What's Wrong With a Free Lunch?
160
What's Wrong With a Free Lunch?
160Paperback(New Edition)
-
PICK UP IN STORECheck Availability at Nearby Stores
Available within 2 business hours
Related collections and offers
Overview
Van Parijs argues that a UBI would reduce unemployment, improve women's lives, and prevent the environmental damage caused by overproduction and fast growth. At the heart of his proposal is the intention to secure real freedom for all, because it offers the greatest possible opportunity to those with the least opportunities. He acknowledges that an idle surfer might not deserve a UBI, but that the surfer's good luck would be no different than the good fortune enjoyed by those who benefit from the current distribution of resources.
Responses to this controversial proposal vary: Some are in favor of a basic income, but only if it's tied to work. Others find the entire proposal unrealistic and unaffordable. Almost all agree, however, that it is time for us to talk about this issue.
NEW DEMOCRACY FORUM: A series of short paperback originals exploring creative solutions to our most urgent national concerns. The series editors (for Boston Review), Joshua Cohen and Joel Rogers, aim to foster politically engaged, intellectually honest, and morally serious debate about fundamental issues-both on and off the agenda of conventional politics.
Product Details
| ISBN-13: | 9780807047132 |
|---|---|
| Publisher: | Beacon Press |
| Publication date: | 05/08/2001 |
| Series: | New Democracy Forum , #9 |
| Edition description: | New Edition |
| Pages: | 160 |
| Product dimensions: | 5.40(w) x 8.50(h) x 0.60(d) |
About the Author
Read an Excerpt
Foreword
ROBERT M. SOLOW
Imagine that someone proposes a radical innovation in social policy, in the case under consideration in this volume, the provision of a Universal Basic Income (UBI). The precise suggestion is that the government should pay a fixed monthly amount, the same for everyone, to each citizen (or resident) aged sixteen (for example) or older. This payment is not to be conditional on any behavior or characteristic of the recipient, other than being defined as an eligible member of the society.
The lively debate that follows explores the merits of this proposal. Philippe Van Parijs argues that a UBI, fixed at a subsistence level, would promote justice by increasing freedom, improve women's lives, and help the environment. In spite of the long history of resistance to redistributive social policy in the United States, I believe Van Parijs's proposal warrants serious discussion. But given its departure from prevailing attitudes about work and compensation (it breaks the link between reward and work) and its substantial cost, how shall we begin to think about the UBI?
One traditional way to sort things out is to divide the question into two parts. Is a UBI desirable? And is it feasible; can it be done? It may not be possible to make such a neat separation between desirability and feasibility. For instance, we might conclude after study that, yes, it can be done, but with certain side effects as consequences. We might then further conclude that those side effects tip the balance against the UBI, although the general idea seems quite acceptable, evenadvantageous.
The scenario might go like this: the availability of a UBI would lead some people to withdraw from the labor force because, with basic needs taken care of, they prefer a life of leisure to the combination of UBI plus wages plus the irksomeness of a job. The side effect of UBI is a somewhat lower income per head for the whole population, perhaps enough to control the decision. I emphasize that this is a made-up scenario, not a forecast. Protagonists of UBI might argue that, on the contrary, the availability of UBI would actually induce a net influx into the labor force, because the consequences of landing a bad job and failing at it would be less disastrous, and the normal human inclination to be active would take over. Belief that one of these outcomes is more likely than the other would have to come from the usual combination of a theory of labor-force participation and an appeal to data. My purpose was only to illustrate how the normative and the positive, though conceptually separate, may be closely intertwined.
Even with this possibility in mind, I think it is worthwhile to think first about the abstract desirability of a UBI. Someone who finds the idea unappealing in principle is not going to be moved by subtle econometrics. Two quite different lines of argument are proposed by those contributors who favor a UBI. Van Parijs himself, and some of his commentators, take a left-libertarian stance. The fundamental goal for social arrangements should be what they call "real" freedom. People should have not only the abstract right to choose the lifestyle that suits them but also the economic wherewithal to convert that right into lived reality. A UBI fixed at somewhere near subsistence opens such options as leisure, contemplation, study, unpopular artistic endeavor, or unpaid or poorly paid devotion to good works and good causes.
