We talked to five experts about what it would take to actually institute Universal Basic Income
Universal Basic Income (UBI) proposals are gaining in popularity across the political spectrum. The measures would see governments hand a set monthly income to every single citizen within a country, either in addition to existing benefits or in place of them (depending on the details of the particular UBI proposal).
Left-wing fans favor UBI’s ability to eradicate absolute poverty, while right-wing libertarians are drawn to its simplicity and reduction in bureaucracy. In Silicon Valley, startup investment firm Y Combinator has plans to fund a basic income experiment in the US, while Finland announced last year it would conduct its own extensive experiment.
But how feasible is UBI to implement in reality?
We spoke to five UBI experts to get their take on the practicalities of the scheme. (Transcripts have been edited for clarity and length.)
Matthew Zwolinski, associate professor of philosophy at the University of San Diego:
The main changes we need to see to introduce UBI are largely conditions of public acceptability. Right now, most people don’t fully understand what a basic income is or how it would work.
We use the term basic income as though we’re talking about a single, well-defined policy when in fact there are a lot of different things that go under the label of UBI. All the schemes have in common that they involve cash grants rather than in-kind benefits or stamps or vouchers. All of them are sort of universal, meaning just about everyone gets a payment. But do children get a grant or only adults—meaning what, anyone 18 years or older? Are grants given to families or to individuals? Are there any income requirements?
Some of these proposals, e.g. Charles Murray’s from his book In Our Hands, involve a progressive tax designed to recapture most if not all of that benefit, for people whose incomes are sufficiently high. So in effect the net benefit that high-income people receive is zero.
As a libertarian, I believe UBI should substitute at least a range of currently existing welfare programs.
Another major question is whether UBI is designed to supplement or substitute for currently existing welfare programs. That’s a particularly big debate between people broadly on the right end of the political spectrum, who think UBI should be a substitute, and people on the left, who view it as something that should be added on top.
As a libertarian, I believe UBI should substitute at least a range of currently existing welfare programs. That said, there are certain programs that can’t really be substituted for by giving people cash. For example, people suffering from severe mental disabilities who are provided with drugs to treat those disabilities or psychological treatment, and giving them cash wouldn’t be an adequate replacement.
Though there’s some concern that UBI could be a disincentive to people working, I think it’s far less of a disincentive than existing welfare programs where there are cut off points at which, one you’re earning a certain amount, you lose your benefits and instead get a high tax rate on your earnings.
Universal Basic Income needs to provide support for anyone who needs it while being affordable. I think something like a $10,000 annual basic income for adults, combined with progressive tax, would be reasonable. However, the more experiments and data we have on how UBI affects different kinds of populations, the better.
Karl Wilderquist, associate professor at Georgetown University School of Foreign Service in Qatar, and co-chair of the Basic Income Earth network:
I think the evidence is clear that it is a financially sustainable policy that could be introduced virtually immediately with very little phase in. If we decide to do it, we can do it now: We don’t have to get growth to some level or discourage some cultural behavior first. Of course, a government that is more responsive to voters and less responsive to campaign contributors would help.
But it’s hard to say what has to happen to make us decide to do it. Why do some political movements succeed and others fail? People need to be concerned with the level of inequality, to realize that we’ve had a lot of economic growth but most of the benefits of that growth have gone to the people who own the resources. The returns on property goes to people who own property and meanwhile we’re demanding the labor of very disadvantaged people who are not really sharing in the benefits of the wealth they help create.
Concern with the side effects of automation is also bringing a lot of people to the movement. Whether or not technology will replace all or most jobs, it disrupts the lives of people whose careers are replaced. Millions of people are drivers. It looks like they’re all going to lose their jobs. There might be other jobs for them, but those jobs might pay poverty wages.
My favored model is an unconditional basic income, high enough to cover a person’s basic needs and given to every man, woman, and child as a right of citizenship. There are many good ways to finance it. I favor taxes on resources and rents. Start charging the market rate for the broadcast spectrum instead of giving it away; the Fed should make money off the banks instead of vice versa; land value should be taxed; all forms of pollution should be taxed; and so on. But there are other ways to raise revenue. A wealth tax is a great idea, but you could also finance a basic income with an income tax—even a flat income tax. All of those are workable, good ways to do it, and all of them will effect redistribution from the very wealthy to the middle and lower classes.
However, there are many things we can only learn about UBI by introducing it at a national level. People will not be willing to accept terrible jobs with ridiculously low wages. How much will employers have to improve wages and working conditions? We don’t know, but can say almost certainly that it will move in that direction, and therefore, it will improve the living standard of lower income people by more than the size of the grant.
Jason Murphy, assistant professor of philosophy at Elms College, who manages the US Basic Income Guarantee Network Facebook page:
Alaska is proof that Universal Basic Income can and does exist. The state has developed a program that gives all of its citizens about $2,000 per year. The state has never been serious about taxing pollution or extreme wealth. If Alaska can do this much, the US is certainly able to do the same and more.
