#and now back to your regularly scheduled blorbo fixating

[cicaklah]

get ready for my thoughts on yaoi UBI

So I’ve kvetched about UBI in the tags for long enough someone finally asked me what I was going on about so here we go! 

I will start with some caveats: 

I am British, and so I can only speak about the British specifics.

I have for the past twelve years worked as a professional health economist, and health economics is based on social welfare theory (specifically growing out of Arrow’s work in the 1960s and Sen’s work in the 80s/90s). I literally could talk forever about this, but I won’t. If you want to know more, read the pretty good wikipedia article on welfare economics.

But fundamental to welfare economics is two things: if we make a great big change, do the benefits outweigh the costs? And does the change make a fundamental change for good? (aka cost-benefit analysis and pareto efficiency).

The other thing you need to know about me is that I don’t like activists very much, because they never have to show their working, and my entire professional life is showing my working, and critiquing other people’s working. We all have ideas mate, show me the plan! I love a plan! and this isn't coming from anything but personal experience; I have been to talks by UBI activists before, including ones by economists, but I have never had the case made to me that UBI would be either cost-beneficial OR approach pareto efficient. In fact, it usually reminds me of arguments that are based on some other imaginary world, and then I get so annoyed I want to scream. 

In the early 2010s when I was first starting working as an economist, I was asked to build a model to see whether switching a disability benefit from government administered to individual administration would be cost-effective. Essentially, if you were newly in a wheelchair and you needed a ramp building up to your house, would it be better for the government to organise a contractor, or for you to be given a cash transfer and organise it yourself? The answer was that it wasn’t, but anyone who has ever had to hire a builder could have told you that, and the government didn’t have to pay my firm £30,000 to make that decision. But that is what UBI essentially is; a cash transfer where you get cash and the government gets to enjoy less responsibility.

There are 37.5 million people of working age in England. (Nearly) every single working person gets what's called a tax free allowance, where the government doesn’t claim income tax on the first £12,570. (Once you make over £120k, your allowance starts to decrease, and you lose it entirely at I think £150k)

Let’s assume that instead of just not claiming tax on this amount, the government switched to making that £12,570 your UBI. That is £471,375,000,000 just for England - just under half a trillion pounds. In cash, or nearest as in our modern economy. And not one off - Every year. 

Okay, let's say that the country does have a spare half a trillion a year (in cash) lying around. What is the benefit to switching from tax free allowance to UBI? Well, let's assume that no one stops working, so there would be the tax receipts from the 20% income tax on the £12,570, and that’s just a shade under £100 million. Not bad.

But if you’ve seen a UBI post, you will know that people like the idea because they will be able to work less. Which probably means that UBI will need to be paid for in some other way. Perhaps by cutting existing benefits. The universal credit cost is around £100 billion. So we’re still £300 billion short, and honestly, you wouldn’t cut all of universal credit anyway, probably only the unemployment benefits, but I’m not digging into the maths on that tonight. 

But, look, I am sympathetic. I am a welfarist. I genuinely believe that the economy is not just money, that welfare is happiness, it is utility, it is all the stuff that makes life worth living, and it is the responsibility of the government to maximise the welfare/happiness/utility/quality of life of the country through efficient use of taxation and other sources of money. So people give the government money and it spends it on goods and services and then people get utility, and then they spend their own money to get more utility, and ultimately we can gain intangible things that are incredibly valuable. 

But the problem is that cash is cash, cold and hard and very real. I don’t know how unlimited spare time translates into half a trillion real pound coins. I wouldn’t know how to build a model that complex and uncertain, especially as this all assumes that you can live on 12k a year, and that whatever replaces progressive taxation is equally progressive. I haven’t even touched on how having a convoluted welfare state insures it somewhat against being entirely destroyed after a change in political opinions, aka what I call the daily mail test. You think the narrative about people on welfare is bad now? But also, how would you deal with people who didn’t manage their UBI money well? What happens if there is a personal crisis?

The more I look at it, the more the existing system is actually remarkably good value for money. Individualism is expensive. Collective decision making and spending is just cheaper. 

Ultimately I don’t see the additional benefit of UBI, requiring a pie in the sky change, when it is far, far, far more cost effective to strengthen the existing regime across the board; taxation law, social safety net, childcare, working laws, education and health - all systems that are already in place, and have a thousand times higher likelihood to be pareto optimal and cost effective than trying to find half a trillion pounds of cash round the back of the sofa, while torching 150 years of progress so middle class people can write their book without having to have a job. If I was conspiracy minded I would say that UBI feels like a psy-op, trying to shut down old fashioned progress in favour of ripping it all out and starting again.

Ultimately, that is my real annoyance. It is far, far, far cheaper for the government to provide you with your new ramp for your house, and that is done through politics, but not fun moonshot politics, the hard shit that isn’t sexy.