Michael Haines, who has previously posted on Troppo, is campaigning for universal income funded from the adoption of sovereign money — which would yield a large amount of seigniorage like revenue to government. Geoff Croker is campaigning for something similar from the UK. I responded to this by email which I reproduce here.
As far as I understand it, you’re both arguing that you generate all this free money with sovereign money and then you spend it on UBI. They’re two separate policies that need to stand or fall on their own merits.
Thus for instance, I’m in favour of green taxes and wealth taxes and some move towards greater sovereign money (I don’t think I’m so clever that I know what would happen with full sovereign money so I’d like to take some substantial steps in that direction and then reassess). But the case for each is a product of their cost-effectiveness, distributional impacts considered in the context of the political economy of each measure. (If you’re not sure what I mean, the last two dot points of this post relate to political economy questions).
The case for UBI likewise needs to be made on the merits.
We have something quite like a UBI now but with work tests. Milton Friedman’s argument for UBI was based on getting rid of the moralism and bureaucracy of such tests.
Others on the left of centre are more concerned with the stigmatisation of welfare. I have to say that that has been what has been the strongest influence tempting me to switch from agnosticism to support of a UBI. But this is very difficult because it is easy to imagine a situation in which, for want of targeting, the UBI is sufficiently expensive that, in the upshot of electoral competition the basic payment available via UBI is made lower than it would be for the dole.
Both on the right and left, most people arguing for a UBI have accepted that it would come with costs. Those costs include
- less targeting leading to higher rates of taxation
- removing the need to ‘work’. This will be a boon to many and to the extent to which it is, to society. But it will also shear away the incentive to work which is, in the minds of many, a foundation of the social contract and the quid pro quo for community support to the destitute. The hoi polloi are highly suspicious of doing away with this foundation, both in terms of its economic efficacy and its social ethics. This is relevant to:
- the economics of how a UBI will turn out — considered broadly — whether it raises or lowers wellbeing (considered broadly) in the long run. I have at least as much respect for the hoi polloi’s suspicions of it underwriting an indolent underclass as I have for my own more optimistic view. I don’t know.
- the politics of a UBI, both as to its long-term sustainability and the rate at which it’s paid.
So I remain agnostic
I’ve made these points previously. But they never turn up as central to your thinking about UBI. You’re an advocate for UBI and you’ve made up your mind. That’s your prerogative and it’s good that we have advocates in the community arguing for different things I guess. But with your stuff and with most of the other stuff I see advocating a UBI, it simply elides the central issues I’ve outlined above.