The Dangers Of A "Universal Basic Income"

Tyler Durden's picture

Submitted by Nathan Keeble via The Mises Institute,

Finland has announced that it is conducting a social policy “experiment” which deserves closer examination. Through 2017 and 2018, Finland will provide a guaranteed basic income of 560 euros to 2,000 randomly selected welfare recipients. This benefit will be subtracted from other, currently existing welfare benefits that participants may be receiving, and, crucially, the payments will continue regardless of any other income that is earned. If a participant of this program finds a job, the government will continue to pay them the 560 euros in addition to any other income.

The Finnish government hopes — and many believe — that this program will help to alleviate poverty as well as make inroads in reducing the country’s current 8.1 percent unemployment rate. This test trial is supposed to prove it, potentially opening the door for a full implementation of a universal basic income (UBI).

Why People Support a Universal Basic Income

The universal basic income is being considered as a partial or complete replacement to the current means-tested system of welfare. Under the current system, welfare recipients’ benefits taper off and eventually stop, completely, based upon how much income individuals independently earn. Naturally, this creates a disincentive to rejoin the labor force, because people fear a reduction in total income as welfare benefits are removed or if they believe the added income from a job isn’t worth the labor. Demonstrated very simply, if someone is currently receiving a total income of $1,100 through a means-tested welfare program, many will be less likely to seek a job which will result in similar income levels, as most prefer leisure to labor.

Supposedly, the UBI’s main innovation is that it manages to largely avoid this long standing failure. Since everyone would receive the established basic income regardless of other income earned, proponents believe that people would still have strong income based incentives to work. Some have gone even further, suggesting that the program will be a positive for employment because the financial cushion provided by a UBI will help people in the transition from unemployment to employment. For instance, a struggling entrepreneur or artist could, in part, rely on it while building support.

For these reasons, the UBI has gained support from the entire political spectrum, including libertarian-leaning think tanks like the Niskanen Center.

Where UBI Proponents Go Wrong

A universal basic income is not the god-sent welfare policy that it initially seems to be. It does not create incentive to work. It won’t help solve unemployment, and it will not alleviate poverty. The truth is that a UBI will exaggerate all of these factors in comparison to what would exist in a more unhampered market. There is even reason to think that it would be worse in the long run than traditional, means-tested welfare systems.

First, UBI does not eliminate the disincentives to work that are inherent in welfare programs; it simply moves them around. This program must be financed after all, and any welfare system, including the UBI, is necessarily a wealth redistribution scheme. Wealth must be forced from those who have it to those who do not. This means that at some point on the income ladder, people must go from being net receivers of benefits to being net payers of benefits.

The progressive taxation that is necessary to finance a UBI means that the more a person earns, the higher percentage of their wealth will be taken from them. The work disincentives are therefore still very much present in the tax system. They’ve simply been transferred onto different, higher income groups of people.

UBI Diminishes the Power of Consumers in Directing the Marketplace

The universal basic income shares another problem with traditional welfare systems. Far from promoting the unemployed from searching for work the market rewards, it actually subsidizes non-productive activities. The struggling entrepreneurs and artists mentioned earlier are struggling for a reason. For whatever reason, the market has deemed the goods they are providing to be insufficiently valuable. Their work simply isn’t productive according to those who would potentially consume the goods or services in question. In a functioning marketplace, producers of goods the consumers don't want would quickly have to abandon such endeavors and focus their efforts into productive areas of the economy. The universal basic income, however, allows them to continue their less-valued endeavors with the money of those who have actually produced value, which gets to the ultimate problem of all government welfare programs.

In the marketplace, wealth is earned by generating value. When someone buys a good, they’ve earned the money they are spending by having produced something else. This is not so with welfare programs like a universal basic income. Money is forcibly taken from those who have produced enough to earn it, and given to those who haven’t. This allows for people who aren’t producing wealth to continue to consume scarce goods. Eventually, all government welfare leads to the consumption of wealth, or, at the very least, a reduction in the amount of wealth that would have been accumulated otherwise. When entrepreneurs have less need to respond to the needs and desires of their customers, consumers will find themselves with fewer choices and with lower-quality choices.This means that overall welfare makes everyone poorer than they would have been in a free market.

