A Universal Basic Christmas?

 By age 4 or 5, I loathed Santa Claus because I noticed that he gave more and better toys to my poorly behaved rich playmates than to me or my little brother even though his production (slave labor?) and transportation costs (lichen for his reindeer) were de minimis and subsidized with literally tons of milk and cookies. Not long after, upon hearing Cheech and Chong’s already classic 1971 bit “Santa Claus and His Old Lady,” I unearthed the conspiracy behind the silly jolly old elf stories. Christmas gifts weren’t magical manna, they were part redistribution scheme, part potlatch, and part savings ploy. At least the consumerist vision of Christmas was, and remains, voluntary.

But now circulating is another implausible legend about economically free gifts, Universal Basic Income or UBI for short. This new legend means Christmas cash for everyone, in equal measure. (It is usually assumed to come once a month, but it could come just on Christmas, or be conceived of as a Christmas present paid in monthly installments.)

I fear that Americans are being subtly conditioned into accepting UBI through repetition of lies and half truths. As I have noted elsewhere, many in the media now label any old welfare program a “UBI pilot” and then tout how it helps its recipients, as if it were not already bloody obvious that extra cash always helps people. The stories, like this one from ABC News in San Francisco, also typically claim that recipients spend all their newfound wealth on “necessities,” as if cash isn’t fungible. The reporters are either morons, or think that their readers are.

While images of poor children having extra socks and other necessities under the Christmas tree may warm your heart as much as it does their feet, adults and even precocious children know that those resources came from somewhere. When the source is voluntary charitable donations, the real spirit of Christmas is fulfilled.

Under a real national UBI, however, the transfers become involuntary. As Aleksandra Przegalinska and I explain in Debating Universal Basic Income (Palgrave 2022), while everyone receives equal UBI payments, the money has to come from somewhere, and in most proposals that somewhere is the middle and upper classes, who end up paying more in taxes than they get from the UBI program.

Exceptions arise only when a government is blessed with something akin to magical manna, like the oil royalties that Alaska and Iran use to fund their respective UBI programs. Few governments have access to such cash cows but there is one great untapped source of revenue available to all governments – increased government efficiency.

If the U.S. government, for example, were to end its massive subsidies for the health and higher education sectors, return to systems of private instead of social security, and scale back its bloated administrative state, it could implement a UBI worth 15 percent of GDP without raising taxes any further. 

Ironically, if Uncle Sam were to bestow such a Christmas present upon the American people, instead of presenting them with more inflation and debt like Congres just did, it would unleash so much economic growth that a UBI would no longer be seen as necessary. But this frigid Christmas, most Americans would settle instead for a giant lump of coal.