The Problem with Universal Basic Income (UBI)
In this video I discuss the controversial idea of Universal Basic Income. Watch now!
VIDEO SUMMARY
Universal Basic Income is an idea that has gained popularity over the last couple of years. The idea is that everybody would receive money each month from the government to pay for food and housing. This idea has really been around for a very long time, that the government provides some level of support to its citizens. In the United States, we already have this to some extent. People who make less money, get subsidized through tax breaks. We also have social welfare programs to support people in need. What is new about the idea of Universal Basic Income is setting a new level of support at food and housing for everyone. This is saying that we are wealthy enough as a society that we could make sure that no one goes hungry and no one is homeless.
You can probably tell by the title of this video, that I am not a fan of Universal Basic Income. However, I am open minded enough to listen to all the arguments. Some of the people who are supporters of Universal Basic Income have impressive credentials. I am not going to name any names, but there are people, who I consider business experts, who think this is a good idea. Not only that, there are a number of social experiments going on today. People have identified communities, and they are trying this out to see the outcome.
I wanted to share my perspective on Universal Basic Income, because it is different from the typical arguments. Most arguments come back to two main ideas: social justice and fear over the economy. Social justice arguments suggest that we could restructure our economy in a way to create more fairness. Fear from the economy comes from uncertainty about the future. That uncertainty suggests the need for stronger financial safety nets. The problem with these two arguments is they are very polarizing. Whenever people talk about how they are not getting their fair share and they are scared about the future, they tend to become very entrenched in their position. These are very emotional issues. I want to suggest that neither of these arguments are dealing with the real issue.
The real issue we are talking about is changing the fundamental concept behind our economy. The world’s economy is based on a very simple idea: you create value then you get paid. Universal Basic Income creates a policy where you get paid, whether or not you do any work. This is a fundamental shift in how our economy works. The current economy has developed this way for a very good reason, because it creates an environment where every person is constantly looking for how they can create value. Getting paid for creating value is how humanity has survived. We see this in the very famous story from Aesop’s Fables of “The Ant and the Grasshopper.” In the story, the ants work all summer long collecting food, while the grasshopper has fun. So when winter comes along, the ants have food to eat and the grasshopper is starving. This story shows the philosophical question we are really asking here: for people who do not work, do we have a responsibility to take care of them? Supporters of Universal Basic Income are suggesting that we have reached a point in human evolution when we can remove the concern of survival from everybody’s life. They are saying the story of “The Ant and the Grasshopper” does not matter any more. This is where I disagree, because I believe you have to look at the fundamentals of economic activity.
I want you all to participate with me in an example today. I want you to close your eyes. I am going to ask you to use your imagination. Imagine what you think the world is going to look like in 20 years. When you think about the future, what type of things come to mind. Now, we are going to go further into the future. I want you to imagine 100 years from now. What will the world look like?
Now open your eyes.
What we just did was to use our imaginations, and this is much more important than you realize. When you think about the different things you imagined for the future, I am betting that most of you thought about different advancements. You probably imagined life getting better. Maybe there are new technologies. Maybe we are living in space. Maybe we have cured major diseases. Maybe we have solved major social problems like hunger, homelessness, and poverty. Maybe there is world peace. It is a very reasonable assumption that there will be progress in the future, because progress has always been part of human history. This is the brilliance of imagination. We are the only creature on the planet that has imagination, and it allows us dream about a better tomorrow that we can work towards.
But here is the deal, our dreams require work. We cannot just dream about the future. We have to do the work. And we are not just talking about a little bit of work. This is going to take enormous amounts of work. Everything you dreamed could happen in the next 100 years, I bet that it is going to happen… all of it. But it will require work. To accomplish all these great things, it is going to require a lot of jobs. We are going to need as many people as we can get, working in these jobs, creating a better future for tomorrow. And when we get to the end of this 100 year period, I bet we will still imagine a better future, and we will still need jobs.
This all comes back to the fundamentals of economic activity. When you talk about Universal Basic Income, you are facing a fundamental choice. You are choosing between our current system of payment for value versus payment for no value. When you look at the next 100 years, and you think tremendous value still needs to be created, our current economic system is still very relevant. It will remain relevant into the future. When you look at it from that perspective, it almost seems silly. We are talking about giving people money for doing nothing, when there is all this work that needs to be done. We should be giving people money for doing all this work. If you want to give people money, give people money for curing cancer. Give people money for building houses for the homeless. Give people money for getting an Engineering degree. Give people money for building a space station on the moon. I can give a ton of examples of work that needs to be done, and I am sure you can think of examples as well.
The only reason you would want to change the fundamentals of economic activity, is if you looked 100 years into the future and said to yourself, “I do not think life needs to get any better than it is today.” You would only change our economic system if you no longer need to create any value. But nobody is ever going to say that. We are always going to say tomorrow is going to be better. If we are saying there is value to be created, let us pay people to do that work, because there is a lot of it.
The reason I do not support Universal Basic Income is because there is a lot of work to be done over the next 100 years. Let us focus instead on creating those jobs, instead of giving people money for doing nothing. I think that is what people really want. It sounds like a nice idea to get a check in the mail every month so you can sit in your house and do nothing. But I do not think that will be fulfilling for most people. What people really want is jobs. People want to do something meaningful, and be intellectually challenged, and be part of a team. People want jobs that are engaging, interesting, and inspiring. People want to change the world for the better. That is what business is all about. Business is about creating progress in society, and raising our standard of living. I make all these videos about business because I believe our future is at stake. Just to be clear, I am not saying that business can solve every problem, or that the government does not have a place, or that we do not need to tackle the serious problems of poverty. All I am saying, is that changing the fundamentals of economic activity is not the best tool to use. I dream of a better future for tomorrow and I look to economics to make it happen. We can do more. We can jump higher. We can accomplish great things together. Business answers that fundamental economic question of how can I create more value for society so I can get paid. That is how jobs are created, and how humanity has moved forward throughout human history. Let us focus on creating those jobs.
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Neither Zach De Gregorio or Wolves and Finance Inc. shall be liable for any damages related to information in this video. It is recommended you contact a CPA in your area for business advice.