Andrew Yang had the worst timing. Or rather, the coronavirus had the worst timing, from the perspective of the Yang campaign. The UBI is really the simplest and best solution to so many of our problems, not the least of which is the coronavirus and its economic fallout.
U.S. net national product per person is on the order of $50,000 per year. Yang's UBI proposal was $1000 per month. How's about we double it? Everyone receives about $25,000 per year, plus somewhat less than half of what they earn, on average, taxed progressively to support the UBI and a few other key government functions. Kids get half the adult UBI, some of it going to their parents to pay for cheetos and video games, and some to a fund for their use upon adulthood, to help with paying for college, starting a business, or throwing parties for their friends (on zoom of course).
Some people, economists among them, assert that the UBI will have big work disincentive effects and reduce national income a lot. But really, will you or anyone you know settle for your 25K? Nah, you'll be bored and want to get a decent job, and work toward those nice dinners out, vacations, and maybe a Tesla in the garage. Yeah, the garage... in your house. Mortgage.
I'm happy that Nancy Pelosi is on board for another $3 trillion in emergency spending, but how about we just make the big move once and for all? I bet if Trump went for it right now, he'd be re-elected in a landslide. Nancy, Andrew: time for that chat with Donald. Let's get it done.
Showing posts with label basic income guarantee. Show all posts
Showing posts with label basic income guarantee. Show all posts
Tuesday, May 12, 2020
Saturday, January 31, 2015
Uber alles
The new world of work, Uber-ized:
Sundararajan's vision of the future somehow echoed a familiar quote:
Just as Uber is doing for taxis, new technologies have the potential to chop up a broad array of traditional jobs into discrete tasks that can be assigned to people just when they’re needed, with wages set by a dynamic measurement of supply and demand, and every worker’s performance constantly tracked, reviewed and subject to the sometimes harsh light of customer satisfaction.Professor Arun Sundararajan thinks it's not a bad thing:
“We may end up with a future in which a fraction of the work force would do a portfolio of things to generate an income — you could be an Uber driver, an Instacart shopper, an Airbnb host and a Taskrabbit,” Dr. Sundararajan said.“I think it’s nonsense, utter nonsense,” says Robert Reich.
Sundararajan's vision of the future somehow echoed a familiar quote:
"... in communist society, where nobody has one exclusive sphere of activity but each can become accomplished in any branch he wished, society regulates the general production and thus makes it possible for me to do one thing today and another tomorrow, to hunt in the morning, fish in the afternoon, rear cattle in the evening, criticize after dinner, just as I have a mind, without ever becoming hunter, fisherman, shepherd, or critic." (Marx, The German Ideology)Of course, Marx assumed a society post-scarcity– distribution "to each according to his need," etc. The Uber economy might not be that bad, undergirded by a fairly generous basic income guarantee, universal health insurance... nah, that would be communism!
Saturday, August 9, 2014
The BIG picture
A Basic Income Guarantee is the natural policy for implementing an eg-lib (egalitarian-libertarian) political philosophy, if that appeals to you as it does to me. The idea is neither more nor less than what it sounds like: the government would guarantee each person a basic income, financed through taxation. BIG redistributes income no questions asked and lets you decide what to do with the money. Of course there are some details to work out: most importantly how much, and with what kind of taxation to fund it, but also whether the payment will go to individuals or families, etc.
Milton Friedman was famously an advocate for a version of BIG– which is known as the negative income tax (NIT) to economists– on sound libertarian grounds: if you must redistribute income, do so in a way that minimizes market distortions and paternalistic meddling.
Uncle Milty notwithstanding, BIG generally has received more support from the left than the right in the United States. Take a glance at the U.S. BIG network's advisory board and you find such lefty stalwarts as Fred Block, Nancy Folbre, and Frances Fox Piven (her first name misspelled!). But BIG has apparently made a comeback among some of the free-market crowd, as indicated by this recent CATO essay by Matt Zwolinski. Zwolinski sees BIG as a "pragmatic" replacement for most of the modern welfare state, one which could accomplish the redistributive goals of the welfare state at a much lower economic cost.
At an abstract level, Zwolinski's claim relates to an idea from economic theory known as the second fundamental theorem of welfare economics: the efficiency of the free market system can be consistent with income redistribution, so long as you redistribute resources "lump sum" and then leave prices and quantities free to adjust. This compatibility between leveling and the market led Amartya Sen to suggest that the second theorem "belongs to the revolutionists' handbook."
In the real world, the second theorem could never be fully operationalized, because any form of redistribution that pays attention to people's position in the income distribution is not "lump sum," and therefore creates inefficient incentives. In the real world, furthermore, the conditions for the market to achieve efficient outcomes are generally violated by a variety of market failures, such as externalities (e.g. pollution).
So, in the real world, we must decide between complex and imperfect alternative arrangements for redistribution and government regulation. Benefits and costs must be estimated and compared, and political feasibility and stability considered. Regarding the net benefits from replacing the welfare state with BIG, Mike Konczal has a pretty convincing take-down of Zwolinski's claims for BIG savings. Basically, the U.S. welfare state doesn't have all that much fat, so there's just not much to be gained. The EITC (earned income tax credit) is already a variant of the NIT, with a work requirement added on. Programs like EITC, Medicaid, and SNAP (food stamps) operate effectively with admirably low overhead. Disincentive effects are likely modest. Near-universal public social insurance programs such as Medicare and Social Security may, for reasons of scale and state compulsion, overcome some market imperfections that would likely afflict a fully privatized system of social insurance under BIG transfers. So we can't be confident that a BIG would make matters better rather than worse, even from a pure efficiency standpoint.
