Analysis

The 5 Biggest Fallacies Of Basic Income

When it comes to their jobs, people despair about two things: 1) that even a monkey could do it, and 2) that a monkey would do it.

Or a machine. 

Fretting about disappearing job types is as old as men’s right hands, but these days it is also always a prelude to call for a basic income (BI) – the least imaginative but most dangerous solution to the latest industrial revolution.

No, it is not self-evident that machines take over jobs. And just because I can’t imagine how life would go on when something changes, it doesn’t mean that it won’t.

So let’s go through the five most misleading topics that occupy 99% of the conversation about basic income.

1. No, idleness is not the problem here.

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Basic income does not make people (as such) lazy. And that shouldn’t be the issue, anyway. But sadly, most discussions about BI begin and end on the topic of incentives, as if this were the main and only concern. It isn’t.

But it’s unsurprising how this patronizing fake concern had hijacked the conversation. We have a double standard for poor and rich, and it manifests itself in the BI conversation about incentives and laziness.

Curiously, no one is concerned about landlords, trophy wives and shareholders living off dividends, and how they find meaning and purpose in their little lives without paid employment. No one dares to patronize aristocrats with inherited wealth in the same way, making sure they don’t get lazy. We only allow ourselves to patronize those we see below ourselves.

But not just entry-level pub discussions cruise on this low intellectual altitude. Even academics engage in this gut-level exercise in righteousness and virtue signalling, and cities that experiment with BI test whether it promotes idleness – rather than looking into the real issues.

Authoritarian minds allow themselves a lot of things regarding those below – that would never occur to them when they think about someone above them.

And when it comes to authoritarian thinking habits don’t feel too complacent. We all harbor a few of these thinking habits – at least when we are worried and helpless. And we all are these days. So this concern about idleness tells more about those who are concerned than those whom they are supposedly concerned about.

But let’s discuss it for a moment because I know you wouldn’t let go.

Some arguments just sound logical on the surface. Keynes’ assumption, for instance, that people who make a lot of money would stop working and enjoy idleness has been widely shared – but it never happened (statistically speaking). In fact, the most successful high flyers seem to spend more and more time with money-making pursuits while the poorest seem most put off by the idea of work. This has been dubbed the leisure time paradox, and it illustrates the fallacy of oversimplified logic perfectly.

But when it comes to the logical way of spending one’s leisure time we simply forget to take into account that incentives can be pressing needs (avoidance of negatives) as well as the pursuit of rewards (positive). And humans, just like rats, have shown a propensity to pursue rewards and keep pressing the pedal that once gave a positive feedback – and stop trying when it never works.

This is why people who found work and business rewarding keep overworking themselves – while people who only ever found rejection and mistreatment when attempted to fit in resort to video games to get their daily fix of success. You go where you feel in control and avoid the pursuits where you feel helpless and powerless. If you understand the first thing about avoiding the sense of powerlessness as a primal human motivation, your “logical” assumptions will wildly change.

The bottom line is that we don’t even know ourselves – let alone others. And our low opinion about everyone else has been proven to do plenty of damage already. The Swiss, for instance, have demonstrated this self-condescension when roughly 10% said they would stop working in BI would be introduced – but 30% assumed that others would.

Basic income is the poor man’s rent seeking. And like every other kinds of rent seeking, it is liable to producing the wrong incentives. But do the benefits outweigh the costs? And when we say benefits – benefits to whom? Costs to whom?

2. Does BI even ease existential anxiety?

The other main argument is that it would fend off economic anxiety – the type of fear that slowly boils your brain, impairs cognitive functions and makes you vote for a populist strongman who promises free stuff. In pursuit of avoiding this outcome, we are now supposed to vote for BI (i.e. redistributionist populists) so as to ease the anxiety that leads to the other kind of populism. So let’s set this straight.

There are people in the world who would be better off (i.e. more useful to society) if the pressure of monthly survival would be removed. There are people who wouldn’t. And there are the ones to whom it wouldn’t make any difference.

This the point where a lot of mouth power is applied to ‘figuring out’ which group is “the majority” (always this majority-obsession…). But the secret is that it doesn’t matter. Don’t design policy with a certain type of personality in mind because

1) you have no idea,

2) because it would make you a condescending idiot, and

3) because whenever you assume that people are such and such you actually create incentives to them to be like that.

And that effect is the only thing that’s certain.

So it is really not the issue whether people would enjoy any psychological benefit from BI. (Especially since it would be more complex that anyone could imagine from the Starbucks sofa.) But the problem runs deeper and, as usual, people are asking the wrong question. Because…

…existential fear is just one half of the problem. The other half is being helpless. And that would only get worse.

The problem with not being needed (even for a monkey job) will not be solved by handouts. The problem of not being in control of the improvement of our own lives – of being economically helpless – cannot be solved by someone taking care of us. And helplessness is as great an evil as fear and economic anxiety when it comes to boiling minds – an issue that BI is meant to tackle.

