Firing the entire welfare state bureaucracy does not save the day for a universal basic income as Robert Greenstein explains
Suppose UBI provided everyone with $10,000 a year. That would cost more than $3 trillion a year — and $30 trillion to $40 trillion over ten years.
This single-year figure equals more than three-fourths of the entire yearly federal budget — and double the entire budget outside Social Security, Medicare, defense, and interest payments. It’s also equal to close to 100 percent of all tax revenue the federal government collects…
Where would the money to finance such a large expenditure come from? That it would come mainly or entirely from new taxes isn’t plausible.
We’ll already need substantial new revenues in the coming decades to help keep Social Security and Medicare solvent and avoid large benefit cuts in them. We’ll need further tax increases to help repair a crumbling infrastructure that will otherwise impede economic growth. And if we want to create more opportunity and reduce racial and other barriers and inequities, we’ll also need to raise new revenues to invest more in areas like pre-school education, child care, college affordability, and revitalizing segregated inner-city communities.
A UBI that’s financed primarily by tax increases would require the American people to accept a level of taxation that vastly exceeds anything in U.S. history. It’s hard to imagine that such a UBI would advance very far, especially given the tax increases we’ll already need for Social Security, Medicare, infrastructure, and other needs.
The universal basic income is a rare bird for the left. It is the only time the usual suspects on the left are happy to cut government bureaucracy.
Furthermore, the left makes no inquiries as to how these redundant bureaucrats who administered the welfare state will find jobs. The market is left to work its magic for once. How convenient.
When a tariff cut is proposed, a trade deal signed, or job reduction in a bureaucracy suggested perhaps as the result of a privatisation, left-wing activists chain themselves to factory gates or government offices in solidarity. The social upheaval from the job losses among existing workers and their dim prospects of reemployment are paramount in their minds.
Why in the case of a universal basic income is the left so relaxed about job losses. Indeed, it celebrates as an advantage of a universal basic income that “Most of the bureaucracy of the welfare system [is] swept away” .
The universal basic income is the only time the left welcomes a reduction in bureaucracy and the role in the state. This switch from welfare payments to a universal basic income does not make those on the benefit any better off. Normally they are worse off under a universal basic income.
None of the the less well groups which of the concern of the left gain from a universal basic income. Despite this, they sell the jobs of their comrades in the public sector down the river.
I cannot believe the explanation is job losses are OK as long as they are the result of left-wing policies. Unless the labour market is liberalised, its ability to find new jobs for workers, for example, made redundant in the public sector after the introduction of a universal basic income is not any under greater than under a right-wing policy that costs jobs.
A universal basic income in New Zealand will have to be financed by a great big new tax because the existing ones are not enough according to the Economist calculations below.
HT: Paul Kerby.
Running around saying that Universal Basic Income will make work optional leaves open the question of who will be the suckers who actually do the work and pay enormous taxes to fund the idyllic lifestyle of the bohemian rest.
Source: Morgan Foundation (12 April 2016) Four Lessons for Labour on How to Sell the UBI.
I will contract out to Geoff Simmons of the Morgan Foundation my reply to the claim yesterday by the Morgan Foundation’s Susan Guthrie that there are no negatives from a Universal Basic income. Simmons said:
With an unconditional basic income, most beneficiaries would be no better off than they are now (in fact sole parents would almost certainly receive a lower benefit).
Single parents are $150 a week worse off and retirees are $50 worse off per week if their current income support were replaced by a Universal Basic Income of $11,000 per adult.
Both were entitled to much more under the current welfare benefit system and New Zealand Superannuation respectively. Unemployment, sickness and invalid beneficiaries are about 5% better off under a Universal Basic Income.
Labour’s background paper described a Universal Basic Income of $11,000 as not enough. Guthrie is even franker yesterday about how inadequate a Universal Basic Income is for the poor:
A basic income policy would provide everyone aged 18 and over with an unconditional, tax free survival-level of income each and every year.
I will contract out to Gareth Morgan (2011) why a Universal Basic Income that provides a “survival-level of income” is not good enough:
Rather than decreeing a minimum wage and discovering the consequences for jobs and top-up payments, let’s agree on what is a minimum income every adult should have in order to live a dignified life and then see what flows from that.
We begin by specifying the income level below which we are not prepared to see anyone having to live.
A survival-level of income and a minimum income on which every adult can live a dignified life are not the same thing.
Gareth Morgan’s universal basic income of $11,000 for adults makes most better off except those for whom the modern welfare state was established to protect.
Most of the evidence against the Universal Basic Income comes from examining the numbers put forward by its proponents such as the Morgan Foundation and its excellent online tool. Brian Easton (2015) put it well when he said:
Many advocates put the UMI forward without doing the sums.
Those who do, find that the required tax rates are horrendous or the minimum income is so low that it is not a viable means of eliminating poverty. Among the latter are New Zealanders Douglas, Gareth Morgan and Keith Rankin.