Thursday, January 29, 2015

Who is pushing for a UBI today? Who is against? (the unsavoriest associations!)

A good friend sent me recently a link to an interesting discussion in a Spanish blog with calculations about the cost of implementing a Universal Basic Income (UBI) in the Country which seemed to reach exactly the opposite conclusion I had reached, concluding it was unaffordable without an extraordinary increase in the fiscal load (the taxes paid by the citizens as a total of the country's economic activity) that made it for all practical purposes unimplementable. Here is the original post: On the economic viability of creating a UBI

Let's start with the positive: the total cost figure he arrives at matches nicely with the one I ballparked in my own post on the subject (for those curious but too lazy to use the "search" function: Where would the money for a UBI come from?), assigning about 8,000 €/year per citizen (with a better rationale than mine, the author quotes studies concluding that to live decently one needs an income around a 60% of the median, whilst I came at the same figure adding what intuitively a young person starting in life and without many pretensions would need to pay rent and utilities, buy food, use public transport and spend a bit on some leisure).

But from there on things go fast downhill, as then the author assumes that the only savings would be the unemployment benefits and a minimal part of the current pensions (so he envisages paying pensions on top of the UBI, which for me doesn't make the slightest sense... as I said in my original post, ¿what does a 80 year old person more worthy of the society's largess than a 20 year old kid? ¿the fact that he has worked and "paid his dues"? puh-leeeeze! that would justify denying pensions to those that have not contributed -for example, homemaking moms, and assumes that retirees somehow receive back what they have saved -or been forced to save-, which is far from true, as if pensions were tied to what everybody has contributed they would stop being perceived at around 75 years of age). If that is all you "save" we absolutely agree an UBI is unaffordable, as the total disbursements of the state become too big, so to sustain them the amount it should take from its citizens in taxes goes completely off the charts, and out of line with the average of the OECD.

But of course that is not what I argued, as I already identified the additional areas that should be cut in exchange for this more uniform (also called non-means-tested) way of distributing the states money. As the state already guarantees the survival of every citizen, no more subsidies and transfers to sustain make believe work, and let prices fully reflect the cost of providing every service (transportation, communication, energy, higher education...), and let every service that can not find enough citizens to show their interest in it by paying the full price be discontinued. That means a country with no subsidized films (ouch, how much would the army of "artists" howl against that!), no subsidized travels for islanders (in times of budget airlines it is shocking that we still pay Iberia to run those routes at thrice the cost) or for dwellers of small cities who are now blessed by high velocity train stations almost nobody uses, no free highways that are better maintained than the toll ones (maybe no free highways at all), no subsidies to leave the land fallow, or not to harvest (be it linen or olives), or to keep unsafe and uneconomical mines, or shipyards open... And probably a substantial reduction in the number of public servants, as many government departments would simply close their doors for good.

That's why I have always been surprised to see proposals for a UBI in the platforms of left wing parties (Podemos in Spain, Syriza in Greece, the example we will see afterwards in the UK). As they approach winning an election they precipitously drop such proposals, as they realize they would only be feasible with substantial cuts to very entrenched interests, some of which happen to be part of their base constituencies. A truly feasible UBI is not a leftist's dream come true, its a libertarian's dream come true, as it means that the state relinquishes control of a substantial part of its budget, and instead of micromanaging who receives what (giving it ample opportunity to derive a substantial portion to friends and cronies, the state as distributor of favors that has transformed representative democracy in a game of knaves, and political parties in pork distributors, enabled by a permanent electioneering system that ensures they arrive to office already pre-bribed) just gives most of what it takes back to the people, and lets them use it as each individual sees fit, independent of merit, desert or alignment with what one considers more virtuous.

In my particular view, as noted by the budget elements I did not touch, the state keeps on providing those services that the market has shown conspicuously it can not provide as efficiently: security, healthcare, basic education, and legislation (writing the rules of the game so all the rest of economic actors know reliably what the regulatory framework will be).

Unfortunately, so far the idea seems to be widely associated with a certain leftist utopianism, which brings me to the UK case, when recently it was incorporated to the platform of the Green party, where it was analyzed, and made a mockery of because it lacked much consistency: The UBI proposed by the Green party hits the poor hardest When numbers where crunched, the original proposal of paying everybody 75 pounds a week (which translates to approximately 4,700 €/year) was found to leave the poor worse off than under the current means tested payments, whilst paying more was considered unrealistic (too much money) and paying less but supplementing it for the neediest case eliminated the ease of administration of the original proposal (as then you need the administrative apparatus to determine who can receive the extra money and who can't). It seems not to have occurred to these geniuses (they are the greens after all, so we shouldn't be that surprised they are not well versed on economics, or logic for what is worth) that no governmental expense is too high or too low until all the effects have been tallied, and that rather than reduce a expenditure (thus making it almost useless, or just another boondoggle in a welfarist behemoth) you may try to balance it by reducing other expenses, and may be increasing a bit some receipts (the UK tax code, which has moved sharply in the last two decades towards less redistribution and more inequality, leaves ample room for tax increases for the richest, btw). But of course the platform does not mention cutting other expenses, or substantially reducing the role of the state in the economy, as that would sound... Thatcherist, and that's the last thing any self-respecting green would like to sound like.

So after those two pieces of opinion I'm a bit disheartened. The proponents of UBI support it for all the wrong reasons (more handouts from a state that can hardly meet the entitlements their citizens have already come to expect, without having the audacity or the imagination to see how most of those would be substantially undermined once a new compact for the distribution of resources is put in place), and its opponents are already hardening in their opposition because of what they associate it with (the left! so it must mean more intrusion of the nanny state in their citizens lives and less efficiency, less growth and more poverty for all). So the chances of ever seeing it happen in my lifetime (even in my children's lifetime) seem to grow dimmer by the day. However, until I find something better, I still think is the best way to substitute capitalism with something better, more humane, and more conductive to the flourishing of their citizens. As being right does not equate with being popular, or holding only majority opinions, we will keep on reasoning, keep on thinking and eventually proselytizing. Let's not forget after many months of reflection, the kind of UBI I favor is what I settled that "had to be done".

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