Universal Basic Income (UBI) is a social safety net where the government provides a certain amount of money to all its citizens or residents, regardless of their income, employment status, or wealth. The goal of UBI is to provide a basic standard of living to all individuals and to reduce poverty, inequality, and financial insecurity.
Dr. Trost re-envisions UBI as a Universal Basic Dividend (UBD), with dividend referring to a percentage of the GDP paid back to American citizens. His plan would allocate 25% of the GDP for federal spending and the UBD, with government spending capped at 9%. This policy would actually increase government tax revenue by a significant amount and lead to a UBD of about $9000 dollars a year per citizen. The payment would increase by 150% after a citizen reaches retirement age.
I have a few questions about Dr. Trost’s proposal:
I am not sure I fully understand the difference between GDP and national income. Is there a distinction between the GDP of a country and the total income of its citizens? If there is, would a 25% flat income tax add up to 25% of the GDP?
What would be the economic effects of a flat income tax versus a flat sales tax like the one Republicans are proposing in the House of Representatives? Is there any advantage of taxing income rather than sales or vice versa?
I wonder what effect a flat tax based on GDP would have on the inflation or deflation of the dollar. There would have to be a section of the constitutional amendment that restricts the government from printing money to make up for its lost revenue.
Lastly, how would this plan account for the transition of American demographics? Many American citizens are in their dotage or will be soon. What happens as the number of people earning a retirement premium steadily increases? Will the tax increase, or will government spending have to decrease?
In order to implement his plan, Dr. Trost proposes drafting an amendment to the U.S. constitution and presenting it to state legislatures rather than congress. This would bypass congressional power by using state legislatures to propose the amendment and a state constitutional convention to decide whether to adopt the amendment. The convention's purpose is exclusively to ratify or reject the amendment; the states would have no power to change the proposed constitutional amendment in any way.
I agree with Dr. Trost that his plan would never gain support in congress. Congress is just too unwilling to voluntarily relinquish power. However, I think his plan to use state legislatures to propose the amendment and a state constitutional convention to ratify the amendment is equally unlikely to succeed. I believe that state legislatures are too entrenched in partisan politics and too intertwined with their federal counterparts to make a radical play against them. Additionally, it would be difficult to coordinate lobbying efforts in 50 states which is probably why the state constitutional convention method has only been used to successfully ratify one amendment to the constitution.
According to Dr. Trost, there are several benefits of a UBD over our current social safety net system. One advantage is that it would increase physical and social mobility. With UBD, citizens would be more willing to risk quitting a dead-end job or moving to a different part of the country because they could rely on UBD income while transitioning. This would also stimulate small business growth because more people would be willing to take risks. Another benefit is that the government would no longer need to bail out businesses that are “too big to fail.” The guarantee of UBD would protect American workers even if large companies went bankrupt.
Dr. Trost’s lecture was the first time that I have heard a libertarian argument for UBI. It honestly makes a lot of sense to provide people with a ubiquitous safety net. I think Dr. Trost is right that it would greatly increase freedom and entrepreneurship among American citizens.
Although UBI has become increasingly popular in recent years, there are still many who are skeptical of it. Some claim that the country can’t afford it. Dr. Trost’s plan effectively covers the cost of UBD by eliminating our current welfare system and replacing it with UBD while also capping future government spending at 9% of the GDP. Others claim that it entrenches the government as a provider. Dr. Trost argues that with the current welfare system, the government already acts as a provider for millions of people. Additionally, UBD would give people the freedom of mobility they don’t have with the current system while simultaneously providing a safety net.
I think framing UBD as a plan that would increase freedom and mobility rather than as a government handout would help convert many conservative skeptics. Additionally, Dr. Trost actually has a plan to pay for UBI which goes a long way toward making it a legitimate argument. I remember hearing Andrew Yang’s plan in 2020 and thinking that although it sounded like a good idea, there was no way we would be able to afford it.
Overall, I think the biggest issue with implementing UBI is ensuring that politicians wouldn’t twist UBI for their own benefit. The nature of a constitutional amendment and Dr. Trost’s non-negotiable terms address this problem but also generate a catch-22. Attempting to pass a constitutional amendment that would drastically limit the power of politicians, but also requires a supermajority of state legislatures to sign off on seems destined to fail.
