Author: Matt Liu, University of Wyoming Director of Debate Our series on cross-x will return shortly, but we’re taking a quick break to give you a timely PF topic analysis. The February PF topic is: Resolved: The United States should replace means-tested welfare programs with a universal basic income. Universal Basic Income (UBI) is an enormous topic with a huge literature base. It’s such a good topic I’d be sad to only have a month on it. It’s such a big topic that we wrote way too much on it (sorry not sorry). I was originally upset the topic was tied to an elimination of means-tested welfare, but after some initial research I’m not as worried about it. UBI is an old idea but one that has recently returned to prominence in mainstream politics. In the US, that’s been largely driven by Democratic candidate for President Andrew Yang, who made a UBI the centerpiece of his presidential campaign. Fear of automation taking jobs, the rise of “the Gig economy” and precarious labor, flatlining wages, and intensifying inequality all mean that people are increasingly willing to hear out UBI advocates. However, this resolution is not Andrew Yang’s UBI. Yang proposes a variety of mechanisms to pay for a UBI, the most significant of which would be a new VAT tax. The crux of this resolution is a trade: UBI in exchange for eliminating means-tested welfare (MTW). That both (1) sets the terms of the debate and (2) will sometimes shift it from UBI good/bad to MTW good/bad. That’s important to remember as you prepare for February. I’ve got 5 thoughts about UBI and MTW below the fold. 1. The devil is in the details A UBI or something like it has received support from sources as diverse as libertarian icon and conservative economist Milton Friedman to Martin Luther King, Jr; from Trump-supporting venture capitalists like Peter Thiel, to former the president of the Service Employees International Union Andy Stern, and even from the Movement for Black Lives. The goals of UBI advocates are as diverse as its supporters. Some view the UBI as a means to eliminate the welfare state and its accompanying bureaucracy. There’s a very good argument that the Silicon Valley moguls clearing a path to automation aren’t advocating for a UBI out of the kindness of their hearts, but because they want to make sure the masses can afford to buy their products after they put them out of work. Others view UBI as a move toward gender equality and a feminist corrective to devalued and unpaid labor traditionally performed by women. Some argue basic income is a capitalist road to communism (and that’s a good thing). Rutger Bregman thinks a UBI gets us to a realist utopia, and that not working is a silver bullet to the world’s problems. What does it mean that libertarians and communists both love UBI? It does not mean that a UBI will inevitably make everyone happy. It means that how a UBI is designed is vital to understanding its outcomes, and that designing it one way vs the other will likely anger half its supporters and fail at half its goals. For example, the question of whether a UBI will disincentivize labor is extremely important. There’s two important things to understand about this: (1) how the UBI is designed determines the answer, (2) different UBI supporters want different answers. If the UBI payment is small, it might provide those doing precarious labor in the Gig economy a cushion (and thus bolster their consumption), but it won’t provide enough of a buffer for them to quit. If the UBI payment is, let’s say, “medium,” it won’t provide enough of a cushion to leave the workforce entirely, but perhaps enough to temporarily exit to find a better job. Finally, if the UBI payment is large, it would enable receipts to leave the workforce permanently. These three levels of basic income correlate (roughly) to three different UBI advocates and their goals: (1) Small UBI (libertarian/conservative/tech mogul). They don’t want people to exit the workforce, they want an end to the complex bureaucracy of the welfare state and a policy that enables sustained consumption. A UBI that is too big encourages free-riding and leisure. (2) Medium UBI (liberals). They want a stronger stick to end poverty, and they don’t mind if people exit the workforce temporarily, because increasing employee negotiating power would raise wages and increase opportunities for entrepreneurship. Leisure is good, but people want to work. #YangGang (3) Large UBI (leftists/socialists/communists/utopians). Work should already be a thing of the past, productivity gains could have already created a realist utopia if billionaires weren’t hoarding the gains. Leisure is good, not bad. A UBI puts us on a path to a Star Trek society, a post-productivity, post-work utopia: fully automated luxury communism. The way this resolution is worded appears to push the pro toward the libertarian vision of the UBI: gutting the welfare state instead of adding to it. But is this the only vision of a UBI the pro can defend? To answer that question, first I want to expand on the different ways a UBI could take shape. Luke Martinelli, author of a