What the Great Economists Would Have Thought of a Universal Basic Income
Imagining what John Maynard Keynes, Milton Friedman, and Adam Smith would have said about our current predicament.
Scene: The heavenly fields.
Dramatis Personae: Professors John Maynard Keynes, Milton Friedman, and Adam Smith.
Heaven governs our affairs without a chief executive but with rotating committees of souls, who argue all the time. The economics committee (the Dismal Séance) is sitting or lounging upon rugs in a field beside a small river in a soft English countryside.
Keynes: The living are going on again about your damn universal basic income or whatever you called it, Milton. Listen to this nonsense. (Lifts up July/August issue of MIT Technology Review.) “Basic Income: A Sellout of the American Dream,” by David H. Freedman. Much of the money in such a scheme would not go just to the poorest people. “In the view of proponents, that money could also benefit people who aren’t poor but aren’t affluent either. They’d gain access to higher education, an escape route from oppressive jobs and relationships, greater opportunity to invest in their children’s well-being and education, and time to spend on artistic or other mostly nonpaying endeavors.” They don’t need a UBI yet!
Friedman (mildly): Well, at least they’re thinking through the complications. But Maynard, it’s your fault.
Smith: During the Great Depression, you told them, “In quite a few years—in our own lifetimes … we may be able to perform all the operations of agriculture, mining, and manufacture with a quarter of the human effort to which we have been accustomed. We are being afflicted with a new disease … of which readers will hear a great deal in the years to come—namely, technological unemployment.” You made them think a universal income inevitable, because machines will work more tirelessly, cheaply, and dependably than men.
Friedman: In my view, the real benefit of a universal income is that it would foster personal responsibility and reduce the scope of the welfare state. I once wrote, “We could replace the ragbag of specific welfare programs with a single comprehensive program of income supplements in cash—a negative income tax. It would provide an assured minimum to all persons in need, regardless of the reasons for their need. A negative income tax provides comprehensive reform which would do more efficiently and humanely what our present welfare system does so inefficiently and inhumanely.”
Keynes: Are they in fact experiencing a permanent structural reduction in the number and wages of jobs?
Friedman: I don’t think so. A recent report from the Council of Economic Advisers said that 83 percent of jobs paying less than $20 an hour could be automated. But around the world, millions of new jobs are created every month. It may be that many people don’t have the right skills to compete, or live in the wrong places, or that governments have crushed business dynamism with burdensome regulations and requirements.
Keynes: Besides, they don’t have the dosh. The cost of giving $10,000 a year to more than 200 million American adults would be over $2 trillion. This year, the entire budget of the American government was three and a half trillion dollars.
Smith: Brynjolfsson and McAfee, who are not yet due to join us, argue that if one day thinking machines were to cause technological unemployment, it would be accompanied by a wonderful increase in the wealth of nations. That prosperity would bring its own difficulties, if it were not more evenly distributed than hitherto. Therefore, in some future state, a basic income might make sense, but not now. However, there is a further difficulty.
Friedman: What will they do with all their free time?
Smith: (Laughs.) Gentlemen, what do we do with our leisure? Still, we’re dead. Down there, work has its own moral value, and self-regard is the reward of labor. One might hope that men and women would spend their free days in study or composing epic poems, or in embracing the risks of what our friend Monsieur Say calls “entrepreneurship.” But we don’t know. When President Nixon (who is in the Other Place) considered a universal income, a number of “Income Maintenance Experiments” suggested that those who received a basic income strived less and that their families were more likely to dissolve. A UBI would demand an altogether different conception of work and its satisfactions.
Keynes: Perhaps the worst of it is that a universal basic income, in humanity’s current condition, would tend to exacerbate the inequality it seeks to remedy, dividing people into productive and idle classes. Besides, there are better immediate alternatives, such as the Earned Income Tax Credit and retraining workers.
All (as one): No, not yet.
Become an Insider to get the story behind the story — and before anyone else.