By Jonathan B. Wight

Charles Murray is pushing the idea of a Universal Basic Income (UBI) for all Americans over 21, an idea he got from Milton Friedman’s “negative income tax.”

This has some commendable features and troublesome quirks.

First, this proposal seeks to reduce economic uncertainty in an era of widespread resource reallocations (which is econ speak for workers getting outsourced and the fundamental nature of jobs changing). 

No longer can we assume that workers coming out of high school will get a middle-class job that will tie them to a company for their careers and a union to represent their interests.  The new normal is part time or contractual jobs that can be terminated at will, subject to market forces. The new normal may well be robots and drones taking over many menial tasks.

Reducing uncertainty in this environment may produce large positive spill-overs in health, since stress produced by anxiety and uncertainty are surely one cause of physical and mental illness. 

Out of the $13,000 annual bequest that Murray proposes, $3,000 would compulsorily be spent on health insurance. The rest could be spent as the recipient chooses. The $10,000 a year is $833/month, which is barely enough to live on, but it would provide a cushion for many families. It is hardly a disincentive to work, although there will be inevitable cases of it.  How this disincentive compares to the disincentives in the current mish-mash of safety net programs is unclear, but it's hard to argue it would be worse.

Second, to pay for this Murray proposes eliminating all other welfare or safety net programs.  Get rid of housing, food stamps, agricultural subsidies, and corporate welfare.  He doesn’t mention the home interest mortgage deduction and gasohol programs, but he should. The administrative costs of these programs are onerous, and too often provide negative incentives.

But Murray goes too far, I think, in advocating eliminating Social Security and Medicare. That isn’t going to fly and skewers the whole deal. I also would make exceptions for programs targeting at-risk kids.  Let’s make real progress on reducing economic distress and bureaucracy but not think we must eliminate everything.

David Freedman has a good article arguing against the UBI. 

[Thanks to Doug Monroe for the initial link.]