by Dallas Emerson, Communications Director & Data Analyst
Austin has decided to launch an experiment with Universal Basic Income (UBI) in partnership with the nonprofit UpTogether. The program, when implemented, will send $1000 per month to 85 low-income individuals in the city.
This is part of a series of experiments with Universal Basic Income occurring throughout the country.
And they’re all pointless.
Let’s set aside the principle and even the theory underlying UBI. Those are arguments to be taken up when the discussion is whether to implement such a program.
No, I want to talk about this “experiment,” and its guaranteed unhelpfulness.
The idea behind running the pilot program is, at first glance, understandable. Rather than unrolling a multi-billion dollar program, we will study a small group of people, and how their lives and behavior is changed by receiving additional income.
But the results will be easily misunderstood or misinterpreted; indeed, I would go so far as to say that the results will be meaningless.
Let’s look at the pilot program again: 85 low-income people receiving $1000/month. That’s not chump change. I would certainly not turn my nose up to that kind of money. And certainly, we can expect that their spending habits would change. Their work habits will likely change.
And that means nothing when only 85 people are receiving this money.
However, if every single Austinite, all 950,000 of them, were to receive $1000/month—or about $12 billion dollars a year—we can only guess at the rapid, unprecedented rise in inflation as we poured an additional one billion dollars every month into our economy. Keep in mind, that nothing else will have changed—there will not be more goods being produced or more workers contributing. There will not be higher quality goods.
We can guess what kind of wild effect this will have on the prices of low-income housing, food, fuel, and childcare in the city.
They will go up.
As we have seen on a national scale, subsidizing demand, by sending cash out to consumers, leads to price increases. This is not an argued point. The only question is how much of the inflation can be attributed to government disbursement of funds.
If the Council agrees to this experiment, they will be putting Austin on a path to receiving information that we know will be misleading. We know that the relatively small disbursement will help these few, chosen families. We also know that these families will be the most likely to suffer from inflation—low-income families are always hit hardest by price increases.
The Council must exercise prudence and take any result of this futile experiment with skeptical eyes.
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