Basic Income Q&A

by Matt Orfaela // November 26, 2016

In my video, “10 Reasons for Guaranteed Income” , I explained that the solution to poverty is simple: give everyone money.

Basic income means we would no longer need to work in order to ensure we can eat and keep a roof over our heads. With 4 out of 5 Americans facing poverty, a system that eliminates insecurity is alien and raises many questions. The following is my response to people’s most common concerns.

Why would anybody work?

There’s more that motivates the human mind than fear of homelessness. Michael Jordan was driven by an unshakable desire to be the best. Steve Jobs introduced technology that changed the world because he wanted to “put a ding in the universe.” It wasn’t for the money. If it were, either man could have retired rich early in their careers.

Michael JordanMichael Jordan’s and Steve Jobs’ accomplishments were extraordinary but their motivations were not. Deep down we all want to be the best we can and to make the world a better place. A guaranteed basic income would give everyone the autonomy and ability to finally act on these motivations.

Would YOU enjoy having a paid job even if you didn't need the money? Survey responses from 19,000 people in 18 European countries showed that the more generous a country’s government benefits, the more likely they were to agree that they would “enjoy having a paid job even if they did not need money.”

They weren't lying either: Across the board countries with the more generous welfare have higher employment. Why would that be? Simple. If people feel forced to work, they repel it. If they don’t feel forced, work is more satisfying and enjoyable.

What about jobs nobody wants to do?

Unwanted dirty jobs are already being automated. In many US cities garbage trucks (not people) pick up the garbage bins. There is no garbage man, just the truck driver, who will inevitably be replaced with technology as well.

Also remember: basic income is an amount just sufficient enough to provide for the basics. Most people are not satisfied with bare minimum and will continue working. The difference is, with a basic income, people will work to earn more, rather than out of fear of homelessness.

Won’t addicts just spend the $ on drugs?

Addicts use substances (or gambling, or video games, or television…) as an escape from reality. But what if reality was pleasant? What if they didn’t have to worry about keeping a roof over their family’s head? There would be less of a desire to escape.

Most are familiar with science experiments showing that rats, once introduced to a drug, will continue to choosing the drug over food… until they die. The experiment has been replicated over and over. But that is only half the story.

Bruce K. Alexander noticed all these experiments only studied isolated rats in cramped cages. So he built a “Rat Park” to test what happened to drug addicted rats in a healthier environment.

Alexander built Rat Park, a housing colony, 200 times the floor area of a standard laboratory cage. There were 16–20 rats of both sexes in residence, an abundance of food, balls and wheels for play, and enough space for mating and raising litters

Junkie rats, who had been forced to consume morphine for 57 consecutive days, were brought to Rat Park and given a choice between plain water and water laced with morphine. Shockingly, for the most part, they chose the plain water.

Basic income would create a more secure supportive environment and help everyone feel less like a rat in a cage. The Rat Park results suggest it may relieve addicts’ need for an escape. It won’t help everyone overcome their psychological issues. Basic income will not make the world perfect. But it will make it better.

Is basic income… communism?

No. Basic income is NOT communism. In Stalin’s communist Soviet Union you had no choice. No freedom. Your occupation, wage, and shelter were decided for you. If you didn’t do what you were told, you’d be sent to a prison camp or murdered.

Basic income, on the other hand, just gives everyone money. What you do with it and your time is entirely up to you. You can work on whatever you want, earn as much additional money as you please, and choose what wages you will and will not accept. If that’s not freedom and liberty, I don’t know what is!

Basic income would strengthen capitalism. A strong capitalist economy needs a healthy supply of entrepreneurs and demand from consumers who can afford their products. Basic Income provides both. All of a sudden anybody will be able to be an entrepreneur and try a commercial idea without risking becoming homeless or indebted.

Why give $ to everyone? Even the rich?