must read study on UBI, roughly classifies UBIs into two schemes: partial and full. According to Martinelli, a partial UBI leaves status quo welfare intact, and thus is significantly smaller. A full UBI would dismantle the welfare state to create a larger pool of funding. Martinelli, as well as the think tank Compass, conclude that a full UBI would be devastating to the poor (so great sources for the con). Now, the pro definitely can’t defend Martinelli’s vision of a partial UBI (which leaves means-tested welfare intact in exchange for a smaller UBI payment). But is the pro bound to defend only a 1:1 exchange of MTW for a UBI? Are they locked into defending that limited libertarian vision? Let’s jump to Yang’s proposal for a UBI to see if there’s an alternative compatible with the resolution. Yang calls for a variety of funding mechanisms for his “Freedom Dividend.” Yang’s plan would fund a UBI by decreasing traditional welfare, but it would also establish a new VAT tax, lift the cap on maximum earnings subject to social security taxes, create a financial transactions tax, impose a carbon tax, lift the income cap on payroll taxes, and change the tax rates on capital gains and carried interest. Yang’s emphasis is on the VAT, but a more progressive vision would place the emphasis on a wealth tax and/or carbon tax (and there are plenty of solvency advocates to do so). Note: one thing Yang’s plan calls for that the pro definitely advocate can’t is a conditional offer: under Yang’s plan current welfare and social program beneficiaries would be given a choice between their current benefits or $1,000 cash a month. That’s probably for the better though, this seems like one of the worst parts of Yang’s plan.
So what does this mean for you? Do you have to defend the libertarian, “full scheme” that is a 1:1 trade of MTW for UBI, or can you defend something closer to Yang’s or even more progressive visionaries’ plans? The resolution says means-tested welfare must be replaced; however, it doesn’t say that should be the only source of funding. I think the best version of this topic sets up eliminating means-tested welfare as the floor for what the pro has to do, leaving it up to the debaters to argue about whether the pro can specify additional sources of funding or even just argue they’re normal means. It would be near impossible to get to a $12,000/year UBI (Yang’s proposal) with just axing means-tested welfare as the only source of income (not to mention almost every study says that version of a UBI would be terrible), which is a pretty good argument for the pro should get to defend (even specify) other sources of income. 2. What are means-tested welfare programs? There are around 80 means-tested welfare programs in the US, but the largest are Medicaid, the ACA subsidies, the earned income and child tax credits, the Supplemental Nutrition Assistance Program (AKA SNAP, or food stamps), Section 8 (housing assistance), and Supplemental Security Income. Social Security, most of Medicare, worker’s comp, and civilian and military retirement programs are not means-tested. Note: Medicaid is health insurance for those in or near poverty, Medicare is health insurance for seniors. Most estimates put spending on means-tested welfare programs in the US just below $1 trillion. 3. What’s the pro have to say? A lot. Let’s start with poverty and income inequality. First, the status quo, without any tricks, is indefensible. There shouldn’t be poverty in 2020 and advocates argue a UBI is a straight-forward solution. Second: automation. This is Andrew Yang’s calling card: robots will replace you. One estimate says 38% of US jobs are in danger of being replaced by automation, advanced AI, and robots. We might be barreling toward a jobless future, and not the utopic fully automated luxury communism variety. This is actually a great debate. Just the automation destroys jobs / no it doesn’t debate is fantastic and there’s copious literature. Anyone who gets deep in this should be rewarded with great speaks, I’d love to see that debate. There’s differing reports with competing models and methodological indicts. The con has great empirics: ‘we’ve heard tech will put people out of work since the industrial revolution and the luddites, but work always changes it doesn’t disappear.’ The pro has great “now key” args about an imminent AI revolution truly being different and uniquely disruptive. Again, just a great little debate. My advice for you when you’re pro: “even if.” Even if automation doesn’t put half the country out of work, jobs will get worse. Even if a robot doesn’t take your job, it will do part of your job – and wages will be lower as a result. Even if automation has no effect on the labor market, decades of neoliberal reforms have already eviscerated the American middle-class and the future looks like working multiple, precarious jobs for far too many Americans already. But poverty and income inequality aren’t the only areas for aff ground. I’ve already hinted at another above: entrepreneurship. Economic desperation keeps people trapped in jobs they don’t like. Economists