Universal Basic Income pilot studies prove the concept works, and advocates say we should support it.
Is Universal Basic Income a silver bullet solution to societal issues or a band-aid on deep wounds?
What is Universal Basic Income?
Universal Basic Income (UBI) is a financial policy proposal under consideration by many municipalities across America. Under UBI, the people of a municipality, acting through the government, provide regular, unconditional payments to all citizens regardless of income or employment status.
The premise of UBI is to ensure a minimum standard of living and reduce poverty and inequality. UBI programs intend to simplify welfare systems, reduce bureaucracy, and provide economic security for the lowest-income earners.
On June 22, 2024, in the LA Times, writer Rebecca Plevin reported, “More than 200 guaranteed-income experiments have popped up nationwide over the last four years in response to the pandemic, as well as racial injustice and widening economic inequality.” In a separate piece published June 26th, Business Insider identified a couple of residents of St. Louis, Missouri, sued the City of St. Louis over objections to its taxpayer-funded UBI program.
How is UBI funded?
Universal Basic Income (UBI) proposals are funded through various mechanisms. Common funding sources include:
Private contributions. Funding for some pilot programs, such as those used for Arlington’s Guarantee Pilot Evaluation conducted in Arlington, Virginia, were from private sources. The Arlington Community Foundation acquired all funding from private donors, business donations, faith communities, and other foundations. They used no public dollars for the study.
Taxes. Proponents often pose income taxes, consumption taxes, or new forms of taxes such as a carbon tax or wealth tax for UBI funding.
Reduction of Existing Welfare. Some proposals suggest funding UBI by streamlining or eliminating current welfare programs and redirecting those funds into the UBI pool.
Other sources might include natural resources such as Alaska's Permanent Fund Dividend. They might also include investment funds owned by the state or from sources like surplus revenues.
UBI Programs Work
So many municipalities are considering UBI because the pilot programs prove it works. Americans aren’t irresponsible with money, or lazy, or stupid. They use the money to gain skills and get better jobs, move into safer neighborhoods, buy shoes and coats for their kids, and heat their houses. They go back to school and get degrees and certifications.
They work MORE with the extra funds, not less. And the work they do is more meaningful.
Or, to be more correct, Americans with enough money live stable, productive lives.
With so much decisive information proving UBI works, I should be arguing for UBI, right? But I’m not going to.
UBI is a Symptom, Not a Solution
Proponents of UBI argue that the programs reduce poverty, simplify welfare, reduce the cost of administering welfare, reduce income inequality, and have still other benefits. They write passionate pieces that convey how UBI programs help those most in need. I don’t disagree with their position.
Though I often write about problems, including low worker wages and how we might address housing challenges, that’s not my decisive effort.
I write about America. I believe in the principles that formed America and in individual liberty. I believe that given the right conditions, individuals will succeed on their own.
UBI programs demonstrate that America is at a crossroads. They are symptomatic of deeper structural issues rather than a solution to them. UBI programs demonstrate that conditions in America are such that individual Americans aren’t surviving on their own. The system is broken. More people than ever are working multiple full-time jobs to survive. Buying housing is out of the question for many. For the first time since the end of the Great Depression, more 18- to 29-year-old adults live with their parents than on their own. UBI programs highlight that the problem is so dire that some would give others money for not even working.
UBI programs are a Progressive response to poverty. I’m not a huge fan of Progressive solutions to move money when there are other options.
It’s not that I’m anti-government. Government is necessary. It provides a means for individuals to combine resources and generate essential services that individuals cannot achieve on their own, such as infrastructure, defense, and education. Without government, we have no interstate market access, no roads for transit, and no financial system to support trade between individuals.
At the same time, government is inherently wasteful. One of the most studied examples that highlights this phenomenon is the US military’s tooth-to-tail ratio, or the ratio of combat effects forces to support forces. At no point in the last 150 years has the military had more than 28% of combat effects forces, with 72% support forces. These support forces have familiar names such as Human Resources (HR), finance, maintenance, and logistics.
All government entities have support forces, and this same principle applies. Larger government waste isn’t studied the same way outside the Department of Defense. But even if the percentages are somewhat different, the point is the same: Funneling money through the government results in the majority of that money being absorbed by support functions. The support is necessary, but it reduces the money that can be directly applied to the problem.
The American people paying government officials to provide a service benefitting multiple Americans is a good use of resources. Yes, the government still gets this funding, but the intent is to provide the service, and the government can achieve the intent.
The American people paying government officials to send their money to an individual living in poverty doesn’t make sense. They just wasted 70% of it funneling it through the bureaucracy. Americans need to earn sufficient money from their work, and the rules need to support wages high enough for individuals to succeed. The intent the government can achieve is to make the rules work for individuals.
As we grapple with UBI and the broader role of government in America, we can revisit the wisdom of historical figures who navigated similar crossroads.
Edmond Burke is the world’s most renowned Conservative philosopher. Just before the American Revolution, Burke sounded a strong call for systemic change to conserve the integrity of the British Empire. He urged King George to address the British government's missteps and expressed that England should pursue conciliatory measures with the colonies.
Burke knew that saving the British Empire meant change.
King George rejected Burke’s counsel, and America was born at war.
If we are going to save the American dream, we can’t say the system is working and bury our heads in the sand.
If Americans can’t succeed as individuals, they will increasingly turn to social programs. America is built on individual liberty, not collective social programs.
When the American people pay tax dollars to fund the government, the decisive effort of those dollars needs to set conditions for individuals to succeed.
Individuals can succeed when they have heat in the house and food on the table from working one full-time job while still being able to go to school at night to expand their skills. They need to be able to buy a house and feed their family on one income. Single mothers need to make enough to pay for childcare so they can go to work and still feed their kids.
To support this individual capability, we need leaders who work for the American people, not just for businesses and not for the government.
May God bless the United States of America.
Postscript.
Universal Basic Income