UBI still an unbelievably bad idea

Opportunists across the political spectrum have been emboldened by the current crisis to propose all manner of terrible ideas.

And among the worst is the universal basic income (UBI) —  a payment to all citizens, unconditional on income or wealth, without any obligation to be in work or study.

Supporters have seized on the government’s pandemic JobKeeper scheme as evidence we’re finally ready to embrace a UBI.

Of course, fans see it as panacea in good and bad times alike.

In good times, it’s the supposed solution to virtually all economic, ecological, and social ills. And in the current crisis, they argue a UBI is uniquely suited to deal with the surge of unemployed, the strain on the welfare system, and the apparent fiscal willingness to spend.

But not only are they wrong to equate JobKeeper with a UBI, they’re also mistaken that the coronanomics support their case anyway.

The JobKeeper payment imposes an effective wage floor for those employed in businesses facing an immediate, massive fall in revenue. These extraordinary circumstances are expected to be temporary, and when the crisis eventually ends, so does the payment. The worker is expected to go back to work, or to seek work on Newstart.

That’s a far cry from the UBI, which is not only permanent, but also is designed to remove the obligation to seek work.

Moreover, UBI proponents fundamentally misunderstand the nature of the economic conditions and today’s world of work.

Rather than a permanent reduction in the demand for labour, the present shutdown is a temporary contraction in labour demand due to forced closures and social distancing (with related reductions in short run supply).

Moreover, if economic life under social distancing has taught us anything, it’s that work has been supported, not threatened, by technology (exactly the opposite of what UBI supporters have been claiming). Indeed, technological integration into work — and study for that matter — has been a lifeline, saving jobs and livelihoods for many.

The other claim is that the government’s unprecedented spending allegedly reflects a willingness for meeting a UBI’s exorbitant price tag. But the government’s big-spending economic rescue package has been forced by a temporary crisis; there is no evidence of a commitment to permanently bigger government.

Moreover, when the costs are being counted, there’ll surely be little left in the piggy bank to fund a UBI.

Good policy options in this crisis are hard to come by and there’s no shortage of terrible ones being prosecuted. Despite what the economic illiterates say, a UBI remains an unbelievably bad idea.