A Different Case for Universal Basic Income
The best part about UBI is the promise for equity.
Andrew Yang is back in the news again as the possible frontrunner of a crowded Democratic primary for Mayor of New York. His hallmark program is a modest form of universal basic income (UBI), the policy that gives people living in poverty a check to help with basic needs.In many respects, this is institutionally the very popular (and arguably successful) bipartisan stimulus at the beginning of the pandemic. If successful, it would be a $1B program and the largest of its kind in the US. For context, his “freedom dividend” plan during his presidential run was much more ambitious: a full $12,000 per year per person. Even if his mayoral bid fails, Yang has successfully mainstreamed what was once a fringe idea.
UBI is most popular among what I call “Silicon Valley Libertarians”: people who hate government services but also walk around San Francisco often enough to know that social safety nets are important. Unlike typically Libertarians who would leave safety net funding to individual charity, the Silicon Valley Libertarians are fine with the government providing an individual-choice based social safety net. They just hate the government running anything, especially if it restricts individual choice.
For illustration, below is the process an applicant has to go through for a typical SNAP application mapped out by the US Digital Service in 2016. You can click this link if you’re interested in seeing the detail, but the point is it’s so complex and lengthy that you need to write it in tiny font to fit on a page.
With that context, here’s my bullet-point summary of the primary arguments for UBI:
It’s cheap to administer: Distributing money without extensive screening needs fewer government employees.
It’s flexible for people in different circumstances: The needs of the poorest folks change, so having cash instead of programs tied to specific needs or services can be really helpful.
It’s respectful of the choices of people in poverty. It’s less patronizing and stigmatizing to get a UBI check than to get food stamps or another safety net program.
However, UBI is far from universally popular on the left.Part of the opposition is the threat it poses to existing safety net programs, like social security, SNAP (food stamps), and TANF (welfare). The more vocal opposition that the UBI in its purest form goes to everyone, regardless of income. They want to add qualifications (which policy wonks call “means-testing”) to ensure that millionaires don’t get handouts as well.
And primary arguments against it:
Cost: It’s really expensive, even compared to the modern welfare state.
Fairness: It’s not fair for millionaires to get government benefits
Work disincentives: If people are getting money regardless, they won’t be incentivized to work especially if this replaces programs like the Earned Income Tax Credit or contemporary welfare programs, both of which incentivize work (this is the main conservative argument against it).
Disinvestment in public services: There’s a contingent of people who believe that public services with the proper investment can work really well due to economies of scale.
In my view, what’s missing from this conversation is a consideration of equity. There’s an assumption on the left that if you create a social program, it magically helps people. That’s not my experience working with a number of social service providers; enrollment is a huge challenge. An application for a benefit may seem to be just a mild inconvenience. It’s not. It’s a huge hurdle in reality.
Consider the Earned Income Tax Credit (EITC), one of the largest social safety net programs. It’s a lot of money - it could be thousands of dollars depending on your state and income. It is set up to be incredibly easy to get - all you have to do is file your taxes. There are national free tax prep programs all over the US to help you file your taxes. Don’t trust them? That’s fine, there’s a ton of businesses that will happily do your taxes for you and take a cut of your refund.
Even with all of these incentives, 22% of people don’t get it nationally because they don’t file their taxes.A lack of information is part of the story, but it’s not the whole thing. Large studies that inform people who don’t file their taxes through mailers and text messages fail don’t seem to work. This isn’t unique to EITC, SNAP has an even lower participant for poor working families. Even enforcing minimal qualifications creates significant barriers for the neediest among us.
And that’s what UBI gets right. Like the stimulus checks, there’s no form. There’s no recertification process. There’s just a check. Ironically, programs like EITC are cheaper because of their relatively low participation rates - it costs less to bypass almost 25% of those who qualify. And it’s those very people who likely need the money most. And best of all they don’t have to work with a social worker, a nonprofit, or spend time worrying about an application being approved.
It’s worth noting that there are alternative models that also eliminate enrollment requirements. They now go under the umbrella of “universal basic services”.It’s a similar idea to national healthcare models - you just can walk in and get services. Virtually no questions asked. This isn’t totally alien to the US. For example, public elementary and secondary schools are a universal basic service and one you have to opt out of if you want to homeschool. I’m still a bigger fan of UBI because most universal services still erect significant barriers. As someone who is living in a country with universal healthcare, I can tell you firsthand that learning how to navigate the complex health system is a critical skill to acquire.
My take isn’t that UBI is a panacea. I recognize many liberal critiques and acknowledge that UBI would likely hurt some people. The folks who are lucky enough to live in an area with great service providers may get back less than they’re receiving now. But it’d be a worthy experiment to try, even at the scale of a New York City, as it could be a notable step in improving the lives of the neediest among us. It’d get money in their pockets and help them avoid having to navigate the morass that is the US social safety net. That is a time-consuming and dignity-sapping process. It could help even out regional differences in service quality between states or contracted nonprofit providers as well.
For me, experimenting with UBI is about leveraging government data to reimagine social services. It’s about recognizing the unvarnished truths about the failures of the current social service provision. It’s about trying something different that builds on what we’ve learned from efforts like cash stimulus. And ultimately, it’s about the promise of making the lives of the neediest Americans perhaps a bit easier.
The cover image is from the New Yorker