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.

The Cure for What Ails American Trade

Trump wants to “win” international trade, and he is considering renegotiation of finalized deals and taxes (for imports) and subsidies (for exports) to accomplish the feat. Those won’t work. Here is what will.

You have to make America lousy, again for the first time. Cue the action plan—do them all for the full interactive effect (links are in some cases NSFW):

1. American assets are too attractive to foreigners. Require that U.S.-based assets cannot have more than 25% foreign ownership.
2. The dollar’s too damn high! We have to make import purchases less desirable and export sales more desirable. Inflation is the tool for the task. Announce and begin immediately paying off all U.S. government liabilities (interest, salaries, and debts) with newly created money. Hey, we just cured the national debt as well. 
3. Rates of return are too good. Increase taxes especially on savings/investment. Take the current rates, and double them.
4. Importing is too easy. Prohibit customs processing for imports on days that begin with the letters “W” or “T” (for “Win Trade”).
5. Reduce property rights. The security investors enjoy knowing that American assets are relatively secure in title and protected from theft and abuse is making investment in America too desirable. Start with strong asset forfeiture confiscation and regulation which effects de facto takings. 

This is just a start. If we really put our minds to it, we can certainly screw this place up.

P.S., I can’t believe I just linked to Krugman. See what Trump has done to this country!

Highly Linkable - "progress" report edition

Let us begin with all the answers: The Cato Handbook for Policy Makers - it reads like stereo instructions for solving public policy problems.

Tyler Cowen has a new book, The Complacent Class, this short video is a good introduction. He suggests you can turn the book into winning advice. And perhaps it offers a unique explanation of Trump.

More from Cowen: Let he who cannot assimilate cast the first stone.

The Trump Rally? Scott Sumner cautions against the conventional view.

Dollars, Taxes: It is that time of year again. One of the promised blessings of President Trump is tax reform. Unfortunately, but perhaps not surprisingly, the version we will get is anything but ideal. Cowen explains. And Scott Sumner points out what economists know about taxes that the general public doesn't.

Do we need a national health policy? Steven Landsburg strongly suggests the question is silly on its face and requires more and different thought than what is generally offered.

One area of public policy Trump is offering no progress on is Social Security along with its ~$11 TRILLION of unfunded liability (i.e., debt in addition to the official national debt). Regardless of the chances, Bob Murphy has thought through a first-step solution to be considered before the inevitable changes to the benefit formula: Let people opt out. 

Speaking of letting people make decisions for themselves (and why shouldn't we given that they are in the best position to make good decisions as it concerns themselves), a surprising thing happened to an Ivy-league professor when she did a study of check-cashing businesses by working at one. She changed her mind about the business's virtues. (HT: David Henderson)

Scott Alexander kindly suggests some groups of people who we don't have to hate.

The Best Laid Plans

It is hard to stop planning--to go from preparing, which is safe and a bit fun, to actually doing. It can be hard to actually use stuff you've been keeping for that special occasion or rainy day. But that is why you were keeping it in the first place! 

Studying is ultimately about performance on the test. Practice is ultimately about playing in the game. Planning is ultimately about execution. Saving is deferred but eventual using.

In Evernote I have a note that serves as a brainstorm journal on blogposts I am planning to write but haven't yet. It is literally 19 pages long. Lack of time and a character flaw of perfectionism are my excuses for the procrastination.

Here is some good advice on converting planning into doing. 

Here is the case against 'just-in-case' items. 

Often we are not actually planning at all--we are just daydreaming. Daydreams can be ends in themselves, but their seductive allure can be destructive as they can be the antithesis of achievement. Daydreaming can be the first stage in the three-act progression (dream-plan-achieve). It can also be a fantasy world that doesn't and won't ever exist. Recognizing which one you are engaged in is vital to success. It is easy to confuse yourself in this regard and easier still to confuse those who are making their own plans around yours. 

