Universal basic income: poor tool to fight poverty? Mapping the debate

by Kate McFarland | Jul 13, 2016 | Opinion

A recent article in The New York Times, entitled “Universal Basic Income is Poor Tool to Fight Poverty,” spawned a debate on the desirability of implementing a UBI in the United States. This Basic Income News feature analyzes the NYT column’s argument against UBI, and looks at the counterarguments posed in several response pieces.     

On May 31st, the New York Times published an article that launched a debate about the cost and effectiveness of implementing a universal basic income in the United States.

The column’s author, Eduardo Porter, argues that “universal basic income is a poor tool to fight poverty” (to cite the article’s title). He makes two main arguments against UBI:

First, on his assessment, a UBI would be either insufficiently low to end poverty, or require too many cuts to existing programs, or it would be prohibitively expensive to administer:

It amounts to nearly all the tax revenue collected by the federal government. Nothing in the history of this country suggests Americans are ready to add that kind of burden to their current taxes.

Second, even if a UBI could be afforded, Porter believes that it would have “many undesirable features” due to its unconditionality. These include a “non-negligible disincentive to work” — work, in his view, “remains an important social, psychological and economic anchor” — and a lack of social control. (Porter brings up housing vouchers as an example of the latter: “Say we know the choice of neighborhood makes a difference to the development of poor children. Housing vouchers might lead them to move into a better one. A monthly check would probably not.”)

Additionally, Porter dismisses one popular argument in favor of basic income: he denies that technological unemployment is a pressing concern.

Pothole Patrol

While Porter admits that poverty and precarity are problems in dire need of better solutions, he believes that there are better policy options than a universal basic income. In particular, he is fond of the idea of subsidized employment, suggesting that “The government could subsidize jobs as varied as school repairs and fixing potholes.”

Is a basic income too expensive?  

Before the end of the day, responses to Porter’s argument appeared across the Internet, defending both the feasibility and desirability of a universal basic income.

Three notable replies include those of Vox columnist Matthew Yglesias, former BIEN secretary Almaz Zelleke, and popular basic income activist Scott Santens. All three of these authors respond to the cost objection, although they employ slightly different strategies in doing so.

While Zelleke remains focused on matters of principle, largely bypassing the attempt to numerically “prove” that a basic income would be affordable, Yglesias and Santens both crunch a few numbers. Yglesias calculates the cost of a basic income of $10,000 per adult (which is, admittedly, below the poverty line) and $6,000 per child. Santens considers an amount of $12,000 per adult (topped-up for seniors and people with disabilities) and $4,000 per child. They conclude that, although expensive, a UBI is not prohibitively costly.

Yglesias points out that the level of spending required, as a percentage of GDP, would not be out of line with the amount of government spending in social democracies like France and Sweden. Thus, while a UBI would “take federal spending to a level never before seen” in the United States, this level would not seem farfetched when compared to other developed nations.

But, of course, the question that worries critics of the UBI is not just “Could America afford a UBI?” but, more to the point, “Where would the money needed to fund a UBI come from?” On this point, all three of Porter’s opponents seem to agree, nodding to an answer that some Americans might not want to hear: funding a UBI will require some tax increases and redistribution.

Zelleke cuts to the chase here: the question of financing a UBI is not really a matter of affordability at all, but of political will:

It’s true that basic income is expensive, but calling it unaffordable short-circuits the discussion we should be having about the costs and benefits of a basic income. Raising taxes is never an easy sell, but might it be worth it if the additional revenues were spent on a program guaranteed to eliminate poverty?

And Santens puts matters even more bluntly, asserting that the money needed to fund a UBI “comes from the raises no one has gotten since productivity decoupled from wages and salaries back around 1973. Basic income belongs to us because it’s been effectively stolen from us for decades.” On Santens’ view, a UBI is not merely an affordable option to eliminate poverty; basic principles of fairness and justice make it mandatory.  

At base, the disagreement between Porter and his opponents is not a dispute about the mathematics. It’s a question of value: it is more important abolish poverty, or to give individuals the shares of collectively-generated wealth that they deserve, or is it more important to avoid raising taxes and federal spending?