How Finland Really Can Reduce Poverty

If Finland (or anywhere else) wishes to help alleviate poverty and unemployment, the best steps to take are in the directions of reducing the cost of living and creating conditions favorable to plentiful employment.

Charles Hugh Smith recently outlined the basics:

This may seem obvious, but the conditions required for work to be abundant and the cost of living to be low are not so obvious. For work to be abundant:

  • It must be easy to start a business.
  • It must be easy to operate the new business.
  • It must be easy to make a profit so the business can survive the first few years and,
  • It must be easy to hire employees.

All these factors require an environment of low-cost compliance with regulations, low tax rates, low costs of transactions, reasonable transport costs, reasonable cost of money (but not near-zero), reasonable availability of capital for small enterprises, local and national governments that actively seek to smooth the path of new enterprises and existing enterprises seeking to expand, and a transparent marketplace that isn't dominated by politically dominant cartels and subservient-to-cartels government agencies.

This matters because the number one cause of the high cost of living is artificial scarcity created and maintained by monopolies, cartels, and the government that serves their interests. Artificial scarcity imposed by cartels and a servile state is the primary cause of soaring costs in a variety of sectors.

In Scandinavia, as in most countries, its is becoming increasingly difficult to open and sustain businesses. In Scandinavia especially, labor unions exercise immense power over private business, pushing up costs and raising barriers to entrepreneurship and creating new businesses.

As has always been the case, it is necessary to create wealth before it is possible to redistribute it, and policies that encourage movement toward less productive types of work will fail to produce the wealth that government planners would like to spread around.

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Fireman's picture

Wealth cannot now be and never could be printed. This is part of the satanic pedophile oligarchs' global cash kill scam to feed the masses worthless blip coupons to eventually chip them and officially reduce them to serfs. It is all being pushed in tandem with the muzz migrant invasion and rape of the ex sovereign countries of the EUSSR and the USSA.


To hell with this Bolshevik scam and those that push it.


Onward to the co££ap$€ of worthless Pentacon protected fiat filth and the execution of the banksters and political whores that peddle it!


GGuy's picture
GGuy (not verified) Fireman Jan 18, 2017 5:29 AM




The 'NAZI JOO RUN MEDIA does not think it is important....

GGuy's picture
GGuy (not verified) GGuy Jan 18, 2017 5:45 AM

ummmmmmmmmmmmm, yeah.....THE GREEDY RACIST ashkeNAZI jews are going to send everyone a big check once robots do all the work, and the 'NAZI joos don't need you goyim and schvartzes anymore...


Yeah, sure!



bwh1214's picture

Can't imagine universal income being worse than our system. The UnAmerican welfare cliff (video).

luckylongshot's picture

Basic income is a good idea but only if the money funding it is created by the state under a public banking system and is not created as debt. If it is created by private banks with interest attached it will fail. Keynes points out that if people and raw materials are available to create infrastructure projects adding money is not inflationary and this explains how basic income would need to operate. Furthermore as robots replace humans there is a problem on the way as less people will be employed and so demand will decline along with numbers of employed. Public banking allows the unemployed to be funded along with the sick and the elderly without creating debt and this approach has worked well in China for years. 

Critics need to appreciate that the current system, where according to the BOE money is created fraudulently out of thin air by banks and then has interest attached to it, is completely corrupt. There has never been a sound money system that survived in the same way that all fiat currencies eventually collapse and this is why basic income needs to be taken seriously- it solves far more problems than it creates.

ronaldwilsonreagan's picture

More proaganda for the mentally chalenged ZeroBrain.

GGuy's picture

Lying&Namecalling......the mark of a 'NAZI Jew coward.

Beowulf55's picture

WOW......another 22 week troll..............


There everywhere............


Let me see....hmmmm 22 weeks ago what was going on?   That's about 7months ago.....


7 months ago?  There was the Burn and Hitlery running a scam operation. 


And then there was Donald Trump kicking neo-liberal ass with the truth........


When did the wikileaks start releasing  the emails showing treason and pedophilia?


Could it be that these  new 22 week trolls be coming from the camps of the traitors and pedophiles?  




Hey ZH, how many new accounts where opened up between June and August?  Got a list of names?



WTFUD's picture

Swanee River, Paddle, Shit Creek

CRM114's picture

There doesn't appear to be a paddle ;)

whatsupdoc's picture

The challenge is create an appropriate tax regime that is reasonable to the greater majority. The problem is the tax regime is made by those in power who do not want to relinquish that power.

