Calls for a universal basic income, a monthly check to all Americans, are plentiful these days. But what are the consequences of using taxpayer dollars to give everyone a government paycheck?
Here’s a transcript of our conversation:
Connor: Hey, Brittany.
Brittany: Hey, Connor.
Connor: You know, there are a lot of people with a lot of really bad economic ideas, and I think one of the worst ones floating around a lot these days is this idea that we should give, we, the taxpayers should be required to give every single American what is called a universal basic income. And what this means is that every month, every single person would get a paycheck from the government. And you know, of course, as I was just saying, the government, I mean, it’s funded by us taxpayers, so we’re basically, paying for this, but.
Brittany: not, basically, we are.
Connor: Yeah, exactly. And there’s a lot of problems with this too. I mean, many people from like Bernie Sanders to Andrew Yang, all these kind of socialist people, they’ve claimed that this will help people who don’t make what is called a living wage, which is this idea that, oh, people aren’t earning enough to, you know, pay their bills and so forth. and I think there’s a lot to debate there about, you know, I mean, we’ve talked in the past about how people who are living, even in poverty in America live better than like kings a century ago. And, you know, people in poverty, I mean, there’s clearly some like really severe problems. I don’t dispute that at all, and homeless and mental health and so forth. But people who are just kind of getting by at under what is called a living wage, you know, they’ve got like TV subscriptions and cable satellite and cell phones and you know, Netflix or whatever. Oftentimes, it’s like, really guys, like, you know, do we, need to force taxpayers to be subsidizing? Like, not everyone’s entitled to have a very comfortable life. You may have to make some sacrifices, but you know, all these people have been claiming, oh, this will help people who don’t have a living wage. Today, I wanna talk with you about a few reasons why, you know, I, think you would agree that universal basic income is a bad idea. It won’t work. We’ve talked before about this idea of a welfare state, right? This idea that the government is caring for people, providing for people from cradle to grave. A cradle is a baby, a grave is a very old person, right? Cradle to grave just means your whole life. And the welfare state is, oh, Connor, you know, no worries. You know, you fell on hard times or you can’t find a job you like, you don’t wanna go work at Starbucks. That’s okay. We’ll give you unemployment insurance. We’ll subsidize you, we’ll pay you. It’s, no big deal. You know, this is the welfare state, and a lot of people advocating for a universal basic income, they claim that it would save taxpayers money because it would replace our existing welfare state. So they say, oh, well this, is better. Rather than paying a bunch of people on welfare, let’s just give everyone a paycheck and that’ll be cheaper. Britney, your thoughts?
Brittany: Yeah, I find this hilarious. Well, not hilarious. Terrifying and hilarious because this is just another form of the welfare state. So it actually kind of reminds me of the democratic socialist, right? Who think like, okay, if you add Democrat in front of the word socialism, it’s a different word? Like it’s a different thing. Like we fool them guys, it’s different. But this is, well, the welfare state by another name, it’s giving people money. They didn’t earn taking it from other people. I mean, it’s, terrible. And it’s also extremely expensive. There was actually a study done by some, a place called the Roosevelt Institute. And what’s funny about this is they set out to show how the UBI is this great idea. And then their data actually showed the opposite. Oh, so they, yeah, it’s hilarious. they presented two different scenarios. The first one was based on like hypotheticals, meaning like, well, imagine if this happened, but they weren’t real situations. And that was the scenario where this looked like a great idea. So then in the second part of the study, they presented this report, and the UBI was funded through increased taxation, which as we know, is the only way you can fund the UBI unless you’re printing money from the government, which we all know what happens when that happens. So in this instance, the study found there was no net benefit, so no overall benefit to the economy. In fact, the report went as far as to state when paying for a policy by increasing taxes on households rather. So instead of paying for the policy with debt. So that was like, what do they call it? What’s the word I’m looking for? Connor Deficit. Yes. Which is a big word. We’ll go back and talk about that. But, so when you’re paying with taxpayer dollars, it doesn’t work in effect. It is giving to households with one hand and taken away with the other. So we’ve talked about that all the time, right? That’s not shocking. You’re literally taking from one household, you’re giving to the other. You’re not creating anything new, you’re just taking.
Connor: But I think it gets worse. there’s a, think tank in the United Kingdom, and they actually kind of ran the numbers trying to see what this would cost to the taxpayer. And, so these guys found that the amount that’s paid would actually be more than the amount that was received. In other words, it’s gonna cost more than people get. So, here’s what, one of the folks said about this, he said, you know, from the he’s talking about pounds, right? That’s the dollar, money.
Brittany: Much money. Yeah.
