UBI without quality public services is a neoliberal’s paradise

https://www.opendemocracy.net/en/transformation/ubi-without-quality-public-services-is-a-neoliberals-paradise/

by howard941 • 7 years ago

78 98 7 years ago

vore3• 7 years ago

UBI often gets held up as a panacea for an "inefficient" welfare system by allowing recipients to have "consumer choice" regarding e.g. healthcare or housing.

In my and the author of the article's mind, UBI only makes sense as a form of supplementary, discretionary income. If a UBI recipient is made to trade off housing payment against health insurance payment, they're required to make a choice between two essentials; if they're both essentials, they're not really fungible in the first place.

The argument often goes hand-in-hand with greater privatization of public services, which inevitably commodifies what should be for the benefit of the public.

weyland1082• 7 years ago

The problem is government services are generally inefficient because the motivation is welfare versus quality of service to attract more “users” (or to put it bluntly profit). It’s not run like a business and it shouldn’t be. ( I don’t think anyone would like the idea of public health program run for profit). I think the general premise of ubi being supplemental to some basic government services is an interesting thought. However I don’t think u can make government programs more efficient by throwing more money at it. The problem is not the money but the motivation when it comes to government programs.

0x262d11• 7 years ago

but they're not. that's a huge misconception. public services are almost universally underfunded and almost universally more efficient than the private sector providing a similar good with similar constraints (eg, being accessible to all rather than a subset of rich people).

"public stuff is inefficient" is the worst sort of received wisdom. it's exactly propaganda by rich people who want to skim profit off of things.

legitster10• 7 years ago

Trade-offs are not that binary in real life. There is a reason you do not live in the biggest house possible, you choose to forgo a bigger house to pay for other necessities.

And these marginal trade-offs are exactly what drive the normal economy - small improvements for price-conscious consumers. As much as I may agree something is essential, that doesn't mean I think it should be one size fits all or centrally allocated.

maxsilver2• 7 years ago

Trade-offs are that binary in real life -- for everyone who would need UBI.

If you are wealthy, you can choose to "forgo a bigger house". If you are middle-class or lower-class, the options are pretty much binary already, today, in the real world. You eat, or you don't. You have a roof over your head, or you don't. You get medical treatment, or you don't.

There's no way to "penny-pinch" , when you are already at the bottom, because all possible savings an individual could make are already priced in. Comparison-shopping isn't a choice, when you are already priced out of all but one of the options.

----

Unless UBI ends up being some huge amount of money (like say, $60k USD/yr/person), there won't be any meaningful non-binary trade-offs for any of those folks to make, regardless of whether UBI happens or not.

0x262d11• 7 years ago

This is a brilliantly concise explanation of this. I think it slightly glosses over one thing, which is that in any case where it might actually be implemented, UBI is basically a trojan horse to undercut and defund actually existing and useful welfare programs. That is what happened in Finland: https://www.socialistalternative.org/2017/03/07/finlands-bas...

Mediterraneo103• 7 years ago

The rhetoric in that linked article sounds like a fetishization of work, the old-school Communist praise of the labourer as the ideal human being. That is, the authors call for creating more jobs and building factories. That is a turnoff to those socialist-minded people who feel that work sucks, it is something our modern society ought to be avoiding by increasing automation.

0x262d11• 7 years ago

SA is completely in favor of automation and actually calls for reducing the workweek. But under capitalism, automation is used to drive down wages and increase the ranks of the unemployed, which is the primary concern of the (growing amount of) people who are living paycheck to paycheck or unemployed.

gojomo2• 7 years ago

The subhead asks: "Why should governments give cash-handouts before providing free, quality public services to all?"

That's pretty clearly because "free, quality public services to all" are really hard & expensive to deliver. Without prices & competition, they're prone to massive inefficiencies, over-provision or under-provision due to various political distortions, and resource- or agenda- capture by insider managers/public-employees/organized-lobbies.

Smaller, tightly-knit polities can often manage more-efficient public services. The two examples given in this article – "quality public housing" and "free public transport" – work well in some places!

