Why I Came To Support A UBI

As regular readers of this blog know, I recently published a book titled Living Together. After a survey of various elements of our society that I identified as “broken,” I drew on a variety of research to propose an expanded social contract. An important part of that new social contract was a Universal Basic Income.

The book was an exercise in utopianism–most of my proposals won’t be adopted in my lifetime, if ever. But a girl can dream…

Be warned: Even the following, abbreviated explanation will make this post longer than usual. (But hey–it’s a holiday…)


Social scientists point to the ways in which America’s obsessive focus on individual responsibility and achievement obscures recognition of the equally important role played by the broader community within which we are embedded. A much-cited remark made by Elizabeth Warren during her first Senate campaign reminded listeners that communal infrastructure makes individual success and market economies possible:

“There is nobody in this country who got rich on their own. Nobody. You built a factory out there – good for you. But I want to be clear. You moved your goods to market on roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory… Now look. You built a factory and it turned into something terrific or a great idea – God bless! Keep a hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.”

The fact that Warren’s observation garnered so much attention suggests that Americans rarely see individual success stories as dependent upon the government’s ability to provide a physical and legal environment within which that success can occur.

The importance of hard work and individual talent should not be minimized, but neither should it be exaggerated. When the focus is entirely upon the individual, when successes of any sort are attributed solely to individual effort, the importance of that infrastructure–and the effects of social and legal structures that privilege certain groups and impede others– become less visible.

Policies intended to help less fortunate citizens can be delivered in ways that stoke resentments, or in ways that encourage national cohesion.  Consider public attitudes toward welfare programs aimed at impoverished communities, and contrast those attitudes with the overwhelming majorities that approve of Social Security and Medicare.

Social Security and Medicare are universal programs; virtually everyone contributes to them and everyone who lives long enough participates in their benefits. Just as we don’t generally hear accusations that “those people are driving on roads paid for by my taxes,” or sentiments begrudging a poor neighbor’s garbage pickup, beneficiaries of programs that include everyone (or almost everyone) are much more likely to escape stigma. In addition to the usual questions of efficacy and cost-effectiveness, policymakers in our diverse country should evaluate proposed programs by considering whether they are likely to unify or further divide Americans. Universal policies are far more likely to unify, an important and often overlooked argument favoring a Universal Basic Income.

What if the United States embraced a new social contract, beginning with the premise that all citizens are valued members of the American polity, and that (as the advertisement says) membership has its privileges?

Contracts are by definition mutual undertakings in which both sides offer consideration. In my imagined “Brave New World,” government would create an environment within which humans could flourish, an environment within which members would be guaranteed a basic livelihood, a substantive, excellent education, and an equal place at the civic table. In return, members (aka citizens) would pay their “dues:” taxes, a stint of public/civic service, and the consistent discharge of civic duties like voting and jury service.

In my Brave New World, government would provide both physical and social infrastructure.

We know the elements of physical infrastructure: streets, roads, bridges, utilities, parks, museums, public transportation, and the like; we might expand the definition to include common municipal services like police and fire protection, garbage collection and similar necessities and amenities of community life. Local governments across the country understand the importance of these assets and services, and struggle to provide them with the generally inadequate tax dollars collected from grudging but compliant citizens.

There is far less agreement on what the social infrastructure should look like and how it should be funded. The most consequential element of a new social infrastructure, and by far the most difficult to implement, would require significant changes to the deep-seated cultural assumptions on which the current economy rests. Its goals are to ease economic insecurities, reduce the gap between rich and poor, restore workers’ bargaining power and (not so incidentally) rescue market capitalism from its descent into corporatism and plutocracy. The two major pillars of that ambitious effort are a Universal Basic Income and single-payer health insurance.

The defects of existing American welfare policies are well-known. The nation has a patchwork of state and federal efforts and programs, with bureaucratic barriers and means tests that are expensive to administer and that operate to exclude most of the working poor. Those who do get welfare are routinely stigmatized by moralizing lawmakers pursuing punitive measures aimed at imagined “takers” and “Welfare Queens.” Current anti-poverty policies have not made an appreciable impact on poverty, but they have grown the bureaucracy and contributed significantly to stereotyping and socio-economic polarization; as a result, a number of economists and political thinkers now advocate replacing the existing patchwork with a Universal Basic Income.

