So here I am, late on Saturday night, waiting from remote for one final server to reboot, when I started thinking about Universal Basic Income.
Maybe it’s the coffee.
Anyhow, the more I thought about it, the more I wondered how a Universal Basic Income would work without the “kindness of strangers”.
Here’s my two cents… and five big problems.
Problem #1: Assuming UBI is granted for everyone who makes under $500k annually, and let’s say just as a hypothetical the UBI is set at $12,000 annually, what’s going to stop employers from deducting the total UBI ($12k in this scenario) from all employee paychecks? I can already hear the… “You’re still making $40k annually! What’s the problem? So we’re paying you $28k instead of $40k, but what’s the big deal? You’re still getting $40k annually with UBI factored in. And, hey, you now pay less taxes since your take-home is less! We need that $12k per to invest and build our business!” Companies will get a spike in their bottom line deducting the UBI rate per employee and the employees are gaslighted into thinking that’s OK.
Problem #2: Again, assuming the UBI is set at $12k, what’s to stop rent and housing increases? Landlords can set the low-end roach infested hole in the walls that were around $400 to the current small one-bedroom rate ($800-$1k) since “everyone can afford that with UBI”, and everything above that level will skyrocket in price. Home ownership will also be affected by this renting spike to keep the “investment” of owning a home more valuable than renting.
Problem #3: Taxation. Let’s say someone invests a significant percentage of their UBI in a profit making enterprise. Does the government get to collect tax assuming the UBI was non-taxable to start with? Or will the proceeds from a UBI funded enterprise be treated as “additional income”?
Problem #4: UBI scams. You see all the title company loan and “settlement cash now” kinds of commercials all over the place. A borrow-against futures industry that’s not well regulated and geared toward taking advantage of the uninformed and those with poor money management skills. What’s to stop this industry from focusing on setting up a “borrowing against the UBI” system? I can hear this too… “We will advance you $24k for your next two years of UBI today! Get the money you deserve now! Don’t worry about the 170% interest.” A much deeper financial trap will be possible with the existing non-regulated borrow-against the futures industry still running wild.
Problem #5: Retirement and death. Would a UBI be factored into retirement / social security plans? Assuming someone works to retirement age and draws from their Social Security fund as well as any Roth or 401k investments, will that individual still be eligible for UBI? And if someone dies before retirement age or of unnatural causes, would UBI be treated as a benefit to their surviving family as social security is now? Or would UBI be a “living” benefit only?
Of course, none of these things might happen, but they all tie into my original “kindness of strangers” (IE: employers and the government) concern. With automation and AI gaining traction at an exponential rate, though, something like UBI needs to be in the works to stave off the mass unemployment rate that will arrive in our lifetime.