Some have hypothesized that a universal guaranteed adequate income or even raising the minimum wage would reduce poverty, prostitution, drug abuse and domestic violence. These would be some good reasons for considering this course of action if it were true, but in fact, the thought is illogical and the opposite is true. There is only one solution to poverty, and that is to have the opportunity to work.
Since the eighties, the war on poverty has been a complete failure, and repeating the same action over and over hoping for a different result is the definition of insanity. Many believe that wealth is obtained chiefly through exploitation or luck and therefore is possessed for the most part unjustly. Income redistribution is a classic way of causing instability in a society and a tried and true way of enhancing the bondage of poverty. The fallacies of Income Redistribution are well known and were first written in 1776 by Adam Smith, in “An Inquiry into the Nature and Causes of The Wealth of Nations”
There once was a foolish young man released from prison for driving drunk at 120 miles per hour and resisting arrest. Although he is a hard worker, at 23 with a spotty work history and a felony, finding a job is just about impossible, even though he is willing to do just about anything for minimum wage or even less. He has no choice but to live with his parents who are retired and living on a fixed income. He gets food stamps to help out, but after months of diligently seeking a job, he is despondent about his future, though he doesn’t stop looking. He cringes at talks of raising the minimum wage, for he knows that it will make it just that much harder to find a job in a shrinking job market.
Would this young man take a universal guaranteed adequate income? You bet he would. Would it be good for him? Absolutely not. What he needs and desperately wants is a job. Would his parents take a universal guaranteed adequate income? Of course. Would it be good for them? They used to live on a maple farm in New England making a living selling maple syrup for $15 /gallon. With inflation, they were forced to sell their farm, even though maple syrup now sells for $50/gallon. Raising the minimum wage and taxing businesses and individuals to pay for the cost of a universal guaranteed adequate income will cause the price of everything to go up more than the increase in the income would cover Mathematically, it just has to. In the end, everyone would suffer. Inflation hurts.
If the government wants to do something to help poverty, it needs to help small businesses and private enterprise to be successful and create more jobs. The economic manipulators need to throw out the singular pie theory – that wealth has to be split between the poor and the rich. This is a fallacy. If you instead make 3 or 4 pies, everyone gets more pie. The government can do one other thing. It can take less of the pie.