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Universal Basic Income: Would It Work?
The idea of a UBI — Universal Basic Income — is gaining traction among liberals. No surprise there. To my knowledge, it’s not gaining traction among conservatives. Also no surprise. But, strangely, the most interesting proposals for a UBI are coming from libertarians. Now that is a surprise. There even seems to be a developing liberal-libertarian alliance around this.
Granted, the UBI is impossible to justify according to pure libertarian principles. But if your libertarianism is of a more practical kind, the UBI is worth a look. If you know that Charles Murray is the strongest proponent and Milton Friedman the author of the prototype we’re considering, you are almost obligated to take a look. And if you accept Murray’s calculations that even a sizable UBI would actually reduce debt if it replaced our 223 transfer programs, conservatives, too, should consider joining this movement.
There are many versions out there right now. Murray’s, to me, is the most interesting and well thought out. In a nutshell, all US citizens 21 years and older would get $13,000 a year, of which $3,000 would be set aside for health insurance. The rest would be sent electronically to a specially established bank account set up for the purpose. The UBI would be phased out — clawed back, as Murray phrases it — until it disappears for those with incomes above $70,000 a year.
As many here probably know, Charles Murray is extremely interested in the importance of civil society. Within the preceding innocuous nutshell version of his UBI lie multiple incentives for building such a society. For starters, obviously, the requirement of citizenship means there are no welfare incentives for people to immigrate. The incremental clawback means people don’t cut back on hours or avoid work in order to preserve their welfare benefits. But the most important incentive, in my opinion, derives from the special bank account. Whereas welfare, as it stands, incentivizes broken families and children having children, the UBI would strongly incentivize the opposite.
How, you ask? Consider this. A baby is not eligible for a UBI and is, therefore, a drain on the income stream rather than a facilitator of welfare derived income. That’s an important incentive for the mom to have no baby unless she really wants one unless she is able to care for it, and unless she has a partner to help raise it. Even better, with DNA testing, it’s possible to determine paternity beyond a doubt. Any deadbeat or runaway dad will lose a portion of his guaranteed income stream to be paid to the mother for the subsequent 21 years, deducted straight from his UBI. After several out-of-wedlock kids, his UBI would be gone. I literally had to catch my breath as I considered the likely outcomes. Has anyone ever devised a stronger incentive against reckless procreation among young virile males than that! In one fell swoop, the fifty-year government subsidization of broken families would come to a screeching halt as reckless youth strove to preserve their automatic income base. And if the baby is produced anyway, both parents have a strong financial incentive to choose to stay together and figure out a way to make their union work.
Personally, that’s good enough for me. I’m convinced. I’m onboard. Reducing both government debt and our greatest social problem is all I need. But there is much more.
The UBI won’t exactly end the bureaucratic state, but it will radically shrink it. 223 bureaucracies, many of them massive in size, will close up shop. A lifestyle of red tape and standing in lines will come to an end for countless millions. Gaming the system will no longer be a life skill exemplified or taught by parents to their children in countless communities across the nation. Entitlement will no longer be imbued into children throughout their formative years.
Murray is deeply interested in the importance of productive work. How will the UBI affect that? For starters, let’s assume there is no minimum wage since the UBI itself supplies the minimum. With no wage restrictions — and with no concern by workers for balancing hours and salaries with the requirements of various welfare programs — there is little distortion of the labor market and less incentive for employers to replace people with robots. You might fear that income for no work could decrease the incentive to find work. Maybe, to some degree and for some people. On the other hand, though the UBI gives everyone a large step up, it doesn’t lift them out of poverty. If you want a decent life, you still have to work. Even low incomes for low skill work, if supplemented by a UBI, should give the worker enough to live a decent life, the kind that gives enough satisfaction to help grow pride in work, and possibly even the initiative to pursue something better.
Cooperation further expands the possibilities. A married couple starts out with $20,000 a year (in addition to health insurance) and other permutations besides marriage are possible. Youth, as they are wont to do nowadays, might stay with their parents for, say, an extra five or ten years, increasing the total family income further; or they might use that time at home to save seed money for some venture. Those so inclined — as many are — might share a house with three or four others in order to pursue art or writing or music or surfing or whatever, working as need be, until (as will likely happen for many) they choose to settle into a more stable lifestyle. At a minimum, the UBI should greatly reduce homelessness and begging. To the extent that petty crime is born of desperation, that should also decline.
Will a guaranteed income flow lead to alcoholism and increased drug use? Hard to say until the experiment is made, but it could easily lead to less. Murray gets into some of the reasons for why it might lead to a decrease in substance abuse.
