Tuesday, July 19, 2005

Universal Basic Income Again

In this post, Henry says that the problem with a system where everyone gets a check for $5,000 is "funding. Giving everybody a check for $5,000 (or whatever subsistence is) would be incredibly expensive." And then advocates restricting it to the bottom 20%. Three points: first, if you had such a program, you could easily distribute checks to everyone because you would have had to have raised taxes on everyone a whole hell of a lot to fund the damn thing; sure people at the top would come out on net far worse off, and for people in the middle it would probably be a wash, but you could still send them a check*. Second, making it universal would also make it cheaper and more transparent: administrative (and monitoring) costs of a universal program like this are really quite minimal; it becomes much more expensive and complicated when you start trying to means-test the program. Plus, universality is the moral goal of the program: everyone is guaranteed subsistence, regardless. Third, the way Henry has framed the question gets back to these posts. The optimal policy here is some sort of means-tested program. Politically, however, you can't get a program passed that is prima facie redistributive, takes money from top to give to bottom. It is at least vaguely, maybe, theoretically, possible that you could pass such a program if it truly were universal, because everyone gets something, though even that is hopelessly utopian and really, the language of optimal policy as well (so maybe this is a bad example). It's so much more fun, however, to think about the optimal policy, rather than the feasible policy. Isn't that what it means to be a policy wonk as opposed to a politico?

*Conditional on the tax structure...

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