Some Thoughts on Universal Basic Income

People who oppose redistribution from the rich to the poor generally give two types of arguments against it. Perhaps the more obvious argument comes from a natural rights perspective – the person who created the wealth has a right to do whatever they want with it. However, if you don’t believe in free will (as I don’t), then this reasoning doesn’t make much sense. If you weren’t truly responsible for the circumstances that led you to create the wealth in the first place, why should you get to keep all of it? Shouldn’t some of it go to all of the people that had any influence on getting you to that position?

The stronger argument derives from incentives. Taking from the productive to give to the unproductive makes being unproductive far more attractive and we end up with a society where perfectly capable people choose not to work because they expect others to support them. Any attempt to solve poverty needs to deal with this issue, which makes designing anti-poverty measures difficult.

Our current welfare system has some checks in place that attempt to circumvent incentive problems, but it doesn’t solve them completely. Many of our current welfare programs involve cutoff levels where benefits begin to be reduced and eventually disappear altogether. This type of program introduces an implicit marginal tax on low income earners. Not only do they have to pay a higher official tax rate as their income rises, but they also lose some of the benefits they received at a lower income.

A simple way around this problem is to never phase out those benefits – to give them to everyone. This idea forms the backbone of the Universal Basic Income (UBI). One of the most complete proposals for a UBI comes from Charles Murray (yes, the same Charles Murray who gets kicked off college campuses because of his dangerous right wing ideas). In his version (laid out in his book In Our Hands), each American over the age of 21 would receive $13,000 per year in benefits unconditionally. Of this money, $3,000 has to be spent on health insurance, but the rest comes with no strings attached.

Of course, such a plan would be incredibly expensive. However, as Murray points out, our current system is already expensive. According to his calculations, if we eliminated our entire welfare system (including Social Security and Medicare), we could more than pay for the UBI. Getting rid of these programs would be difficult politically, but Murray offers several reasons why doing so would be desirable for almost everyone. Most notably, he estimates that poverty would be all but eliminated under his program vs the approximately 15% that remains under our own system.

Murray’s justification for some level of redistribution is similar to my own:

Inequality of wealth grounded in unequal abilities is different. For most of us, the luck of the draw cuts several ways: one person is not handsome, but is smart; another is not as smart, but is industrious; and still another is not as industrious, but is charming. This kind of inequality of human capital is enriching, making life more interesting for everyone. But some portion of the population gets the short end of the stick on several dimensions. As the number of dimensions grows, so does the punishment for being unlucky. When a society tries to redistribute the goods of life to compensate the most unlucky, its heart is in the right place, however badly the thing has worked out in practice
Charles Murray (2016) – In Our Hands

If we accept that some redistribution is desirable, a UBI seems like a more efficient way to carry it out than our current welfare setup. One common argument against the UBI is that it doesn’t make sense to waste resources on the rich. Bryan Caplan has given some arguments along these lines and argues that phasing benefits out gradually would avoid the implicit marginal tax rate problems without needing to give benefits to everyone. And it makes sense. If our goal is to eliminate poverty why not focus our efforts there?

But I don’t think that argument really works when you consider that a UBI is inextricably linked to the tax system. A UBI doesn’t look so universal after you consider that the rich are going to be paying for almost all of it. Everyone might get a check for $13,000, but top income earners pay far more than that in taxes. Their net benefit from government programs would still be strongly negative even after receiving the UBI. Depending on your perspective towards redistribution, this feature could actually be a negative, but given that redistribution is going to happen anyway, the UBI seems like a more efficient way of actually doing it.

It’s obviously not without fault, but I do think a UBI would be an improvement over our current system and I definitely recommend reading Murray’s book (it’s not that long) to anyone who wants to help the poor but believes we can do better than we do now.

 

How I’m Voting California Ballot Propositions

voting_united_statesCalifornia has 17 new propositions up for vote on the ballot next week (the link has longer descriptions as well as arguments for each one). I had to do some research to figure out how I’m going to vote on each one anyway, so I figured I’d write down some thoughts here as well. In general my instinct is to reject unless given a good argument to accept, so we’ll see if any of them can convince me. I spent approximately 5 minutes deciding on each, so this analysis probably isn’t the deepest. Let me know in the comments if I’ve missed any good arguments on either side.

Proposition 51: Public School Facility Bonds

What it Does: Allows $9 billion in new borrowing to be used to improve education in California

How I’m Voting: No

Reasoning: California may be doing better in terms of budget these days, but debt levels are still not so good. Even Gov. Jerry Brown says no. Maybe if the money was going to a good cause it would be worth taking on more debt. But it’s going to education:

education_spending
Source

The $3 billion allocated to “modernization of school facilities” is particularly concerning. The school system has problems. More money is not the answer.

Proposition 52: Continued Hospital Fee Revenue Dedicated to Medi-Cal Unless Voters Approve Changes

What it Does: I’m not entirely sure. Apparently there is a fee paid by hospitals that goes to MediCal (California’s version of Medicaid). This proposition would continue that fee and would only allow it to change if voters agreed. A no would allow legislators to change it and potentially divert funds away from MediCal to the general fund

How I’m Voting: Yes

Reasoning: It looks to me that either way the money is going to be spent. If I understand correctly, a yes vote makes sure it is spent on healthcare for the poor rather than whatever politicians think is important. That seems better to me.

