Universal Basic Income is economically bankrupt policy. In theory, it spikes price inflation, costs too much and eliminates the incentive to work. A new study from Finland has proven the theory behind this. Finland gave 2,000 unemployed individuals a UBI amounting to $634 per month, and these individuals were no more likely to pursue employment than those who were on the current welfare system.
Universal Basic Income Has Destructive Effects
While the study indicates that the unemployed were happier, this does not demonstrate that the experiment is a good idea. Universal Basic Income discourages innovation whereas it has the capacity to remove people from the workforce. It leads to a chilling effect. If I am satisfied by the monthly UBI, I then have no incentive to contribute to the market, which makes not only my life better, but also improves the lives of the people at large.
Universal Basic Income Drives up Prices
If a UBI is implemented among everyone, prices would skyrocket. Consider the incentives: if I am a landlord and I know everyone is making a certain amount of money per month, then I have every incentive to increase rent. This would make housing even less accessible to those in need. Decreasing prices, not a guaranteed income, has led to unprecedented levels of prosperity throughout the world. A UBI would obliterate the poor’s buying power and make them even more reliant upon the state, which is the exact opposite way to lift people out of poverty.
Universal Basic Income is Cronyism
For everyone who still has a job, they are still receiving the UBI (assuming it is actually universal). With this in mind, an intelligent businessperson would slash wages whereas workers can afford to take this pay cut. The businesses, in this way, are offsetting the costs of business to the taxpayer. Universal Basic Income becomes a form of corporate welfare whereas it forces the common person to pay the wages of workers when that ought to be the responsibility of the employer.
Universal Basic Income Destroys Incentives
In other words, incentives matter. Incentives encourage behavior that benefits you, the consumer. As a consumer, you have next to no power in a society with a UBI. If everyone has a secure income, they have no incentive to respond to market cues. This naturally leads to inefficient use of resources, crowding out ideas that would actually benefit humanity. UBI collectivizes society’s resources and therefore makes economic calculation impossible.
Universal Basic Income fundamentally alters the incentive structure of society. It encourages stagnation and complacency. It stunts innovation and entrepreneurship. The UBI closes the economy off to innovation, dooming it to a closed system which will inevitably die. The UBI is a failure in theory; it is also a failure in the real world.