Economic security and “the great disturbing factors of life”
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FDR

FDR

“I am looking for a sound means which I can recommend to provide at once security against several of the great disturbing factors in life–especially those which relate to unemployment and old age. I believe there should be a maximum of cooperation between States and the Federal Government. I believe that the funds necessary to provide this insurance should be raised by contribution rather than by an increase in general taxation.”

— Franklin D. Roosevelt, June 8, 1934.

Steve Randy Waldman of the interfluidity blog pulls me back into Universal Basic Income (UBI) land. I appreciate the compliments, but let’s get to the cheddar.

I share his foreboding of a political future without a labor movement. It’s unpleasant to imagine how bad things could get, even aside from that whole destruction of the planet thing. In troubled times, there is a natural conflict between trying to preserve old, embattled forms of social protection and casting about for new, more viable ones.

In general I have no problem with providing unconditional cash money to the poor rather than in-kind benefits. The problem of course is that we have in-kind benefits for food and housing because of the historic, political weakness of free-standing cash assistance. So we need a political environment that would be conducive to some kind of conversion.

The Supplemental Nutrition Assistance Program (SNAP), formerly known as “Food Stamps,” got its political boost from agri-business interests, support which is waning. Rep. Ryan wants to turn SNAP into a block grant, a type of death sentence. Not the sort of conversion we want. (With the advent of payment cards, SNAP benefits are more like cash.) By contrast, there is a very good reason for in-kind benefits in the form of health insurance. You don’t want to cast people into an individual market with some kind of voucher. I’m puzzled by SRW’s suggestion that public provision of health care has become infeasible, though later he seems to say it isn’t.

I believe SRW’s characterization of the libertarian impulse is wrong. At its root I would say is not some desire for minimal bureaucracy and free choice, but a drive to drown a whittled-down welfare state in the bathtub. If you don’t like bureaucracy, try not to spend much time dealing with private health insurance companies. The Koch-fueled libertarians use UBI to trash existing programs and advocate a wholesale trade. Big government for all its flaws provides some measure of protection from predators that abound in the private sector.

SRW says the UBI is social insurance. It’s America, and we are all entitled to our own definitions. So what exactly is social insurance? It’s not clear. SRW claims the support for a program depends on the extent to which its benefits are general to the politically-enfranchised. Well sure, but what was it about the program that won the support of the politically-enfranchised in the first place? I still think it’s the contributory rubric. FDR thought so too.

Of course the public has no clue as to the actuarial connection between any social insurance benefits and payments. The thing that matters, however, is that they think there is one. The popular sense of a difference between the dole and “stuff I paid for myself” is strong. Underlying this is the general approval, however unethical, for benefits in excess of any contributions for the deserving. The deserving are those who work or who acquire by fair means or foul some reward for private sector activity. (An exception is the bank bailouts.) I didn’t say this is fair. I only claim it has durable political salience.

NOT FDR

NOT FDR

Steve claims the UBI is a bridge from the U.S. to welfare states that are more effective in addressing poverty. By this criterion the U.S. certainly ranks comparatively low. The question is where such a bridge would lead. Existing, more effective welfare states are built on big social insurance, not UBIs.

The preference for big, universal programs over narrow, targeted ones to reduce poverty is well-taken. It is usually advanced for the promotion of social insurance, not UBIs. For the reasons I’ve proposed, contributory social insurance is the best existing vehicle. The basis for solidarity is mutual recognition of ‘desert,’ and such recognition rests on contribution. That’s my story.

On a liberal plain, UBI does look better than targeting and means-testing. The tricky problem here comes down to specifics. I noted this in previous posts. Something that sounds good in the abstract can founder when it is spelled out. This actually was the fate of negative income tax proposals in the 70s. They enjoyed bipartisan support, including from Richard Nixon, but the proposals blew up when Congress considered some relevant numbers.

If we are talking about a swap of UBI for means-tested benefits (SNAP, Temporary Assistance for Needy Families, Supplemental Security Income, housing subsidies, and the EITC are the big ones), the money formerly used to finance these benefits, once spread out over the entire UBI-eligible population, brings huge hits to existing beneficiaries. Of course there are other possible, supplemental sources of funds. We need to imagine ways to get at them that have some political plausibility — where losers don’t overwhelm winners. It isn’t easy.

One sort of compromise between our positions lies in the universalization-by-socialization of certain types of services. Mickey Kaus used to write about this, before he went insane. Universal pre-K, for instance, is a variation on the theme of UBI that enjoys some support. But notice, in the realm of universal K-12 there are huge distributional struggles, for a function with a constitutional foundation that enjoys widespread approval. In practice, K-12 is substantially financed on a quasi-contributory basis through grossly unequal local property taxes. But by all means, let’s push for free pre-K, free mass transit, a public option within ObamaCare, etc.

Another potential area of mutual interest is TANF. On what basis could TANF be moved closer to a national not-U basic income? Take it back to the Federal budget, minimize benefit reduction rates, cut back on annoying behavioral requirements, raise the benefit floors in the states of Jesusland. What to call it? Family allowance, children’s allowance, I don’t know. I do know that’s where the most deprivation can be found.

It would be great if some enterprising persons could set up a well-designed poll to test the fundamental political question in this debate: does support for benefits hinge on universality or on ‘desert’ based on contribution. An historical analysis would be revealing as well, though as always, past performance does not guarantee future returns.

