A Universal Basic Income?

Even if you never read the book, I recommend reading David J. Hebert’s review of Universal Basic Income at the Acton Institute. Here’s a snippet:

Despite the quirky format, I’m now far more aware of the nuances to the various UBI policy proposals than I was before picking up the book. For example, the authors begin by noting, “a lot of confusion about the concept of a UBI results from people talking about it as though it was a single, precisely defined policy proposal. We think it’s more helpful to think of the UBI as a family of proposals” (emphasis original). They then list three common elements all UBI proposals share:

1. They involve unrestricted cash transfers.
2. These cash transfers are unconditional.
3. They are universal, in that everyone qualifies.

It’s useful to discuss these in more detail. A UBI as an unrestricted cash transfer means that the government is simply transferring cash into the hands of every citizen—that’s it. If we compare this to the current welfare system, as the authors do, we can already see a stark difference. Consider electronic benefit transfers (EBTs). In the current system, the government decides 1) who is eligible to receive benefits, 2) how many dollars those people receive, and 3) what they’re allowed to purchase with those dollars. There is tremendous potential for cronyism at each of these steps. For example, did you know that you can buy iced coffee with EBTs but not hot coffee or cold chicken, and not hot, ready-to-eat roasted chicken? Where is the line between “cold” and “hot” anyway?

And consider Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) benefits: “For some items—such as yogurt, cereal, and pasta—only specific brands are eligible” (pg. 81).

The list of welfare programs is too long to go through exhaustively, but if you think through those three questions above for each one, you’ll quickly find that cronyism pervades our current welfare system to an alarming degree.

In the end Mr. Hebert isn’t sure whether the book convinces him that a UBI is a good idea or not but he’s certainly tempted.

IMO there’s an important distinction between a hypothetical UBI and a UBI that would actually be enacted in law. That’s illustrated by this quote:

Finally, consider the universality of a UBI. This is the one aspect that even the authors balk at. As they note on page 8: “A UBI that gave money to everybody would either be so expensive as to be unmanageable, or so small as to be practically useless to the people who need it most.” This is probably the weakest part of the book: the authors contend that universality is a central theme of all UBI proposals … but then write that “while most proponents of a UBI say that eligibility for the grant is not dependent on income or wealth, we’ll let you in on a little secret: nobody really means this” (emphasis original).

The hypothetical UBI in which everyone is eligible and everyone receives the same amount would probably be effective in reducing “cronyism” as Mr. Hebert infers. IMO it would also be unconstitutional as well as horrifically expensive or ineffectual, depending on the amount of the stipend. That’s why an actual UBI would be based on need, be arguably constitutional, and not reduce “cronyism”.