Universal Basic Income–For or Against? A Debate

Universal Basic Income–For or Against? A Debate


– Good afternoon and welcome to our debate on the Universal Basic Income. My name is Charles Wheelan. I’m a senior lecturer at
the Rockefeller Center. The last decade, if not longer,
has obviously seen a debate over our market-based capitalist system. The financial crisis brought a lot of the
weaknesses to the fore. Now, we are experiencing
several political campaigns that discuss whether moneyed interests have co-opted the system, whether there’s sufficient competition, particularly in high tech, whether we should reinvestigate antitrust. Obviously big concerns
about income inequality with San Francisco and California
being an example of places where enormous wealth are being created even as there are 10 cities
that are more familiar in developing countries
than in modern America. Amidst all that, people
are asking questions about capitalism itself. If you look at surveys of young people, support for both democracy
and capitalism have fallen. People are bandying
about the word socialism, which is somebody who lived through the Fall of the Berlin
Wall was not something we thought was going to be resurgent. When you push on that a little bit, what people tend to really mean is they kind of want to rethink the finer points of our
market-based system. So it’s not necessarily
throwing out the car but maybe a redesign, if not some serious buffing and polishing. One idea that has emerged
from that larger discussion is the possibility of a
universal basic income and I’ll define what that
means in a little bit and that’s the narrow discussion
that we’re going to have. But of course it touches on
lots of other big issues, income inequality, what we
owe the poorest Americans, what we ought to ask of the
wealthiest Americans and so on. That’s what we’re going to explore. It’s obviously important enough that it is basically
launched and sustained the political campaign of Andrew Yang. It’s kind of a one idea
that has resonance. There are two guests who are
going to be debating this issue. On my far left, Karl Widerquist,
who is associate professor of Georgetown University at Cutter. He is an expert in political philosophy and distributive justice, which is really a
discussion of who has what and is that fair? He holds not one but two doctorates. Around here, we’re usually impressed with people who have one
PhD, but he’s got two. One in political theory from Oxford and the second in economics from City University of New York. He is the author of
numerous articles and books including the book, “Independence Propertylessness,
and Basic Income: “A Theory of Freedom as
the Power to Say No.” To my immediate left is Oren Cass, who is a senior fellow at
the Manhattan Institute. He is the author of “The Once and Future Worker: “A Vision for the Renewal
of Work in America.” He was the domestic policy
advisor for Mitt Romney in his presidential campaign in 2012. Before that, he was the editor
of the Harvard Law Review. He worked at Bain and Company he has BA from Williams and
a JD from Harvard Law School. Karl will be kicking
it off with his defense of the universal basic income
and Oren will go after that. They’ll each talk for about 10 minutes and then we’ll allow them to debate and eventually, we will
open it up for questions from all of you. In anticipation of Karl’s talk, let me just set out the parameters of what we mean by universal basic income and we can debate the nuances. But for opening purposes, it
is a benefit that is cash. So it doesn’t have to actually be bills but it’s not an in kind
benefit like food stamps. It is a cash benefit that
goes to all individuals who are eligible. So if there’s a household of
three, it would go to the male, to the female, to any of the
kids in trust of their parents. It is not means tested. So it goes to all folks in America. We can talk about whether that’s citizens, non-citizens and so on. But it’s unlike say food stamps where if you’re below a
threshold, you get them. If you’re above the threshold, you do not. This is a universal benefit and there is no work requirements. So there’s nothing you have to do in exchange for that basic income. And it is regular, meaning that it is not a one-time payment. It is something that can be given annually or as we may discuss more regularly because that’s more important for people who are struggling at the low end of the income scale. There are different flavors
of a universal basic income. We can get into that. It can be additive to existing benefits. So it can be layered on top
of the social safety net or it can also be used to
replace some of those benefits because it’s simpler than some
of the means-tested programs. So with that basic explanation, I will turn it over to
Karl who will make the case for universal basic income. – Thank you. I support basic income because
I think it’s wrong to become, to come between people, anyone and the resources
they need to survive and that is exactly what we’ve done. We’ve taken the resources of the earth that were here before anyone came along and we’ve said this is government property or this is private property and these belong to these people. And then we divvy them up between the privileged
people in the world, but the rest of you didn’t get a share. And the only way you can get a share is if you work for these people and you can’t work for yourself. We’ve taken away any possibility
for propertyless people to work for themselves. And we say the only way you can work is the follow order for these people who already control resources. I think that’s a really
terrible thing to do to anyone. And I think all of you
in your heart of hearts to some extent and agree with me. And I think that’s why
suppose some entrepreneur came in here right now and he appropriated the air in this room. He just sucked all the air
out of the room and said, and an improved mixed his
or her labor with the air to make it better air and say, so this air is my property now. We were sharing it. Now it’s my private property. If you all get jobs,
you can buy air from me and you better hurry ’cause
you have seven minutes. I think all of us would be pretty upset. We’d say, well, if you
want me to work for you, maybe I will show me what the job is, but give me my air back first. You can’t hold me under this duress that you’re holding under
by depriving me of air. But yet we do that every
day with other resources, food and shelter and water and
the resources to make them. We hold most of the
working in the middle class and the people under this duress of you don’t get these things
unless you work for somebody. I think that the people who own stuff, the people who own stuff
really need to pay back for what we own. That when you take a piece of the earth and you make it your property, what you’re doing is you’re
imposing a duty on everyone else saying this part of the earth or whatever I’ve made out
of this part of the earth used to be anybody could use
it, now only I can use it. So you’re all under this duty. Well, if you’re going to
impose a duty on other people, you should pay for it. So I envision is you’re paying
taxes on the property you own and you’re getting paid for the property that everybody else owns. You’re simultaneously paying, you’re simultaneously getting paid. Some of us are going to
pay more than we can get. Some of us are going to
get more than we paid. If you pay more than you get, if you pay more than you
get back in basic income, that is your reasonable fee for hogging a bunch of
the earth’s resources. And if you’re getting more than you pay, that is your reward to spend as you wish on the services provided by everyone else for using less resources
than everybody else. It’s only normal. Now, it’s in the sense it’s
really not a radical reform. We can combine it with
lots of other reforms. But if all we do was introduced
basic income tomorrow, what we’d have is a market economy where income doesn’t start at zero. That’s not so radical, but it
might have radical effects. It might have radical
effects because as I showed in that opening illustration about air ownership of resources gives you not only
enjoyment of those resources but control other people. If you control things that
people need to survive, you control not only those
things, but those people. It puts all the rest
of us in this position where we have to go to
whatever privileged group owns the resources. And it doesn’t matter if
it’s a capitalist group or if a socialist group or somebody else. If it’s not you, they
have control over you. And we should not be putting
people in this condition. Now, people who oppose
this idea will often say, I think fanciful things. They’ll pretend that we actually
do provide these things. We don’t. We have most of our policies run out. If you get disability that
lasts for the rest of your life, if you live long enough
to get social security, that will last of the rest of your life. Food stamps don’t. And TANIF doesn’t and most
of the things that we do to help poor people run out, and most of them come with conditions. Now, a lot of conditions are popular. People say they want to fight
poverty, but with conditions. But often these conditions
are very self serving on the part of the privileged. First of all, it’s the privileged who are deciding conditions. So we’ve already taken all the resources and now we’re the ones who get to decide what those who didn’t get any resources, what they have to do to get the resources they need to survive. Well that’s kind of self-serving,
and kind of cruel isn’t it? That you don’t get these
