Free money, work, and crumbling infrastructure

Margaret R. McDowell
Margaret R. McDowell

“Well we’re living here in Allentown … and they’re closing all the factories down.” — from “Allentown,” as performed by Billy Joel

Part two in a two-part series

Last week we considered some UBI (universal basic income) proposals, one of which would provide $1,000 monthly to each American adult. And we examined a privately funded pilot program that currently pays $500 monthly stipends to struggling citizens in Stockton, California.

There are three main criticisms of UBI. The first is that it’s simply unaffordable on a national level. Secondly, some may use this stipend to purchase alcohol or other substances. Last, and perhaps most importantly, it violates our national ethos that one should work for one’s pay.

Let’s compare UBI to food stamps. One positive aspect of our current SNAP program is that people are required to spend on specific items. They cannot, for instance, buy hot food, like deli sandwiches. They must purchase food that has to be prepared at home. Nor can they buy alcohol. These are prudent spending restrictions. One downside of this and other welfare programs, however, is that there are far more administrative costs than would presumably exist with UBI.

UBI proponents assert that people know their own needs better than government administrators. Folks attempting to escape the poverty cycle will buy their children clothes, food, school supplies and other necessities. That some will abuse these dollars is, in their opinion, a small price to pay for helping millions improve their lives.

Those in favor of UBI view it as inevitable public policy, because so many jobs will be lost to technological automation in the near future. They also contend that it would create some inflation, a task that trillions of dollars of quantitative easing (QE) couldn’t accomplish. Working class recipients of UBI will almost certainly put that extra $1,000 a month right back into the economy, which would likely summon some inflation.

That’s not necessarily a bad outcome. The Federal Reserve wants more inflation, and printing money and giving it to people directly is a far more efficient way of generating inflation than QE. The problem is that free money is so popular with voters that it can quickly become a political boondoggle and may create too much inflation. It’s $1,000 a month today, but who’s to say that 2024 presidential candidates won’t propose a monthly stipend of $2,500?

I’m not sold. Temporary benefits are one thing; a total giveaway is quite another. We are a society that values and was founded on work. America is still a place where people come to labor their way to prosperity. While we’re an egalitarian country at heart, there is something about working for a living that reflects our history and the American spirit.

In a country with less than 4% unemployment, there are jobs available. We want to encourage folks to work, not to wait for a monthly government check. Rather than provide free money to our struggling citizens, why don't we put Americans to work rebuilding our infrastructure?

Margaret R. McDowell, ChFC, AIF, author of the syndicated economic column "Arbor Outlook," is the founder of Arbor Wealth Management, LLC, (850-608-6121 —, a “fee-only” registered investment advisory firm located near Sandestin.