A lowish basic income satisfies the right’s desire that there be only limited redistribution. But it would compel people to find low-paid and unpleasant work.
Pointer from Mark Thoma.
Dillow believes that a basic income should be high enough so that a person could turn down low-paid and unpleasant work. I am confident that I could not persuade him otherwise, but all I can say is that I disagree. The summers I spent in an electronics factory were much better for my morale than the summers that I spent idle. And if my daughters faced the choice of a future cleaning hotel rooms or a future living on welfare checks, I honestly would think of them as better off cleaning hotel rooms.
In fact, one of the arguments against a negative income tax is that there is some evidence that labor supply is highly inelastic, so that even with high implicit marginal tax rates poor people choose to work. That evidence would suggest that many people share my preferences about the dignity of having a job and earning one’s living.
If the studies are correct, then lowering the implicit marginal tax rate will induce only a small increase in labor supply. I happen to think that in the long-run, perhaps meaning the multi-generational long run, the labor supply elasticity is higher than the studies show. However, even if I am wrong about that, I would still prefer lowering the marginal tax rate on ethical grounds. Let government policy reinforce the work ethic, rather than exploit it.
Another reason to lower implicit marginal rates is to lessen the incentive to work for cash under the table instead of working on the books.
Doesn’t Ed Prescott show that over long periods of times differences in marginal tax rates can have very large effects on income and GDP?
I’d offer the following supporting points to what Arnold said:
I think it’s often forgotten how often menial jobs can have very large benefits to the people working them, even if the pay isn’t great. I’ve worked as a telemarketer, door-to-door sales guy, and as a low status bank officer and all three were very useful for developing my sales skills, giving me realistic access to how other people view the world, and lots of valuable experience in coordinating my actions with people who were very, very different from me. When I look back I still don’t think highly of the people I had to deal with, but to call it “oppression” that I had to work for low wages, have idiot bosses, and create transactions based on values that were different from my own would be a terrible way to frame the issue.
I consider myself just as smart as some of my peers who have passed through the credentialist guild, but consider this “real world” experience to be very valuable and prefer it over the buffered academic path of internships, study abroad programs, and abstract schoolwork that’s comprised their work experience to date.
That’s great if you only have to deal with other people who exist in the same bubble, but life offers lots of opportunity to those willing to scrape between the cracks.
So no, I don’t think the point of a BMI should be to eradicate the need to work shitty jobs.