Dec. 17, 2016 - Freedomain Radio - Stefan Molyneux
17:52
| 
| Time | Text |
|---|---|
| Hi everybody, Stefan Molyneux from Freedom Aid Radio. | |
| Hope you're doing well. | |
| So an idea that is returning like a bladed boomerang is this question of, or the argument for, a universal basic income, or UBI. It has been experimented on in the past, in the 60s and 70s. | |
| It's coming back to my home province of Ontario. | |
| It was recently rejected by Three quarters of Swedish voters this summer. | |
| And the idea basically is that this complicated alphabet soup of benefits provided by the government for people who are poor or disabled or single moms or whatever, well, that's just too much of a mess. | |
| It's too much overhead. | |
| and there is the problem of the welfare cliff, which is where you lose benefits by increasing your income to the point where the actual tax rate, sort of quote tax rate for increasing your income if you're poor, can be actually over 100%. | |
| In other words, you get a raise, you end up with less take-home money and or benefits. | |
| So this is a big giant mess. | |
| So what we need to do is sweep all of that bureaucracy away and just have a simple universal basic income. | |
| And this will deal with the problem, which we'll talk about in a few minutes, of automation that the robots are going to be taking all of our jobs. | |
| And therefore, we're going to have so much wealth because of automation that we could just afford to hand out this money to everyone. | |
| So, this is not... | |
| The universal basic income is truly universal. | |
| It doesn't matter if you make a billion dollars a year or one dollar a year, you get a certain amount of money. | |
| Now, the challenge, of course, is that if the benefit is fairly small, then it's quite affordable, but it doesn't really change behavior that much. | |
| It's not enough to live on. | |
| If it's large enough to live on, then the implications for the tax system are pretty large, and you could argue that it's too large to pay for. | |
| It is an old idea and has been advocated for by a wide variety of people. | |
| Thomas Paine, an ancient pamphletist, argued in 1797 that the government ought to pay everyone 15 pounds per year. | |
| Boy, that's back when money actually meant something, eh? | |
| And they would give this 15 pounds a year in exchange for a social consensus that private property rights ought to be defended. | |
| A little bit of a contradiction there saying, well, we'll steal from money and give money to you so that you'll support a respect for property rights. | |
| Well, that's just a little bit too twisty for me. | |
| So just looking at the U.S., we'll chew through a few numbers and see if we can make any sense of it. | |
| Let's just say kind of a bare minimum, a basic income of, say, $1,000 a month. | |
| So, you know, $12,000 a year, not really quite enough to live on, I guess, after you're no longer a student, at just a smidge or two above the poverty line for a single person. | |
| So, $12,000 a year. | |
| Now, about 242 million adults living in the U.S., 7% of them are non-citizens, and let's just say the money only goes to citizens, so we've got 225 million Million adults times 12,000 a year, that's, well, just a little over $2.7 trillion, or about 70% of the current federal budget. | |
| So, on the cost side, we are talking about $2.7 trillion. | |
| Now, even if you get rid of things like temporary assistance for needy families, or welfare, unemployment insurance, Social Security, food stamps, and all that, Well, the government is only spending about $1.2 trillion on those particular programs. | |
| Now, if you give people $12,000 a year, it's going to be less than the money that a lot of the people are getting from the welfare state as it stands. | |
| So, you either have to increase it just for those groups, or you have to increase it as a whole. | |
| And so you're going to end up, you know, a $3 trillion or a $4 trillion program, which replaces $1.2 trillion of current welfare spending. | |
| So... | |
| That's quite expensive when you think about it. | |
| So what do you do? | |
| Well, the way that governments do these things in general is they will either raise taxes. | |
| Let's say they raise taxes. | |
| So they raise taxes on the wealthy, of course, because there's not much point giving people money and then taxing it back. | |
| Even as a government program, that's too obviously useless. | |
| So you raise taxes on the wealthy and on corporations and all that. | |
| Okay. | |
| Well, what happens is when a corporation's taxes go up, they don't have this big magic pile of money to pay it with ad infinitum, so what they do is it drives up the price of their goods, right? | |
| They have to pay more in taxes, so they have to charge more in goods. | |
| So you give people $12,000 a year, you raise taxes on a lot of other people to pay for it, and that drives up the prices. | |
