Thoughts on Universal Basic Income

In the current presidential political season, several of the Democratic candidates have proposed a Universal Basic Income (“UBI”) as a solution to various problems. With a UBI, the government provides all citizens with a set stipend on which to live, regardless of whether they have a job or not. The recipient can spend it any way they want; they can piss it a way or invest it effectively.

The successes have been cited in the small-scale scenarios where it’s been tested: those who have used UBI to enable themselves to start small businesses or return to school, get a degree, and start a career before the experiment ended.

Still, I’ve not seen good statistics on whether these effective uses are commonplace or cherry-picked anecdotes. Some things don’t always scale well, and social behaviors have an inertia to them, changing gradually after policy changes as people analyze and adapt to new laws.

But, we also live in a country where the level of crazy has increased as the financial screws have been ratcheted down by the capitalists. We suffer when we’re stressed out of our gourd about getting the bills paid, and working long hours (maybe some of them unpaid) because we’re afraid of losing our jobs if we don’t. Our families are damaged by our long work hours and the exhaustion we feel when we’re off. UBI might short-circuit that vicious cycle in a good way.

But detractors argue UBI could create disincentive to work because people will have all they need. Within myself, I could see it going either way: on the one hand, when I’m idle a bit I get restless and want to create. But if I have enough, will I look for a job? Maybe, but I might just work on some personal project, or volunteer my time to some charity or public project. But that’s not such a bad thing either, right? Still, I recognize I’m unusual; it might be that others would simply loaf around.

Implementing UBI

One if the biggest objections to UBI is the potential cost. But if we implement a UBI, we won’t simply turn it on and leave everything else in place as-is (at least I hope we won’t!). Instead, there’s a hell of a lot that can be restructured in the way things work, and that to me offers a hell of an incentive to think about UBI.

Think about it: the UBI provides enough for a person to live on. All the social-safety net systems that are based on need, now go away:

  • Unemployment insurance
  • Welfare
  • Food stamps/SNAP
  • Disability (entirely or simplified)
  • HEAP (heat energy assistance program)
  • All the charities and NGOs that are in place to help people with housing costs, etc.

All the bureaucracies affiliated with these can go away, and we can reap the savings of not paying all those bureaucrats.

UBI also simplifies the tax system. Right now, there’s a complicated system of dependents and exemptions so that the first several thousand dollars are exempt from taxation, so that we have enough to live on. But if everyone is already receiving enough to live on, any additional income they earn can be taxed right from the first dollar.

I think we still need a progressive income tax system for the high earners, but all the complexity in the tax code to make sure we can provide for our own essentials can disappear. It’ll be closer to a flat-tax system.

Additionally, right now low earners can receive an earned income credit (“EIC”), which may mean they get back more money than they pay into the tax system if they earn little enough. And while some of the tax system makes sense to me, EIC is a magic black box. That whole bit of confusion can disappear too.

UBI would yield a more straightforward, understandable tax system.

Problems UBI will not solve

Sometimes, it seems UBI proponents will think it will solve all social ills. This I do not agree with. The essential problem is:

You cannot legislate financial reponsibility.

Some people will take their UBI funds and do effective things with it. That’s great. But others will not, just as they don’t do effective things their their pay, SNAP funds, or welfare money. Their UBI funds will simply get pissed away on tobacco, alcohol, drugs, partying, or just living on the high hog while they have money in their pocket—then they’ll be destitute again until the next payment comes in. Irresponsible parents will use UBI intended for their kids toward their own vices, rather than set aside that money and use it for the child’s needs.

This isn’t anything new. I’ve worked as a cashier, and I’ve seen the parents who tell their kids, “Put that back, we don’t have money for that,” when their kid sees a book on display at the checkout. Then they ask for 3 packs of cigarettes to go with the 2 six-packs they’re buying.

Food stamps used to be paper trading cards, but they’ve been moved to a card system to reduce abuse: people were selling their paper food stamps for cash to buy drugs or whatnot.

School districts offer free lunch and, increasingly, free breakfast, because so many parents are neither budget conscious enough to provide lunch money, nor responsible enough to provide their kids with breakfast.

And just watch TV for the structured settlement buyout offers. People get injured and (sanely or not) lawyers talk it up and get an agreement that provides them income for lost wages and medical needs over a long period. That seems fair. But then people want to turn that compensation into a windfall, so you can sell your settlement rights to some company that’ll pay a fraction of the money but you’ll get it now. But if that money was to be for your living costs because you allegedly can’t work, then what will you live on when it’s gone? And yet, I suspect most of the people who go through this get their settlement and turn it into a windfall, piss that away and end up destitute again.

UBI does not fix issues of irresponsible money handling. The social safety net can’t make people responsible. Some will be responsible and use UBI income effectively, as they do with any income they have today. Others will spend recklessly, as they do today too.

Conclusion

UBI would be a far-reaching simplification to the US social safety net and taxation systems. That’s worth taking a look at, but we should do so knowing UBI will not be a silver bullet; it cannot overcome people’s individual irresponsibility. Thus, while I’m curious and open to more evidence and analysis of UBI’s costs and likely outcomes, I remain for the moment skeptical of its overall viability.