Published on July 27, 2024 6:36 AM GMT
The PDF version can be read here.
UBI stands for “Universal Basic Income”. In its simplest form, UBI is a direct payment to every citizen every month. It would (at least in theory) replace other government programs that alleviate poverty, such as means-tested welfare. It is growing in popularity as a political proposal. In this essay, I’m going to make the case against UBI.
The basic argument for UBI is that we already agree on the existence of a social safety net, and UBI would be simpler and fairer than existing welfare schemes. As it is typically conceived, UBI would just be a direct payment from the government to all members of a society, without the complex bureaucracy that administers means-tested welfare schemes. Because it would be universal rather than means-tested, it would also eliminate or reduce certain perverse incentives of existing welfare schemes.
Let’s consider some of the problems with means-tested welfare scheme. They require means-testing on an individual basis, so they need a bureaucracy to administer and enforce. They can be abused in various ways, such as by working on the black market, using false identities to claim extra benefits, or lying about family relationships. They create a perverse incentive not to work. If a person on welfare gets a job, she loses her welfare benefits. This means that the net benefit from getting a job might be very small, especially considering the lost work at home and the costs of employment. Means-tested welfare schemes also create perverse sexual incentives. They disincentivize marriage and pair-bonding (because a husband’s income might disqualify a woman from receiving benefits). They create a financial incentive to have more children, because welfare typically increases with each child. The overall effect is a welfare-dependent culture of single mothers, short term sexual relationships, and black market employment (such as dealing illegal drugs). Means-tested welfare has a lot of negative consequences.
I agree that UBI would partially remedy some of those problems. However, it can be very misleading to compare an existing scheme to a hypothetical scheme. It is very easy to be fooled by such a comparison (or use it to fool others). It is much easier to imagine something than to make it real. People are often seduced by utopian dreams that turn into dystopian nightmares (e.g. communism).
UBI would still require a bureaucracy. It would be less complex to administer and enforce per recipient, but it would be on a larger scale. Overall, it appears to be much simpler, but that’s partly because ideas are simpler than realities. To make it a reality you’d have to add a lot of detail to the basic idea. For example, who decides how much the UBI should be? What is a “basic income”? Is a basic income in New York City the same as a basic income in Kalamazoo? Is a basic income for a paraplegic the same as a basic income for a healthy young person? What about medical and retirement benefits? Are those schemes subsumed by UBI, or do they exist in parallel? UBI might be simple in theory, but reality is complex. You can imagine replacing all welfare schemes with a single one, but doing it in practice is another matter.
UBI would reduce the disincentive for welfare recipients to work, but it would create a much broader disincentive to work. There are many people who would choose not to work, or choose to work less, if they received a free basic income. Welfare might be a trap that is hard to get out of, but it also has barriers to entry. To get welfare, you have to qualify for it, and often you have to look for a job or demonstrate that you are unemployable. Welfare is low status compared to employment. Many people will not go on welfare because of the bureaucratic barriers to entry and/or because it is low status. Those barriers would be removed by UBI. It would make living off the government easier and more socially acceptable. The UBI would create a kind of dependency trap that is not as deep as welfare’s, but much broader.
(see the rest of the post in the link)
Discuss