| And so you give them $12,000 a year, but prices go up to the point where pretty soon it's only worth $10,000 a year. | |
| or $8,000 a year and so on and so on and therefore you have to increase your universal basic income to keep it in pace with the inflation that's being driven by all the tax increases And then, of course, to pay for the increase to your UBI, you have to increase taxes more. | |
| And that further devalues the UBI because it drives up inflation. | |
| Anyway, you get the idea. | |
| This is a cycle with no particular end. | |
| The same thing happens, of course, if you print the money to pay for the UBI. Inflation actually refers to creating more money out of thin air, you know, unlike gold or Bitcoin, which are limited by physics and mathematics. | |
| So you can create lots of money out of thin air and pretend to pay for the UBI. That drives up inflation as well. | |
| And therefore, the UBI is worth less. | |
| So you have to increase it to pay for that. | |
| You have to print more money. | |
| You understand. | |
| You can't square this circle. | |
| And that's kind of how it works. | |
| Now, what governments really like to do, of course, is to borrow or sell bonds, which is sort of the promise of future payment to pay for current stuff. | |
| That, of course, does bring a lot of money into the economy that otherwise may not be there, which is also going to drive inflation. | |
| And, of course, it just defers the problem down the road. | |
| So it's really, really tough to find out some kind of way to pay for it. | |
| So then what you might say is because, you know, people would say, oh, a billionaire is getting $12,000 a year in universal basic income. | |
| That makes no sense. | |
| He already has more than enough money. | |
| So then what you have to do is you have to start saying, okay, well, if you're above a certain income, we're not going to give you UBI. And then you basically have just ended up with a welfare state again and all of the problems. | |
| with that so it's really really hard to find a way that any of this stuff could conceivably work in long-term practice you know in short term sure you can print a bunch of money you can pretend to pay people a lot of money and for a year or two you know inflation often takes sort of 18 months to show up when you increase the money supply or raise taxes or whatever so well that's a uh you can make it work for a short amount of time in the long time it's a big problem It's also interesting how it might affect something like immigration. | |
| So will taxpayers like sending money to immigrants? | |
| You set foot and you get your residency of some kind in some country and immediately you qualify for this $12,000 a year or whatever it's going to be and are people going to feel that that's a good use of their money? | |
| Are they going to feel like it's worthwhile? | |
| I would imagine not. | |
| There does seem to be a bit of a nationalist wave sweeping through the West and I think that would be a big problem. | |
| Now one of the arguments of course for the universal basic income is those robots are going to take our jobs. | |
| And now this has been a kind of staple or cliche of science fiction fears for decades if not longer. | |
| And there was a 2013 paper. | |
| It was written about quite a lot online and in print. | |
| Two Oxford economists said, well, 47% of all US jobs were at risk of computerization. | |
| And, you know, 46% of those, of course, were Marco Rubio. | |
| Boom! | |
| But yeah, so almost half of US jobs were at risk of computerization. | |
| So, let's say that there's some validity to that. | |
| And of course, as minimum wage demands go up and up and up, you know, you go to McDonald's and now there's an automated kiosk rather than somebody taking your order. | |
| So people are going to be thrown out of work. | |
| It's not just because of automation. | |
| It's because of complex regulations. | |
| It's because of unions. | |
| It's because of lawsuits. | |
| It's because of minimum wages. | |
| It's because of all of this. | |
| Kind of crazy stuff. | |
| And also, Western educational systems have become pretty terrible, which means that as an employer, you're kind of getting brain wrecked, indoctrinated people whose childhood dreams and rationality has been crushed into pulpy brain orange juice because of terrible educational standards. | |
| It drives up demands for robots when human beings become ungodly expensive because of regulations and a lack of tort reform, and also because they're just not as reliable and as competent because they've been raised, well, badly in general, particularly by the schools. | |
| I mean, if you can imagine, A private voluntary educational system. | |
| Parents would know that there's this risk of automation or computerization in the future. | |
