The first mailbag post in a while– first of any type of post in a while– is brought to us from “F.A.”, who writes:
Hey Mr. V, I don’t know if you’ve been following the Democratic party and all that jazz at all but since you have a background in economics, I wanted to hear your take on Andrew Yang’s platform, namely his policies and ideas on universal basic income? I’m doing some research and listening to a lot of what he has to say and it sounds great on the surface level but I wonder if its actually a good idea from an economist’s perspective.
I’m opposed. I am against any proposal that creates any new tax without eliminating old taxes. I am also against any proposal that creates new social programs without eliminating old social programs. Yang’s proposal creates new taxes (e.g, the VAT) and a new type of social program (the Freedom Dividend) without eliminating anything, so I am opposed.
Reducing some taxes and social programs while consolidating others isn’t good enough. Nothing in Yang’s proposal would actually keep the old taxes low or restrain spending on the old social programs. And those old taxes would eventually go back up, guaranteed, and the spending on the old social programs would eventually go back up, guaranteed. And then we’d be stuck with higher taxes and higher spending on social programs.
My position on this matter is supported by the entire history of federal taxation and spending. Every major social program in American history has cost more than originally projected. And every tax aimed at funding those programs is higher than originally promised. The same would be true of Yang’s proposal. There is absolutely no reason not to believe this.
Look back at this poorly written post from ten years ago to get a sense of a UBI plan that I might sorta kinda be willing to support. Seriously, read it. I’ll wait here.
Back? Good. Today I’d probably oppose even Murray’s plan because I have virtually no faith that the costs would be controllable, but set that aside for now. The reason I might sorta kinda be willing to support it is that it would replace every form of federal social spending without raising taxes. But that’s assuming projections go to plan, and that’s assuming the pressure to raise the payout is somehow structurally and constitutionally contained, and that’s assuming we ratify a constitutional amendment restricting federal social spending to this one program.
I won’t belabor that point anymore. I have other concerns.
I don’t think automation will be as dangerous or disruptive as Yang and others do. I think interfering with market processes will be more dangerous than Yang and others do. The more they tinker, the faster labor is replaced by capital. I’m too tired to explain that right now, and I’m trying to watch the Patriots-Steelers game. I actually like Belichick a lot due to his background in Economics.
I think it is socially and psychologically dangerous to give people something for nothing. Workfare programs have the virtue of giving a dollar to someone who’s earned it, and thus are relatively popular in the US. But giving UBI to a bunch of no-good soy-latte-sipping cravat-wearing goateed neo-Gramscian beatniks who vape fair trade vegan CBD oil in their rent-controlled solar safe space hippy communes and snap their soft fingers to laments about the evils of earning money? That wouldn’t play in Peoria. Neither would giving UBI to a bunch of lazy Nazis. If someone can work, you really shouldn’t incentivize them not to work.
In short, Yang’s take on UBI looks nice on paper but would be very, very bad.
I appreciate your question, because I’ve been far too slack with the blog for far too long.