Book Review of Zwolinski and Fleischer’s “Universal Basic Income: What Everyone Needs to Know”

Matt Zwolinski and Miranda Perry Fleischer—professors of philosophy and tax law respectively at the University of San Diego—have written a clear introductory text for the general reader that outlines responses to many questions about different versions of UBI. Both authors provide their expertise with deft anticipations of numerous objections. While they can’t offer exhaustive replies to all, they always gesture in directions that should give charitable readers plentiful avenues to explore further. The book can be read cover to cover, but it’s also easy to navigate via small modules that needn’t be read in order. The authors do an excellent job of signposting various parts of the book that cross-​reference specific questions and replies.

Many different forms of basic income have been proposed, but its core features are universality, unconditionality, and a cash basis. UBI is universal because everyone receives the same amount of income, though higher-​income people are net contributors through taxes that outweigh the extra income amount, while lower-​income people are net beneficiaries. UBI is unconditional because aid is not premised on the recipient’s situation or behavior, such as whether they are employed, drug-​free, or have children. Finally, UBI is based on cash transfers rather than in-​kind aid, which further allows recipients to spend the cash any way they prefer.

The authors survey and endorse several defenses of UBI: disruptions caused by automation, efficiency, poverty and inequality, respect, freedom, and compensation for past injustice.

“Technological unemployment” is a growing topic. Given the advent of automated processes, such as AI, replacing what was traditionally human labor, some worry that many lower-​skilled people will either need retraining or become permanently unable to earn a livable work income. It remains to be seen whether contemporary forms of automation will disrupt traditional forms of work while creating other jobs—as when the automobile industry replaced the horse and buggy—or precipitate a novel transformation that destroys many jobs altogether without creating new ones. Basic income may provide temporary help for those between jobs or a permanent safety net for those no longer able to find work.

The authors defend a “UBI-​minus” that largely replaces the current welfare state, rather than an infeasible “UBI-​plus” that supplements the current welfare state with another layer of redistribution. (“Largely” because there may be people who require aid beyond what the UBI can provide.) UBI-​minus, they argue, would require much less overhead and fewer transaction costs than current welfare programs. The approach would unburden recipients from having to navigate the labyrinthine bureaucracy in their applications for assistance, freeing up time for work or family. Indeed, those most in need are likely also those least adept at handling the Kafkaesque maze of welfare bureaucracies and confusing application forms in securing state assistance.

UBI may reduce poverty by supplementing people’s work incomes. The current welfare system often doesn’t allow people to earn beyond a minimum threshold if they are to receive benefits, but basic income is unconditional on this matter. You may work as much (or little) as you want, and basic income amounts won’t change. While basic income may eliminate life-​threatening poverty, it won’t by itself lift everyone to a comfortable existence. UBI can also reduce inequalities of opportunity, for example, by allowing poor children to have greater access to necessities like nutrition and parental time, which greatly increases their educational and life prospects.

UBI-​minus proponents argue that basic income is more respectful of those in need because, unlike other existing forms of welfare and unemployment insurance, it entrusts individuals with the discretion to spend cash transfers as they judge best, respecting personal autonomy and dignity. The current welfare system proceeds as if the poor lack the discipline to make their own best choices, and so they must be given in-​kind aid or monitored closely to ensure proper use of cash transfers. This condescending attitude assumes poverty is largely a result of individual failures while downplaying the effects of structural pathologies on agency. Many conservatives think poverty is due to lack of effort or bad character, while many progressives think some poor are too weak or overwhelmed to use their aid for the correct priorities without strict government oversight. With basic income, recipients are entrusted to know better than governments do on what they need—given their unique circumstances and preferences. For instance, maybe a given recipient doesn’t need food right now but would like to save some funds for covering emergency costs. Current programs don’t typically allow that option. UBI recipients would not be subject to demeaning intrusions into their private affairs while enforcing program compliance.

Basic income helps people better realize the worth of their freedoms. Libertarian emphasis on freedom as non-​interference may overlook private domination, such as the arbitrary power of tyrannical employers or abusive partners exploiting those who desperately need a job or a partner’s finances. Those with very few resources are often stuck in these vulnerable and exploitative situations out of desperation, not by their own free choice. Access to basic income may enable them to find better work or leave abusive domestic circumstances. The poor are also in a more precarious situation. A broken-​down car may be a nuisance for a well-​off person but leads to job loss for a poor commuter, and many poor lack any savings to cushion themselves during temporary downturns like joblessness. A UBI helps smooth over rough patches by allowing the worse-​off more opportunities to look for jobs or afford training that would increase their attractiveness on the market. It also enables individuals to have greater power to say “no” to employers or abusive domestic partners.

