Lane Kenworthy, The Good Society
May 2023

A universal basic income (UBI) would give individuals a regular cash payment. Eligibility wouldn’t be conditional on need or employment status. The idea originated centuries ago, with proponents such as Thomas More in the 1500s and Thomas Paine in the 1700s. It had a small but influential group of supporters in the late 1800s and early 1990s, including John Stuart Mill, Henry George, and Bertrand Russell. Milton Friedman and James Tobin popularized it in the 1960s (as a “negative income tax”), and US policy makers gave a version of it serious consideration in the early 1970s.¹ Today it has advocates on both the left and right sides of the political spectrum.

On the left, supporters highlight the potential enhancement to freedom — specifically, freedom from work.² In the words of Philippe Van Parijs³:

A basic income would serve as a powerful instrument of social justice: it would promote freedom for all by providing the material resources that people need to pursue their aims…. A UBI makes it easier to take a break between two jobs, reduce working time, make room for more training, take up self-employment, or join a cooperative. And with a UBI, workers will only take a job if they find it suitably attractive…. If the motive in combating unemployment is not some sort of work fetishism — an obsession with keeping everyone busy — but rather a concern to give every person the possibility of taking up gainful employment in which she can find recognition and accomplishment, then the UBI is to be preferred.

For proponents on the right, the chief advantage is reduction in the deadweight costs of public social programs. If the government simply cuts a check to each person, there is no need for caseworkers or bureaucratic oversight.⁴

A third attractive feature of a universal basic income is that because it would go to everyone, recipients will face no stigma.

There are important details to be worked out. Should the payment go to all individuals, to all residents, to all citizens, or to all adults? Should it be paid out monthly or once a year? What should be the amount? Should the amount be the same or different across geographic regions in a country and across age groups?

At the generous end of the spectrum, Philippe Van Parijs and Yannick Vanderborght argue for all permanent fiscal residents as recipients (this excludes undocumented migrants and tourists but doesn’t presuppose citizenship).⁵ The amount would be one-fourth of a country’s per capita GDP, which in the contemporary United States would be about $15,000 per year. At the lower end, Charles Murray suggests $10,000 per adult.⁶

Despite its potential advantages, I don’t think a basic income grant is a good idea for the world’s rich democratic nations at the moment. The last three words in that sentence are important. In the future, artificial intelligence may advance to a point at which robots are able to perform complex in-person service tasks — preschool teacher, elderly caregiver, yoga instructor — as well as humans do. Robots don’t get sick or show up late for work, so it’s likely that as consumers we will prefer them over humans. (Some might favor humans because they’re quirky, but presumably robots can be programmed to have that feature too.) In this scenario there may be few jobs that we’re willing to pay other humans to perform. A basic income would then be a necessity.⁷

The question, though, is whether it would be good to move to a universal basic income in advance of that future scenario. I think not, for four reasons.

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• Free choice, paternalism, and well-being
• Employment
• Differing needs
• Known effects and unknown effects

FREE CHOICE, PATERNALISM, AND WELL-BEING

For many basic income proponents, a major advantage is that it lets people decide what to do with the help they receive from government. This freedom to choose does have an appealing quality.

On the other hand, a key purpose of government is to help individuals to do things they should but otherwise wouldn’t, or to do those things for them. Government builds roads, ensures clean air and water, and protects us from physical harm. It educates us, provides access to medical care, and helps us to save for retirement. It encourages us to take time off during the first months of a child’s life, offers parenting advice, and helps to monitor the health of newborns and their parents. Caseworkers for active labor market programs and social assistance help us to see what types of professions or jobs might be a good choice, how to develop the right kind of skills, and how to get hired.

These types of public services and goods improve lives. They are worth spending money on.⁸ In part because of their value, the share of income spent on such services and the share of people doing this kind of work — advising, educating, organizing, managing — has increased significantly over the past century and may well increase further going forward. The fact that some public-sector bureaucrats do their job poorly, or that some people would prefer to be left alone rather than instructed, guided, cajoled, or pressured by a caseworker, doesn’t mean we should turn away from providing such support to the individuals and families who need and/or want it. Paternalism has a place in a good society.⁹

EMPLOYMENT

The likely reduction in employment produced by a basic income could be economically and politically problematic. Let’s stipulate that a basic income grant worth discussing would be large enough to allow people to opt out of employment. For many proponents, that is one of its chief virtues. Some supporters suggest that the drop in employment might nevertheless be small or nil because current social assistance recipients would no longer face a withdrawal of benefits if they were to work more, because budding entrepreneurs would create more new firms given the increased cushion in the event of failure, and because people would have more freedom to choose a job they truly want and to get the skills needed to succeed in it.¹⁰ Even so, we should expect some loss of employment.¹¹

How much? We have little useful information for prediction. Perhaps the best is a three-year basic income experiment conducted in a small Canadian town in the 1970s. Labor force participation dropped by about 10 percentage points.¹² For a basic income that is permanent and more generous, as proponents would like, we might anticipate a larger drop.¹³

Suppose the decline amounts to 15 percentage points. How problematic would this be? An optimist might point out that since 1970 the employment rate among prime-working-age (age 25-54) men has dropped by about 10 percentage points in many of the rich democratic nations, and this hasn’t been especially problematic.¹⁴ But that’s mainly because the employment rate among women has risen more rapidly than it has fallen among men. We need high employment to ensure a tax base large enough to pay for generous social programs and government’s other functions,¹⁵ so a decline in the overall employment rate of 15 percentage points could have troubling consequences.

