Paul L. Caron

Saturday, June 4, 2016

The Politics Of A Universal Basic Income: WSJ For, NY Times Against

BasicFollowing up on my previous post, Interest In Negative Income Tax Spreads: 'Freeing The World Of Bullshit Jobs'

Wall Street Journal Saturday Essay:  A Guaranteed Income for Every American, by Charles Murray (American Enterprise Institute):

When people learn that I want to replace the welfare state with a universal basic income, or UBI, the response I almost always get goes something like this: “But people will just use it to live off the rest of us!” “People will waste their lives!” Or, as they would have put it in a bygone age, a guaranteed income will foster idleness and vice. I see it differently. I think that a UBI is our only hope to deal with a coming labor market unlike any in human history and that it represents our best hope to revitalize American civil society.

The great free-market economist Milton Friedman originated the idea of a guaranteed income just after World War II. An experiment using a bastardized version of his “negative income tax” was tried in the 1970s, with disappointing results. But as transfer payments continued to soar while the poverty rate remained stuck at more than 10% of the population, the appeal of a guaranteed income persisted: If you want to end poverty, just give people money. As of 2016, the UBI has become a live policy option. Finland is planning a pilot project for a UBI next year, and Switzerland is voting this weekend on a referendum to install a UBI.

The UBI has brought together odd bedfellows. Its advocates on the left see it as a move toward social justice; its libertarian supporters (like Friedman) see it as the least damaging way for the government to transfer wealth from some citizens to others. Either way, the UBI is an idea whose time has finally come, but it has to be done right.

First, my big caveat: A UBI will do the good things I claim only if it replaces all other transfer payments and the bureaucracies that oversee them. If the guaranteed income is an add-on to the existing system, it will be as destructive as its critics fear.

Second, the system has to be designed with certain key features. In my version, every American citizen age 21 and older would get a $13,000 annual grant deposited electronically into a bank account in monthly installments. Three thousand dollars must be used for health insurance (a complicated provision I won’t try to explain here), leaving every adult with $10,000 in disposable annual income for the rest of their lives.

People can make up to $30,000 in earned income without losing a penny of the grant. After $30,000, a graduated surtax reimburses part of the grant, which would drop to $6,500 (but no lower) when an individual reaches $60,000 of earned income.

New York Times:  A Universal Basic Income Is a Poor Tool to Fight Poverty, by Eduardo Porter:

Why doesn’t the government just give everybody money?

Figure out a reasonable amount — the official poverty line amounts to about $25,000 for a family of four; a full-time job at $15 an hour would provide about $30,000 a year — and hand every adult a monthly check. The minimum-wage worker stretching to make it to payday, the single mother balancing child care and a job — everybody would get the same thing.

Poverty would be over, at a stroke.

Being universal — that is, for the homeless and the masters of the universe alike — the program would be free of the cumbersome assessments required to determine eligibility. It would also escape the stigma typically attached to programs for the poor.

And it would be politically secure. Programs for the poor are often maligned as poor programs. Indeed, defunding antipoverty programs rarely carries political consequences because the poor rarely vote. It’s another story entirely when everybody benefits.

The idea of universal basic income sounds extravagant, right? Well, the Finns and even the Swiss are thinking about it. On Sunday, Swiss citizens will vote in a referendum on whether to hand out 30,000 francs a year — just over $30,000 — to every citizen, regardless of wealth, work status or whatever. ...

Readers of my conversation with a fellow Times columnist, Farhad Manjoo, a few weeks ago know that I think the idea is, let’s say, poorly thought out. Given its resilience, however, it is worth taking apart more methodically.

Its first hurdle is arithmetic. As Robert Greenstein of the left-leaning Center on Budget and Policy Priorities put it, a check of $10,000 to each of 300 million Americans would cost more than $3 trillion a year. ...

Thinkers on the right solve the how-to-pay-for-it problem simply by defunding everything else the government provides, programs as varied as food stamps and Social Security. That, Mr. Greenstein observes, would actually increase poverty. It would redistribute wealth upward, taking money targeted to the poor and sharing it with everybody, including you and me. ...

Work, as Lawrence Katz of Harvard once pointed out, is not just what people do for a living. It is a source of status. It organizes people’s lives. It offers an opportunity for progress. None of this can be replaced by a check. ...

In this world, though, where work remains an important social, psychological and economic anchor, there are better tools to help than giving every American a monthly check.

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If autonomous vehicles become a reality, doubtful, but possible, something like this will need to be implemented. The dislocation of labor will be on a tremendous, rapid scale. The car is king because nearly all professions and vocations are in related to its operation or production. Much of my law practice is related to people screwing up behind the wheel. How many traffic court judges would loose jobs? Prosecutors? Hearing Officers? Police? Ticket writers? Impound Lot folks? Adjusters, Insurance, secretarial, Motor Vehicle examiners? Driver's Ed?, Limo Drivers, Taxi, Messengers, Parcel Delivery, and on and on and on. Millions of folks jobs are somehow tied to a car.

Posted by: Captain Hruska Carswell, Continuance King | Jun 4, 2016 9:32:39 AM

If the guaranteed income is an add-on to the existing system, it will be as destructive as its critics fear.

UBI presumes that everyone can manage money reasonably well, at least for one month. That is not reality. In-kind assistance will continue. It's the government's way to attempt to help people who cannot hold onto money.

Posted by: AMTbuff | Jun 4, 2016 7:19:54 AM