Guaranteed income programs are moving right along
This isn’t going to be the definitive post on guaranteed income programs. I’m hoping to write one at some point, but that point isn’t now.
But this development is certainly of interest:
Communities throughout the U.S. are experimenting with social programs that give a “guaranteed income” to some residents with few or no strings attached…
Most of the programs are funded by taxpayer dollars and are generally described as “universal basic income” and “guaranteed income,” which share many characteristics but differ slightly. Universal basic income programs are generally open to everyone in the community. Guaranteed income programs target a specific sector of the population, often lower-income individuals.
A 2019 study by the University of California-Berkeley’s Goldman School of Public Policy used three features for its definition of Universal Basic Income. It provides “sufficiently generous” cash benefits without other earnings; it doesn’t phase out or phases out slowly as earnings increase; and it’s available to a large percentage of the population rather than just targeting a specific group, such as single mothers.
Ann Arbor, “Chicago, Denver, Los Angeles, Shreveport (La.), Durham (N.C.), Gainesville (Fla.) and the state of Georgia have all announced Universal Basic Income types of programs in 2022.”
The article really doesn’t emphasize the huge difference between these programs and other welfare programs, although it mentions it. The difference is the “few or no strings attached” element. When government welfare programs were first instituted, there were many strings attached and part of the reason – or perhaps even the main reason – was that such programs were considered moral hazards without them. Therefore, although it was known that the administrative costs to monitor them would be substantial, they were considered desirable and even necessary.
Now? Not so much.
One of the ways in which advocates of guaranteed income programs attempt to justify them is that technology is making the worker obsolete, and so such programs will be increasingly necessary. This is what the much-quoted (and I believe poorly-understood) “useless people” statement of Harari was all about. This is part of his 2020 speech on the subject:
In Davos we hear so much about the enormous promises of technology – and these promises are certainly real. But technology might also disrupt human society and the very meaning of human life in numerous ways, ranging from the creation of a global useless class to the rise of data colonialism and of digital dictatorships.
Automation will soon eliminate millions upon millions of jobs, and while new jobs will certainly be created, it is unclear whether people will be able to learn the necessary new skills fast enough…And people will have to do it not just once but again and again throughout their lives, because the automation revolution will not be a single watershed event following which the job market will settle down, into a new equilibrium. Rather, it will be a cascade of ever bigger disruptions, because AI is nowhere near its full potential.
…Whereas in the past human had to struggle against exploitation, in the twenty-first century the really big struggle will be against irrelevance. And it is much worse to be irrelevant than exploited.
Those who fail in the struggle against irrelevance would constitute a new “useless class” – people who are useless not from the viewpoint of their friends and family, but useless from the viewpoint of the economic and political system. And this useless class will be separated by an ever-growing gap from the ever more powerful elite.
To me, this reads like a warning, not approval. He continued:
If you know enough biology and have enough computing power and data, you can hack my body and my brain and my life, and you can understand me better than I understand myself…And you can do that not just to me, but to everyone.
A system that understands us better than we understand ourselves can predict our feelings and decisions, can manipulate our feelings and decisions, and can ultimately make decisions for us.
Now in the past, many governments and tyrants wanted to do it, but nobody understood biology well enough and nobody had enough computing power and data to hack millions of people.
He then goes on to warn about Stalin types arising, but follows that by making it clear that it wouldn’t take a Stalin to do it and that it’s already happening to a certain extent:
So even in supposedly free countries, humans are likely to lose control over our own lives and also lose the ability to understand public policy.
He then segues into a suggestion for a solution that I see as a pernicious non-solution: globalism rather than nationalism. Dream on, Hariri.
When I hear about guaranteed incomes, Kipling’s poem “The Gods of the Copybook Headings” immediately comes to mind. The poem never fails to give me a shiver – actually, shiver after shiver after shiver – whenever I read it. Each stanza is well worth pondering, but it’s the sixth, seventh, and especially the final one that are especially relevant here [emphasis mine]:
…On the first Feminian Sandstones we were promised the Fuller Life
(Which started by loving our neighbour and ended by loving his wife)
Till our women had no more children and the men lost reason and faith,
And the Gods of the Copybook Headings said: “The Wages of Sin is Death.”In the Carboniferous Epoch we were promised abundance for all,
By robbing selected Peter to pay for collective Paul;
But, though we had plenty of money, there was nothing our money could buy,
And the Gods of the Copybook Headings said: “If you don’t work you die.”…And that after this is accomplished, and the brave new world begins
When all men are paid for existing and no man must pay for his sins,
As surely as Water will wet us, as surely as Fire will burn,
The Gods of the Copybook Headings with terror and slaughter return!
“One of the ways in which advocates of guaranteed income programs attempt to justify them is that technology is making the worker obsolete, and so such programs will be increasingly necessary.”
Commonly asserted, but not really much evidence for the assertion. US labor productivity has not shown much sign of a sharp upward break…see, for example:
https://www.bls.gov/productivity/images/pfei.png
For some historical perspective, see my post series Attack of the Job-Killing Robots, which discusses technological unemployment…real and feared…over the centuries:
https://chicagoboyz.net/archives/54252.html
This recalls the meme of the activist about to push a fork labeled “socialism” into both slots of an electrical outlet.