resources until you do what I say. And I’ll show you how self-serving it is. What’s the number one thing we always ask of the less privileged? To prove they’re amongst the truly needy rather than those bad, needy people who aren’t really truly needy. Is that you must be willing to work. Well, that sounds good, but you
know what they mean by work. They mean take a job, go in and be a servant to your employer in a sense of you might not
be in the service industry. You might not be a butler, but you’re a servant in the sense that you have to go in
and take orders every day from someone with more
privileges than you. And we think that’s natural, that that is synonymous with work. Well, that’s not what work was through most of human history. People could work for themselves. You can not work for yourselves anymore, since we enclosed the commons, since we killed the Buffalo, since we had the colonial movement that created the private
property rights system around the world. We made it impossible
for the mass of people around the world to work for themselves. Work means those of us with less, following orders of those
of us who have more. I don’t think there’s
anything wrong with the job. I just think if you want
somebody to work for you, you should get them to agree. You shouldn’t be able to
starve them into submission. You shouldn’t be able to deprive them of air or food or shelter or water or the things that they could
make those out for themselves. You shouldn’t be able to do that. And if you do, if you do deprive them of the ability to work for themselves without following
someone, being a follower of someone else’s orders, then you owe them back compensation and compensation is always in cash. Another problem with conditional approach is the conditional, people
say, I want to end poverty, but with these conditional programs. You can’t do it because unless
you have phony conditions. Because conditions, people will
always test your condition. If you have a policy that approaches poverty with conditions. if you do this, we’ll
get you out of poverty. Then you have to have
the threat of poverty or some other threat
like jail or something for the people who don’t
meet your conditions. So the conditional programs inherently use poverty as a threat. That’s cruel. Shouldn’t we be ashamed of ourselves? That’s been our approach to
poverty for over 100 years. Is threatening people with it. Now of course they’ll say things like, well, if we don’t make people, if we don’t force people to work with this threat of homelessness
and economic destitution, they won’t work. They’ll be lazy. These lazy workers won’t work. Notice they do it. Why is it always lazy workers
and never cheap employers? Maybe if people, if somebody offers a job and you don’t want it,
maybe the wages are too low, the working conditions are too poor. Nobody ever talks about
this being a conflict and that wages and working
conditions might be too poor, that people shouldn’t. Maybe they should say no to these jobs. Maybe these are crappy jobs. So we put employers beyond
reproach and we judge. You’re judging the weakest
and the most vulnerable people as being lazy, but the
people with privileges, you’re not even subjecting
them to judgment, not even admitting that
this is really a dispute or that people could
reasonably disagree on. All of us say everyone must work. We have a work ethic. No, we don’t. We don’t have a work
ethic in this country. Rich people don’t work. Well, they can if they want to, but that’s what I want for everyone. I think if we’re not going
to say every single person has to work, then we have to say, no single person has to work. That’s equality before the law. We all get access to enough resources so that work is voluntary for everyone, or we have some kind of system
where everybody rich or poor, all has to work in equally onerous job. And we’re not doing that work. We’re not about to hold
the wealthy to this. And they’ll say everyone and also, they’ll say that jobs are fulfilling. Well maybe they are. Sometimes they are, but also
things you can do by yourself. Things you can do with
resources of your own to combine with other people
like you are fulfilling. It’s really a condescending way to say that a job where you
go in and follow orders is the only way to get familiar. That that’s automatically fulfilling. I don’t know. I’ve washed a lot of dishes in my time and I didn’t find it terribly fulfilling. Maybe somebody does, that’s
up to the individual, but up for us, the privilege
to say the less privilege are only going to get
fulfillment by following orders, but not by getting money
that they can buy resources and start their own projects. Well that’ll never fulfill them. Only following our
orders will fulfill them. That’s kind of condescending
and self serving. But ultimately, it’s self-defeating, at least for most of us,
except for the very wealthy because in the last 41 years, national per capita income has doubled. But yet most of us haven’t shared in that. We could be working half as
much and consuming the same, or we could be working
same and consuming double, but most of us are where we were. Most of us were where
we were 40 years ago. All those benefits have
gotten to the top 1% because of this enormous incentive problem where companies don’t have an incentive to share the benefits of
economic growth with us. And also people who don’t want this. So let’s say they’ll
say, UBI just won’t work. It won’t work. As if the entire system
is going to collapse. People who otherwise praise
the market system will say, it’ll never work as if the
entire capitalist system will collapse if we don’t
force the less privileged with the threat of poverty and homelessness and
destitution to play along. We can never get their
voluntary agreement. We must threaten them with this or the whole system collapses. I don’t know. If that’s true, it shouldn’t be so. Also they’ll give
exaggerated cost figures. They’ll say it’s really accent. They’ll just multiply the number of people getting the basic income
by the population. That’s not the cost of basic income ’cause most of it’s pain and getting paid, you pay your own basic income. Privileged people get
20,000 or 10,000 or 12,000, whatever the figure is. They get that, but they
also pay that in taxes. And I’ve done some estimates
that up to five sixths of what you’re paying in basic income is just people paying themselves. Once you net that out,
the cost of a poverty line basic income at 12,000
a year is 539 billion. And the cost of a much more generous one, a $20,000 a year basic income is, I didn’t write that down. Well anyway, it’s something in the, it is less than 10% of GDP. – [Charles] Thank you very much. Oren, you’re up. – Thank you. All right, well thank you
everyone for coming and Karl, you’ve had to come a
lot longer than I had. So I’m glad to be here. I usually try to spend some time at the start of these discussions emphasizing just how crazy an idea of universal basic income is. I think it’s important to emphasize that while there sort of seems to be a lot of cultural
interest in it right now, and Andrew Yang is making great hay of it. It’s not actually anything that has real political salients
with the actual population. And one way you can tell this is because when the Green New
Deal was initially introduced AOC put out this fact sheet and one of the sub bullets on it was one part of the Green New Deal was going to be unconditional
economic support regardless of whether
or not someone works. And the backlash and outcry was so severe that it had to quickly be taken out, not from the right of center. The right of center thought this was hilarious and delightful. But from the left of center for
whom the AOC Green New Deal, outlandish as it might
be was worth discussing. But unconditional economic support was so obviously a nonstarter. And so obviously detrimental to the cause of trying to
advance the Green New Deal that it had to be struck. So people who actually work in politics and look at what what people
want and are thinking about don’t see this as an especially
plausible or viable idea. And I think you see some
of that in Karl’s remarks, which are very interesting
philosophically, but I don’t think actually
hold a lot of water tangibly with respect to how our
lives actually operate. I was writing down some of the comments and just to take a few, the idea that you can’t work
for yourself isn’t true. In fact, many, many people
work for themselves, start their own businesses,
are self employed. The idea that if you take a job, you’re a servant to your employer is again a very strange
description of employment, which is an agreement between two people to perform a productive task. The idea that if you don’t take the job, your employer is therefore
“starving you into submission,” is again not relevant in a market economy. If you had a single communist
employer, it might be. But in an a market economy, part of the premise is multiple employers are potentially competing for
and offering work to workers just as multiple workers potentially offer their
labor to the employers. So in the abstract, this idea that somebody is
depriving or oppressing somebody might sound appealing, but it’s not clear to
me who that person is, doing the depriving. And we should be skeptical if
we can’t identify who that is. I think if we want to believe that we’re depriving people of something, we’d also need to know what
we’re depriving them of. Certainly we don’t want to deprive
people of air and we don’t. And in fact, we have strong
environmental laws in place that are widely supported because
we can make sense of that. Karl mentioned food, shelter
and water as other items. Water, again, we typically protect and is provided by the government. Things like food and shelter though do not exist in the state of nature for us to just go in frolic among. We actually have to produce those things. And so I think it’s really
