Last year, we released this video comparing the benefits of government welfare programs to those of a universal basic income.
Now, Preston Cooper of Economics 21 has pointed out one major downside of instituting a universal basic income: the difficulty of reform.
Cooper outlines how the incentives of voters and politicians make benefits programs so hard to change over time:
When programs benefit a limited group, it is sometimes feasible to change them. The welfare reform of 1996 is a good example. But a universal program, by construction, provides visible benefits to everyone. Even when a universal program is in dire need of reform, changing it can be next to impossible.
Consider the case of Social Security. There is a reason the program is known as the “third rail” of politics. Almost everyone over the age of 65 collects it, and Social Security benefits represent 39 percent of seniors’ income. The program, which has existed since 1940, has ballooned from less than one percent of GDP in its early years to over five percent of GDP today. Moreover, the program’s expected costs are going nowhere but up.“]
Social Security is incredibly difficult for politicians to cut or reform—any changes in the program would deprive a large portion of their voting base of benefits, which could cause politicians to lose the next election. As a result, reform never occurs.
The problem would only be worse with a universal basic income, as Copper notes:
Now imagine a universal basic income, which everyone would receive. Once policymakers pick a benefit level and method of calculating the cost-of-living adjustment, they will be stuck with it for a long time. Most of their constituents are going to be unhappy with any attempt to reduce benefits or trim the inflation adjustment. Like Social Security, once the program is set on autopilot, it will be very difficult to change. Design it wrong, and the federal budget could be stuck with more unsustainable costs.“]
Read the whole article over at Economics 21.