To make matters worse, the existence of a UBI might reduce public pressure on government to provide jobs and full employment. That could add to the employment loss that results directly from the basic income.

Reciprocity norms are unlikely to disappear, so a policy that significantly reduces employment might contribute to a polarizing political divide.¹⁶ In their 2017 book Basic Income, Van Parijs and Yannick Vanderborght propose a UBI of one-quarter of a country’s per capita income, which in the contemporary United States would mean about $15,000. This would go to each individual, including children. A couple with four children would thus have an employment-free after-tax household income of $90,000, which would go a long way in many parts of the country.

Here is one prediction, by Paul Krugman, of how reciprocity considerations are likely to play out in the United States¹⁷:

Britain, pre-Thatcher, had an unemployment benefit system that effectively allowed you to decide to live on the dole. There was even a song, “I’m going down to Liverpool to do nothing, with UB40 in my hand.” That ended up being a very unpopular system, even in Britain, where the politics are much less racially polarized than they are here. It’s going to take a long, long time to persuade a significant block of American voters that a system in which you can simply choose not to work is okay.

Here is another, by Robert Frank¹⁸:

A moment’s reflection reveals that a payment large enough to sustain an urban family of four at the official government poverty threshold (about $25,000 today) would quickly doom the program politically. Imagine, for example, that a group of ten families formed a rural commune and supplemented their $250,000 in cash grants with the untaxed fruits of gardening and animal husbandry. If they located in Colorado or Washington, they could also grow marijuana, both for sale and for personal consumption. Their mornings would be free to drink coffee and engage in extended discussions of politics and the arts. They could hone their musical skills. They could read novels, write poetry, play nude volleyball. Is it far-fetched to imagine that at least some groups would forsake paid employment in favor of leading lives like these at taxpayer expense? Once such groups formed, wouldn’t it be only a matter of time before journalists found them and created an eager audience for reports of their doings? And wouldn’t most voters react angrily once footage of the reveling commune members began running on the nightly news?

Of course they would, and who could blame them? An Indianapolis dentist with varicose veins rises at 6:00 each morning and drives through heavy traffic on a snow-covered freeway to spend the rest of his day treating patients with bad breath who take offense if they’re charged a fee for breaking an appointment without notice. How could such a person not be indignant at the sight of able-bodied people living it up on his tax dollars?

In short, it is a pipe dream to imagine that an income grant large enough to lift an urban family from poverty could win or sustain political support for long. Voters might support a cash grant if it were far too small to support comfortable living in groups. But the proposal would then fail by definition as an effective social safety net.

DIFFERING NEEDS

The third reason I don’t favor a universal basic income at this moment is that it very likely would have to replace some existing public insurance programs, and in doing so it would reduce our ability to allocate resources according to differing needs and circumstances.¹⁹

Consider the Van Parijs and Vanderborght proposal. They recommend a basic income grant equal to one-fourth of GDP per person, which means total spending on the UBI would amount to 25% of GDP. If we set aside health care, that’s more than any rich democratic nation (including the Nordics) currently spends on public transfers and services.²⁰ Suppose we go with a less expensive version, proposed in several recent popular books, of $1,000 per month for each adult.²¹ In the United States, that means $12,000 per year for the 250 million adults, which totals about 17% of GDP. Adding that to our existing public social programs would still put the US well above the total public social expenditures of any other affluent democracy. So the political feasibility of such a grant would hinge on getting rid of some, perhaps most, other public social programs.

We then would have little or no ability to address differential need. If I’m a single adult earning $50,000 a year who gets downsized from my job, I would be much better off receiving 80% of that salary in unemployment compensation rather than $12,000 or $15,000 from a basic income. If I have a disabled child who needs daily support and special educational services, the cost will be much greater than the $30,000 or so I would get for my basic income plus that of the child. And so on. Public insurance programs have been put in place over time to address specific and varied risks and needs. Losing this would, in my view, outweigh what we would gain from the simplicity of a basic income.

Van Parijs and Vanderborght advocate for starting with a smaller UBI. If we do that, it wouldn’t be necessary to reduce spending on other programs. UBI would be a complement to the existing welfare state, rather than a substitute. The hope is that once established, it could grow over time alongside those other programs.²² However, as we get richer, policy makers would need to decide whether additional money should go to the UBI or to other benefits and services. Because of differences in needs and the advantage of programs that cater to those differences, policy makers might reasonably tend to favor increasing spending on those programs rather than on the UBI. This makes it hard to envision the path to a UBI large enough to give people the freedom from employment that advocates desire.

KNOWN EFFECTS AND UNKNOWN EFFECTS

The final reason, and the most important one, why I don’t favor a shift to a universal basic income at this moment is that we know social democratic capitalism yields very good outcomes, whereas basic income’s long-term effects are unknown.²³ If and when modern societies get to a point where artificial intelligence is producing widespread joblessness, we probably will have no alternative to a basic income. But today we do, and that alternative is an attractive one.