Friend: “That’s never ever worked in the past.”
Activist: “They were doing it wrong.”
AFAICT, these are pilot programs and it’s a passable wager the strongest vector in influencing their adoption is the Federal money puke enacted by our awful Congress (some of with DJTs encouragement). Given the restrictions our awful appellate courts have dreamed up on enacting residency requirements to receive welfare benefits, doles run by municipal governments aren’t sustainable.
The idea of the researchers is to use UBI to replace a mess of extant programs. Various constituency groups will be lobbying to keep the extant programs and lard this on top of them.
An elaboration on EITC which would provide matching funds for earned income and some extra cash for the elderly and disabled would be an agreeable idea to replace subsidies for mundane expenditures (SNAP, Section 8, LIHEAP &c) and replace TANF. It might also be agreeable to make use of a sliding-scale premium to means-test Medicaid in lieu of eligibility thresholds and adding co-pays to Medicaid coverage. You might find a lone wolf like Megan McArdle or Reihan Salam arguing for such things, but I doubt the social work industry lobbies will like them.
Friend: “That’s never ever worked in the past.” Activist: “They were doing it wrong.”
There are days it seems every witless idea in circulation ca. 1973 has reappeared.
Had such a program been in effect when I was juststarti9ng out in adult life, I would have followed a much different path in life. At eighteen I dreamed of a life working as a ski instructor in the winter and a seasonal park ranger in the summer. Fortunately, I was aware that such an existence would not reliably keep a roof over my head or food in my belly. I had worked summer jobs every year since I was thirteen. I knew what work was and I liked earning money, but I wanted to work at something I enjoyed and outdoors. A guaranteed income would have made it possible. Looking back, I’m glad it wasn’t available. My life has been much more meaningful and worthwhile because I had to work to make my way.
I have encountered a number of slackers over the years. People who pretended to do a job but did as little as humanly possible. These programs are perfect for them. But the moral hazard is that some who aren’t slackers may decide to quit being fleeced by the government and join the slackers on the dole. Thus, creating a shortage of workers. Hmm. will machines take up the slack?
Even without a guaranteed income a labor shortage has developed post pandemic. It seems that many boomers have taken early retirement, some housewives have decided they would rather stay home than work, some young slackers are living on the dole and/or their parents, and many otherwise employable people have fallen into addiction and homelessness. The result has been a fall in the labor force. Everywhere I go locally, there are help wanted signs. Fast food places are hurting. They’re paying more and getting fewer employees. I fear a lot of businesses are going to fail as we sink into recession because they can’t stay open. Then where are the taxes going to come from to pay the guaranteed income? It’s a terrible idea and always has been.
“Most of the programs are funded by taxpayer dollars and are generally described as “universal basic income” and “guaranteed income,” [my emphasis] Tom Gantert and Brett Rowland
Ah… the old; “From each according to their ability (income & assets) to each according to their need.”
From Larry Summers, at Twitter:
“Most of those not working say they don’t want to work; there are two vacancies for every unemployed person; all countries have structural change but the US stands out. Demand side economics won’t fix this problem.”
“There is some social phenomenon which I suspect explains non work, non marriage, deaths of despair, general alienation and, I suspect, the rise of reactionary populism. It should be a major task of social science to understand it.”
https://twitter.com/LHSummers/status/1572433427365826565
Just a few years ago a guaranteed income program was implemented in Finland. It lasted only a few years and the program was ceased.
It did not produce the desired results.
The hope was that the free money would allow folks to concentrate on getting back on their feet without having to worry about their next rent payment or next meal.
In San Francisco, the prevailing wisdom of those responsible for “handling” the homeless problem there actually believe that homelessness CAUSES drug addiction. So there is an effort there to find homes for those living on the street, which, in the view of the SF “experts” should cure the drug problem.
At one time, you would expect to read this sort of stuff in MAD Magazine.
Here’s what I think; if each homeless person was given 3 million $$$ in cash, tax free, most of them would spend it on drugs, trash their new living quarters and be back on the street within a year or so.
The poverty experts in SF would then say, “well, we should have given each homeless person 5 million $$$$.
In “Life At The Bottom,” by Theodore Dalrymple, he studied the native born, white underclass in England. By omitting blacks, Indians, Pakistanis, and other immigrant groups from his study, he eliminated the variables of ethnicity and race.
In short, he found the white underclass there suffered from the same social pathologies prevalent in the inner cities of the USA; drug addiction, broken families, high crime rates, poorly educated students, etc.
Government policies to help the poor never worked as intended.
Kausfiles is pretty good on the related topic of the Democrats’ welfare schemes (also on immigration). Unfortunately, it takes a while for bad ideas to die — and even then they are never entirely dead and incapable of returning.
“There is some social phenomenon which I suspect explains non work, non marriage, deaths of despair, general alienation and, I suspect, the rise of reactionary populism. It should be a major task of social science to understand it.”
The problem may be tied to our society’s prosperity, and that makes problem and solution hard to separate.
