WHERE’S THE MONEY?
Given the downsides of existing transfer programs, where does the resistance to UBI come from? Why are there so few cash transfer programs, anywhere in the world, that are universal and come without strings attached?
One simple reason is money.
Universal programs in which no one is excluded are expensive. The proposal to pay $1,000 a month for every American would cost $3.9 trillion a year. That’s about $1.3 trillion more than all existing welfare programs, roughly the equivalent of the entire federal budget, or 20 percent of the US economy.11 To finance it without cutting back all the traditional functions of government (defense, public education, etc.) would require eliminating all exiting welfare programs and raising the US tax level to the level of Denmark’s. That is why even the enthusiastic supporters of UBI talk about a design where the transfer would be lower as people got richer, and would be zero above a certain income. So not, in fact, universal. If UBI were paid only to the poorer half of Americans it would cost a much more affordable $1.95 trillion. But that would require targeting, with all its pitfalls.Source:
Banerjee Abhijit V., Duflo Esther. Good Economics for Hard Times. PublicAffairs,2019. — 403 p.. 2019
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