Universal Basic Income is (Usually) Economic Insanity: There's a right way to implement UBI, and then there's the way it's actually being done

Universal Basic Income is (Usually) Economic Insanity: There's a right way to implement UBI, and then there's the way it's actually being done

By Daniel Goldman | Politicoid | 23 Jul 2019


I’m honestly tired of seeing all of these articles supporting government run universal basic income. It’s possible to have UBI that works, but government isn’t the solution. It’s really not the solution to any problem, and as I’ve explained in many cases, government is the cause of so many of our problems. In this article, I’ll explain why UBI generally doesn’t work, but I will also explain how we could implement it in a successful way.

Before jumping into universal basic income itself, an important point needs to be made. Universal basic income is not a right, at least not as of now. The reason why it’s not a right is because it requires others to act in order to enjoy it. A right must be voluntarily enjoyed, in the absence of others. As of now, all major implementations of UBI rely on taxes. And taxes are implemented through the threat of violence. So even if we need UBI, it’s still not a right. It’s a privilege.

In order to turn UBI into anything close to a right, we need a voluntary system. And I’ll describe such a system later in this discussion. But for now, I’d like to move onto the next issue with current implementations of UBI: they are geographically specific and therefore require strict immigration controls to prevent ballooning costs.


By offering anyone with citizenship a minimum income, it makes citizenship far more valuable. $1,000 a month, for life, starting at 18 and with an average lifespan of 78 years, you’re offering someone nearly $1M. That’s a nice lotto ticket. By increasing the benefit of being a citizen, more people will apply for citizens, and more people will try to get across a border in order to have children in the country that offers the option.

As it is, government programs are stressed by undocumented immigration. As discussed by an editorial on Investors.com, many non-citizen households do get benefits, and they also create a significant burden on emergency room costs.

Don’t get me wrong. I’m for open borders and free market immigration, so I’m not advocating for increased border control. I’m just pointing out the reality of the situation. A region that tries to implement UBI will end up with increased requests for documented immigration and increased attempts at people trying to get into the country without permission.

Administrative Costs

Even Alec Zaffiro estimates that the annual cost, before any administrative expenses, would be $1.8T a year, for the US population alone, in his five minute explation. However, the government isn’t exactly efficient. There’s often a lot of overhead when it comes to government programs. Consider that, in 2014, SNAP had an overhead expense of about $3.6B and issued about $70B in benefits to 46.5 million people (SNAP Administrative Costs). That isn’t horrible, but that’s still 5%. Now consider scaling that figure up to the $1.8T expense and we see a figure of $90B. In other words, the overhead of the UBI program would exceed the entire cost of the SNAP program in 2014.

Corporate Subsidies

One argument is that poor people are more likely to spend their money than rich people. That might be true, to an extent, but let’s consider where the money would go in each case. For well off people, the money will go to investments. For the masses, it will go to businesses that cater to low income individuals, such as Walmart and fast food restaurants.

What we need to do is boost the number of high wage jobs and increase the size of the middle class. UBI isn’t going to do that. And if we’re using taxes, we’re actually taking revenue out of the system, passing it through government, and then finally, after dealing with administration costs and other factors, such as untrustworthy politicians, the people finally get some of it back. That’s not a good solution. And there is a better option.


The one place where UBI could work is if we implement it in blockchain. A decentralized and distributed, cost effective option, built right into our monetary system could work. For one thing, it’s not geographically limited, and it is completely disconnected from citizenship.

Distributed Inflation

Inflation can be a monster. Because of inflation, the USD has lost around 90% of its purchasing power since the mid 60s. And as I mentioned in my discussion on the USD as one of the worst sh*tcoins out there, the inflation is unbalanced. The masses lose purchasing power, as those connected to the injection points receive extra purchasing power. It’s theft. And it’s redistribution of wealth, from the masses, to the rich!

A blockchain based system is different. Inflation can be built into the network, either at a fixed rate, based on the rate of adoption, and so on, and can be distributed to every wallet. As a result, the universal basic income would just be the inflation of the system itself, and would even out purchasing power.


One argument against blockchain based solution is that digital currencies are problematic for people without access to computers. To an extent, that issue may hold true, but a wallet isn’t a thing, digital or otherwise. It’s information, and that information can be encoded into a physical key which can then be used with many different merchants.

Besides, we’re considering a system that pays $1,000 a month to every person in the system. With the $1.8T cost estimate for the US alone, if we only added 10% overhead for the development of infrastructure necessary to easily access the blockchain, including the delivery of a specialized tablet to every individual in the system, that would allow for $180B a year. Apple’s worldwide revenue is about $265B. In other words, with just a 10% overhead, the blockchain based system would be able to fund projects with a cost equaling 67% of Apple’s annual global revenue!

Beyond UBI

Here’s where things get interesting. If we’re going to go through the trouble of funding a system to access the UBI network, why not just go beyond UBI and offer other features that are reasonable and useful? I already think that we need a blockchain technology that’s well suited to coordinating human interaction. Smart contracts need to be as human readable as possible, and a system of credit monitoring would be useful. I mentioned all of these ideas in my article on lawyers of the future.

The UBI element could even be tied into the proof of lock system, so that inflation is distributed both as UBI and also as payment for the burned portion of the users’ funds.

But even more is possible. With the infrastructure in place, the tablets that are provided and the network that would be developed for those tablets, could also be used to provide access to educational tools such as Wikipedia and Project Gutenberg, and perhaps actual online education tools like edX. All of these things could be accomplished, just through the development of this technology, and all without the need for government. So why are we wasting our time and resources funding abusive institutions that we can’t trust?

Originally published on the Politicoid blog on Medium


Daniel Goldman
Daniel Goldman

I’m a polymath and a rōnin scholar. That is to say that I enjoy studying many different topics. Find more at http://danielgoldman.us


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