Andrew Yang is getting attention for promoting an idea which has been gaining traction for some time. Universal Basic Income or UBI.
I have written about UBI on several occasions. I am very much in favor of it. More and more jobs are being eliminated thanks to automation, while centralization has eliminated millions of jobs over the past 25 years. Much of that is thanks to advances in technology making it more efficient and cost-saving for companies to condense business operations into much smaller remote locations with far fewer employees. None of those jobs will be coming back because they simply no longer exist.
UBI would definitely create jobs and boost the economy considerably by increasing consumer spending.
However, UBI would have to include other components to be effective.
First of all, it would be counterproductive to make it truly universal. There should be an income cap where a person is no longer eligible. For an arbitrary number, say $100,000 but research would be beneficial to determine the optimum average number. Beyond a certain income, an earner ceases spending and instead places money in savings and investments. Any calculations would have to consider not only wages but income from all sources, including capital gains. If a recipient used the funds for other than spending in the economy, the effect would be removing any UBI funds received by that person from the economy. Instead, it would be horded in banks and stocks.
Second and most crucial is that price caps would be necessary, especially such as rent controls and food price caps. This is not suggesting a simplistic approach. It would have to be calculated by city or region due to price fluctuations from one geographic location to another. Without price caps being imposed, capitalists would take advantage of the increased average income by increasing prices, leading to the fears many state of increased inflation, nullifying any benefit seen by UBI. Once again, the ultimate effect would be an increased flow of wealth to the top and the money would be removed from the economy.
I know some will claim that price caps are somehow un-American or anti-capitalist. Yet this country is no stranger to price caps. There were once price caps on many items in this country. The subsidies we still have on dairy products are a remnant of price controls which once existed. There would be nothing anti-capitalist about dynamic price controls based on market conditions and imposed as a profit percentage for producers and retailers. We definitely have the technological means today for such price controls to be implemented and merely doing so would create a fair number of jobs.
The fact is, the US uses price caps right this minute in a form. Of course, they are called any number of other names and are primarily for the benefit of corporations. I am talking about corporate subsidies. Some people will object to price caps when they benefit the people of this country but if their corporate masters benefit, it’s okay because “capitalism”. Some estimates say we subsidize fossil fuels to the tune of over $700 BILLION a year. The military contracting industry is not only subsidized but is wholly and completely dependent on federal funding. Ethanol is massively subsidized. It is possible that subsidies for some of these items help keep prices lower. However, without caps we can have no real idea. One thing is true, which is that subsidies do not come free of charge. They cost taxpayers and drive up the national debt, meaning the subsidies of today will cost taxpayers for entire generations.
I’d say if we can afford it for corporations, we should be able to afford it for the people of this country.
No matter what, UBI is not as simple a solution as it is promoted to be. It is well worth looking into and implementing. In fact, it is mandatory. Without it, the economy is likely to collapse over the next few years. Wait until autonomous vehicles are being used in mass numbers and millions of workers lose transportation jobs. By then a lot of damage will have been done, so it’s better we start acting on UBI now.