Static money benefits one; flowing money benefits all

images-26The idea of a Universal Basic Income, or UBI, is simply giving each citizen enough money to survive without going to a job.  This money would not be enough to be rich, but it would cover a very basic apartment, food, health care, etc.  In a way, it ties into Nick Hanauer’s TED talk about how to further stimulate the economy.  It is an idea that would both satisfy progressives, in that it would directly help the poor, but also satisfy conservatives in that it would shrink government.  So it should be easy, right?  Not so fast…

To get you up to speed, here is a great short blog post that explains it and some early results from places that have tried it:

Basic Income: A radical idea for eliminating poverty

As the post rightly notes, the sticky point with implementing UBI is the idea that we are giving out “free money”.  There are many people who feel this is wrong so strongly that they can’t even have a serious conversation about it.  Folks say they are worried that if we give free money to people, they will just sit around and do nothing (I think they really don’t want to do it for another reason that they are hesitant to verbalize, but more on that in a minute).  The short blog post above compiles some statistics on what has been learned in a few small UBI studies so far, and they show this is largely not the case.  I’m sure this happened, don’t get me wrong, but the studies showed that the majority of folks did NOT just sit around with their new free money and do nothing.  They did things like stayed home with their kids instead of both parents going to work, they furthered their education, and they took chances starting small businesses.  All of these activities arguably make society better for ALL, as well as making life better for the individual in question.

So, if the (admittedly limited) data shows a UBI doesn’t simply foster laziness, why do so many people I talk to about it still use that excuse for opposing it?  I believe it is because their real opposition is that the idea of just giving people money doesn’t seem fair to them on a moral basis.  They feel “I work hard.  Why should someone else get free money, when I have to work so hard for what little I have?”.  Even when I try to explain that the idea is that this “free money” won’t cost taxpayers any extra, and likely will actually save taxpayers money, they still don’t think it’s fair somehow.

I will refrain from saying that I have explained to my kids countless times that life is not fair, and that’s why the two words “life” and “fair” are spelled differently! :)  Instead, what these people don’t understand, in my opinion, is that money is simply energy, and as such it must flow to be effective.  Static money helps one individual, and flowing money helps the entire economy.  So, giving someone “free money” who will immediately spend that money helps the entire economy.  It is a bit like giving your kid some money so they can buy you a gift at the school holiday shop.  Sure, you are giving them “free money”, but it is immediately being spent and as such helps the child (they get to feel great about getting you a gift), the school (they fundraise out of it), and you (you get a gift).  Everyone wins, once we realize that giving a small amount of money to people who will immediately spend it is not a zero-sum game.

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