I know it is hard to believe but the sense of not being in control of one’s outcomes and future contributes to populism as much as fear and existential anxiety do.

3. There is no money for it

And the discussion should end here, but it won’t. Of course not. People are made to regard the state as being able to just print money. Beware what you wish for.*

According to OECD and the calculations by the Economist, Hungarians would get 4500 dollars per annum if all social expenditures (apart from healthcare) went into the pot and redistributed equally and without the stupefying means testing bonanza. And that includes saying goodbye to the current old age pensions – that is hardly sustainable, but its removal would meet epic resistance nonetheless. So the amount wouldn’t help anyone but cripple the taxpayer anyway.

So yes, I do understand the appeal of removing costly means-testing and the condescending, paternalistic bureaucracy that does provide the wrong incentives, just as BI is accused to, but

  1. it would never happen because politicians never let their turf (the number of people on their payroll) shrink, and
  2. it would save enough to make up for a rotting economy’s inability to pay a living basic income.

4. Basic income would put a price tag on citizenship

And make our freedom of movement even more limited.

This would be the second most devastating consequence of national BI schemes (the first one merited a separate post). It is also a great moment to realize – if you haven’t done so yet – that you are owned by your country of citizenship. A passport may be interpreted as a heartwarming promise on consular care abroad, or a tool to make bureaucratic nuisances go away – but some already realize that those nuisances are caused by the states themselves.

Citizenship has a very tangible monetary value (as well as branding) that can make someone’s life miserable. If you don!t believe me, just try to make friends claiming you’re Nigerian or Serbian. With BI the inequality by birth by the accident of citizenship would become even more suffocating.

But BI will be a beautiful memento to the hard-to-grasp fact that you are controlled not just by negative tools and threats, but also by positive ones. That when they give you something for free, you also lose something. Always.

5. Politicians wouldn’t let go of redistributive power

Although some journos calculated that everyone could have a basic income in Hungary if only we stopped spending horrendous sums on the prime minister’s football obsession and erecting monster stadiums on public money – but you can’t seriously believe that it would ever happen, right? It would be similarly great if politicians could somehow do their jobs without corruption but that never happened either.

If BI spending would happen, it would happen on top of corruption and stadium spending, not instead of it. We would probably also have to throw in some consolation prize for our politicians to allow us to have BI. Maybe they get to build new churches or billion dollar memorials on public money to make up for the loss of political opportunities by the introduction of BI, I don’t know.

We could be super rich if only public money were spent without waste – but it isn’t. And it will never be, given the nature and logic of public spending.

Which leads us to the real reason why BI would end in disaster. In the next post…

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* Your politicians are already buying “experts” who the advice a politician always wants to hear: tax more, hand out money yourself, manipulate the economy, because you are GOD. And what happened to your housing costs will happen with everything else, and as it happens, you will clamor for more and more price controls, that will raise prices even further and salary controls that make real jobs scarce – until everyone works in jobs guaranteed by the state and financed with printed money, using products and services whose prices are kept artificially high by state-enforced licensing monopolies and crony-friendly price controls. (I know you don’t understand how your political wet dream, price controls raise prices, but that’s because your logic is applied with missing information. If you know the first thing about how a politician works – and you dare to believe it – it is not surprising at all.)

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10 thoughts on “The 5 Biggest Fallacies Of Basic Income

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  3. I like how they call the funding problem a fallacy – then provide absolutely no way to pay for Basic Income whatsoever.
    Watch for it, no one ever has a feasible plan to pay for BI. Never. It’s always utterly naive bullshit, like pretending you can just cut all social spending and that will do it (hint: that won’t even come close, you’ll need to cut all social spending and then double taxes on top of it, but the public would never in a million years allow you to double taxes overnight).

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  7. You cut your points pretty short, maybe more insightful if you were to spend more time on fleshing out the individual concerns with supportive and contrary arguments. As it is now, I don’t see much more than fearmongering in this piece.

    Also talking about fallacies must have been a stylistic choice of words, rather than trying to actually mean what fallacy means, given people don’t just randomly assume that there are no problems with rather obvious points of concern that are frequently raised in the context.

    sorry if double post, can’t figure out where exactly these comments are supposed to show up.

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    • Yes, I agree with you on the brevity. But I am keeping my posts under 1000 words and this was already much longer.

      I have previously written about the pros and cons and listed 12 very convincing arguments in favour of the idea. (In Hungarian, maybe I get to it later.) But there was one devastating argument against it that cancels out all the others. That’s in the next post, I plan to complete it by Wednesday.

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  8. You cut your points pretty short, maybe more insightful if you were to spend more time on fleshing out the individual concerns with supportive and contrary arguments. As it is now, I don’t see much more than fearmongering in this piece.

    Also talking about fallacies must have been a stylistic choice of words, rather than trying to actually mean what fallacy means, given people don’t just randomly assume that there are no problems with rather obvious points of concern that are frequently raised in the context.

    Like

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