Universal Basic Income Won’t Work

Is the $1,200 sent to most Americans under the CARES Act plus the $600 per week federal unemployment payments actually the proverbial mice’s nose under the tent for an Universal Based Income? Author and researcher, Patti Kurgan, explains how American’s are currently in a grand experiment to push forward pay without work and the consequences of this proposed public policy.

Universal Basic Income Won’t Work

Remember biology lab?  Some of us did live experiments watching mice in a maze and their reaction to stimuli—some frozen in their tracks, some turning around to where they came from, and still some moving forward through an obstacle to get the cheese.  Today we are all part of a live experiment, whether or not we are aware of it.  Some people are reacting out of fear, others out of caution, and still others out of freedom.  Personally, I have experienced all three.  There are many tentacles to this experiment as there are physical elements, social and psychological elements, political elements and fiscal elements that are all reactive to COVID-19.

As a small business owner, I find myself reading daily articles on the impact of COVID-19 to businesses and their employees, and what policies are suggested from the Politicians, Bureaucrats and Special Interests (PBIs).  One of the many proposed policies in the maze of fiscal incentives, clothed in the premise of helping the unemployed, is Universal Basic Income (UBI).  You have not read about Universal Basic Income, a guaranteed minimum income, in these terms.  However, this is exactly what the PBIs are discussing under the legislation, Emergency for People Act, introduced by Rep. Ryan (D-Ohio) and Rep. Khanna (D-CA).  Every American over the age of 16, who makes less than $130,000 as an individual or $260,000 for a married couple, would receive $2,000 per month and these payments would continue for a minimum of six months or when the unemployment rate is equal to the record pre-COVID-19 unemployment level.  This guaranteed income found its way into The HEROES Act that recently passed the U.S. House of Representatives.

Sixteen-year-olds are in the biology lab during their high school career.  Most students are focused on sports, clubs, drama, music and dating.  My children did work at the age of 16 and they were an anomaly.  They certainly did not come close to earning $13,000 a year let alone $130,000 for an annual salary.  How many adults do you know that make $130,000 per year?  This is another example of vote buying as I wrote about in an earlier piece.  If passed and signed by the President, Zilvinas Silenas, President of Foundation for Economic Education, states that every single dollar of federal, state and local budgets would go to this one line item.  All other funding for any governmental department would be eliminated.  A Universal Basic Income would also stifle innovation and creativity as those who produce would probably not knowing that all the fruits of their labor would end up in somebody else’s pocket due to excessive fees and taxes.

Presidential candidate Andrew Yang consistently spoke of UBI implementation.  Other noted advocates for an UBI system are Pope Francis, Elon Musk, Mark Zuckerberg and libertarian Charles Murray.  With the COVID-19 reaction disruption and high unemployment, Nancy Pelosi in an MSNBC interview stated: “Others have suggested a minimum income, guaranteed income for people.  Is that worthy of attention now?  Perhaps so, because there are many more people than just in small business and hire by small business … that may need some assistance as well.”

This live experiment began with The CARES Act.  The CARES Act paid $1,200 to individuals who made less than $60,000 or $120,000 as a married couple based on their 2018 or 2019 tax return.  Additionally, the unemployed receive an additional $600 per week from the federal government on top of their state unemployment insurance.  Many people will be making more by staying home than going back to work.  Businesses are reporting across the nation that employees are not accepting work because of this financial incentive.

UBI has been tried in Finland and Canada, to name two countries, and both failed miserably.  Those who were heavily taxed to pay for this astronomical program vocalized their disdain as to how their money was being distributed to jobless people who had no requirement nor incentive to work.   The people of Switzerland voted 77% against an UBI a few years ago.

UBI exacerbates unemployment as it incentivizes people not to work.  Employees are needed for employers to re-open businesses.  Government should eradicate burdensome government interference by permanently eliminating rules and regulations that are on a “temporary hold,” and minimize restrictions on home businesses and sole proprietors.

When people are paid without working, the products that are necessities in our lives will not be produced or at least delayed in production.  This leads to empty shelves absent products that we love and have taken for granted.  If UBI becomes a reality, get ready for empty shelves to be the new normal state of affairs.  Some people will take the “free money” earned off the hard labor of someone else enjoying their free time devoid of any financial responsibilities in terms of earning a living.  In America the majority of the people take the challenge of opportunities arising in the job market to take care of themselves, their families and retain their dignity.  Similar to the mice that run the maze to find the cheese, every day hardworking people will run towards freedom to obtain their personal goals with the self-respect to climb up the income ladder.

 

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