Universal Basic Income
The case for the reduction of poverty
Prof. Trost defines freedom as the number of things a person can walk away from. A $9,000 dividend from the government would allow impoverished Americans to afford food, housing, and other basic needs that they otherwise could not cover. This dividend could prove to promote the freedom of the poor living in the U.S., but there are instances in which I think it would have the opposite effect, creating that sort of dependency on welfare that Prof. Trost is attempting to avoid.
Some of the driving forces of poverty are unemployment and lack of job opportunities. The dividend would decrease people’s vulnerability to the fluctuations of the job market, giving them the security to cover their basic necessities in their quest for work. But when provided with this safety net, why would they be motivated to pursue another job when there’s not an absolute necessity for it?
In this particular case, I think it would be difficult for people to shift from enjoying the dividend in addition to their own earned income to only relying on $9,000 a year, which in turn would motivate them to seek that level of comfort again. Despite being aided by the government, people would still consider themselves responsible for the future they want.
In other cases, however, where people don’t share the same sense of responsibility, I think the dividend alone would give people the ability to walk away from “poverty” but stroll right into dependency. When suffering from addiction issues, health problems, or just overall inefficient financial management skills, I’m unsure if impoverished people would have the necessary expertise to utilize those $9,000 in a way that would decrease their dependency in the long run. As a result, they would continue to rely on the work of others to survive, and I think Bastiat (and myself) would categorize it as a form of plunder. Freedom to benefit without contributing is unfair.
In order to truly walk away, I think it’s important for the government to promote accessible educational materials in addition to the dividend. They could teach the poor how to seek greater returns with the help of the government and place special emphasis on the conditions they have to face on a daily basis. A vital part of freedom is not only money but knowing what to do with it.
Benefits in Education from a student’s perspective
One of the primary benefits of UBI in the U.S. would be releasing pressure from the middle class. For instance, it could make education more affordable, thus increasing the opportunity to offset the income gap. Prof. Trost argues that UBI would allow Americans to mobilize to areas with a higher-quality education, but I think the opposite could occur at the college level. According to the Education Data Initiative, the average in-state tuition for American universities is $9,377, which would almost be entirely covered by the dividend. I think this could motivate students to avoid additional living expenses when moving to other states, posing mobility as more of a hassle than a benefit.
Even if they do choose to study out of state, the universal basic income would help students repay their loans. The Education Data Initiative calls the average student loan debt in the U.S. to be $37,574 per student. If directed solely for the purpose of repayment, The dividend would help students make their payments in around 5 years. I think this could be quite helpful considering how half of American borrowers still owe 20,000 after 20 years (Education Data Initiative).
Benefits in Education from a student’s perspective
Additionally, I think the increased security that UBI would provide to the middle class could allow them to pursue their passions more comfortably as opposed to choosing a career just for the profits. For example, I think this would give additional support to K-12 teachers, who are desperately needed and currently underpaid.
I think this is the primary reason why the idea of a universal basic income has great support from millennials, who value working to live more than living to work compared to previous generations.
How low (or high) would salaries go?
One of Prof. Trost’s unnegotiable rules for the establishment of the UBI system is the elimination of minimum wage restrictions. He mentions that this would allow low-skilled workers to find jobs as companies would be allowed to pay them accordingly. Paraphrasing Bastiat, people are more inclined to plunder others when plundering is easier than labor, and as reflected in this case, I don’t think people would voluntarily join the labor force to earn $2/$3 an hour for 40 hours a week when it’s easier to live from the dividend. I think this would hold to be true especially when all welfare is eliminated at the corporate level, leaving employees with no benefits aside from the possibility of a low wage.
In the short-term, if companies maintain low wages (compared to the $7.25 today), and low-skilled employees rely on the dividend with no motivation to seek a job, I think that it would increase the United States’ dependency on illegal work or outsourcing.
In the long term, AI and technology are transforming the future of work rapidly, and low-skilled jobs are at high risk of being automated anyway. I think that this would motivate low-skilled employees further to rely on UBI and not attain the new technical skills that the future might demand.
On the positive side, a universal basic income could increase salaries offered by companies as Americans are in a much better position to walk away from a wage they don't want or don't think they deserve. Especially when companies could not offer retirement aid or health care plans, they would have to rely on a generous salary to motivate people to leave the comfort of the dividend and join the workforce.
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