Each week, In Theory takes on a big idea in the news and explores it from a range of perspectives. This week we’re talking about universal basic income. Need a primer? Catch up here.
Oren Cass is a senior fellow at the Manhattan Institute, focusing on energy, the environment and anti-poverty policy.
America’s greatest domestic problem is its growing social divide. Researchers from across the political spectrum — most prominently Charles Murray and Robert Putnam — have observed with concern the widening gap between more- and less-educated Americans, as evidenced by indicators of social well-being, including marriage, parenting, employment, crime, civic engagement and basic trust.
The gap emerges not from changing economic conditions at the top but rather from a catastrophic social collapse at the bottom, one that shows no sign of slowing. This collapse threatens to permanently split American society into groups of haves and have-nots, the latter lacking strong families and tightly knit communities that endow children with the discipline and responsibility they need to navigate life.
[Other perspectives: Our welfare system insults the poor. Basic income could do better.]
Because this gap in social welfare correlates closely with a gap in income, the two are often seen as the same problem. Policymakers focus on increasing economic resources for low-income households, hoping to close the divide. But that conflation is a mistake and leads to counterproductive proposals — such as universal basic income.
Social inequality and income inequality are simply not the same thing. Historically, the two have not been closely linked — in the past, Americans across classes enjoyed remarkably similar levels of social well-being: universally high marriage and labor force participation rates led to the formation of stable, two-parent families with stable employment. And there is little evidence that today’s social collapse stems from economic woes — in recent decades, the poverty rate has held steady and living standards for those defined as poor have improved dramatically, even as indicators of family formation, full-time work and community health eroded rapidly.
For several reasons, it is social inequality that should remain the focus of any effort to better society. First, because in social terms the fortunes of many Americans are truly declining, not just failing to rise as quickly as in other groups. Second, unlike income inequality, gaping social inequality threatens to dramatically curtail opportunity for future generations. And third, our social collapse shows signs of spiraling out of control, with each generation worse off than the one before. While economic progress tends to ebb and flow with the business cycle, present social trends point toward permanent decline.
Some approaches might constructively engage both social and economic challenges, but the basic income does not. It moves policy in precisely the wrong direction, focusing virtually all government resources on material well-being at the cost of devaluing labor, and eliminating the social stigma and economic consequences associated with not working.
That approach only reinforces the ongoing decline of work, which is a critical step in the cycle of social decay. Unstable families in weakened communities often fail to endow their children with life skills or marketable skills; without being able to successfully enter the labor market, their path to adulthood often leads to unstable families and weakened communities of their own. In his 2012 book “Coming Apart,” Charles Murray reports that in 2010, only 53 percent of white households in his working-class cohort included a full-time worker, compared with 81 percent in 1960. Since 1990, America’s labor force participation rate has fallen by 10 points among prime-age workers relative to Europe’s rising participation rate. The U.S.’s decline has actually accelerated since the recession’s end.
Ensuring that even those with very low human capital enter and remain in the workforce offers one of the highest leverage points for breaking the cycle of social decay. A job provides not just a wage, but also structure, skills and social engagement. It gets someone onto the first rung of the economic ladder, which is the first step to climbing any higher. New policies should aim for this outcome — making work pay, not paying regardless of work.
Proponents of the basic income sometimes argue that it can increase the incentive to work by removing the enormous marginal “tax” that poor households face when they begin to earn income and thus become ineligible for existing safety-net benefits. Each American would keep the basic income regardless of other income earned.
But this compares the current $1 trillion safety net to a theoretical basic income program that would likely cost two to three times as much. No viable basic income could be crafted purely from existing safety-net spending (which, by definition, aims to provide resources of similar value to a basic income — but only to the poor, not to everyone). And in a world where the funds required for a basic income were available, they could better remedy the marginal tax problem through an aggressive wage subsidy that created strong incentives to work.
The current social safety net is clearly a tangled mess in need of reform. But given the challenges we face as a society, now is no time to declare work optional.
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