The authors don’t shy away from common objections to UBI, such as its expense, concerns about misaligned work incentives, and the potential for recipient waste.

A UBI must be large enough to make a meaningful difference but not so large that it would be prohibitively expensive—and damaging for economic growth—to fund. Could the costs for a relatively modest UBI, such as $500 per month, be offset entirely by ending or drastically reducing other government welfare programs? Cutting or reducing many current transfer programs would free up funds, but the authors acknowledge more revenue would still be required through some form or combination of taxation: most likely through income, consumption, or a value-​added tax. Alternative taxes from financial transactions, carbon, wealth, or land value may not always be feasible or sufficient. The net cost of such a UBI-​minus in the United States would still be over a trillion dollars, requiring a more-​than-​minimal tax if all else is kept equal. This would cost about seven percent of GDP, compared with current government spending at thirty-​eight percent of GDP. Defenders of UBI face an uphill battle making this proposal appealing to those who think we already pay too much in taxes.

Another concern is that unconditional income will reduce incentives to work. If I receive an extra $6,000 a year from UBI, I may be motivated to reduce my productivity by some or all of that amount since I will receive the same income either way. The authors claim studies across various countries and pilot programs do not bear out this observation. People looking to improve their material conditions or build a nest egg will often work just as hard, or harder, with the supplemental UBI income, so that they can increase their earning power and savings. However, concerns about free riding are politically salient. Most people are willing to help the “deserving poor” mired in poverty through no fault of their own, but they bristle at giving money to the “undeserving poor” who remain in poverty through laziness. UBI’s unconditionality requires its defenders to concede that even the indolent jobless gamer living in his parents’ basement should continue to receive taxpayer funds.

Still, the relevant institutional question is “compared to what?” Compared to a world of no redistribution, UBI-​minus offers money for nothing and likely would decrease overall incentives to work. But compared with the current welfare system’s perverse cutoffs—where working one additional hour beyond the maximum eligibility threshold risks terminating all of one’s benefits—a UBI-​minus might encourage more work since it doesn’t condition benefits on employment status or hours of labor.

A final, related, concern is that many recipients will blow their cash on harmful activities or frivolities rather than use it to cover basic needs. But the authors cite numerous studies in the developing and developed world (including Alaska, Canada, Kenya, and Namibia) that don’t support this hypothesis. Recipients of cash transfers typically use them to meet their needs and improve their prospects, including their ability to be productive not just in economic but non-​economic ways too, such as more time spent raising children or volunteering. Granted, some people will use the cash on “temptation goods” and not really contribute anything, but they aren’t the majority and shouldn’t be the reasons for avoiding UBI altogether. Besides, current welfare programs are also susceptible to recipient abuse despite increased oversight, while wealthy and politically connected beneficiaries of corporate welfare engage in all kinds of frivolous spending at taxpayer expense. The poor should not be singled out when some of the already privileged are offenders too.

The authors explore many intricate and tricky details about recipients, especially considering political attractiveness. It is better for individuals than households to receive UBI because each adult can manage their own funds without the difficulties of joint ownership. This also allows people in abusive or controlling households more freedom to exit. While some UBI defenders claim it should be limited to adults, others argue that children should receive payments, not directly, but through a trust fund that could alleviate much childhood poverty and allow more young people equal footing, without reliance on sometimes irresponsible parents.

Issues become more complicated with senior citizens since Social Security is a “third rail of politics,” and people who claim they’ve paid into the system might bristle at their Social Security payments being replaced by lower UBI payments. Some have proposed allowing seniors to choose between the current Social Security programs or the replacement UBI program. Basic income might be limited to citizens rather than new immigrants, since opening it to all comers risks an influx of migrants who may strain the system, causing a nativist backlash. The authors argue UBI should be the same amount regardless of cost of living, not only due to the administrative headaches of trying to determine variable payouts, but because high cost-​of-​living areas often provide higher wages and greater job opportunities. They also defend a national UBI as preferable to decentralized systems. Despite the value of learning from different approaches in state or local experiments, there are downsides. For example, regions offering more generous UBIs may drive out business because of the higher taxes used to fund the payments, while simultaneously attracting poverty as low-​income recipients move in. Other locations may react by competing over “low generosity” basic incomes that don’t end up helping recipients meaningfully. More on this below.

The authors explore many other questions. Should low-​income but wealthy people receive a UBI? Should people be allowed to use their UBI as collateral for loans, or receive their future UBI payments as a lump sum? How frequently should UBI payments be made? Would basic income cause inflation? How will basic income affect families and communities? What would stop a basic income from getting bigger over time, as we’ve seen with other entitlement programs, like Social Security and Medicare? On this last question, the authors don’t deny that UBI might be susceptible to growth, but it’s also less susceptible to rent-​seeking and other forms of exploitation given its universality and transparency compared with current entitlement programs.

