A list of controversial claims on both side of the UBI debate

by Karl Widerquist | Jun 1, 2017 | Opinion, The Indepentarian

In the process of cowriting a book about the upcoming Unconditional Basic Income Trials, I’ve been trying to come up with a list of the claims that tend appear in the debate. Below are two lists: first a list of supporters’ claims and then one of opponents’ claims. I gave each claim a name to make it easier to talk about them, but these names do not reflect any standard definition. I tried to order the claims in each list from the relatively more important or more common to the relatively less important or less common.

To say that a claim appears on the supporters’ or opponents’ lists is not to say that all supporters or all opponents agree on it. In fact, some of the claims contradict each other, which is to be expected, because different people support or oppose UBI for diverse reason. They might have little in common but their support or opposition to one policy proposal.

Supporters have claimed:

• The freedom claim: UBI gives people greater freedom by giving them more effective power over their own lives.
• The poverty claim: UBI (usually in combination with other policies) can eliminate poverty.
• The anti-exploitation claim: UBI reduces exploitation in employment by giving all workers the power to refuse exploitive working conditions.
• The welfare claim: UBI raises the welfare of net-recipients (by eliminating destitution, reducing poverty, increasing incomes of people near poverty, reducing inequality, and other effects) and many net-contributors (by removing the fear of destitution, improving their bargaining position in the market, and so on). To the welfare claim we could add many supporting claims, that UBI is good for physical and mental health, that it decreases homeless and malnutrition, that it decreases infant mortality, and so on.
• The increased-worker-income claim: UBI increases in the income of workers directly by acting as a wage subsidy for lower-income workers and indirectly by creating market conditions likely to increase wages.
• The better-working-conditions claim: UBI improves working conditions for many workers both by giving them the flexibility to move more attractive sectors and by creating market conditions likely to give employers incentive to improve working conditions.
• The affordability claim: UBI at the desired level is affordable. (Most UBI proposals call for one high enough to eliminate official poverty or to raise incomes to 150% of the officially poverty level. Some call for meeting basic needs or to enable social participation and to secure a life in dignity. Some simply call for the highest sustainable UBI regardless of what that might be.)
• The economic equality claim: UBI increases economic equality both by direct redistribution to lower income people and by creating market conditions where workers can command higher wages and better working conditions. (The taxes used to support it can also be formulated to increase equality.)
• The social equality claim: UBI increases social equality by reducing social isolation of people with very low incomes, by reducing the stigmatization of people who benefit from redistributive programs, by reducing housing segregation, and by other means.
• The poverty-trap claim: UBI encourages people on benefits to reenter the labor force in greater numbers than a conditional system, by ensuring they are always better off earning more private income than earning less.
• The anti-ghettoization claim: UBI reduces (both personal and social) costs linked to high concentrations of poverty both by reducing housing segregation and by significantly raising average incomes in those communities.
• The cost-effectiveness claim: UBI is relatively more cost-effective than traditional, conditional welfare policies (in achieving goals such as increasing equality, raising welfare levels of recipients, and so on).
• The reduced-capture claim: UBI’s benefits are less likely to be captured by others (such as employers, landlords, and bureaucrats) than conditional welfare state policies.
• The bureaucracy claim: UBI reduces the overhead cost associated with income support.
• The labor-productivity claim: UBI increases labor productivity both by encouraging employers to substitute skilled for unskilled workers and by improving workers’ ability to enhance their skills and search for higher-productivity jobs.
• The productive non-labor claim: UBI allows people to do more unpaid work (such as care work and volunteering), some of which is more productive (or socially valuable) than many forms of paid labor.
• The politically-enabled-proletarian claim: UBI—by freeing low-wage workers from long hours and low pay—makes them a greater force for progressive social change on all other issues.
• The acceptable-labor-supply-effect claim(s): if UBI causes a reduction in labor supply, it will be within acceptable levels, and/or if UBI causes a greater-than-desirable labor-supply reduction, it can be at least partially counteracted by other policies to increase labor supply or the demand for higher-wage employees.
• The macro-stimulus claim: UBI, in combination with the taxes that support it, helps improve economic growth and reduce unemployment by helping to stimulate and stabilize aggregate demand.
• The “degrowth” claim: UBI helps economies move away from overconsumption and overexploitation of resources.
• Greater respect for people in need: UBI and other universal programs treat everyone with respect while many conditional programs treat virtually all recipients as suspected cheats, even if they fit almost anyone’s definition of the most truly needy.
• The increased-overall-redistribution claim: UBI results in greater overall redistribution to the poor, because universal policies foster greater feelings of solidarity and support once in place