An open-ended system that does not have any real impact on the top end and yet suffocates the poor is not ever going to be good for a country. No-one is worth many, many multiples of any other.

A system that gives to the poor such a gift that they never even try to get out of their situation is also poor. There is however an obligation to the poor because the governments take the tax. If you don't want to sustain the poor then don't tax them either.

A creative solution that proportionally increases the tax burden the more you extract from others is what is needed; along with a constant flush of all decision makers in all levels of government. There should never be permanent high-paying government positions. Ever.

Kidrobot's picture

I always struggled with the idea of an individual contributing to society to legitimize his billions in worth.  If somehow Bill Gates managed to bring everyone who had a hand in getting microsoft to where it is today with him, from the janitor to the ceo, great.  But that isn't the case, and I can also see the reasoning behind 'but the janitor is pleb work that anyone can do'.  I don't know what the solution is, but I know my soul would feel more at ease if the variance between janitor and ceo wasn't a million lifetimes difference in pay.

ItsAllBollocks's picture

So the Mass Unemployment caused by Robotics will be hidden by the Universal Basic Income. As Digital Currency is the end of freedom, it means whoever is running the sytem can control us totally reguardless of our financial situation. Translation... We are all fucked...

BorisTheBlade's picture

In theory it's a total control: production via robotics, dependency via welfare, societal control via comprehensive data collection and analysis (including artificial intelligence), economic control via elimination of cash and consolidation of banking. No possible way to opt out.

rmopf2010's picture

Your absolutely right, this program is another buying votes program to socialism, so in the end we are all hostages to the welfare state/big government.

As Socialism gets more votes the more power it gets.

Than instead of a democracy you get Ineptocracy:

"A system of government where the least capable to lead are elected by the least capable of producing, and where the members of society least likely to sustain themselves or succeed are rewarded with goods and services paid for by the confiscated wealth of a diminishing number of producers."

CRM114's picture

Fortunately, an Ineptocracy is relatively easy to topple ;)

Anasteus's picture

I wouldn't be so damnatory. UBI is intended to address the natural lack of work when robotics evolves to such an extent it can cover most of materially productive activities, as described in Rifkin's 'The End Of Work'. It's, therefore, the robotics what will create that kind of wealth. It's not the god-sent welfare, it's a robotics-sent welfare.

Non-elimination of disincentives is likewise disputable. For example, in software trade we already have many non-profitable open source projects collecting a large number of voluntary contributors, yet the overall quality level is not only high but also covering most of software oriented needs. In this case money is certainly not incentive to work, not a traditional money based stick-and-carrot approach.

The standard business can take much advantage from it too. Firstly, the UBI base can be deducted from the cost of companies resulting in reducing salaries. Secondly, the conditions to discharge less productive or unqualified employments can be relaxed, as it inherently does not create social tension. In result, the companies can be even more profitable and effective than they are today. The incentive to work in companies is thus supported by additional, and perhaps much bigger, income compared to the standard UBI base.

In perspective, I also like the UBI concept because of its possibility to get rid of boring, mechanical or stereotypic work. Instead, it gives opportunity to evolve non-profitable creativeness or activities to the extent not possible to manage in the standard model. I don't share 'everyone-stops-working' concerns. Quite the opposite, I perceive work to be the fundamental need, without which many would drive mad. Instead, a relevant problem I see is lack of meaningful work, not work itself.

UBI has certainly many open aspects to address but is definitely worth considering and studying. Especially in cases when mass involvement of robotics had to explode.

CRM114's picture

I take your point, but open source software is not a widely applicable example because the Government haven't found a way to regulate, inspect, and charge it fees yet, unlike almost everything else. I'm sure they are working on it, however.

I don't think UBI to solve mass robotic-induced unemployment is a solution, but yet another attempt to buy time at vast cost.

Anasteus's picture

I think your point is based on existing mass-elite feudalistic model of society, economy, and relations. This, of course, is a necessary thing to get rid of in the first step. Without this any further delibaration on UBI introduction would not make sense.

THE DORK OF CORK's picture

UBI is being set up as a failure to put a stop to the underground and totally suppressed social credit philosophy. 

