My topic today is Universal Basic Income, a.k.a. UBI, which I regard as nothing less than a cancer of the mind, and which I fear may soon become a cancer on society. The origin of this metastatic neoplasm was supposedly innocent intellectual woolgathering by libertarian economists, but it may yet end far less innocently.
Most libertarians understand that it is insufficient to have good intentions for a proposed policy, as good intent does not imply good results. In the end, all policies are implemented not in a utopia inhabited by angels, but rather in a society composed of self-interested humans. Laws are administered not by divine spirits but by politicians and bureaucrats who are themselves self-interested, and who possess all the foibles of the flesh.
Advocates always say social engineering would work if ‘done right’, but the possibility of ‘doing it right’ is zero in the real world. Public choice economics is no more avoidable than physics; you can no more handwave it away than you can handwave away the second law of thermodynamics.
In some theoretical sense, of course, physics seems more rigid than the rules of human behaviour, because individual humans can to some extent choose how to behave, but in practice, once you have huge masses of people involved, the law of large numbers takes over, and the force of their natural behaviour is only slightly less inexorable than gravitation. One needs to remind oneself of that early and often when thinking about proposed political policies, even in an academic context.
In spite of this principle being well understood by libertarians, the notion of UBI has taken root in parts of our community, and it has now even spread into the wider society, having infected the minds of many intellectuals on the left and right.
For those that are not familiar with the term, UBI (Universal Basic Income) means, roughly, “the government should guarantee everyone some minimum level of income whether they work or not”.
The notion began simply enough. Some economists observed that there are a myriad of intersecting government programs for the poor (in many countries, dozens) which distort behaviour in horrible ways and which cost a fortune in overhead to administer. This is where the problem of UBI begins, in the hubris of the armchair philosopher. “What if”, these economists asked, “we can’t get rid of the dole entirely (even though that would be better) but we could at least make it efficient by replacing the entire morass with a single program, say a negative income tax?”
Trained to explore ideas (no matter how bad) for a living, said academic economists then vigourosly explored this impossible hypothetical world in which they could not get rid of the dole but could somehow get politicians to perfectly implement their hypothetical improved alternative, and proceeded to write lots of papers about it.
Again, this academic musing was already a utopian impossibility, for in the real world, there are interests that would act to block the elimination of existing welfare schemes and insist that the new scheme be added to the current ones rather than replacing them. This sort of thing is routine, of course; originally, VAT schemes were thought of by academic economists as a less distorting replacement for income taxes but ended up added in addition.
The interest groups arrayed against replacement of existing welfare schemes range from the bureaucrats whose job it is to administer said schemes (and who for whom ‘efficiency’ means unemployment), to the vast range of contractors employed in providing benefits of one sort or another, to the politicians who get votes and power in exchange for largesse paid for with other people’s money, to the current recipients of existing benefit schemes who will correctly reason that the notion behind ‘efficiency’ is not to increase their benefits. There’s no advantage in replacement for any member of the existing system, and thus, it was a non-starter to begin with.
This did not, however, prevent many people from falling in love with the idea, as wouldn’t-it-be-ever-so-elegant-if-it-could-happen so often trumps this-is-reality in the minds of those saying ‘what if’ over a pint or seven late in the evening at the pub next to the economics department offices.
Oh, and of course, a form of the negative income tax was created in the United States under the name of the ‘earned income tax credit’; as might have been predicted in advance, it was added to existing welfare programs rather than in any way replacing them.
From this simple yet benighted beginning as a completely unrealistic thought experiment, the idea of UBI gained traction and then, as most cancers do, developed a mutant and even more virulent cell line, one that allowed it to spread and grow in the minds not only of leftists (who are already inclined towards redistribution of all sorts) but those on the right who are inclined to view ordinary people as useless.
We are now informed that UBI is a solution to a different problem as well. We are informed, in not-so-hushed tones, that the rise of new technologies like Artificial Intelligence will soon automate away most jobs, resulting in a vast class of people who will be unemployable in any trade whatsoever, which will consequently lead to mass unemployment, and that said permanently unemployable people will starve to death if we don’t find ways to provide them with income.