Some respondents who favor a UBI find this particular justification for it unattractive. Indeed left-libertarians seems to share with right-libertarians a view of a society as nothing but a collection of more or less isolated individuals, atoms. There is no trace of society as a cooperative enterprise, made possible by a preexisting web of fellow-feeling and mutual obligation. (In the libertarian view, cooperation can occur only when it is individually, even strategically, advantageous to each purely self-regarding participant.) As Edmund Phelps points out, the libertarian view creates a problem for the definition of eligibility for UBI; if just happening to be there is the criterion for membership, a hypothetical newly discovered population of Martians has a valid claim to a monthly check.
Other respondents offer a quite different justification for the institution of a UBI. It comes in two parts, a stock part and a flow part. On the stock side, the land and natural resources within any society's territory are seen as the patrimony of the entire group. A UBI—equal for all and unconditional—is one valid way of sharing this gift of nature, to which everyone has an equal claim; the income produced by natural capital can be seen as the economic base for a social dividend. (Of course this was one important basis for Henry George's advocacy of a land-value tax. It is a thought that might have appealed to the nations of the former Soviet Union, and might still appeal to developing countries.) The flow part starts from the observation that the annual production of a national economy must be owing in large part to social interactions, shared understandings, institutional capital—there are perhaps too many names for this—and not wholly to the efforts of individuals and their property. That common part is validly available for common purposes, and a UBI is at least one natural way to use it.
Some of the same commentators, and some others, find fault with the concept of UBI from a slightly different, but related, angle. They find the passive receipt of such a subsidy repugnant, and they think that this feeling is widely shared. Taking without giving violates a norm of reciprocity; the monthly check should be earned by some kind of service to society, even if not by paid employment. This is another way in which desirability and feasibility resist any clean separation: the thought is that this feature of the proposal is likely to make a UBI politically unacceptable.
This part of the discussion raises important questions about the design of redistributive policies even before issues of affordability are considered. Redistribution always creates losers as well as gainers, more or less by definition. (Van Parijs may be right that UBI will bring some efficiency gains via the mitigation of uncertainty, but he does not claim that these would be enough to cover the cost.) Anyone seeking democratic enactment of such a zero-sum policy urgently needs a broad consensus. Proponents of a UBI have something to learn from the reactions of fundamentally rather sympathetic commentators like those in this volume.
When I mentioned the issue of feasibility at the very beginning, I was thinking of economic, not political, viability. It is time to get back to that now. Obviously a very low-level UBI would be feasible in economic, even budgetary, terms, especially because it would at least partially replace some current means-tested transfers. Equally obviously, the immediate first-order gross cost of a meaningful UBI is one reality check. Van Parijs mentions a figure of $150 per person per month as a starting figure. There are about 210 million people aged 16 and older in the United States now, so the gross cost of this scheme would be about $380 billion a year. (The net cost would of course be less, depending on how other entitlements were affected.)
What should this figure be compared with? It is only about 3.5 percent of GDP, about the same as military spending. But that is about 18 percent of total federal (on-budget and off-budget) revenues, and therefore a major use of central government funds. Remember that this buys a UBI of $1,800 a year for a single person, probably not enough to buy a lot of "real" freedom. A larger UBI would have a proportionally higher gross cost. When you get to figures like $8,000 a year, approximately the "poverty line" for a single person, the gross cost is up to 16 percent of GDP and 80 percent of federal revenues. These are much more than marginal changes.
Ronald Dore speaks of spending 40 percent of GDP on a social dividend, roughly twice the current federal budget. But he is envisioning a society quite different from the one we have now. In Europe, the standard rule of thumb describes anything below half the median income as a degree of poverty that needs to be remedied. This has real advantages over the standard U.S. poverty line, which is known to be full of distortions, some up and some down, and anyway ignores the social and psychological importance of relative deprivation. The current median family income in the United States is about $40,000; so application of the European standard to a family with two adults would imply a UBI of $10,000. But it is not clear that the fundamental purpose of a UBI is the relief of poverty, however that is defined.
Anyway, this kind of easy calculation is not the fundamental one. Any nontrivial UBI will change the incentives faced by many people, indeed practically everyone: recipients of UBI checks, their relatives, taxpayers, employers, mortgage lenders, sellers of art supplies, you name it. When incentives change, behavior changes. In principle, you would want to know these "general equilibrium" effects of a UBI before deciding what you think about the proposal itself.