refer to this idea as “job-lock.” A little bit of financial wiggle room means people could explore new options, temporarily exiting the labor market to try to get a better job, take an internship, or start a business. There’s a lot of great defense of increasing entrepreneurship and innovation. (For when you're con, at least one author refers to this as magical thinking, because when you don’t need to work you’re far more likely to binge Netflix than start a new company). There are also plenty of people who think that a UBI would be great for the economy from a macro-economic perspective. A UBI would likely massively increase consumption, bolster wages by giving employees more negotiating power, and enable more creative destruction in the economy (no more need to protect failing businesses with bailouts because you’re worried about out-of-work employees). That’s all before we get into the leftist takes on what a UBI could do. As explained above, The Movement for Black Lives argues a UBI should be a form of reparations. Many argue a UBI promotes gender equality. Some say it will strengthen works and unions by bettering their bargaining positions. Others contend basic income is a realistic path to communism. Some say a UBI is good, because a decreased labor supply is necessary for an ecologically sustainable path to degrowth. Finally, the pro has the strategic lever of means-testing bad. Here are just a couple of arguments made against means-testing: 1. Stigma: because they’re targeted at the poor and because of the intrusive inspections to make sure recipients are poor, there’s a stigma attached to means-tested welfare that is both harmful to society and deters eligible people from seeking it. 2. Poverty trap: because means-tested welfare punishes people for leaving poverty (losing benefits), seeking to better your circumstances often initially hurts you more than helps you- creating an incentive structure that traps you in poverty. 3. Net widening: a throwback term, but means-testing’s intrusive application process allows the state to collect more info on its subjects, which both many libertarians and leftists agree can and often is put to nefarious purposes. 4. Political resilience: many argue universal benefits are harder to take away or cut back later, because since everyone is a recipient everyone will advocate for them. However, the recent history of Medicaid expansion in the ACA might belie that point, a good argument for the con to make. 5. Complexity: complicated rules means that people don’t know if they qualify for means-tested programs, and they also don’t know what might cause them to lose access, deterring people from seeking to better their circumstances. This second part of the complexity argument is often referred to as the bureaucracy trap. 6. Administrative costs: running large intrusive programs is expensive, which diverts money that could be going to recipients. 7. Fraud: conservatives routinely complain about well-off people defrauding the system and receiving means-tested welfare they shouldn’t. I wouldn't suggest going this route. 4. What about the con? Still a lot to say. Let’s start with poverty and income inequality, again. This is less UBI bad, and more MTW good. [Note: even if the resolution didn’t specify the trade-off, you’d likely be having this debate anyway. There’s a number of good articles that say any UBI that could pass would require capitalizing on its support from libertarians who want to exchange the welfare state with a UBI, especially in our current political climate (AKA the normal means debate would have been good for the neg). ] So, is trading MTW for a UBI a good idea, from the perspective of the poor? There’s some pretty good args that it’s not. First, MTW is targeted at the poor. If you take the same amount of money and give it to everyone, you’re redistributing wealth upwards. Billionaires will be getting money that would otherwise be going to those below the poverty line. If the pro argues that a UBI would have additional sources of funding (or specifies them), the con might have less arguments about poverty, but great arguments against taxation. As Luke Martinelli put it: “an affordable UBI is inadequate, and an adequate UBI is unaffordable.” The con can also argue that a UBI would decrease the labor supply. If you didn’t have to work, would you? Less workers would hurt businesses. Even if the labor supply didn’t go down, all the pro arguments about employee negotiating power resulting in increased wages are still bad for businesses. This money is zero sum, what’s good for the worker is bad for the business. The tradeoff, shift, and solvency arguments are fantastic. In a world with a UBI, political momentum for every other economic reform would collapse. Who would fight for a $15 minimum wage when everyone has a guaranteed income? Certainly a lot less people. Housing reform, Medicaid for All, etc.. almost every activist cause would have the wind sucked out of its sails. On top of that, those in power might actively seek to rollback existing reforms. “Why do you need a minimum wage when