There is a policy idea stalking the land of economists and policy wonks on the left. It is the universal basic income (UBI), which is a stipend given to all adult Americans each month. It sounds populist but is not. It is merely a handout that will exacerbate the current system of handouts that we have in America. It also does absolutely nothing to change the inequality we see in our nation. This is a con being performed on the many struggling readers of left wing publications or college students.
A UBI sounds good though doesn’t it? We give money to all Americans with no questions asked. This will empower them! Not really. With $1,000 extra dollars per month, will landlords not just raise rents, will producers and distributors not just raise prices since people have more discretionary income? Does the UBI replace other welfare programs or just layer on top of it? One could easily see the poor or young receive a UBI and still blow that money on consumption, and then turn around and ask or plead for the old section 8 and SNAP transfer payments.
It sounds great because the readers of books like Annie Lowery’s book “Give People Money” are educated liberals who want to do something and still believe throwing money at problems makes them go away. Lowery’s attempt to pay for the program reveals how this new program is no deviation from the status quo. It will not change anything. Lowery wants to add a national sales tax, a VAT, to pay the trillions of dollars for the UBI. This would be around 15-20%. Lowery wants to charge all Americans an additional 15-20% of their consumption to make sure a UBI is funded.
This would be a regulatory burden on all producers and immediately suck money out of the basket of goods people can afford now, which Lowery admits is a time of inequality. A national sales tax is a regressive tax as consumption of basics makes up a higher amount of money for lower earners. Nowhere does Lowery suggest a populist measure like a tiered sales tax with a lower tax rate for a set of items and then a higher tax rate for luxury items. This is not a surprise as Lowery has formerly greased the skids for Wall Street’s favorite academic toadie Lawrence Summers’ potential nomination to head the Federal Reserve.
This is the problem with the Democrats’ economic policies. Nothing they propose will change the system. Lowery and the UBI pushers want a new program to feed crumbs to the poor who vote overwhelmingly Democrat without disrupting the structure of our current economic situation that create the inequality that they rail against. Nowhere does the Left want to address the asset inflation of real estate that has caused massive inequality in our Democrat stronghold cities. The Left’s economic approach is to avoid discussing the financial apartheid present in their blue cities or blue states and just pacify their voting bloc with transfer payments.
Make no mistake a UBI that people could save might be helpful for some citizens to save for a rainy day or citizens with good financial habits. It would also make these citizens more resilient or antifragile at time of job loss or to make choices to work or not. Because of this, watch the Democrats’ media arm push to make a UBI instead a universal consumption credit, making it impossible to save by only allowing for the money to be used to consume. This would serve the large firms that already enjoy the government EBT programs to supplement their customer base.
A UBI will do nothing to alter wealth inequality, which is a creation of our economic policy environment and unchanged by UBI. Adding taxation across the board with a VAT to fund it will harm the quality of life of all Americans. There is no guarantee that the producers and landlords of our country will not just adjust their prices up to collect that UBI to make it a transfer scheme further enriching asset holders. The worst part of it all is that the left will push for a UBI to help the poor while opening the borders to all, destroying any bargaining power they had as labor. UBI is not about empowering anyone. It is a coping mechanism proposed by the policy wonks of the left to cover for their failures to provide for the citizens that they supposedly fight for.