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Economy
Translated from the original Dutch by Pierre Madden

Click on the links to see the full text of the objection

 

   27. Basic income is unaffordable

   28. UBI does not use sophisticated information and its goals are cumbersome and limited

   29. A basic income causes huge inflation

   30. UBI will lead to higher taxes and that is bad for innovation and industry

   31. Basic income worsens the position of the Netherlands on the international market

   32. Basic income will boost the informal economy, illegal transactions and fraud

   33. UBI promotes consumption and is therefore a catastrophe for the environment

   34. UBI means that fewer people will accept work and the economy will stagnate or shrink

 

27. Basic income is unaffordable

Explanation

 

Basic income is unaffordable if it is to be sufficient to replace all benefits and other targeted forms of public assistance.


The high transfer payments associated with a basic income will crowd out public spending on, for example, health care and education.


A low basic income will maintain the current bureaucracy surrounding allowances, benefits, etc. and is therefore not a sensible solution.

Refutation

There are many studies to refute this objection, see for example the VBi note Basic Income: feasible and affordable (in Dutch).


See also Basic Income, Asocial or Unaffordable? (in Dutch)

In order to make the Basic Income affordable, the financial flows within the National Account can be rebalanced without increasing the National Account. If this happens to a sufficient extent, no problems will arise. The following adjustments are both obvious and feasible:

  • Set off basic income against the existing salary structure.

  • Abolish or reduce existing social security systems and related bureaucracy.

  • Changing the tax system (e.g. abolish self-employed deduction; equal rates for the three boxes; shift to consumption taxation)

  • eliminate unnecessary policies (e.g. many subsidy schemes; unnecessary bureaucracy as in the health sector; design smart policies)

  • introducing compulsory social service.

In addition, savings can be expected in several areas, such as: less absenteeism due to illness, less fraud, less crime, less environmental damage, less useless consumption, less debt restructuring.

Finally, the extra expenditure of people who are lifted out of poverty with their basic income will lead to more tax revenues.

28. UBI does not use sophisticated information and its goals are cumbersome and limited

 

Explanation

 

This is an objection that is regularly mentioned by Bas Jacobs, among others.


It is better to give money only where it is needed. For example, a basic income would be used to give money to the non-working spouses  of affluent men.


There are better, less problematic and more robust alternatives to dealing with the problems that Basic Income would address.

Refutation:

This objection considers that the main objective of basic income is poverty reduction. However, there are other objectives, such as increasing freedom and simplifying tax and social security systems. It is in keeping with these goals to use less information!


The way of combating poverty through the current social security system has become a network of controls and regulations with inhumane and unpredictable effects.

 

The fine-tuned allocation of income transfers causes, among other things, a lot of expensive bureaucracy, fraud, misuse and poverty trap effects.

 

For the majority of the people who do not need it, it can be taken care of by the existing wage structure or tax system.

 

With the basic income, nonworking partners or housemates receive compensation for domestic work, child rearing, informal care, etc. Such households will indeed improve financially. Whether this is 'not necessary' is open to discussion.


29. A basic income causes huge inflation

Explanation

Basic income will cause inflation because money is being pumped into the economy.
The additional taxes required for a basic income make products more expensive, and then basic income is no longer sufficient to meet basic needs.


A basic income distorts the interaction between supply and demand on the labour market, as people are less dependent on which jobs are in demand when choosing one. This can lead to large shortages of certain types of production and therefore to inflation.


With a basic income, a large group of people would receive only the basic income, which would cause inflation in the prices of goods of interest to this group only (e.g. cheap housing).

Refutation

 

Experiments to date have shown the opposite. For example, the Mincome experiment (Dauphin, Manitoba, Canada) shows that young people continue to study longer.

A basic income facilitates the pursuit of education and lifelong learning as well.

 

Contrary to what some would have us believe, people do not want inactive lives, they want to engage in meaningful activities, and that is facilitated by a basic income.

