UBI revisited: someone explain the fairytale


Two issues ago, I wrote an op-ed arguing that a Universal Basic Income (UBI) program would not work. My opinion was unpopular with all but one of the readers who responded. A lot of harsh words were levelled in the responses, which were all printed, so I’ve granted myself one more crack at the subject to respond in kind. Let me begin by saying that I’m still not convinced. 

When I went through each response, I couldn’t help but believe that the technical jargon and emotional commentary were doing nothing more than hiding the dollar signs in their authors’ eyes. Here is why I still don’t believe in a UBI program: because getting something for nothing is a fairytale. 

Money is a standardized barter system that helps us keep track of contributions to society. If a farmer, a lumberjack, and a musician all live on a remote island, they would all rely on each other. Assuming they already had shelter, the farmer would supply food, the lumberjack would supply wood for heating, and the musician would supply entertainment to pass the time. It wouldn’t be fair for the farmer to supply bushel after bushel of produce only to have the lumberjack cut him only one piece of wood. It similarly wouldn’t be fair for the farmer or lumberjack to generously supply the musician with the necessities of life while she professes to be too tired to play them songs night after night. 

Putting a monetary value on things helps decide what type of contribution is fair. In the fictitious island example, a day’s worth of food should cost the same as a day’s worth of firewood or entertainment – say $5 for example. When both the lumberjack and the musician purchase a day’s worth of food, the farmer has $10 – enough to buy both a day’s worth of wood, and a day’s worth of music. And so on. All must contribute for others in order to get what they need, which is the balance and function of society. 

I am fully aware that this example is over simplified. Canadian society doesn’t consist of three people with basic needs inhabiting a single island. It consists of over 38 million people and thousands upon thousands of goods and services, some “needs” and some “wants”, some people who are able to work and others who can’t, children and elderly people who don’t work but must be educated or cared for, etc. The point however, remains the same: giving everyone an income boost for no additional contribution to society is akin to the farmer, lumberjack, and musician saying “I know a solution to our problems! Why don’t we just have more food, wood, and music?” It makes no sense – goods and services don’t appear out of thin air. If they wanted more, they would need to produce it. 

With a Canadian UBI program, which fairy would be called upon to magically ramp up the production of goods and the provision of services? Let’s say we suddenly had millions of people with an extra $20,000 per year sitting around. Many would go from eating the bare minimum to eating like royalty – who is making that extra food? Many would buy things that qualify as “wants”, such a huge TVs, boats, and luxury cars – who would produce them? Many still would suddenly find a desire to visit a spa on a regular basis, or to get a haircut once a week – who would provide these services? Businesses have a hard time hiring staff as it is. 

More dollars chasing fewer goods drives prices through the roof. Putting billions of dollars annually toward a UBI program would mean pulling that money from one of two places: higher taxes, or the increased printing of money. One method ends up producing a net zero program that disincentivizes employment, the other produces a net zero program in which everyone has more money but now must pay out of control prices for everything. The worst part is that since so much money has passed through government coffers, and the government must take its slice of the pie, no one comes out ahead in the end. Those who support a UBI program are likely the same people who believe that the precious metals found in the 16 Psyche asteroid would solve all the world’s problems by making everyone “rich”. 

My conclusion, similar to last time, is this: lower taxes and less government involvement in personal finances would provide far more assistance to Canadians than a UBI program. Keep government credits and programs for those who are low income and struggling (particularly parents, seniors, and the disabled population), but otherwise, keep the government out of personal finances. 


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