By |Published On: February 7th, 2022|Categories: Christopher E. Baecker, UBI, Universal Basic Income|

The enactment of a Universal Basic Income (UBI) is dependent upon a couple variables.  The first is theory.

In a perfect world, a UBI would replace all other federal welfare spending programs.  Adults would be given a monthly stipend from the government.  Rather than depend on various programs, such as for food aid, health insurance, etc. they would be free to take care of their needs as they see fit, on an individual basis.

The bureaucracy that runs and maintains these programs would be folded in favor of a check-cutting operation akin to that of social security.  The potential savings could amount to more than half of current federal government spending.

There’s also the intangible benefit of a market working more efficiently, plus more personal autonomy over government welfare.

In the real world however, the aforementioned savings translate into special interests, starting with 535 federal legislators in the U.S. Congress.

In the traditional sense, their job is simply to represent their districts’/states’ interests in the federal government, giving voice to a diverse set of American voices from coast to coast, from the Rio Grande to the Arctic Circle.

In reality, with almost $7T in annual spending and 70K+ pages in the federal register, they’ve morphed into “getting things done” puppets.  They need to be seen as dispensing favors to this group or that.  If there is less to “do,” or less taxpayer revenue to dole out, they would likely feel useless, unneeded.  The prospect is no doubt untenable to some.

Then there’s the bureaucracy, staffed with 1000s of civilian employees who have jobs on the line.  Also, the inherent nature of government expects less of them given the fact that it will never “go out of business” due to lack of competition, or profit-seeking.  That makes it a cushy gig to give up without a fight.

Finally there are the nominal beneficiaries of these programs, represented most vocally through various lobbying groups.

Though those that are actually dependent on federal welfare programs might reasonably be expected to protest their demise, so would their advocates.  The reason for these activists’ 9-5 existence is lobbying not only for these programs’ continuation, but many times their expansion.

This is not to exclude all the state and local level agitators reluctant to see the federal gravy train shut or slowed down.  One ostensible principle put forth by these factions is that “we’re all Americans, and should therefore take care of each other collectively, from rich states to poor states.”

There are other, countervailing principles at work.

While it’s true that a UBI has garnered support from some conservative corners of the debate, it is predicated on the notion that the responsibilities of the federal government are accepted as-is.  Moreover, to one degree or another, it should take care of its citizens.

Not everyone accepts this precept.

There are one or two segments of the American political spectrum that rejects outright that government should financially support its citizens, for multiple reasons: they do not have to work for it, it comes courtesy of faceless bureaucrats, it robs them of the incentive to invest in themselves, work, save, etc.

Plus, in many instances, there are multiple non-profit, private charities in that arena, who arguably do as good, if not a better job.  These charities are funded by voluntary donations, fact that could lead to a compromise in the public sphere.

The operations of the federal government are largely funded by taxes on income and investment gains.  By definition, these levies discourage these optimal, beneficial behaviors.

Society progresses, and people flourish, when they work, when they find a match for their passions and/or skills.  They are productive.  When they save a portion of their disposable income, some of that finds its way into the hands of those of us who have ideas for new or improved products.

These flow back into the hands of consumers who then utilize them to make their lives easier, frequently saving them time, which in turn can find its way back into (more) productive ventures.  It’s a virtuous cycle …

… when unimpeded by obstacles such as taxation.

To compound matters, progressive taxation tends to fall disproportionately on those who are most productive (as measured by the marketable value of certain skillsets), more able to save and keep this cycle going.  Of the various types of taxation, the ones we’d ideally frown most on are those that disincentivize the behaviors/habits society most benefits from.

That leaves consumption.

There is the mistaken notion that consumer expenditures “drive economic growth.”  This is likely due to how Gross Domestic Product (GDP) is reported.  More than two-thirds of it is chalked up to us buying stuff.

Consumption is literally the destruction of all that came before it.  It’s the end of the production process.  Destroying something being labeled as growth is the equivalent to the popular misconception that WWII brought us out of the Great Depression.

Alas, we do it.  After all, we’re Americans.  Part of our trade deficit is due to our preference to buy more than we save (hence the foreign direct investment which fills the gap).  We’re going to buy stuff.  Only an exorbitant level of sales tax will stop us from doing so.

If we want to move forward with a UBI, repealing the 16th amendment is a crucial step.


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