Crampton on UBI

Eric Crampton writes:

In principle, a Universal Basic Income, as floated by the NZ Labour Party, sounds great. It’s once you start looking harder at implementation that things quickly become, well, messy, writes Eric Crampton.

If you like a UBI, economist Kevin Milligan tells us you can choose two of the following three options. But only two.

1. A high enough basic income that few people on current benefits are made worse off;

2. A low phase-out rate so that lower income workers do not face sharp penalties for accepting work;

3. A cost that isn’t massively higher than current spending on benefit programmes.

You cannot have more than two of these.

Labour could never do a UBI that doesn’t do 1 and 2 so hence the only sort of UBI Labour could do is one that costs massively more than current welfare spending.