Bryan Caplan's Best Line and My Thoughts
I was stuck at LAX for about 9 hours on Saturday after my wife’s and my flight was cancelled. So we used our time to work and I used part of my time to watch on Facebook co-blogger Bryan’s debate with Will Wilkinson about the Universal Basic Income. (No, I can’t find it now, but look around and you probably will.)
I thought Bryan knocked it out of the park, both with his prepared presentation that he posted about today and with his back and forth with Will.
I had two favorite parts.
The first was his question to Will about the phase out rate. Will supported a $5,000 UBI per adult and Bryan asked him by what percent the UBI would fall as the recipient got other income and at what income threshold the UBI would fall. That was a great question to ask. Will didn’t know the answer to the first part and said, if I recall correctly, that the phaseout would be gradual. I would bet he has in mind 25% or less, but he wouldn’t put a number on it. Will did, though, put a number on the income one is allowed before losing a dollar of UBI: $20K. That is, $15K in other income and $5K in UBI. So if my hypothesized 25% phaseout is correct, anyone with other income of up to $35K would get some benefit. That makes the program very expensive.
The second, and my absolute favorite, was Bryan pointing out that his father, a man I met and liked, by the way, is not at all libertarian and that even he would oppose a UBI because it would give money to people who are not necessarily desperate. Then Bryan said, “I think libertarians should be at least as libertarian as my father.”
Here’s a point that Bryan didn’t make but is important. In the UBI version that Ed Dolan supports, Dolan makes it spending-neutral by ending Social Security
and Medicare as well as all the welfare programs. Consider what the Dolan $4.5K per person would mean to a 70-year-old couple who, in 2016, were getting the maximum monthly Social Security benefit: $2,639 for the high-earning spouse and half of that, $1319, for the other spouse. That’s $3,958 per month, or $47,496 per year. Their income from the government would fall from $47,496 per year to $10,000 per year, a drop of $37,496. And notice that in these calculations, I haven’t even measured the loss due to losing Medicare.
Will Wilkinson works for the Niskanen Institute, an organization that prides itself on coming up with partial steps that could be politically palatable. Imagine the political storm that this proposal would face. In 1981, when Reagan and Stockman proposed cutting the early retirement benefit for 62-year-olds from 80% of the benefit for 65-year-olds to 55%, they faced huge opposition and quickly took it off the table. A UBI fashioned a la Ed Dolan would be dead on arrival.
Why say this in a debate with Will when Will explicitly said that he would not touch Social Security? Because in the back and forth between Bryan and Will, Will was edging towards a UBI that would be spending neutral and would be about $5K. To get there, he would have to end Social Security
I gave a talk at my daughter’s school, Santa Clara University, that Dan Klein sponsored in 2004 when he was on the faculty. It was titled “Social Security: The Nightmare in Your Future.” I think one thing that many people do not understand is that with regard to federal spending, the cupboard is bare. If we’re lucky, we’re going to be trying to come up with ways of reining in the welfare state for the next 50 years.
Update: Bryan has informed me that I was unfair to Dolan. He does not advocate eliminating Medicare. Bryan quotes Dolan as follows: “In the following discussion of affordability, I will neither expect the UBI grant to cover healthcare expenses, nor will I look to any reduction of existing government healthcare spending as a source for financing the UBI.”