No one could actually carry out the complete calculation. Fortunately only some of the ramifications are likely to be important enough to matter, and those could perhaps be traced. For example, labor-supply effects are clearly of interest. If the institution of a UBI at some significant level were to induce many people to work less or not at all, then the aggregate income of the society would be lower and the fraction of it diverted to redistribution would be larger. Some respondents note that the supply of labor does not appear to be very sensitive to (small) changes in after-tax wage rates. That is fair comment. But UBI would involve both a higher tax rate and a lump-sum benefit; this combination of what economists call a substitution effect and an income effect would need to be analyzed carefully.
Earlier proposals for a negative income tax foundered on the realization that three desired outcomes of the NIT were arithmetically incompatible. The three were (a) that the system should provide a reasonable income for those without other income, (b) that it should not transfer any income to the well-off, and (c) that the marginal tax rate on low-wage earnings should not be discouragingly high. The UBI resolves this problem in a drastic way: it leaves the marginal tax rate on earnings exactly where it was before, but it transfers the same amount to rich and poor, thus roundly violating (b). So one cannot infer from the NIT history that the same adverse labor-supply effects would apply to UBI. But UBI offers problems of its own, and research and wider discussion will be needed to settle them.
That discussion is worth pursuing. Van Parijs and his respondents debate fundamental questions about the goals of social arrangements and how social policy can help create the kind of society we want to live in—about how to correct for poverty amidst plenty, and how to ensure that everyone gets a fair share of the benefits of social cooperation. While the market for redistributive social policy in the United States today remains limited, public debate about these important questions should be kept alive. This volume is a refreshing opening to that discussion.
Preface
JOSHUA COHEN AND JOEL ROGERS
In our statement of purpose for the New Democracy Forum (NDF), we promised politically engaged, intellectually honest, and morally serious debate about fundamental political issues, with an emphasis on constructive remedies. Achieving greater equality, we also said, would be a theme of many of NDF's discussions.
This NDF volume delivers squarely on that promise. The lead author, Philippe Van Parijs, is a Belgian political theorist and prominent proponent of a Universal Basic Income (UBI) policy. Under a UBI scheme, all adult members of society would be guaranteed a basic income. Everyone: dot-commers and waitress moms, doctors and ski bums. And unconditionally: UBI would not require one to work, or engage in other socially constructive activity. Van Parijs recommends UBI in part on practical grounds: he thinks it would ease labor market problems, both of the American (low-wage) and Western European (high-unemployment) kind. But his principal argument is about freedom. Guarantee everyone a basic income, and they will be in a better position to pursue their aspirations, refuse grueling work, and exit from abusive relationships. In short, UBI means more real freedom, for all.
Some of the respondents to Van Parijs are supporters, who present further arguments for UBI and strategies for achieving it in the real world of American politics. Others are friendly critics, who quarrel about the proper size of a UBI, and the best way to finance it. And some are opponents, who reject UBI on the grounds that it conflicts with the value of reciprocity: people who work hard are entitled to a fair return, but people are not entitled to basic income just because they live in the United States.
These normative arguments aside, UBI proposals are commonly assailed as simply too costly. And here what is striking is that no party to this discussion condemns UBI on grounds of cost (William Galston reports a "suspicion" about costs, but focuses his criticism elsewhere). The main hurdles to establishing a UBI in the United States are honest disagreements of political morality and depressing failures of political imagination. UBI could be done. The question is whether we want to achieve it.
Table of Contents
| Foreword | ix | |
| Editors' Preface | xvii | |
| 1 | ||
| A Basic Income for All | 3 | |
| 2 | ||
| What about Reciprocity? | 29 | |
| UBI and the Flat Tax | 34 | |
| Falling in Love Again | 39 | |
| Security and Laissez-faire | 43 | |
| Subsidize Wages | 51 | |
| UBI and the Work Ethic | 60 | |
| Optional Freedoms | 70 | |
| Good for Women | 75 | |
| Dignity and Deprivation | 80 | |
| Why Pay Bill Gates? | 85 | |
| Something for Nothing? | 90 | |
| A Debate We Need | 98 | |
| The Big Picture | 102 | |
| On Liberty | 106 | |
| Pathways from Here | 111 | |
| 3 | ||
| Reply | 121 | |
| Notes | 129 | |
| About the Contributors | 136 |