important to keep in mind that what we’re talking
about is how much stuff and material quality of living
is our economy generating and under what conditions
do people gain access to it? If for instance, we said
the basic necessities of staying alive, food,
shelter, medical care are something we should
provide to everybody, I think that’s a view that
would achieve widespread support and is of course, exactly how we provide our safety net today. It’s not true that food stamps run out. We provide in addition
to guaranteed access to emergency care in hospitals. We obviously have a trillion dollar, well, $600 billion of Medicaid and another trillion of Medicare. And so we have all these programs and the question is to
look around and ask, well, what’s missing? Do we really have all of these people being starved into submission? And the answer is no, we
don’t actually have anybody being starved into submission. Do we have holes in our safety net? Could we make it more effective? Absolutely. And I think that would be a
great conversation to have. But to take the fraction of
a percent of a population that not only is not able to participate in the productive economy
but is also not served by the trillions of
dollars we spend a year in making sure those basic
needs are met and say, rather than address that we
should replace the entire system with up to $20,000 going to
every person in the country, I think is very hard to justify just on the practical merits when we talk tangibly about
what actually is happening here. And now all of that being said, we could still say, well, okay, so we don’t need a UBI, but we like one. We think it sounds nice. Would be great if we just
all got a check every month. And I want to talk about
the couple of reasons why that would not in fact be nice. One of them is more sort of
conceptual and in principle and then one is very nuts and bolts. And I’ll take the nuts and bolts one first because I think it’s easier, and ultimately less important. We could technically do a basic
income as Karl pointed out. It is within the scale of resources in our society to do one. It’s important to recognize though that even if what you’re
saying at the end of the day is that people are going to be receiving their own basic income to
offset the taxes they’re paying. The tax burden is still enormous. And this is similar to
the debate we’re seeing in Medicare for All where supporters of it are trying to explain,
well, ignore the fact that there’s a massive
middle-class tax increase because you’re also
getting free healthcare. And that’s fine. That’s an exchange we could
decide we want to make, but let’s make sure we understand what the tax side of
that equation looks like. If you wanted to provide
$10,000 to every American, you’d be talking about upwards of three trillion dollars a year. We typically talk in
10-year budget frames. You’re talking about $30
trillion over 10 years. Conveniently, that’s about
what Medicare for All costs, though note that money
doesn’t cover your healthcare. So in addition to that,
we’re going to need to decide what we’re doing about healthcare. But where would we get
30 trillion of income on top of the $15 trillion 10-year budget deficit we already have? Well, even if you took every
dollar earned by everyone who earns over $500,000 a year, you could get maybe 10 trillion, assuming they all still work and just give you all their money. CBO has scored what it would take to actually raise the $30
trillion for Medicare for All, or in this case, to provide basic income. And what you’d be looking at is a 39 percentage point
increase in the payroll tax. So what that means is
every dollar you earn beginning from the first dollar, the majority of it is now
re collected in taxes. Now, do you also get the basic income? Sure. But what’s that going to do
to how you feel about working to the return to actually
participating productively in the economy, to create
all of these things that we are allegedly
excluding people from? It’s a real problem. Another thing you could do
as an 88% value added tax, roughly a sales tax that doubled the cost of everything in the economy. That would pay for this. But now everything in the
economy would cost twice as much. So essentially, taking out of one pocket to put into the other. So that’s sort of the
scale of tax increase you’re talking about. And again, then with no money left over to do something like Medicare for All or all of the other things
we might still care about. Even if you could do it though, for me, the more interesting
question is should you? And here I think the conceptual question is such a fascinating one. I think Karl has presented one view on it, which is based in this
idea that the resources that exist in the economy and to be a little bit on charitable, magically exist regardless of
whether or not we make them are everybody’s entitlement and that that is a preferred
way that people think is fair. I don’t think that’s actually true. I think actually the value of work and the reason that we say
that work is fulfilling is not because dishwashing
is inherently fun, but it’s because actually
doing something productive for society in return for
which you receive back the things you want from society is core to both our
understanding of ourselves and core to a healthy society. Social science repeatedly
shows that employed work, this exploitative avoidance
of starving into submission is in fact crucial to
people’s life satisfaction, their self esteem, their mental health. Certainly if you ever want to
move up on the economic ladder, you’d better step onto that first rung. It’s at least as important
for family formation, the economic rationale for marriage, the centrality of that relationship to being able to support
and provide for a family is critical to creating
marriages in the first place and to their stability. When work goes away, especially for men, family formation declines,
divorce skyrockets. Work is critical for children. Children being raised in
households where people are working have better outcomes. Children being raised just in communities where people are working,
have better outcomes. And all of this is
holding constant income. This isn’t because people who
are working are earning more. It’s because work really has
value in the human condition. And so what I’d say we should
think about conceptually is this, do we believe a basic income is the right way to raise our kids? Because today, certainly
everyone who’s well-off has that choice. You could raise your kid telling them, maybe you’ll go off and
do something productive, but I want you to know
I’m going to provide you this steady income
that’s enough to live on regardless of what you do with your life beginning at age 18. Typically we think that’s probably not the ideal way to
build a healthy society. And the thing about a UBI is that a UBI is the equivalent of your crazy uncle Sam showing up and doing it at Thanksgiving. Because if we create a UBI, you as a parent can’t
exclude your kid from it. Your kid will receive it. The cultural message will be there, that when you turn 18, you could start moving forward
with a productive life. Or you could also just
smoke pot in the basement and play video games and backpack
around Europe indefinitely and there’d be nothing you
could do to prevent that. And so I think the day when we say, actually, gosh, yes, that
is the society we want, that’s what we should be striving for. That’s the day when this
will be politically viable and when philosophically we
should find it compelling. But until then we should recognize it as an interesting thought exercise, a good way to test our priors, a good way to think about how
we can be doing a better job with the safety net we have, but not something we would
ever want to consider actually imposing on ourselves. Thank you. – Thank you. And then we’ll have a five minute rebuttal and both of you are allowed
to ask each other questions. It’s going to be a discussion
as well as the debate. So Karl, five minutes for your response. – Okay, sure. Sort of making competitive
assertions here. Let me try to explain what this, I think you’re under an illusion of wildly exaggerated cost figures, and let me try to explain that. What really affects people’s behavior and their lifestyle as
far as what tax costs are, are their total tax burden
and their marginal tax rates. And making a universal basic income rather than a target
program doesn’t affect, it doesn’t affect either one. The targeted version of basic income is called a negative income tax. And negative income tax only
gives to those with low income to make sure we get up to some minimum. So let me imagine it. So let’s say that the people on my right side of the aisle to my right, that group of people are, let’s say it’s about a sixth of us, say those are the low income people and everyone here is the
higher income people. And you’re all collectively
going to pay taxes to help this group. And that’s going to cost you. So you’re going to give
them each a dollar. What’s that about? That’s about 50 people. That’s going to cost you
collectively about $50. Now then, so that’s a targeted program, and then where say, okay, then
what I want you all to do, all the rest of, we’re going
to change this targeted program into a universal program. So I want you all to
do is to take a dollar out of your wallet and put
it back in your wallet. How much does that cost you? That costs you nothing. Your wallet after the first one, your wallets all got a little smaller. That cost you something. After the second one, your
wallet didn’t get any smaller. We took it out, we put up again. We could do that again. Take it out again, put it up again. We can do that a trillion times. It wouldn’t make any difference. The only meaningful cost that affects either your marginal costs
