A Critique of UBI
of itself, not compared to or paired with any other paradigm, policy, etc.
[Note: this critique applies to the U.S. specifically; the implications of a UBI for any nation are particular to its place in the global economy.]
First of all, I am not against instituting a UBI. I do think having a UBI would be an improvement over ‘what is’. A UBI as a proposal does, however, have flaws.
I am not considering here any specific proposal for a UBI. I am critiquing it as a concept. To the extent that I might refer to any particulars, such as how much money a UBI might be, that will be in general terms, taking into account the ranges in the specific proposals this critiquer has seen.
One flaw in the concept of a UBI is that it is politically inefficient. By that I mean that the amount of political effort it would take to get any UBI adopted is disproportionate to the benefits to society that would ensue from it.
There are two sides to that coin. One is how difficult it is to get a UBI adopted and the other is the benefits to be expected. In conjunction with the latter, potential costs must also be taken into account, so we are really talking about ‘net benefits’.
It can definitely be argued that it is not a flaw in UBI as a concept that instituting one is as politically difficult as it is. Still, any new idea is always going to be a tough sell in a democracy. People are committed to pre-existing positions.
That is not without irony. The inherent advantage that democracies should have over other political systems is that new ideas can come to the fore as needed. Yet, convincing large numbers of people of the desirability of a new idea is a challenge. In other political systems advocating for change can be dangerous, but there are fewer people to convince — even as few as one.
At any rate, let’s turn now to the other side of the coin. I’ll consider first the expected benefits, then consider identifiable possible costs. Costs can include costs that would accrue if neither a UBI nor any other alternative paradigm were to be adopted — i.e. costs associated with doing nothing different.
One unintended benefit of a UBI would be to make the economy less prone to recessions. It would accomplish that by reinforcing consistent demand in the lower tiers of the economy.
Really, though, the purpose of a UBI would be to provide people with more money. However much the amount of a UBI might be, it would make life materially better for most citizens of this nation. That is to say, its material effect on their lives would be noticeable for most people.
Or would it? If everyone’s income increased by the same amount, would anyone be materially better off?
That would depend on prices. If prices remained the same, people would be better off; if significant price inflation ensued (and the amount of the UBI were not increased in turn) no one would be materially better off.
So, setting aside the idea of adjusting a UBI for inflation, whether the primary expected benefit of a UBI were to be realized would depend on the presence or absence of price inflation. What is the likelihood of price inflation resulting from a UBI?
That depends on the capacity of current potential supply at existing costs. If supply could be increased in conjunction with the increase in demand that a UBI would engender with no (or almost no) increase in cost relative to revenue, then inflation should not arise.
For most of the things that the people who would noticeably benefit from a UBI would be buying with their increased income, the existing potential supply is, I would say, sufficient at current costs. Much food goes to waste simply because supply exceeds demand to the extent that food rots. As for non-perishable items, along with a vast global capacity for low-cost supply of new items of that kind, the existence of second-hand stores and the mountains of excess stuff that already exists assures that the supply of usable non-perishable goods is sufficient to preclude inflation there.
That leaves, among the basics of material life, energy, transportation, and housing (setting aside education and health care, which to me are of a different societal character — and for sure neither is anything a UBI is intended to impact in any direct way). To cut this short, of those three the only one I think would be problematic would be housing.
The poorer people are, the more they tend to rent. Rent could be easily raised in response to an increase incomes because there is already a shortage of housing. Moreover, the shortage of ‘affordable housing’ is particularly acute.
As I see it, there is only one way to prevent increases in rent that would essentially consume a UBI. There would have to be mandated controls on increasing rent.
I am not against that idea. I think it could be done in a way that would prevent the problems with rent controls that have existed in the past. A UBI would presumably generate some increase in demand for single-family homes as well as additional apartments, which would potentially increase costs in that industry. So it would make sense to tie allowable increases in rent to increases in costs of materials in the residential construction industry. That would deny landlords the excuse of failing to maintain properties because such costs were increasing in the face of fixed rents.
In short, I see a UBI as being economically feasible. Yet, I still say it is politically inefficient. Though people would be better off, all of the effort entailed in instituting a UBI would not solve a single material societal problem.
To my mind, we have five major material societal problems: unemployment, poverty, taxation, public debt, and environmental sustainability. Again, some people might add education and health care to those, but as I see it they are not integral to the structure and functioning society or its continued survival in the way those five are. So let’s look at each of those five in turn in the context of a UBI.
The first two are so intertwined as to be effectively one. Some proponents of a UBI suggest that it would make unemployment irrelevant. A UBI is “universal” in order to camouflage its redistributive effect: if it is paid to everyone it can’t be called ‘welfare’. That ‘need’ for universality has impelled people to suggest that requiring work in exchange for an income is somehow nefarious. That I do reject. After all, to have a job is to make a productive contribution to society.
Anyone can contribute to society without receiving income in turn, but to engage in that is a purely personal choice. Perhaps one might be an unappreciated artist — or philosopher/political economist. Or perhaps someone volunteers time and effort as a moral good in itself. However any such contribution might materialize, it strikes me as illogical to go from there to suggesting that it is somehow wrong for society to require a productive contribution in exchange for an income provided by the members of society.
At the same time, no proposal I have seen calls for a UBI in an amount that would eliminate poverty. So people would still have to have a job that paid an income to escape poverty. Yet, there is no essential reason why, with a UBI in place, everyone who wanted a job could get a job. The same problems associated with the labor market currently would still exist. So again, while a UBI in any amount would allow some to move from poverty to being above that level materially, poverty would still exist.
Taxes and public debt also exist in tandem. With a UBI the central government would be providing an income to all (adult?) citizens. That income would be provided by collecting taxes or by borrowing money — which must be repaid using taxes.
[To suggest that borrowing by the central government is irrelevant is to meander in to another paradigm altogether: MMT; so in considering a UBI in itself I’m sticking to the idea that it must be paid for, one way or another, by taxes.]
Taxes/public debt are always problematic, and on more than one level. Far from solving taxation/public debt as a problem, a UBI would contribute to it. Enough said? Enough said.
That brings us to environmental sustainability. A UBI would in fact acerbate that problem.
One major reason our economy as it exists is systemically unsustainable is because output must be maximized in order to maximize employment, income, and taxes. A UBI would make maximizing output even more imperative than it already is. (To reiterate, this critique concerns a UBI in itself, without reference to other policies, programs, paradigms or other developments that could also exist along with it.)
Environmentally, I am convinced that the path we are on will destroy Liberal society, then civilization itself. Rather than taking us from that path, a UBI would of itself accelerate us along it.
So why do I say I am not against instituting a UBI? Simple: a society heading for a cliff would be better with more material well-being for the non.