Opponents have claimed:

• The reciprocity claim: UBI allows people to share in the benefits of social production without contributing their labor.
• The exploitation claim: a tax-financed UBI redistributes income from workers to people who do not work, thereby exploiting workers.
• The harm-to-workers claim: the taxes needed to support UBI financially harm workers, all things considered.
• The unacceptable-labor-supply-effect claim(s): UBI causes an unacceptably large reduction in labor supply that is not easily counteracted by other policies.
• The self-destruction claim: UBI increases self-destructive behavior in recipients.
• The meaninglessness claim: UBI makes it possible for people to live lives that they will eventually find meaningless because paid labor is a central source life meaning.
• The capture claim: many of the benefits of UBI will go to someone other than the recipients, perhaps because employers reduce wages, because landlords increase rents in low-income areas, because bureaucrats create overhead costs, etc.
• The inflation claim: UBI causes inflation that is not easily counteracted by other policies.
• The migration claim: UBI encourages immigration and/or migration into areas with UBI.
• The unaffordability claim: UBI at the proposed level is prohibitively expensive.
• The negative, relative cost-effectiveness claim: UBI is more expensive than other programs that can achieve similar goals.
• The gender-role reinforcement claim: UBI helps maintain traditional gender roles by making it easier for women to remain out of the paid labor force while performing unpaid care work and other traditional women’s roles.
• The macro-deterrent claim: UBI decreases economic growth by enabling reduced labor market participation and increasing costs.
• The shut-door claim: UBI creates political pressure to restrict immigration and migration.
• The bought-off-proletarian claim: UBI—by providing a minimal level of contentment for workers—reduces their effectiveness as a force to challenge the deeper inequalities and other social inequities in society.
• The consumerism claim: UBI leads to even more environmental destruction because of increased consumption.
• The decreased-overall-redistribution claim: UBI is (politically and/or economically) feasible only at such a low level and only accompanied by so many other social programs that it will leave low-income people worse off than traditional, conditional social policies.
• The strategy-to-cut-redistribution claim: factions in government will use UBI as an excuse to cut other programs, then cut in a strategy that will lead to much less overall redistribution.

I compiled this list from general knowledge accumulated over years of reading about the UBI debate. It is bound to be incomplete. Many more claims (of various levels of relevance, certainty, and testability) are undoubtedly circulating in the academic and nonacademic literature on UBI. But I hope it captures a significant range of what is being said. This list is enough to demonstrate the difficulty of designing a trial and communicating its results in a way that successfully raises the level of debate over these claims. Some are things that can’t be tested. Some are things that can only be tested indirectly, partially, or inconclusively. Few if any of these claims can be directed tested with any accuracy in a trial.

I’m interested to know how comprehensive people think it is. Did I include all the relevant claims you can think of? Did I overblow any claims that don’t deserve to be on the list?

A stock image used to evoke a mental connect with the word “experiment”

How much does UBI cost?

by Karl Widerquist | May 26, 2017 | Opinion, The Indepentarian

I just completed some simple, “back-of-the-envelope” estimates the net cost of a UBI set at about the official poverty line: $12,000 per adult and $6,000 per child with a 50% “marginal tax rate.” They are in a paper entitled, “the Cost of Basic Income: Back-of-the-Envelope Calculations.” It’s currently under peer-review at an academic journal and available in un-reviewed form on my website.

Here are some of its most important findings:

• The net cost—the real cost—of a roughly poverty-level UBI is $539 billion per year, less than 16% of its often-mentioned but not-very-meaningful gross cost ($4.15 trillion), less than 25% of the cost of current U.S. entitlement spending, less than 15% of overall federal spending, and about 2.95% of Gross Domestic Product (GDP)
• This $539 billion UBI would drop the official poverty rate from 13.5% to 0%, lifting 43.1 million people (including about 14.5 million children) out of poverty.
• This UBI will be a net financial benefit to most families with incomes up to $55,000, making it an effective wage subsidy (or tax cut) for tens of millions of working families.
• The average net beneficiary of this UBI is a family of about two people making about $27,000 per year. The family’s net benefit from the UBI would be nearly $9,000 raising their income to almost $36,000.
• Lowering the marginal tax rate to 35% would spread the benefits of the UBI program to more of the middle class while increasing the cost to $901 billion.
• The cost of a UBI of $20,000 per adult and $10,000 per child is $1.816 trillion per year, less than 85% of total entitlement spending, less than 45% of total federal spending, and less than 10% of GDP.

-Karl Widerquist, Begun in New Orleans, completed at Cru Coffee House, Beaufort, North Carolina, May 21, 2017