Universal Basic Income, How To Sleepwalk Yourself Into Serfdom. Part II: Government: The Hand That Feeds and Takes
Whoever thinks that a Universal Basic Income (UBI) is a good idea, please think twice. Who pays you has power over you. If the government pays you, the government has power over you. It would be very naïve to think your government is going to give you money without compensation. Maybe you trust your government now, and your government is reliable, but who knows what government you will have in four years?
A welfare state by any other name is still a welfare state. And the UBI is just replacing one pricey system for another. And unlike the current welfare state, which has standards for determining who qualifies for specific aid, a UBI would be given to everyone. This would dramatically increase the pool of citizens receiving benefits from the government and inflict massive expenses across the board. It will increase the government´s power. Governments are rarely keen on relinquishing their power, and there is great power in controlling the welfare of the citizenry. It is therefore doubtful that the welfare state as we know it today would simply cease to exist. The UBI creates the illusion of decreasing the welfare state while, as a matter of fact, all points to the contrary. We live in a society of individuals with individual aspirations and goals. Pretending that we can centrally plan a welfare system with so many distinct wants and needs is unrealistic and unobtainable.
The USSR used a centrally planned economy, and history taught us where that leads us to. Overfulfillment of the plan led to a bonus, but underperformance did not lead to withholding salary. Dismissals were extremely rare only if a person violated the law and an employee could be demoted, but this was very rare. There was no unemployment. In a way, it was comparable to a UBI, but with the difference that you had to perform work and produce. Even this system did not work out economically. It is not hard to imagine that if there is a UBI without an obligation to work, the economic consequences will be even worse.
The state is that great fiction by which everyone tries to live at the expense of everyone else.
F. Bastiat
Trying to get individuals transitioned off one welfare plan and into the next requires temporarily the funding of both programs. A decision to enact a UBI would not magically abolish the welfare system. Welfare programs have been around for so long; it would take time to get rid of them. Too many people have become reliant on our welfare state to have it simply wiped out overnight. A UBI will make more people more reliant on the government. The government could actually be creating surpluses and shortages in various industries by distorting demand and supply. Furthermore, UBI would be a big political agent, which could lead to instability. UBI will become a political football, with governments of opposite parties taking turns instituting it, rolling it back, restarting it, cutting or crippling it, until everyone’s head is spinning. For a UBI to work well, it needs to be stable and predictable.
The UBI has to be paid by taxes; if fewer people pay taxes, fewer people have to pay more taxes. This can lead to a fiscal death spiral where fewer and fewer people have to pay more and more taxes. Or, the government has to cut the rate of UBI to balance the budget. It will not suffice to escape the death spiral because the working class is still hemorrhaging members to the class enjoying UBI and the pleasantry. The government has to cut the UBI even further to fund tax cuts to attract people back into the working class. The pleasantry riot. There are a lot of them, and they do not have to go to work, so they riot hard, every day. This can lead to social collapse and the end of the UBI. An alternative scenario is that the government controls the riot police and commands the riot police’s loyalty. The riot police are loyal because the government pays them well, and that has remained the case because the government can just take the funding it needs to make sure that its decisions stick. Or the government can demand that in return for getting your UBI, you will have to serve in the riot police.
The problem with Universal Basic Income is that you eventually run out of other people’s money.
Paraphrased after M. Thatcher
In a study about UBI, the Roosevelt institute states that: `when paying for the UBI policy by increasing taxes on households rather than paying for the policy with debt, the policy is not expansionary. In effect, it is giving to households with one hand what it is taking away with the other. There is no net effect.´ This statement cannot be accurate. The government is not an efficient business; it is a bureaucratic machine not made to produce money. Money that is put into the government will never come out 100%; there always will be a loss. And the more money goes into the government, the more money gets lost. Colvile (director of Centre for Policy Studies, UK) writes that this type of proposal means that a vast sum of people will be paying more in taxes than they already do. Colvile also notes that `In fact, it would represent a transfer of £120 billion of extra taxation into the welfare state — the equivalent of the entire budget of the NHS in England.´ If we cannot financially maintain our current system, it would be unwise to believe we could somehow afford a UBI.
As Colvile says when comparing one welfare system with the other, `It’s old wine in new bottles, redistributive, seventies-style taxation under a trendy new branding.´
The role of citizens in a democratic society should be that of creators of wealth and prosperity. Democracy is based on the assumption that citizens are the producers of wealth and the owners of property. UBI is undermining the foundations of democracy because it transforms citizen freedom into citizen dependency. The alternative of democracy would be to enter an era of corporatist totalitarianism dressed up as representative democracy.
Interesting links:
Universal Basic Income, How to Sleepwalk Yourself Into Serfdom. Part I: Robotics Will NOT Make Us Jobless
Universal Basic Income, How To Sleepwalk Yourself Into Serfdom. Part III: Digital Currencies, Total Control
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