As strong as the argument in favor of a guaranteed income may be, there are simply too many unanswered questions to rush forward with any such plan. Opponents of the welfare state have long criticized its supporters for believing that even good intentions justified failed programs. In considering some form of a universal basic income, we should avoid falling into the same trap. Instead we should pursue incremental steps: consolidate existing welfare programs, move from in-kind to cash benefits, increase transparency, and gather additional data. This would allow us to reap some of the gains from a universal income without the costs or risks.
It is a comprehensive, well-balanced paper. Nonetheless, I disagree with his conclusion. I think that the incentive problems with the current system are so bad that I would like to see the next Administration take its best shot at something better. As you know, my preference is for a negative-income-tax type system, but with the added administrative issue of having the grants be in the form of flexible-benefit dollars that only can be used for food, housing, medical care, and education. In terms of the trade-offs Tanner discusses, I am willing to incur higher administrative costs in order to keep the overall cost of the grants lower while trying to keep the implicit marginal tax rate below 25 percent.
Because the current system discourages marriage and work, I think that the larger mistake would be to leave it in place rather than try something that is likely to be better, knowing that it will be imperfect.
This Friedmanesce concept has always seemed to be simply a different variety of taking from some and giving to others.
So, what differs? Principally the manner (modes) of giving and possibly the basis for “measuring” the recipients (efforts & needs).
The efficient “taking” seems to be taxation; but, is it “earmarked” or part of a broader “grab?”
The answer today is: We are doing the taking anyway and the modes of giving have proven dysfunctional. We have evolved groupings of those who have particular interests in the continuation of the present modes of distribution (jobs, influence & graft). Dislodging those interests may decrease the dysfunctions. That’s about it; still taking from some and giving to others through politically directed means.
The problem with the scheme is the high risk, indeed likelihood, we end up with both the “guaranteed income” and welfare.
C.f., carbon tax.
Yeah, my sentiments, as well. Will some people take the cash, spend it irresponsibly, wind up on the street, and prompt Section 8 housing vouchers make a roaring comeback? Seems pretty plausible, if you ask me.
I agree, but that problem is also a feature, because it makes the changes more incremental. There is thus always an alternative to any proposed new welfare program: do we support the program, or just increase the cash payouts?
I have a relatively low opposition to actual cash assistance to those of low income. The things I oppose coming out of Washington are strong misguided regulation, and wasteful spending on programs that don’t even obviously help anything. I bet that many people could be convinced of the same, especially if it were phased in gradually.
I’ve never been offered this supposed case, so I’ve had to make one up. First, the current system the professionals gave us is so screwed up anything would be better. Second, negative externalities- for which I am pretty sure an accounting has never been attempted.
“Because the current system discourages marriage and work, I think that the larger mistake would be to leave it in place rather than try something that is likely to be better, knowing that it will be imperfect.”
This is a good argument for piecemeal experimentation in this direction, which I would endorse. Let’s try it in Maine or somewhere (with some type of waiting period for in state immigrants) and see what happens.
It is certainly a terrible argument for trying it broad scale. “You guys completely screwed up the last system beyond all recognition, so we will empower you with an even bigger and broader initiative.” The latter argument almost reduces down to a failure of imagination — supporting increasing power and interference because you can’t personally imagine how screwed up they could make it.
Are we really sure there is something that is likely to be better? There seem to be unavoidable tradeoffs between cost, effectiveness, simplicity, incentives and political issues, and the more you improve one dimension, the more another is compromised. The prospect for a sweeping reform, which starts from a blank slate, seems all but impossible, but even if it were possible we’d just end up with a different mix of compromises.
If the income security system you propose guarantees each household poverty line income (in flex dollars) and has a 25% implicit marginal tax rate (presuming this means federal taxation and benefit withdrawal combined), then no household that makes less than 400% of the federal poverty level will be contributing revenue to the federal government. A family of four earning $90,000/yr would still be receiving $1,750 of flex dollars and paying no taxes under this approach, for example. A newly minted college grad earning $35,000/yr would be receiving $3,020.
This complicated by the fact that most people consider the poverty level to be ex-education and ex-health care (e.g. the $11,770 poverty threshold for a single person makes no sense if that person would be expected to pay market value for even a catastrophic health care plan), and so properly covering those two items would inflate the bill even further. Giving an unemployed single mother with a chronic illness $15,930 worth of flex dollars and no Medicaid will leave her household in bad shape.
If, however, your plan doesn’t guarantee that people can live at the poverty level, then there will be unavoidable pressure to bolt on other elements of the status quo welfare system and/or raise spending on the flex dollar program.
Why not just take the Fair Tax and tweak it into a universal basic income by upping the prebate to 100% of poverty level? And why try to restrict what it’s spent on? That just leads to black markets and corruption. Isn’t there enough federal money inflating education costs already?