Corona Daily 478: Opposition to UBI

UBI faces strong opposition – usually by those who don’t require any basic income.

The First worry is the abuse of the grant. It will encourage bad behaviour and tempt the recipients to spend it on alcohol, tobacco or drugs.

A detailed worldwide study found this concern to be unfounded. In most countries, this income was used for survival needs rather than temptation goods. Only in Peru, the research found a few instances of people buying roasted chicken or chocolates on the day they received money.

Secondly, it is argued basic income will make people lazy, and they would rather be idlers than work.

Again, no research supports this. In Canada, a study found only two groups who worked less as a result of getting a basic monthly income. New mothers were able to pay more attention to their babies. And working teenagers spent more time on education.  

If this is survival income, most people supplement it with a job. When a person must work for survival, his bargaining power with the employer is zero. He is forced to do jobs he doesn’t like, at wages he is unsatisfied with. This is a classic way of enslaving a poor person. Basic income improves his bargaining position, allowing him to look for a job of his choice. Many of us don’t realise this point, because we didn’t look for jobs when starving.

Thirdly, a worry population would grow further because citizens are getting guaranteed money. Well, without the existence of any UBI, we have added nearly 7 billion in the last 200 years. This concern is as meaningless as the concern about addiction. Most of those consuming temptation goods don’t get any basic income from the state.

Fourthly, critics point to Switzerland rejecting UBI in a referendum, and the end of the UBI experiment in Finland.

Switzerland is a rich country with strong social security. UBI was rejected mainly because the Swiss felt UBI replacing their current benefits or tax exemptions may make matters worse. In Finland, the pilot experiment was planned for just two years. Full analysis is expected or was expected in 2020, but the initial findings were positive.

Finally, the cost. In 2016, 60% of American economists disagreed UBI would be a better replacement for the current welfare measures (like in Switzerland).

Economists often express views as economists, not moralists.  In 2012, a set of eminent Chicago economists strongly defended price gouging, hiking prices and profits in disaster times (such as unreasonable prices for masks or sanitizers in some places).

But the concern about UBI being expensive is valid. It is very expensive. But so are nuclear weapons. So are the wars on Iraq and Syria. So is the beautiful wall to keep the Mexicans away.

Tomorrow, I will talk about how expensive it is, and how to finance it.

Ravi