In continuing on the debate over the viability or lack thereof of the Universal Basic Income (UBI), from Slate.com:
What If We Just Gave Poor People a Basic Income for Life? That’s What We’re About to Test
Despite the the fact that the likelihood of a UBI in America is pretty much nil, that didn’t stop the article from being shared by 17,000 hopefuls.
And also the transcript of a recent Freakanomics podcast about the UBI: Is the World Ready for a Guaranteed Basic Income?
The pro-UBI argument seems to be predicated on some assumptions:
1. It will be in lieu of some or all existing welfare programs
2. It will be cheaper than existing welfare
3. Recipients of the UBI will use it to ‘better their lives’, ‘start businesses’, ‘go to school’, and the money ‘will not be wasted’.
From the Slate article:
As it turns out, that assumption was wrong. Across many contexts and continents, experimental tests show that the poor don’t stop trying when they are given money, and they don’t get drunk. Instead, they make productive use of the funds, feeding their families, sending their children to school, and investing in businesses and their own futures. Even a short-term infusion of capital has been shown to significantly improve long-term living standards, improve psychological well-being, and even add one year of life.
But I’m still not sold on the UBI, and maybe that makes me a ‘mean person’ because I don’t think the government should be writing checks to people willy-nilly? If it can be demonstrated that a UBI will be less expensive than existing programs, maybe. If the UBI is being spent on non-essentials, likely won’t help. IQ and education may be good filter for determining who stands to benefit the most from cash payments, versus regular welfare. Smarter, more educated people are more likely to use their income efficaciously, providing a positive ROI to taxpayers.
Maybe individuals who squander their UBI and have to resort back to welfare should have their UBI revoked, since apparently they were unable to ration their money wisely.
The UBI also assumes that the fiscal multiplier is high enough that the UBI will pay for itself, which is a matter of debate:
So what do the data say? There aren’t many studies of the issue. But two stand out: Robert Barro’s work and research by Valerie Ramey, an economist at the University of California–San Diego, on how military spending influences GDP. Both studies found that government spending crowds out the private sector, at least a little. And both found multipliers close to one: Barro’s estimate is 0.8, while Ramey’s estimate is 1.2. This means that every dollar of government spending produces either less than a dollar of economic growth or just a little over a dollar. That’s quite different from the administration’s favored multiplier of four. What’s more, Ramey also found evidence that consumer and business spending actually decline after an increase in government purchases.
Form the Freakanomics transcript, this passage stood out:
ALTMAN: Maybe 90 percent of people will go smoke pot and play video games. But if 10 percent of the people go create new products and services and new wealth, that’s still a huge net win. And the kind of American puritanical ideal that hard work for its own sake is valuable, period, and you can’t question that, I think that’s just wrong.
FORGET: Well, I think that there are lots of kinds of work. I think that people do need to create meaning in their lives, and for a lot of people that does come through work. I’m not sure that they necessarily need eight hours of work a day and 40 hours of work a week to find that meaning.
Forget, like Sam Altman, sees a potentially huge upside in freeing people of the need to work.FORGET: If you look at the 18th and at the 19th century, some of the great scientific breakthroughs and some of the great cultural breakthroughs were made by people who did not work. These were gentlemen of leisure, right? These were people who had enough family money to support themselves. They certainly didn’t have to dirty their hands doing the kinds of work we take for granted. I don’t think these individuals felt useless; I don’t think their contribution was negligible. I think it was very important to the development of the world.
That’s probably true, so why not give the income to the 10% who will actually use it better their lives and society, rather than everyone? That’s my motivation ind the high-IQ basic income: if studies show smart people are morel likely to be creative, to make breakthroughs, then the best results would be obtained by only limiting payouts to the smartest of society, not everyone. Give high-IQ people the financial freedom to tinker and create, improving society in the process, instead of them having to worry about making ends meet. I think that’s compromise that can satisfy both proponents and opponents of the UBI.
In regard to the Slate article, another problem is a UBI may not be enough for some expenses, like higher education, starting a business, medical bills, or certain types of job training, so projections about what a UBI may be able to accomplish may be too optimistic. Whether it’s education, healthcare, or a basic income, some rationing and judiciousness is needed to ensure not too much taxpayer money is wasted.