Basic Income: Not All It's Cracked Up to Be

Image obtained from Colorado Peak Politics

After I had published my previous post reacting to an article at FiveThirtyEight extolling some benefits of a Universal Basic Income, Michelle Ray (the same GaltsGirl) tweeted a link to an article at The Bloomberg View, by Paula Dwyer. Interestingly, the tweet for the article shows as something like “Basic Income might be the next big thing”, but the article is actually titled “A Basic Income Should Be the Next Big Thing” (emphasis mine in both cases). But I digress.

Dwyer begins with a short description of the idea of UBI, then talks about trials and studies around the world. She links to an article from Boxing Day, 2015, in the English publication The Guardian, that talks about a pilot program in The Netherlands. That program is limited to 20 municipalities, and will include only “small groups of benefit claimants”, to be qualified by their current income. It is not universal, and the amount is only around $950/month. It is apparently intended to be a supplement to whatever odd jobs they can get, rather than the envisioned substitute for a meaningless job while the citizen pursues education, training, or practice to follow a higher calling.

Dwyer then explains that some see UBI as a way to reduce poverty and inequality. But how can that be? If every citizen gets the same amount from the government, but is still free to have any other career and make any amount of money they can on their own, the same inequality of income will exist. And poverty? It will just be “defined upward”—the poverty level income will go from $12,000 to $25,000 to $40,000 and beyond. People receiving the UBI and nothing else will still be considered poor, and people who find a lucrative market for their skills and work hard to sell themselves will still be considered rich, and people who raise an outcry against this inequality will continue to cry out.

Dwyer also mentions the “about $1 trillion” of current US welfare spending, and admits to the approximate $3 trillion price tag I came up with (even with a US citizen population of only 322 million, rather than the 350 million I presumed). She then attempts to reduce the expense by eliminating segments of the population: Social Security recipients, households earning more than $100,000 annually, children. Now I agree with this last, because a “citizen” must be an adult who is capable of fulfilling the obligations of citizenship in order to partake in its pertinent rights and benefits. But when you start excluding other groups, even high earners, not only is it not universal, it is not equal. It is no longer something that every citizen can enjoy, but once again simply a wealth-transfer program. (Not that it ever was not intended to be.)

Dwyer does write about how a UBI program could be designed to eliminate the multiple, overlapping assistance programs at the federal and state levels, and acknowledges that some totalitarian collectivists—whom she calls “liberals”—object to it because of this. She says they “worry” that the bureaucrats currently administering all those programs could lose their jobs. I say, oh, but then they would be receiving the UBI, and maybe they could get better private sector jobs, or even become artists, writers, and the like! (But they would no longer be dues-paying public-sector union members, and the size of the bureaucracy, and some administrators’ domains, would shrink. I suspect those are bigger worries for some.)

In conclusion, Dwyer expresses hope that perhaps this isn’t so fantastic, this approach she calls “Social-Security-for-all”. Well, all but those evil rich folks.

Universal Basic Income

A Utopian Success Story*

On or around the 24th of April, 2016, a rather long piece about Universal Basic Income (UBI) was posted at FiveThirtyEight (Where did they come up with that name, anyway? And why don’t the articles bear a posted-on date?) by Andrew Flowers. I have just a few comments about it.

One of the big questions throughout the article is, just how much is required to make up a “basic income”? Flowers cites a proposal in Switzerland to pay each citizen a suggested 2,500 Swiss Francs per month, which he explains is about $1,700 “after adjusting for the cost of living.” In real dollars as of this writing, it’s around $2,586, but that doesn’t really matter.

Flowers states that the United States government spends nearly $1 trillion dollars annually on public assistance programs, both direct assistance at the federal level and transfers to state programs. At the bottom, this total is explained and clarified to be a little under $900 billion a year.

So, taking the author’s figure of around $1,700/month, that amounts to about $20,000/year. Multiply that by 350 million citizens^†, and the total is $7 TRILLION. EACH YEAR.

Later in the article, Flowers states that advocates of UBI often propose a starting figure based on the current per capita welfare expense of the nation (or state/province, or city) in question. For the United States, that’s around $700/month. Doing the same math as above, that adds up to nearly $3 trillion. Still a bit higher than current spending.

And this figure is “just a floor.” Some advocates are proposing the UBI be as high as 60% of median income, which was $28,889 per capita in 2014, the latest year for which data are available. That gives us a potential UBI of $17,333/year, or $1,444/month. Obviously from the $700/month figure, the total will be somewhere around $6 trillion per year.

Basic income, indeed. Flowers states that a “huge increase” in revenues to the federal bureaucratic behemoth—oh, wait, that’s supposed to be significantly reduced by the elimination of myriad welfare programs—to the federal government. This naturally implies a “big hike in tax rates” for the admitted redistribution. What are you thinking, Mr. Flowers? Something on the order of 100% of all income over $30,000? Even that would run in the red. Maybe just 100% of everything?

