How’s That UBI Working Out?

Along with “Modern Monetary Theory” (otherwise known as, ‘money machine go brrr!’), one of the great hobby horses of mendicant socialists (a tautology?) in recent years has been “Universal Basic Income” (UBI).

This is the idea that everyone, regardless of employment status, income, or means, is paid a standard pension from government coffers, no questions asked. No need to provide proof of need, or proof of jobseeking efforts: just a guaranteed income for all.

For socialists, the attraction is obvious. Even some libertarian types see some merit in the scheme, arguing that it renders a huge chunk of state bureaucracy obsolete (imagine abolishing almost the entire staff of Work and Income, not to mention a huge slab of Kāinga Ora and even Oranga Tamariki).

But what is the evidence that it will work?

For the socialists, evidence isn’t needed. Utopian wishful thinking is all that’s necessary. According to them, UBI will unleash an outpouring of human creativity. Freed from the necessity of actually earning a living (ugh!), all those Fine Arts majors will be free to create away. Prepare yourselves for an avalanche of Etsy feminist basket weavers and interpretive dancers on every street corner.

Those of a more sceptical bent rather suspect that it will lead to a generation sitting on its collective arse playing computer games all day. This is, as it happens, the pessimistic view of the writers of The Expanse SF books, where “basic” is a stultifying mass opiate for the bulk of the population of an overcrowded Earth. Socioeconomic mobility is all but dead.

So, who’s more likely to be right?

According the largest controlled experiment in UBI in America to date, the pessimists have it.

Not, of course, that you’ve likely heard about it. The media have scrupulously avoided reporting anything about it.

I wonder why?

The study was funded by the founders of ChatGPT, no doubt in anticipation of mass job losses caused by their creations. Eleven hundred randomised households earning less than $29,900 pa were given $1000 per month for three years. In other words, their income increased by 40 per cent. The participants were spread across rural, urban, and suburban towns in Texas and Illinois.

How did it pan out?

Households ended up $1500 pa worse off. Every dollar in UBI translated to a 21c drop in total earnings.

How did this happen?

Employed UBI recipients worked less and there was no noticeable change in the quality of their employment. Far from unleashing their potential, UBI recipients did little to improve their education or training.

In fact, UBI recipients actively looked for ways to work less. Recipients increased their self-reported rates of disability, limiting their ability to work, by four per cent. “Participants also report slightly worse disabilities or health problems that have persisted for slightly longer periods of time.”

In other words, UBI encouraged a ‘skiving’ mentality. The implications for Australia’s National Disability Insurance Scheme, which has experienced explosive growth, especially in mental health and ‘neurodivergent’ disorders, are obvious.

Unemployed UBI recipients stayed jobless for an extra month. There was a three per cent decline in looking for work and unemployment rates increased.

As for social effects, UBI recipients all showed a decline in social leisure, childcare or caring for others, community engagement and self-improvement. Recipients also spent less time with family, on recreation, reading and even chores.

On the other hand, ‘solitary leisure’ increased.

All in all, the study underscores just how right Ronald Reagan was, when he said that:

“Work and family are at the center of our lives; the foundation of our dignity as a free people. When we deprive people of what they have earned, or take away their jobs, we destroy their dignity and undermine their families.”