The chances are that you haven't heard anyone say what I'm about to say. In fact, I imagine that you've heard the polar opposite quite a few times.
I'm not against UBI. If you want it, you can have it. But I want you to understand the most important reason why it will accelerate inequality growth.
A Bit of History
In 1909, a chap named Winston Churchill gave a speech in the Parliament of the UK in which he told the following story...
Some years ago in London there was a toll bar on a bridge across the Thames, and all the working people who lived on the south side of the river had to pay a daily toll of one penny for going and returning from their work.
Okay, people had to pay a toll to someone who owned a bridge. Nothing unusual there.
The spectacle of these poor people thus mulcted of so large a proportion of their earnings offended the public con-science, and agitation was set on foot, municipal authorities were roused, and at the cost of the taxpayers, the bridge was freed and the toll removed.
Sixpence was a lot of money back then! The toll was removed and people suddenly had more money in their pockets. Hurray! Winston knew how to tell a feel-good story.
All those people who used the bridge were saved sixpence a week, but within a very short time rents on the south side of the river were found to have risen about sixpence a week, or the amount of the toll which had been remitted!
THIS! Landlords saw that everyone had more money and thought to themselves "I'm going to have that, thank you!" Because they had control over the land on which people lived, they were able to raise the rents. When the toll was cancelled, all of those sixpences went to people who controlled residential land instead of whomever controlled the bridge, so only the rich were better off - not the public!
Why Inequality Growth Matters
Maybe you work hard for a living and maybe you really deserve that money you earned. Inequality growth is a symptom of that money being transferred to people who did nothing to earn it - they just have some kind of economic privilege, such as owning land.
Wealth goes from the hands of the many to the hands of the few, and the few don't even have to do any work to get it. It's been happening for a very, very long time.
You might think of it as a kind of pay-to-play tax that the rich levy on everyone else. The official name for it is economic rent*.
Can We Ever Have A UBI?
Sure. You have two options.
- Ruin Society
or - Instead of taxing incomes that people earn, tax the ones they didn't earn
All taxes are unfair, but I don't see society reaching a stage of enlightenment where we won't have money or government any time soon, so let's try to straighten out our stepping stones. It's less unfair to tax people on income that they've swiped from someone else for no other reason than because we can than it is to tax people for doing work.
If you allow inequality growth to continue, then you end up with an oligarchy controlling you. Sound familiar?
The Solution
The only way to make UBI work is to go for option 2. This can be achieved by reducing income/corporate/sales taxes and replacing them with a land value tax (LVT).
- The majority of people would end up paying less tax
- Corporations and the rich wouldn't be able to evade the tax (because they can't send land to the Cayman Islands)
- Inefficiencies and economic distortions would be removed
- Inequality growth would greatly diminish
There are probably more reasons, but I think that most people only remember three at a time, so I've already given too many.
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