Economists and the Universal Basic Income: The Details Matter a Lot

 

062916ubiWell, the IGM Forum economists survey produced some unpleasant results for universal basic income advocates. And these comments suggest why the economists are so skeptical:

– “Current US status quo is horrible. A more efficient and generous social safety net is needed. But UBI is expensive and not generous enough”.

– “Total health expenses and risk will remain high for individuals. It might also shift the norm whether to work. Work = being part of society”.

– “Field experiments/empirical studies are promising, but we should wait for data (e.g. from the Oakland experiment)”.

– “Limitation to people over 21 can’t be the right answer”.

– “Bill Gates would get 13K, which is crazy. Raising taxes is costly and so redistribution should be targeted to those who need help most”.

– “13K is inadequate for anyone with no other income. Some people eligible for welfare choose to not apply, making this proposal unnecessary”.

– “A minimum income makes sense, but not at the cost of eliminating Social Security and Medicare”.

– “And the children get nothing? The basic idea is sound but too simplistic as stated”.

– “There is much to recommend a universal basic income, but specifically a 13k income while ending all other transfers is difficult to assess”.

OK, this is basically the UBI plan of AEI’s Charles Murray — with the exception that Murray would mandate $3,000 be used for health insurance — as recently outlined in a Wall Street Journal op-ed. Still, it seems as if the economists might be open to a UBI that was larger, or an add-on to the current system, or wasn’t so universal in nature. Some more data would be nice, too, before axing the current welfare state.

An important point: Murray isn’t suggesting this policy just as a response to “the rise of the robots,” the automation context in which you often hear UBI discussed. Instead recall his book Coming Apart, which documents the socioeconomic and cultural splits in modern America. Murray wants those gaps bridged, and sees UBI as a way of doing it. The point isn’t to cut people checks, and if they lose themselves in virtual reality, so be it. To Murray, UBI is about community, not isolation.

Murray in that WSJ piece:

Under my UBI plan, the entire bureaucratic apparatus of government social workers would disappear, but Americans would still possess their historic sympathy and social concern. And the wealth in private hands would be greater than ever before. It is no pipe dream to imagine the restoration, on an unprecedented scale, of a great American tradition of voluntary efforts to meet human needs. It is how Americans, left to themselves, have always responded. Figuratively, and perhaps literally, it is in our DNA.

Regardless of what voluntary agencies do (or fail to do), nobody will starve in the streets. Everybody will know that, even if they can’t find any job at all, they can live a decent existence if they are cooperative enough to pool their grants with one or two other people. The social isolates who don’t cooperate will also be getting their own monthly deposit of $833. … UBI will radically change the social framework within which they seek help: Everybody will know that everybody else has an income stream. It will be possible to say to the irresponsible what can’t be said now: “We won’t let you starve before you get your next deposit, but it’s time for you to get your act together. Don’t try to tell us you’re helpless, because we know you aren’t.”

The known presence of an income stream would transform a wide range of social and personal interactions. The unemployed guy living with his girlfriend will be told that he has to start paying part of the rent or move out, changing the dynamics of their relationship for the better. The guy who does have a low-income job can think about marriage differently if his new family’s income will be at least $35,000 a year instead of just his own earned $15,000.

Or consider the unemployed young man who fathers a child. Today, society is unable to make him shoulder responsibility. Under a UBI, a judge could order part of his monthly grant to be extracted for child support before he ever sees it. The lesson wouldn’t be lost on his male friends.

Or consider teenage girls from poor neighborhoods who have friends turning 21. They watch—and learn—as some of their older friends use their new monthly income to rent their own apartments, buy nice clothes or pay for tuition, while others have to use the money to pay for diapers and baby food, still living with their mothers because they need help with day care.

These are just a few possible scenarios, but multiply the effects of such interactions by the millions of times they would occur throughout the nation every day. The availability of a guaranteed income wouldn’t relieve individuals of responsibility for the consequences of their actions. It would instead, paradoxically, impose responsibilities that didn’t exist before, which would be a good thing.

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  1. Misthiocracy Member
    Misthiocracy
    @Misthiocracy

    James Pethokoukis: Still, it seems as if the economists might be open to a UBI that was larger, or an add-on to the current system, or wasn’t so universal in nature.

    “We’d be willing to go along with the policy but first you have to eliminate everything you like about the policy.”

    • #1
  2. Ron Harrington Inactive
    Ron Harrington
    @RonHarrington

    It seems to me it would be better if tied to work. Giving an hourly wage subsidy for low income workers would provide relief for low income workers and incentivize work at the same time. It would have to be phased out gradually at a fairly high level to prevent a cliff. You could provide the $10,000 per year with a $5 hourly subsidy for a full time worker.

