Universal Basic Income will destroy incentive to work

Universal Basic Income has been getting increasing attention recently. Not only from those kind people with a genuine, if sometimes misguided, concern for the less successful in society. But also from wealthy, successful people who should know better.

Universal Basic Income

What is a Universal Basic Income and why is it receiving attention now?

The idea of a basic income for all the citizens of a country as a “right”, has been bounced around for years, it was one of the basic ideas of communism. The idea that everyone should have an equal share of the economic pie.

We only have to look at Cuba, the collapse of the former USSR and the failed states in Africa to see how well that worked.

It is receiving more attention now because of the fear of new technology making huge numbers of workers redundant. The concern is that hundreds of thousands of newly unemployed people will lead to massive hardship, civil unrest and anarchy.

My contrarian view is that many of the suppliers of consumer goods and services are more concerned that unemployed people will be unable to pay for those goods and services. More concerned about profits than the welfare of the unemployed.

What a wonderful idea if the remaining employed can be forced to pay higher taxes to subsidise the unemployed so that this group can continue to buy large screen TVs, the latest in smart phones and ride around in driver fewer cars.

It goes without saying that many of the wealthy proponents of a Universal Basic Income are in a position to insulate themselves from increased taxes through legal tax avoidance strategies.

Universal Basic Income vs Incentive

Incentive to improve our lot in life has been the driving force behind most of the social, technical, medical and industrial advances in human history. Sadly it has also been responsible for wars, persecution and mistreatment of millions of people.

The idea of a Universal Basic Income is wrong and extremely dangerous on four counts.

  • History shows us that it is unnecessary.
  • It would remove the incentive for individuals to improve.
  • It would slow down advances in technology in all sectors.
  • It would reduce the competitiveness of the developed countries.

History

For centuries, each major advance in technology has created disruption and anxiety.

The steam engine started the decline in traffic on European canals. The internal combustion engine made horse-drawn wagon makers redundant. Improved telephone systems displaced telephone exchange and switchboard operators. Thousands of, mainly women, NCR and Burroughs accounting machine operators, typists and secretaries became unemployed as fax machines and word processors found their way into offices. Those machines and their operators, were quickly made obsolete by the personal computer.

The list of job categories that have disappeared in my life time alone is huge. Yet in the Western world, unemployment levels are not significantly different to those of a century ago. Income disparity has increased. Many people have not developed the skills to cope with a changing world, but for most people it has not been a complete disaster. Hundreds of thousands have benefited from new opportunities.

incentive

History show us too that many of the dire predictions of machines replacing people did not happen.

That’s why the idea of 95% of vehicles on the road being driverless by 2025 is fantasy. What about farmers, service people in remote areas, emergency service vehicles, the developing world?

Incentive

I mentioned communism earlier, that is enough reason to understand that a Universal Basic Income would lead to reduced productivity. It would have the effect of reducing huge numbers of people to a common level of misery. Exactly the opposite of it’s intended purpose.

Incentive to compete against others, against one self and the incentive to improve on “the way it’s always done” is driven by the rewards of success. Recognition and financial being the two major rewards. The most altruistic among us may be happy to work harder for no financial reward, but the majority will not.

That’s why there would be a serious effect on technological advances.

Competitiveness

A universal Basic Income for a resident of North America or Western Europe would be higher than that for a resident of most of the countries in the developing world. Wages would have to rise to provide an incentive for people to work. Wages for the same job would rise far more in the industrialised nations, that would have an immediate impact on costs of manufacture.

Opportunities

Just as in all the earlier waves of disruption to employment, many opportunities for new jobs will be created in the future. It’s already happening.

A Universal Basic Income together with certain other proposed policies, a cashless society, unlimited drone surveillance, and certain aspects of the ownership and control of driverless cars, all pose threats to democracy and our independence.

We should be careful what we allow our governments to impose upon us.

What do you think?

Money graphic courtesy Stuart Miles / freedigitalphotos.net

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  1 comment for “Universal Basic Income will destroy incentive to work

  1. April 5, 2017 at 7:08 pm

    You are exactly correct, Peter! UBI is a pipe dream. And the folks who say it will work do not know human beings nor do they know history.

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