Interestingly, Porter himself seems to tacitly agree with opponents like Yglesias that, technically, the United States could afford a universal basic income. In an article published just a week later, he complains that paying for a sufficiently high basic income would require “raising taxes to Scandinavian levels.” Similarly, U.S. News and World Reports contributor Chad Stone — in an article echoing Porter’s — says of Yglesias: “he assumes that the goal of ending poverty would make conservatives and GOP politicians comfortable with raising federal spending to European levels…”

Happy Finnish and Swedish people
Photo credit: Rob Watkins/Paf

Even its adversaries, then, seem to admit that a UBI could be financed if the United States was willing to raise taxes to a level that already has a precedent in countries that rank among the happiest in the world. Where money alone is concerned, the United States can pay for a UBI.

As Santens puts it, “The money is there, it’s just massively maldistributed after decades of upward redistribution.”

A June 6th article in Quartz — written in part as a response to Porter’s New York Times piece — makes a similar point: the debate over the cost of basic income “isn’t really about welfare spending: It’s about tax policy.”

The remaining disagreement, I submit, is twofold:

1. Is it fair to raise taxes on the highest earners in order to redistribute money to all?
2. Even if it is, could this be a viable sell in American politics?

These are the debates that must be had. I believe that, where matters of justice and fairness are concerned, UBI proponents can easily mount the more compelling normative argument. Political feasibility, to be sure, might require a tough and prolonged fight — but the advantages of UBI are enough to warrant it.

(For more background on these normative arguments and practical advantages of UBI, I recommend further exploration of the BIEN website.)

Would a basic income harm society?  

So, then, a universal basic income is affordable in the United States — as long as the country can summon the political will to implement it. But would it harm society?

Porter gives two reasons to think that it could: a UBI would disincentivize work, and it would deprive the state of valuable and productive control over how individuals spend money. While Yglesias and Zelleke do not focus on this portion of Porter’s article, Santens addresses both in some detail.

Porter’s first worry is a common objection to UBI: if people can get money for free, they might stop working (specifically, they might abandon or reduce time spent in paid employment [1]).  

Note that, in general, there are two ways to respond to this objection:

1. Don’t contest the implicit evaluative presupposition that it’s bad if people stop working (in paid jobs), but deny that this is likely to happen under a UBI.
2. Don’t contest the prediction itself, but deny that it would be a bad thing if people spent less time in paid employment; that is, deny the evaluative presupposition that more paid work is better for individuals or society.

Of course, one could employ both tacks in tandem — which is, roughly, what Santens does in replying to Porter.

For the most part, Santens takes the first approach, countering Porter’s empirical claim that a UBI would disincentivize (paid) work. In doing so, he cites multiple studies of cash transfers and basic income pilots — notably drawing upon an article written last fall by none other than Eduardo Porter — that show that unconditional cash transfers have not, in fact, had this effect.

There is a danger, though, in relying too heavily on this first tack: it can tend to reinforce the assumption that, all else equal, more time spent in paid work is better than less. It reinforces the view that the issue is an empirical one (“Will people spend less time at jobs or not?”), when the bigger issue is a normative one (“Is it bad or good if people spend less time at jobs?”).

Ezra Klein’s contemporaneous piece in Vox, which was also inspired by Porter’s article, partially exemplifies this danger. Klein takes for granted that some people would leave the workforce if provided with a basic income — and that this would indeed be an unwanted result “in a world where a job with a steady paycheck is the only path to self-respect.”

In fact, he goes so far as to say,

If that’s the reality of the situation, then, yes, a UBI is a bad idea — it’s better to push people to work by supplementing incomes or using the government as an employer of last resort. Sure, that’s more paternalistic, and it means we’ll waste people’s time in unpleasant or useless jobs and consign others to unemployment.

Although Klein is willing to admit that a UBI could be a good idea if Americans change the way that they view work, he believes that Americans have not yet reached this point.

I submit, however, that it is precisely the job of the UBI advocate to challenge Americans to change the way that they view work — assuming that Klein is correct about the status quo.