    • #2
  3. I Walton Member
    I Walton
    @IWalton

    There is no such thing as an expert in these matters including economics and confidence should raise ones skepticism  There are people who have studied economics and practiced economics in the real world, have business government  and other experience are old enough and know enough of the rest of the world to have acquired wisdom.  These are the people to pay attention to but one at a time.  While  a guaranteed income as outlined could be a major improvement to the disaster we have now,  when the “experts” begin by saying  transfers are not generous enough it tells me what kind of programs we’d end up with.  I’d prefer to just transfer all of it the states with no money after one or two years and let the states figure it out or kill them.

    • #3
  4. Frozen Chosen Inactive
    Frozen Chosen
    @FrozenChosen

    Too many people would blow the money on vices like alcohol, drugs or gambling and they would still need food, housing and medical care so the thought that it would eliminate current social services costs is wishful thinking.

    Also, paying people money without requiring work is horribly destructive to people’s moral character.  We can see this in our current welfare system.  A wage subsidy such as I Walton suggests would be much better.

    • #4
  5. Flapjack Coolidge
    Flapjack
    @Flapjack

    If UBI were to be instituted, perhaps those who put in more than they take could have the name(s) of those they support?  Make it really personal.  (I’m only half joking.)

    • #5
  6. Richard Finlay Inactive
    Richard Finlay
    @RichardFinlay

    Increase the deduction for dependents and allow people who provide a minimum level of support to others to claim them as a dependent.  A shelter that provides room & board for enough people could probably be “profitable” to someone rich enough to use the deduction.  Maybe it should be a credit ….

    • #6
  7. Kate Braestrup Member
    Kate Braestrup
    @GrannyDude

    Frozen Chosen:Too many people would blow the money on vices like alcohol, drugs or gambling and they would still need food, housing and medical care so the thought that it would eliminate current social services costs is wishful thinking.

    Also, paying people money without requiring work is horribly destructive to people’s moral character. We can see this in our current welfare system. A wage subsidy such as I Walton suggests would be much better.

    Of course people would blow the money on drugs and whatnot. So what? They do that now.

    We enjoyed a long conversation about (more or less) this idea last year.  Since then, I’ve had vicarious experience with Gummint Aid (I’m the financial guardian for a relative on SSI) and feel even more strongly that this is the way to go. As it stands now, trillions of taxpayer dollars are spent paying the salaries of lumpy, unaccountable and (in my experience) unattractive bureaucrats so that earnest, conscientious, genuinely disabled people get screwed over and lazy hucksters quickly learn to game the system.

    • #7
  8. Fake John/Jane Galt Coolidge
    Fake John/Jane Galt
    @FakeJohnJaneGalt

    You are going to have to do better than that.  Nobody can even get close to living on $13000 per year, even in low income areas.  So I am not sure exactly what you are trying to accomplish.

    • #8
  9. Titus Techera Contributor
    Titus Techera
    @TitusTechera

    Fake John/Jane Galt:You are going to have to do better than that. Nobody can even get close to living on $13000 per year, even in low income areas. So I am not sure exactly what you are trying to accomplish.

    His point seems to be that this 13k is only to make sure a body ain’t starvin’. For the rest of aid to the poor, all the resources freed by the dismantling of the welfare state would allow Americans, morally & financially, to take responsibility for the poor. In short, charity would deal with the troubles in ways that bureaucrats can’t. I’d like to see it tried…

    • #9
  10. Hypatia Member
    Hypatia
    @

    The one and only thing UBI would accomplish is making each and every citizen dependent on the gov’t, stifling any dissent.  Whyncha just give everybody a $13K tax cut?  Oh, right, cuz most people don’t pay taxes…

    What has happened to America, that anyone is even discussing going Communist?

    • #10
  11. Titus Techera Contributor
    Titus Techera
    @TitusTechera

    Hypatia:The one and only thing UBI would accomplish is making each and every citizen dependent on the gov’t, stifling any dissent. Whyncha just give everybody a $13K tax cut? Oh, right, cuz most people don’t pay taxes…

    What has happened to America, that anyone is even discussing going Communist?

    Lady, sorry to say, but nobody in America talks in public about repealing the New Deal. Don’t let it exasperate you.

    • #11
  12. Phil Turmel Inactive
    Phil Turmel
    @PhilTurmel

    Fake John/Jane Galt:You are going to have to do better than that. Nobody can even get close to living on $13000 per year, even in low income areas. So I am not sure exactly what you are trying to accomplish.

    Note Murray’s comments about roommates vs. social isolates.  A UBI level that won’t be quite enough to live on provides motivation to work to make up the difference, or cooperate with others to pool resources, both public goods.

