It has been a big week for the UBI. On Sunday, a referendum in Switzerland failed, although the mere fact that the issue was on the ballot was viewed by its supporters as a victory in the long run. The NYT, The Economist, and Vox.com also had several opinion pieces on the subject.
The pros and cons of the UBI are not much in doubt; many of them are opposite sides of the same coin. Here they are, in a nutshell:
Pros
1. If the amount of the stipend is computed properly, it will put a huge dent in poverty. No further elaboration necessary.
2. The universal nature of the benefit turns it into an entitlement program, builds a broad constituency for it, and makes it harder to cut. Just like Social Security, and unlike many other anti-poverty programs that have been vulnerable to GOP cost-cutting plans.
3. It is relatively cheap to administer, unlike most anti-poverty programs, many of which could be eliminated. Again, in that respect, it is similar to Social Security.
4. It avoids the poverty trap. Because it doesn’t decrease when wages increase, it doesn’t discourage higher paying work in the same way as, say, the EITC.
5. It leaves more room for individual choice on issues of consumption than most anti-poverty programs. As a result, it has some support from libertarians.
Cons
1. Because the benefits are universal, not targeted, the program is extremely expensive, and would result in enormous tax increases. Adoption of the UBI would, in fact, make the US look like Denmark in terms of the amount of public spending as a percentage of GDP.
2. It discourages work. Someone has to produce the goods and services on which we rely. The robots haven’t taken over yet.
3. It makes immigration an even more fraught issue. The notion of paying the UBI to immigrants would be very troubling to most.
My reactions are as follows:
1. This is the kind of debate about the future of the welfare system that we should be having. I would have more interest in Bernie Sanders if he made the case for the UBI instead of, for example, his bogus proposal for free public college.
2. The politics of this issue would be very painful. Most of the right in this country believe the left just represents a moocher class. This proposal would do nothing but reinforce that opinion.
3. The relationship between the UBI and Social Security is uncertain. Logically, the UBI could replace Social Security at some point, and thereby actually save some money, but there is no way that is going to happen for current beneficiaries, who largely believe that they are being repaid the money they put into the system. Operating both Social Security and the UBI during a transition period would drive the costs up even more.
4. We haven’t reached the point where technological and demographic change makes the moocher argument irrelevant. Ten years from now, however, we might–we just don’t know right now.
5. The UBI does nothing to address the problem of stagnant wages. As I have indicated before, stagnant wages are a bigger political problem than increasing inequality or poverty.
6. It would work best if it is adopted throughout the West. Otherwise, capital will flee to countries with lower taxes.
On the whole, therefore, my attitude towards the UBI is that it is an idea whose time has not come yet, and may never come. On the other hand, it has some real merits, and I wouldn’t be surprised if we see it on the table for real in 2024, or possibly even 2020.