UBI – That Radical Right-Wing Idea?

By The Banker | Blog Posts, Inequality, Taxes, Texas
22 Jan 2017
  • SumoMe

basic_incomeLast week’s post — on a poverty eradication experiment in Africa of giving no-strings-attached cash — was a bit of a Trojan horse for this week: UBI is the idea of granting all adults a small amount of income, for life.

UBI is having a moment right now. Finland launched an experiment in 2017 to address joblessness with basic income, and the Netherlands is also attempting small-scale trials. Swiss voters rejected it in a referendum in 2016, but Swiss UBI supporters rejoice that it at least came up for a vote. A Silicon Valley startup Y-Combinator plans to launch a basic income experiment in Oakland, California, this year.

Futurists see UBI as the solution to the automation problem, when robots eliminate all of the human jobs. 1


The best advocate in the United States for UBI that I’ve read is Charles Murray, in his 2016 version of his book “In Our Hands: A Plan to Replace the Welfare State,” in which he calls for a universal basic income of $13,000 for every adult in the United States. Somewhat to my surprise, I found his book, and the ideas, very compelling.

Is Charles Murray a fellow traveler of Bernie Sanders, attempting to socialize America with his plan for free money? No. Actually, he’s just the opposite. He is a hard-core Libertarian, opposed to big government. In his version, UBI is meant to replace the welfare state built by President Franklin D. Roosevelt’s New Deal of the 1930s and President Lyndon B. Johnson’s Great Society programs of the 1960s.

Murray’s unexpected advocacy is what got me intrigued enough to read his book.

Charles Murray first came to wide academic prominence in the 1990s with his controversial book “The Bell Curve,” which placed him somewhat to the right of Attila the Hun on the political spectrum. Why, I wondered, would a right-wing guy propose UBI?

Murray’s idea, briefly, is this:

charles_murrayEvery American 21 years or older would receive a $13,000 annual stipend, of which the first $3,000 must be dedicated to catastrophic health insurance.

As a Libertarian, Murray believes that giving recipients a choice of how to spend their money, rather than relying on a massive federal bureaucracy to control choices and incentives over housing, nutrition and work will improve the lives of people in poverty.

Although the UBI would cost $2.58 trillion per year (in 2014 dollars), Murray points out that our welfare infrastructure, as currently constituted, costs $2.77 trillion per year (also in 2014 dollars.), offering the federal government — and therefore, U.S. taxpayers — savings from UBI from the start.

Murray makes the interesting point that for people in poverty — in particular unwed mothers or unemployed young men of working age — a guaranteed income suddenly changes certain incentives. Those incentives, he argues, could address the roots of endemic poverty.

Murray speculates that UBI could directly benefit single mothers, for example, by providing a guaranteed source of income even if they cannot join the workforce while caring for a child. In addition, the fact that a child’s father receives a guaranteed income — easily tracked through a known bank account — would greatly aid collection of mandatory alimony payments. Murray further speculates that unemployed working-age men who might have previously lived for free with a relative or girlfriend may suddenly find themselves forced to pay rent, as they have known sources of cash.

A UBI could increase labor mobility for people who would like to move to where jobs are more plentiful, but do not have enough financial cushion to take the risk of relocation. Although $10,000 in available annual income is not very much money for any individual, when pooled by cooperative adults it could also serve as a boost to solve collective housing needs.

The long-term benefits of UBI remain speculative because only short-term and small-scale experiments have ever been tried in the United States — the largest being a 1970-1980  experiment in Seattle and Denver, with 4,800 participants. It produced data and policy directions thatresearchers found inconclusive.

Look, I know that it’s incredibly easy to criticize UBI. Just twenty seconds of thought gets me the following word salad:

  1. Politically untenable
  2. Disincentive to work hard, or work at all
  3. You might snort money-for-nothing straight up your nose
  4. Without necessity, where is the invention?
  5. Higher taxes
  6. Now we’ll REALLY need a wall
  7. Replacing some or all our social safety net programs at once sounds scary
  8. Is $13,000 the right amount?

I’m sure you will be able to come up with additional objections in another twenty seconds, and we’d probably agree on those as well.

robots_for_basic_incomeInterestingly, in the United States UBI receives the harshest criticism from the left.

Robert Greenstein, an advocate for traditional Democratic Party-sponsored programs to reduce poverty, came out strongly against UBI last year, calling it both politically unrealistic and a distraction from programs such as subsidized housing and minimum wage increases. Roosevelt Institute fellow Mike Konczal has argued that Libertarian claims of a bloated welfare state obscure the important work that social programs accomplish. Bernie Sanders has been asked repeatedly about UBI but always expresses a preference for “basic standard of living” policies rather than “basic income.”

Personally, I find the idea that people in poverty could be trusted with no-strings cash highly compelling, when compared with the complex alphabet soup of federal programs, including SNAP, Section 8, TANF and EITC. Wshould pay attention to poverty-relief experiments with direct cash payments in Africa, as they may do better than targeted programs that attempt to control the behavior of people in poverty.

In the face of financial dysfunction and the persistence of poverty — despite our great national wealth — we ought to be able to have a conversation about speculative and interesting ideas to address poverty.

 

A version of this ran in the San Antonio Express News and Houston Chronicle.

 

See related posts:

Cash Transfers in Africa

Inequality in America – the Washington Post Map

Video: Inequality in America

 

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  1. Except finance blogging, obviously, which can never be automated. It is too essential and too creative to ever fall prey to Skynet.

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3 Comments

  1. stinky mcpoop says:

    For this kind of thing to work in America, though, you’d need to address issues around:

    – immigration
    – drugs and drug abuse
    – the social issue (i.e. incentivized single parenting or other degeneracies, our country’s social decline, etc.)
    – fraud, waste & abuse

    National experiments work great in isolated countries like Finland and the Netherlands because they’re small and isolated, and don’t have the kinds of issues countries the size and scope of ours has. Comparing Denmark to the US is like comparing apples and oranges, yet people continually use it as an argument for social change.

    It should come as no surprise that US liberals are opposed to this – it’s in direct conflict with the end game of the ‘progressivism’ sold wholesale in this country, which is a totalitarian state everyone depends on for as many things as possible. All of those government programs you mentioned for fighting the so-called ‘war on poverty’ come with bureaucratic fiefdoms run by nameless, faceless state workers collecting comfortable paychecks and pensions. You would be hard-pressed to find a politician willing to take on these budget-busting bureaucracies, despite the greater good that could come out of it. There is no finer example of this kind of waste than the state government that runs New York. But I digress.

    Frankly, it’s a great idea. And thank God we have a new administration willing to listen to new ideas.

  2. Beergut says:

    The argument that it would help single mothers and help track down fathers to make them pay child support is reason enough to attempt this program.

    Is UBI only for adults? You don’t want people having kids simply to collect $13k a year.

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