on skills like the arts, literature and music. That could well be true and some recipients might very well put their UBI income to good use – but knowing human nature, I would say that vast majority would probably squander the chance to do something productive and worthwhile. Why do I say that? I think most would say: ‘Why bother doing anything if I can just get by doing nothing?’.
I would like to jump back to the welfare state and the concept is a good one. You pay into your National Insurance account during your working life and it helps cover illnesses through the NHS and when you retire it is supposed to pay you a living wage. Nothing wrong with that, but the problem is that since the Old Age Pensions Act of 1908 and the creation of the NHS in 1948, the purpose and scope of the welfare state has ballooned and the change in demographics has also created a debt time bomb for the government. Taxation, deficit spending and the national debt are ballooning out of control to pay for the welfare state, whereas in 1908 most people died before they were eligible for the Old Age Pension. Back in the 1970s and 1980s the baby boomers easily financed the system as there were about seven people working for every pensioner. Now it is down to around three to one and decreasing as the baby boomers, who had less kids than their parents, are now retiring. So how exactly would we, the taxpayers, possibly be able to fund another addition to the welfare state or UBI?
My final argument will be to use an analogy to try and convince the reader why any kind of government social or welfare program to help the less fortunate invariably ends up having the exact opposite effect. Simply said, when a child is born the parents have the responsibility to nurture, care and support the child until the child is ready to go out into the world and become an independent member of society adding value and contributing. We can of course, as parents, sometimes spoil our children but in general we try to prepare them for the real world as generally we will be gone way before they are still around and we want to make sure they are not dependent on mum and dad. It is this dependence that, in my opinion, is the paradox of socialism and welfare programs like UBI. The other effect that dependency has is to discourage action and therefore entrepreneurship – which is one of Autonomy’s goal with their pilot UBI program.
In conclusion, I know it would be very tempting to just take money for nothing, but I think one question you should ask is: ‘Why am I being given this money?’. Does the state really care about my well-being or doesn’t just want to make me more dependent on it? Afterall, if the great majority of society is happy and living in prosperity, what is the purpose of big government? With that I will end with a famous epigram by 19th French statesman, essayist and economist Frederic Bastiat: ‘The state is that great fiction by which everyone tries to live at the expense of everyone else’.