My advice, which is for myself as much as anyone, is to not allow the 'someday I'd like to ...' daydreaming without honestly identifying if I am writing fiction or making plans. Ideally this would avoid the confusion of daydreaming as ends and daydreaming as means. Get busy living or get busy dying. There are enough real constraints preventing us from 'someday' being 'today'. Life doesn't need any help with roadblocks. Aspire to the end result, but admit that aspiration is just fruitless desire in the absence of actual progress. Plan to do.

R.I.P. Rosling and Arrow

This month saw the passing of two giants. Not many people in history truly change minds. These two men did.

Kenneth Arrow: Among his many contributions, he proved that majority-voting will always lead to suboptimal results. There are many fine tributes linked here.

Hans Rosling: Among his many contributions, he showed time and again that what we believe about poverty and development is simply and tragically wrong. Tim Harford has a great More or Less podcast tribute. The NYT obit is good too.

May their ideas, influence, and spirits live on.

Update on the Once and Future Tsar

Well, we are one month into the greatness. And it has been stellar!

• Unemployment went from being a horrific 4.7% to a terrific 4.8%. 
• Protesting is at a 45-year high.
• The swamp is draining so fast we can't hold on to National Security Advisors.
• Tax-reform hopes are getting lost behind the shadow of a border-adjustment tax that has consequences on Nero could love.
• Cronyism has gone international in a bigly way.
• And so much more!

Steve Palpatine Bannon finally spoke using his own voice instead of the orange puppet. Spoiler alert: Anyone who proudly speaks of 'economic nationalism' isn't going to win the Shazam Prize in Economics. 

He laid out three pillars of Trump's plan, and two out of three were bad. He starts with national security and sovereignty--we know how that has gone so far. Next comes the same type of thinking applied to trade--you see, kids, menage a trois (or menage a beaucoup when plus de deux) is bad in trade. Lastly is a promise that I would like to see come to play out, 'deconstruction' of the administrative state--can we count on this crew to pull anything like that off? I am highly doubtful. I believe they lack the ideological integrity to follow through or the intellectual acuity to be successful. My guess is that they want the administrative state to work for them rather than to truly reduce its breadth or depth.

What about Dodd-Frank and Obamacare reform? Well, where is the Republican Congress? They are the only chance at that. Meanwhile we lose ground on immigration, drug policy, and asset forfeiture. School choice, reversing net neutrality, and satire are among the areas that still have a good degree of optimism for progress. 

We will see...

Highly Linkable

First of all, it is settled--I will be inviting Alton to my Super Bowl party next year.

But I'm not inviting Adam because he ruins everything--in this case debunking 13 things that aren't true.

Carol Anne, they're out there.

Speaking of scary things, the news isn't so calming. I find Bryan Caplan's advice to be a sound counter to the tide of common opinion. 

The most I'll allow myself to speculate is that the supposed momentum issue in today's politics of a desire to look inwardly to protect what we have and regain what we've lost will be soon enough revealed as a chimera based on delusion. As Scott Sumner says, absolute poverty dwarfs relative discomfort as a material issue. (BTW, thanks again to Scott for his time in OKC and his nice comments at the bottom of that post).

If you want evidence of how phony the President's argument is and the unlikelihood of lasting "reforms" brought by his administration, look to this illustration of just one widget's journey through a supply chain that spans all of the NAFTA countries. (hat tip: David Henderson)

Alas, fear of Trump ruination continues to grip many. I recommend more advice from Bryan Caplan--embrace limited government!

Trump's own ruination appears more likely to me. I am just surprised by how fast it seems to be developing (perhaps this is wishful thinking). In fact I fear it will all be but wishful thinking that meaningful, good reforms will come from this Republican government. Perhaps Congress will be compelled to tell The Donald "You're Fired!" in short order and a President Pence can then be the signator to healthcare reform, corporate tax reform, and perhaps even major tax reform that can be bundled with climate change (externality) reform. It is amazing how simple and achievable these solutions can be--and accessible when presented by John Cochrane.