Getting back to the topic of Universal Basic Income, Megan McArdleon Bloomberg wrote a very good article on why UBI won't work.
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Last night, I was part of a Wonkblog debate
on guaranteed income. The discussion ranged widely, but I thought I’d
write up a few of what I think were the most important points:
Cost:
Not a few libertarians have embraced the idea as an alternative to the
welfare state. Get rid of all the unemployment insurance and just cut
everyone a check once a month. There’s a lot to like about this: It has
minimal overhead, because you don’t need to verify eligibility beyond
citizenship, and it may reduce some of the terrible incentives that poor
people face under the current system.
There are a couple of
problems with this, however. The first is that zeroing out our current
income security system wouldn’t provide much of a basic income. Total
federal spending on income security (welfare, unemployment, etc.) is
under $600 billion
a year. There are 235 million adults in the U.S. Millions of those are
undocumented immigrants, but that still leaves you with a lot of people.
Getting rid of all of our spending on welfare and so forth would be
enough to give each of those people less than $3,000 a year. For a lot
of poor people, that’s considerably less than what they’re getting from
the government right now.
The problem is that if you try to bring
it up to something a bit more generous, the cost quickly escalates.
Cutting everyone a check for $1,000 a month, which most people in that
room would consider too little to live on, would cost almost $3
trillion. But if you means-test it to control the cost, or try to tax
most of the benefits back for people who aren’t low-income, you rapidly
lose the efficiency gains and start creating some pretty powerful
disincentives to work.
Reciprocity: I made
the point that while many societies redistribute more than ours does --
many hunter-gatherers have practiced something close to communism --
that sharing takes place in a strong network of reciprocal obligations.
This is not the reciprocity of trading, in which I give you something in
exchange for something else right now, and when the trade is finished,
so are our obligations to each other. The sharing environment is more
like a family, in which the obligations are deep and fairly
wide-ranging, but you don’t necessarily know who will collect on them or
when.
The guaranteed income is often explicitly touted because it
obviates the need for reciprocity; why should you have to work some
crappy job just to get the basics you need to live? Or jump through
hoops for some social worker? Mike Konczal made the point that bankers
don’t have to pee in a cup to get paid.
I oppose drug-testing
welfare recipients, because I oppose the drug war. But I think the
broader argument for a guaranteed income has some really deep problems.
Some are moral: How can you say that the affluent have an obligation to
give a considerable portion of their income to their fellow citizens,
precisely in order to free said fellow citizens from any obligation to
the people who are paying their bills? Others are practical and
political: Such a program would not have broad-based political support,
and it would be corrosive to civic society.
I think you can make
an argument that society should make it possible for those who are
willing to contribute to support themselves; I would not be opposed to a
system of guaranteed jobs that paid $10,000 a year, or whatever we
think this basic income should be. But you cannot sustain a program that
posits huge obligations on the part of one group to people who have no
reciprocal obligations at all.
After the talk, naturally, someone
asked me about trust-fund babies: Why do people worry about welfare
recipients but not about people who live off inherited wealth? I think
there are a lot of answers to that: The number of people with sufficient
inherited wealth to free them from the need to work is very small, and
they do not make ongoing demands on everyone else’s monthly paycheck.
The broader answer is that I am bourgeois enough to think that trust
funds are bad for people, and I have occasionally toyed with the idea of
a 100 percent estate tax.
But
one thing to point out is that the questioner was actually wrong: The
person with inherited wealth usually obtained it by just the sort of
nannying that Konczal decried. In order to get the trust fund, they had
to submit to many hours of being harangued about their manners, habits
and life choices -- and if you know anyone in line for a substantial
inheritance, or have read a P.G. Wodehouse novel, you know that their
elderly relatives often use the money to control the lives of their
potential heirs. The reward may be wildly out of proportion to the
amount of harassment they have to suffer, but in very few cases is it a
free guarantee.
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You can read the entire article by clicking here but this illistrates some of the same points I made about why Universal Basic income is bad and should be universally rejected.
What do you think about the article? Post a comment and let me know.
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