Pittsburgh Mayor Bill Peduto has fallen in love with yet another social re-engineering scheme – “guaranteed income,” another moniker for “universal basic income.”
The idea — embraced not only by “progressives” and garden-variety socialists but also some libertarians — is to guarantee a select (government-chosen) cohort of people a certain amount of money each month.
The argument is that such a monthly stipend would be cheaper than the current welfare system. Never mind that that doesn’t pass the sniff test.
The program Peduto has latched onto involves 16 cities and is funded privately, drawing on a portion of a $10 million kitty supplied by Twitter’s Jack Dorsey.
The mayor told KDKA-TV that in Pittsburgh’s administration of the program “a number of people” will be chosen to receive a monthly debit card loaded with $500.
He says recipients will be chosen based on their financial struggles, the ability for the cash to “change their lives” and involve “different types of demographics and backgrounds” to facilitate a study of the program’s effectiveness.
The study, he says, would seek to discern if the monthly stipend improves health, leads to better school performance by recipients’ children and if it keeps people out of jail.
Peduto claims results from Stockton, Calif., after 18 months show recipients have spent the money on “basic necessities” – not vices — and “has changed people’s lives.”
Of course, it’s one thing to have a private benefactor footing the bill. After all, that’s the benefactor’s business.
But it’s quite another thing to, as some supporters of such programs have called for, expand the program on a “federal level,” meaning taxpayers would be asked to pay for it.
Universal basic income (UBI), once the allure of the veneer is peeled back, has quite serious and well-documented problems.
As economist Milton Ezrati writes in City Journal, the magazine of The Manhattan Institute:
“Though the scheme has a certain superficial appeal, it is so wrongheaded that one wonders why so many people advocate it, given the considerable economic and social harm that would arise from implementing it.
“Most fundamentally, the UBI would undermine the link between work and self-reliance that has sustained the American social fabric.”
Citing Commerce Department calculations, Ezrati says the “wide-ranging arguments for UBI overlook the costs.”
To wit, UBI would massively increase federal outlays, critically burden taxpayers and soar government debt.
It’s an imprudent idea in good times; talking about such a thing in our coronavirus world – on top of pandemic-inspired “bailouts” to tens of millions of people and businesses — would be economic suicide.
Writing well before the pandemic, Ezrati says “such a huge draw on federal financial resources would preclude other government priorities, such as infrastructure refurbishment, the building of hospitals and the construction of affordable housing.”
“The consequences would undermine productive incentives and constrain economic investment, both public and private. Economic activity would suffer accordingly.”
Writing on the topic recently for the Foundation for Economic Education (FEE), Brittany Hunter reminded us of the words of French economist Frederic Bastiat:
“The state is that great fiction by which everyone tries to live at the expense of everyone else.”
She notes how universal basic income “creates the illusion of decreasing the welfare state when the facts of the matter all point to the contrary.”
Or, put another way, it’s just another in a long line of central plans that are anathema to our free-market system and the rugged individualism on which this republic was founded.
Despite what the economic ignorami insist, both have served us quite well.
Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).