$2,000 a year for all, or $8,000 for a family of four, is not enough to lift everyone above the poverty line. But it’s a lot more than ever trickles down to our least-well-off through corporate welfare and tax write-offs for the wealthy. There are communities that are invisible or despised by those in power that would see more with this size grant than they will see with development boondoggles. Once we implement a small dividend, we would see the good it is doing and decide to abolish poverty.
A basic income can be funded by taxing bad things, things we need less of, such as pollution, financial transactions, and extreme wealth.
Secondly, a basic income is a big budget item but it is cheap to administer. We already have a revenue service. Social Security already has our numbers. It can deliver a dividend to all.
A basic income can be funded by taxing bad things, things we need less of, such as pollution, financial transactions, and extreme wealth. Whatever comes in, goes into the dividend. Put part of it into an Alaska-style fund for the future. We will soon see that this is the way to go.
Thirdly, the city of Saint Louis should take all of the money it was going to give the Rams and put that into an Alaska-style fund. If it could find it for a stadium, it can find it for a local basic income.
Kevin Milligan, professor of economics at the Vancouver School of Economics at the University of British Columbia:
UBI gets all this attention and popularity, but I haven’t seen one model that’s even on the planet of financial feasibility. These things are utopian. Finland is conducting an experiment in giving every adult a check for €800 a month, which would require spending far more than what the government raises in taxes. Whatever you think about giving €800 checks to every citizen, the only way you’re getting that money is by taxing citizens double what you’re taxing them now.
There’s no magic wand that makes the funding challenges go away when you put on the Universal Basic Income label.
I guess it’s not difficult to understand the attraction: We’re giving out free ponies here. But the math matters a lot because the money has to come from somewhere. Under any kind of UBI scheme, you’re sending checks not just to existing benefit recipients but to a wide host of working poor and middle class families. Which sounds great except for the fact that you have to get that money from taxing those people to start with. And UBI is great at reducing bureaucracy—but we’re talking pennies on the dollar of what it would cost to run these schemes. I’ve run the numbers for Canada and we’re talking well over hundreds of billions of dollars to run such a program and the bureaucracy involved is not even close to covering that cost.
The issues UBI plans to address are important. Lowering bureaucracy, lowering the phase-out rate on benefits to lower-income earners, and giving more money to people who are struggling—those are all great things. But there’s no magic wand that makes the funding challenges go away when you put on the Universal Basic Income label.
Matt Bruenig, contributor at progressive thinktank Demos:
Whether or not UBI is feasible depends on what people mean by UBI. At some level, it can obviously be funded. You could give everyone $1 and that would be UBI. You could give them $100 a year, $1,000 a year—there’s just going to be some tipping point at which it would be too high, either because of the fiscal constraints or because of its possibly negative effect on labor supply.
Obviously $12,000 is more liberating than $11,000 a year but less liberating than $13,000 per year.
The sweet spot might not be high enough for people to live off, but it would still be a basic income in the sense that it’s the basic floor income that everyone receives. And such a scheme would significantly improve the lives of people who currently fall through the cracks. In the United States we have a non-trivial number of people who are in $2-per-day poverty because they’ve fallen through our assistance programs. For those people, $3,000 a year under UBI is a huge improvement over the kind of income they have now.
There’s no set number where UBI achieves liberation for all, because that will always be on a sliding scale. Obviously $12,000 is more liberating than $11,000 a year but less liberating than $13,000 per year. The more you have, the more you’re able to resist bad employment situations and that’s true all the way up the scale. There’s no real threshold where you can say, “Yup, that’s emancipation.”
I approach UBI by dividing people into three age groups: You have children, you have elderly, and then you have adults. Children should receive allowance handed out by the parents. Elderly people receive old-age pensions, which are often already a kind of basic income. And adults would get the universal basic income. One approach would be to have it replace all other adult benefits. If you’re going to do that, you could make it pretty high, probably equal to 10% of GDP.
The French, for instance, don’t seem to like to work that much. So UBI in France might create a larger drop in labor supply than a UBI in Japan.
Or you could introduce UBI alongside existing assistance, such as disability benefits, benefits for students, benefits for caretakers paid leave and unemployed benefits. Then UBI would have to be lower, but combined with other benefits it could keep you pretty comfortable if you found yourself in a difficult situation.
To me, 10% GDP would be do-able. It wouldn’t be the net additional amount of government spending but you could raise it through higher income tax, through a VAT that we don’t even have. We could get to that level pretty quickly if we were prepared to do it.
However, there’s uncertainty about how UBI will affect labor supply. Money partially motivates people to work and so UBI gives you slightly less motivation. But obviously people work for other reasons, related to status and getting along in society. And you still have the ability to differentiate yourself by working. Everyone would receive UBI but if you worked harder or longer or in more highly paid areas, you would still be better off than people who didn’t. That’s why I think you need basic income experiments, which people have been toying with in Finland, just to see what happens if you dial up UBI.
Its effects might play out differently in depending on national culture. The French, for instance, don’t seem to like to work that much. So UBI in France might create a larger drop in labor supply than a UBI in Japan, which seems to be very hard-working.
Overall, the Nordic countries seem best situated to implement UBI. They already have large welfare states with strong public support, and they’re very competent at tracking the effects of such public schemes. And so the trial currently being prepared in Finland is one of the most promising developments in UBI.