Guaranteed Income And Living Wage Schemes Cannot Possibly Work
Facebook founder Mark Zuckerberg Supports Universal Basic Income.
In its basic form, universal basic income means “everyone gets a paycheck, whether they have a job or not.”
Many expect even more. They want a guaranteed “living wage”.
Useless Trials
Such schemes cannot possibly work. But that does not stop fools from trying.
For example, Finland is giving out a guaranteed monthly income of nearly $600 to 2,000 citizens.
Canada’s province of Ontario, which includes Toronto, started a pilot program in April that provides 4,000 citizens with an unconditional income of about $12,600 a year. Applicants must be between ages 18 and 64 and living on a limited income.
Those studies cannot prove anything, no matter what the results.
Free Money Proposals Do Not Scale
Sure, one can do a trial and show that 20,000 or whatever sample size is better off.
However, any benefit to the trial participants must at the expense of a bigger deficit or higher taxes on everyone else.
Imagine giving 200 million people a guaranteed living wage. Who is going to pay for it?
Next, imagine all of Europe doing this coupled with freedom of movement.
Why stop there? Imagine the same program for the entire world? Free money for everyone!
Mike “Mish” Shedlock
Disclaimer: The content on Mish's Global Economic Trend Analysis site is provided as general information only and should not be taken as investment advice. All site content, including ...
more
Money is a product of human creation. In such systems, if widespread, people will end up paying from inflation. That is not the main issue though. Incentives to work would drop and pay would have to increase dramatically for low skilled unliked jobs like trash collection. I can see this happening later if robotics take over all menial jobs. Right now it has a lot of unintended consequences if done widespread. It may not actually benefit people as much as one would think. Of course the answer will be to raise it more, and more, and more. That is the big problem with social programs. Keeping them reasonable and cost efficient. Affordability has little meaning given governments don't care that much about debt until they do (at which point it is too late because that means they are having a hard time borrowing more money).
Well said. Unfortunately though, we may be entering an age where something like this is necessary. I've seen reports that AI could replace 1/3 of even high skilled professionals by the middle of the next decade.
While I agree that a universal basic income cannot ever work, some kind of solution will be needed or we're going to end up in a lot of economic trouble anyway.
Agreed, The Affluent Society brought up the problem we will be facing in the future. It's worth a read if you ever have the time.
Not a bad idea. I'll have to see about obtaining a copy.