| So they'd sit down with whoever was trying to offer them the school services and they'd say, okay, well, how are you going to prepare my kid for an increasingly automated world, right? | |
| So when the economy shifts and you can see it coming, and this one is not going to be a sudden event, you can see this coming many years down the future, well, parents would be asking how the school is going to prepare their kids for that. | |
| Of course, with government schools where you're forced to pay and often forced to send your kids there, and it doesn't matter what you want, they don't have to respond to these market forces. | |
| So this is sort of another example of one terrible government program giving rise to the need for another terrible government program. | |
| Government schools are not adapting to the modern economy very well, if at all, and therefore you need universal basic income because schools are spitting out people who have negative economic value relative to robots. | |
| And, you know, given all we're capable of as human beings, it seems a little tough that we can't find any way to give kids economic value greater than a robot. | |
| Social resentment is not inconsequential as well. | |
| If you get two people next door to each other, and one is getting up and going to work, and let's say they're both healthy or whatever, one is getting up and going to work and the other one is staying home and binging on Netflix and doing whatever, and maybe not as high a standard of living, not making as much money, Aren't you going to kind of feel if you're kind of getting up early and shaving and going to work and fighting traffic and bad weather and so on? | |
| Are you going to feel at some point that you're kind of being ripped off a little bit? | |
| The other person's kind of sitting around and you're going through paying for them. | |
| And at some point, it's going to feel like, hey, why bother? | |
| And that, I think, is important. | |
| One of the great mistakes that's made with government programs is you say, ah, well, only 10% of people are poor. | |
| And so we'll just take a little bit of money from the wealthier people and we'll give it to the poor people, and lo and behold, we will eliminate poverty. | |
| But of course, by transferring money from richer people to poor people, you change the decisions of both richer people and poor people. | |
| It's called public choice theory, and it's a really fascinating thing to sort of understand. | |
| Dynamic nature of human society. | |
| That if you say, well, we're going to take money from wealthy people, give it to poorer people, then it becomes more valuable to become poor and less valuable to become wealthier. | |
| And if you tie that into, you know, well, kids need food and so on, and therefore, you know, we're going to take money from people who don't have kids fundamentally and give it to people who do have kids, particularly if they don't have any income or they don't have a marriage or they don't have a provider and so on. | |
| Well, you're taking money from more responsible people and giving it to less responsible people to breed. | |
| And you understand. | |
| This is kind of how it all works. | |
| It changes. | |
| Everything you touch with government money, with incentives and all of that changes. | |
| And so I think there would be a lot of resentment that came out of this sort of universal basic income in a way that doesn't happen as much with something like a disability because you have to go through some process to say... | |
| A doctor's got to certify, I think, that you can't hold down a job. | |
| And so there's a sense that it's more legitimate than just handing out money, so to speak, like candy. | |
| So, yeah, governments couldn't possibly afford it. | |
| It would end up most likely being means-tested. | |
| And what that means, of course, when something becomes means-tested, let's say that you say, well, everyone who's making less than $12,000 Now it's going to be given $12,000. | |
| Let's just say you make up some rule. | |
| And you say, well, there's only a few percentage of people who are making less than $12,000, so here's how much it's going to cost. | |
| But it makes no sense at all. | |
| Because let's say you make $13,000. | |
| And if you make $12,000 or less, you get free $12,000. | |
| And if you make $13,000, you get nothing. | |
| Well, what that means is that your income has just been slashed enormously because you're now working the whole year not for $13,000 but for $1,000, which is the difference between the $12,000 and the $13,000. | |
| So if you quit your job, it only costs you $1,000 if you're making $13,000 and then you get the $12,000 from the UBI. If you quit your job, it only costs you $1,000. | |
| And you get all of this free time and all of this wonderful stuff. | |
| And this sort of goes up. | |
| Up and up and up. | |
| So what happens, of course, is that people who are close to that line will then drop down into that line. | |
