Should Labor Law Reform Advocates Support a UBI?

Once simply the subject of academic books and articles, Universal Basic Income (UBI)—wherein the state provides a uniform cash grant to every citizen without a means test or work requirement—has seemingly become de rigueur for progressive activists. In their thoughtful and interesting posts, Andy Stern and Brishen Rogers talk about why and how UBI proponents should support labor law reform. However, both take for granted that UBI is something that we (progressives, egalitarians, labor activists) should want. In this response, I reverse the question and ask whether proponents of labor law reform should support a UBI. It is telling that I think that both Brishen’s and Andy’s comments already largely undermine the case for UBI. In this post, I explain why, and go further.

Part of the appeal of UBI, I believe, is that despite its simplicity (in concept and program, if not near-term political feasibility) it proposes to accomplish a lot: (1) it can eliminate poverty at a stroke, (2) reduce income inequality, (3) establish a floor in the labor market to improve worker bargaining power, (4) solve the problem of mass, technology-induced unemployment (the “robot apocalypse”), (5) liberate the “lazy surfer” or “starving artist” from the market-imperative to work, and (6) create an efficient, nonpaternalistic, and stigma-free alternative to existing welfare state policies. A simple, no-strings attached cash grant can do all of that. Amazing!

The problem is that, in trying to “be all things to all people,” UBI doesn’t do any one of these things particularly well. In each case there is typically an already existing policy instrument that, if strengthened or improved, would do at least as good of a job, and more likely a better one. To be clear, Brishen and Andy would advocate UBI as a complement, rather than a substitute, for these other policies. My point is that if these other policies do a better job than UBI, it would be more cost effective and more politically sustainable to rely on them exclusively, and not adopt UBI—particularly in light of UBI’s hefty price tag ($2.7 trillion per year for a $1000 monthly grant to each citizen). In other words, my position is not so much against UBI. It’s just that it’s not clear to me what additional benefit UBI brings to the mix of tools already available. To see this, let’s examine each of these arguments in favor of UBI.

The central appeal of UBI to Andy and Brishen, and many others, appears to be its capacity to eliminate poverty. But not even UBI’s most ardent and articulate proponents, such as Philippe Van Parijs, defend UBI on these grounds. As Van Parijs quite candidly observes: “For it is possible—indeed, it is most likely—that if the aim were just to durably maximize the lowest incomes, some sort of conditional transfer system would, in many circumstances, perform better than an unconditional basic income.”

Therefore, if poverty reduction is the goal, means-tested programs such as a guaranteed minimum income, a negative income tax, or perhaps even a revived AFDC would do better than UBI. The response to this from UBI proponents is that conditional, means-tested programs are not as politically sustainable as universal programs. This is supported by evidence showing that countries with more universal social programs also redistribute more. UBI, the argument goes, is not subject to the politics of division attendant to supporting policies for “those people.”

Unfortunately, UBI is unlike other universal welfare benefits in two, fatal respects. First, UBI provides benefits in cash, rather than in kind. While the rich can buy into quality, state-supported education, health insurance, or pensions, they don’t need cash. As Brishen himself observes: “The taxes required for a progressive UBI would make it harder for upper-middle class families to do all those things, and would not deliver anything of value to them.” UBI, unfortunately, doesn’t free us from the politics of division.

Second, while data demonstrate a positive correlation between program universalism and the level of redistribution, evidence that universalism increases individual support for the welfare state is weak. Instead, what some have argued makes the welfare state work, especially in the Nordic countries, is precisely the conditioning of universal benefits, implicitly or explicitly, on work requirements. One also wonders if these work requirements are in fact what make these Nordic policies politically sustainable: people are willing to help others, but only reciprocally.

So much for the poverty-elimination argument. What about redistribution? Here again, as Brishen and Andy implicitly recognize, questions loom over the viability of UBI as an effective redistributive tool. Andy replies to Brishen’s objection about UBI’s massive cost by arguing that a UBI could be financed through a number of alternatives, “including a financial transaction tax; carbon taxes, repurposing some of the $1.2 trillion in tax expenditures, a VAT or asset tax, and I now would add Bill Gates robot tax and President Trump’s border adjustment tax, and this would avoid using income taxes as the central funding mechanism.” This is fine as far as it goes, but the obvious point is that the further we move from income taxes, the less progressive—the less redistributive—a UBI will be.

If UBI is not the best tool for poverty reduction or redistribution, can it at least substantially transform and improve the welfare-state? This is the argument that UBI can provide a nonpaternalistic and administratively efficient alternative to existing welfare-state policies. But as Brishen points out and Andy appears to agree, this leaves us with a “libertarian” rather than a “progressive” UBI: “If means-tested welfare benefits are eliminated, the poor may end up with fewer overall resources.” Thus, Brishen supports UBI as a complement to existing welfare state policies. But in doing so we would lose any benefits UBI brings to streamlining the welfare state.

What about increasing worker bargaining power? On this score, it is not clear what UBI does that is any better than existing policy tools. Unemployment insurance—supplied at higher replacement rates, on more generous terms, and for longer periods—can just as effectively increase worker bargaining power at a much cheaper cost. Other tools—full employment policies, a government job guarantee—can also increase workers’ position in the labor market and also provide significant additional, spillover benefits.

Robot apocalypse? The first problem is that we’re not sure how real the threat of technology-induced mass unemployment really is. If labor-eliminating automation is the imminent menace it is alleged to be, we should be seeing massive increases in productivity. But we don’t. Like computers in the 1990s, robots are everywhere—except in the data.

The second problem with the robot-apocalypse argument is that (supposing that it is real) it is again not obvious that UBI is the best, or even an adequate, policy instrument to address this problem. Why not improved and updated overtime or working-time regulation? Such a policy would transform increases in productivity into employment opportunities as well as a leisure dividend for a much broader class of individuals, middle-class and low-wage alike. It would also be a way to reduce the economic footprint on the environment, something that the pro-consumption UBI policy runs directly against.

Liberation from work? See: working-time regulation, above. Also, while for some the lazy surfer or starving artist is the paradigmatic UBI recipient (like Van Parijs, whose book, Real Freedom for All, features a surfer on its cover), it is not clear that she would be its representative one. I suspect that most of those who would benefit materially from UBI want to work. In this case, benefits that were more closely linked to work, or would assist people in getting into the labor market would be preferred. Examples include: job training or skills upgrading, active labor market policies, or housing policies for the poor to live in areas with closer access to available jobs and social networks.

In conclusion, Brishen thinks UBI needs to be linked with broader labor law reforms. Andy is worried that this strategy puts us on defense rather than offense. Ben points out that Brishen’s strategy is not defensive, but that the road is necessarily long in getting there. I want to make sure this road is worth getting on in the first place. So far, I’m not convinced.