Basic income is about giving everybody enough money for the basic needs they deserve. Even rich people. It sounds wrong at first. But understand: Bill Gates will be paying way more in taxes on his $80 billion than he would receive in basic income (assuming those tax loopholes are eliminated).

Also rather than pay government employees gross administrative costs to analyze everyone’s data to determine who deserves what amount, it would actually save money to simply give everyone the same amount.

Will I have to pay higher taxes?

The key component of Unconditional Basic Income is that it goes to everybody unconditionally…including yourself. So unless you’re one of the highest earners you would likely make a net gain, and receive more from BI than you would be paying in any additional taxes.

Where will the money come from?

Basic income would replace the current welfare system. When every single citizen is given an unconditional monthly cash deposit, less money is wasted on government bureaucracy. It goes straight to the people.
Rather than spending so much overseas with counter productive results — 2/3 of the Humvees the US sent to Iraq to fight terrorists have ended up in the hands of Islamic State militants — we can spend that money at home, in the US, to not merely “fight” poverty but eliminate it. The US could cut it’s military budget by 70% and still have the largest military budget in the world.
By reducing bureaucracy, trimming excessive expenses, and simplifying taxes, we can easily afford a basic income without printing new money.


Would basic income cause hyperinflation?

Hyperinflation is when the value of the local currency falls rapidly. Wikipedia explains “Hyperinflations are usually caused by money creation”. As made clear earlier, new money creation is not necessary to fund basic income, so it’s unlikely basic income would cause hyperinflation. In fact, there is surprising evidence that giving citizens free money actually lessen inflation.

Kuwait gave $4,000 to each of its 1.155 million citizens in 2011. People were worried about inflation. But instead of rising, inflation dropped.

Alaska used to have a higher rate of inflation than the rest of the US. But since 1982, when Alaska began providing a partial basic income annually to all its residents, Alaska has had a lower rate of inflation than the rest of the US!

Infographic by Scott Santens
Infographic by Scott Santens

How the hell is that possible?

Experiments suggest the way basic income lowers inflation is byincreasing competition.

In India, those given regular cash payments were twice as likely to increase their productive work as those in control villages. They invested in seeds and pesticides for growing food, and sewing machines to make and sell clothing.

In Liberia, when given basic incomes, 1/3 of recipients started their own businesses.

In Uganda those given a year’s worth of income invested most of it in “skills and business assets,” ending up 65 percent more likely to practice a skilled trade.

In Namibia residents used the money to start their own small business, including brick-making, baking of bread and dress-making. Self-employment jumped 301%.

In Kenya, when poor people were given cash unconditionally, 90% of them used it to start their own businesses or purchase livestock.

Cash transfers enable people to invest in themselves and create their own businesses. More competition → lower prices → more value in your dollar = Deflation.

What’s stopping all the landlords from raising everyone’s rent $1,000?

The basic principle of capitalism we mentioned earlier: competition.Basic income will lead to more competitive housing markets than we have ever seen. When not anchored down by a job, people can move to a different neighborhood/city with more competitive prices. It’s also a lot easier to move when you get $1,000 in the bank every month. This will force housing markets to offer more competitive prices. Anybody that raises prices when supply is abundant and demand stays constant risks having their ass served by competition offering a better price. And with such an overabundance of housing in America (over 5 vacant houses for each homeless American) there will definitely be competition.

Another deterrent to keep landlords from colluding is jail time. Price fixing is illegal in the US (as well as Canada, UK, Australia, and New Zealand).

Still have questions?

Ask the Reddit Army. And check out the Basic Income FAQ.

Wouldn’t Unconditional Basic Income Just Cause Massive Inflation?

The Basic Affordability of Basic Income

The Job Market: A Game of Musical Chairs Over Hot Coals

Post Author: Matt Orfaela

─ He's an independent journalist and media producer based in Washington DC who brings light to issues he feels need to be addressed more often. Follow Him On Facebook Here Sponsor His Independent Work
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