Saturday, April 29, 2017

To UBI, or not to UBI

Alternatively titled, "I Wish I Were BIG".

An idea that has been percolating for a couple years now is a replacement of the current welfare/income transfer system with a Universal Basic Income (UBI) or Basic Income Guarantee (BIG). This idea has origins back to Milton Friedman's Negative Income Tax idea first introduced in Capitalism and Freedom back in 1962.

Watch this space. I predict this idea grows to dominate the debate especially as the unarguably unsustainable social welfare systems reach critical breaking points.

I find the idea fascinating for a number of reasons. My biases creep in all along this debate starting with its origins with Friedman. Some central considerations:

  1. Is the proposal(s) simplification a feature or a bug? My bias is to always simplify all else equal.
  2. Does it replace the entire welfare system (including Medicare and Social Security)? My bias is to replace it all.
  3. Can we reliably replace rather than have this be a politically-captured add on to the current mess? My bias is to avoid opportunities for add on--i.e., I worry about this risk.
  4. Can we trust people to make their own decisions (i.e., cash versus in-kind support)? My bias is to allow adults to be adults and not dictate their choices at least not through the government. On-the-ground private charity will undoubtedly find their mileage varies along this dimension. 
  5. Should it be a very basic subsistence level of aid or a substantial amount (i.e., allow you to pursue that well-fed artist career you've always dreamed of)? My bias is to the low end.
The tension between directional versus destination libertarians is thick here. The interesting and constructive debate is fully within the directional camp (i.e., is this a long-term improvement towards the ideal?). By no means is this a first-best solution (i.e., not a destination).

Bryan Caplan is against the idea. My bias is to first assume Caplan is correct in all things he has a strong opinion on. David Henderson agrees with Caplan. The discussion between Caplan and Ed Dolan is a very thorough treatment of the topic (DEFINITELY read the whole thing). Now cue Mike Munger to start making the strong case for it. Arnold Kling was not impressed. And he makes a strong point about means-tested aid versus behavior-tested aid including where (government or private charity) the competitive advantage in each resides. 

The devil is in the details SO MUCH in this quagmire. Perhaps the most critical (and damning) question is who would be politically capable of achieving this type of a change. While I am very sympathetic to the idea, I cannot conceive of any name attached to the Congressional act that would give me any trust I could support the measure.

P.S., Sorry for all the "i.e." use.