or your total tax burden is how much is being distributed
from the net contributors to the net beneficiaries. That’s the only meaningful cost and that’s less than 3% of GDP for a poverty line, basic income and less than 10% of GDP for a $20,000, much more generous basic income. Now, the idea that you
can work for yourself it’s just simply not true. If you have no resources,
you don’t get resources. You can work for a client,
but a group of homeless people cannot work for each other as clients ’cause they don’t have
any money or resources or anything to reward each other with. And it’s not true that
we all work in a circle, that we all work for each other. We work in something like a pyramid. The extent that you can
work for a boss or a client depends on how much money they have. And how much money they have, depends on how many services they provide with people with even more money. We cannot in any meaningful
way, work for ourselves the way my grandfather did on his farm or the way a friend of mine’s
grandfather in Somalia did as a nomadic herder. That opportunity is lost
to us in this system without a basic income. We have to go and find somebody
with property to do it. It’s simply not true that
we can work for ourselves in the meaningful way
that I’m talking about it. And so jobs mean following the desires and the winds of those. And many of our jobs are meaninglessly following whims of wealthy people. A lot of them are counterproductive, doing very wasteful things
for very wealthy people. And we are killing the
environment that we live in doing all these wasteful
things for wealthy people. And we wouldn’t be the
first society that did it. In Easter Island, they had
people chopping down trees to build monuments to rich people and then carry them across
the island and set them up. And they chopped down every
last tree on the island and then couldn’t go out on
fishing expeditions anymore and had a big population crash. And were doing something,
not all work is productive. And multiple employers is better
than being a chattel slave. But multiple employers
is not the same thing as working for yourself
with your own resources. It is a choice of masters. And this, if people will pretend, choice of masters is exactly the same as being able to work for yourself. They will pretend that. Now, even though the people
who created this system explicitly said that’s not true, and that’s why we’re doing this. The peasants of Europe before
the enclosure movement, many of them were able
to work for themselves. And you know what they
said about those peasants who worked for themselves
on their own farms or on common lands? They said, these are lazy because they won’t accept my wage work. And so they intentionally
said, what we need to do is to privatize, enclose all of this land and then they’ll have to work for us. Now they pretend, as long as
you have a choice of people, then we’re not forcing you to do anything. No, it’s true. No one employer is forcing
you to work for them, but the government system
is forcing all of us to work for those who
control enough property. (mumbles) – [Charles] Oren, five minutes roughly. – I just don’t think this
is an accurate description of our economy. I mean you could go start a pizza shop in a working class neighborhood that sells pizza virtually exclusively to other working class people. That’d be fine. We live in an economy where
you actually are expected to produce and contribute
something of value to others in return for the things
you want a value from them. And to describe that as this
exploited pyramid scheme, I think is both conceptually
and in fact wrong. One easy way to say this is to just, let’s kind of embrace the hypothetical and say you know what, you’re right. That enclosure movement in
1600s England was a tragedy. Let’s take some federal lands
out West and open them up where anyone who wants
to go be a homesteader and farm themselves is welcome to. Would that satisfy us? The answer is it wouldn’t. No one would take that seriously because the things that we want and that you’re supposed to be able to buy with this 10 or $20,000 of basic income includes health care and
cars, and electronics and all sorts of things that of course you can’t
produce for yourself. So by definition, if we want
to live in the modern economy and enjoy the material standard of living that a basic income is
attempting to provide to people, we’ve already given up on this idea that working for yourself
could mean genuinely, simply supplying your own needs. We are going to be in an exchange economy and then the question is
just do we like the idea that we actually expect everyone to contribute and exchange in it? And I think we do. And the what did you start me at? (mumbles) – [Charles] You got about three minutes. – Perfect. ‘Cause I’ll keep going.
– Yeah I know. (laughing) (mumbles) – But this question of why
we want the exchange economy and what does the alternative look like I think is really important. ‘Cause I think Karl made a very fair point in his opening statement, which he said, some people say the capitalist system is going to collapse with a basic income. People do say that, and I agree
it’s a silly thing to say. The concern is not in my mind that the capitalist system will collapse. It’s that we will accelerate on the trajectory we are on right now of an ever smaller share of the population creating ever more of the economic value and essentially writing checks to everybody else to leave them alone. In 2010, at sort of the
depth of the recession, we were down to a point where only 53% of working class households
had even one full time worker. Now, in terms of material
standard of living, everyone at every point in
the socioeconomic spectrum is doing better than they ever had before. Thanks to the range of transfer program and thanks to progress in technology. People have more better stuff than ever at every point on the
socioeconomic spectrum. But we don’t actually, we recognize that that’s not satisfactory, that a society in which
an ever smaller share are the productive valued members and everyone else who’s supposed to live on transfers to them is
not a good one for society and it’s not a good
one for the recipients. And by the way, if you speak to people in working class households, people who are struggling
about what they want, it doesn’t tend to be a
check, it tends to be a job. In fact, if anything, you will
find an inverse relationship between how wealthy someone is and how excited they are
about universal basic income. So the idea that we have
these exploitive masters who are forcing everybody to work and it would be much nicer
if we just wrote them checks is again, neither conceptually
nor factually accurate. It’s condescending and it
completely fails to appreciate what is actually central to a good life, what people want, what we all want. The idea that rich people
don’t work is simply not true. Rich people, including these
Dartmouth college students when they graduate, most of
them are going to go work really hard and we
consider that to be core to how you build a good life. So what I worry about is
not the system collapsing, but releasing the political pressure to actually make the kinds of reforms that would move us toward an economy where everyone can be a
productive contributor and support a family. Because when Karl said no one subjects employers to
scrutiny, that’s just not true. I wrote an entire book called, subtitled, ” A Vision for the
Renewal of Work in America,” which is about all the three ways that elites have screwed up policy and employers are behaving
badly and we need to do better if we’re going to provide meaningful and family supporting work for everybody. And I would say that’s a much
more constructive conversation to have in a much better
direction for our society than how big a check we need to write to make them leave us alone. – So I want to probe what I
think is an area of agreement we were meeting before we came out here. And one of the rationales for a more comprehensive
social safety net and the UBI, if you choose to do it that way, is the fear of rising automation,
artificial intelligence. So there’s always been
creative destruction, jobs being destroyed, but there’s a fear that that will likely
accelerate and therefore, we have to pay more attention to those who will be displaced. And if you could each comment on that and how it relates
to your view of the UBI. – You can go first. – I’ll say, I think it’s
an interesting question because you can’t prove the negative. I can’t prove that it
never will accelerate and the singularity will never come. And so I will stipulate that if and when the singularity comes then
like luxury automated communism or whatever the kids are
talking about these days is something left to
at least grapple with. What I can prove is that
it’s not happening now, that in fact we are not seeing
increased rates of automation and technology and production. And we can tell because
we measure productivity. And productivity growth
is not accelerating. It’s in fact stalling out. We can have a great conversation about all the reasons for that. If I could say it really succinctly, it would be robots are cool, but you know what’s even
cooler, electricity. And that is as incredible as the things we’re developing
right now seem frankly, the lower hanging fruit was in the past and we showed it was perfectly compatible to increasing incredible
amounts of new technology and use it to actually
boost workers productivity and boost quality of life and standard of living for everybody, and that that’s what we
should still be striving for. – I don’t make this automation
argument as you described. I think that it is possible