But giant geographically, economically, ethnically diverse polities like the US have a much harder time. Public housing in the US sucks. Mass public transport here faces costs 5x as large in as other developed countries – due to the sclerotic interplay of dysfunctional bureaucracies, mercenary contractors, and powerful public employee unions. That is, those exact unions in the "Public Services International" federation which employs this op-ed writer. So of course she's arguing, "pay us first, and more, before spending more directly on the poor".

But the point of UBI, if it were to work as hoped, is to route around such non-poor middlemen – those who claim to be serving the poor, but rarely seem to reduce overall poverty. Cutting checks is comparatively easy to do, and most non-addicted adults can spend $X for their own welfare better than any supposedly altruistic outsider could spend the same $X.

0x262d11• 7 years ago

everything in this comment is completely, empirically wrong. public services are more efficient and have been basically forever. where public services are bad, it's generally because they are desperately underfunded and cut into by the private sector and austerity governments, which under capitalism are nearly all governments.

https://newint.org/features/2018/05/01/the-private-sector-ef...

legitster10• 7 years ago

This is a VERY biased source.

Also, there is a difference between how efficiently those services provide, and how well those services actually match consumer needs. The government can likely build cars more efficiently than anyone else, but would do a very bad job at determining what should be in a car or determining who those cars go to.

lolsal• 7 years ago

Isn't underfunding a form of inefficiency?

theslurmmustflo3• 7 years ago

Look at how well competition works in our broken healthcare system. Our costs are the highest in the world yet our life expectancy and infant mortality isn’t all that great.

Or look at education at all levels, where costs have also skyrocketed and public options keep getting cut because bureaucrats from “competing” private industries try to push their agenda (you could argue this is even worse in healthcare and pharma).

Competition and profit motive hasn’t been proven to work so well for public goods, in my opinion, but would love to hear of examples where it worked. This is why for some things we still agree we should pay for at a government level (local or national), such as firefighters, defense, mail, etc, etc.

Not even going to get into how inflationary ubi would be, instantly driving up costs due to “rational” economic behavior.

0x262d11• 7 years ago

competition and capitalism work well to drive technological improvement in conditions of extreme scarcity such as existed 100+ years ago. of course, it does this pretty violently.

there's no reason to believe it is better than democratic, central planning (note: not stalinism) in either this or the last century. public planning would, of course, go out of its way to incentivize automation and further technological improvement... something that has historically been publicly funded anyway.

edit: typos and stuff

Stronico• 7 years ago

It would not be inflationary - inflation is a monetary phenomenon - not a fiscal one. Wages might go up, which results in higher prices, but that is not the same thing as inflation (which is a GENERAL increase in prices and fall in the purchasing power of money).

Brendinooo• 7 years ago

There isn't true competition in the US's healthcare system.

Could very well argue that it's not possible because you can't shop treatment for a heart attack to get the best price, but I can say with confidence that trying to keep costs down for prenatal/labor/delivery was unlike any other buying experience I've had.

Lasik is a good example of how a less-regulated medical procedure got more cost-competitive over time, but again, it's elective. https://surgerycenterok.com/ is an example of a place that's at least doing flat, visible pricing, which shouldn't be a revelation in a market-based system, but is.

bhupy2• 7 years ago

Healthcare is NOT a free market, there is no pricing mechanism like there is in literally every other industry. It is the only good/service in America in which the prices are known/paid only AFTER the services are rendered.

https://fee.org/articles/imagine-if-we-paid-for-food-like-we...

dsfyu404ed• 7 years ago

Look at how well competition works in our broken healthcare system.

There no effective competition which is why the "race to the bottom" is not taking place.

Competition and profit motive hasn’t been proven to work so well for public goods, in my opinion, but would love to hear of examples where it worked.

Shipping everything larger than a letter comes to mind.

This is why for some things we still agree we should pay for things at a government level (local or national), such as firefighters, defense, mail, etc, etc.

Just because the government regulates and pays (fully or partially) doesn't mean the government should deliver the service. Private utilities seem to be slightly less dysfunctional than government owned ones. Private EMTs work fine. Private security isn't known for brutalizing people without a good reason. The roads are plowed at pretty competitive rates by private contractors.

