• December 14, 2019

Universal Basic Income hinders wealth creation - Odessa American: Opinions

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Universal Basic Income hinders wealth creation

THE POINT: These “free money” programs only diminish the value of work, education and investment.

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Posted: Monday, September 30, 2019 5:19 pm

The latest Democratic presidential primary debate was largely predictable, but one little-known candidate, entrepreneur Andrew Yang, created some buzz with his pre-debate promise to do “something no presidential candidate has ever done before.” Yang promised to give 10 people $1,000 a month for a year to reinforce his support for something known as Universal Basic Income. Despite all the hype, it’s much ado about very little.

The Universal Basic Income idea has been around for many years. It’s mostly touted by progressives who are eager to help the poor. In their view, poverty is caused simply by a lack of money. Give poor people money and problem solved. But some conservatives, including free-market economist Milton Friedman, backed the idea. They argued that it could reduce the need for meddlesome social-service bureaucracies. It could cut out the middle man.

In its latest incarnation, the program largely is the hobby horse of tech moguls who fear that their industry is leaving many less-skilled workers in the dust. “In the next 12 years, one out of three American workers are at risk of losing their jobs to new technologies,” according to Yang’s campaign website. It argues that “the Freedom Dividend, a universal basic income (UBI) for all American adults, no strings attached” is the first step in avoiding an “unprecedented crisis.” Yang points to Stockton, Calif., as a model.

Stockton officials are handing out $500 a month, without any limits on how the money can be spent, to 130 randomly selected low-income city residents. The program is privately funded, which keeps taxpayers out of it. But the project’s goal is to create positive stories about the value of just giving people money — and create a blueprint that other agencies can emulate. But no matter who pitches it or pays for it, Universal Basic Income is a terrible idea.

For starters, there will never be enough money to endlessly provide a financial boost to every American who can use one. Private foundations can put their own money through a paper shredder if they choose, but taxpayers shouldn’t be forced to pay for no-strings-attached handouts. In theory, UBI-type programs could replace welfare bureaucracies, but they won’t. Supporters don’t suggest using the money to replace existing welfare payments, but to supplement them.

These “free money” programs only diminish the value of work, education and investment. Anyone would enjoy having an extra 500 bucks in their wallet every month, but the way to prosper is to learn new skills, work hard and invest. The idea that poverty can be eliminated by simply giving people cash promotes the idea that wealth is about luck. It therefore encourages bad behaviors and a passivity about one’s circumstances.

“I think poverty is immoral. I think it’s antiquated and I think it shouldn’t exist,” said Stockton Mayor Michael Tubbs, in a recent interview about his city’s program. No one likes poverty, but such sentiments make it harder to combat by creating the impression that prosperity is created by waving a magic wand.

Instead of figuring out new ways to redistribute existing wealth, policy makers need to figure out ways to boost business investment and job opportunities. It makes great headlines for mayors and presidential candidates to fund a lottery, but Universal Basic Income basically is nonsense.

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