There are other beneficial outcomes that can reasonably be predicted from a UBI, but one is, to Murray, especially important. For over two hundred years, as capitalism has wiped out jobs in the process of creative destruction, Luddites have been predicting mass unemployment. For over two hundred years, they have been wrong. But now, for the first time, they may be right. Take one example. Driving in one form or another employs more people in the US than any other field. Within a decade or two, 95% of drivers may be out of work. Is the new economy going to find 50 million new jobs for them? It’s hard to imagine that it will. Granted, the “hard to imagine” explanation has been trotted out for 200 years. But, again, this time it might be right. Especially when you consider that most new jobs will likely require a fairly high level of intelligence. Jordan Peterson tells us that 20 percent (I think he said) of the population has an IQ below 85, and that precludes them from doing any but the simplest of jobs – jobs which are being done more and more by robots. Even the cognitive elite – to use one of Murray’s terms – are likely to find much of their work taken over by computers. The job of a travel agent, for example, which was a highly skilled job requiring a great deal of experience, knowledge, and analytical ability, has almost been extinguished over the last few years. So, the UBI may soon be necessary to prevent mass joblessness and mass homelessness.
The UBI is already affordable, or at least more affordable than what we have. According to Murray’s calculations, we passed the tipping point on affordability in 2009. In other words, since 2009 his UBI is cheaper than our current system. Also, the cost of the UBI will not increase along with projected increases in unemployment since the UBI is already universal.
Places in Canada and Europe have started experimenting with some version of the UBI. Switzerland recently voted against the experiment, but that’s hardly an indictment since the Swiss, of all people, hardly have the need, nor are they infected with the social problems the UBI is intended to solve. Surprisingly, the longest-running experiment with a UBI is happening right here in the US. Many years ago, good ole libertarian Alaska decided against giving its oil income to the government and instead divides it equally among all its residents. And, in what may be one of the great what-ifs or if-onlys of history, the American government, back in 1970, took up Milton Friedman’s idea. First, the Nixon administration conducted real-life experiments around the country with a number of families receiving benefits to see how that would affect work habits and lifestyle. With the results excellent, a UBI sailed through the House of Representatives twice, only to fail in the more liberal Senate, which wanted a higher base, a base it thought it could get it after the next election. That didn’t happen. Instead, we went all in on the ad hoc, hodgepodge welfare programs that have led to our current 233 transfer programs, along with massive debt and destruction of the family.
Check out In Our Hands: A Plan to Replace the Welfare State by Charles Murray, published last year. It’s an updated version of his earlier proposal from 2006.
I haven’t actually read it, I’ve only listened to him (and others) talk about the idea on YouTube while cooking. Reviews and summaries of In Our Hands would be much appreciated!
Published in Domestic Policy
There’s a lot of good info here, and I appreciate that. It strikes me as naïve, however, to think that this would replace, rather than supplement, the welfare state.
There’s theory, and then there’s practical politics. I agree that getting from where we are now to a UBI would be tricky (to put it mildly), but I hope that doesn’t derail the discussion over whether it’s a worthwhile goal in the first place.
Does the “claw-back” count married incomes jointly, or separately? It seems to me it should count them separately, such that a homemaker would qualify for the full $13,000 regardless of her husband’s income. This would be a further incentive to marriage, and without it there would potentially be a “marriage penalty” of up to $13,000.
Can’t disagree. I think most proponents of UBI would agree it won’t achieve what we desire unless it does replace rather than supplement the welfare state
Absolutely. My concern is obviously for the mind-set of the modern “progressive,” and I would think most discussions should entail views on 1) how to get them to buy in, and 2) how to stop them from changing the program when the inevitable carping begins.
It’s preferable to our current welfare programs and if we could eliminate all welfare,minimum wages, food stamps, medicaid and replace all with a UBI designed by Milton Friedman economists, or better yet libertarian economists, and get it through our Congress without major changes, it’d be great. We know that isn’t going to happen. Or just send all welfare with one or maximum one and a half year funding and no mandates, to the states and let them figure out what do. Some will come up with programs that do less damage than the current system, some even more damage and some would eliminate them. Then we wouldn’t have to attack welfare or welfare recipients just assert the importance of local knowledge, local accountability, and eventually local funding as we champion the safety net.
I’m almost certain Murray counts them separately, as it should be. This would, as you point out, not disincentivize marriage. It would also, as Murray points out, make volunteer work (such as teaching literacy within over burdened low income school districts) a rewarding and important form of work. Murray recognizes both marriage and volunteerism as essential features of the American style civil society.
That’s already started, it would seem. One liberal proponent in a discussion with Murray makes it clear he wants the UBI to supplement what we already have. Of course he does. That, of course, would destroy almost everything good about the UBI.
As soon as enough women with kids blow their income in 6 months and the kids get hungry, this goes by the boards.
My view is, the UBI needs to be combined with a flat-tax rate (i.e., replace progressive tax rates) so that instead of “clawing back” the UBI, you get the UBI and pay a high(er) rate on your first dollar of income such that you pay back the UBI (relative to the current tax structure) by the time you make, say, $70k.
That means everyone pays (roughly) the same rate on marginal income, and we eliminate the distortion the progressive tax rates create.
This is undoubtedly a real risk.
One question. If a 10 year old child is orphaned, abandoned, or kicked out of their home is this a death sentence or is there still a program for them?
Not a risk. This is a certainty.
Did I miss a clause that calls for closing of all orphanages?
There will be a program for them, it will just be privately funded rather than government funded.
