On universal basic income
Universal basic income (UBI) is an idea to distribute a certain amount of income, such as one thousand dollar a month, to every adult (or every person) in a society. It forms an important part of Andrew Yang’s campaign platform.
I watched most of the Andrew Yang interview with Rubin. He has gone through a lot of difficulties in life. He is a solid guy.
He said too many smart people are concentrated in law and finance, doing highly paid but meaningless work. I totally agree with him.
Andrew Yang has been an active advocate of universal basic income (UBI). He said that the cost of UBI is much lower than most people thought. Currently, a large percentage of population are already covered by many types of government programs. By making payments universal, the administrative costs can be greatly reduced.
I totally agree with his assessment. However, he didn’t consider the lifestyle changes and the associated long term costs brought by UBI and other welfare programs.
Overtime, there is steady increase of drug use and death from drug overdose. This is accompanied by the steady increase of welfare net, such as free prescription drugs. When one is not concerned about making a living, the quickest way to attain happiness, at least over a short period of time, is to use drugs. Further expansion of welfare systems, such as UBI, can only further expand the drug use population.
UBI will create a large and increasing group of people with ample leisure time. Not everyone with time to squander will indulge themselves in art or mathematics. Most people, not surprisingly, will engage social activities, such as demonstrations, to further increase the UBI payments. With higher UBI payments and correspondingly, higher tax burden to working population, more people will quit job to enjoy life. Actually, labor participation rate has been declining for over a decade. Further increase of welfare can only further decrease the incentive to work.
Overall, the long term costs of UBI, or any other welfare programs, are much higher than their short term costs.
In the following, we will briefly examine some of the experiments on UBI. In Canada, a UBI experiment took place in Manitoba between 1974–1979. The result?
| The original budget of $17 million was never more than a wild guess and, in the event, proved far inadequate. The inflationary price increases of the 1970s, coupled with a larger than anticipated unemployment rate, meant that the proportion of the total going to programme expenses exceeded estimates and was not under the control of the researchers. |
The government didn’t resume funding for the program. In 2017, in Ontario's Basic Income Pilot Project, 4,000 people received about $150,000,000 per year, in monthly installments. The project lasted for a year. While there are many similar experiments, they never last long for the lack of further funding. Some mentioned Alaska Permanent Fund. It started in 1982 with 1000 dollar annual distribution. In 2018, the annual distribution is 1600 dollar. This is far less than the basic income that can cover basic needs. Due to tough weather in Alaska, few would stay in Alaska unless they have jobs. So there is little relation between the fund and employment, especially when the amount of distribution is very small.
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