On Universal Basic Income

On October 30, 2019, the Political Economy Project and the Rockefeller Center sponsored a debate on Universal Basic Income between Karl Widerquist from Georgetown University-Qatar and Oren Cass from Manhattan Institute. The moderator of the debate, Professor Charles Wheelan, defines UBI as a benefit that is in cash that goes to all individuals who are eligible. It is not need-based, and there is no work requirement, In fact, there are no requirements at all.

The advocate, Widerquist, argues that people have taken the resources of the world and divided them up to the privileged. Making a distinction between “the workers” and “the capitalist,” and arguing that work is coercive in nature: “You can’t access resources unless you work for somebody,” Widerquist reminds me of Karl Marx. “You have to take orders from someone else as a servant,” he laments about the fact that one cannot work for herself “but only for the privileged.” The purpose of UBI, to him, is to free people from exploitative work; with UBI, he suggests, people will be enabled to truly work for themselves. Moreover, according to Widerquist, opponents often say that people won’t work anymore if they get UBI, but that sentiment is unfair to begin with, because the alternative is to impose some sort of a work requirement onto welfare admissions, which is exactly the traditional approach to combating poverty. We should be ashamed of ourselves, “threatening” the poor by withholding resources from them unless they work, he argues. 

The opponent, Cass, thinks that UBI is, first and foremost not economically viable, comparing UBI to the Green New Deal. Philosophically, he attacks the premise that people are entitled to get money even if they don’t work. Contrary to Widerquist’s argument, Cass states that work in a market economy is voluntary in nature, and the idea that capitalists starve workers into submission is simply wrong. More strongly, Cass argues, work is inherently noble and moral, core to a healthy society and a whole person. Furthermore, because we have many existing welfare programs such as food stamps, UBI is realistically unnecessary. Furthermore, Cass argues that to pay for UBI, businesses may see a 39% increase in payroll taxes. Alternatively, the government could implement a value-added tax, which will double the price of goods in the entire economy. Fundamentally, to Cass, the moral question about UBI comes down to this: do we, as parents, want to raise our children this way? “Uncle Sam” will pay your children, as soon as they turn 18, $1000 every month, even if they choose to stay in the basement and smoke weed, Cass chuckles as he delivers his point.  

Professor Wheelan mentions Arthur Brooks, a speaker who recently visited Dartmouth toward the end of the debate, and asks the debaters for their opinions on a universal job guarantee. Cass argues that, first, it will be much more costly than UBI, and secondly, the government will actively crowd out private sector jobs. In opposition, Widerquist believes that such a program, like existing welfare programs, creates a “poverty trap.” The idea is that the short-term cost-and-benefit analysis discourages people from coming off of the programs and starting to better their lives themselves. Guaranteed a job, people might find it difficult to switch to another occupation that they genuinely like and might improve their living conditions more efficiently in the long term. Similarly, people will lose their welfare benefits very quickly as soon as they start to turn their lives around. The necessary tradeoff between your placement in these programs and what might improve your life overall renders these programs inferior to UBI, which supports you regardless of your working status in life. 

Sitting in the auditorium and listening to Widerquist fiercely attack “the rich” and “the privileged,” I am reminded of perhaps the most interesting feature of UBI: it attracts people of tremendously different political views, libertarians and communists alike. Although I wholeheartedly disagree with Widerquist’s arguments about the entitlement of the poor, exploitation, and compensational nature of UBI, I stand with him on the observation of the “poverty trap” that government programs create, and think that the most compelling case for UBI lies precisely in that observation. UBI gives the wage-earner the leverage to protect her own interests; she can either quit and choose what she actually enjoys doing, or demand a raise. 

To me, the best case for UBI is that it has a psychologically liberating effect on people, and reemphasizes individual choice and individual power. Imagine that you are on welfare, and it has been years since you last imagined yourself to be something more than another welfare recipient. Your entire life was laid out in front of you, but you are always barely floating above water, with all the postponed projects that remain forever in the future. “Not now,” you say to yourself when there is a decent job opportunity; you no longer entertain yourself with new business ideas, because you have accepted to this way of living through perpetual welfare. To put it extremely, in the eyes of the state, you are just another livestock to feed. You internalize that perception of yourself through constant paperwork, and rationalize it, so you don’t have any regrets in life. Ultimately, you make peace with the idea that this is your life—unambitious, uneventful, insignificant. 