that that could happen, but it also leads to the (mumbles) and then if it does someday,
then we’ll have basic income. But I think there are
automation related reasons why we need basic income now. One of which I mentioned
in my opening remarks is that we have this incentive problem where we don’t have incentive for employers to pass on the benefits of automation to all of us. The reason that our economy
as on a per capita basis has doubled in the last 41 years is largely because of automation. And the reason so many of
us haven’t got our share is because we don’t have the
power to say no to poor wages and bad working conditions. Is that if basic income
is not about nobody works. It’s about we as a
society commit ourselves that nobody ever lacks for
their most basic needs, but we offer them good
positive reasons to work, good wages, good working conditions, and they say everyone has their price. People will work if you pay them enough. And that’s a responsibility we
should all give to ourselves is to pay ourselves enough. So you create the situation
where people don’t have to work, but they can work. You give this incentive to pass on the benefits of automation to everyone. That’s one reason why we
need a basic income now. Another reason is that basic income is that creative destruction, is that it destroys this industry and it creates that industry. So even if the number of jobs
isn’t ultimately decreasing, or even if it’s increasing, if you’ve worked in this industry and you’re in your 40s and your 50s and that industry is destroyed, then you go back to the bottom. That’s cruel to people and very often, they can’t find a job in the bottom. You find a lot of people whose jobs are out motored applying for disability or for something else because
they can’t find a decent job. And this is why there was a
lot of movement 200 years ago, not because people were
against technology, but because technology was
taking away the middle class jobs of people who worked in the textile mills and forcing them into the bottom, which was poverty-wage jobs at the time. It was this very rational response. You need basic income to cushion people to what would be one of the otherwise really cruel aspects of a
creative destruction economy. We don’t need that. – I have a question for both of you all. I’m going to ask it in two different ways. So Karl, are there some aspects
of the social safety net that are targeted that
might be more productive than giving people cash? So for example, targeted
early childhood education, which might make other
workers of future generations more productive, more
successful in the labor force. That will be that example. Flip side of the question for Oren is, are there some aspects
of the social safety net that would be better to give people cash? So for example, unemployment
for workers in their 50s where we know retraining
isn’t very effective. We know some of the systems
for making people eligible are very cumbersome. So really flip side of the same question or something’s better targeted
and some things better, just lump sum cash, Karl. – Oh yeah, I think it would be very cruel if you had a basic income society
and then you told somebody somebody who is a paraplegic, you’re going to have to
buy your own wheelchair out of your basic income. You want to have a little more of a level playing field than that. And specifically target things. I think healthcare is
probably better provided. I’m not an expert on the health industry, but I think it’s probably better
provided with direct means rather than just giving people cash and putting them to the
private healthcare market. Public school or some
kind of targeted school, I don’t think we should be
letting parents decide to say, well, I’m not going to send you to school, but I’m going to put your basic income have a basic income high
enough to cover your school. But it’s all private schools and your parents can just decide to put that in a trust fund for you and they get it when you’re 18. No matter how much you get when you’re 18, it’s not going to make up
for that very bad decision your parents made when you’re young. So yeah, there are things
that are better targeted. – I do think there’s a
particular case for cash, which I’ll come to in a
moment, but I want to emphasize the importance of the case for not cash. And this comes back to to
the point Karl was making about why the expense isn’t
necessarily that large, which is essentially they were saying today we have this system that phases out as you start to earn more money and that unfortunately, has
the effect of discouraging you from going to work in the first place. It’s a huge problem with our safety net. And what I took to be his
defense of basic income from a fiscal perspective was
that at the end of the day, the basic income kind
of works the same way. You start with a bunch of cash, and because we’re going to
have much higher tax rates as you switch into work,
the marginal gain of working isn’t going to be as high
as it might otherwise be. And so I think it’s very interesting to actually kind of line
these up next to each other and say, well, one way to
think about basic income is we’re kind of just
taking all those benefits we already provide and saying
it wouldn’t it be better if that was all just cash? And my answer that question is no. That while certainly our
existing mix of benefit programs is messy, that that messiness
is a feature and not a bug. And that what we’ve done
is to build a safety net that guarantees that people don’t truly go without the basics, food,
shelter, medical care but that we provide those basics in a way that’s frankly not as good as being able to afford them yourself. And while that might seem harsh, it’s actually critically important in a society where we commit
to providing the basics to everybody that we
still say, you know what? You’re still better off in
a relatively low wage job earning and providing yourself than asking government to provide for you. And so I would say it’s
affirmatively a good thing that we provide safety net
benefits in kind and not in cash. The one place where I think a cash benefit could be very attractive is
in what I call a wage subsidy, which is one policy I
very strongly support is trying to actually boost wages at the low end of the scale by putting more money directly
in people’s paychecks. So one way to think of this is sort of as a reverse payroll tax. Just as today, we look at
how much your paycheck is and we take money out, even
if it’s a very low paycheck. You could just as easily
look at that and say, well, for people earning, if this is a nine dollar an hour job, we’re going to put three or $4 an hour in and that’s going to phase down. So by the time you’re at $15 an hour, you’re just earning the market wage. But if we did that, we would
get more support to people at the low end of the income spectrum. We would make it more attractive to get in and take that
job in the first place. But we would do it in a way
that affirms the value of work and ties it to a commitment to making a productive
contribution to society, instead of offering it in the absence of that kind of activity. – Arthur Brooks was here
a couple of weeks ago, former president of the
American Enterprise Institute. I think he agreed with both
of you in some respects. He proposed a fairly
significant jobs program. I think he may have, I don’t
want to put words in his mouth. He may have offered up a jobs guarantee. And so my question for you is, if this were Congress
and they came to you, both of you and said, okay, Karl, we’re going to provide a
basic standard of living for everybody, but we’re going to violate one of your precepts here, which is they’re going to have to work. It’s going to be conditioned on that but everybody’s going to get it. And they said, Oren you’ve said a lot about the importance of work,
but it’s going to be expensive and some of these jobs are
going to be make work jobs, but we will be getting
people into the labor force and it probably be meaningful for them. Is that a world where you guys
might be able to compromise and say yes or is that
unacceptable to both of you? – I suspect we’ll both say no. I don’t know who you want to have sets. – That’s my unique gift here. (mumbles) – I’ll say no first. In theory, the idea of a jobs guarantee I think sounds like a step
in the right direction. I think the problems
with the job’s guarantee are very practical. One is just that it is not something government is especially
well equipped to doing. And like you said, you end
up with a lot of regret. I think it’s very explicit that it’s actually a lot
more expensive than tax ’cause you get– – Right. Secondly, you actively crowd
out private sector jobs. And so you actually, you
end up even with a drag beyond just the make work
nature of what you’re doing. Thirdly, you have a real cyclical problem, which is you need to
come up with a program that can both employ 15
million people in 2009 but only three million people in 2019. And so while we hear
about all these things, we need more workers for,
elder care, pick your thing, none of those actually work for this because they’re also going to be times when there aren’t a lot
of people taking you up on the public sector job guarantee. So in my mind, the wage
subsidy is actually effectively a private
sector job guarantee. The idea is to say we value
the existence of these jobs. We would rather set a
essentially market price on the creation of UBAM and let whoever in the private sector is going to find the best use
of that labor step forward. And then it’s automatically responsive to the business cycle. And it leaves government doing
what it’s fairly good at, which is running the money process. But I think the public job guarantee just doesn’t work at the end of the day. – Karl.
