Moneybox

Universal Basic Income Is Not the Solution to Poverty

So why do lefty wonks keep writing about it like it is?

A hand holding cash.
Photo illustration by Slate. Photo by ollinka/iStock.

Utopia—a term meaning both “good place” and “no place”—has a long history: It dates back to Thomas More’s book of the same name, which was published in 1516. More imagined a perfect world as a lens through which to see the current one: In order to fully appreciate the unfairness of 16th-century England, More contrasted it with a hypothetical Utopia where all men were equally prosperous.

No one mistook More’s Utopia for a policy proposal. As Rutger Bregman explains in the introduction to Utopia for Realists, virtually all of humanity was living in extreme poverty in More’s day. What’s more, the same was true 200 years later. The average annual income in Italy in 1300 was roughly $1,600; by 1880, after the Renaissance and the Enlightenment and the invention of gunpowder and the steam engine and the printing press, it was still $1,600. For all those centuries, Utopia was only an ethos, no more than a provocative thought experiment.

Since 1880, however, Utopia has come increasingly within our grasp. The wealth of the average Italian has increased fifteenfold, while the size of the global economy has multiplied 250 times. Less than 10 percent of the world’s population now lives in extreme poverty, vaccines have saved many more lives than all of the 20th century’s wars killed in aggregate, and 6 billion people own a portable computer that can connect them to anywhere around the globe.

In such a world, with tens of trillions of dollars of wealth, extreme poverty is a choice, not an inevitability. That’s the compelling and compassionate heart of Annie Lowrey’s new book, Give People Money: the simple and powerful proposition that ours is a world with more than enough money to ensure that no one lives in poverty.

And yet, Lowrey finds poverty everywhere she looks. She travels from Korea to Kenya, and from Mumbai to Maine, and finds objectively unacceptable levels of poverty in each of those places, forcing us to look unblinkingly at the kind of situations and individuals from which many of us would normally avert our eyes.

Lowrey doesn’t just document the problem; she also offers a simple and effective solution. If you take very poor people and give them money, they stop being very poor pretty much by definition. They also, it turns out, become healthier, work more, and generally become vastly more productive members of society.

From development circles to fully industrialized economies, this broad idea is relatively uncontroversial. Cash-transfer programs, including Social Security, which don’t try to tell you what to spend the money on, tend to work very effectively and lift millions out of poverty. Many governments have adopted what development economists like to call CCTs, or conditional cash transfers, with significant positive results; more recently, there has been a lot of buzz surrounding UCTs, or unconditional cash transfers, which remain largely untested at scale.

And then there’s universal basic income, or UBI, which is basically the mother of all UCTs: an unconditional transfer going to every single person in a society, no strings attached. Whether you’re a homeless single mother or a jet-setting billionaire, you receive the same set amount every month. (In the U.S., that amount would be somewhere between $500 and $1,500.) UBI is the big idea Lowrey is pushing with her book; her unsubtle subtitle is: How a Universal Basic Income Would End Poverty, Revolutionize Work, and Remake the World.

UBI is having a moment right now. The idea has been around for centuries, but there’s something about UBI that’s resonating today, with dozens of books written on the subject from all manner of different perspectives. The most common takes come from the left (as Lowrey does), from the right (as a means of dismantling the welfare state), and from the techno-dystopians, who worry about a future where the robots have taken over and no one has a job. The appeal of a UBI to all three groups is easy to see: It appears to be a very simple solution to any number of incredibly complex problems. Think of it as the “put it on the blockchain” of political economy.

Lowrey seems to know there are no easy fixes, but she forges ahead anyway, explaining in one bravura sentence toward the end of her book why: She sees a rare opportunity to do something really bold, or at least to make milder versions of a UBI more politically acceptable.

In light of the country’s political polarization, veiled and unveiled racism, income inequality, wage stagnation, and geographic pulling apart; for all the growth in the wealth gap and of student-loan debt; given the country’s retirement and disability and child-care-work crises; granted the Uberization of the economy, the Overton window—the scope of policy possibilities—has been thrown open.