Connor: Written, right? So from the first pound you earned to the 43000, and first, you’d pay a combined rate of, income tax and, everything around 35 to 40%. So 35 to 40% of your, of your earnings you’d pay to the government. And then he says, after that, the higher rate of kicks in. In other words, you know, to get this amount of money from the government, this UBI you pay thousands of pounds more. In other words, you’d be having to pay more than you’d be getting. And so, you know what this type of proposal really means? He goes on to say, is that he says, A vast sum of people will be paying more in taxes than they already do. And then he talks about how this would be way more money to the welfare state. Like, he says, the entire budget of like their I think it’s their healthcare system in England, it would be that amount more like you’d be just growing the government, growing the welfare state to do, this universal basic income. And so, you know, why do you think people, why do people think it would work here if it’s not gonna work elsewhere? I don’t think that just, cuz that was the UK means that, oh no, America’s different. Like, I think, I think the economics of it is a problem. And, what I mean by that is, you know, I really don’t think that putting people on a guaranteed income from taxpayers is the right idea. I think it’s the wrong incentive. I, remember, you know, at the height of COVID especially, but even still in some places, the government was like, oh, we’re gonna give you even more money if you’re unemployed. And then now, like, you know, restaurants still are having a hard time and other businesses finding people to come work because people have, have grown accustomed to, what decades ago was called being on the dole, DOLE. It was this, idea of like, you’re on the, you know, you’re benefiting from the welfare state. You’re on the doll, you’re on the, I don’t know, you’re on the dole. I guess that’s.
Brittany: Thank you Connor for that precise.
Connor: exactly explanation. The synonym of dole is dole. but, but you’re basically just benefiting from the government and, and so you’re incentivized to continue or you’re disincentivized to work hard and, and you know, really fight to increase your earnings and stuff cuz it’s just easy to, to stay what you’re doing. And, so I think that would be the case here in America as well.
Brittany: I’m glad you brought that up cuz that was the point I was gonna bring up next is, you know, our listeners know right now that incentives work. We know how powerful incentives can be. And when you institute something like a UBI, I, you’re actually removing incentives, right? There’s no greater incentive than financial security. We all have to hold a job, we have to put a roof over our head we have to pay for food. But when something comes easy, it’s, easily taken for granted. So if you’re just being handed a check, you know, every month, you don’t, like you said, like, why would you work? There’s no incentive to, and maybe you’re not gonna be making a lot of money, but if you’re making enough to take care of your basic needs, I know there are a lot of people who would just choose not to work And, you know, people hate the whole, if you give handouts to people, they’re not gonna work because I think a lot of people on the left like to pretend that isn’t true because they want to give out handouts. But as soon as you know, remove this incentive, the state, the government is really, encouraging you to be lazy. I mean, you’re, you’re going completely against the entrepreneurial spirit. And it’s funny, during the Clinton era of all things, and, I was gonna say, Bill Clinton, was a democrat, but things have changed a lot, you know, since then. But, the welfare state actually, decreased a lot. But that didn’t mean people were struggling to get by, employment actually increased and individuals were incentivized to get jobs. So it was interesting because again, you have a democratic president, but back then the Democrats weren’t calling for this big UBI and by decreasing the welfare state, people were better off. So why we think increasing it now with a UBI is gonna work is just crazy to me.
Connor: There’s one last point I think to make that’s really important. So whether or not there’s this UBI universal basic income, the welfare state isn’t going anywhere. I mean, it’s like we said in the beginning, people like to think that the welfare state would just magically disappear if we had, you know, if we just gave everyone a steady paycheck, we could get rid of the welfare system. but, you know, every time the government starts a program, it’s likely that it’s never gonna go away. And, it’s hard to contemplate that the welfare state could go away. Ronald Reagan, who was a Republican president a few decades ago, he had several good little pithy quotes, which it’s sad when you think of, you know, presidents. Even Obama had some good quotes. You know, it’s like these guys are often known for their quotes and yet like, well, let’s not talk about their actual policies and the really bad stuff they did, even if they had some good one-liners. But Ronald Reagan had some good one-liners and one of them went something like this. He says the closest thing to eternal life on earth is a government bureaucracy. You know, and it’s like these things just don’t go away. These government programs when they’re created, our most recent Tuttle twin’s kid’s book, the, Leviathan Crisis, it’s based on a book by Bob Higgs written a few decades ago called The Crisis of Leviathan. And he talks about, in that book about, he, really heavily focuses on World War II. I think he wrote the book in like the eighties. And so he, he was showing in this, this it’s more of a scholarly book. there’s a lot of detail, but he shows how all of these programs created during World War II never went away. They just changed their names because it was like, you know, the war department of planning and production and the, you know, all these like, war-related things. And then they just like changed their name and changed a little bit of their purpose. But, you know, all these bureaucrats have jobs, they have budgets, they have, you know, there’s this inertia. In other words, you know, this, this, these people just want to continue everything. And it’s hard to just like cut everything away when you’re, oh, but Bob is so nice. We don’t want to get rid of Bob’s job. Let’s find something else for him to do. And so you have all of these programs that were created in a crisis and we need all this government intervention and spending and all these things. And then, oh, the crisis is over. Well, you know, let’s, let’s find something else for them to do. Or let’s do the same thing, but just call it something different. And so that book Crisis of Leviathan was really good to show how, you know, during times of crisis, the government grows that Bob Higgs called it the ratchet effect. So for the kids out there, if you don’t know a ratchet, it’s kind of like a, I call it kinda like a screwdriver, that only goes in one direction, but then you can kind of lift it up and then continue down. Like, it only pushes in one direction. It’s a ratchet. And so he talks about how like government grows and then, but it doesn’t go back down. It ratchets up and up and up and it only kind of keeps going in that direction. And so taking it back here to this idea o the UBI, the universal basic income, my fear, like let’s say we get some democratic socialist president and Congress, and they’re like, okay, UBI for everyone. It’s like, but the welfare state is gonna continue. There’s all these people and all these different programs and all those bureaucrats running those programs, and I just don’t, like, they probably just changed the name and then like, yeah. Oh, we don’t have social security anymore. We have like, you know, guaranteed help for those in need.