There is so much wrong with this propaganda piece that it makes it difficult to know where to start.

The basic income is financed via the tax system.

It's a transfer system that helps stir class warfare like all other state  payments.

A national dividend is very different.

It transfers ownership from the banks to the people.

It is the only conservative monetary policy that can prevent the  entropy caused by the gap between net income and prices.


OverTheHedge's picture

I'd not heard of the National Dividend idea, so I had a rummage and came up with this:

Interesting stuff.

ronaldwilsonreagan's picture

The real issue with a basic incomes that it becomes more expensive to pay 2 prostitutes to piss on each other if they already have something to eat and a place to live. Keeping the price of compensated sexual assault low is first priority. What is the point of being filthy rich if you can't pay some peasant to let you shove your cock down her throat until she vomits on you and then beat the shit out of her for being such a slut. Without peasants being a billionaire means nothing. Vote Rapist Piss Clown Trump:)

Aussiekiwi's picture

I understand where you are going from a macro economic viewpoint, perhaps you could have used a different analogy to get your point across, :)

THE DORK OF CORK's picture


I urge you to watch this video.

It's a good breakdown of social credit philosophy. 

The Mises people wish to sustain their capture of the communities credit.

They are demonic agents of the bank monopoly.

Aussiekiwi's picture

No mention of how they are going to control the inflation a Universal Basic income creates, suppose all of us have another $500 a week tomorrow regardless of if we work or not, might that end up being somewhat inflationary? within 12 months due to inflation resulting from this we all need that extra $500 a week just to be where we were before the Universal basic income came in and the unemployed are even worse off than before.

beijing expat's picture

That's where the cashless society comes in.

Faeriedust's picture

Right.  It needs to be a Guaranteed Minimum Income, not just everybody gets another $500.

exi1ed0ne's picture

Please be more specific about what inflation you are talking about.  Compare the costs to the billions a month the Fed is gifting the large banks.  The problem at the bottom end is there is not enough wage inflation to match price inflation.  It took a few decades to become a really noticeable problem, but it's here now.

Personally I think the difference will be null.  There will be a reduction in wage inflation due to the layabouts.  Also I can't believe that 100% of UBI recipients will do nothing.  Welfare discourages any productive pursuit other than producing more children.  For every 100 layabouts there will be 1 dude or dudette in their garage making the future.  As mentioned above open source software is a perfect example of value created without a personal profit motive.

One of the biggest tricks TPTB pulled on us was to convince the masses that we are all worthless, unreliable scum that can't be trusted to help a lost child without raping them.  The percent of actual worthless people are vastly outnumbered by people with personal integrity.  If not, we should just nuke ourselves and let the cockroaches take over since the alternative is to be babysat by whatever political faction and ivory tower intellectuals that happen to get themselves into power.

beijing expat's picture

LMAO. Alex Jones been right all along.

To Hell In A Handbasket's picture

Our current economic model is broken, beyond repair and I've been saying this since the mid-90's, because it was obvious. We can go off in all tangents, but the first step to building a solid and stable building, is having solid foundations. IE: we need to go back to sound money; IE precious metals and you can only print as much money as you have in precious metals.

If we don't abide to the aforementioned, you have an unfair and rigged monetary game, where the USSA, ECB and selected countries can embark on QE to the moon and back madness and everything is OK. Then when Argentina, Venezuela, or Zimbabwe embark on the same madness, their currencies go to shit and rightly so.

Sound money is precious metals, or some other limited commodity, then everything flows from there. What the Mises institute has done is come up with a course of treatment, without knowing what the original prognosis was. Thus The Mises Institute are spouting bullshit economics 2.0. Fuck them, fuck their listeners and fuck their deluded readership.

south40_dreams's picture

Great way to suck the soul out of someone

Urban Redneck's picture

Unintended consequences... how about those $40 hot dogs Tyler loves complaining about.  At EVERY ski town in Switzerland (not just Davos) hot dogs, salads, club sandwiches and the like are all $40-$50 at the top hotels because of the purchasing power of the high local wages.  Had Switzerland passed the CHF 24,000 basic income then those hot dogs would soon be $75 because the marketplace demands price discrimination between the local equivalents of Comfort Inn and the Ritz Carlton, otherwise everyone will simply go to the Ritz Carlton. 

