On Wednesday, October 30th, 2019, American political philosopher and economist Karl Widerquist of Georgetown University-Qatar and Senior Fellow at the Manhattan Institute Oren Cass sat down in Filene Auditorium for a Political Economy Debate on the merits of Universal Basic Income (UBI). Widerquist debated on behalf of UBI while Cass debated against it.
Widerquist has been a passionate advocate for a UBI since he was 15, when he first encountered the concept on Milton Friedman’s television show. Much of his subsequent academic work has focused on the subject. Cass, who served as Mitt Romney’s domestic policy advisor in the 2012 presidential election, first seriously considered the concept in his research on why America’s economic progress hasn’t correlated with improved outcomes for its workers. Unimpressed by UBI as a policy prescription for elevating the American worker, he’s written numerous articles critiquing UBI in recent years.
Widerquist made the first remarks on the debate, outlining his philosophic support for UBI and how he believes the concept could be implemented. His first comments offered a scathing indictment of the American employment system, in which he believes a privileged few have monopolized the resources of society. For the average person, “the only way you can get a share [of resources] is if you work for these people.” For Widerquist, the privileged are holding those without resources hostage through the constant threat of poverty, which forces the underprivileged to perform menial and unfulfilling labor for the privileged resource-holders. Our current social safety net does little to improve the position of the underprivileged, merely providing stopgap programs like food stamps that “run out.”
In Widerquist’s estimation, this unequal status quo cannot be allowed to continue, and a UBI is a perfect prescription for breaking the monopoly that employers have over resources by granting everyone in society enough resources to survive independent of employment.
Having explained the necessity of a UBI, Widerquist then discussed how society could pay for it. First, Widerquist critiqued right-wing economists who “give exaggerated cost figures” for UBI and laid out his thinking on the actual cost of the measure. Because UBI involves direct cash transfers from the government to the people, Widerquist doesn’t think about the cost of a UBI through the tax burden that it imposes, but rather through the net cost of the program. The privileged and the wealthy will “pay [their] own basic income” in the form of taxes in addition to receiving a UBI. Considering UBI through this lens, Widerquist claims that a $10,000 per year UBI would impose only an additional net cost of $539 billion per year on the country. “Up to five-sixths of what you pay in basic income is just people paying themselves,” Widerquist says.
Cass then offered point-by-point responses to Widerquist’s arguments, characterizing them as “very interesting philosophically” but not holding “a lot of water tangibly.” On Widerquist’s point that the privileged few have unjustly monopolized the resources of the earth that everyone is entitled to, Cass pointed out that: “Things like food and shelter do not exist in the state of nature for us to go and frolic among, we actually have to produce those things.” Because individual human labor goes into many of today’s goods, Cass argues, society cannot collectively claim ownership of them.
In his response to Widerquist’s argument that employers hold the employed hostage and force them to work, Cass argued that: “The idea that if you don’t take the job your employer is therefore starving you into submission is again not relevant in a market economy. If you had a single communist employer it might be, but in a market economy part of the premise is multiple employers potentially competing for and offering work to workers.”
Cass was also critical of Widerquist’s characterization of America’s social safety net as being entirely lackluster, arguing, “It’s not true that food stamps run out” and that “we provide…guaranteed access to emergency care in hospitals, we have $600 billion in Medicaid and $1 trillion in Medicare.” Cass asked, “Do we have holes in our safety net? Could we make it more effective? Absolutely, and I think that would be a great conversation to have.”
Having responded to Widerquist’s points, Cass then offered his own reasoning for his opposition to UBI, with one “nuts and bolts” reason and one “conceptual” reason. Practically, Cass is opposed to UBI because of its massive cost. Cass acknowledges that “we could technically do a universal basic income,” but that “the tax burden is still enormous.” “If you wanted to provide $10,000 to every American, you’d be talking about upwards of $3 trillion a year,” Cass says. This means that “we’re talking about 30 trillion dollars over ten years.”; however, it should be noted that Cass considers the total tax burden of a UBI, and not the net cost to society after all income transfers have been made, as Widerquist does.