– Yeah. I actually, one of the… One of my complaints
about the job guarantee. I think a job guarantee
could help a lot of people. I think we have to admit that. And whether it’s, even though it’s not our most desired program. But I think it has one
of the same problems as this patchwork of conditional programs that you spoke in praise of earlier, and that is that it creates, all of these things
create a poverty track, where you either you
do your guaranteed job or your work in the private sector and there’s the kind of a dichotomy there. You have a similar thing. Either you’re on unemployment insurance or you lose the whole
unemployment insurance and you’re in the private sector. Either you’re on disability
or you lose a whole disability and you’re in private sector. Very often you lose an entire house, public housing subsidies and get around. And what these do is they create this notch where actually you make more, but your income goes down. Basic income, unlike the job guarantee and many of these other things, you might be able to structure
a subsidy that work this way. They try to structure
the earned income tracks credits this way so that
there is no such notch. There’s always a possibility
of you earning more. The incentive to work and basic income is the basic income is basic. It’s not deathly low,
but homelessness is real. We really do have people
living on the street and eating out of dumpsters. And people and very often
you find people in shelters, they try to get them
eligible for something and they don’t find anything
they’re eligible for. But other people who are on programs, they often have to give it all up. Where if you have the whole
thing up to get something, where the basic income and if
you have a marginal tax rate that is say 30% you’ve got say
just to make the math easy, a $10,000 basic income,
you get a $10,000 job, your after tax income is
$17,000, not quite double. That’s a pretty good, that’s a pretty big boost
in your standard of living. Pretty good incentive
for you to take a job. So basic income works in better than, I think it works better for getting people to be able to move back
into the labor force where they’re in a system where you’ve got to prove you’re disabled and then keep proving it
by never working again. – So we’re going to have
microphones in a minute. My last question is,
I think you both agree that we’re all better off if
people enter the labor market with more skills, right? And a lot of the debate over whether they can
really work for yourself depends on what you have to
sell to a capitalist economy. Do either of you have
top of mind suggestions about policies that would upgrade the skills of the workforce, irrespective of what we do
for the folks who fall out and don’t thrive in that system? – Well, one of the best things you can do for improving education outcomes and for improving
productivity is to make sure no child ever grows up in poverty. Poverty during childhood is one of the worst
things that you can have for the rest of your life,
increased costs for you and it creates cost for
the rest of society. But when they talk about we’ve got to give this work incentive, they’re actually, your children, the fear that your children are going to grow up in poverty
is one of those incentives and it’s not the children’s fault. So one of the things we most need is to make sure no child ever does. No child ever grows up in poverty and that very much increases
their performance in school. They found that in a lot of the negative income tax experiments in the 1970s is they found that student performance and students staying in school went way up when they’re not under
this constant threat. And that’s why we have things. We have all this patchwork of policies like school lunch programs,
subsidized school lunch programs is a bare substitution for a system makes sure that no child
grows up in poverty. – I agree with the child poverty point, although again, I would
ask kind of how do we plan to solve it and what are we
going to give up along the way? It’s certainly true that kids
raised in better off homes, have better outcomes. It’s even more true that kids raised in two-parent households
have better outcomes. So my favorite stat about
American public policy, which is work that Richard Reeves did at the Brookings Institution
found that if you look at kids who grow up in the bottom quintile, the lowest 20th percentile are 20% of the income distribution. If they are raised by
continuously married parents, they have almost exactly equal chances of landing in any queen tile as adults. In fact, they are more likely
to land in the top quintile than stay in the bottom quintile. If you asked the same question about kids raised in single-parent homes, they are 10 times as likely to
remain in the bottom quintile as reach the top quintile. So I’m certainly sympathetic to the idea that material conditions
matter at the margin. But if I had to choose, I
would care an awful lot more about finding way to get our society to a point where kids are being raised in stable two-parent households with at least one parent who’s working over moving to a system
that is probably going to, based on everything we know, lead to fewer people in that situation even if they are receiving larger checks. Where I would focus is on providing non-college pathways into the workforce. It’s this critical juncture point around when people are entering adulthood around age 18 where I think saying, and you now get a check every month, regardless of what you do is so damaging. But then what we do today
is also incredibly damaging, which is we say, go to
college or you get nothing. Go to college and we spend about $150 billion
annually subsidizing you. Don’t go to college and we don’t know, we haven’t thought about it. And the reality is that
most high school graduates, let’s not forget, we still have almost 20% who don’t even complete high school. Most high school graduates
are not ready for college and most people who enroll in college will not complete or will end up in a job that doesn’t require a degree. So rather than just keep shoving people through that pipeline, we should be frankly doing the opposite. We should be saying, if you think you’re going
to succeed in college, there are going to be great
economic opportunities for you and you’ll probably be able
to pay back your loans. But we have a $150 billion over here to invest in helping people
who aren’t on that track to actually get into their first job, develop some real skills
and get them to age 20 with years on the job, marketable skills, money in the bank, an employer. And I think that would
be a much better pathway. And so step one would be
for places like Dartmouth to give all the money back. – [Charles] And what’s step two? (audience laughing) – Step two is to then commit
that money to alternatives. So one thing you can do is directly invest in better
vocational education programs, which we should start at
the high school level. It makes no sense to just
have college prep academies until you walk across the
stage with your diploma, even if most of those kids aren’t going to succeed in college. But I also think we should be providing, as with wage subsidy, we should be subsidizing
employers directly. We have this weird kind of concept that obviously it makes sense
to give Dartmouth $10,000 to help some for a year here. But oh, heaven forbid we give
$10,000 to a corporation. And yet if I step back and ask which institution in our society is best suited to help
exactly the population that is struggling to establish themselves in the labor force? It’s not Dartmouth. It’s not any school. It’s employers. Now a lot of times what employers will do is turn around and make a deal
with the community college to set up a training program. But if they did that, then the employer would be the
community college’s customer. And I think we get awfully better outcomes than the 15% completion rates we get in community colleges today, if the way they stayed in business was to provide value to employers as opposed to by enrolling students and then cashing federal checks. – Okay, let’s open it up. I think there are microphones back there. So put your hand up. I’ll call on you. Wait for the microphone
’cause it’s being recorded. We’ll start, so up here in the front. Eliza Jane? – Area.
– No, that as me. – I will repeat the question, so go ahead. (speaking off mic) – I was wondering if you would talk about (mumbles) What I mean by that is this, the way as our economy grows, the money supply needs to grow too. The way we do account
was by borrowing money. Like I mentioned, the
$24 trillion federal debt and bankers buy bonds and then
loan out money to all of us with home loans and credit
card loans and things and grow the money supply. That one what have they
said that we figured out how much we need to grow the money supply and then issue everybody their share. Isn’t money a shared resource? Why did the bankers get the profit and not the guy whose already with a PDR, which I think is more valuable. – Okay. Raise the tax issue. The question is seigniorage, can we use an expanded money supply to fund some of these plans? – You were you not expecting
a seigniorage question? – I was not. I love seigniorage. – It’s a very interesting question. I actually have a friend in Boston who’s working on a similar concept. And so I won’t do full justice to it ’cause I’m not a monetary policy expert. But what I would say at least in part is I think it’s really
important to separate the way that we expand
money supply through credit, through the banking system from the way we expand money supply through actual seigniorage, literally the government
just creating money out of thin air. And my sense is that the
government creating money out of thin air, I mean
in a sense of just fun, at the end of the funds
is part of the government. So in a sense it is shared by all of us. Everyone gets a slightly
lower tax burden as a result. Whereas to your point, when the money supply is
expanded through credit, that is something that operates
within the financial system. It’s not clear to me if you could replace the expand money supply
in the financial system through credit with just
giving everyone more money. And the reason I say
that is because I think it would be quite inflationary. And so that may be an insufficient
response and I apologize, I’m not not the expert on it, but it strikes me that to the extent our solution is just kind of throw money out of helicopters to everybody. You have a problem that if it’s chasing the same set of stuff in the economy, we haven’t actually
produced anything more. So we could have a redistributive effect, but we’re not actually any wealthier. We’ve simply created more money chasing the same amount of stuff. – [Charles] Go ahead Karl. – I think that there’s an enormous amount of government giveaway in
the federal reserve system. I’m also not an expert
on financial accounts and so I’m not going to get on with it in the technicalities of it. But the federal reserve