| And that means that vastly more people will end up needing universal basic income if it's got an income cap than would otherwise have needed it. | |
| Beforehand. | |
| So then what happens is you can say, well, we're going to raise the UBI so that fewer people have an incentive to drop down in their salary. | |
| But, of course, what that means is let's say you make the UBI 15%. | |
| Okay, well now the $13,000 guy definitely won't keep his job because he's making minus $2,000 by getting up and going to work. | |
| And usually when you get paid low wages, you're not usually having a great time at your work. | |
| It's usually not a huge amount of fun. | |
| So that doesn't work. | |
| And then all the people at $20,000 look at the $15,000 one and say, okay, well, if I quit, I get all this free time. | |
| And I only lose $5,000. | |
| In other words, me working full-time only makes me $5,000 a year, so they'll drop down, so fewer people will be paying taxes and all this kind of stuff. | |
| So it's a big, giant mess. | |
| The moment you touch incentives, this problem arises. | |
| Now, this is a well-known problem among private charities. | |
| And private charities work very hard to support people without enabling them, to help them during temporary emergencies without creating the roach motel endless quicksand gluey sticky trap of the current welfare state. | |
| Like once you get caught in the welfare state it's almost impossible to get out in terms of rational calculation because as you make more money you lose benefits and it's like trying to climb an escalator in slow motion. | |
| You're trying to get up but you just keep going Further down in your income and then you end up having to make like $60,000 or $70,000 before you match what you're getting, especially if you're a single mom with kids, before you match what you're getting just by being on the welfare state. | |
| So private charities know that that's a big problem, that you want to help. | |
| The deserving poor, right? | |
| The people who are poor, you know, through no basic fault of their own sort of bad luck, bad circumstances and so on. | |
| You want to help those people. | |
| But you don't really want to help people who are milking the system or who have made really bad mistakes or really bad decisions. | |
| You don't want to sort of reward that. | |
| So you'll give them very conditional help. | |
| You'll give them very limited help. | |
| And the help won't just be financial. | |
| It will be helping them figure out how to get and keep a job. | |
| It will be helping them over addiction problems. | |
| There will be lots of things to do with actually helping the person in terms of the root cause of poverty. | |
| And the root cause of poverty is not necessarily just a lack of money. | |
| That's an effect. | |
| It could be a variety of other dysfunctions that are causing the behavior that results in poverty. | |
| And of course, the government can't do that. | |
| Someone in a bureaucracy mailing out a check. | |
| I mean, they don't know the individual circumstances. | |
| So private charities are very effective at helping people overcome poverty and get out of poverty because charity programs are privately funded to the degree with which they prevent and alleviate poverty in real time. | |
| Whereas government programs are funded by force and there's no requirement that they reduce the number of people who are poor. | |
| And of course, governments, particularly on the left, kind of like a lot of poor people, are being dependent on the state because that means they'll always vote for more and more government and more and more bigger government. | |
| People who are on welfare have very little problem voting for increased taxes because those taxes don't affect them because they don't pay taxes in general other than maybe some sales tax. | |
| So, income taxes, yeah, no problem. | |
| The more people who are working and paying income taxes, the more pushback there is against increasing income taxes. | |
| So, the governments love having, leftist governments in particular, love having people dependent on the government. | |
| They can jack up taxes and they can be guaranteed of votes for larger and larger government because that's the host that the people are currently feeding off. | |
| So, as far as universal basic income goes, yes, it is a terrible idea. | |
| Morally, of course, it requires the initiation of the use of force to shovel money around from one We're good to go. | |
| And it's impractical in its economics. | |
| So I just really wanted to get that idea out there because I know it's floating around. | |
| And so I hope that you'll find this interesting. | |
| Please let me know what you think in the comments below. | |
| And please don't forget to go to freedomainradio.com slash donate to help us out with this show and all the good that we're doing in the world. | |
| Thank you so much. |
Export Selection