All this will do is inflate away the debt of nations the savings of the lower and middle classes without changing the standard of living of the masses, and massively inflating the nominal wealth of the rentier class.  It's a very high price to pay for new gold leaf in the poor's gilded jail cells.

Faeriedust's picture

No, the idea is not to just expand the money supply, but to TAX the rich on levels more similar to those common in the mid-twentieth century, thus raising the incomes of the poor and reducing those of the wealthy -- taking those Davos hot-dogs down to $30 since that will be all the poor rich can afford.

Urban Redneck's picture

Where you inject the money only has a marginal and short term impact.  Instead of increasing the banks excess reserves they could have simply added extra money to EBT cards.  The net effect is the same, the poor are still poor and it shows while Jeff Bezos & Jamie Dimon make out like bandits.  

If you think this going to make the rich become poorer, then you need to lay off the drugs, because you are out of your mind.

Faeriedust's picture

Apologists for the broken system of capitalism need to learn that in fact, capitalism is neither natural nor inherent in the human species.  It has been a small, local, and mostly failed experiment of roughly three centuries and at most 50% of the world's population out of roughly 300,000 years of evolution. Therefore, experiments with alternatives to the "pure", ideological form of this system are rational and may be productive.

In fact, experiments with the Guaranteed Minimum Income have already been tried on small scales in the U.S.and Canada, and in both cases the results were merely that some 25% of women only used the income to assist them in curtailing marketplace activity SO THAT THEY COULD TAKE CARE OF THEIR CHILDREN.  Children, you see, aren't generally accounted for in pure capitalism, which was a system invented by men under the expectation that women and children were irrelevant.  The Japanese have come up with another solution to this shortcoming, though.  As reported by BBC, in the rapidly aging and overpopulated Japan, 61% of women under the age of 40 simply have no interest in sex or marriage.  In other words, the final result of capitalism taken to its logical extreme is social sterility.  The reasons given -- careers, independence, expenses of childrearing and lack of affordable living space -- may also shed some light on the sudden fashion for celibacy in the Roman Empire beginning c. 300 CE.

The following is grossly misleading:

"The struggling entrepreneurs and artists mentioned earlier are struggling for a reason. For whatever reason, the market has deemed the goods they are providing to be insufficiently valuable."

As we well know, ALL new businesses require a period of incubation and investment.  What we are saying here is that only those that can count on Mom's limitless bounty of free rent and food, or a bevy of wealthy and well-disposed maiden aunts, should be given the chance to reach sufficient critical mass to attract customers and outside investors.  Those without personal resources in the form of wealthy friends and family need never see the light.  And that condemns us as a larger society to benefit ONLY from the entrepreneurial and artistic products of the vapidly overprivileged, those whose experiences, needs, and ultimately creativity are limited to the world of the overly-comfortable.  It is a sure recipe for "art" that consists of random paint splotches, "music" so bland you forget its existence in thirty seconds, and endless innovations on the order of automatic nose-hair clippers and precision gourmet fava-bean grinders.

Finally, as for redistribution: remember that EIGHT fat old men, all but two of them Americans, own more wealth than fully FIFTY PERCENT of the world's people.  I think they can afford a few more taxes.








THE DORK OF CORK's picture

Even if you taxed the richest men to a point where they have zero in their accounts it would not feed the masses.


The problem is much deeper then that

It's one of cost accountancy.

The poverty we see around us is a result of the physical wealth lost in our present production / distribution / consumption system.

2muchtax's picture

Poverty is the human condition. The most granular level of socialism is the tribe. Name any tribe in human history that is not in poverty.

Look at the explosion of technology that capitalism developed. Capitalism is the anti poverty system. Not that it will eliminate, but will reduce poverty. Poverty can't be eliminated, because it is an effect not a cause. The cause is consuming at or above your productivity level. Most people are grasshoppers not ants. I was born into a destitute grasshopper family and I chose to be an ant. It's that simple, if you're born of sound mind and body, just make the choice. My two best friends were born into millionaire families and now can't miss one paycheck without devastating effects.

P.S. don't confuse the effects of money devaluation with capitalism. The minimum wage in the 1960s would be today's $20+/hr if the money hadn't been devalued. The Federal Reserve is a poverty machine.