These are just a few examples of questions the authors address. They also devote a section comparing basic income with alternative programs like the Earned Income Tax Credit, the Child Tax Credit, the Negative Income Tax, “baby bonds,” and guaranteed employment. Those seeking detailed policy comparisons will find much of interest.

The authors canvass some experiments and pilot UBI programs. Some highlights include the popular bipartisan Alaska Permanent Fund, which is financed by oil revenue rather than income tax. Each Alaskan resident receives a yearly fund, and results have shown positive outcomes on poverty reduction. This program lends support to the Georgist view that taxes on various natural resources, especially land, are preferable (and more politically favored) than taxes on labor. A major experiment in numerous Kenyan villages includes philanthropic funding from Give Directly, which also shows positive results in poverty reduction. However, the authors note that pilot programs have inherent design limitations since most are temporary and target select demographics. There is also frequent taxpayer opposition (as in Finland) to experiments in unconditional basic income, while privately funded experiments reveal the benefits of basic income without dealing with the costs that a larger tax-​funded UBI would bring.

While it’s unfair to expect one volume to address everything conclusively, several issues are underexplored and deserve more attention in future editions or other work. First, the authors may be overly sanguine about the prospects of a national UBI-minus, given the public choice incentives of federal politicians to keep the current welfare system and layer basic income over that. Or, politicians may revive specific welfare programs if a UBI-​minus is seen as “insufficient.” Daniel Mitchell observes about a centralized UBI: “there’s no guarantee that politicians in the future won’t re-​create the current panoply of programs that the basic income is supposed to replace.” This follows especially if the federal government not only funds state and local UBI programs but also administers them. In other words, we may get UBI, but on top of it, all the other government programs as well.

By contrast, the authors sound overly skeptical of decentralized approaches. As noted above, they suggest states or cities that pursue overly generous policies would reduce economic growth and attract less productive recipients. Perhaps, but decentralization also gives local governments greater incentive, and pressure, to balance policies in ways that don’t alienate the tax base. Moreover, if only states or cities can administer even federally funded basic income or welfare programs—after all, these aren’t enumerated federal powers in the US Constitution—then perhaps the national government will have a more difficult time justifying or executing its own rigid attempts at welfare administration.

And perhaps UBI isn’t the best approach everywhere and for everyone. Mitchell argues that the main benefit of a federalist approach “is that you stop the Washington-​driven expansion of the welfare state and trigger the creation of 50 separate experiments on how best to provide a safety net. Some states might choose a basic income. Others might retain something very similar to the current system. Others might try a workfare-​based approach, while some could dream up new ideas that wouldn’t stand a chance in a one-​size-​fits-​all system.”

Furthermore, much of the discussion assumes taxes must fund basic income, but what about voluntary basic income networks in civil society funded by philanthropists or dues-​paying members? If these networks function better than government programs, they will attract people who might otherwise be stuck on welfare rolls. An influx of recipients to civil society would make it more difficult for politicians and bureaucrats to justify the government’s continued role in welfare provision. The experiments are worth running so we can know whether they are viable alternatives to government-​funded programs. Alas, if not, at least we know what the options are.

Finally, while the authors admirably confront worries about steep costs in funding basic income, one wonders if these concerns are overstated. After all, automation partly motivates calls for a UBI, but if automation also causes unprecedented growth that can benefit all, the portion of GDP used for UBI can decrease. Cost estimates of a basic income should be about trend lines rather than past or current snapshots of GDP. A generous basic income a generation from now may require much lower tax rates than one today. Huge future increases in wealth (including lower prices) made possible by automation should provide a large pool from which to ensure that everyone can benefit, not just those who own the robots.

Regardless, the seven percent estimate is dwarfed by the thirty-​eight percent the US currently spends as a percentage of GDP, so libertarians concerned with the cost of UBI should keep focusing on where else we can decrease unnecessary or excessive government spending. Free-​market supporters of basic income should not proceed as if everything else must be held equal. For instance, defenses of massive military spending are weaker if one also advocates for global free trade that lessens nationalism and military conflicts. Perhaps a stronger case for basic income can be embedded in liberal and libertarian arguments for decreased government spending along other dimensions.

Universal Basic Income will not convince progressives who believe UBI-​minus doesn’t go far enough, nor will it persuade libertarians skeptical of its redistributive implications. Nonetheless, everyone is susceptible to a life without sufficient income to flourish, and the authors have given us a book providing a great introduction to considerations about how we should confront this human vulnerability.