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Economist pooh-poohs Basic Income. I'm not having it!

April 29, 2018

 

 

Here we have Stephen Gordon, an economist, weighing in on Universal Basic Income (UBI). He is addressing the issue of cost, certainly one of the two major objections to UBI. One would have hoped to receive the special insights of a professional on this public policy proposal.

 

Instead, I found the article dismissive and the tone condescending. It is titled You know, there's a reason no one's put in a guaranteed annual income yet and subtitled GAI Stage III — not actually a joke, but not a proposal to be taken seriously, either. His three stages of understanding Guaranteed Minimum Income are: 1)incredulity, 2) zealous and naive advocacy and finally 3) wise and chastened skepticism. This strikes me as applying to the gullible. People aren’t stupid, Dr. Gordon, they are misinformed. They count on academics like yourself to fill the information void. I think Dr. Gordon falls short in his mission here.

 

He is letting his politics get in the way of his economics. I don’t care what Stephen Gordon thinks is politically feasible. That is a question best left to Justin Trudeau and the electorate. What we expect from an economist are reliable economic facts and analyses.

 

 

Our economist seems convinced of the benefits of Basic Income. They are “certainly real enough,” he says.

 

Then he gets to the cost and makes statements like this about a $2000 per month payment to every Canadian: “How much would that cost? The answer is $800 billion a year.” How was that calculated? Easy enough: $2000 per month X 12 months X 35,151,728 people in Canada (according to the 2016 census) = $843,641,472,000.

 

Here is an economist who is trying to make us swallow that every man, woman and child in Canada would receive $24000 per year without paying anything back in taxes.

 

He later concedes that this number does not include any clawback. However the $800 billion number is left to stand. Gordon even mocks UBI advocates for not understanding the meaning of this number. It is the economist who has failed in his responsibility to put this number in its proper context , to explain that the cost of a policy is it’s net cost. Cash is distributed, of course, then taxes are collected, savings are realized by the real benefit of Basic Income.

 

Doing such an analysis is your job, Dr Gordon. We rely on you to do your job. Not to do it is, in my opinion, irresponsible.

 

Instead, you state that UBI is an unreachable goal “[u]nless you’re willing to try and persuade Canadians to accept a doubling of their current tax burden...” Again, this is in the purview of social science and politics. At best, you could contribute to the mathematics of how much Canadians would be willing to pay to eliminate poverty.

 

Later you write:

“You can have generous benefits at low cost, but only if they are focused on those with low incomes and are rapidly clawed back from those with higher incomes.”

 

Generous benefits at low cost. That is exactly what we are looking for. And you suggest that you have the answer.

 

Indeed you add:

“[A]ll the things promised by GAI [UBI] advocates are good and worth having, but that they are also impossible to combine in one package. Unless you’re willing to advocate for a drastic increase in taxes, the responsible thing to do is abandon the impossible GAI dream and focus on what is possible with current levels of tax revenues.” [emphasis added]

 

Can it be called responsible to abandon what is good and worth having, without a fight?

 

 

Thankfully there are other economists willing to dig into the data to explain how rather than argue that it can't be done. Robin Boadway et al. have produced a study that shows how a Universal Basic Income of $20,000 per year to every adult in Canada, could be implemented without raising taxes. As an economist, you are well placed to comment on this paper.

 

We are all counting on you

 

Stephen Gordon’s article appeared in the National Post of November 20, 2017.

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