A New Try With UBI: As Wrongheaded As Before – Forbes

New York City mayoral candidate and UBI proponent Andrew Yang. (Photo by Michael M. Santiago/Getty ... [+] Images)

Andrew Yang, when he ran for the Democratic Partys presidential nomination last year, pushed the idea of a universal basic income (UBI). The scheme to give every American a government stipend regardless of need went nowhere (as did Yangs candidacy) despite considerable UBI boosting from a number of journalists and prominent tech barons.Now Yang is campaigning for the Democratic nomination for New York Citys mayor.Though his platform has a lot of worthy elements and his candidacy has appeal on several levels, he continues to push a form of UBI, which remains a bad idea on several levels. It is the same for new UBI experiments in upstate New York as well as in Stockton, California and that states wildly affluent Marin County a universally bad idea.

Candidate Yang has certainly toned down his UBI ambitions. As a presidential candidate, he wanted to give $12,000 a year to everyone in the country for an estimated annual cost of $2.8 trillion. For New York City, he wants $2,000 a year for citizens in extreme poverty, a lower price tag than last years proposal certainly but perhaps less manageable for New York City than the trillions would have been for the federal government. Candidate Yang says that he knows where he can get the money by ending the tax-exemptions enjoyed by operations such as Madison Square Garden. Even if there are enough such entities to raise the required funds, there are many better ways for the city to spend the money than on UBI, by improving the subways, perhaps or cleaning the streets, filling potholes and fulfilling many more of the citys primary obligations better than presently.

Whether at a city or a national level, UBI could not, as some more libertarian boosters claim, substitute for other entitlements programs. Certainly, Yangs proposed $2,000 a year, even concentrated at the most needy, would fail to cover the needs of New York Citys disadvantaged. An enlarged stipend would still fail to acknowledge other important facts of life. Substituting a UBI for welfare or, as some have suggested, using a broad UBI to substitute for Social Security at the national level, would certainly encounter political resistance. A broad UBI as a substitute for Social Security and Medicare would constitute a partial transfer from the old to the young, and using it as a substitute for disability insurance would constitute a partial transfer from the disabled to the able bodied. Such considerations, once widely understood, might well dissolve any public support for UBI, except perhaps among undergraduates who would simply see in it more beer.

The vulnerabilities of the disadvantaged would also thwart the feasibility of using UBI even as Yang now proposes in New York, much less as a substitute for family support. Many of these people have trouble managing their finances. The predominance of payday loan operations in poor neighborhoods, along with furniture leasing outlets and the like, speaks not only to the cash-short nature of residents, but also to their susceptibility to hucksters. Noteworthy in this regard are Census Bureau statistics that estimate how 11 million American adults barely have basic literacy skills and some 30 million have difficulty completing basic financial forms. Without the guidance and strictures of present welfare arrangements, many less fortunate recipients of these stipends would find themselves either bilked out of them or would spend them too quickly. Surely, a Mayor Yang would balk at telling financial incompetents who have spent their allowance too fast to tighten their collective belts and await the next check.

If these considerations were not sufficient reason to question the wisdom of a UBI scheme, the evidence from various trials is not especially encouraging. A Bureau of Labor Statistics study of people on unemployment discovered, for instance, that they spent more time in front of the television and sleeping than upgrading their working skills, as some UBI proponents say it would do. A similar study on disability recipients revealed similar patterns. Statistics from earlier federal pilot programs on negative income tax, a variant of UBI, are equally discouraging. Between 1968 and 1980, Washington made four controlled trials of negative income tax, involving thousands of people across six states. Hours of work desired by all recipients fell some 9% below to those not in the program. They fell some 20% for married women and 25% among single women heads of household.Desired work among single men fell some 43% below non-recipients. If those receiving the negative income tax lost their job, the spell of unemployment lasted two months longer on average than with non-recipients and 12 months longer for married women.

There is an additional consideration, less quantifiable but perhaps more significant than any of these others. Even in a scarcity-free utopia, where a UBI would presumably be easy to grant, the transfer would do people harm.Simply giving people the means to acquire necessities and the material pleasures of life would effectively make every citizen a ward of the state or whatever entity does the giving. That is fine for children. It binds them to dutiful parents. But it would undermine the independence of adults and in so doing steal the sense of responsibility for themselves that undergirds self-respect. It would create a nation (or city) of sheep and do people and the society considerable harm, perhaps even destroy them.

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A New Try With UBI: As Wrongheaded As Before - Forbes