Why not look to the Middle East for real-world Universal Basic Income effects?

I was chatting with an NYU professor. She recently taught a class at the university’s Abu Dhabi campus. I asked her what the students were like and she said that only four were Emiratis and “they were all girls; Emirati boys can’t be bothered since they know that they will never have to work.” It turned out that young people from all around the world competed for all-expenses paid slots at this college and the vast majority turned out to be foreigners.

As someone who hates to see money poured down the administrative drain I have long been a fan of UBI-style ideas (see my 1996 food-and-shelter idea, for example). But I’m wondering if experience in the Middle East should be studied before we go too far down this road. A lot of oil-rich Arab countries offer the basics of life to all of their citizens. U.S. and European taxpayers have been providing food, shelter, healthcare, and education to Palestinians since 1950 through a UN agency. The result seems to be low participation in employment (but maybe we will match them soon!) and a high birthrate: Qatar has the 6th highest population growth rate on the planet (CIA Factbook); the Gaza Strip is not too far behind at #13 (CIA Factbook).

Tel Aviv cab driver on the subject: “I told my kids that the only place ‘Success’ comes before ‘Hard Work’ is in the dictionary.” (works better in Hebrew, presumably; he had worked at a desk job for 36 years before retiring from that to drive a cab)

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6 Comments

  1. Mark Wilkins

    July 21, 2016 @ 1:59 pm

    1

    It would be interesting to see what actual data someone could collect in such a country. I’m not sure it makes sense to base policy choices on one person’s impression.

    Details of what support is provided, and how much, matter too — if I were able to live at my current standard of living forever based on my country’s oil royalties, I might choose to do spend my time other ways than work, but the universal income proposals out there would at best offer a minimum standard to someone who were to accept it.

    Finally, it’s likely there are cultural differences regarding life priorities that might make some cultures assign more value to working life than others, so there’s no assurance that results from there would be indicative of the result here.

    There’s a widespread presumption on the right that small amounts of support, barely enough to sustain life at a poverty threshold, actually dissuade able-bodied people from working. To make such a claim in a meaningful way, real data is essential.

  2. Yossi Kreinin

    July 21, 2016 @ 4:04 pm

    2

    Well, you could say that democracy doesn’t work by looking at the Middle East. This is not to say UBI would work, just that different cultures work differently and examples from one transfer poorly to another.

  3. Vince

    July 21, 2016 @ 4:40 pm

    3

    Once again, that labor force participation graph that you link to includes all Americans over the age of 16. Much of its decline reflects the retirement of the baby boomers. So Social Security could be considered to be some sort of UBI which induces sloth in those over 62. Maybe some would say that it should be eliminated to get all those elderly back in the workforce.

  4. philg

    July 21, 2016 @ 7:20 pm

    4

    Vince: Blaming demographics for the decline makes sense until you look at Singapore. http://www.singstat.gov.sg/statistics/visualising-data/charts/labour-force-participation-rate for example.

    See also https://blogs.harvard.edu/philg/2015/06/01/book-review-the-redistribution-recession/ for more granular data on what kind of Americans are withdrawing from the labor force (hint: it is disproportionately those who can get cash and/or in-kind benefits such as free housing).

  5. Vince

    July 21, 2016 @ 9:01 pm

    5

    That Singaporean chart doesn’t show anything of relevance. It’s a fact that, if you look at the population of all Americans 16 and older, a larger portion of them is over the age of 65 than was the case 10 years ago. You may also not be aware of the definition of labor force participation. A person is considered to be participating in the work force if he is either employed or looking for work. So if ten million Americans quit their jobs next week but claimed to be looking for work, it would have no effect on the participation rate.

    Those are two reasons to ignore that labor force graph, even though so many people love to reference it. The graph that I link to below shows something more useful, which is the employment-population ratio for people aged 25-54. The employment-population ratio represents the percentage of that age cohort actually employed. That graph can also be said to show that America hasn’t yet recovered from the last recession, though the situation isn’t so dire. The participation rate is also shown on the graph. Looking at the graph, some people might think that the 1960s were a very bad time for the US economy, even including the early ’60s, before LBJ’s Great Society programs. Of course, there are quite a few other statistics that indicate the economy was doing quite well in the’60s.

    https://3.bp.blogspot.com/-4detz1FXowY/VyyX6ZzVpNI/AAAAAAAAngI/GhbnYtJFNToKIfU5iupg4OimEIdLchAuQCLcB/s1600/EmployPop2554Apr2016.PNG

  6. ZZAZZ

    July 22, 2016 @ 3:50 am

    6

    Vince, I think a graph of the labor participation rate for *white males* 25-54 would make the 60s look much better than the unfiltered data do.

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