There is one major problem with simply giving people money to purchase the necessities required to live. It places the responsibility of acquiring those necessities upon the recipient, regardless of their cost. Model programs and experiments in UBI have all taken place within the confines of many other influences in the general economy and have never been of much influence themselves. The outcomes will change drastically when the UBI becomes the driving force to determine those costs and inflation.
Once the UBI influences the cost of necessities above its ability to purchase them the recipient moves into negative territory unless the benefit is increased. This escalation of demand without correlating escalation of production is the essence of inflation. The only way to assure one of being able to purchase those necessities with the allotted benefit is to enforce tight cost controls, which also hold down labor. This degree of a managed economy has proven to be a reach too far in the past, reserved for emergency use during times of war or natural disaster.
Placing the responsibility for securing the goods and services necessary for basic living on the currency-issuing government avoids this problem, as the currency issuer is almost always the price setter as well. The currency is available to the issuer without restraint from revenue, so there is no possibility that the issuer of benefits directed to pay for specific goods will be unable to purchase those goods in sufficient quantity. Only a political choice would create such a situation, not economics. That political choice becomes much easier when the benefit is defined in terms of a specific dollar amount that everyone receives and it would take no time at all for employers to factor in the benefit when adjusting wages to meet the cost of living. Good luck talking the boss into a raise when s/he views your wages as “extra money”.
The freedom to say no to an employer is only available if one’s income totally satisfies the cost of basic living, which is much higher than any numbers I’ve seen forwarded for consideration by UBI promoters. Any benefit below that only gives advantage to the employers by lowering the required wage level to allow one to live, which they will be free to manipulate with the upper hand given by UBI.
A much better system of providing more control to workers is available via a guaranteed job funded by the federal government’s power of the purse. By guaranteeing a livable wage job with benefits to anyone who wants one the floor is set for private sector employers as well. We would only have to redefine “work” to include many things that benefit the society to open the possibility of truly working for the greater good as a career path many would opt for permanently.
However, the real advantage of a job guarantee is in its countercyclical nature of injecting federal money into the economy as needed when the private sector falters and rejects workers. Such economic cycles would no longer threaten the base economy and vital supply chains as workers would simply transition between public and private jobs as the private sector bids for them in response to increased labor demand. This system pins the economy to the hour of labor worked, not capital as the UBI does. It also preserves the safety net for those who cannot, or simply choose not to, work. We have the foundation for such a benefit already in Social Security. We simply need to get over the concept that everyone must feed the corporate profit machine to be useful.