Just a few more minor points—things that made me scratch my virtual head:

• As arguments in favor of UBI, Flowers says that a similar plan was outlined by Thomas Paine, and Dr. Martin Luther King, Jr. advocated something like it to combat poverty. But this does not say that Paine actually advocated this plan, only that he outlined it. And it is implied that Dr. King’s plan was not universal, but targeted at the poor.
• To investigate effects of a government-supplied UBI, a study is being organized in the United States—by a private organization. Nothing wrong with that, of course. If only the private organization could garner the funding to actually implement UBI nationwide.
• A government study was done in a few United States cities, looking at whether receiving a basic income affected people’s work habits. In that study, primary earners reduced their work by “no more than 5 to 7 percent.” Does this mean “no more than 7%”? Or does this mean the data were not clear enough to get an accurate measure?
• A Canadian study that Flowers calls the “closest research” to a true UBI involved only “eligible families”; i.e., the UBI was means-tested. In one municipality that was a “saturation site”, only 30% of all the families qualified to receive it. Other sites had lower participation rates. I would say this isn't nearly close enough to universal.
• Flowers starts one paragraph by stating, “A basic income could be any amount….” Really? It could be $1/year? I don’t think so. That statement is meaningless.
• The Swiss advocate, a gent named Daniel Straub, said, “The market economy is great, but…” and to me, the rest of that sentence may as well be, “it requires hard work to do well, and I’m lazy.”

The basic idea of a career hasn’t changed. The proponents of UBI at the beginning of the article ask, what do you really want to do, or what do you love to do? A career means someone somewhere is willing to pay you to do that. It’s up to you to find them. The internet should make that easier than ever before. Straub says he remembers his great-grandfather working ten hours a day, six days a week. (When I was a small lad, my grandfather was already in a nursing home. His family’s generations must have been awfully close together. But I digress.) I say, if he was doing what he loved to do, was it really a chore? Maybe he would rather have spent his time doing what he was doing than sitting down at the pub drinking beer with the old men.

Many thanks to Michelle Ray—Twitter’s (and Google +’s) +Galts Girl—for sharing the link to this article. As Michelle tweeted, it’s long, but you should read all of it. Also, be sure to check out the Czar of Muscovy’s thoughts on UBI over at the Gormogons blog. (As of this writing, permalinks are not working; it was posted on 06 April 2016 if you need to scroll back to find it.)

†It is true, there aren't 350 million adult citizens in the U.S. Still, even the lowest total here would be more than the current expenditures, even if we only used 175 million, or half.

*Remember that “Utopia” is derived from the Greek for “no place”.

UPDATE as of 2016/06/06, reports are that Swiss citizens have rejected the UBI proposal by a margin of nearly 4 to 1. And yet, when I searched Twitter for an article about that referendum, nearly all the tweets were of the nature, “Well, we lost one battle, but we must keep trying!” I must repeat an observation my DW has made several times: people will put untold effort into avoiding work.

Things I’d Like to See a New Chief Executive Do

See page for author [Public domain], via Wikimedia Commons

In February of 2016, I posted the following tweet:

Eliminate:
HHS
HUD
Ed
Energy
Transpo
Labor
Commerce
Ag
Interior

— ScottO30 (@gscottoliver) February 18, 2016

Since these are all departments of the Executive Branch, it seems to me a Chief Executive could eliminate them whenever he or she wished to do so. To create a new department, as George W. Bush did in 2002, the President must go to Congress to get money appropriated for it. But to terminate one? It would simply mean that any unused budget it had would remain unspent, and that’s a good thing, isn’t it?

In reverse order of their creation, I believe we should eliminate the following U. S. government cabinet departments:

• Education
• Energy
• Transportation
• Housing and Urban Development
• Health and Human Services
• Labor
• Commerce
• Agriculture
• Interior

Any legitimate Federal functions can be moved to an appropriate Department that is left: State, Treasury, Defense, or Justice.

I would leave the Veterans Administration separate from Defense, as the latter’s responsibility is active defense of the nation, while the former is charged with taking care of the people who have served the nation in that capacity.

I would even suggest that the Department of Homeland Security is redundant, and its important functions should be moved to Defense or to Justice, as appropriate.

Finally, the White House lists the Environmental Protection Agency, the Small Business Administration, and the United Nations Mission as separate entities. I submit that neither of the first two have any place at a Federal level. If the Federal government didn’t confiscate resources at such a high rate, States and Localities would have plenty to deal with any violations of their citizens’ right to life. And in my opinion, the United Nations does more harm than good, and the U. S. should withdraw from it (and maybe raise its rent).