Opus 2026-477: The Paper It Is Written On

One of the popular ideas that gets thrown around is establishing a guaranteed minimum income.  I think it works this way, first of all you establish how much money a person or family needs to meet their basic needs.  For our purposes that will be somewhat flexible.  You can establish what that need is at any level you want for our conversation.  Does it include entertainment?  Fine.  Does it include vacations?  Add it in.  When you arrive at your basic number, whatever it is, we’ll go from there.  We will call it the GMI.

There are two basic flaws in thinking that this would make any real difference.  And those two flaws are ones that you are familiar with because you deal with them every day.

The first flaw is that of human nature.  If you have more than one child, you have seen this kind of thing at work.  Give two children a $10 bill.  Come back a week later.  One child has $10 in his piggy bank, the other has $10 worth of candy and sparkly things.  They take the money you give them and spend a different ways.  This is also true of adults and families across the general population.  I’m sure there would be a small group of people who would take your GMI, spend it wisely, and live better than their living now.  The thing is those people who are thrifty and responsible probably would have been living OK already.  A more common picture shows the person going to the local 7-Eleven.  While they’re there, they pick up a bag of chips, a few sodas or beers, depending on their age, and they might stop to buy a lottery ticket because you’re feeling lucky.  The odds are that they overpaid for everything and they could have got it cheaper at a grocery store.  The odds also are that they didn’t buy anything that they really need to stay alive and healthy.  And sure they wasted their money.  Up until recently they could’ve bought it all with their EBT card.  Well maybe not the lottery ticket, but everything else.  Basic human nature says that no matter what you do for some people, they are going to waste what you give them.

The second flaw is simple economics.  Have you heard of supply and demand?  When you dump more money in the economy without increasing production to compensate, what happens is that everyone, now that they have their GMI, decides they’re going out to eat.  That creates lines at the restaurants.  It also makes it hard for the restaurants to get help to wait on all these people with their new wealth.  How do they respond?  They raise prices.  People decide that with their new wealth they can buy a new car.  Or they decide that they are going to buy some new clothes.  What essentially happens is there is more money in the system, but there are no more things to buy and so prices go up.  Within a short period of time, relatively speaking, everyone’s back to where they were before they got the free money.

A GMI is kind of like the warranty that you paid for on your new computer.  It makes you feel good.  It gives you a sense of security, until something breaks.  Usually, I have found that the warranty is not even worth the paper that it’s written on.

The world is full of people who start off equally disadvantaged.  One group will find a way around the problem and emerge victorious.  The other will sit around and wail about poverty and failure.  The reality is that you cannot help some people and the only way they will learn is through pain and struggle.  Let them grow up.

homo unius libri