OverTheHedge's picture

What do you mean by poverty? Most tribal individuals in the Amazon put in four or five hours per day of what could be labelled "work"; they spend most of their days working out how to have affairs with their neighbours' spouses.

How many hours a day do you work? Me, I like to put in a good three to four hours, five days a week. I do less in school holidays, as I quite like my offspring. I consider myself to be extraordinarily wealthy, but you might think I am hovering on the edge of poverty, as I don't have all the shiny stuff you might think I need to get by.

(I made 100 litres of cider today - now THAT'S what I call work.)

billwilson2's picture

Mises again spouting rubbish. Simply put those that are benefiting from the technology gains in the last few decades owe a dividend to the society that helped them accumulate their wealth. That dividend is a basic income.

Beowulf55's picture

Hey Bill,  being here 17 weeks has not taught you anything.  It might be best to shut up and learn for now.


This goes for 22 week RonaldReaganWilson too.....

Beowulf55's picture

Hey Bill,  being here 17 weeks has not taught you anything.  It might be best to shut up and learn for now.


This goes for 22 week RonaldReaganWilson too.....

NoPension's picture

Dear god. Hate to dredge it up again.... it's Idiocracy. The documentary.

The bright and educated hold off or minimize breeding ( in this current environment ).... the dregs of society breed like rats and rabbits. And WE subsidize the breeders. The last people we need adding to the population. The ones who, on the whole, can't raise their fucking spawn...and foist it on the rest of society to take care of.
Because like the wildlife they are, all they can think about is breeding.

There are answers...but they are not going to be popular. Or...let nature run its course. In the end...the same result, a lot of useless fucking eaters will have to die.

There quite simply needs to be a way for society to permit breeding. I know. I don't like the sound of it, either. But without controls, the low iq crowd will just keep fucking away, like the animals they are. And we have to subsidize them, because they fog a fugging mirror.

Even the downvoters know I'm right.

hoist the bs flag's picture

no down votes except mine... they all agree that the police state that you endorse, that will be needed to enforce the violence of depopulation ,plays right into the NWO enslavement you claim to abhore. good job

EndOfDayExit's picture

Unfortunately there is one fundemental flaw in this logic. IQ is generally not inherited - the IQ correlation coefficient between children and their parents is only 0.4 (look it up). Hence it does not matter much who is breeding - the well-off successfull folks or the dirt poor ones, the number of high IQ kids will be about the same at the end.

NoPension's picture

Here's a thought....

If you require, desire or need society to provide your income....society demands birth control on your part.

The sperm donors....I'd hunt those fuckers down like animals. There is no excuse to fuck all these children into the world, and you don't have the resources to raise them. I'd make it a capital offense.

You get more of what you subsidize.

fredquimby's picture

Jeez. Talk about not looking into the real reasons.

"The universal basic income is being considered as a partial or complete replacement to the current means-tested system of welfare"

No, it's being considered because the system we have is fucking shit and as a community we should be able survive without having to beg to to work for some asshole for next to no money per hour.

UBI gives everyone the power to say no (to dipshit bosses especially).

It is the only way forward I believe. I am no communist/socialist I can assure you.

Well, would YOU just sit infront of the Teevee all day if you got a UBI to cover your living expenses? No, I thought not.

CRM114's picture

Yes, it will mean people don't have to work for dipshit bosses, but then where do the taxes come from to support the UBI?

It'd all collapse in 2 years.

The problem is that a good proportion of large corporations' owners don't have a stake in the community,or even any one nation. They'll just shut down the plants, open them again in Goatfukerstan, and head off to Davos for some skiing.

NoPension's picture

Give a human food and shelter.

The result will be a fat, lazy blob. Taking drugs to cope with the boredom, and fucking anything that comes along or stands still.

It's easy to see it today. Go to any major metro area.

This goes for any life form.

fredquimby's picture

No it isn't it's an empowered individual with the means to make a life of his own.

Let the slobs be slobs. Fuck 'em. Yes, any metro are is fucked because of...poverty. This would imo be a good start at helping these people out of their hole.

The question down the pub will be then "what do you do" not "what do you do to earn money".

mikkip's picture

UBI means penalizing productive members of society and subsidizing unproductive members. The incentive is clearly going to mean less added value in the economy. This in turn will mean less money to distribute and an increase in poverty.