Don't get me wrong, some "essential for society to function" services should be provided by or managed by government to varying degrees but the degree depends on the service. In housing a service does not inherently make it better.

weberc23• 7 years ago

I'm of the impression that public investment in education increased manifold since the ~60s without much improvement in outcomes. Presumably education is an example of goverment management gone awry (which is not to say that private management would fare better).

icelancer5• 7 years ago

Look at how well competition works in our broken healthcare system. Our costs are the highest in the world yet our life expectancy and infant mortality isn’t all that great.

Yes, we have the worst of both worlds: We socialize losses and capitalize gains. Banking/healthcare are two examples of non-free markets, because there is no ability to let them fail. When you cap the downside, you get exactly what we have.

This is a good example of poor market interventionism, not free marketeering, which is not to say that a free market is the right approach for healthcare (I think it should be fully socialized).

orbifold• 7 years ago

This is a self fulfilling prophecy. Whether the services are like you describe is largely a function of government competence, attention to detail, culture etc. Compare the Greek Internal Revenue Service to the German one. One did not manage to collect even basic taxes on a population that actually had a lot of real estate property, the other one has a pretty good track record (far from perfect of course). When it mattered the Ecole de Mines (A french grand ecole) produced some of the best mine inspectors, that had a fantastic salary (Poincare was one of them).

If you run your country properly and efficiently, none of the things that you mention must be true. This is really a question of mindset and culture, nothing more. Of course rich people and their lap dogs, like Milton Friedman would like you to believe differently. Ultimately if the private sector outcompetes the public sector for (most of) the best and brightest, you will end up in a situation like in the US. At various points in time, you could not achieve much higher prestige than being an elite public servant in France (all the grand ecoles recruited for that) or be part of the diplomatic corps in Germany. Some of these positions still have very competitive salary to this day.

Hopefully converting government services to digital services (the German government is planning to do this for all of its ~500 functions over the next decade) will eliminate a lot of the lower / middle management in the administration.

i_am_proteus• 7 years ago

Perhaps ironically, the Federal government's bureaucratic approach to equitable pay is why public-sector jobs are not competitive in the United States. Why would a talented person work for a fraction of the pay that the private sector offers?

weberc23• 7 years ago

So all we have to do is get a significant number of Americans to buy into the right culture and wait for the effects to manifest themselves in federal government? What a brilliantly trivial solution! Why has no one considered this before?

tathougies4• 7 years ago

Hopefully converting government services to digital services (the German government is planning to do this for all of its ~500 functions over the next decade) will eliminate a lot of the lower / middle management in the administration.

And provide a nice supply of testers! Nothing can beat German efficiency!!

icelancer5• 7 years ago

If you run your country properly and efficiently

Have you ever wondered why very large companies are run inefficiently and have a lot of bureaucratic morass in them, while startups and small businesses actually get things done?

Now compare the size of the United States' landmass, population, and GDP vs. individual European countries.

There was a time when the United States' model was supposed to be like the European Union, with strong individual states governed by a national body, where each state would have wide latitude over how they conducted their business. In such an alignment, you might see examples of efficiency (Germany) and examples of stupidity (Greece). Alas, this is not the direction the US decided to go, and instead has a pretty inefficient strong national state that gets very little done specifically because of its size.

opaque• 7 years ago

But giant geographically, economically, ethnically diverse polities like the US have a much harder time.

I've heard this refrain from a number of otherwise sensible people and it always makes me shiver. Not only does it imagine all the world's non-US megacities are quaint "tightly-knit" monocultures, but the dog-whistle "ethnically diverse" component is particularly repellant. To give the benefit of the doubt: that's probably not intentional, but I really wish we could end this meme as to why the US has inadequate public services.

EthanHeilman• 7 years ago

Are you arguing that racism has played no part in why the US has inadequate public services?

gojomo2• 7 years ago

You've heard it from sensible people because there's a significant social-sciences literature studying the idea, and largely confirming it – no "dog-whistles" required. I want more ethnic diversity in the US, but my eyes are open that in practice, such diversity (for at least a generation or two, maybe longer) tends to weaken political support for public services, and strain such services' competent administration. The right cultural & policy innovations might be able to overcome this effect! But probably not, if merely acknowledging it becomes a taboo, and we pretend it's not an effect at all.

