Missing the Basic Flaw

You might want to read Peter St. Onge’s consideration of the Universal Basic Income at the Foundation for Economic Education. He’s against it.

Fascinating to me is that he misses the gravest practical problem with the UBI. Assume for a moment that a UBI is implemented and it takes the form of sending every man, woman, and child in the United States a check for $1,000 every month, funded simply by issuing credit. What would happen?

What’s more important is what wouldn’t happen. It wouldn’t result in the production of more goods and services, especially in areas like real estate where there is natural scarcity. They aren’t making new land.

What would happen is that rents, home prices, the prices of many other goods and services would rise to absorb the additional cash and we’d be just about back where we started except that we’d be issuing a lot more debt ($330 billion a month). There would be political pressure to increase the monthly stipend, politicians would yield to the pressure, ad infinitum.

Then there are other problems: the psychological, physical, and social problems of mass idleness, the rush of people across our borders to take advantage of the program, etc. etc.

I don’t believe in master stroke solutions to problems for the simple reason that are always complications, run-on effects, and it is a commonplace for run-on effects to overwhelm the actual result desired. However, as master stroke solutions go, the UBI is a terrible one. A national guaranteed job program would be better but that would have its own set of problems.

1 comment… add one
  • walt moffett Link

    Its always those rifling details the technos forget.

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