system versus government lends either creates money directly, lends it to the federal reserve
banks at a very low rate. Then they rented out to the rest. They lend it to the rest
of us at higher rates, then we buy stuff, deposit
it back in those banks and they lend it out again,
which creates more money, which means that most
of the money creating, the banks are just doing this, based on this little amount
that the government makes. The banks are creating most of money and getting most of the profits out there. And the federal reserve system is set up to make the banks have very
little risk as they do this. The government insures
them against all the risk and the federal reserve system is run by very wealthy private bankers. And it’s set up that all
the boards are made up around a very wealthy private banks. It’s supposed to be, it’s one of our most
essential public trust and it is being run by some
of our wealthiest people whose first concern is
for their own corporations and their own money. And that’s part of the corruption that is built into our
system that is so corrupt that we don’t even think
of it as corruption. Which is one of the reasons I’m skeptical of giving even more money to
businesses through subsidies. We’ll do anything for the poor, except for actually helped the poor. We’ll give it to the rich people. So we want to help the poor. Okay, let’s have a casino. We’ll subsidize a casino. Oh, let’s help the poor. We’ll get some jobs for the poor by subsidizing the local football team. Oh that’ll generate jobs. Well, it’ll generate a lot of money for the guy who owns the sta, who gets to own that stadium. Oh, we want to help people get jobs. Let’s subsidize the automobile companies. While it’s very good for
the automobile companies, but very few jobs end up coming out of it and we do one thing after another. The government just gives
out one favor after another for wealthy people including the fact that we probably, almost everybody here has pennies in their pocket. I don’t like throwing them in
the trash where they belong. Pennies. We only make pennies because the company that sells
the pennies to the government gives so many bribes. I mean campaign contributions
to members of Congress that they keep buying the pennies. That’s the way most of the
defense department works. It’s not because the
generals and the admirals think we need most of that stuff. It’s because companies want to
sell this to the government, so they give those bribes we
call campaign contributions to members of Congress and the
government buys it and says, oh, it’s a public works project. It’ll give people jobs
and it’ll defend us. I have this ridiculous weapons things is that we live in a system where the corruption is so built in that we don’t even think
of it as corruption. All of those senators and Congress people who are taking all these
campaign contributions don’t even think of it as a bribe. That is one of the most
fundamental things we attack and the banking system is
just one small example. You take away this stuff and there’s lots of money
to finance basic income and other things that are
actually going to help the people who need it. – So do we have questions on this side? So Taylor in the red hat. – Thank you both for your remarks today. Really enjoyed hearing from both of you. I think a common theme
in both of your remarks was the incentive structure
and whether or not the UBI or an alternative welfare system incentivizes work or productive
contribution to society. And so on that theme, I have two targeted
questions to both of you. Apologies, I’m going by first names ’cause I can’t pronounce last name. Karl, I was wondering– – [Karl] That’s what I
tell all my students to do. – Okay. Karl, I was wondering to
what extent do you think UBI incentivizes or disincentivizes work? The empirical evidence is kind of mixed and I was just wondering
what your take on that was. And Oren, I was wondering, you’ve talked a little bit in your remarks about how the cutoffs and a
lot of the welfare programs, that’s like a problem
that needs to be fixed based on like how much income you earn. But a program that we studied
extensively in our class is the disability program and how it actively disincentivizes work by cutting people’s disability checks if they’re engaging in work. And I was like, part of the
reason why people support UBI is because it doesn’t have
that same conditionality because it’s universal. And I was just wondering
if you could comment on the disability program and
whether or not you think UBI actually fixes that incentive
problem that exists there. – Go in reverse order. Oren, you want to go first? – It’s a great question. I think and Karl spoke to this too, that we have programs that are incredibly poorly designed today like disability Medicaid especially Post Affordable Care Act is creating some very serious cliffs. Unemployment insurance,
how it’s typically deployed has just this massive, as
soon as you start working, you lose it all kind of model. And so finding a way to deliver benefits that do not have those features I think is an incredibly important reform. And there are lots of good
reform proposals out there. I mean, when you’re talking
in terms of healthcare, it’s actually somewhat perplexing that we set up these Obamacare exchanges that have a contribution, a subsidized contribution to your premium and it phases down and we said, unless you’re below this
percent of the poverty line and then you can’t access that system. You get Medicaid instead. A phase down Medicaid would
make an awful lot more sense. A phase down disability
instead of a cliff, a period where you can go back
to work for a period of time before you lose the disability. There are lots of ways
do better than we do and there are lots of good
proposals out there on them. So I certainly think
those things need reform. Even if you get rid of the cliffs, you still have the
problem of the phase out. Effectively a marginal tax rate. And in fact, if you look, the highest marginal
tax rates in our society are not paid by a high income households. They’re paid by the
lowest income households. If you take into account
what they lose in benefits for every dollar that they earn. And that’s really silly. So again, you can address
particular programs. Another thing you can do
is what I just described. With the wage subsidy concept, which is if you say, look,
we really want the safety net to be for people who can’t work. And if you can work, we
really want to find ways to make sure that, that the
work actually is sufficient to support your family. And if you provide the
support, the wage subsidy, you don’t get the phase out. And the reason you don’t get the phase out is because you only scale down the subsidy as your wage goes up. So if you work 40 hours
a week at a given wage, you get some amount of subsidy. If you want to work 80 hours,
you can get twice as much. If someone else from your household works, still get the subsidy. It’s just based on your wage. Now, when you get a promotion,
when you get a raise, 10 to 12 to $14 an hour, your
subsidy starts to decline. But unlike with extra hours of work, people tend to like promotions in wages. It’s not nearly as much of a problem to discourage on that margin. And so again, you can’t
avoid the problem entirely without pure university reality. Although I take Karl’s
argument to be in fact, actually UBI also imposes
quite large marginal tax rates and even lower income households. But you can do it a lot better. And then the last thing I would just say is that it’s important to keep in mind that the kind of extremely analytical economic measurement of marginal tax rate is just one of many factors that influence people’s
decisions about work. Other factors, cultural and social factors about expectations, the economic structure of career trajectories available
or at least is important. And so trying to optimize a system for the bright marginal tax rate at the expense of completely blowing up all of your social and cultural
expectations around work, I think will not have the effect that the Economics 101
blackboard might say it would. – Okay, so the question is to what extent does UBI incentivizes
or disincentivizes work? UBI is a lump sum payment. And in that sense, it neither incentivizes
nor disincentivizes work. It’s what we call a neutral,
that lump sum payments are considered by
economists to be neutral. You don’t have to change your behavior to get the basic income. Now the taxes, depending on
how you collect the taxes, those might have a disincentivising or incentivizing effect. But basic income in and of
itself doesn’t have one. Now you need to look at it in
combination with those things. It does have income effects, but it does not have the incentive. So if you get on disability,
you have a strong incentive to say, I’m going to stay on disability. Whereas basic income,
you can go back and forth off of basic income all you want. If you find you’re temporarily eligible for unemployment insurance,
you have a strong incentive not to get a job until that runs out because you can’t get it again in the way it’s structured in most states. So it takes away these
disincentivizing effects of a lot of the policies that we have now. And if you reverse a lot of the giveaways that I’m talking about
for the very wealthy that we have now, and you reverse a lot of the decrease in
taxes for the very wealthy that we’ve witnessed over
the last 40 years or more, if you reverse those things, you might be able to have basic income with actually rather very marginal, low marginal rates for
people near the bottom. And that will create a
much more equal society. But I think what we have
to really understand here is that we need to look at this in a different, in much
more realistic way, is that the incentive problem that we face is that employers don’t
have a good incentive to pay good wages and offer
good working conditions. Why would we need a job
subsidy if we didn’t admit that yes, there is a problem. Employers don’t have an
incentive to pay good wages. The fact that we have
proposals for minimum, why would we need a minimum wage if employers had a good, in a sense, those things simply admit that we have an incentive problem. The regulation of working hours. Why do we have regulations
of working hours? Because we know we have an incentive, we have a poor incentive for employers to offer good wages
and working conditions. The regulation of child labor, the prohibition of child labor is because we know we don’t
have a good set of incentives for employers to pay good wages. So people don’t need to send their kids into the labor market. The problem that I’m
talking about is obvious and the best way to address that problem is to give the workers the power to say, no, I will work for myself. And rather than you, unless
you make it worthwhile. And I think we can handle it. I think we can make jobs worthwhile for everybody who wants to take one. – Can I say one quick thing?