A Universal Basic Income (UBI) is a stipend sent to every U.S. adult citizen, with no strings attached– no requirement to work, or to spend the money on certain items and not others. It’s a cash grant sufficient to insure basic sustenance; a number of proponents advocate $1000 per month. As Andy Stern, former President of the Service Employee’s International Union has written,

“A basic income is simple to administer, treats all people equally, rewards hard work and entrepreneurship, and trusts the poor to make their own decisions about what to do with their money. Because it only offers a floor, people are encouraged to make additional income through their own efforts… Welfare, on the other hand, discourages people from working because, if your income increases, you lose benefits,”

With a UBI, in contrast to welfare, there’s no phase-out, no marriage penalties, no people falsifying information–and no costly bureaucracy. Support for the concept is not limited to liberals and progressives. Milton Friedman famously proposed a “negative income tax,” and F.A. Hayek, the libertarian economist, wrote “There is no reason why in a free society government should not assure to all, protection against severe deprivation in the form of an assured minimum income, or a floor below which nobody need descend.” In 2016, Samuel Hammond of the libertarian Niskanen Center, noted the “ideal” features of a UBI: its unconditional structure avoids creating poverty traps; it sets a minimum income floor, raising worker bargaining power without wage or price controls; it decouples benefits from a particular workplace or jurisdiction; since it’s cash, it respects a diversity of needs and values; and it simplifies and streamlines a complex web of bureaucracy, eliminating rent seeking and other sources of inefficiency.

Hammond’s point about worker bargaining power is especially important. In today’s work
environment, characterized by dramatically-diminished unions and the growth of the “gig economy,” the erosion of employee bargaining power is confirmed by data showing that wages  have been effectively stagnant for years, despite significant growth in productivity. With a UBI and single payer health coverage, workers would have the freedom to leave abusive employers, unsafe work conditions, and uncompetitive pay scales. A UBI wouldn’t level the playing field, but it would dramatically reduce the tilt. And if the robots do come—if the predictions of jobs that will be lost to automation are even close to accurate—a UBI could act as a national safety-net, helping the country avoid massive civil turmoil.

It is also worth noting that a UBI would have much the same positive effect on economic growth as a higher minimum wage. When poor people get money, they spend it, increasing demand.

There have been several pilot projects meant to assess the pros and cons of UBIs. The Washington Post reported on an extensive experiment in Africa, which found positive results not just for those receiving the money, but for their communities. The Guardian recently reported equally positive results from an American pilot project in Stockton, California. As with earlier experiments, skeptical predictions were not borne out; the money was primarily spent on food, medicine and education. Studies have also reported a significant positive spillover on female empowerment, and large increases in psychological well-being of recipients.

An economist quoted in Forbes noted that when Native Americans opened casinos along the Rio Grande, they used the proceeds to deliver basic incomes to the tribal poor.

“Child abuse dropped drastically, crime dropped. Simply handing money to poor people was salutary. It really helped them. Being trapped in poverty, with the stress and insecurities associated with that, is progressively debilitating. Sometimes even the simplest kind of transfers can break the cycle.”

Counter-intuitive as it may seem, a significant body of research supports the
importance of a robust social safety net to market economies. As Will Wilkinson, vice-president for policy at the libertarian Niskanen Center, has put it:

“A sound and generous system of social insurance offers a certain peace of mind that makes the very real risks of increased economic dynamism seem tolerable to the democratic public, opening up the political possibility of stabilizing a big-government welfare state with growth-promoting economic liberalization.”

As Wilkinson argued in an article for the conservative National Review, contemporary arguments between self-defined capitalists and socialists misunderstand economic reality. The left fails to appreciate the role of capitalism and markets in producing abundance, and the right refuses to acknowledge the indispensable role safety nets play in placating the human, deeply-seated distaste for feelings of uncertainty and insecurity.

If we were a country that truly valued all citizens, these would be compelling arguments.

Tomorrow: how to pay for it.


Cory Booker’s Big Idea

The thing about gloom and doom–a venue in which I increasingly reside–is that it makes you question some basic assumptions. Privileged people who wake up each day to depressing news about our country’s governance and prospects for social progress have a choice: we can take an “I’ve got mine” approach, ignoring the effects of social disintegration on those less fortunate, or we can try to figure out what went wrong and why, and what it might take to fix it. Obviously, I believe the latter option to be the moral one.

