Charles Murray, (in)famous for authoring the Bell Curve, in which he pointed out that the world circa 1994 was unfriendly to those with a low IQ, has an editorial in this weekend’s Wall Street Journal: “A Guaranteed Income for Every American: Replacing the welfare state with an annual grant is the best way to cope with a radically changing U.S. jobs market—and to revitalize America’s civic culture.”
Here’s his proposal:
In my version, every American citizen age 21 and older would get a $13,000 annual grant deposited electronically into a bank account in monthly installments. Three thousand dollars must be used for health insurance (a complicated provision I won’t try to explain here), leaving every adult with $10,000 in disposable annual income for the rest of their lives. …
The UBI is to be financed by getting rid of Social Security, Medicare, Medicaid, food stamps, Supplemental Security Income, housing subsidies, welfare for single women and every other kind of welfare and social-services program, as well as agricultural subsidies and corporate welfare. As of 2014, the annual cost of a UBI would have been about $200 billion cheaper than the current system. By 2020, it would be nearly a trillion dollars cheaper.
How could this work in a country with the world’s most expensive health care system? Murray says people will spend $3,000/year on health insurance. But Medicare costs more than $10,000/year per beneficiary (2009 data). Medicaid also costs more than $3,000 per year (2011 data). Consider two non-working parents with five kids. Right now they will get an array of taxpayer-funded services whose value could exceed $100,000 (housing, Medicaid, food stamps, Obamaphones, etc.). How could they survive on $26,000 per year when that wouldn’t even pay for a medical/dental policy in the private market?
Separately, Murray’s article demonstrates the depth of American political support for a government-run system that turns heterosexual sex into cash:
The unemployed guy living with his girlfriend will be told that he has to start paying part of the rent or move out, changing the dynamics of their relationship for the better. … Or consider the unemployed young man who fathers a child. Today, society is unable to make him shoulder responsibility. Under a UBI, a judge could order part of his monthly grant to be extracted for child support before he ever sees it. The lesson wouldn’t be lost on his male friends.
If Murray advocates for free enterprise, why doesn’t he support the decision of an adult “girlfriend” to pay most of the household expenses for an unemployed man? Can we not infer that he is providing her with something that she values as much or more than the space and food he consumes? Would Murray consider an unemployed woman living off the fruits of a man’s labor to be equally reprehensible?
In a country that offers on-demand abortion and for-profit abortion, Murray scolds the second example unemployed man for the birth of a child. Why isn’t his sex partner scolded for not educating herself regarding U.S. family law (see California, Florida, and Massachusetts, for example) and having children who are cashflow-positive?
The author is against more government spending but he wants to continue to assign a taxpayer-funded judge and prosecutor to determine the profitability of every out-of-wedlock birth in the U.S.?
Readers: Can this WSJ piece be read as anything other than a fantasy? Could it possibly work without cutting U.S. health care costs by more than 50 percent? And if we could do that, with almost 10 percent of additional GDP available every year to invest or spend, wouldn’t our economy then be in such great shape that we wouldn’t need to tweak our welfare system?
Could the idea be rescued with some tweaks? How about tackling the elephant in the room head-on: universal health care at a modest budgeted cost. If the U.S. had an English-style system that covers everyone to at least a basic level of care, then older Americans could live off their UBI instead of handing it over to the health care industry. Today’s Welfare parents with five kids wouldn’t be doing so great at $26,000 per year, but at least they wouldn’t spend 100 percent of that money on health care. Speaking of kids, if nobody gets a UBI until reaching age 21 it will be tough on current Welfare recipients who have produced children with the expectation that taxpayers will provide adequate housing, food, etc. On the other hand, if ownership of a children produces a $13,000-per-year revenue stream to an adult that will presumably encourage adults to have more children and fight over ownership (“custody”) just as they currently do in U.S. family court. The difference in spending for a married couple with and without a child is about $4,300 (see discussion of UCLA Professor William Comanor’s analysis in the Methodology chapter). This is in the neighborhood of maximum child support awards that are obtainable, even after having sex with a truly rich person, in many European jurisdictions. What if health care were covered and each child yielded a $3,000-per-year revenue stream for the adult owner(s)? Now the married couple with five kids gets $41,000 per year. That would put them above the poverty line for a family of 7 (source) and, of course, they could supplement that income with paid work if they wished to. Because the children wouldn’t be hugely profitable there wouldn’t be an economic incentive to have more kids (though of course people who enjoy having children around might have more kids even if profit-neutral).
I think that it would be more interesting to see an analysis of the economics of a system in which major health care costs did not come out of the UBI and in which the additional expenses of children were accounted for at least partially. The current litigation-based system of establishing private-sector adult dependency (alimony), child ownership (custody), and child profitability (child support), probably costs the economy at least $150 billion per year ($50 billion in direct expenses and at least another $100 billion in lost productivity either from people following incentives not to work or from preparing for the courtroom rather than working). If that were torn down because an alimony or child support plaintiff can now collect UBI, that would enable UBI to be bumped up by roughly $500 per American per year. Health care remains the tough one, though. We have a track record since the 1960s of crazy high costs and high growth rates in those costs, fueled by tax breaks for insurance and government spending through Medicare and Medicaid. Is it reasonable to assume that we could one day cut health care spending to only double Singapore’s, as a percentage of GDP?
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