And it's not just ethnicity – it's many dimensions of "largeness" and "diversity", including geographic dispersion, variety of economic industries and incomes, religions, density, etc.

Only 2 countries in the world have a larger population than the USA: China and India. They're not known for top-notch free public services, either – though China's anti-union, anti-local-control authoritarianism allows public infrastructure development at a crazy pace, and (forced relocation into) public housing. The other 7 most-populous countries (Indonesia, Pakistan, Brazil, Nigeria, Bangladesh, Russia, Mexico) aren't stellar examples of public services, either.

The "high services" models most often highlighted tend to be less than 1/30th the population of the USA and far more culturally/economically homogenous (the Nordics), or at most 1/6th to 1/5th the population of the USA (UK, France, Germany), and still less varied geographically, economically, and culturally.

negzero7• 7 years ago

I don't know if "ethnically diverse" affects public services here in the US, but we are more significantly more diverse than the majority of other first world countries.

https://wapo.st/2YSx1Ry

icelancer5• 7 years ago

but I really wish we could end this meme as to why the US has inadequate public services.

You're going to need more than wishing for this to go away, because as other commenters have pointed out, this isn't dog-whistling. It's empirical fact that a greater share of tribalism and sense of community (of which, surprise surprise, similar race/ethnicity is a factor) improves socialized goods/services.

Inconvenient facts are not racist when simply noted, and that's a meme I'd wish would go away.

xmonkee• 7 years ago

adults can spend $X for their own welfare

yes, but spend on what? Rent, privatized healthcare, and uber rides? This article is exactly right, it's idiotic to think that giving money to people with no affordable services to spend it on is going to improve their lives.

Give people $1000 per month and watch the next rent cheque go up by $900.

oh_sigh• 7 years ago

Why do you think housing would capture a majority of excess cash that people have, and not food vendors, or other groups that provide essential services?

gremlinsinc• 7 years ago

In some instances it's probably cheaper to give money than build buildings, hire staff, etc that cost more money than the dole being given. If we could give 2-3k per month for less than the cost of other handout programs, then why not automate the process of check writing as much as possible and just make it happen?

Though, this must be combined with major healthcare reform (single payer or something akin to Europe/Japan/Canada). If people have food, housing,and medical without fear of losing any of those then they will have less stress. Less stress = less anxiety, anxiety leads to fear, fear leads to the darkside aka crime/suicide/mass-murder then suicide/becoming Donald Trump.

legitster10• 7 years ago

Providing a single mother with a cash payment to fend for herself in an inflated housing market is not as effective as providing quality public housing. Giving people more money to fill up their cars is not as progressive as offering free public transport.

To me, this is actually an argument for UBI. A poor single mother deserves access to the same market of housing as everyone else! And public transit is great, but your living and employment options are super limited if that is your only choice.

Absolutely, we need to study how much social services would actually need to be offset. Perhaps free housing and buses are still valuable even with UBI. But having dual-class public and private options is not true progress.

It seems that in this author's view, a UBI is only a means to an end for tackling inequality, and doesn't believe the actual poverty alleviation aspects are of value. While I respect the point being made, I would argue that this in itself is a pretty privileged position.

Mediterraneo103• 7 years ago

Public transit is great, but your living and employment options are super limited if that is your only choice.

In most countries where UBI is even remotely a realistic possibility politically, public transit is just fine and how most people get to work. Indeed, for a single mother a personal car may well cost far more than the actual utility it provides. The USA is an odd one out in this respect.

legitster10• 7 years ago

True, this is a US example (although I was surprised by how many European cities have competing private transit systems). But I stand by my point that prescribing people's needs robs them of important choices.

cwkoss• 7 years ago

Author is defending the pork that funded this article.

gumby4• 7 years ago

I agree they are orthogonal. Part of the purpose of a UBI (and it needs to be U -- Universal -- not as a welfare replacement) is to correct for inefficiencies or inequities in structure -- you don't live close to a transit stop so you may spend some money getting to/from.

The other purpose is for signalling within the commercial system (tortilla chips are more / less popular that potato chips) which is crucial for the functioning of an economy.