One day, everything changes. You are given the choice of unconditional cash, and you are invited to think about what you can do with the money. Aside from the fact that it is unconditional, the beauty of UBI—also its downfall, according to opponents—is that no one tells you how you should use it. UBI won’t magically grant you visions and initiatives, but, better than existing programs, it invites you to develop your own visions and initiatives. After all, true initiatives can only come from within. With UBI, you are trusted and encouraged to envision a new life for yourself. I believe that people have the natural tendency to better their own conditions, and the welfare system we have right now is, with all its good intentions, a roadblock for them to do so. To truly help someone is to help them know themselves, think for themselves, and believe in themselves, rather than simply giving them food or shelter, especially not if these are given at the expense of dignity, self-love, and aspiration. Fundamentally, UBI empowers the individual: it is money in your hands, rather than money that goes up into the “pipes” of the government and disappear, to quote Andrew Yang. Economically, with the support of UBI, many people who are currently living on welfare programs will be able to come off of those programs and generate new structures of value transactions on the grounds, create jobs, and produce values to each other in ways we cannot imagine from a non-primordial, top-down perspective. 

Welfare programs induce an entire legal industry that specifically helps people get on them. In theory, there does not seem to be anything wrong with this kind of a legal industry, but in practice, it prevents people from exploring alternative options and try things out. Welfare, instead of a last resort and safety net, becomes the default for many Americans in places that are not doing well economically, and it has many detrimental effects on our lives. The “Trends with Benefits” podcast produced by This American Life, Please Stop Helping Us by Jason Riley and Larry Elder raise alarming statistics about welfare. Thomas Sowell argues that the War on Poverty, for example, significantly increased the single-motherhood rate and disproportionally hurt the Black community. 

With the implementation of UBI, instead of a legal industry to get you on welfare, an entrepreneurship-oriented, informational, and educational industry will arise, in response to the demand for invest and entrepreneurial enterprises increases. Before, low-skilled workers who have some physical issues may be placed on welfare because they lack the exposure to career possibilities and to opportunities in which they can develop aspirations and new career ideas. The new entrepreneurial enterprise that I believe will arise will provide people exactly with the resources to develop new aspirations. This is especially needed in the age of automation where robots replace humans in performing repetitive, non-cognitive work. Humans need to devote more time in doing—and learning to do—what humans can only do, and UBI can help with that. 

As automation becomes more integrated in business, without UBI, low-skilled workers would continue to be frozen out of the market and stay on welfare programs. The job participation rate has been declining, and welfare has been ever expanding. It is time to replace the welfare trap with UBI so that we can enable low-skilled workers to participate in society again. Therefore, compared to existing social benefit programs issued by the government, UBI is clearly a better alternative to me, and maybe even a necessary one. Consistently, UBI should be implemented at the expense of welfare programs, however gradually. 

UBI can help people think for themselves. For many, it will be a second chance in life. It provides them with a cushion rather than a trap. It can be paid with a new Carbon Tax, Robot Tax, and an ever-increasing economy that benefits from both the productivity is unleashed from previous welfare recipients and automation. Charles Murray argues that “The grand bargain is that we will let you spend an awful lot of money on transform payments to help the disadvantaged, and your part is you give up the role of the state in state-managing people’s lives.” The implementation of UBI can benefit from brewing sentiments of unfairness and inequality, but, fundamentally, it serves as an epistemological change in how we understand people—as lost causes or as trustworthy generators of value. 

UBI is probably the best solution we can offer to make up for the damages that welfare programs have done. Yes, it is deeply un-American to hand out free stuff, but we have already been handing out free stuff for more than half a century. Since UBI can re-orient us to consider our individual powers, construct local economies, and have aspirations again, it may be the best deal of freedom we have today, and the only American solution to the problems we face today. In short, UBI will result in a gradual reduction in welfare, and free recipients from being treated as livestock and give them the opportunity to make something of themselves again. It invites individuals to contemplate their own futures and makes room for people to develop aspiration and obtain a sense of purpose again in life. It all starts with the individual: that’s where all economics, politics, and values begin. 

The opponent, Cass, fails to recognize the difference between welfare and UBI as well as the profound effect UBI could have on individuals. It is hard to imagine how, on aggregate, children will be happy to stay in their basements and smoke weed when the society is defined by an entire culture of entrepreneurship and purpose. UBI may result in a national awakening, one that reveals to each individual their own power, value, hope, and strength. Families living paycheck to paycheck will become less agitated, children will grow up with happier parents, and everyone will be more likely to develop their inner-characters and self-love, the absence of which arguably contributes to mass shootings, drug abuse, and an overall sense of despair and purposelessness. In short, UBI will powerfully reenact the culture of individualism, a deeply American ideal that is at jeopardy.