Phil Magness replies to my post by advancing a new argument that while the UBI might be a fine policy, we can’t get to it from our present circumstances. If we try, we’ll end up with a UBI + the current welfare state arrangements. In order words, you can’t get there from here.
This is, to my mind, a new argument, and in some respects a better one. I think there are serious institutional hurtles to getting a UBI off the ground in the US. Not only is it far away from what most people think is feasible, which itself makes the UBI less feasible, it likely violates the sense of justice of most people in the US, given that it is likely that the unconditional nature of the UBI will create enormous resentment.
But these considerations, along with Phil’s story about how we’d end up with the welfare state + a UBI prove too much. They suggest that policy change isn’t seriously possible, and so isn’t worth pushing for. In a detailed exchange between Will Wilkinson, Phil, and Pete Boettke in one of my Facebook threads, we were eventually able to agree that the UBI is not feasible at present in the US. But Phil and Pete insisted that unless we’re very careful about explaining how we could arrive at a UBI through a series of practical political bargains, that we UBI advocates are essentially utopian.
I don’t think that’s true. And I don’t think they really believe that either. This is because both Pete and Phil are libertarians – they support policy changes that would radically alter the institutional landscape in the United States. They recognize that these arrangements aren’t presently feasible, but by fighting and winning the battle of ideas, they hope to make presently infeasible arrangements feasible. So it can’t be fallacious to support ideas or policies that are not at presently politically feasible or hard to arrive at. You just have to be aware of the non-ideal circumstances in trying to figure out how to gradually render your policy proposal more feasible by changing moral beliefs, altering the power of interest groups, etc.
To illustrate, I’m going to run an argument parallel to Phil’s post by replacing “UBI” with “privatization” and “welfare state” with “socialist state. I will also make a few other minor alterations. If the parallel argument is successful, it should also show that we shouldn’t attempt to privatize socialized industries. And that, I presume, is an unacceptable outcome for Phil (or Pete). My general point is that if Phil is right, we should doubt whether we can make any major policy change given that Congress will muck it up. For after all, why risk privatization when we might end up with a worse replacement, like a botched privatization that leads to a more long-lasting resocialization, or perhaps an inefficient crony-capitalist industry with vestiges of socialism (privatized profits but socialized costs)?
So here we go mimicking Phil’s post:
I can accordingly think of one very likely scenario where [privatization’s] affliction with the problems of rent seeking, waste, corruption etc. is not simply worse but significantly worse than … current [socialism]: the scenario in which [privatization] is adopted due to a promised [“free market”] replacement for the existing [socialist] state…. Now wait a minute, you might say – that’s not a part of what [the privatization advocate] is proposing! Indeed it isn’t, but remember – we are living in a non-ideal political world. The seamless execution of a [political move from] the current [socialist] state to [privatization] is highly improbable in non-ideal conditions, so we must contemplate the adoption of our non-ideal policy in accordance with the most likely pathway to its implementation.
I’ll go ahead and predict right now what will likely happen if, say, Congress were to seriously consider implementing a [privatization]:
- A deal would be proposed to [substitute a privatized industry for] the existing [socialist] state …. This deal would carry all the promises that we now hear from [privatization] supporters about how the new policy would be welfare-improving and more efficient than the hodgepodge of a system we currently have.
- Once [privatization] is adopted, it will need to be phased in over several years if not decades in order to wean us off the old [socialist] system and onto the new. This will involve a “phasing out” of all of the elements of the old [socialist] state over many years, likely on a schedule prescribed by law.
- When the first phase-out deadlines arrive for the old [socialist] state, interest groups that are highly invested in those programs will begin to realize the imminent loss of their captured and concentrated program-specific rents, even though all people also now have [a privatized industry]. A number of them will move to preserve the rents of the old [socialist] system by pressuring Congress to carve out an exemption to the previously agreed upon schedule.
- Pressure to abandon the agreed-upon schedule will be immense, and will point to perceived deficiencies in the newly-adopted [privatized] system as a reason to “preserve” part if not all of the old [socialist] state …. You can expect to see news features and TV commercials that illustrate the sob stories of children or other dependents who still need food/clothing/medical attention despite having [privatization]. This includes a very likely number of cases where incompetent parents or guardians misappropriated their [shares in the privatized industry or lower prices from the privatized industry] on wasteful or frivolous self-indulgence, leaving their dependents little better off than they were previously. The paternalistic instincts of the [socialist] state will come out in full force.
- Amidst these and other pressures, Congress will cave, because the concentrated benefits of that rent will have an advantage over the diffuse costs of the [privatization]. We also have extensive evidence that Congress will cave because that is what Congress usually does in this very similar scenarios where a previously agreed-upon expenditure-limiting schedule runs into political demands in the present for continued appropriations.
- Instead of getting the promised [privatization], we will be saddled with both an extremely expensive new [crony capitalist industry or resocialized industry] and [so] substantial preserved elements of the old [socialist] state.
I say this scenario is likely because the existing [socialist] state is the product of many decades of rent extraction, as well as a number of deeply entrenched and relatively stable stakeholder interests that sustain it and make the execution of substantial changes to it very, very difficult…. Vested interests with substantial existing rent extractions do not simply dissipate, unless the rent itself also dissipates to the point that it is no longer worth the political investment to maintain it (and that scenario is highly unlikely with a direct payout system, as welfare is). Nor do interest groups easily [accept privatization] from [socialist conditions]…. Doing so is something akin to scrapping one’s lucrative and existing political investments – including investments that keep out other competitive seekers of the same rents – and starting again from scratch under a new rent allocation regime that is, comparatively, open to new competitive entrants seeking to capture some of its fruit.
In the end, a non-ideal transitional [privatization] program may explicitly eschew an idealized unicorn “fix” for [socialism]. But its implementation is still subject to a non-ideal political world. Delivering a massive proposed overhaul intact through that non-ideal political world therefore becomes its own unicorn problem, given everything that we know to be true and evidenced by centuries of experience within that political world.
It’s not enough to compare the [socialist] state and [privatization] – even a non-ideal transitional [privatization] – side by side and see how they stack up. We must also ask if we can even get to a [privatization] from the current [socialist] state while also leaving its promised benefits over the [socialist] state intact. Since one of those benefits necessarily entails repealing and replacing substantial parts of the [socialist] state within a non-ideal political world, the obstacles that political world places on the pathway to [the privatization] implementation must not only be addressed – they are the very essence of why [privatization], idealized or not, is a politically impractical program.