Basic Income, Complex Costs

An interesting debate has been happening in the blogosphere about the wisdom of “guaranteeing” a basic income, a policy where the government sends everyone in the country enough money to get them above the poverty line. On one side you have Pascal-Emmanuel Gobry at The Week, who looks back at several decades of field experiments and concludes that “science says the [universal basic income] doesn't work.” On the other side you have Dylan Matthews at Vox, who cites a Brookings Institute scholar on the way to asserting that a “basic income of sufficient size would, by definition, eliminate poverty.” Is one of these guys wrong?
A government check can obviously help people meet their material needs. What the left and right butt heads on is whether achieving that outcome comes at such a high cost that it ultimately does more harm than good. Gobry’s position is if the government provides everyone with a basic income, “millions of people who could work won't, just listing away in socially destructive idleness.” Matthews’ position is that this concern is overblown, but I think it’s reasonable to be cautious about adopting policies that could lead to lots and lots of people working less.
[GALLERY: Cartoons on the Economy]
Workers wouldn’t have to drop out of the labor force forever. As Matthews notes, people could simply choose to remain unemployed longer than they otherwise would. Let’s imagine I lose my job. Then let’s further imagine that although I could find another one — my resume is pretty impressive, after all — due to the guarantee of a minimum basic income from the government, I decide to take an extended break from working. I’m not doing it to care for a child or a disabled relative — I simply like the idea of spending a year sleeping a lot and reading the entirety of "Game of Thrones," and by living frugally on my government check, I’ve determined I can do it.
Is this a positive development? It’s great for me, of course. Matthews correctly observes that some people may choose not to work because “they've actually identified something besides work that create[s] even more value in their lives.” The question remains whether the rest of society is better or worse off because of my decision to transition out of the workforce. Might there be macro-level costs that outweigh the micro-level benefits? In the absence of a basic income guarantee, a person who draws a paycheck must have done something productive to earn it. With a basic income guarantee, I can choose to be productive or not and cash a check each month either way. The positive is that I get to step away from the stress of the workplace and do whatever makes me happy. But society has lost something twice over in the bargain: It’s lost a taxpayer and a year’s worth of the fruits of my time and talent.
[READ: America's First World Inequality Problem]
The issue then is whether reducing the incentive for any given individual to be productive by giving him the option to stay home would lead to markedly less aggregate economic output. Matthews’ piece says that “a generous plan set to 100 percent of the poverty line would all the same only cost about 1.5 percent of GNP.” In simple terms, proponents think the cost of implementing a basic income would be small in relation to the size of the country’s economy as a whole. But even if the cost of such a program is more or less fixed, the denominator in that equation is not. The size of the economy (which is another way of saying the sum total of the workforce’s productive output in a year) is directly affected by how productive Americans are with their time.
None of this proves the costs of a basic income outweigh the benefits. It’s true that if you give everyone enough money to lift them out of poverty, by definition you’ve lifted everyone out of poverty. It’s also true that if your policies cause enough people to stop contributing economically, by definition you’ve shrunk the economy.