We are told we thus must guarantee a minimum income for all, without regard to whether they are capable of earning a living on their own, or we’ll have riots on our hands once AI based systems become ubiquitous. They claim that we should, nay, must, promise everyone some minimal subsistence income, whether they work or not. This will provide the masses with the ability to survive, and thus society will be preserved.
I note that this ‘automation will lead to mass unemployment’ scenario contradicts centuries of experience in which, rather than leading to mass starvation, various forms of automation have always led to vast increases in human welfare as per capita productivity skyrockets, and old jobs have simply been replaced with new ones.
However, we’re told that this time, it’s different. “We’ve never seen automation this thorough and extreme!” we’re told. “AIs can replace white collar workers, not just blue collar! No one will be useful any more!” Well, maybe. But as it has not happened yet, and Ricardo’s comparative advantage argument remains intact even if AIs exist, I remain quite skeptical that “this time, it’s different.”
Regardless, in their zeal to fix a problem that might or might not happen at an undefined time in the future, the UBI advocates may create a problem that’s far, far worse. (That’s even ignoring, for the moment, the fact that insisting that some people be allowed to live off of resources taken by force from others is deeply immoral.)
If you promise people an income regardless of whether they work or not, many will decide not to work, as not working is attractive. Once they have decided not to work, they become dependent on the state for their continued ability to survive while not working, and become inclined to vote for increased benefits. Starting as a safety net, the UBI will be seen as an ordinary way for people to live, and advocates will demand ever more. They will scream “no one can survive on £700 a month! It forces people to live in squalor! The UBI must be raised to £1200 a month!”, and then “£1200 is insulting when some earn millions! It must be £2000” and then “How can anyone raise a family on only £2000 a month with modern expenses in an expensive city! The UBI must rise to £3000” and on and on.
Elections, are, even at the best of times, an advance auction of stolen goods. If there’s a UBI, votes will hinge upon how much more generous with other people’s money one candidate is versus another. As benefits rise, more and more people will decide that they, too, would rather not be working, and join the class of people who only take and never make. Freed of the need to consider questions like “can we afford these children”, UBI recipients will feel happy raising larger families than they might otherwise, while those who work continue to feel the pinch of limited time and resources. If it’s truly available to all, UBI recipients will become a plurality of the populace, and then a majority, and from there, a death spiral is almost inevitable.
The larger the fraction of society on the dole, the more obviously foolish actually working will seem, the faster more people will go on the dole, and the faster the system will disintegrate. If UBI becomes a reality, most of the population is going to become unproductive, resentful of productive people, and strongly motivated to see increases in the UBI through ever increasing expropriation of the resources of the productive. Sure, we have some of that now with existing state benefits. With UBI, it will become vastly worse. Candidates buy votes now, but with UBI it will become an ever-accelerating race among politicians to see who can buy more votes with more resources stolen from an ever-shrinking productive minority. Perhaps the end could be staved off by making the franchise contingent on not being on UBI, but that’s a pipe dream; in the real world, the advocates will scream about the rich disenfranchising the poor and the like and it will never happen.
If almost everyone depends on the state for their survival, that’s the beginning of the end for that civilisation. A spiral towards a Soviet or Venezuelan style collapse is inevitable, and there’s no way to fight it in a democracy, because in a democracy, the majority get what they want, good and hard.
The only thing left for anyone who does not want to join those on the dole, anyone with assets, marketable skills, and an urge to produce, will be flight. Which will probably become illegal, because if you flee, you’re depriving the majority of your work. The system requires your slave labor to keep everyone else fed. Eventually, as in the Soviet Union, you will not even be allowed to leave.
Many advocates of UBI are probably well intentioned. That does not make the idea any less dangerously foolish; intentions do not matter much, and they matter practically not at all when an idea is sufficiently destructive. Of all the terrible ideas I’ve seen gripping the fevered imaginations of social engineers in recent years, this has been one of the worst. UBI is a political cancer, and will kill us if it is not extirpated.
