How to debate universal basic income

Daron Acemoglu has a piece at Project Syndicate arguing that basic income is a bad policy. His argument, in a nutshell, is that a truly universal basic income (UBI) would be prohibitively expensive, and that raising additional taxes to pay it “would impose massive distortionary costs on the economy”. The alternative, to cut all existing social programs for the sake of UBI, would be “a terrible idea”, since these programs are targeting those that are particularly vulnerable or needy. He argues that the political effects of a UBI would be bad – a UBI would “keep people at home, distracted, and otherwise pacified”, whereas “we need to rejuvenate democratic politics, boost civic involvement, and seek collective solutions”. For Acemoglu, the top priorities in the USA should be “universal health care, more generous unemployment benefits, better-designed retraining programs, and an expanded earned income tax credit (EITC)”, as well as higher minimum wages.

I share Acemoglu’s view that “One should always be wary of simple solutions to complex problems, and universal basic income is no exception.” In a paper I wrote last year (alas, in Dutch, and I haven’t had the time to translate it, but perhaps google translate can help us a little), I’ve argued that the debate on universal basic income is confused and confusing, and will not be getting us far, because too many papers/interventions are not clear about their assumptions, are not spelling out the goals (e.g. is the primary aim poverty reduction or creating freedom from the need to submit to the labour market for survival or something else), and are not giving the details of the package deal.

The detail of the package deal should include information on the level of the universal basic income (at the poverty level, or higher or lower?), who will receive it (only citizens or everyone who legally resides on the territory?), the age (what do children get?), and, importantly, how it will be funded. If the funding of the UBI occurs via cuts of existing social programs, those need to be spelled out. Finally, one needs to consider other policy options that are trying to reach the same policy goals, as well as other societal needs, such as providing better funding for existing underfunded public goods, such as, possibly, the judicial system, the police, or the public universities.

My view on the basic income debate is that too many people in this debate have already made up their minds whether they are in favor or against, and as a consequence there is not enough participation of people who do not have a strong conviction (for or against) but who are willing to take the idea seriously, and study it with an open mind. Since most people who write on basic income are arguing in favor, this closed-minded-activist mode is most visible among its advocates. But this piece by Acemoglu shows that my plea for a more nuanced, more detailed, and more comparative analysis also holds for those who attack basic income. Granted, on the comparative part he does say which other policies he favors, which is a good thing since it invites basic income advocates (in the USA) to argue why they believe a UBI is better than the social changes that Acemoglu advocates. It could also allow others to ask why none of the social programs that they would prioritize, such as free high-quality child care and parental leave, are on the list of priorities.

Acemoglu ignores the freedom-enhancing effects that UBI will have (even a small basic income). He ignores that it may empower workers relative to employers, since a UBI improves the quality of the exit options of the workers. His arguments that basic income would make people politically passive are exactly the opposite from the assumptions that basic income advocates make, and as far as I can tell these are things one cannot predict, either way. He assumes that holding a job is in itself a good thing (which arguably depends on whether it is good/decent work or not). The implicit account of well-being he is using seems very “productivist“, and does not take into account that there is more to life than earning a living on the market, and that some dimensions of well-being may be positively correlated with not having to take whatever job one can find. Moreover, his claim that raising the taxes for a basic income would be prohibitively expensive is just as unproven as the claim of some basic income advocates that a basic income can be funded (often these claims are rather simplistic calculations based on the aggregate availability of money/the size of GDP, not taking the disincentive effects of increased taxation into account, nor whether increasing taxation is politically feasible in a globalised economy; this is why I think one of the first tasks basic income advocates should now take on their plate is to propose how they would fund a basic income, and why they believe that their proposal for funding is politically feasible, and why those collected funds should not be spend on something else – for example, why ecological taxes should be spend on a UBI rather than on financing climate mitigation & adaptation funds).

How, then, should we debate basic income? Arguments for or against (or, simply, analyses) a basic income should:

1. make explicit what the goals are that a basic income is supposed to meet or what problems one hopes it will solve, and what values are taken to be at stake and how those are values are understood/conceptualized;

2. be careful about the (implicit) empirical assumptions that are made, and how much evidence we have that these will occur in the context for which we are writing (for example, we can’t simply assume that behavioral effects in context A will also occur in a different institutional or cultural or historical context);

3. give the details of the basic income (level, scope, how it will be funded, which social programs will be cut, etc.);

4. make a comparison with other policy options that serve the same goals/values.

And, of course, since money can be spent only once, why those goals are more urgent than other goals that require money.

Of course, Acemoglu’s piece is an Op-Ed and not a scientific paper, and the above requirements are difficult to examine all in a short piece. But the general point stands: he has made up his mind, and my point is that one can only do this if one has well-thought-trough answers to the above issues, and several of those are lacking in his piece.