Suddenly, it’s everywhere. Lately I’ve even heard even libertarians suggesting that it might be a good idea to provide a Universal Basic Income (UBI) to replace the buffet of specific welfare programs that are now available to people who can’t afford things like housing (Section 8), heat (LIHEAP), medical care (Medicaid), food (SNAP), and so on.
This idea is a classic example of what Thomas Sowell calls ‘stage one thinking’, which is the apparent inability (or unwillingness) to appreciate that actions have consequences, and consequences propagate.
(Yes, I know that Milton Friedman advocated for a negative income tax, which is one type of universal basic income. But Friedman also advocated for income tax withholding, which has turned into what we might call ‘the opiate of the taxes’.)
In the case of UBI, stage one is supposed to look like this: We give everyone a basic income, whether they need it or not. And now they can buy things like housing, heat, medical care, food, and so on, from private suppliers, just like everyone else. The markets compete for their business, government bureaucracies are eliminated. Everyone wins, right?
But Sowell’s approach — thinking beyond stage one — requires us to ask: And then what?
Specifically, in the case of UBI, we have to ask: Let’s imagine that someone gets his guaranteed income. And for whatever reason — addiction, poor planning, bad luck — he’s blown it all by September. Here comes winter, and there’s no money for heating oil, or food, or anything else. What do we do about that?
Do we give him more money? If we do, it sort of makes a mockery of the whole idea, doesn’t it? And it would create a perverse incentive to spend everything he’s given as quickly as possible, so he’ll be given more. So we can’t really do that.
So do we let him freeze, or starve, or go without medical care? If we were willing to do that, none of the current welfare programs would exist in the first place. So again, the answer is no.
And that means we’d have to have some kind of program — or programs — to help him with specific needs, instead of just giving him more money to spend without supervision. So we’d have to keep in place some version of the system we have now.
That is, UBI can’t replace any current welfare services. It can only add one more to the pile. All the existing safety nets would have to continue to exist, as backups for when the new one fails.
(Note that we haven’t even started to consider the effects that UBI would have on wages, and consequently on prices. Or on motivation. Or on taxes, and deficit spending.)
There are only two ways that UBI could work. The first is if universal income is tied to universal acceptance of the idea that people must be allowed to fail. But that’s a non-starter.
The second is if there’s no longer scarcity, so everything can be provided to anyone who wants it essentially for free. Of course, that would make ‘income’ irrelevant. But in any case, we’re not there yet.
So I suspect that many people who advocate UBI see it as a ‘good first step’ step towards what they really want, which is ‘single-payer everything’:
- You need a doctor? You go get the treatment you need, and the government pays for it.
- You need a car? Or to have your car fixed? You go get what you need, and the government pays for it.
- You need new shoes, or braces, or heating oil, or pizza, or movie tickets, or piano lessons? Don’t sweat it. The government will pay for it.
Bastiat said that government is the great fiction, through which everybody endeavors to live at the expense of everybody else. And in their hearts, this is what advocates of UBI are dreaming of: A society where there is enough for everyone, and no one has to do anything, because everyone is entitled to everything, at someone else’s expense. It’s the government equivalent of perpetual motion.
Anyway, when you hear people talking about UBI, the thing to remember is that it’s an abbreviation for ‘single-payer everything’. And it’s pronounced ‘utopia’.