The world is not ready for universal basic income
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The debates over whether the US or other developed countries should institute a Universal Basic Income (UBI) do not consider a basic point: we already have UBI. We just have different names for it.
At its lowest level, UBI is called variously prison fare, care standards for mental patients or military Meals Ready to Eat given away during natural disasters.
Homeless shelters and border patrol detention sites are also dreadful components of our existing UBI system.
A few years ago, if you were hungry in America you could get “government cheese” from agriculture department distribution centres. You can be grateful if you have never been reduced to eating that substance. For the most part actual government cheese has been replaced by electronic benefit cards, but the Trump administration has plans to bring it back in the form of cardboard ‘ “America’s Harvest“boxes filled with food nobody would buy.
If you are poor and sick or injured, you can even obtain the government cheese equivalent of universal medical care.
You may have to travel some distance, at additional pain, and wait a long time in an uncomfortable plastic chair. Eventually, though, you will get your sticking plaster and ibuprofen tablets.
And, of course, you will receive all this free stuff with a generous helping of contempt from clerks, guards and any members of the general public who happen to see you. If you are ever put in that position, though, you should not worry about being recognised by anyone. People will look right through you.
If you have a bit more skill at gaming an application to an administrative judge, or composing a self-diagnosis, you could arrange to receive Social Security Disability Insurance payments. Some recipients call these ‘ crazy cheques”, but SSDI is also available for people who believe they have unbearable musculoskeletal pain. It helps to have a noticeable employment history. The key point is that you have to convince others that you are unfit to work, which usually means you have to believe that yourself. SSDI is good for $1500 or even $2000 per month.
When I read the elegiac prose about UBI from leftwing think tanks, or the barely controlled rages about it from their rightwing counterparts, I wonder whether any of them have ever had a piece of government cheese.
Because that is what UBI could turn out to be: a government cheese life for everyone we would like to forget.
Having said that, a simple, non-means-tested UBI could, theoretically, disintermediate many of the social workers, experts, and administrative judges who now stand between poor people and public money.
If you think that is a bad idea, spend some time watching the proceedings in a metropolitan family court. You would see that the search for alternatives to our current system is not just about reducing administrative costs or increasing the efficiency of distributing common goods. We need something other than a disposal system for unprofitable customers and undesirable employees.
Inconveniently, though, the econometrics we have at hand cannot model the demoralisation created by court-structured families and means-tested benefits. We can intuit that there is a great deal of human capital being wasted, but we cannot measure the loss.
What we can see is that advanced countries would be unable to pay for UBI by simply consolidating current benefit spending.
According to a study on UBI proposals last year by the OECD, even in its relatively advanced member countries, “big tax rises and reductions in other benefits would be needed, even for a modest basic income”.
In France, the OECD calculated that UBI would require an increase in income taxes of 5.6 per cent of GDP and a reduction of other benefits of 5.3 per cent of GDP. In Finland, paying for a UBI would require income tax increases of over 10.2 per cent of GDP, and benefit reductions of 6.7 per cent of GDP.
Given the political tensions that have already been created by changes a fraction of those levels, it becomes clear that there is no budget abracadabra that can pay for UBI.
Or, at least, it cannot be done within the bounds of the existing social contract in advanced countries.
Yet social contracts have changed before. What made that possible?
Well, historically it has required a war. Or maybe a couple of wars. It really took both the first world war and second world wars to create the social consensus for the European welfare states. A plague might do the trick. The Black Death did much of the work necessary to end the income stagnation of the European feudal system.
It will certainly take more than machine intelligence programming and the insecurity of the gig economy to create agreement on the need for UBI and the resources to pay for it. Sorry, billionaires and think tankers. Not yet.
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