Thanks to Steve Randy Waldman for a provocative exchange. See also Josh Mason at Slackwire.

 

 


Comments

Economic security and “the great disturbing factors of life” — 14 Comments

  1. I like this idea for several reasons : it helps even out income disparity, it gives security to all citizens. I’m aware of a limited test in Canada that showed promise, but I can’t shake the idea that many people, given enough to live on, will decide not to work. Is there a corollary to oil rich nations where their citizens become unproductive because they can? I really would like to hear the social impacts of this discussed.
    Thanks for what you’ve written.

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  3. I’m leaning towards Waldman, although as everyone says it all comes down to the transition. Max gives the example of Paul Ryan and SNAPS. Yes this is what they want. But they didn’t get what they want with Obamacare. They had to rely on the Supreme Court to allow redneck states to opt out, but that seems to be backfiring. The Republican candidate for governor in Michigan is running on boosting health care coverage for his state (b/c of Obamacare) like Romney did for Massachusetts. Isn’t some state like Vermont trying do single payer?

    Things have been moving the wrong way so long it’s hard to imagine a turnaround, but as Waldman points out, no one expected such quick advance in gay marriage and marijuana decriminalization.

    Basically UBI plus public services and a full employment economy would give workers more bargaining power. (For me a lot of it comes down to the Fed.)

    Of course if the Republicans got their way and we had a meager UBI without public services and loose labor markets, that would be very bad.

    With the UBI proposal the glibertarians are saying the capitalist system doesn’t work. I would characterize Waldman as way to the left of the glibs and not a young, Voxster, so his input was interesting. It’s coming more from a big picture economist/political economist viewpoint.

    The political moment is weird. Like the vote on Scottish independence. It seemed like it came out of nowhere but did express a disatisfaction with the global neoliberal elites. Even though the labor movement is moribund, the turnout for the referendum was at record highs. And the elites were visably rattled.

  4. Most people will not be happy with just “enough to live on”. If they can find work to supplement this income, they will (so they can buy the goodies, like iPhones, travel, etc.) Just surviving isn’t “living” to most people. I’ve been there, done that.

  5. We should create new legal category for people who receive the UBI. Call them “The Useless”. People who want to play chess in the park or spend their life writing poetry should be guaranteed room and board and safety. In exchange they forgo the right to make more than a limited amount of money on their own and the right to vote. When they decide to rejoin honest society they’re welcome to, with all the rights and privileges of “citizenship”, a term libertarians don’t even recognize.

    It would be helpful in the long run for society to have a category now only allowed for academics. Everyone who chooses should be allowed time to contemplate “the idea of the theory of the theory of the idea”, or work on their blues licks 12 hours a day, full time, while being mocked by the hard-working drudges.

    M. Sawicky buys too much into the Protestant Ethic, or the spirit of capitalism (pick one?). But rather than the ethos of competition between self-interested irrational strivers, democracy needs the adversarial relation between useless dreamers and practical drones. Out of that tension a thousand flowers will bloom, over the rotting corpses of the libertarians, who will all have been shot.

  6. Max,

    I do hope you’ll give me your best answer, I’m sure Steve will enjoy it too…

    Some facts:

    1. The poor tend to work for the poor.

    2. Requiring work (with a Minimum Wage set at $40 per week) to receive a Guaranteed Income (say $280), and then localizing the work requirement (you don’t have to leave your neighborhood), will drive down prices by 30-50% in deep poor areas.

    3. $280 per week goes A LOT further when haircuts are $2, and daycare is $50 per week.

    4. What’s more since bosses now have to live AMONGST their hires, but then they can now compete with a massive comparative advantage to minority entrepreneurs with the rich white guys running businesses on the opposite side of the town.

    5. I’d also preclude Fortune 1000 from hiring this GICYB labor. In my model this forces Walmart to raise wages (to compete against more fun jobs), and raise prices, and lose market share to minority owned small businesses.

    6. NOW the only lever for us to consider is the effect of a LOWER Minimum Wage – $40 per week vs. say $120.

    Hopefully with #6, you can find some clarity here…

    Given the GI of $280, the lower the Minimum Wage, the more choice of jobs the worker has: you can blog, sing, play in your band, craft, paint murals, whatever.

    Given the GI of $280, increasing the MW will remove people from the labor pool – many people who can deliver ROI at $40 per week, cannot do so at $120, or $160 or whatever.

    So IN A WORLD WITH A GUARANTEED INCOME OF $280 per week, increasing the MW reduces:

    1. Labor in pool. (just like not requiring work at all).

    2. Increases prices in poor areas, reducing consumption for the poor. $8 haircuts and $100 per week daycare for everybody!

    3. Gives advantages to Fortune 1000 (and their shareholders) over minority small business owners and the LS labor.

    7. Since GICYB doesn’t actually require spending any more money – it can actually PASS.

    If you haven’t actually read GICYB plan, yet:

    https://medium.com/p/1d068ac5a205

    If any of this is STILL freaking you out, such that you think snide comments will put my arguments aside:

    Simply model today’s welfare state, where tomorrow, each able bodied welfare recipient has to report to another one (nearest him on his left), and on will report to him (the guy nearest on right)…

    Each has 1 boss and 1 employee.

    Without spending a new dollar, without any Uber style technology for search matching, we’ve DRAMATICALLY increased the consumption for all welfare recipient.

    There can be only one.

    Selah.

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