The UBI Paradox

The fear of automation is a familiar one, since it has been circulating for many decades, and lo and behold, putting aside periodic recessions, there have always been more jobs. The long-run trend in US employment is unambiguously positive.

We should get straight that there is no question that “automation” destroys some jobs. And yes, I have heard of artificial intelligence and self-driving trucks. In other words, as capital becomes more productive, it displaces labor.

The case for the UBI is founded on a more specific claim — that automation permanently reduces the level of employment, or causes it to expand ever more slowly than the labor force, depriving a growing share of the population of any way to earn a living.

The best recent treatment of this age-old canard is from Dean Baker. Baker’s basic point is that if automation permanently reduced the aggregate level of employment, we would see progressive job loss as productivity grows. We do not.

We do see changes in the composition of employment, and not for the better. But the government can usually raise the level of employment with budget and monetary policy, if it so chooses. Workers displaced by automation can be provided with new jobs, though they may not find the alternatives to their liking. No doubt, these days some former unionized manufacturing workers are pacing the aisles of Home Depot in orange aprons.

The UBI story is that people will be left without any employment options at all, so they will require cash support from the government. Yang proposes a payment of $1,000 per person per month.

Much of the strength of UBI’s appeal is the widely shared support for some kind of income guarantee. The wrinkle is that UBI is not the only way to provide such a guarantee, and it is arguably far from the best. Yang and others try to normalize the UBI by claiming that in the past it was proposed by Martin Luther King Jr and Milton Friedman, among others. That is simply inaccurate. MLK advocated an income guarantee, not specifically a UBI, and Friedman advocated a negative income tax, a different animal.

We already have a raft of income guarantees in the United States. For the elderly, disabled, and survivors of deceased workers, there is Social Security. Veterans have their own pension program. Low-wage workers have the Earned Income Tax Credit and the near-money Supplemental Nutrition Assistance Program (formerly known as food stamps). The unemployed have unemployment insurance. Those disabled at work have workers’ compensation. The indigent elderly have Supplemental Security Income.

Many recipients in these programs receive paltry assistance, but the biggest gap in coverage pertains to those formerly eligible for Aid to Families with Dependent Children (AFDC), which was “reformed” to perdition during the Clinton administration. The neglect of this gap, common to all the Democratic contenders for the nomination, is egregious. Proposals for a gigantic UBI program further obscure this area of greatest need.

So what’s wrong with the UBI? In a nutshell, if it’s universal, it can’t be basic, and if it’s basic (provides a decent income floor), it can’t be universal. The US population exceeds 300 million. If the UBI benefit is $10,000 a year (less than Yang’s), you can do the math. The entire federal budget is about $4.4 trillion.

As things stand, transitioning to Medicare for All and the Green New Deal, among other goals, will be pretty big lifts for any Democratic president. People can’t buy a GND with their UBI payment, and it would not do to send them into the individual health insurance market.

A common defense is that since the UBI is universal, it would not be subject to the stigma attached to welfare benefits. Not so. The fact is that the bulk of the UBI would have to be recovered in taxes, so there will be net payers and net receivers. The net payers will be aware of their status on the periphery of the UBI benefit universe.

We already have programs that escape the stigma of “welfare”; we call them social insurance. Their benefits are founded on the contributions of employed workers. That hasn’t prevented assorted politicians — in both parties — from attacking them. It makes more sense to defend and expand them than to join in the attacks by promoting an entirely fanciful alternative.

The difficult AFDC problem — providing a basic income for those with no alternatives — will remain. Nothing is easy. If it was, it would already have been done.

Mr Yang Goes to Washington

Yang’s support appears to skew young and tech-oriented. I speculate that his followers are not familiar with the oldest political cliché in the book — the outsider, untainted by politics, who goes to Washington and shakes things up. Some might think of the president in that way, but the fact is that he sprang from the vile maw of the Republican Party and has enjoyed its unwavering support.

The children’s crusade aspect of Yang’s campaign is underlined by its website, which features a hundred or more proposals, many of which are well-motivated, if vague. It’s ironic that someone whose slogan is “MATH” declines to provide any sort of overall budget with, you know, actual numbers.

There is little point in pressing any campaign with the “how to pay for” question. But if you are going to propose everything plus the moon, there is some obligation to outline the broad parameters quantitatively. Yang has a bit about Medicare For All with no details but some blather about holistic treatment. The effect is to give the appearance of a policy wonk for people who don’t know much about policy.

One of the sketchier angles regarding “pay for” is the idea that the UBI would replace existing programs. In the past the proposal has drawn some libertarian support on the strength of this hope. Yang proposes that existing program beneficiaries will have a choice between the UBI and whatever benefit for which they are otherwise eligible. Here again, the “universal” aspect of the program is undercut. I get Social Security, and you bums get UBI.

The impression persists of a campaign conceived for purposes other than actually winning. Marianne Williamson comes to mind in this vein as well. We will have a better gauge of Yang’s intentions once he is excluded from the debates and, eventually, when a nominee is chosen. Insofar as his agitation narrows down to the UBI focus, its prospects are dim. We have bigger fish to fry. Anti-fascism. Medicare For All. The Fight for $15. The Green New Deal.

The internet magnifies flashes in the pan, but the real struggle for democratic socialism is in the streets.