Brittany: Elderly insurance or something. Yeah. No, I think that’s exactly right. And I think the other thing is like nobody’s saying how we’re gonna replace the welfare state, right? They’re just saying, oh, this will replace the welfare state. It’s gonna be great. Okay, well what’s the plan for doing that? You know, like that what is, how are we going to get people off that? And if you think about it, every time a politician talks about cutting anything, Ron Paul did this, when Ron Paul talked about cutting anything, the people, people would freak out. They would lose their minds. How dare you take this away? So I think if you threatened to take something away in order to put the living wage in, or the, sorry, UBI in, people would lose their minds.
Connor: Well, I think it’s like our friend Frederick Bastiat once said, this is one of my favorite one-liners by him. He had the benefit of not only having good one-liners but also having good character and doing really important things. So, you know, that’s good too. But he says in this one-liner that the government is this great fiction. In other words, this pretended thing, this great fiction through which everyone tries to live at the expense of everyone else. So the government is this fiction, this fake pretend thing where people are just trying to live at the expense of other people. In other words, they’re trying to get other people to pay for them. Like, I don’t wanna work hard or I don’t wanna save, or I wanna be able to have all the, you know, Netflix and video game subscriptions I want, but you still need to help me. You need to give me money. I, want to live at your expense. You go work, but then I’m going to get some of your money, you know because I need it. And so I think Bastiat it was right to talk about how you have this welfare state and, government is this system through which people are like, Hey, I, just wanna have other people care for me and, support me and I don’t have to work as hard. And, my gosh, that’s so horrible. Like, that’s just, that’s just backward. And, this is why welfare states fail, that you can’t take from one and give to another and expect that all these problems go away. And, it’s wrong to take from people force. People help one another. Like, I want to help people any, time my family, and I, encounter a need. Like we try and go out of our way, we sacrifice, we help, like we wanna do that. We wanna be those types of people. but it has to be voluntary. And, the more the government gets involved in caring for people, oh, we need to guarantee a living wage. We need to subsidize people, bail them out, give them unemployment assurance. We’re destroying their motivation. We’re destroying their confidence. We’re destroying their drive to work hard and do better. It’s like we’re giving everyone participation trophies, right? Like, oh, good for you, you’re alive. Okay, here’s your check. Right? Like, that’s enough. You’re alive. Good job. You know, here’s your, here’s your participation check from the government. UBI for me just seems so backwards.
Brittany: It’s backwards and it simply won’t work. Even if it’s a great, you know, idea for, for socialist, you just have to come to the, you know, point that you can’t do it. It just doesn’t work. So not only is it morally wrong, it just doesn’t work.
Connor: Mic drop. This is true. Yep. All right, we’ll wrap it there, Brittany. Great, chatting, important topic, especially as people keep bringing this up and keep saying, oh, but this is better. Like, no, it’s, really not. Like, let’s not be deceived. So if you guys wanna do some homework, we’ll add a link or two on the show notes page about universal basic income where you can learn a little bit more and get your own thoughts, have a debate with others. Let’s see if, you know, we can avoid having even more government caring for us from cradle to grave. So check out Tuttletwins.com/podcast. Thanks as always for being subscribed. We love having you guys listen to and share the podcast with others. And, until next time, Brittany, we’ll talk to you later.
Brittany: Talk to you later.