As a welfare replacement it's terrible because it suffers from diseconomies of scale.

dullgiulio• 7 years ago

If it is Universal as you say, it cannot be zero-sum. If it is not zero-sum, what is it? Fueled by debt? Highest income pay more taxes (on income or assets)? In that case it is tecnically not Universal. You can't have money ex-nihilo.

anticensor2• 7 years ago

Debt-based bond-backed money is already ex-nihilio. UBI-backed money might exist and the monetary system would have been much simpler.

gumby4• 7 years ago

In macroeconomics, you can have a liquidity crisis, and the large number of poor is a liquidity crisis which also affects business. Remember money has multiple functions of which store of wealth is only one (and it's not the only instrument used for that purpose).

At a microeconomic level yes, this seems absurd, but microeconomics and macroeconomics are disciplines as different as physics and chemistry: the emergent macrobehavior is quite different from the micro behavior and calculation based on micro is not tractable.

purplezooey• 7 years ago

"... not as effective as providing quality public housing."

That is so far fetched. We can't even build more than 10% of the housing we need, much less add enough public housing.

novok4• 7 years ago

UBI shouldn't be implemented until regulatory supply constraints on the basics of life (healthcare, education, housing, etc) are removed. Otherwise the rent will go up by about the same amount that UBI provides and we will be back at square one again.

anchpop• 7 years ago

I shopped around for a good price when looking for an apartment (in a college town). Would competition not be sufficient for keeping prices down for renters? I understand it would raise rent prices some, since people having more money would increase demand, but increasing nearly the same amount as the UBI seems surprising. I'm not very knowledgable in economics so I apologize if this is a stupid question.

novok4• 7 years ago

Many places in the USA and elsewhere have NIMBY zoning policies that prevent new housing and / or dense housing from being developed, slow it down, make it significantly more expensive than it needs to be with 2:1 parking requirements, reduce property taxes for long term holders and so on.

This reduces new housing being developed in response to demand and thus increases the price when there is an increase in demand by an inordinate amount.

UBI will increase demand universally across the board in the form of cash for everyone, and inelastic supply constrained essential goods like housing will go up as a result.

This RE investment article explains it a bit more: https://www.nreionline.com/finance-amp-investment/why-supply...

beat5• 7 years ago

"Rent will increase to cover the entire value of UBI/minimum wage increase/anything else that helps" is a stock argument. That doesn't mean it's a good argument, just a common one.

On the other hand, in popular places to live (major cities), housing will continue to be a scarce resource. Adding UBI won't mean all the poor people get to move to nicer neighborhoods. But it also doesn't mean that increased rent will eat 100% of their UBI. Rather, it'll increase the amount of money they have relative to what they pay for housing, money that can go to less constrained resources like food and education.

cryoshon• 7 years ago

the issues shouldn't be related.

the point of UBI is to maintain liquidity of goods and a baseline level of demand for goods amidst a financial environment of increasingly extreme economic inequality which would otherwise cause sharp contractions in demand as a result of the public's lack of money.

if public services expand, each UBI dollar goes that much further. expanding public services alongside UBI creates a virtuous cycle in which a larger portion of each UBI dollar can be spent on non-essential goods, stimulating demand and subsequently funneling more money into the tax fund.

if public services contract, each UBI dollar has less purchasing power because a larger portion of its value is earmarked to purchase substitutes for essential public services. for instance, if your municipality slashes its water purification services, you'd need to purchase more bottled water than before, so you'd have less spending money because you'd still be paying the same amount of taxes yet you'd be forced to take on an additional expense as a result of the cuts. this situation completely undermines the economy as a whole because the cost of private sector substitutes will rise with every additional service cut until they are unaffordable, at which point demand will finish crashing and be incapable of recovery.

jedberg• 7 years ago

I don't know of a single supporter of UBI who doesn't first support health care and education for all.

bluGill• 7 years ago

UBI fails because most people who we want to help won't make good decisions. As my childhood barber noted, in the great depression the "men" who couldn't afford to feed their family where the ones hanging out playing pinball with any cash they had. UBI wouldn't help them, any money they get wouldn't go for food, shelter (or a long list of other things), but to expensive entertainment.

UBI without quality public services is a neoliberal’s paradise

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