Bryan Caplan recently advanced some criticism about Universal Basic Income (UBI) over at his otherwise excellent substack (Bet On It) that I view as both specious and too dismissive. Debates about UBI are often challenging to disentangle: they incorporate a myriad of interlinked controversies about desert, bureaucracy, redistribution, labor markets, technology, etc. So, I’ll focus on just two recurring issues that are overdue for some more careful analysis.
Every local experiment in guaranteed income for lower-income households (that I know about) has shown overwhelmingly positive outcomes--the squandering argument doesn’t hold up. In terms of land taxes, it seems to me there’s way more available economic rent money available in financial investments than real estate.
Exactly! Even the reductions in employment, iirc, were because people chose to become full time carers for family members or went back to education instead of working from mid/late teens.
You hit on the core reason I prefer a UBI or NIT-like structure. In my experience, the government has shown near zero ability to delineate who “deserves” aid from who doesn’t. These categories are completely arbitrary.
Most importantly through, a UBI would be best funded via land taxes that target economic rents and thus are not pulling money (earned labor) from one person and putting it into another person’s pocket.
>>What’s remarkable to me, actually, isn’t how exorbitant UBI proposals would be but that they’re even within the ballpark of feasibility at all.
Yes!! I had no idea it was actually anywhere NEAR affordable tbh.
I think one way it could be labelled (and formatted) is as a universal tax credit, which turns into positive transfer once we hit medium to low earners and non-earners.
I do think we'd need a child version, because fertility rate is already low, and for a benefit that replaces all income support/welfare (I'm not American, so I'm assuming healthcare remains separate and socialised ;) that many poor families would rely on largely or fully, a child element would need to be included, but obviously not at the rate of an adult.
Incidentally, it would encourage two-parent family formation (economies of scale) instead of discouraging it (as, for example in the UK, benefit system does -- an unemployed couple on benefits gets less than 2x individual rate).
The simplification of admin would create savings too.
The "giving money to squanderers" is a problem with any benefit system unless it's in kind, and surely no developed country provides benefits in kind -- a person living on benefits is as free as an earner to spend them on booze or chocolate or drugs or substack subscriptions.
The biggest criticism of UBI I've seen (tho admittedly, my researched totalled about a week's work in preparation for one essay ;) was from the opposite end: that universal, equal provision at a fairly low/barely above subsistence level would heavily disadvantage some people with higher needs, whether those living in more expensive locations (assuming social housing is as inadequate as it is now) or those with extra support needs (eg someone physically disabled who NEEDS a personal help/carer or MUST have and maintain a car, or requires adaptations in their accommodation etc). Increasing the UBI for everyone to cover car+carer necessary for some would make the scheme financially completely non viable, but introducing add-ons wouldl make a mockery of the "universal" and the admin savings.
Much interesting stuff+ current pilots at Stanford UBI Lab.
I'd like to see a proponent of UBI explain why it would be better than an increase in the EITC.
Also, the idea that a UBI could replace major transfer programs like Medicaid, Medicare or Social Security if a fantasy. Those programs are targeted for a reason; they are not just ways of making after-tax incomes less unequal. Either would of course reduce expenditures on programs that are means tested by income.
I don't really see EITC and UBI aims as coextensive. UBI supporters view the unconditional aspect of UBI as an asset (either because of the reasons mentioned above or fears surrounding AI and the labor market). I agree that medical care probably requires a distinct strategy, but I do think UBI could consolidate many smaller programs and facilitate a massive overhaul of Social Security (e.g., privatization).
Partly I guess I do not appreciate exactly what the objective of UBI is beyond transferring income to low wage workers. If the OBJECTIVE is to eliminate other transfers, I'd rather see the case made for that directly.
I suppose SS coud be replaced with a compulsory saving schemes, with one vehicle being a real GDP Treasury security., but I see this as pretty skew to an income transfer program like EITC/UBI.
Every local experiment in guaranteed income for lower-income households (that I know about) has shown overwhelmingly positive outcomes--the squandering argument doesn’t hold up. In terms of land taxes, it seems to me there’s way more available economic rent money available in financial investments than real estate.
Exactly! Even the reductions in employment, iirc, were because people chose to become full time carers for family members or went back to education instead of working from mid/late teens.
You hit on the core reason I prefer a UBI or NIT-like structure. In my experience, the government has shown near zero ability to delineate who “deserves” aid from who doesn’t. These categories are completely arbitrary.
Most importantly through, a UBI would be best funded via land taxes that target economic rents and thus are not pulling money (earned labor) from one person and putting it into another person’s pocket.
Still waiting for that explainer on the differences between the LVT and the old-fashioned property tax when applied to real estate. :)
>>What’s remarkable to me, actually, isn’t how exorbitant UBI proposals would be but that they’re even within the ballpark of feasibility at all.
Yes!! I had no idea it was actually anywhere NEAR affordable tbh.
I think one way it could be labelled (and formatted) is as a universal tax credit, which turns into positive transfer once we hit medium to low earners and non-earners.
I do think we'd need a child version, because fertility rate is already low, and for a benefit that replaces all income support/welfare (I'm not American, so I'm assuming healthcare remains separate and socialised ;) that many poor families would rely on largely or fully, a child element would need to be included, but obviously not at the rate of an adult.
Incidentally, it would encourage two-parent family formation (economies of scale) instead of discouraging it (as, for example in the UK, benefit system does -- an unemployed couple on benefits gets less than 2x individual rate).
The simplification of admin would create savings too.
The "giving money to squanderers" is a problem with any benefit system unless it's in kind, and surely no developed country provides benefits in kind -- a person living on benefits is as free as an earner to spend them on booze or chocolate or drugs or substack subscriptions.
The biggest criticism of UBI I've seen (tho admittedly, my researched totalled about a week's work in preparation for one essay ;) was from the opposite end: that universal, equal provision at a fairly low/barely above subsistence level would heavily disadvantage some people with higher needs, whether those living in more expensive locations (assuming social housing is as inadequate as it is now) or those with extra support needs (eg someone physically disabled who NEEDS a personal help/carer or MUST have and maintain a car, or requires adaptations in their accommodation etc). Increasing the UBI for everyone to cover car+carer necessary for some would make the scheme financially completely non viable, but introducing add-ons wouldl make a mockery of the "universal" and the admin savings.
Much interesting stuff+ current pilots at Stanford UBI Lab.
I'd like to see a proponent of UBI explain why it would be better than an increase in the EITC.
Also, the idea that a UBI could replace major transfer programs like Medicaid, Medicare or Social Security if a fantasy. Those programs are targeted for a reason; they are not just ways of making after-tax incomes less unequal. Either would of course reduce expenditures on programs that are means tested by income.
I don't really see EITC and UBI aims as coextensive. UBI supporters view the unconditional aspect of UBI as an asset (either because of the reasons mentioned above or fears surrounding AI and the labor market). I agree that medical care probably requires a distinct strategy, but I do think UBI could consolidate many smaller programs and facilitate a massive overhaul of Social Security (e.g., privatization).
Partly I guess I do not appreciate exactly what the objective of UBI is beyond transferring income to low wage workers. If the OBJECTIVE is to eliminate other transfers, I'd rather see the case made for that directly.
I suppose SS coud be replaced with a compulsory saving schemes, with one vehicle being a real GDP Treasury security., but I see this as pretty skew to an income transfer program like EITC/UBI.