UBI fails and increases inequality.

Maybe UBI will free everyone to get training and make a dramatic leap up the income ladder. But prior UBI-like programs, such as the Negative Income Tax experiments of the 1970s, resulted in negative effects in terms of work and earnings. More recent trials show neutral to slightly negative impacts on work. But confidence in these experiments is low due to small sample sizes, low external validity, or convoluted designs. Participants also know these free checks are not going to last forever, so quitting a job to pursue “whatever,” to use Pelosi’s term, would make little sense. Yang’s permanent program could displace far more work. At the very least, it begs broad testing before jumping off the UBI cliff. Another cause for concern is the staggering cost of UBI: giving every US adult $12,000 each year would cost roughly $3 trillion annually, equal to about three quarters of all current federal expenditures. With the federal government already operating trillion-dollar deficits and unable to pay for currently-promised entitlements, that would require tax hikes that spook even normal tax hike advocates: “A UBI that’s financed primarily by tax increases would require the American people to accept a level of taxation that vastly exceeds anything in U.S. history. It’s hard to imagine that such a UBI would advance very far, especially given the tax increases we’ll already need for Social Security, Medicare, infrastructure, and other needs.” But the universality of UBI is what really sets it apart from past efforts to boost family incomes. Instead of growing refundable tax credits for lower income workers to “make work pay,” or even adding more “near poor” people to the welfare rolls, the new money in UBI heads for people with middle and higher incomes. That points to the ultimate irony of UBI — it would worsen inequality by shifting federal spending higher up the income ladder. That seems unlikely to become law, or if it somehow did, would not last long as budget cutters target payments to upper income households. Yang suggests it would take a constitutional amendment to curtail his UBI, but Congress could have other ideas. In that case, “universal basic income” could quickly become just “basic income” for the poor — that is, a massive new welfare program that supplants work. Either way, that’s a bad idea that risks more harm than good.