The Folly of the Universal Basic Income

The Folly of the Universal Basic Income

A journalist for The Atlantic named Elizabeth Stoker and her colleague Matt Bruenig are trying to create a monster even more destructive than Stoker’s namesake Bram created..but this one is known as the Universal Basic Income.

In the United States, we are generally told that poverty is a deeply complicated problem whose solution requires dozens of reforms on issues as diverse as public schooling, job training, and marriage.

But it’s not true. High rates of poverty can, as a policy matter, be solved with trivial ease. How? By simply giving the poor money.

via How to Cut the Poverty Rate in Half (It’s Easy) – Matt Bruenig and Elizabeth Stoker – The Atlantic

The economically undereducated due go on to point out how simple the process would be and all the great benefits like:

  • Increased tax revenues…from taxing a portion of the money that government gives away to every adult in the nation that it raises in taxes and presumably borrowing
  • Elimination of the exorbitant cost of all those poverty fighting programs…but they go on to say their proposal will cost more than double the cost of all those programs and their inefficient management

Universal Basic IncomeIn addition to the obvious inflationary affects of dumping an additional $2+ Trillion into the U.S. generated from an additional $2+ Trillion in taxes, the very idea of a “Universal Basic Income” is insidious as part of the ever increasing government led disincentive to work, create and build.  You don’t need an economics degree to understand that more money chasing the same limited quantities of goods leads to higher prices (and a new, higher $$ definition of poverty)… all you have to do is look at what happens to the price of a generator after a power outage (yes an extreme example but accurate and illustrative.  These writers even think they’ve figured out how to pay for such a monstrous scheme…

Could we afford it? Sure. For starters, we could raises taxes, first on the rich, who would pay more in new taxes than they would receive in basic income, and then on lower-middle class and poor families, who would come out ahead. There is also plenty of room to cut tax expenditures on homeowners, personal retirement accounts, capital gains exclusions at death, and exclusions on annuity investment returns. This submerged welfare state for the affluent costs hundreds of billions of dollars each year. There is also the matter of the $700 billion military budget, which could take some trimming.

…It is important to stress that this idea is not as exotic as it might seem. Multiple movements are already afoot across Europe to put in place a basic income for both the entire European Union and in particular countries. Activists in Switzerland recently collected over 100,000 signatures to put the matter of a basic income before Swiss voters in a coming election.

Well, if it’s an economic tool that those sophisticated Europeans are using then by all means, let’s jump in with both feet.  While we’re at it we can implement some other European economic brainstorms like a negative interest rate on savings accounts,  one or moreone time wealth confiscations” to balance the books or paying people to use antiquated farming techniques because it looks good.

The authors go on to point out that…

You get a check from the government every month no matter how much… you work. Maybe that will convince a few Americans work isn’t worth it anymore—but the vast majority who will probably continue to work… It might let workers demand better wages and working conditions, because they know they always have something to fall back on. In other words, it could level the playing field for the bottom 99 percent.

Since when is the American dream about leveling the playing field?  I thought it was about giving each of us the opportunity to make of our lives, including our financial lives what we will through varying combinations of hard work, willingness to take risks, luck and the like.

Lord protect us from journalists, politicians and idiots…but I repeat myself!

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