Lowrey’s book is not detailed policy proposal, like the one Facebook co-founder Chris Hughes put forward in his own UBI book, Fair Shot. Ultimately, Give People Money is a continuation of More’s project: an examination of the present through the lens of a counterfactual. Lowrey’s UBI is “an ethos,” she writes, as much as it is an actual proposal. It’s a way of espousing a certain set of beliefs; it’s “a lesson and an ideal”; it’s a push “to keep imagining, so that when the future arrives, we are ready.”

Perhaps that’s because UBI is a pretty inefficient way of giving poor people money. Think about it this way: Just 40 percent of a UBI’s expenditure would go to the bottom 40 percent of the population, and a mere 10 percent would go to the 10 percent who need it most. What would happen to the rest of the money?

Study after study has shown that when you give money to the homeless and the very poor, they don’t spend it on frivolities like booze and tobacco: In fact, rates of drinking and smoking invariably go down rather than up. On the other hand, if you gave me an extra $1,500 per month, no strings attached, I’m sure a significant chunk of that would end up in my wine fridge. That might be popular with my local wine merchants, but as a means of redistributing society’s wealth in the interests of fairness and equality, it does leave something to be desired.

That’s why so many UBI experiments are taking place among the very poor—in Kenya, say, or India. In California, the big UBI pilot is happening in Stockton, not in Palo Alto. By targeting the poor, UBI researchers can generate the biggest possible upside, with the lowest potential for waste. But the heart of a UBI is the U: the universality. And the minute that a UBI becomes truly universal, encompassing the rich alongside the poor, it starts becoming much more wasteful than any pilot project.

Lowrey understands this, and is not particularly wedded to a truly universal basic income. In India, she toys with the idea of excluding anybody fortunate enough to own an air conditioner. In the U.S., she says, the UBI could be applied only to the bottom 60 percent of the population. She also brings up the idea of instead giving “baby bonds” of $50,000 to everybody born into the lowest wealth quartile, or implementing some kind of jobs guarantee. At one point, she writes that an “even better idea would be to implement a UBI as a negative income tax” that takes your annual income and, if it’s below a certain minimum level, raises it to that level.

There are always trade-offs. A negative income tax would not benefit anybody much above the poverty line, and in that sense, it would lack a key feature of the UBI, which is that it’s needs-blind and benefits everybody. If only the poor benefitted from a negative income tax, that would create resentment among the middle classes: The slogan coined by British sociologist Richard Titmuss is that “a policy for the poor is a poor policy.”

Ultimately, Lowrey punts on choosing between these options, saying that working out policy design issues risks getting “stuck in the fine print.” Her big idea is to give people money, not to worry overmuch about how to give people money. As a good first step, she says, we should just convert existing programs, like Section 8 housing vouchers, into cash transfers; in general, when it comes to government social spending, the more unconditional it is, the better.

She’s right about that. The big idea in Lowrey’s title—give people money—is a powerful one, strongly backed up with abundant evidence. But her subtitle talks about a UBI, rather than about cash transfers in general, and Lowrey structures the book from its opening chapter as being a case for UBI—the very front on which the book falls short.

Lowrey is convincing on the need to eradicate poverty, and equally convincing that cash transfers can often be one of the best ways of doing so. But she fails to mirror her passionate rallying cry on the subject of poverty reduction with an equally passionate argument for UBI in particular. Lowrey has more zeal than the bloodless Chris Hughes, who is so unexcited by the idea of unconditionality that his preferred solution actually includes a work requirement. At the same time, she lacks Bregman’s infectious enthusiasm for UBI—Utopia for Realists is a full-throated case for UBI—and she ultimately doesn’t come close to demonstrating that a universal basic income would be the best way to target cash at the poor.

“UBI is hardly a silver bullet,” writes Lowrey, correctly. But if you want a designed a policy, one that reflects the desires of the poor and the neediest, one that’s calibrated to become broadly politically palatable, then at some point you need to revert back from being a crusading revolutionary with Utopian ideas to being a policy wonk in the weeds. Too clear-eyed and empirical to be an ardent true believer, yet also too Utopian to be a policy wonk, Lowrey ends up falling uncomfortably between the two stools. Her book is an excellent guide to the issues surrounding a UBI. But it won’t cause many people to start advocating for one.