A National Assured Basic Income Will Poison the Well
The point is that a nationalized oil company such as the ones found in socialist nations can gather, process and export their own oil. They may then, if they wish, distribute some of the profits to their citizens as a direct form of welfare. Alaska doesn’t follow that model. In order for the oil to find its way to market and generate a profit, outside companies have to come in and do all of the hard work of creating wealth. Alaska simply offers a refund to their taxpayers if the income exceeds the costs of doing government business. But the key point here is that somebody still has to invest the time and labor, generate a product and realize a profit for it to work.
But let us leave aside the nationalized oil model for a moment and move on to the essential idea of handing out paychecks to all and sundry as a form of safety net. Now, Mr. Wheeler isn’t talking about anything as extravagant as $33.6K per year for everyone… perish the thought. He’s suggesting a far more modest, barely sustainable “living wage” for those who are not working. Where’s the harm in that?
In order to see the long term impact of such a move – assuming we could even afford it – we must tie in this conversation with one of the problems with a vastly higher national minimum wage, also currently on the table for election year Pablum. When you raise the minimum wage, prices go up. This is a given. But now consider what happens if you begin handing out some minimal living wage to anyone willing to scrape by on it. If you have a choice between flipping burgers or stocking shelves to get a basic income or sitting at home watching daytime television, which will you choose? And when companies can no longer find anyone to show up and run the fry machine or keep the cereal aisle full, they will need to pay more to attract workers. In effect, you’ve just raised the minimum wage without a mandate.
Aha, the progressive argues… that’s what we’ve been saying needs to be done all along! This plan is perfect! And it might be except for one pesky detail. When you pay all the workers more, you have to charge more for your product. Which means that the money paid to the person sitting at home watching The Ellen Show won’t be enough to squeak by on. So you’ll need to pay them more. And then the shelf stocking, burger flipping contingent will lose interest in working. And…
You can see where that story is heading. But even the cost analysis doesn’t nail down the fundamental flaw with this plan which is best seen from the ten thousand foot level. In a productive, capitalist society, there is no wealth beyond that which is produced through private endeavor. When production is greatest there is more left over to be scooped up by the government and redistributed. But the more people you have drawing cash from the pool without generating any of the wealth the system runs on, the shallower the pool becomes. In short, when everyone sees riding in the cart as being preferable to pushing it, the cart stops.
A national assured basic income is not only antithetical to a capitalist society, it’s poisonous to it. And when you inject this practice into the system, it’s the same as when a massive, dying star begins to produce iron in its core. The next step is rapid and unavoidable.