NB: This post should be read as a response to an earlier piece by Whitmore.
The Universal Basic Income seems an outlandish idea. Since President Bill Clinton signed the 1996 Personal Responsibility and Work Opportunity Reconciliation Act, welfare discourse in the United States has long accepted the underlying premise of rewarding work. On the surface, a UBI fails this test. Some worry that the stipend would encourage more would-be workers to leave an already depleted labor market. Others are concerned that the simple arithmetic doesn’t add up.
These are legitimate concerns. When four separate state experiments with negative income taxes were conducted in the 1960s, the results disappointed economists who were searching for an innovative policy panacea: workers left the marketplace and income gains were meager. But if the UBI has been around for a while — supporters are quick to count notables such as Martin Luther King, Milton Friedman, and Bertrand Russell among their members — its appeal rests not on its fundamentals but the uncertain trends that are forming our future.
Once a quirky idea only entertained by those who have secured their legacy elsewhere, the UBI has become a “serious idea” almost overnight. As Guy Standing, a British economist who co-founded an organization to analyze the UBI, tells FiveThirtyEight in an in-depth profile of the UBI, “In the last five years we’ve taken on a new respectability. But in the last two years it has become an avalanche.”
Switzerland recently put the UBI to a referendum after more than 100,000 people in the country of 8 million people signed a proposal calling for each Swiss adult to be paid an unconditional monthly income of roughly $2,555 and an additional $650 per child. The country’s entire political establishment rallied against the UBI, and the measure was rejected by 77 percent of citizens. But while Switzerland’s measure has failed, other experiments in Finland and the Netherlands will provide more data for an enhanced debate. Closer to home, the Y Incubator, a prominent Silicon Valley venture capital outlet, has announced a decision to test the UBI in Oakland by measuring the effects on recipients over a controlled time period. If these random control trials (RCTs) work closer to the successes the Canadian province of Manitoba witnessed in a UBI trial from 1974 to 1979 rather than the United States’ failures in the 1960s, then the empirical case for a UBI will be stronger.
But even shorn of this data, Whitmore’s endorsement of Charles Murray’s recent Wall Street Journal piece is worth considering. Murray’s support for a UBI is not new, and many of his conservative allies have also considered the UBI a more efficient alternative to the existing labyrinth of entitlement programs and welfare initiatives. The current system, which carries an eye-watering price tag that nears $1 trillion annually, can be represented by this damning graph. Using data from the Congressional Budget Office, FiveThirtyEight produced another chart that shows how welfare as it stands today can create steep marginal tax increases for low-income Americans and consequently disincentivize individuals from pursuing more work. It’s well worth checking out here.
But when those on the left, such as Andy Stern, the former president of the Service Employees International Union, are also calling for a UBI, it’s not hard to imagine that the political feasibility of the UBI will similarly only grow in the coming years.
My own take is that the UBI will become a better option over time if two ongoing trends continue to mature and accelerate. The first trend is a divergence between labor and income. While productivity has generally shot up over the past 30 years — notwithstanding a recent slowdown during the Obama years — median wages have largely stayed stagnant. As such, labor’s share of the economic pie has edged downwards. The second trend is the specter of widespread automation.
If our structural levels of unemployment rise as a result of the second trend, and the jobs that do exist no longer provide a sufficient source of income, the UBI may well be a necessary tool for policymakers to deploy in the coming years. Budgetary pressures mandate that it would have to be means-tested and the amount given to each eligible household won’t be, by itself, sufficient for individuals to live with dignity and the resources necessary to ensure every channel of opportunity is open to their children. Welfare politics and the differing needs of different groups — veterans, the disabled, refugees — all mean that a UBI as a standalone substitute for a complex welfare state would be akin to wielding a sledgehammer rather than a scalpel. What I could see supporting is a UBI complemented by a necessary assortment of programs.
But while I cautiously support the gradual introduction of a UBI, paired with simultaneous cuts in duplicative welfare programs, I want to add one set of caveats and concerns that I hope a more full-throated supporter of the UBI can address — whether on this blog, in the comments section, or in a post elsewhere:
- The possibility that the UBI might be a cop-out for policymakers and other actors from wracking their brains and committing the necessary resources to create jobs for Americans. As I hope to explain in a later post, the notion that there aren’t any jobs in the 21st century is both pernicious and wrong.
- This program will only move in one direction. It’s hard to imagine a policymaker winning on a platform of cutting the UBI. Perhaps inflation and inertia can join forces or politicians can cut other programs and entitlements, but I worry the UBI will only go in one direction: upwards. Entitlement estimates are always initially underestimated. But the UBi in particular is well-suited for a gradual and inexorable rise. If it starts at $2,000 a month per household, what will stop populists from calling for $3,000 or $3,500 a month? The current welfare system, with all its complexities, actually allows for politicians to make cuts (this can be for better or worse) and ensure the U.S. welfare system remains nimbler and more responsive than its sclerotic counterparts in Europe.
- The moral dimensions of work and how we perceive the role of labor in our lives matter. I worry that in a country that increasingly views jobs through the narrow prism of income — we will miss the recognition that human dignity rests in part on an individual’s capacity to contribute in a meaningful way to the welfare of others.
These are all important but not necessarily fatal concerns. A broad and simplistic UBI is too clever by a half. But one that augments our existing toolkit is worthy of a serious discussion, not just in Switzerland, but here in the United States.