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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
That’s why I’ll never support a VAT/National sales tax without a Constitutional amendment to outlow the income tax first – or we’ll wind up with both.
So if I forget my wallet at home one day and don’t have money to get lunch at work, I’m food insecure for the whole year?
There are huge problems with how they measure it, but if you consider that they measure it in order to determine how much taxpayer money they need to spend to fix it, they will makes sure that the answer to that question is “more more more more!”
By the USDA’s definitions, “food insecurity” does not automatically mean going hungry, skipping a meal, or changing the amount of food you consume. Food insecurity includes “reports of reduced quality, variety, or desirability of diet. Little or no indication of reduced food intake.“
This is really a side-issue, but . . . for several years our church has contributed to a weekend meal program through our local schools. In these programs, on Friday afternoons, needy kids are given a grocery bag of food to take home for the weekend so that they’ll have food. “Food insecurity” is one of the major drivers of this program. What shocked me is that they don’t check to see if a kid’s family really is food-insecure. They trust that the kids who need the food will be the ones taking the food. They don’t want to shame anyone by asking questions, so . . . there it is, kids! Take it!
I’ve seen a lot of abuse of assistance programs, but with most of them, at least a little effort is required to properly abuse them. This one is easy to abuse.
Anyway, back to the regular topic.
Here are some things I’ve written on the subject.
http://ricochet.com/archives/against-the-ubi/
http://ricochet.com/457711/forget-ubi-america-already-has-universal-basic-consumption/
I strongly disagree with the pernicious consensus that’s forming among people who should know better.
If the people who seem to need the UBI thought like people who want to give it to them, then they wouldn’t need the UBI. Money isn’t the cure for poverty. Poverty is a state of mind. Poor people aren’t middle class people without money. The current welfare system has the benifit of being at least somewhat means tested and somewhat of a PITA to sign up for. Giving an entitlement to everyone is a recipe for disaster. You have to think of the people on the margins. There are a lot of them and the UBI would cause a ton of people who currently work to stop working.
Mike, I missed your earlier UBI discussions you linked in #35 above. For anyone thinking about this, I suggest looking at those. Tomorrow I may (or may not) have some time to post on why I disagree (or agree) with Mike.
Exactly, that’s why we can have 1 in 6 children suffering from “food insecurity” while simultaneously facing a childhood obesity epidemic…
But the UBI is too, with the “claw back” feature, right? What’s the difference?
Nicely put.
People really need to stop worrying so much about the national debt and measuring policy based on the effects it has on the debt. It’s not that important that it be lowered. The pace of growth just should be kept reasonable. I say this as someone who things practically all government spending is wrong. We shouldn’t implement any policy simply based on the effect it has on the debt. We wouldn’t even notice and practical consequences.
It gives people who stand to make anywhere near the UBI incentive to quit work, especially when you consider that some would choose to pull their resources and live pretty comfortably on other people’s dime.
Most proposals for new policy don’t take into account the incentives caused by the new policy. Partially because it’s really hard, but also because it’s easy to look at a problem and propose a solution by assuming nothing will change except for fixing the problem.
People like us would still work because we understand the incentive structure and we are productive enough to make the UBI no different than a much more efficient tax structure.
It’s easy to commit the typical mind fallacy and assume that everyone else thinks approximately like we think, but the people who would be most affected by the implementation of the UBI are nothing like us and wouldn’t respond as you or I would.
But I am looking at incentives, and what you identify as one of the strengths of the current system:
I view that as a bug, not a feature. The current system incentivizes young women to have kids so they can go on welfare, and further incentivizes them to not marry the baby daddy lest his income (if he has any) reduce her monthly checks. This is a big part of what’s driving up the rates of out-of-wedlock births, fatherless children, and all the social pathologies that result from it, as Charles Murray has been documenting for decades.
If we could fix that problem alone, I’d be happy, even if we face a new epidemic of able-bodied young men who’d rather spend their days surfing than working. At least they’re adults choosing to waste their own lives.
In economic terms, it doesn’t matter what the average person does, it matters what the marginal person does.
I think the consequences would be much worse, even if it would fix out-of-wedlock births (not obvious). People have out of wedlock births because it feels good and commitment is hard, especially for the people who don’t seem to care where unprotected sex will lead.
You think the opioid epidemic is bad now, with a rash of who knows how many people with nothing to do and nothing to fulfil the human need to contribute, you’ll not just have lazy young men, you’ll exacerbate the soul sucking depression that government intervention already causes.