Proposition 53: Voter Approval Requirement for Revenue Bonds above $2 Billion

What it Does: Requires any infrastructure project that requires more than $2 billion in funding through bonds to be approved by voters first

How I’m Voting: Yes

Reasoning: Supporters refer to it as the “No Blank Checks Initiative.” Sounds good to me.

Proposition 54: Public Display of Legislative Bills Prior to Vote

What it Does: Requires laws to be posted online for 72 hours prior to a vote by the legislature

How I’m Voting: Yes

Reasoning: The opposition says “Prop 54 will throw a monkey wrench into the ability of our elected officials to get things done.” I thought they were trying to convince me to vote no. But seriously, increasing transparency in legislation is a welcome change.

Proposition 55: Extension of the Proposition 30 Income Tax Increase

What it Does: Extends a tax increase on incomes over $250,000 passed in 2012 for 12 more years

How I’m Voting: No

Reasoning: How about a tax decrease?

Proposition 56: Tobacco Tax Increase

What it Does: Increases taxes on cigarettes by $2.00 per pack

How I’m Voting: No

Reasoning: Current taxes are 87 cents per pack so we’re looking at a 230% increase. Here’s what the first study that comes up when you google “Do cigarette taxes work?” says about cigarette taxes: “Estimates indicate that, for adults, the association between cigarette taxes and either smoking participation or smoking intensity is negative, small and not usually statistically significant.” I’m already opposed to higher taxes in principle. Taxes that hit the poor the hardest and are allocated to specific government programs which are sure to be highly inefficient are even less appealing. I’m all for reducing smoking. The government isn’t the one that should be leading the charge. (Also perhaps most importantly I need my roommate to be able to pay his rent.)

Proposition 57: Parole for Non-Violent Criminals and Juvenile Court Trial Requirements

What it Does: Increases parole opportunities for non-violent criminals and allows judges to decide whether to try juveniles as adults

How I’m Voting: Yes

Reasoning: Seems like a no brainer. We put way too many people in jail. The opposing argument makes some scary claims that this is going to put rapists back onto the streets. I don’t buy it.

Proposition 58: Non-English Languages Allowed in Public Education

What it Does: Repeals a previous proposition that required English to be used in all classrooms and non-English speakers to take an intensive English training class

How I’m Voting: Yes

Reasoning: Would it be better if all students knew English? Maybe. But the reality is they don’t. If I’m a science teacher and I can teach my Spanish speaking students in their native language better than in English I should be allowed to do so. Get politicians out of the classroom and let teachers make the decisions.

Proposition 59: Overturn of Citizens United Act Advisory Question

What it Does: Nothing as far as I can see. It will “Call on California’s elected officials to work on overturning Citizens United v. Federal Election Commission and other similar judicial precedents…Proposition 59 would not legally require officials to act as the measure advises them to”

How I’m Voting: No

Reasoning: What? This should not be on the ballot. It’s a poll not a law.

Proposition 60: Condoms in Pornographic Films

What it Does: Ahem, just read for yourself (Don’t worry, link is safe for work, just a description of the proposition)

How I’m Voting: No

Reasoning: No comment, except maybe they should have waited 9 more propositions before proposing this one (sorry)

Proposition 61: Drug Price Standards

What it Does: Regulates drug prices to ensure state agencies pay no more than the Department of Veteran Affairs

How I’m Voting: No

Reasoning: I think we should move closer to a free market in healthcare. This proposition moves us further away. Is this analysis too simple? Maybe, but unless there’s a crystal clear argument in support, I’m not voting for price controls in any situation.

Proposition 62: Repeal of the Death Penalty

What it Does: Self-explanatory

How I’m Voting: Yes

Reasoning: I don’t feel comfortable deciding whether another human being deserves to live or not. That’s already enough for a yes, but then I read the support argument and found out there’s been 13 executions since 1978, but they cost $5 BILLION?! and that “a death row sentence costs 18 times more than life in prison.” I can’t imagine why, but it makes my decision that much easier. Also, remember that even for the most heinous crimes, it’s not their fault.

Proposition 63: Background Checks for Ammunition Purchases and Large-Capacity Ammunition Magazine Ban

What it Does: Self-explanatory

How I’m Voting: No

Reasoning: I’m not necessarily opposed to the idea of increasing the difficulty of getting a gun, but this just seems like putting another layer of red tape on top of the red tape that’s already there

Proposition 64: Marijuana Legalization

What it Does: Legalizes marijuana for recreational use for adults over 21

How I’m Voting: Yes

Reasoning: The drug war costs a ton and puts a bunch of people in jail for doing something that doesn’t harm anyone. Marijuana is safer than alcohol. Anyone that wants it can already get it with ease (if anything, legalization might make it more difficult for minors to get it although probably effect would be small). Easy vote for me.

Proposition 65: Dedication of Revenue from Disposable Bag Sales to Wildlife Conservation Fund

What it Does: Diverts all funds from the sale of bags to the Wildlife Conservation Fund. Currently stores are allowed to keep them I believe.

How I’m Voting: No

Reasoning: I wish I could just eliminate the fee altogether, but I definitely don’t want to turn it into a tax.

Proposition 66: Death Penalty Procedures

What it Does: Reforms death penalty legal procedures, shortening time legal challenges can take to 5 years

How I’m Voting: No

Reasoning: Let’s just repeal. If this gets more yes votes than 62 it supersedes it. I much prefer 62.

Proposition 67: Plastic Bag Ban Veto Referendum

What it Does: Bans plastic bags

How I’m Voting: No

Reasoning: I like plastic bags