I’m not entirely sure what “reactionary populism” is supposed to mean, but I wouldn’t assume that it is part of the problem, rather than part of the solution.
If we give low-skilled people a guaranteed income because we think low-skilled jobs will disappear, those jobs will indeed disappear. But it will be because of the guaranteed income. No one will take those jobs at wages employers would be willing to pay.
Add Austin to the list. Mayor Adler hates to be last implementing a bad idea.
We are just this month starting a pilot program of giving $1000/month to 135 selected people. For 18 months, IIRC.
No strings attached. And no embarrassing reporting of how it’s going from receivers nor the mayor or city council. They melt at even a whiff of accountability, here.
Already planning to expand the program,
Plant your money trees, people!!
IMHO humans can always find something to do for one another that they are willing to pay for. Those who want to work will work, those who prefer slack will not work. What we have now is an incredible mess of programs which have been gradually expanded to provide money to anyone who can come up with some disability claim.
I retired back to the family farm in 2005 and ran a plant nursery for several years in downstate Illinois, an area where unemployment and drug addiction were so bad it was hard to believe it existed in the US. Schools had failed and a huge underclass was basically illiterate. The local prison was full of illiterate drug pushers. The lower class people who were living a somewhat normal life were almost all on some sort of disability for claims that would never have passed during my youth in the 1950’s and 1960’s. The others were trapped by illiteracy and lack of funds to travel to find work. Their hopelessness is something I never expected to see in the US.
Illinois has been destroyed by its Blue Cities and by sending its small factories offshore. During my youth most of my friends parents were factory workers and lived happy middle class lives. They owned their homes, had cars and boats and took vacations. Schools produced literate graduates.
I moved to rural Texas south of Houston in 2014. It is a paradise compared to downstate Illinois. It is very much like my downstate Illinois was in the 1950’s and 1960’s. Inner city Houston is a Blue cesspool of Democrat corruption and mismanagement, surrounded by Red suburbs of middle class peace and prosperity.
The only way I can see to improve areas like current downstate Illinois is a basic income. I don’t agree with Andrew Yang on all his examples, but I think this would work.
Also needed is a total abandonment of the K-12 public school monopoly and replacement with individual student educational endowments. An amazingly large numbers of high school graduates struggle to read. Homeschoolers should be paid for successful results from individual student educational endowments. Homeschooling pods would see explosive growth and provide adequate coverage, and this reform could happen almost instantly.
The Larry Summers quote provides a lot to think about. Maybe the problem is that we have a society that is devoted to hedonism but that still demands work and life discipline. We kick aside beliefs, traditions and restraints and expect people to have an individualistic inner drive, but for many people that isn’t nourished by their environment, so it doesn’t develop. That there are such pronounced differences between winners and losers, and that the winners often don’t look too happy either doesn’t encourage such development in some people (or, to play devil’s advocate, perhaps some people demand too much support and what earlier generations might have called coddling).
Or maybe the problem is that our economy, society, and culture tell large numbers of people that they aren’t needed. Not content with hollowing out our inner cities, we do the same for large stretches of the country. Europe has the same problems as America, but the problems aren’t as serious, perhaps because of economic necessity, or intact social structures, or cultural identity, or ethnic homogeneity, or religious belief, or political and civic organizations, or government policies that restrain or offset the dynamic.
From what I’ve seen of Larry Summers (a lot of it comes from the movie the Social Network), I see him more as part of the problem, rather than as part of the solution. Harvard and MIT aren’t going to provide meaning to most people’s lives. More likely they do the opposite, to the surrounding society if not to insiders. It’s also not surprising that an economist from a family of economists has trouble with things non-economic. I also doubt the answer is political in any right/left sense. Different societies have different ways of generating meaning. We don’t seem to be doing that good at any of them.
The only way I can see to improve areas like current downstate Illinois is a basic income. I don’t agree with Andrew Yang on all his examples, but I think this would work.
Would work toward what end?
Courtesy the Bureau of Labor Statistics and the Census Bureau, you can calculate the ratio of employed persons to persons over the age of 16 for the following commuter belts. The national mean is 0.60.
champaign: 0.648
springfield: 0.645
st louis: 0.633
davenport: 0.622
kankakee: 0.601
rockford: 0.584
cape girardeau: 0.578
peoria: 0.522
carbondale-marion: 0.519
About 2.4% of the national population were SSI recipients at the end of 2020. In Illinois, the mean was 2.0%. Counties exceeding the national mean were as follows:
Alexander: 5.2%
Pulaski: 4.4%
Saline: 4.3%
Gallatin: 4%
Hardin: 4%
Vermilion: 3.4%
Union: 3.4%
Franklin: 3.3%
Marion: 3.3%
Massac: 3.2%
Macon: 3%
White: 2.9%
Jackson: 2.9%
St. Clair: 2.8%
Greene: 2.8%
Peoria: 2.7%
Cook: 2.7%
Richland: 2.6%
Winnebago: 2.6%
Knox: 2.5%
Morgan: 2.5%
I’m seeing room for improvement, not some ghastly social crisis. And I’m not seeing why you’d advocate policies which discourage outmigration.