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Tuesday, September 17, 2019

Yang's UBI Scheme: The Start of Libertarian Reform?

One of the Democrats running for president is using his campaign to showcase what universal basic income looks like. This is of course a way to get attention, but it also opens up for a serious conversation. With some tweaks, his experiment could actually make the case for a libertarian alternative to the welfare state.

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I would not have expected to see some intellectual innovation among the Democrat presidential candidates. Andrew Yang's scheme for showcasing universal basic income (UBI) does not rise to that level, but it could actually morph into an innovative idea worth considering. 

Even from a libertarian viewpoint.

Before we get there, let us not beat about the bush on what Yang is actually doing with his UBI showcasing. Breitbart reports on how he has found a way to give people money for supporting him:
Andrew Yang’s offer from the Democrat debate stage last week to pay ten American families $1,000 a month for a year to showcase his universal basic income campaign promise has drawn almost a half a million email entries into the $120,000 lottery. The offer also helped the 44-year-old long-shot presidential candidate collect $1 million in donations in the 72 hours following the debate, Yang’s campaign told Politico 
I bet this started out as a raffle idea, with campaign workers sitting around trying to figure out a way to get their guy some attention. Someone wanted to just tell people to "support Andrew Yang and you will be part of a lottery for money", but some lawyer told them the scheme would be illegal. The UBI showcasing program made the same scheme legal.

In other words, morally Yang has not made much of a contribution. On the contrary, in fact: it is bad enough that people can give candidates money and expect favors in return; once candidates start giving people money in exchange for their vote, the last moral vestige of a democratic society is beginning to crumble. 

History speaks the same language. The first money-for-votes entitlements appeared already in Ancient Rome, as did campaign donations in exchange for favors. Read Cicero's collected letters, and be amazed at the level of sleaze and lack of moral standards in Roman politics. But we have actually already taken it up a notch: the modern welfare state is in good part an institutionalized form of give-aways to people who then become dependent on re-electing the hand that feeds them.*

That, however, does not mean we should entirely dismiss Yang's idea. First, though, we have to weed through his official motive for setting up this voter raffle. Let us hear a bit more from Breitbart:
The campaign said that over 90 percent of the email addresses are new, a huge expansion of the candidate’s email list. He also gained more Twitter followers over the course of the debate than any other candidate. While some rivals on the debate stage laughed and rolled their eyes at the ploy, Yang’s campaign sees the “Freedom Dividend Pilot Program” as an example of why their internet-first campaign has pushed them to sixth place in the crowded contest. We’ve got a 21st-century candidate and we’re running a 21st-century campaign,” Campaign Manager Zach Graumann said in the Politico report. 
And he is now betting his campaign on the promise "vote for me and I will give you money". This gives him a leg up - or down, morally speaking - on other Democrats who are promising everything from Medicaid for All to free college. 

Yang expanded that moral erosion into the campaign itself. He tries to hide his cash pandering behind a nifty moral excuse:
“When you donate money to a presidential campaign, what happens?” Yang asked in his opening statement at the debate. “The politician spends the money on TV ads and consultants, and you hope it works out. It’s time to trust ourselves more than our politicians.” ... “If I gave a million dollars to [a] media company or consultants or hired like a small army of canvassers no one would blink an eye, but if we give the money directly to the American people somehow that’s problematic,” Yang said. “So, it just speaks to how messed up our system is where giving money directly to Americans actually raises eyebrows.”
With that said, let us get back to the UBI showcase that he uses as official motive for his vote raffle. The core issue here is the difference between what he is doing now and what he wants to do if elected president:
  • It is one thing to give away your own money, voluntarily, or to pool privately donated, voluntarily surrendered money into a give-away pool, as his campaign does;
  • It is a completely different matter to force other people to give up their cash so you can hand it out to others. 

This moral difference has gone unnoticed in the media, yet it makes a world of difference in terms of what Yang is preaching and practicing. If he were smart he would convert his UBI showcase into a much more productive reform idea. In my book Ending the Welfare State I have a chapter on the so-called Charity Compact, a reform model that would institutionalize voluntary giving to a point where it replaces existing welfare programs. I presented the original version of the Charity Compact in a white paper back in 2011; this past summer I modified the model for Medicaid reform here in Wyoming.

Yang, of course, is not out to replace any other program. His goal is to create a tax-paid universal basic income entitlement on top of existing entitlements. However, the Charity Compact could be adapted to mimic a universal basic income, without forcing taxpayers to contribute. 

Here is how it would work. The basic tenet of the Charity Compact is that taxpayers can divert a certain amount of their tax dollars to a specific program, in the original case welfare and in the adapted version long-term care under Medicaid. In return, taxpayers get a dollar-for-dollar deduction on their tax bill. Under a federally sponsored welfare program the deduction would be from the federal income-tax bill; in the long-term care example, which is limited to Wyoming, the deduction would come from the property tax (since Wyoming currently does not have a state income tax). 

The Charity Compact donation would go through a clearing house before reaching its beneficiaries. This clearing house would then work with providers of benefits, such as a non-profit helping people applying for welfare. Some non-profits will apply generous criteria, giving cash handouts with no real strings attached; this is the UBI model. Others would require recipients to get on a path to self support. Donors to the compact could then decide who they want to give money to - the UBI charity or the stricter one.

Andrew Yang's giveaway program could be a dry run for a Charity Compact style UBI program. Every person in America who supports the idea could elect on their tax return to divert a certain portion of their federal income taxes to the UBI Compact. They could also volunteer to donate more money, though any amount above the deduction cap would be a net dollar given away. 

The UBI Compact would then give money out according to eligibility requirements. Since a tax deduction is involved, Congress would be setting at least some of those requirements; if Congress really were serious about this they would take a hands-off approach and attach a minimum set of rules to the UBI Compact. Donors would then be able to attach strings, such as "give only to the poor" or "this is for everyone who wants cash". 

So long as the UBI is funded voluntarily it has the potential of becoming a good example of libertarianism in practice. Less government, more adulthood among taxpayers and citizens, and a more direct relationship between those who need or want other people's money, and those who give that money.

I doubt Andrew Yang will pick up on this idea, but maybe there is a true libertarian out there somewhere, who is willing to run with it...?

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*) There are two great books that explain how the welfare state gets people hooked on re-electing entitlement-friendly politicians. Coincidentally, they have notably similar titles: Myrdal, G: Beyond the Welfare State from 1958, and Heckscher, G: The Welfare State and Beyond from 1984. Myrdal was the main architect behind the Swedish welfare state while Heckscher, an influential Swedish politician, gradually went from being a staunch critic to giving up, conceding that the welfare statists had won. His book was an attempt to help the winners - the socialists - make the best out of the disaster they created.

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