I have concluded that the major, underlying problem we face–in America and the world– is tribalism. Us versus Them. Suspicion of the “Other.” Tribal identities and interests–racial, religious, political–make it infinitely harder to solve other pressing problems.

Rapid social change operates to harden those tribal affiliations.

If my conclusion is correct, we need to determine how a different approach to U.S. social policies might ameliorate tribal antagonisms, rather than exacerbating them.

Look, for example, at America’s (inadequate and patchwork) social safety net. Critics of “welfare” are everywhere. How many times have you heard someone accuse “those people” of abusing the system, how often do you hear someone complain about paying taxes to support “those people” who don’t work? (Yes, I know the data contradicts these assertions, but data rarely convinces those who don’t want to be convinced.)

Now try to think of the last time you heard similar criticisms of Social Security recipients. Crickets, right?

Social Security is a universal program. We all pay taxes into it; we all are entitled to benefit from it. It undercuts those “us versus them” scenarios. Social welfare programs that are universal are less likely to stoke tribal resentments and feed stereotypes; that is one of the appeals of proposals for a Universal Basic Income. But the UBI goes against the ingrained American belief that people should work for what they get.

And that brings me to Cory Booker’s big idea. As Vox reports,

Sen. Cory Booker (D-NJ) has a big idea: give 15 local areas federal money so they can guarantee all their residents a job.

The Federal Jobs Guarantee Development Act, announced by Booker on Friday, would establish a three-year pilot program in which the Department of Labor would select up to 15 local areas (defined in the bill as any political subdivision of a state, like a city or a county, or a group of cities and counties) and offer that area funding so that every adult living there is guaranteed a job paying at least $15 an hour (or the prevailing wage for the job in question, whichever’s higher) and offering paid family/sick leave and health benefits.

Booker’s bill is a pilot project to test the policy outcomes and political practicality of a jobs guarantee. The Vox article has a lengthy discussion of the merits and risks of such a proposal, and notes that, ideally, such a program would both improve the lives of lower-income Americans and support Americans’ belief “that people should work to earn their crust.”

“The job guarantee asserts that, if individuals bear a moral duty to work, then society and employers bear a reciprocal moral duty to provide good, dignified work for all,” Jeff Spross added in the influential center-left journal Democracy.

As Amanda Marcotte wrote in Salon,

While universal basic income has become a hip talking point, it would be a lot easier to implement if it was attached to a job guarantee program. The reality is that most Americans value work, for themselves as well as others.

Right now, the United States is experiencing massive conflicts of values and interests and world-views. These conflicts are especially dangerous due to the widening gap between the rich and the rest, the predatory behaviors of the political class, and the disintegration of democratic norms.

We comfortable folks can shrug our shoulders, note that Rome fell too, and go about our individual lives–or we can begin the very arduous process of reimagining and reinvigorating American social and governing institutions.


Eliminating Welfare

When I first became interested in economic policy, I found Milton Friedman’s advocacy of a “negative income tax” appealing. As I recall (and I read about it a long time ago), the idea was that people making more than a set amount–presumably, an amount sufficient to live on–would pay taxes, and those making less would receive a supplement bringing them up to sufficiency.

One virtue of such an approach would be to cut out the costs of the significant bureaucracy devoted to administering complicated systems of public assistance.

As I say, I read this a long time ago, and my recollection of the details is hazy at best. What brought it to mind was reading about a proposal currently under review in New Zealand.

New Zealand’s Labour Party is considering the concept of a basic “citizen’s wage.” Andrew Little, leader of the Labour Party, confirmed this as the result of the potential for higher unemployment in in the coming months and years. “Citizen’s income” is also known as Universal Basic Income (UBI). The idea is that everyone gets a basic amount of money to live off of, like a wage, and benefit systems are gotten rid of.

Switzerland and Finland have introduced similar systems.

I haven’t seen studies comparing the costs of such systems to the patchwork, cumbersome and demeaning welfare programs we currently administer, but I suspect a citizen’s wage would save considerable tax dollars.

Of course, I’m sure the very idea would raise howls of protest from the self-righteous legislators who want to punish people for being poor, and who seem to enjoy telling welfare recipients what they can buy at the grocery…