Basic Income – A Response

I came across a Facebook post that linked to an article that, at first blush, seemed a reasoned and researched argument in support of Basic Income. I read it carefully and even read some of the studies and source materials used. Perhaps more so than the author did. Here is my response to his positions.

So the author starts by saying that Basic Income is money, not socialism. This is a strong part of his basis for discrediting most common sense opposition and is the foundation for his arguments. This, of course, is absurd. From Wikipedia “Basic income systems that are financed by the profits of publicly owned enterprises (often called social dividend, also known as citizen’s dividend) are major components in many proposed models of market socialism. Basic income schemes have also been promoted within the context of capitalist systems, where they would be financed through various forms of taxation.” Basic Income isn’t just money. It’s either someone else’s money (via taxation) or it’s “The Government’s” money via State owned businesses. This is the very core of socialism. Whether you are for or against socialism is irrelevant. We can’t have an honest discussion of a topic without acknowledging that Basic Income is absolutely a part of socialism.

He then goes on to espouse the benefits of a free market system where people vote with their money. No argument there, I’m all for a free market where you can only make a profit by selling what people want to buy. But his underscoring inference is that if you give people more money there will be increased markets and profit. Again, he’s ignoring where this money comes from. But since he saves that coup de grace for the end, so will I. However, he does go on to point out that you start with free money in Monopoly so surely that would work in the real world. I guess he’s glossing over the part where you win the game by bankrupting all of your opponents despite their access to “free money”. In his world, free money means you always have enough to live on. He’s clearly never known any homeless people. But I’ll save that for part of my rebuttal.

Then comes the comparison to Alaska. It almost sounds compelling until you really do the math. So if you live in Alaska you can get a whopping $1000 (approx) per year because the State of Alaska put a 25% tax on all natural resources pulled from the ground. So, with a relatively small population and a 25% tax on all natural resources they can only manager about $100 per month. In a state that has a cost of living about $30% higher than the national average, it’s a pittance. And, most importantly, it’s not scalable. They couldn’t tax enough to get folks to a Basic Income. As a side note, here is where he says again “Does this sound like Socialism to you?”. We’ve already answered that question. And he has proven the issue by pointing out an effective 25% tax that still isn’t enough to do any good.

Now he goes on to philosophizing, effectively saying anyone who disagrees with Basic Income just doesn’t know what it means and then lists a huge selection of studies to prove it works, including the Alaska example. The problem I see immediately as I start looking into these is that they are all small pilot programs. Some of the links were dead, but even of those that weren’t, many of these experiments were known to be short-term experiments. This in itself can skew the results but even in that, the publication about Seattle and Denver showed that it did reduce “work effort”. That means people stopped trying to work because they didn’t need to even though they knew it was only temporary. How much more if it were permanent?

Next he moves on to discuss Social Security as an example. But even how he couches it leads me to believe he realizes the problems. He asks if seniors are “worse off” for it. Well, no, the people receiving the benefit they paid into and were promised are not “worse off” for it. However, even at that, Social Security income rarely is enough for them to live on. Also, it’s designed to start at age 65 until you are dead, which in the US is typically 78. So let’s be generous and say it’s designed to last most folks 20 years. And that doesn’t include folks who paid into it and died before they could collect. Did the author not know about the $11 trillion dollar shortfall? So here’s a program where the government was entrusted to invest money on behalf of citizens and provide retirement funding but has over-promised and now is having to find ways to either under-deliver or over-tax people in the future to make up for it. You’ll see what that looks like in my rebuttal.

Then he goes on to link back to the partially broken list of “studies” and claim they provide evidence that Basic Income effectively solves all of society’s woes. He has clearly never met a drug addict if he’s going to claim that providing money to an addict magically cures them. Many of the other claims are also suspect since, again, these were a hodge podge of programs, not all Basic Income, and with limited scope and duration.

At this point he takes a breather to imply that if you aren’t convinced by now it’s because “you don’t care how basic income improves lives”. That’s the polite way of saying you are evil and heartless even if you think his premise is bunk. Then he pushes the idea that since other people came before you and bought up the whole planet, you are entitled to a piece of what they have because they don’t deserve it. He clearly isn’t aware that thanks to death taxes, competition, and sometimes just gross incompetence, many fortunes have been won and lost over the years. Being born rich doesn’t ensure you stay that way and being born poor doesn’t ensure you stay that way. Or at least, not in this country.

I also found it humorous in a kind of laugh so you don’t cry sort of way that he says that taking away from the top 20% so the bottom 80% could live better would mean taking an inch off their yachts. This is where I think a lot of socialists show they can’t do math. First off, based off Federal Income Tax data, I fall in the top 25% (perhaps the top 20% but the available chart doesn’t provide the 20th percentile). I assure you, I have no yacht. The simple fact of the matter is that there isn’t enough wealth in the US to provide the standard of living that people are saying is a bare minimum. This is a recurring cry from those with any sense and math skills. But we’ll get to that later because the author effectively acknowledges this later.

