Wednesday, July 11, 2018

Universal Basic Income discussed

A pretty good article (by way of a book review) of the dubious idea of a Universal Basic Income is at Slate.   Here are a few paragraphs:
 UBI is having a moment right now. The idea has been around for centuries, but there’s something about UBI that’s resonating today, with dozens of books written on the subject from all manner of different perspectives. The most common takes come from the left (as Lowrey does), from the right (as a means of dismantling the welfare state), and from the techno-dystopians, who worry about a future where the robots have taken over and no one has a job. The appeal of a UBI to all three groups is easy to see: It appears to be a very simple solution to any number of incredibly complex problems. Think of it as the “put it on the blockchain” of political economy....

Lowrey’s UBI is “an ethos,” she writes, as much as it is an actual proposal. It’s a way of espousing a certain set of beliefs; it’s “a lesson and an ideal”; it’s a push “to keep imagining, so that when the future arrives, we are ready.”

Perhaps that’s because UBI is a pretty inefficient way of giving poor people money. Think about it this way: Just 40 percent of a UBI’s expenditure would go to the bottom 40 percent of the population, and a mere 10 percent would go to the 10 percent who need it most. What would happen to the rest of the money? 

Study after study has shown that when you give money to the homeless and the very poor, they don’t spend it on frivolities like booze and tobacco: In fact, rates of drinking and smoking invariably go down rather than up. On the other hand, if you gave me an extra $1,500 per month, no strings attached, I’m sure a significant chunk of that would end up in my wine fridge. That might be popular with my local wine merchants, but as a means of redistributing society’s wealth in the interests of fairness and equality, it does leave something to be desired.....

Lowrey understands this, and is not particularly wedded to a truly universal basic income. In India, she toys with the idea of excluding anybody fortunate enough to own an air conditioner. In the U.S., she says, the UBI could be applied only to the bottom 60 percent of the population. She also brings up the idea of instead giving “baby bonds” of $50,000 to everybody born into the lowest wealth quartile, or implementing some kind of jobs guarantee. At one point, she writes that an “even better idea would be to implement a UBI as a negative income tax” that takes your annual income and, if it’s below a certain minimum level, raises it to that level. 

There are always trade-offs. A negative income tax would not benefit anybody much above the poverty line, and in that sense, it would lack a key feature of the UBI, which is that it’s needs-blind and benefits everybody. If only the poor benefitted from a negative income tax, that would create resentment among the middle classes: The slogan coined by British sociologist Richard Titmuss is that “a policy for the poor is a poor policy.”

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