This brings us to the second of line of response to Porter’s “a UBI would disincentivize work” objection — which, in fact, Santens also touches upon (although he does not develop it in his response to Porter to the extent that he has elsewhere):

[B]asic income is not at all an idea about paying people to do nothing, but instead about paying people to do anything. There is so much work being done right now that is not seen or recognized as work, but is. And there is so much work people want to be doing on their own volition that they are prevented from doing in a system that requires they spend their hours working for someone else just to survive.

Again, if Klein is right about how Americans view work, then Americans must change the way they view work. She might, though, simply be wrong about the current state of affairs in American culture: plausibly, Americans can see the value of unpaid work — or, in Santens’ words, “work that is not recognized as work” — even if it’s not always obvious that they can.

“Frustrated man at a desk” CC LaurMG

This leaves Porter’s contention that, as Santens puts it, a UBI “would not be paternalistic enough.” Santens’ response here is to argue that the lack of paternalism is for the best: allowing individuals more discretion over how they spend money, and with fewer restrictions and qualifications on who receives it, has been shown to produce the better outcomes.

He takes up Porter’s own example — housing vouchers — to create a compelling case study, combining anecdotal and statistical evidence in favor of the effectiveness of cash transfers and against that of means-tested programs. According to the research he cites, over three out of four people who qualify for housing assistance in the US don’t receive it. Meanwhile, studies of cash-transfer programs show that many beneficiaries do, in fact, use their cash to move into better houses or neighborhoods.  

As Santens repeatedly complains, Porter’s attack on UBI rests on little in the way of empirical evidence. Now, perhaps Santens himself has cherry-picked studies in favor of his pro-UBI conclusion. Even if that were the case, however, he at least does provide some hard-and-fast data. Minimally, this shifts the burden of proof back to Porter to demonstrate — with evidence — why paternalistic welfare programs would provide a greater benefit to individuals and society.

Finally, in addition to arguing that direct cash transfers are more effective in producing certain results, one might directly object to the normative presuppositions of means-tested welfare programs — as Santens does here:

I’m fed up with people with positions “up on high” looking down at everyone else and telling them they know better who needs assistance and who doesn’t, and how that assistance should be provided and when that assistance should be taken away. I’m fed up with the idea that anyone must prove their right to live to anyone at all.

I will close with this passage. We do need to consider the evidence; sometimes, though, we need just to step back and ask “What does this policy imply about basic human dignity?”

Image Credit: Ivaan Kotulsky

[1] When critics like Porter complain that a basic income might cause people to “stop working”, they often conflate “working” with working for money — ignoring the many types of unpaid activities that add value to society (if not to the GDP), and that are even colloquially regarded as “work” (e.g., volunteer work, care-work, and housework).

Continuing to use the word ‘work’ in this narrow sense, they paint a false dichotomy between working for money and idleness. The important category of “unpaid work” is ignored — even though it might well that, given a basic income, many individuals would choose to engage in more unpaid work rather than either paid work or “idleness”.

In the interest of clarity, I’ve disambiguated ‘work’ as ‘paid employment’ in my treatment of the argument — but it should be noted that, quite misleadingly, Porter does not.  

BIBLIOGRAPHY

Original article:

Eduardo Porter, “Universal Basic Income Is a Poor Tool to Fight Poverty,” The New York Times, May 31, 2016.

Critical responses:

Scott Santens, “Universal Basic Income Is the Best Tool to Fight Poverty,” The Huffington Post, June 2, 2016.

Matthew Yglesias, “A universal basic income could absolutely solve poverty,” Vox, May 31, 2016.

Almaz Zelleke, “Actually, a Universal Basic Income Will Solve Poverty,” May 31, 2016.

Sympathetic responses:

Chad Stone, “A Universal Basic Income Is No Solution,” U.S News & World Reports, June 3, 2016.

Related:

Alexander Holt, “Critics of Universal Basic Income just don’t understand how the policy would actually work,” Quartz, June 6, 2016.

Ezra Klein, “A universal basic income only makes sense if Americans change how they think about work,” Vox, June 1, 2016.

Thanks to Asha Pond, Tyler Prochazka, and André Coelho for reviewing a draft of this article — and, as always, to my supporters on Patreon (click the link to join ’em!).

Featured image CC Luis Felipe Salas.