Nonetheless, Cass explains, raising such a large amount of money to even begin to engage in the income transfers of a UBI would involve an excessive amount of taxation. The effects of a UBI tax would mean that “every dollar you earn, beginning with the first dollar, the majority of it is now collected by taxes,” Cass emphasizes. “Another thing you could do [to pay for a UBI] is an 88% value-added tax, that would pay for this, but now everything in the economy would cost twice as much,” mitigating the effects of a UBI.
As a final point, Cass described his conceptual opposition to UBI, specifically how a UBI could negatively affect labor participation and the litany of social outcomes that are tied to it. Before explaining how UBI would affect work in America, Cass defended work, no matter how menial, as something good for people and for society. “I think that the value of work and the reason that we say that work is fulfilling, is not because dishwashing is inherently fun, but it’s because actually doing something productive for society in return for receiving back the things you want from society is core to both our understanding of ourselves and core to a healthy society.”
To Cass, the benefits of work are clear: “Certainly, if you ever want to move up in the economic ladder, you’d better step on that first rung,” Cass says as a basic argument for starting work. Work is “at least as important for family formation” and “the economic rationale for marriage.” Family formation declines “when work goes away,” which is disturbing as “children being raised in households where people are working have better outcomes.”
In a country where labor participation is already at a record low, Cass argues against UBI conceptually because it could exacerbate the trend of declining labor participation in the United States, contributing to the litany of ailments resulting from lack of work that he outlines above.
Cass’s remarks concluded, and Widerquist began his rebuttal against him. Regarding the cost figures Cass provided for UBI, Widerquist described him as being “under an illusion of…exaggerated cost figures. What really affects people’s behavior and their lifestyle as far as what tax costs are, is their total tax burden and their marginal tax rates.” UBI “doesn’t affect either one,” Widerquist explains, illustrating it with this example: “What I want you all to do is take a dollar out of your wallet and put it back in your wallet… you could do that a trillion times; it wouldn’t make any difference.” Widerquist explains, likening a UBI to this kind of action.
Widerquist also objected to Cass’s characterization of the employment system as one of competing employers that gives jobseekers a choice, instead calling it a “choice of masters” because people without resources still cannot work for themselves. “You can work for a client, but a group of homeless people cannot work for each other as clients because they don’t have any money or resources to reward each other with,” Widerquist said in defense of his point. In today’s employment system, we still “cannot in any meaningful way work for ourselves as my grandfather did on his farm.”
In response to this rebuttal, Cass rejected Widerquist’s assertion that people without resources cannot work for themselves, stating that “you could go start a pizza shop in a working class neighborhood that sells pizza virtually exclusively to other working class people and that’d be fine.”
Cass also argued that being able to work for yourself, in the sense that Widerquist alluded to in the example of his grandfather’s farm, was unrealistic and undesirable. To prove his point, Cass offered this hypothetical: “Let’s take some federal lands out west and open them up, where anyone who wants to can be a homesteader and farm.” How many people would accept this proposition? In his estimation, the answer is not many. This is because “the things that we want include health care and cars and all sorts of things that of course you can’t produce for yourself.” Cass continues, “if we want to live in the modern economy and enjoy the material standard of living that a basic income is attempting to provide to people, we’ve already given up on this idea that working for yourself could mean genuinely supplying your own needs.” In other words, our interdependence in a modern economy makes it more difficult for a UBI to solve the power imbalance between the worker and the employer that Widerquist condemns.
Cass concludes his argument with the observation that “In 2010, in the depths of the recession, we were down to a point where only 53% of working-class households had even one full-time worker.” A UBI he worries, “will accelerate the trajectory we are on now of an ever-smaller share of the population creating ever more of the economic value.”
Indeed, Cass says, when working-class people are asked what they want, “it doesn’t tend to be a check, it tends to be a job.”
-Written by Ben Vagle ‘22, Rockefeller Center Student Program Assistant for Public Programs