It can be helpful to flip an analysis on its head for perspective sometimes. Thought experiment: instead of thinking of welfare incentivizing young women to have a baby, consider being a woman and having a baby as a hurdles to receiving enough welfare to throw away the rest of one’s productive life. Now consider UBI as the removal of both of those hurdles for receiving enough welfare to throw away the rest of one’s productive life.
UBI is a really bad idea.
There ain’t no commitment like the commitment of raising a kid. Made only harder if you try to do it by yourself instead of with a partner. I can’t even imagine. (and my wife has told me on multiple occasions that I don’t have to worry about divorce, because she is *NOT* raising these kids alone).
The connection between obesity and poverty makes a lot of sense to me. I love to cook, and I find decent meats and fish, vegetables, and fruit are very expensive. What’s available for a few bucks is not good food. It contains way too much salt and sugar and fat and other chemicals that extend its shelf life. It’s certainly okay once in a while, and it will keep your stomach from growling, but it won’t nourish you. And it will probably make you sick down the road.
My daughter runs a charitable nonprofit in northern New England, and one thing her organization works on is to connect the poor with decent food through organizing farmers’ markets that actually go into or near poor neighborhoods once in a while. And the families in these poor neighborhoods love these markets.
Looks sort of the like old North End open air marketplace in Boston. :)
I don’t understand this. There is no salt or preservatives in fresh fruits and vegetables, and they’re way cheaper than prepared foods.
Maybe it’s a regional thing. In New England, with our short growing season, fresh fruits and vegetables are not cheaper most of the year.
Time to prepare meals using fresh vegetables is a factor too. Everyone walks in the door at the same moment at the end of the day, tired and hungry.
One thing I really love in our local grocery stores is a new section of fresh vegetables all cut up and ready to rinse and cook. It’s great and easy. And potatoes you can throw in the microwave! Wow. :)
My wife’s retired, and she loves to cook.
Now I keep reading the subject header as “Universal Bacon Income.”
That’s something I support, by the way.
Not if you’re unemployed and on welfare (or UBI)…
See, *my* perfect world would fix that, by requiring anyone receiving public assistance to show up at a “workplace” each day at 8 AM and stay there until 5. In an Ideal world they’d do something productive, but I really don’t care what they do there – it can just be a big empty warehouse where they sit and read magazines or chat with friends for all I care. But I want them out of the house and away from the TV. (I’d probably have a cell signal blocker and no wifi too).
If I have to leave the house every day to pay the taxes to support them they can leave the house every day to receive their support.
So you are out the door when she deems the children raised enough to make divorce work? Not sure I would care for that threat hanging over my head.
I’m old – I’ll be dead by then. (My youngest graduates high school the year I’m eligible for full Social Security.)
A charity called Give Directly has for some time been experimenting with giving aid in the form of money instead of other things and recently has begun experimenting with a basic income. It’s data, mostly from Kenya, show that the money goes to good use.
Many commenters have explained why UBI won’t replace the various income subsidies (in cash and kind) that are now in effect. I won’t rehash their explanations, which display a sound understanding of practical politics. The libertarians who support UBI are barking up the wrong tree, if they really want to reduce the number and cost of income subsidies. The right tree is economic growth. The surest way to reduce poverty, broken homes, drug addiction, etc., is to make it more possible for people to earn a decent living and all that goes with it: less poverty (of course), marriage, children raised by both parents, less dependence on drugs to escape life’s harsh reality, etc. How does that happen? Through robust economic growth that raises real incomes and produces jobs at a far faster rate than the U.S. has experienced in recent decades; for example:
Why has the rate of growth declined? Because government controls so much of the economy through spending and regulation. For a quantitative estimate of the effects of those factors, see: https://politicsandprosperity.com/2016/08/31/the-rahn-curve-revisited-2/.
I admit that curbing government spending and regulation is just as hard as replacing myriad assistance programs with UBI. But at least its a step in the direction of reducing dependence on government instead of finding a new way to reinforce it.
xxx
Suppose that a UBI were instituted in place of all other forms of welfare. What would the government do when people for whom the UBI were their only source of income ran out of money – or went deep into debt – long before their next payment? I doubt that legislators would leave it to private charity. So, we would see the gradual reinstatement of the current welfare system.
Some places are already trialling variations to this approach:
Apparently a subgroup of participants were randomly selected from the potential population, they didn’t go big bang with everybody. It’s also not strictly speaking universal basic income, as it’s going to unemployed people only.
Which seems a really smart approach.
Ontario’s earlier experience with a similar approach to Seniors in poverty apparently worked well.
This UK experience was less encouraging:
This despite:
I have the time. Here goes…