What is Universal Basic Income?
Universal Basic Income has been an increasingly popular topic of conversation, especially in the younger generations. With the surge of support for a universal basic income (UBI) by millennials and Generation X, it is important for citizens to truly understand what universal basic income is, as well as what it serves to do. Universal basic income is the principle that the government should provide a livable income for its citizens, enough of which would pay for essentials like food, shelter, and clothes. This would essentially free up a citizen’s income for other non-essentials, and allow for a greater margin of trade and free enterprise.
What is Trost’s Plan?
In the lecture by Dr. Steve Trost, “The Libertarian, Conservative, Progressive, Communist (not Socialist) Case for a Universal Basic Dividend,” he proposes a “plausible” solution for the United States to implement a UBI. The plan would be implemented via a constitutional amendment, and consisted of a 25% tax on all citizens, with no other taxation authorities and no other welfare programs. The federal government would have a spending cap of 9% of total GDP, with the other 16% going to the UBI. Based on figures from previous federal spending, this would equate to about $9,000 per citizen per year, meaning families of four would receive $36,000 a year. In addition to this, there would be a 150% retirement premium to help the elderly cover extra expenses related to healthcare – this would being the UBI to $10,300 for senior citizens.
UBI in the World Today
There are a few instances of UBI programs that are currently in place around the world. One instance that Dr. Trost emphasized in his lecture was in Alaska, which gives a small portion of oil profits to the people that live there (averaging about $1,000 per year). While this is a good example of the implementation of stimulus checks, it is not a viable income that could support individuals and provide for their basic needs. A true UBI would cost much more, and would not come directly from extra exporting profits such as the oil industry. Other countries that have implemented UBI programs include Mongolia and Iran. Many libertarians praise the ability of the Iranian government to implement a UBI without causing a decline in labor force – one of the major concerns regarding a UBI in the States. However, Iranian officials give citizens about an extra $1.50 income per day. This averages to an extra $547.50 per day. While the cost of living is lower in Iran, this is still not a livable wage, especially in America. The inability to survive on the UBI is one of the main driving forces behind the sustained labor force in Iran. In Mongolia, resources-to-cash schemes are not new, with the first scheme originating in 2004. Being a mineral rich country, Mongolia paid its citizens based on the exporting profits they made through their mineral mining companies. This resource-to-cash program is very similar to what we see in Alaska today, but unfortunately, Mongolia cannot provide its citizens with nearly as much income as Alaska. Mongolia ran into issues with inflation and skewed elections. Politicians started promising a certain amount of pay to citizens through this program, and once elected, could not deliver due to the ever-changing demand for minerals and price flux. Eventually, a law was put into place preventing politicians from promising a certain amount in their dividends. Mongolia re-introduced this plan after COVID-19 hit, and they saw great promise in their citizen’s abilities to sustain themselves during lockdowns, quarantines, etc.
Problems with Trost's Plan
Although Dr. Trost’s plan prepares and protects the UBI from mal-intentions from politicians, it has some serious weak points. One of the main issues with Dr. Trost’s plan is inflation. In countries with UBI, inflation is a serious issue. In Mongolia, the MNT is equivelent to $0.0003 USD. Even with their handouts of MNT 96,480, it still only equates to about $30 USD. In Dr. Trost’s plan, with a $9,000 handout, and nearly 340 million Americans, it would cost the government nearly $3,000,000,000,000 to implement. This is already nearly half of the total government spending in 2021. It is almost certain that the cost of living would increase, especially without regulations on businesses to maintain ethical prices. In addition to this, Dr. Trost called for an elimination on regulated minimum wage. However, I think this provides even less incentive for people to work. This is especially true when large companies could low-ball every employee to maximize their profits. Even though Dr. Trost argued that it would increase competition, I believe it would aid in the decline of the labor force, especially in younger age groups (particularly 20-29 year olds). Without laws regulating a minimum wage, there is nothing stopping companies from unethically dropping wages and using their employee’s UBI as an excuse. Even though a UBI would technically eliminate the government’s protection of large business and no-fail industries, that gives these billion-dollar companies even more incentive to maximize their profits to ensure their success. I guess citizens would have an income to fall back on if they were unhappy with their wage, but this could result in a massive unemployment rate and an economic downturn. In addition to this, Trost called for an elimination of all other welfare programs – government owned or corporate owned. However, corporations stay competitive based on the benefits they can provide to employees. Without these benefits, companies would have a much harder time trying to attract high-value employees as well as retain these employees, without a massive wage promise. If the only way companies can attract employees is through the wage they are offered, then the sky is the limit regarding how much a company can pay their employees. This would further add to inflation and would not benefit the economy, the people, or corporations.
Are Sectors Based on Industry Viable?
A more interesting proponent of Dr. Trost’s plan is the idea that people would move to areas that specialized in a certain industry. Giving the people freedom of mobility with a UBI means that families could move to areas based on how well the public schools perform. This is a great way to increase competition within public schools, as there currently isn’t any sort of competition. However, Dr. Trost went even further to explain how certain sectors could become hubs for specific industries. For example, he imagined a sector in which competitive art schools were located, and if an individual wanted to live there for this schooling, they could, until they wanted to move on. This idea was a very unique ideal of his plan. However, it may not be completely viable. If people needed to move in order to get the education they needed, it could result in an inability to use the UBI for what it was truly intended – food, clothes, and shelter. Relocating is expensive, and if the sectors increase their cost of living around these competitive schools, it could result in an inability for people to actually move there. Dr. Trost mentioned that if the cost of living is too high for someone to live there, then the UBI would give them the freedom to move to a more affordable area. But if the competitive schools result in an influx of population, and the cost of living increases in those areas, then only the ones who could afford that education could live there, severely limiting the ability of the poor to receive a valuable education. This is exactly the opposite of what Dr. Trost hoped would happen when it comes to public education, however, it is a very real possibility that should be considered.
Final Thoughts
Even though the idea of a universal basic income is attractive, especially after the government supplied the population with stimulus check during COVID-19, the actual implementation of this in the United States has some worrying drawbacks. Even with prior planning on how to prevent the abuse of UBI, the issues arise when considering inflation, lack of regulation of corporations, and the congregation of industries geographically.
Works cited:
Samuel, Sigal. “Everywhere Basic Income Has Been Tried.” Vox, Vox Publications, 19 Feb. 2020, https://www.vox.com/future-perfect/2020/2/19/21112570/universal-basic-income-ubi-map.
Yorgun, Meric. “Mongolia's Resource-to-Cash Transfers.” BIEN - Basic Income Earth Network, 15 Sept. 2020, https://basicincome.org/news/2020/09/mongolias-resource-to-cash-transfers/.
