Thursday, November 13, 2014

Food Banks and the Basic Income Model

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Did you know that nearly a million Canadians are now using food banks each month? According to HungerCount, there has been a 25% increase in food bank usage since the Financial Crisis six years ago. HungerCount Reports are considered to be the only comprehensive study of food bank use in Canada. Unfortunately they don’t stop at their statistical findings. They advocate policy.

The report says social assistance, such as getting money for having a disability, have not kept pace with inflation. And of course, official inflation numbers are much lower than they should be. It is well known that central banks like to exclude food and energy prices from their core indexes – for whatever reason. However, that said, Statistics Canada shows that meat prices have climbed 11.5% in the past year. The fastest increase since 1987.
Which is really troublesome. Aside from the fact that the government’s polices are essentially forcing low-income Canadians to become vegetarians – eating meat is one of the hallmarks of a civilized society – rising prices are troublesome for all classes. Even if you are a vegetarian, which I have nothing against, meat used to be a luxury reserved for an economic elite. Thanks to free markets, meat has become available to the masses. But now thanks to central bank inflation and the destructive fiscal policies of governments, meat is once again becoming too expensive for the common man.
What’s also troubling about this HungerCount report is that one in six people who use food banks already have a job. Which to me indicates that their paycheck is so low that they have to choose between rent or groceries. This isn’t a hyperbole. I know people in this exact situation. And of course, the continual money printing done by Western central banks – especially since the financial crisis of 2008 – has only worsened the situation.
Which brings me to my beef – no pun intended – with the conclusions of this HungerCount report. The food bank report recommends more investment in affordable housing and says that welfare programs should be replaced with a basic income model.
Well here’s the problem with that: one, it ignores the role of the central bank in destroying our purchasing power. The zeitgeist is that a little bit of inflation every year, usually 2 or 3 percent, is required for a robust economy. Obviously that is total bunk. Even at 1% after 30 years what do you have? Your savings are cut in half. And as anyone with a basic grasp of economics can tell you – savings are required for a prosperous economy. Otherwise we’re just consuming capital. Remember it’s not technology that makes Canada or the US rich, it is the generations of accumulated capital that the powers-that-be are now destroying through their Keynesian economic policies.
But the problem with “investing” more into affordable housing, as HungerCount recommends, is that the government cannot invest. They can only tax and spend. Investing implies a reduction of consumption and increased savings. These mechanisms are nonexistent in government. Furthermore, the more you subsidize something, the more of it you’re going to get. Again, this is basic econ knowledge you can pick up by reading Henry Hazlitt’s Economics in One Lesson. Even if that is the only economic book you’ll ever read, you’ll still know far more than the general population or even the Keynesian professors at state-funded Universities.
The basic income model has become a dominant social meme and is reiterated in the HungerCount report. This idea is popular even among some libertarians. Although I question your commitment to the non-aggression principle if you believe the government has a right to redistribute income. And again, this basic income model only creates further problems and incentives not to work. For example, if I only made $400 by working 40 hours a week and the government offers me $200 a week for doing no work, why would I want to work 40 hours a week? That means when I’m working 40 hours a week, I’m really only making an additional $200 because the alternative would be no work and still receive $200.
Now don’t get me wrong, I realize there are many people out there who can’t work and need this kind of social assistance. But both empirically and logically, it makes more sense to fund these initiatives through voluntary exchange. There is nothing compassionate about using the threat of force to help the poor. If the government’s welfare model of the 20th century has failed, then why exactly would we give them more power to implement a basic income model? Obviously the failure is with government bureaucracy and the destructive policies of central banks everywhere. This is not a problem that can be fixed with a band-aid solution. We need to strike the root and find the fundamental cause. Fortunately the root of the problem is right in our wallets. Is that money you’re holding or paper tokens that wouldn’t exist without debt? That’s the source of excessive income inequality, the wars, the debts, the unemployment. What our money is and who controls it is the real problem. An increase of people relying on food banks is a symptom of a greater disease.

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