Bring on Universal Basic Income

6/3/20

The first time I heard Andrew Yang (@andrewyang) propose his Freedom Dividend — a version of the Universal Basic Income (UBI) concept — I was critical. I thought it was a crude ploy to buy attention and votes. Since that original reaction, I’ve had a change of heart. I’ve come to appreciate that UBI would be transformative for America, if given the chance. It deserves much wider attention and consideration than it is currently getting.

The Covid-19 pandemic has highlighted structural problems that have persisted well before this virus took hold. The fact that income insecurity has overtaken people who hadn’t previously identified with the stress and desperation of the chronic poor has moved the needle. That these newly stricken people are our friends and neighbors — and our children — has enabled a political conversion, where at least some federal relief has been forthcoming.

More is needed, but equity is demanded. In particular, those at the bottom of the income ladder shouldn’t be overlooked or relegated to that status by default. As the richest country in the world, we can afford to give a helping hand to those who struggle to put food on the table and a roof over their heads – not just until we get a vaccine, but throughout their times of difficulty, i.e., perpetually, if need be.

My sense is that the biggest obstacle for UBI are sensibilities like, “I don’t need it, so they shouldn’t need it, either.” And along a similar vein, “I worked for what I’ve got. If they want more than they have, they should work for it like I did.” Ultimately, the anti-faction simply abhors the idea of giving out a handout; but these sentiments are shortsighted. Too many people are trapped into a social strata, largely as a function of little or no wealth and zip code; and without doing something to address the needs, the knee-jerk “No to UBI” traps us into maintaining the status quo. In a post-George Floyd world, the status quo won’t do.

We actually have some experience with UBI, both in isolated experiments in selected locals in the US and internationally, in Canada, Finland, Germany, Iran, and others. The scale and breadth of these experiments have varied from situation to situation, but the results are overwhelmingly positive. The two biggest fears have largely been dispelled — that recipients will opt out of the labor force and spend the money on things like drugs, alcohol, and cigarettes. These outcomes don’t appear to be supported by the data. More positively, recipients have reported a sharp improvement in their sense of well-being, with objective improvements in health outcomes.

Critically, UBI will also have bottom-up economic benefits. The improved incomes will inevitably support consumer spending, to the benefit of the economy at large. And increased income levels in our most depressed communities will likely motivate entrepreneurs to bring new goods and services to those areas. Additionally, it’s reasonable to expect UBI to improve social mobility as well as educational performance for those at the bottom of the economic ladder.

Finally, it’s worth remembering that while the concept is for everyone to receive the basic income amount, our progressive tax system will serve to claw back increasing portions of these distributions at higher and higher income levels, thus serving to make UBI a needs-based federal program.

UBI is an idea whose time has come. Spread the word.