FWIW, my wife is involved with what used to be called an orphanage in our local town. Several years ago, we went to “reunion” that was initiated by a elderly man whose parents dropped him off there during the depression, he went on to get a PhD.
Today they spend most of their management time jumping through government hoops and they are required by law kick their kids out at a certain age into the state run “foster family” system.
All I can say is, given the horror stories I have heard from graduates of this orphanage, the state run programs are the worst possible place for dispossessed children. These children looked back on their days in this private orphanages as the best days of their lives.
As was mentioned above, the big problem with UBI is not in the theory, but in reality.
Who here believes that the likes of McConnell or Ryan would be able to completely replace the current system with a UBI? They’d first have to believe that smaller government is desirable, a proposition for which there is little evidence other than meaningless political rhetoric spewed forth every couple of years. Anyone think the GOP Congressional leadership, current or future, could or would pull this off? Anyone? Bueller?
But let’s entertain the nearly, but not-quite, impossible notion that they were able to replace enough of the current mess that the resultant mess was at least an improvement over the status quo. Who here doubts that, within 10-15 years, the congress would have reinstated almost every program cut in the first place? Anyone?
So, no, I’m not in the mood to discuss the theoretical desirability of UBI, knowing it would turn out to be just another stalking horse for bigger, worse, more intrusive, and more expensive government boondoggles.
Maybe it’d be different if we had conservative congressional leadership that wanted smaller government rather than just wanting to grow it less quickly than the Democrats want. We haven’t had such leadership in my not-so-short lifetime, so I’m not holding my breath.
This. It cannot happen as proposed by libertarians. Which means it can only happen by coalition, and the only other interested parties are statists/leftists.
Count me out. Good intentions, road to hell, and all that.
What happens to Social Security? Because for many elderly their SS check might be higher than the 1000 dollars a month this UBI gives. If it replaced it you will in essence be cutting their benefits, not to mention the added benefit of Medicare which this also replaces. Cutting benefits to the elderly or soon to be elderly is politically unworkable as we have so often seen. Heck even jigering the benefits puts them into fits.
$10,000? To replace 223 existing programs? What a joke.
I’ve seen estimates that the cash value of transfer and in-kind programs for the poor and indigent are worth well into the upper 30k worth of income. If you don’t start the calculations there, you’re just kidding yourself.
I wonder. Of course some people will do as you describe. But people do stupid and irresponsible things under any system. Under what we currently have, homeless are everywhere, at least here in the Bay Area. That hasn’t caused our current system to go by the boards… unfortunately.
I haven’t read the book. But I get the impression that Murray characteristically goes into great detail on this and pretty much all the objections raised in the comments. Soc Sec and Medicare are probably the biggest hurdles, politically speaking. From hearing him talk, it seems he would phase in the program step by step so that those receiving or close to receiving Soc Sec and Medicare can keep them instead of the UBI.
Considering that Charles Murray is Charles Murray, I doubt that he is kidding himself on the calculations. He does point out numbers such as you describe, and then points out the absurdity of spending that much and still having an endemic and growing homelessness problem. That’s what happens when government distributes the money through arcane, overlapping, contradictory, inconsistently and inefficiently applied rules and procedures. Better to get rid of all that, spend less but make sure it goes to everybody, and then let each person figure out his own best interest. As mentioned in #22 there will still be lots of stupid decisions made by stupid people, but probably lots fewer than the stupid decisions made by stupid bureaucrats whose lives aren’t on the line.
As you and others mention, the political realities are daunting. Personally, I think the whole idea is near impossible. On the other hand, under our current system, we are approaching the point of crisis. Periods of crisis are probably the only time when such a plan might be feasible. We almost turned to the UBI once, in another period of crisis, in 1970. It will be harder this time but the crisis will be bigger, which just might be enough to get us to focus on workable solutions such as this might be.
In any case, the calamitous crisis certainly seems to be coming. Unless we have solutions such as this already current in the national discussion, solutions worse than the crisis itself are almost inevitable. Like you, I’m not holding my breath. I think the great American experiment may be on its deathbed. But on the chance and hope that I’m wrong about that, I’ll continue looking for a way to save the great experiment.
Liberals already like to tout studies claiming things like:
There really are crack moms on welfare (not to mention parents addicted to opioids), and some who simply lack basic budgeting skills (or self-restraint). As a result, the welfare check gets spent and by the end of the month there’s no food in the house and the kids experience “food insecurity.”
There’s really no system short of taking such kids from their parents and putting them in foster homes to ensure the kids never go hungry.
And right there is the #1 Argument against a UBI, as proposed by Murray and company. Anyone with any understanding of politicians and human nature knows with absolute certainty that new welfare programs would be birthed in short order to replace the ones shut down by the UBI.
Now – if there was a Death Penalty Clause in the UBI legislation mandating the immediate public execution of any lawmaker that even proposed a new welfare program… Maybe, just maybe the UBI would work.
Yeah – Kinda what I was thinking.
That’s a big if. An if so big it’ll never happen given the current make-up of our legislative body.
What’s more likely with those cement-brains on the Hill is that we get UBI and still end up kajillions in debt with entitlement programs.
“Food insecurity” is a concept designed to mislead.