you have a guaranteed income?” employers will ask. Finally, prices would just go up. Say you're a landlord and suddenly your tenants have an extra $1,000 a month- why not increase their rent $300? Now apply that across the range of goods and services. College tuition is going up. Milk costs more. Why not? You can afford it. Employers might also lower your wages- you don’t need it, the government is paying you just to live. The net effect of these tradeoffs, shifts, and solvency arguments might make the world a far more economically hostile place, even with a UBI. Finally, just like a UBI has leftist and libertarian support, it also has leftist and libertarian opposition. Ana Cecilia Dinerstein argues that a UBI is a “bad utopia for the left,” as it “leaves us beholden to capital, the state, and money. In short, it consolidates capitalism.” Andy Stern makes an argument for a UBI as a pressure outlet that is maybe the best leftist argument against a UBI: that it’s the best hope for the rich to avoid “the guillotine” amidst growing inequality and desperation. In other words, a UBI removes all pressure for systemic reform. 5. Bad argument of the month In January we warned you to stay away from arguing Venezuela was failing because it’s socialist (it's failing, but it's not socialist). This month our warning is to not make the argument that the poor will spend their money poorly. This is the argument that a UBI is worse than targeted welfare (food stamps, for example) because those in poverty will “waste” the money if it comes condition-free. First, this argument is insulting. The poor probably know best what they need to spend their money on. Second, this argument is overwhelmingly rejected in the literature. A meta-study of 19 different studies on UBI from all around the world found robust evidence that disproves the notion that UBI will increase consumption on temptation goods. One related thought here: there’s no impact to saying people will free-ride on a UBI. That’s an internal link, not an impact. You need to explain why a decreased supply of labor hurts someone. Increased leisure time ceteris paribus is a good thing, not a bad thing. Conclusion I’ve said a lot but I’ve left even more out. Like I said, UBI is a great debate with so much literature to dig into. You could have a good debate about whether data drawn from empirical examples (Finland, Kenya, NITs, Alaska) is better, or if micro-simulations provide the only useful form of data about UBI. There’s another great (uniqueness) debate about whether traditional welfare is working now. Is social security about to become insolvent? It’s not means-tested but it still says a lot about whether we need a new solution to poverty because welfare is collapsing. Or does the slow uptick in Medicaid expansion prove welfare is politically viable and increasing in efficacy, not decreasing? How does the growing movement to attach work conditions to welfare affect the debate? These are all awesome questions you should get to explore on this topic. Here’s a cite list to get you started: must reads https://www.bath.ac.uk/publications/assessing-the-case-for-a-universal-basic-income-in-the-uk/attachments/basic_income_policy_brief.pdf https://www.jacobinmag.com/2016/01/universal-basic-income-switzerland-finland-milton-friedman-kathi-weeks https://publicpolicy.wharton.upenn.edu/live/news/3136-a-closer-look-at-universal-basic-income https://www.compassonline.org.uk/wp-content/uploads/2016/05/UniversalBasicIncomeByCompass-Spreads.pdf Pro https://rooseveltinstitute.org/wp-content/uploads/2017/08/Modeling-the-Macroeconomic-Effects-of-a-Universal-Basic-Income.pdf https://qz.com/1034358/ubi-and-automation-could-be-the-symbiotic-solution-for-displaced-workers https://medium.com/age-of-awareness/universal-basic-income-is-an-inevitable-part-of-our-automated-future-3cc181d4778d https://www.versobooks.com/books/2315-inventing-the-future https://www.dukeupress.edu/the-problem-with-work https://www.ssc.wisc.edu/~wright/Basic%20Income%20as%20a%20Socialist%20Project.pdf Con https://www.cbpp.org/poverty-and-opportunity/commentary-universal-basic-income-may-sound-attractive-but-if-it-occurred https://www.dissentmagazine.org/article/false-promise-universal-basic-income-andy-stern-ruger-bregman https://www.commondreams.org/views/2018/04/02/oligarchs-guaranteed-basic-income-scam https://www.theguardian.com/commentisfree/2019/may/06/universal-basic-income-public-realm-poverty-inequality https://www.jacobinmag.com/2017/12/universal-basic-income-inequality-work https://fee.org/articles/why-universal-basic-income-is-a-pipe-dream/ https://www.vox.com/future-perfect/2019/10/18/20919322/basic-income-freedom-dividend-andrew-yang-automation theguardian.com/politics/2016/jun/10/potential-benefits-and-pitfalls-of-a-universal-basic-income https://www.ft.com/content/100137b4-0cdf-11e8-bacb-2958fde95e5e Disagree with something we said? Have a question? Feel free to jump in in the comments! Do you have a topic you’d like us to address in a future post? Email us at [email protected] Go Pokes!
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