    • #12
  13. Hypatia Member
    Hypatia
    @

    Titus Techera:

    Hypatia:The one and only thing UBI would accomplish is making each and every citizen dependent on the gov’t, stifling any dissent. Whyncha just give everybody a $13K tax cut? Oh, right, cuz most people don’t pay taxes…

    What has happened to America, that anyone is even discussing going Communist?

    Lady, sorry to say, but nobody in America talks in public about repealing the New Deal. Don’t let it exasperate you.

    Not sure why you mention the New Deal.  Relief for the working poor, and forced savings in the form of Social Security payments to the elderly(that’s what it was originally supposed to be, and still would be if not for Johnson) bear no resemblance to a guaranteed UBI.

    I find the scenario of  supposed benefits in the OP a rather naive construction.  Just take child support.  Okay, so if a guy has a string of girls who’ve born him a kid, and he’s got a string of child support orders against him which he can never catch up on, and you garnish his UBI–so what?  Wages can already be garnished in my state for support obligations.  That results in the dad left with nothing to live on–and nothing for his current family to live on.  This is a well- known fact and the theme of many rap songs.  It doesn’t seem to have had any salutary effect and I don’t think garnishing a UBI would, either.

    • #13
  14. Titus Techera Contributor
    Titus Techera
    @TitusTechera

    Well, the New Deal is the first step. Then came the Great Society. I don’t see American politicians or other people who have influence talk publicly about getting rid of that either. Even notions of changing those welfare programs seems to doom politicians.

    Maybe Obamacare would be a third step. That’s too soon to tell, though it seems that Mr. Trump has no intention to repeal it, which would be the first big public step for bipartisan approval.

    UBI might come later, as a fourth step, perhaps, if at all.

    It is not obvious whether Americans can be persuaded to stop or backtrack on this road, which is FDR’s road, hence my starting point…

    I wish conservatives who want to try to persuade people every success. But it’s not good being exasperated…

    Then the other matter you mention–it seems to me you’re right about the limits of UBI in cases where society has broken down. If possible, preferring the women & children to the men might still be the reasonable to do, but that is a very difficult thing to establish…

    I’m not sure this dooms UBI as such.

    • #14
  15. Phil Turmel Inactive
    Phil Turmel
    @PhilTurmel

    Hypatia: Wages can already be garnished in my state for support obligations. That results in the dad left with nothing to live on–and nothing for his current family to live on. This is a well- known fact and the theme of many rap songs. It doesn’t seem to have had any salutary effect and I don’t think garnishing a UBI would, either.

    I concur.  For UBI to be useful as an alternative to social supports, it must be off limits to garnishment.  However, with it in place, I think judgements and garnishments for any other purpose could go after a much higher percentage of other income and assets.

    • #15
  16. Hypatia Member
    Hypatia
    @

    Dear Titus and Phil–a guaranteed income is not going to make people any more anxious to pay up on obligations they want to avoid.  Speaking from experience in family law, debt collection, and attempts to collect on judgments for money damages: people would rather spend the money on something else!  So they usually do, pronto, before the creaky due process mechanisms can be ignited.  So much for “income”

    As for a higher percentage of “assets”, creditor  can already take ’em all (except certain statutory exemptions for Bibles, sewing machines, etc) to the extent necessary to satisfy a judgment.  IF creditor can find ’em.  Which again is why people habituated to debt spend any lump sum they acquire down pretty fast.

    no, the only effect this will have on social issues is to dis incentivize people who might otherwise work.

    • #16
  17. Titus Techera Contributor
    Titus Techera
    @TitusTechera

    I agree that UBI is not going to help with alimony or child support.

    I don’t see at all that it’s going to be a significant incentive not to work.

    • #17
  18. Richard Finlay Inactive
    Richard Finlay
    @RichardFinlay

    Fake John/Jane Galt:You are going to have to do better than that. Nobody can even get close to living on $13000 per year, even in low income areas. So I am not sure exactly what you are trying to accomplish.

    But if four of them team up and ‘room’ together, I bet they could survive on $52k/y.

    • #18
  19. Probable Cause Inactive
    Probable Cause
    @ProbableCause

    In practice, a UBI would probably be a disaster, as it wouldn’t be created by dispassionate policy makers sifting the evidence, but by a Congress full of members trying to buy votes.

    On paper, though, I’ve long thought that it makes sense.  We already have a hodgepodge of a UBI now, with the standard deduction, earned income tax credit, minimum wage, unemployment insurance, and welfare.  (I would also include Social Security; but even on paper, that’s untouchable.)  Why not scrap the Frankenstein’s monster for something simple and clean?

    The big benefit is that the punishment for working all but disappears.  You are never in danger of losing your benefit because you take a low wage, part time job.  And by doing so, you pay some taxes to partially offset your UBI.  You also experience the dignity, habit and reward of work.

    As a side benefit, it should be easier to administrate.  Since every citizen is eligible, the bureaucracy required to verify eligibility is smaller.

