Sunday, December 18, 2016

Universal Basic Income: Two Corrections

The UBI must be gaining headway; it got a big writeup in today’s New York Times.  The article centers on an experiment underway in Finland, where a random sample of households is getting the benefit.  Here are two things you should know that the Times failed to report:

1. Despite the claims of the article, the case for UBI has next to nothing to do with fighting income inequality.  It moves some  money from the rest of the population to the bottom of the distribution but does nothing at all about the concentration taking place at the top.  At best it is about ameliorating the conditions at the bottom, period.

2. It so happens that we’ve been here before: the Seattle-Denver Income Maintenance Experiment of the 1970s.  The results were favorable from a labor supply standpoint, but lots of women saw the income guarantee as an off ramp from unsatisfactory relationships.  The program’s primary sponsor, Daniel Patrick Moynihan, gave up on it in the interest of “saving the family”:
in 1978....Senator Daniel Patrick Moynihan announced in a speech on the Senate floor that evidence of high rates of family dissolution among recipients in the Seattle-Denver experiment had caused him to question his earlier advocacy of a negative income tax.
How soon we forget.


reason said...

Re point 1,
Yes BUT depending on its size it is a big shift in income for many people and demands higher marginal rates to finance it. The more people there are now in the very poor bracket, the more it will reduce overall inequality.
Re point 2 - is that a point for or against it?

Peter Dorman said...

Progressivity of financing matters, of course, for UBI as well as anything else, but the main effect is to sand off the left tail of the distribution. I'm not saying that isn't worth doing, just that it's primarily about a different problem.

Point 2 is neither for nor against, just a comment about amnesia, especially since sexism was such a force in shooting down the UBI last time around.