30. UBI will lead to higher taxes and that is bad for innovation and industry

Explanation

Higher taxes are bad for innovation and business

Refutation 

Whether or not there is inflation when introducing a basic income depends entirely on the way in which this is done.


If you introduce it by means of gradual redistribution, the risk of inflation is limited or non-existent. If it is introduced abruptly, we can have significant effects, but the automatic effect of inflation is an unproven proposition.


Here is an English-language article in which this question is addressed in a nuanced way: Will basic income cause inflation?


By the way, the 2017 research report Modeling the Macroeconomic Effects of a Universal Basic Income by the Roosevelt Institute concluded that a monthly payout of $1,000 to every American adult would boost the economy by roughly $2.5 trillion over an 8-year period!

31. Basic income worsens the position of the Netherlands on the international market

Explanation

​The taxes needed for a basic income will drive businesses out of the country.


Basic income will have price effects (both in wages and products) which will make it harder for us to compete with other countries.

Refutation 

This objection is also based on the unproven assumption that the introduction of a basic income will lead to higher taxes.


An obvious solution is for basic income to be introduced in neighbouring countries as well as in the Netherlands. At the moment, the social security systems in north-western European countries show great similarities, without being compelled to do so by an international body!
Incidentally, a basic income means a society that is operating much more efficiently than it does at present. This is a good  for  business.

On balance, however, businesses do not have to bear a higher burden if the national account is not increased or only increased to a limited extent.


Incidentally, large companies pay much less tax than small ones, and it would be a good idea to do something about this.

32. Basic income will boost the informal economy, illegal transactions and fraud

Explanation

​Increased taxes will make undeclared work supported by a basic income much more attractive.


Higher taxes will lead to more people committing tax fraud (including undeclared work).


If part of the extra costs associated with the basic income has to be borne by higher VAT, a larger part of the revenues will also be kept out of sight of the tax authorities in order to avoid paying VAT.

Refutation 

Unfortunately, tax evasion is widespread, both among the least well-off (where it is called undeclared work or fraud) and among the more wealthy (where, in addition to fraud, they are often able to influence the rules and exercise creative control).

Volunteering will indeed be encouraged. This is outside the national account, so this will lead to the measurement of some quantitative shrinkage. On the other hand, this free output does contribute to prosperity.


In some cases, undeclared work is discouraged because you lose some of your current benefits when you work openly. With a basic income, this incentive is lost.


Illegal workers are becoming less attractive to employers because they do not have a basic income. In the case of legal workers, the basic income can be factored into the salary.


There is less inducement to engage in criminal activity, and the need to make a living is no longer required for people who find it difficult to find normal employment. 

 

33. UBI promotes consumption and is therefore a catastrophe for the environment

Explanation

The introduction of Basic Income will increase the amount of money in circulation. Prosperity is on the rise and that leads to more consumption. This is accompanied by accelerated environmental degradation.

Refutation 

​The introduction of a basic income will undoubtedly go hand in hand with many major changes in the tax system, social security and wage determination in the labour market. There is a strong case for taking advantage of the opportunity to take environmental considerations into account when making such adjustments. 


It is not clear, however, that the introduction of a basic income will lead to more money. It is also possible to conceive of directing the implementation in such a way that it mainly involves redistribution.


Although this as such falls outside the idea of basic income as such, the majority of supporters of basic income are also very concerned about the environment and the overexploitation of the earth. 

34. UBI means that fewer people will accept work and the economy will stagnate or shrink

Explanation

The introduction of a basic income will mean that many people will not work anymore or will work less. This will lead to a contraction of the economy and a reduction in prosperity.

Refutation 

This is a variation on the  objection that Basic Income makes people lazy.


As mentioned earlier, the experiments carried out so far do not give any indication that these claims are correct.


However, young people are studying longer while young mothers take on more caring tasks.


It is also to be expected that, because people have more financial security, they are less inclined to do work that is considered pointless (bullshit jobs). The disappearance of pointless employment may reduce GNP (as an indicator of prosperity), but it will contribute to increasing well-being rather than reducing it.