This seems like an extremely effective way to completely hollow out all people's will to produce goods and services. It's basic economics really - subsidize something and you will get more of it. Tax something and you will get less of it. This will subsidize mediocrity and stifle the entrepreneurial spirit that built Western Civilization. Simply would not work in real life.
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What it eliminates is the motivation to do work that does not really need to be done. In real life, our priorities might change drastically, and people would still do all sorts of work for a variety of reasons.