    So there’s lots to like.

    Again, on paper.

    • #19
  20. I Walton Member
    I Walton
    @IWalton

    Make the distribution through the income tax, so we don’t need  more bureacracy, policing is already in place and there are incentives to work legally and pay taxes.  The main problem with the idea is that Democrats would hate it and undercut it at every step.  They couldn’t hand out goodies, force people into dependency, destroy families, insist on minimum wages and otherwise sow divisions and failure.

    • #20
  21. Ford Inactive
    Ford
    @FordPenney

    This is ridiculous on so many levels. Bureaucrats are going to cut programs to fund this? Not going to happen. People are going to be more ‘responsible’, like they are with their EBT cards? With their parental responsibilities?

    And if you think the minimum wage issue is a ‘moving the goal posts’ event then this is just the beginning of a larger social war. ’13k isn’t a living wage, it should be at least 17 or 21 or 36…’ choose your number. (and if you are a minority maybe a little reparations thrown in there?)

    Adjusting the American bureaucracy; moving this lever, tweaking that dial? Seriously? We can’t get the system we have working, and look how it is ‘gamed’ now, and this is the ‘genius’ solution?

    Why doesn’t the government just do the easy thing? Give every American a million dollars and call it quits? Now we are all set right, no one would blow such a windfall right?

    Last one out please turn off the lights.

    • #21
  22. Frozen Chosen Inactive
    Frozen Chosen
    @FrozenChosen

    Probable Cause: Since every citizen is eligible, the bureaucracy required to verify eligibility is smaller.

    This will never happen in a million years.  No way they give it to those evil rich people(anyone making over $80k) – they will just make them pay for it

    • #22
  23. Kent Lyon Member
    Kent Lyon
    @NanoceltTheContrarian

    This is a truly insane idea. Like the Federal Income Tax or the minimum wage, this policy, if enacted, would create an endless spiral of political controversy with unceasing increases in the amount of the wage, and the circumstances of its application. This would add a layer of complexity to government and the economy as well as civil society, that would lead to the collapse of civil society.  We would be a nation of pajama boys. This idea would in no way increase civic commity. We need to shrink government, not expand it exponentially as this would do. With federal debt at 100% of GDP and Social Security and Medicare headed toward insolvency, anyone who would suggest something like this is a clear and present danger to the nation. No transition plan from current Medicare and Social Security is described and if anyone thinks current and incipient beneficiaries of these could be bought off, immediate psychiatric care is recommended. The pseudo-intellectual analysis of this suggestion needs to cease, and a stake be driven through the heart of this monstrosity.   This is as far as you can get from conservative. This is the Progressive wonderland writ large.  This makes the National Industrial Recovery Act look like a model of Conservatism. Derision is all that is appropriate here. Ricochet was billed as a conservative site.  I think I want my money back.

    • #23
  24. Kent Lyon Member
    Kent Lyon
    @NanoceltTheContrarian

    The key problem with this proposal is that it represents a fundamental change in the relation of society and the individual as well as a fundamental change in the relation of government and individual. Heretofore, benefit programs have been based on individual contributions to the “system”. The benefits are “earned.” This is the case with Social Security and Medicare.  Welfare programs don’t rely on earned benefits but are limited to a small segment of the population, are not automatic but have eligibility criteria, and are revokable when criteria are no longer met. A basic salary for which all are eligible, regardless of contributions, is a quantum leap in policy that enshrines a concept that has never been extant in America, namely that everyone is eligible for a benefit automatically. It essentially says that a “natural right” of individuals is a guaranteed income. That so called “conservatives” would advocate a fundamental change in the relation of individuals and society, and individuals and government, is almost beyond belief. That they would advance this as a policy suggestion to be voted up or down on a majority vote in Congress, is reprehensible.  If considered at all (which it should not be), it should only be done so in a Constitutional amendment with the Constitutional process of ratifying an amendment. That no such thing is mentioned clearly indicates that Mr. Pethokoukis and Murry, et. al. have no regard for the Constitution. Shameful. This would be far worse than a federal income tax.

    • #24
  25. Barfly Member
    Barfly
    @Barfly

    Kate Braestrup: trillions of taxpayer dollars are spent paying the salaries of lumpy, unaccountable and (in my experience) unattractive bureaucrats

    That’s the real purpose and the real cost of the welfare state. The single  most important benefit of UBI would be the impoverishment of tens of thousands of useless drones.

    The progressive project is and has ever been to transfer wealth, power, and status from those who produce to those who persuade. It has never had any other goal, and all it does is directed to that end.

    The political left exists as an organized force for one purpose – to steal.

    Sure, paying people not to work is ugly. But paying those ugly people to steal is far worse. UBI is a good deal for productive conservatives like me.

    • #25
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