args

Universal Basic Income

His plan increases the “income effect” compared to a UBI The entire premise of my opponent’s argument is that everyone will get at least $15,000 and full employment. The differences between a UBI and a means tested program are not significant under the current system, as far as income effects go, for poor people, and both programs retain work efforts at the lowest income levels. My opponent’s plan, however, provides an extra $5,000 in income at this level for those in the private sector. The difference between no assistance and assistance under Con’s plan is more than it would be under a UBI, meaning his plan would reduce work incentives compared to a UBI. EITC reduces work incentives for many groups Con claims the EITC has mechanisms which reduce the negative effects of the phase-ou. Economic research has demonstrated that the EITC significantly discourages work for many demographics, especially women. Women in the phase-out portion of the EITC become 5% less likely to work, and for women who are already working, women work 20% fewer hours per year.[1] Another study came to the same conclusion, and discovered evidence of a negative impact on many females. “[T]he EITC explains 71 percent of the decline in low-educated married mothers’ desire to work between 1988-1993 and 1994-2010…While the “welfare to work” reform was designed to do bring welfare recipients into the labor force, the reform could have had the opposite effect on the “weaker” nonparticipants by shifting them from a program with some connection to the labor force (welfare) to a program with no connection to the labor force (disability insurance).”[2] Wage subsidies, like the EITC, introduce multiple distortions in the labor market. These distortions are favorable to low-wage industries, making domestic production costs lower. This means imports are negatively affected, which distorts trade, and hurts the economy.[3] By making the EITC more generous, we would be increasing the work disincentives for women. A more generous EITC would also increase distortions in the labor market. The issue with public works and education Con’s plan is trying to create a quasi-universal basic income system, but instead through providing employment and job training. This solution is problematic. The way Con sets up his plan would negatively affect the private sector. There are two scenarios for poor people: either they get nothing, work for the government/educate and get a $10,000 UBI, or work for the private sector and at least earn $15,000. This plan creates a whole new level of bureaucracy and would drastically increase spending--Con’s claim that this would somehow reduce spending is insane. The plan causes thousands if not millions of new people to work for the public sector. The issue with this is that there would be a “crowd out” effect. Many tasks the government completes could be provided for by the private sector if the government wasn’t providing them. While government expands, the private sector retreats.[12] We must weigh the two effects. The crowd out effect would affect all industries, because my opponent’s plan has to be able to, at full capacity, be able to employ the entire country. Every industry will experience some type of crowd out. The cost of his job guarantee for low-income people in order for them to obtain welfare is extremely large. This is essentially his plan: People are poor. People need assistance. They must work in order to get assistance. The government should offer work to those who are currently idle. Thus, he basically is ensuring work for anyone who wants it. It is implied that the government should be able to, at maximum capacity, provide work for 300 million people. But this means the government would have to get involved in all industries: fast food, technology, yard work, etc. The reason is because we only have so many construction projects, and many construction projects are already done efficiently by the private sector. When public roads are fixed, all public buildings repaired, and all museums erected, what then? What if the demand for these new products (like museums) wane over time? Or a recession strains the system and it cannot handle the influx of workers? The simple fact is these public works programs would not be doing traditional public construction jobs after a period of time, and the government would be forced to distort the market by entering formerly private industries in order to ensure employment. The cost of such a program would be enormous. Under a UBI, you simply hand over the check. Under a job guarantee/workfare regime, you have to pay managers, supervisors, and other bureaucrats in order to supervise work projects. You would have to pay for the education programs, the teachers, and administrators. You would require a large number of other employees to make sure everyone receiving benefits needs it; the increase in administrative complexity and costs would be enormous. Under a UBI, administrative costs would be virtually zero. Nothing about the UBI restricts or inhibits public work programs. As I already explained, the UBI increases work incentives, on balance, even for those who are at the bottom of the income ladder. This means implementing a UBI would expand the size of the labor market and it would be easier to staff public work programs. A study in Germany predicts a UBI would increase the labor supply and increase work incentives.[4] The U.S. is considered the most innovative economy because of its “cut throat” capitalism and private sector innovation.[9] By making the government the largest employer and heavily distorting private markets, the U.S. economy would be destined to become less innovative and productive. It would be much more efficient to allow the private sector to deal with education and employment. Marco Rubio has an education plan that promotes and encourages vocational training using private sector mechanisms.[5] The research on vocational training is ambiguous, with the GAO saying any “positive impacts [from vocational training tend] to be small, inconclusive, or restricted to short-term impacts.”[17] A 2008 study found no difference in employment, wage, and economic outcomes for those who have gone through work training programs compared to those who had not.[18] Did workfare work in the past? Con claims the welfare reform act of 1996 dramatically reduced welfare rolls and increased work incentives. This argument is flawed because welfare rolls were falling before the implementation of workfare. One study found only “15 percent of the decline [in welfare rolls] is due to welfare reform, the rest to the significant expansion of low-wage work during the 1990s.”[6] In other words, economic growth reduced welfare rolls. Another study published in the American Economic Review argues 50% of the decline in welfare roles was due to a reduction in number of people receiving welfare.[7] This has important implications for those who interpret welfare reform as a success. A reduction in the number of families receiving welfare may have negative impacts on those at the bottom of the income ladder. Indeed, of those who have been kicked off of or became ineligible for welfare, “most are in poverty.”[6] Economists who have reviewed the literature also note how only about one third, at best, of the reduction in caseloads is due to welfare reform.[8] The benefits of my opponent’s counterplan are overstated Keeping people out of poverty is a benefit of both of these plans, according to Con. But as I noted, the significant distortions in the labor market caused by his plan may make the situation worse, and require that the U.S. becomes the largest employer in the country. In the long term, this would reduce not only U.S. but also global economic growth and innovation. His plan would not reduce wasteful spending. A UBI would eliminate administrative costs. His plan increases costs, because not only are you giving money to people, you are also doling out paychecks to thousands of extra unnecessary employees that oversee the public works. A UBI program is affordable.[10][11] My opponent’s plan would undoubtedly increase costs. The production of skilled workers is much better suited for the private sector, mainly due to the massive public costs of ensuring education for every poor person if they wish to pursue it (and by artificially increasing the amount of skilled workers, the value of education would fall and reduce wages for those who are already educated). Crime rediction is nonunique. Poor people, who are more likely to commit crime, often do so in order to make a living. One way to fix this, as my opponent notes, is to give them a job. But a UBI would have the same effect: by reducing financial hardship, a motive for crime would be substantially weakened; a UBI would also increase social cohesion. In Nambia after a UBI was implemented, crime fell by 42% due to an increase in cohesion.[13] In India, UBIs increased economic activity and school attendance.[14] Obtaining unearned income makes people more sociable. When people earn small lottery winnings, the ones close to UBI level, it has been found “that unearned income improves traits that predict pro-social and cooperative behaviours… as well as reduce individuals' tendency to experience negative emotional states.”[15] A UBI would have the same effect, meaning a UBI would positively impact our society. When the government does more, the private sector does less, and oftentimes the crowd out effect is larger than the benefits of increased public works. An research suggests increased infrastructure spending is a poor economic stimulus and the crowd out effect more than cancels out the benefits of increased infrastructure spending.[16] Creating other public goods, if there is no demand for them, is a net-negative because the taxpayer has to pay for these institutions. http://bit.ly...