– Sure. And somewhere over here. Someone can find the
microphone in the meantime. – Yeah the disability, there’s one other very interesting thing about the disability example, which is that while the
incentive on going back to work is problematic, you could
also look at it and say like, well wow, wait a minute, look at this. We created this great program
for people who aren’t working, that provides them. It’s on the order of $12,000 a year. It’s actually very close to basic income. We have all these communities
around the country where the share of people who have chosen to take us up on that
bargain has skyrocketed, and this is great. We’re all really excited and
feel like it’s a great success that we have all of these
people out of the labor force living on $1,000 a month
provided from the government. And of course, we don’t think that. We think it’s a complete disaster because it is not in fact the
vision that we want to pursue for a healthy society. (mumbles) – It is. So I’m from just North of San Francisco. There’s no power in my neighborhood, and it’s full of smoke. This has been happening
for the recent few years. The school is canceled
for smoke my senior year, and when I think of UBI,
I think of the money that wouldn’t be going
into infrastructure. While it may be true that
this is going into places, into politics that could be shifted with major structural changes
to the system that we have, I wonder how with the UBI we could still support infrastructure with things that will be really, that will be requiring
attention very quickly with rapidly increasing climate change. How could we find the money for that and still care for vulnerable people? – Yeah, I think that that actually, climate change and other
environmental problems, I think climate change is an enormous environmental problem, but it’s not even our biggest one. Plastics in the environment,
radiation in the environment, general toxins in the environment, the general loss of habitat, the nitrogen nation in the ocean. All of these things are killing us. And one of the best ways to address this is to tax all of those things. Tax anything that’s bad about the economy. But one thing people will say, so tax the overuse of our environment, tax the pollution of our environment, tax these things, tax the
emission of greenhouse gases. But if you do that alone,
if you do that alone and don’t do anything else,
that’s creating a drag on the otherwise creating
a drag on the economy. But if you combine that with a dividend, the tax and dividends
solution to global warming and other environmental
problems, you tax the bads, you tax the polluters,
you tax the pollutants and then you redistribute that back as a dividend for everyone, then you are, then if you’re
paying more than you receive, that’s your penalty for being a polluter. And you ought to be paying that. If you’re receiving more than you pay, that is your reward for polluting less than the average person
and you deserve that. And that then then what you’re
also doing when you do that is you’re creating an incentive
to pollute less and go, so you’re making everything
that the production of which involves pollution cost more and you’re effectively by
redistribute that money in a dividend, making everything that the production of everything that doesn’t involve pollution costs less. So basic income is a very important tool as part of a system of
fight climate change to make it both equitable. So it’s not just all coming
the backs off the poor. If all we did was tax these
things and not be distribute it, the poor would be the ones most effected, not the rich who are
the biggest polluters. And it would also create
a drag on the economy that doesn’t need to be there
if we have a tax and dividend. It is part of an overall strategy. And on your first thing, is that we need a greater
commitment to both things like infrastructure and to
helping the least among us. And we get away from this corrupt system where our two priorities
are less taxes on the rich and more government giveaways to the rich. If we get away from those things, yes, we can afford to do things. We can afford to do things
and they’re not in conflict. (mumbles) – My question was yes or no on the carbon tax. You don’t have to spend it on UBI. – No, but that’s a much longer discussion. Although it feeds into to this issue, which is that a tax and
dividend system for UBI is almost kind of taking
all of the product. We have a UBI and making them worse because taxes on basic essentials like goods with plastic in them or energy are extraordinarily regressive, relative even to other consumption taxes, let alone relative to
progressive income taxes. And so the more that you try
to fund these kinds of programs through taxes on these bads,
the higher a share of it, you will be asking your lowest
income households to fund. And can touch them and saying, driving to grandma’s house
in your minivan is bad, and so we’re glad that you
are paying more for it. But the reality at the end of the day is that you are managing to shift the overall economic balance even further in negative
direction with the added bonus of particularly discouraging
exactly the kind of employment in which particularly men and particularly people
with less formal education tend to work most productively
and at the highest wages. – Last question, back there. – First of all, thank
you both for being here and sharing your thoughts today. I think something interesting is that we haven’t really defined the scope of how a hypothetical UBI would affect the existing welfare state. And I was curious about your thoughts on whether we implemented a UBI and removed the existing
hodgepodge system, 120 different programs
that we have currently, whether that would factor
to the calculation one to weather Milton Friedman’s
argument, for example, for a negative income tax
kind of his philosophy on this factors into it. Also keeping in mind that Milton Freeman also said that a temporary
government program is the most permanent program out there. – Okay. Well as with any program,
the devil is in the details and it is possible to have a bad, to have a bad basic income program. And to me that would be one that had, one that involved less of a commitment to help those who are less fortunate and less privileged than the rest of us. We have systematic inequalities that generation by generation
benefit those at the top. And we have a problem
with economic mobility and with health at the low
end that affects everyone. We need a greater commitment
to help for people at the bottom. Basic income programs
that are replacing things but making people, but replacing them with something bigger and better that is making people
at the bottom better off are good programs. People that would take you, people that will say,
well, let’s just take everything we’re doing for the poor and then redistribute it in
the form of the basic income and they’ll cost the basic income in terms of the gross costs,
which I said is of course an unrealistic look at the cost. What you’re doing there
is lowering our commitment to helping the poor by five, six. That would be a bad plan. So it has to be one
that is a greater plan. And there are some things that
are more readily replaceable by basic income that can. If you are poor, then cash buys everything that food stamps buys and more. You have every reason to prefer and basic income is
higher than food stamps. And yeah, every reason to prefer that. Now, but if you’re in a big city and you’re getting public housing, it’s very hard to get a basic income that’s going to replace
that public housing. That might not be replaceable. So that has to be considered
on a case by case basis. But the overall rule is we
simply are not doing enough to help those in need. We need to stop judging and start helping. – I think that is an admirably
clear and honest response and I don’t mean as compared
to your other responses. I mean as compared to
what you will often hear from UBI advocates, which
is a sort of hand-waving that we can do this instead. And the reality as you
just sort of walked through is when you look at what we spend today, it’s actually incredibly difficult to replace it with the UBI. So biggest things we spend on today are Medicare, Medicaid,
and social security. We already provide in
Medicare and social security to a typical retiree,
close to $20,000 of value, if not more. So good luck convincing them that they should just get the UBI instead. And as Karl noted, you
can’t really replace medical care with it, especially easily when you get to Medicaid,
you have the same problem to the extent it’s health insurance. A lot of its nursing home care. Can’t cover nursing home care with a UBI. Then you get to things like disability, which as you noted, were
presumably still going to address the added costs of people
with substantial disabilities. Housing in high cost markets, UBI is not really going to cover that. You pretty soon get down to out of what is about three
trillion dollars a year that we make in transfer payments
and means tested benefits. You get down to a couple
hundred billion food stamps and so forth that TANIF
which is traditional welfare that you could genuinely say like, but now they’re getting basic income so they don’t need that. And so you’re really talking about this incrementally on top of
most of the architecture that we already have which
I find conceptually puzzling and again, means you’re
having to find a place to get all that money. – Well, a quick response. I think that is true. There’s probably only
a few hundred billion that you can replace with
the UBI, but as I said, the cost of a poverty line
UBI is $539 billion a year. So if it’s $300 billion
worth of stuffing replaced, that’s half of the cost
of UBI right there. That takes it from a cost of 2.95% of GDP, down to maybe one point something percent. For a country without poverty. I think that’s really worth it. – I want to thank you both for
your thoughtful discussion. Thank you all for coming. (audience applauding)

11 Comments on "Universal Basic Income–For or Against? A Debate"


  1. I support UBI given today’s economic and technological environment, but the way Karl justifies isn’t a strong argument

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  2. We already have UBI, but it runs under different names. Add these up: 1) Section 8 pays for housing + 2) Medicaid pays for healthcare + 3) Food stamps and free school meals cover food + 4) Lifeline program pays for phone and internet access + 5) Educational vouchers pay for childcare/kindergarten + 6) An entire bevy of specialized, targeted grants (aka free money) for tribal communities, for blacks and Hispanics.
    And 50% of US working age adults do not pay any taxes (hence Mitt Romney calling them 'moochers').

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  3. While they were initially discussing things I think Oren had the advantage, but after the questions started, Karl won handily.

    Watching this caused me to think that UBI is more practical than the alternatives offered. I prefer something simpler to implement and more difficult to exploit over a convoluted system of welfare.

    Reply

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