Universal Basic Income (UBI)

The problem with UBI has nothing to do with people being lazy and getting by on their $1,000/month “freedom dividend”. The real problems are:

  1. The market will price up basic goods to “soak up” that extra money being dumped into the economy. This is because very little of this money will go into savings. It will mostly get spent. And spending means demand for basic goods increases. This drives up prices. Now, the hope is that the price goes up a little but the satisfaction of basic needs goes up a lot. Kids get more nutritious food, adults get more job training, you can take some time off instead of working overtime, and so forth.

  2. Gig economy, especially, but businesses in general will drive down wages or provide fewer benefits. The UBI stipend will mean people can take lower paying jobs. The hope is that this means people will do things like work part time and go back to school, or maybe will be able to work less and spend more time caring for an aging relative. The reality is in any job that can get away with it the price of labor will drop to account for the fact that the people that take those jobs need less to squeak by because they have UBI.

The hedge against the second point (which could provide enough money to overcome the first point) is to mandate a minimum wage that is sufficient to provide a full time employee with enough income to put a roof over their head (maybe this is a shared apartment in a bad part of town, just any roof) and food in their belly.


There is something you always need to remember when you are thinking about scenarios like UBI: “There is no such thing as a free lunch.”

There's a reason that no matter how hard you work, you can't get ahead. It's called the market. The reason, in Canada, our lives don't totally suck is because we are not 100% free market driven. Healthcare, for example, is NOT a free market. It is regulated, and we all benefit. Some things do not do well in a free market because markets tend to drive toward solutions that are not necessarily optimizing utility. They will happily trade this for profit.

Does this mean I hate Capitalism? Do I view free markets as a horrible thing that we must eliminate? No, not at all. But it is important to remember that things are not as simple as either/or solutions. The world is complex, there are no simple solutions to the problems we face. We must use our wisdom and experience to work out the best solutions and tune them over time. Saying “the market can solve any problem” is a typical example of overly simplistic thinking. This is a total abdication of responsibility. If two children you are looking after have a conflict do you say “hey, kids, the market will solve this... which one of you has more money on you?”. No, you try to get into the problem and work out a compromise. And you try to get them to be nice to each other and the empathize.

Think about what the world would be like if we never took the time to come up with complex solutions.

Contagious diseases? Let's let everyone who gets one die off and then the people left will be immune. Simple, right? What do you get? Anti-vaxxers (all too real).

Don't need cops if everyone has a gun? Try living between a couple of warring drug cartels... will you buy a gun and jump in there, try to get away, or wait to get caught in the crossfire? Hm, maybe life is better with law and order, and not “might makes right”.

Why bother cultivating crops, I can just hunt and gather! And so on...

History is basically the journey of humans from a living in a state of hard scrabble survival to a state of plenty (and relative peace) as a result of pursuing more and more complex and interwoven solutions. So when I hear people proposing we turn the clock back (conservatives) by deregulating, reducing social programs, ignoring science, and hating “the other” I just can't stand it. Grow up people, that way leads back to the stone age.

Tags: #opinion