As a stand-alone substitute for the welfare state, BIG suffers from other criticisms that can be leveled against libertarianism. Some people are simply not capable of making good decisions for themselves: young children, addicts, people with severe emotional or developmental disabilities. Libertarians love to level the charge of paternalism against liberals, but nearly everyone agrees that (gender-neutral) paternalism may be called for in some cases. And not all children or dependents are blessed with a qualified or benevolent "pater" or "mater" to spend their BIG for them; who else is there, if not the state?
Political feasibility and stability are further concerns. Political support for Medicare and Social Security spring in considerable part from the view that people pay into the systems and are entitled to take benefits out. The sense of entitlement that follows from payroll contributions is a feature of Social Security by design, according to a well-known quote attributed to FDR:
Having acknowledged all these drawbacks of the BIG idea, I still can't help thinking it deserves a bigger place in our political landscape. Politically, it represents a potential source of common ground between the liberal left and libertarianism. Is that enough to reconfigure our heavily polarized political space? By itself, no... but throw in immigration reform, personal and civil liberties, and anti-militarism, and who knows?
Economically, I have read enough sci-fi and witnessed enough advances in computing and robotics to agree with those who are seriously concerned about a future in which capital, with its highly concentrated ownership, displaces much of the demand for labor. No, not technological unemployment... just technological immiseration. Making BIG part of the mainstream political agenda now is a way politically and institutionally to set the stage for decoupling income and private property. Friedman meets Marx... why not?
Milton Friedman was famously an advocate for a version of BIG– which is known as the negative income tax (NIT) to economists– on sound libertarian grounds: if you must redistribute income, do so in a way that minimizes market distortions and paternalistic meddling.
Uncle Milty notwithstanding, BIG generally has received more support from the left than the right in the United States. Take a glance at the U.S. BIG network's advisory board and you find such lefty stalwarts as Fred Block, Nancy Folbre, and Frances Fox Piven (her first name misspelled!). But BIG has apparently made a comeback among some of the free-market crowd, as indicated by this recent CATO essay by Matt Zwolinski. Zwolinski sees BIG as a "pragmatic" replacement for most of the modern welfare state, one which could accomplish the redistributive goals of the welfare state at a much lower economic cost.
At an abstract level, Zwolinski's claim relates to an idea from economic theory known as the second fundamental theorem of welfare economics: the efficiency of the free market system can be consistent with income redistribution, so long as you redistribute resources "lump sum" and then leave prices and quantities free to adjust. This compatibility between leveling and the market led Amartya Sen to suggest that the second theorem "belongs to the revolutionists' handbook."
In the real world, the second theorem could never be fully operationalized, because any form of redistribution that pays attention to people's position in the income distribution is not "lump sum," and therefore creates inefficient incentives. In the real world, furthermore, the conditions for the market to achieve efficient outcomes are generally violated by a variety of market failures, such as externalities (e.g. pollution).
So, in the real world, we must decide between complex and imperfect alternative arrangements for redistribution and government regulation. Benefits and costs must be estimated and compared, and political feasibility and stability considered. Regarding the net benefits from replacing the welfare state with BIG, Mike Konczal has a pretty convincing take-down of Zwolinski's claims for BIG savings. Basically, the U.S. welfare state doesn't have all that much fat, so there's just not much to be gained. The EITC (earned income tax credit) is already a variant of the NIT, with a work requirement added on. Programs like EITC, Medicaid, and SNAP (food stamps) operate effectively with admirably low overhead. Disincentive effects are likely modest. Near-universal public social insurance programs such as Medicare and Social Security may, for reasons of scale and state compulsion, overcome some market imperfections that would likely afflict a fully privatized system of social insurance under BIG transfers. So we can't be confident that a BIG would make matters better rather than worse, even from a pure efficiency standpoint.
As a stand-alone substitute for the welfare state, BIG suffers from other criticisms that can be leveled against libertarianism. Some people are simply not capable of making good decisions for themselves: young children, addicts, people with severe emotional or developmental disabilities. Libertarians love to level the charge of paternalism against liberals, but nearly everyone agrees that (gender-neutral) paternalism may be called for in some cases. And not all children or dependents are blessed with a qualified or benevolent "pater" or "mater" to spend their BIG for them; who else is there, if not the state?
Political feasibility and stability are further concerns. Political support for Medicare and Social Security spring in considerable part from the view that people pay into the systems and are entitled to take benefits out. The sense of entitlement that follows from payroll contributions is a feature of Social Security by design, according to a well-known quote attributed to FDR:
“We put those pay roll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program. Those taxes aren’t a matter of economics, they’re straight politics.”BIG, transparent dole that it is, may be politically vulnerable in the long run. (A partial exception would be a BIG based on shares of a commonly held resource, such as dividends on the Alaska Permanent Fund, directly linking the payment to property rights.)
Having acknowledged all these drawbacks of the BIG idea, I still can't help thinking it deserves a bigger place in our political landscape. Politically, it represents a potential source of common ground between the liberal left and libertarianism. Is that enough to reconfigure our heavily polarized political space? By itself, no... but throw in immigration reform, personal and civil liberties, and anti-militarism, and who knows?
Economically, I have read enough sci-fi and witnessed enough advances in computing and robotics to agree with those who are seriously concerned about a future in which capital, with its highly concentrated ownership, displaces much of the demand for labor. No, not technological unemployment... just technological immiseration. Making BIG part of the mainstream political agenda now is a way politically and institutionally to set the stage for decoupling income and private property. Friedman meets Marx... why not?
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