The author then glosses over two huge glaring problems. First he says that everyone should be given enough money to be able to refuse to work so employers have to provide a higher incentive to get workers. This is a huge problem because if nobody needs to work and employers have to provide large incentives (read, high cost, low productivity) then who is going to produce the goods? The author implies nobody and gives the solution, which is the other glaring problem. Automate it with robots! Right. He has clearly read far too many high-tech futuristic tech articles. The kind of automation he is talking about is still in rudimentary stages and extremely expensive. We are, of course, seeing some industries (such as fast food) trying to automate because the cost of real people is already getting too high. If it’s already too expensive to support a productive person, how are companies supposed to make enough revenue to support unproductive (ie. unemployed) people? Perhaps, when we have replicators, androids, and limitless clean energy like in Star Trek we can do this. But we are not there yet. Oh, and he finishes his point by effectively saying that all business owner (presumable including small businesses) are just benefiting from involuntary labor. Those heartless beasts…

He then goes on to say that automation is already causing middle skill labor to lose their jobs and have to take low skill labor jobs. To prove his point he shows one graph out of a long and thorough paper. The conclusion of which, BTW, was that automation is nowhere near a problem in the foreseeable future and that the real problem is the unskilled people our education system is churning out. In fact, the paper he cites also points out that it’s actually high level skill jobs that are dropping both in desire and in pay and low skilled jobs that are showing an increase in demand and pay. Have you watched “Dirty Jobs”?

The next section shows he was getting tired and losing his ability to reason. Somehow in his world of Basic Income there is less income variability. But presumably, an employer would need to put in a pretty sweet incentive to get someone to work so if a person is going to school or unemployed he would have much less income than if he were being enticed to work. And, since there’s no real desire to stay employed, I would think income variability would actually increase. Just ask a small business owner in a trade like painting how hard it is to get a new employee to come back after the first paycheck already, (I didn’t ask but I got to hear all about it many times). The same goes for the fast food industry.

The following section on the pitfalls of the existing welfare system is probably the only area where I agree with the author about a legitimate problem that seems to be resolvable with some tweaking. The problem is that once you are on welfare it’s very hard to get off because you lose too much benefit if you get a low paying job. I agree wholeheartedly that there should be a way to incentivize people to get off welfare wholesale. Even if that means continuing to support them awhile after they start getting income and not removing all the benefits right away. Where he and I disagree is that I believe the goal should be that the individual stop receiving benefits from the government at some point and support themselves through employment. I think it also points out an interesting side note, that the welfare system is already so good that there IS a disincentive to leave it.

OK, and so his final statement is to effectively admit there isn’t enough money and so he goes off into la-la land to explain where all the magical money comes from. Cryptocurrency and Federal Reserve-based hyper inflation of currency. We can just make enough money to give it to everyone! And that’s pretty much where his lack of critical thinking comes shining through. Oh, and you deserve it. You are owed money. About the only statement I agree with in his conclusion is that “Basic income is not free money”. It’s true, someone other than you worked for it. It cost someone else time, effort, labor, and work to produce it. It just wasn’t you.

So far I have only exposed a few holes in his logic and his source data. But let’s move away from random small scale studies and look at the real world. Because, none of this is new. Millenials didn’t think of this nonsense on their own. Socialism has been around a long time, is around now, and has plenty of real world examples of why it fails.

Let’s start with Venezuela. Here is an example of Socialism over an extended period of time where things seemed mostly fine so long as the money the government made off the sweat of others was enough to spread around to everyone. But since governments tend to be bad at business and finances in general, when things turn south on the government’s income stream all of the people dependent on the government suffer. Well, that is, of course, except for those who have “most” benefited who remain loyal and aptly rewarded. You see, with Socialism there is always a small cadre of people who get to direct the flow of resources. And they have always, and will always, protect their own power and wealth first. When it’s big corporations, you have your choice of master. When it’s government, you have no choice. If the government isn’t corrupted, it can have power over corporations to ensure they obey certain restrictions on how they operate (such as environmental laws, fair labor laws, etc). I’m actually not against those so long as they are sane and reasonable. But right now the people of Venezuela are starving and bakers are forced to sell bread at a price that’s lower than it costs them to bake it. The government says they are evil profiteers. Who do you believe?

Then let’s look at Italy. There have been riots in Italy for the past 5 years because of austerity measures. Here’s 2012 and here’s 2017. What are they rioting for? The government is running pretty much solely on debt (and it’s not alone in the region). It has earned itself the 8th spot in the world’s quality of life index but now it’s creditors are refusing to extend any more credit unless they back off the benefits to their citizens. The request of an additional reduction of their deficit spending of 0.2% of GDP by reducing benefits or increasing taxes is what set off the most current riots. And all of that is without a Basic Income. That’s just strong labor benefits and retirement benefits.

Finally, I would like to finish with something that might be hard for some of you to swallow unless you’ve tried to encourage people to not be homeless in the U.S. There are a large number of safety nets in this country. There are numerous organizations that will help you with food, shelter, education, and employment all on top of what the government might have to offer. Poverty isn’t always about lack of resources. Sometimes it’s a lack of self control. No amount of resources can fix that. I’m not saying it’s everyone, I’m saying it exists. If there were a Basic Income in this country would we still need homeless shelters? Food banks? Subsidized housing vouchers? I believe we would. But there would be even fewer resources to support those things because the money would have been wasted. Yes, money can be wasted. It can be spent on things that aren’t necessities. That’s fine if you have to do so, but I am not inclined to work extra hard so that someone else can work less and receive the same benefit. I am willing to help another person in any way I can to get on their feet. I am willing to support a person who truly can not support themselves and have nobody else who is willing. But I suggest that all of these people who want to make other people’s lives better start by taking care of their own families and supporting their needs. Then look to their neighbors and support their needs before telling me who I should be supporting.

Like the author said, “Money is freedom.” And his whole article was about making me give up my freedom to someone else without any say. No thank-you. I will choose who I will support with both my time and my money.

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About Michael Wigle

I am a servant of Christ who is married and has two children. For employment, I am the IT Manager and the Cincinnati Association for the Blind and Visually Impaired. I also have a wide variety of interests from economics to politics to caving.
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