Thanks for the Phelps reference.
I note that in his essay..A response to A Basic Income for All by Phillippe van Parijs, he says a few things that I can agree with. Certainly a step in the right direction. However I do have a problem with some of his assumptions about the negative results of the adoption of a UBI (Universal Basic Income).
Here is part of Phelps' essay:
It is implicit, I think, that the social surplus is a flow of income that can be legitimately redistributed, since the way a free market would distribute it is morally arbitrary and a free market is an impossibility in any case.
It is also implicit in all these expressions, I believe, that the social surplus is to be made available for redistribution to the contributors, not to non-contributors. It would be incoherent to say that the contributors to society’s enterprise, in generating a social surplus, have–as defenders of a UBI suggest–the obligation to share it with those who have not contributed. What do the latter have to do with it? If they can be shown somehow to have a claim, is there a claim of animals and other sentient creatures? If we earth people should discover Martians unwilling to trade or collaborate with us, do they nonetheless have a claim too?
2. The argument for UBI set out by Van Parijs appears to be substantially pragmatic. He appears to believe that, although it might go against the ideology of some to hand out the basic income unconditionally, the practical effect of doing so will be to encourage participation, hard work, self-support, achievement, and all the other desiderata dear to those with that perspective.
A UBI, Van Parijs writes, "makes it easier to take a break between two jobs, reduce working time, make room for more training, take up self-employment, or to join a cooperative. And with a UBI, workers will only take a job if they find it suitably attractive, while employer subsidies make unattractive, low-productivity jobs more economically viable. "
One can see that a UBI would open up some new job options to many people, just as inheriting a substantial sum of money would make it possible to try one’s hand at composing music or writing a book. But financing it will entail lower after-tax wages and lower private saving until private wealth (defined to exclude the present discounted value of the expected stream of UBI) has reached a sufficiently reduced level; to a rough approximation, private wealth would fall by as much as social wealth (defined as the present value of the UBI stream) rose.
So there is no alchemy here by which a net increase of wealth is achieved and costlessly at that. At some point in middle age, the average worker-saver will have a lower total wealth, private plus social, than he or she would otherwise have had, since wealth per head (which I am taking to be unchanged) is an average of the wealth per head of the young, who now get their social wealth right off the bat, and the wealth per head of the old. The contention that there is a social gain from "moving up" people’s wealth to the first year of adulthood, since the increased liquidity serves to increase freedom, depends on the assumption that the social benefit from the added liquidity is sufficiently large to overcome the social cost resulting from the reduction of after-tax rewards to working.
Of course the main part of the argument is redistributive: the increased wealth would occur among those with little, the reduction of wealth would occur among those with much. But a low-wage employment subsidy scheme also would be redistributive in the same direction. So we must weigh the practical balance of benefits and costs posed by the UBI against the corresponding balance offered by low-wage employment subsidies. I see some serious drawbacks of a UBI; these drawbacks mirror the merits of low-wage employment subsidies.
I’ll emphasize four drawbacks. First, the pay rates available to low-wage workers are already so low as to be demoralizing. A large UBI would seem towering to a low-wage worker, and would further depreciate his or her earning power; moreover, the UBI, in requiring higher taxation to finance it, would tend to reduce their net pay rates further. Worsened employee performance would follow and, since firms won’t create jobs for workers who will quit or shirk or are absent at the drop of a hat, a large number of jobs held by low-wage workers in private business would become extinct.
Second, we are in dire straits to begin with in this regard. Work, career, and achievement are already threatened by a whole array of competitors–crime, unemployment, and the underground economy.3 This is no time to launch a new scheme that would create further disincentives to work in the legitimate business economy. Marginalization must be reduced, not increased. Introducing a UBI would make that task harder.
Third, what matters to people is not just their total receipts; it is the self- support from earning their own way. No amount of UBI would substitute for the satisfaction of having earned one’s way without help from parents, friends and the state–as valued as they are. I would note that, if the UBI were adopted in the United States, it would continue to rankle low-wage earners that their pay was less than half the median wage. The reason it would, I suggest, is that low-wage workers would view such low relative pay rates as bluntly showing that they cannot hope to earn their own way in the sense of gaining access to most of the median earners’ way of life through their own earning; they can only gain access through the demogrant, which they may see as demeaning.
Finally, what about Parijs’s image of the workplace with its exhausted women and tyrannical bosses? I feel that many academics and others reared in relatively privileged circumstances cannot see how those working in a factory for forty hours a week could value it as a means to mix and interact with others, to gain a sense of belonging in the community, and to have a sense of contributing something to the country’s collective project, which is business. If I am right on these matters, we should feel sorry, not envious, about Van Parijs’s surfer who feels lucky to be able to drop out of the world of work thanks to his UBI; he doesn’t know what he is missing. And we shouldn’t feel sorry about women "subjected to the dictates of a boss for forty hours a week." They have the self-knowledge to know something that Van Parijs appears not to know about them: the sociability, the challenges, and the sense of contribution and belonging that those jobs provide are an important part of their lives, as they are of the lives of others.
The problem is that the low-end pay rates are much too low, so low that some low-end workers must take the least "liberating" jobs to make ends meet. The solution is not to endow workers with a UBI, so that they move to somewhat better jobs at a reduction in pay or else just drop out. That way lies dependency, unfulfillment, depression, and marginalization. The solution is to institute a low-wage employment subsidy, so that all pay rates facing low-wage workers would be pulled up to levels better reflecting the social productivity of their employment, their support of themselves, and their development. Then low-wage men and women could afford to avoid dangerous, unhealthy, or oppressive jobs and opt instead for more rewarding work. And many more people would be able to know the satisfactions of self-support, development, participation, and contribution.
Interesting. |
