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Affluent Christian Investor | June 19, 2019

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Universal Basic Income Has Already Been Tried: Here’s What Happened

U.S. Representative Alexandria Ocasio-Cortez.

Many Progressive politicians and Leftist academicians and pundits, both in the U.S. and abroad, have advocated for a “Universal Basic Income” (UBI). The concept involves providing regular, unconditional cash payments to everyone, regardless of need or status. Some see this as a way of alleviating poverty and the stress of earning a sufficient sum to survive. Others view it as backdoor approach to replace capitalism with a communist-style system.

As in most socialist ideas, there is, of course, a logic gap.  Someone has to pay the overwhelming costs UBI would entail.  Many individuals, freed from the need to actually earn a living, would be less inclined to work and pay taxes. Those that did work would be burdened with higher tax rates, providing a further disincentive to engage in employment or engage in business. Where, then, would the funds come from?

A British study on UBI was recently completed by Public Services International (PSI), a global trade union federation representing 20 million working women and men who deliver public services in 154 countries. It is important to note that the study was not the work of conservatives or business leaders—it was completed by a union federation of 669 public services, trade unions representing 20 million workers. PSI represents workers in social services, health care, municipal services, central government and public utilities.

The study examined fourteen examples, selected because they have been referred to as examples of UBI and/or cited as “evidence” of how UBI can work in practice. They include past, present and prospective trials in poorer, middle-income and richer countries:

• In poorer countries: completed trials in Madya Pradesh, India and Zomba, Malawi; current scheme in Kenya.

• In middle-income country: three current schemes in Brazil

• In richer countries: completed trials in in Manitoba, Canada, and New Jersey, USA; current schemes in Alaska, USA, Finland, and the Netherlands; prospective trials in Switzerland, California, USA, and Scotland.

The study reports that UBI would not work. The costs are prohibitive, and would essentially wreck a national economy. The average cost of UBI would be in the range of 20 to 30 percent of a nation’s Gross Domestic Product (GDP).

Among the issues with UBI, PSI found, from a union perspective, that:

• UBI can entrench low pay and precarious work. It will not improve workers’ pay and conditions, or their bargaining power.

• The sums don’t add up: an affordable UBI is inadequate and an adequate UBI is unaffordable.

• The trade-offs are unacceptable: paying for it by abolishing other forms of social protection would exacerbate inequalities; it would make those without work poorer and would benefit the very rich.

• It is not a route to effective welfare reform: it would create a powerful new tax engine to pull along a tiny cart.

• It is a lazy utopian remedy that fails to address issues of class, economic ownership and the productive capacity of the economy.

The study concludes that,

“There is no evidence that any version of UBI can be affordable, inclusive, sufficient and sustainable at the same time. There is no evidence that UBI will help to increase the bargaining power of workers and trade unions or solve problems of low pay and precarious work…Rapidly changing labour markets, inadequate welfare systems, poverty, inequality and powerlessness are complex problems that call for complex changes on many levels: there is no ‘silver bullet’ of the kind that UBI is often claimed to be…The campaign for UBI threatens to divert political energies – as well as funds – from more important causes…the money needed to pay for an adequate UBI scheme would be better spent on reforming social protection systems, and building more and better quality public services.”

Frank Vernuccio serves as editor-in-chief of the New York Analysis of Policy and Government.

 

 

Originally published on Townhall Finance.

 

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