Lorna Collier on the Universal Basic Income
Lorna Collier wrote a post on the Universal Basic Income that appeared yesterday. She interviewed me for it, but didn’t use anything I said. That’s alright because she took the arguments I made, fashioned them into a short op/ed by me, and gave me veto power. So the op/ed by me in the piece faithfully reflects my views. She did quote other people saying the same things I said: the huge expense of a UBI; the huge tax increases required pay for it and still leave us with a deficit of “only” $1 trillion; the effect of those tax increases on incentives; the fact that if it replaced all means-tested programs, it would leave many poor people worse off.
That’s all in there.
If you want to look at it, note that it will be gated in a few days, so look now.
But she did get one thing wrong. Collier quotes a Federal Reserve study as follows:
A 2019 survey by the Federal Reserve found that 27 percent of participants said if faced with a $400 unexpected expense, they would have to borrow money or sell something to pay for it, and 12 percent said they could not pay it at all.
Although the Federal Reserve study is often quoted the way she did, that’s not what it said. I posted on this in May and cited Alan Reynolds’s excellent post on the issue. During our conversation, the issue came up and I told her that many people were getting it wrong. I offered to send my post on it. She said yes and I sent it. I don’t know if she read it.
Some highlights of the Collier piece follow.
First, Robert Greenstein, who is usually on the opposite side of issues from me:
A Yang-type UBI would cost “something like 50 percent to 100 percent of the entire federal budget,” says Robert Greenstein, founder and president of the Center on Budget and Policy Priorities, a liberal think tank that analyzes budgetary issues affecting low- and moderate-income Americans.
Good for Hillary Clinton:
Hillary Clinton wrote in her recent memoir, What Happened, that she tried to devise a UBI policy to recommend in her 2016 Democratic presidential run. But she abandoned the idea because “unfortunately, we couldn’t make the numbers work,” Clinton wrote. “To provide a meaningful dividend each year to every citizen, you’d have to raise enormous sums of money, and that would either mean a lot of new taxes or cannibalizing other important programs.
My EconLog colleague Bryan Caplan:
Similarly, Bryan Caplan, an economist at George Mason University in Virginia, argued that it is “common sense” that there would be “a large fall in work effort. People may not immediately quit their jobs, but this provides a great relief from the need to find a job when you don’t have one.
Oren Cass, a senior fellow at the Manhattan Institute, a conservative think tank in New York City, wrote that a guaranteed income would “make work optional and render self-reliance moot. An underclass dependent on government handouts would no longer be one of society’s greatest challenges but instead would be recast as one of its proudest achievements.”