By
We are
frequently told that poverty in the United States is such an intractable and complex problem that any
serious attempt at eradicating it requires a diverse array of approaches and
reforms.
But
what if that’s not true? Universal basic income (UBI), which
has gone by various names at different
times and places, is one of the most straightforward policy proposals to
eliminate poverty: the government unconditionally gives
everyone enough money so that their basic needs are met.
Despite
recent misleading headlines,
Finland is not about to begin cutting checks to every single one of its
citizens anytime soon. However, the Finns are investigating how they might try
out a basic income, adding to a list of other experiments with the concept over
the past 50 or so years in places all over the world, including Brazil,
the Netherlands,
and rural North Carolina.
Could
UBI ever be implemented on a national scale here in the United States?
Bipartisan
support—really
On
its face, the idea seems ludicrous given America’s vaunted culture of
“self-reliance.” But the truth is the idea has historically enjoyed support
from politicians and other advocates, on both sides of the political spectrum.
For
liberals and the left, UBI is seen as having the potential to reduce inequality
and completely eliminate poverty. It has been supported by everyone from Martin Luther King, Jr. to 1972 presidential candidate George McGovern.
UBI
also appeals to some conservatives, such as famed libertarian economists Milton
Friedman and Friederich Hayek, because of its potential to shrink government and
do away with the minimum wage. Richard Nixon, during his first year as
president, proposed a so-called
negative income tax—a variant on UBI—where a family of four would get, say, a
$10,000 refundable credit, which is then taxed away as their income increases
and they no longer need the assistance.
Not
that expensive
Considering
that nearly all levels of government in the United States are struggling to
balance budgets, is UBI even fiscally feasible?
In
2014, almost 15 percent of Americans, or 47 million people, lived in poverty.
According to some calculations,
these citizens are $175 billion below the poverty line. While not
insubstantial, that number, according to The Atlantic,
“is equivalent to 1.08 percent of the country’s GDP, one-quarter of the
country’s $700 billion military budget, and exactly what we spend on Social
Security disability benefits.”
UBI,
theoretically, would cost much less to administer than many of
our current overly bureaucratic and inefficient social welfare programs. Rather
than having separate state and federal agencies handle SNAP (food stamps),
Section 8 housing vouchers, and Medicaid, all those programs could be
consolidated into a single agency, dispersing a monthly cash benefit that could
then be used to pay for food, housing, and healthcare.
It’s
possible the savings wouldn’t stop there. A UBI pilot program in a Namibian village of
1,000 people led to “a 42 percent drop in crime.” Granted, a Namibian village
isn’t exactly Times Square. Still, if you believe poverty is a root cause of
crime (and certainly, not everybody believes that),
law enforcement and court expenses might decrease as well.
But
will people still work?
Perhaps
the most common criticism of UBI is that, like traditional welfare programs, it
will create a disincentive to work. Society will become less productive, and
growth will stagnate due to lower employment.
But
the stereotype of the lazy freeloader doesn’t hold up under scrutiny. For one, surveys and studies frequently
confirm that having a job is tied to most people’s self-esteem and self-worth.
Would people really be so willing to give that up, simply because their most
basic needs were already being met?
And
unlike traditional welfare programs that reduce benefits as an individual’s
income rises (effectively causing a poverty trap where the marginal tax rate is
100 percent), most UBI plans keep the rate of increase positive at all incomes.
Large-scale UBI studies in Seattle and
Denver have found that very few people stopped working, while some people
reduced their hours slightly. Considering how overworked America is,
this isn’t such a bad thing.
Of
course, knowing that they have money to fall back on, some people—such as
students who need to concentrate on school and single parents who need to care
for their children—might choose unemployment over working low-wage jobs.
However, just because activities such as learning and parenting are not
traditionally included in the productivity metrics of most economists doesn’t
negate their broader value.
If
it is indeed true that most people will not stop working—and granted, more
studies need to be conducted—UBI could have other profound macroeconomic effects.
Always having a source of income to fall back on would give low-wage workers
more bargaining power with employers, who would likely have to improve wages,
working conditions, and benefits in order to convince workers to stay in the
labor market.
But
there is more to flourishing as a society. For example, we’ve agreed upon the
value of Social Security to enable citizens the possibility to retire after a
lifetime of work. UBI would give individuals the resources to leave bad jobs
and the flexibility to decide to spend time on family care, education, or
volunteer work—all of which would accrue to our collective benefit.
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