Edward Glaeser on poverty and a guaranteed income

See Give People Money’ and ‘The War on Normal People’ Review: The Cure for Poverty?b

A guaranteed income does nothing to address the misery of joblessness, nor the associated plagues of divorce, opioid abuse and suicide. Edward Glaeser reviews “Give People Money” by Annie Lowrey and “The War on Normal People” by Andrew Yang.

Excerpts:

"The folly of UBI is that it sees a cash payment as a substitute for purpose and accomplishment and that it enables joblessness when we should be encouraging employment and job-creating innovation."

"We need policies that encourage job creation and working, not policies that pay people not to work.

In the mid-1960s, about 5% of men aged 25 to 54 were jobless. For 40 years that share has risen, and for much of the past decade the rate has remained over 15%. Suicide, divorce and opioid abuse are all associated with nonemployment, and many facts suggest that the misery of joblessness is far worse than that of a low-paying job. According to the most recent data, only 7% of working men in households earning less than $35,000 report being dissatisfied with their lives. But that share soars to 18% among the nonemployed of all incomes. This suggests that promoting employment is more important than reducing inequality."

"50 years of evidence about labor supply in the U.S. suggests that giving people money will lead them to work less.

The Negative Income Tax experiments of the 1970s—when poorer households in a number of states received direct cash payments to keep them at a minimum income—are the closest America has come to a UBI. But they did not show “minimal impact on work,” as Mr. Yang suggests. Rather, they produced a quite significant work-hours reduction of between 5% and 25%, as well as “employment rate reductions . . . from about 1 to 10 percentage points,” according to one capable study. Moreover, these experiments occurred at a time when most men were more firmly attached to the labor force. The combination of free money and artificial intelligence today could have far more catastrophic effects. Ironically, UBI could easily help to create a dystopian, jobless future, as more money induces more workers to leave the labor force even as entrepreneurs put diminishing effort into innovations that employ less-skilled Americans.

There are many sensible ways to fight mass joblessness. We could reduce the regulations that stymie entrepreneurship. We could reform benefit programs, like disability insurance, that deter work. We could reduce the payroll tax for low-income workers and their employers, and we could even reward low-income workers with wage subsidies (a per-hour boost) paid for by taxpayers. A future in which two-thirds of America lives off UBI is a true horror. If we “give people money,” we should do it by subsidizing them to work."