You can’t redistribute income that doesn’t exist

Bold new plans for expanding universal basic income (UBI) programs are threatened by Minnesota’s slow-growth economy.

St. Paul Mayor Melvin Carter was posting just yesterday on Twitter (X) about the wonders of such “guaranteed income” programs,

It’s certainly true that those getting free money for merely existing support getting more free money. But is it good public policy?

Mayor Carter’s post was referencing this opinion piece appearing at MN Reformer. The authors explain the concept,

Twice now, however, the Minnesota Legislature has considered but not passed an equally groundbreaking innovation: A statewide guaranteed basic income pilot program that would be the largest ever conducted in the United States. We urge state lawmakers to improve and reconsider the proposal — with an improved design — during the next legislative session.

Guaranteed basic income programs provide no-strings-attached monthly payments to families living below an income threshold. Unlike most government programs, they don’t require recipients to participate in job training or other activities and don’t restrict how the money is used. Guaranteed basic income programs trust that individuals know best how to improve their lives. 

That’s the thing about UBI programs, you have to have the “I” (income) produced by someone else in order to redistribute it.

And Minnesota’s slow-growth economy has not been keeping up. My colleague, Center economist John Phelan, has documented how Minnesota’s economy has been growing more slowly than the national average for the past ten years.

That decade of slow growth has finally caught up to the state. Phelan has been digging into the numbers at the U.S. Bureau of Economic Analysis and discovered that the state economy fell below the national average late last year,

Lake Wobegon is long gone.

Nobel-prize-winning economist Milton Friedman proposed a similar idea under the name “negative income tax” decades ago. His idea was partially adopted in the form of the earned income tax credits (EITC) that are provided through the state and Federal income tax systems.

But Friedman meant his idea to be a substitute for, not an addition to, the dozens of benefit programs (including EITC) that already exist.

UBI is a bad idea that just won’t die.