Can Universal Basic Income Be a Solution?
Prepare yourself. I am about to cross the event horizon into a policy that could be considered, on the surface, socialism. To be very clear, I am not a fan of socialism by any means. I believe that Margaret Thatcher said it best when she said "The problem with Socialism, of course, is that eventually you run out of other people's money." But is the concept of Basic Income really pushing socialism? Or is it effective implementation of a safety net? Could it actually be cheaper than current social nets as they exist in society?
To start, let's review what Basic Income is and put a few constraints on the theory. Basic Income is the paying of a living salary to every citizen in a country, usually on a monthly basis, in replacement of - or addition to - current welfare and social safety net programs. I'm going to focus on Basic Income as a replacement of the current existing social programs, not as an addition to, because I believe the main benefits of the idea are in the savings that come from the simplification of the administration process. Simply giving everyone more money is nothing more than just "helicopter money".
The first thing to consider in this discussion is how many actual social programs the United States runs, and the dollar amount of the payouts for these programs. Wikipedia has an awesome breakdown of the different types of means tested programs provided and the dollar amounts associated with each. Feel free to run through it. I was quite surprised. To sum up, however, there are 79 different means tested social safety net programs that are administered - in some cases at just the Federal level, in other cases at the Federal and State level. The total amount of the cost of all of these programs was, in 2011 (latest data not yet available), $2.3 Trillion. Now, that includes Social Security and Medicare, so one could argue that these should be removed as they are benefits to be given solely to retired citizens, but for the sake of this discussion, I'm going to include them.
Google tells me that there are 322,267,564 citizens in the United States as of December, 2015. Rough, back of the napkin math means that if you canceled all of these means tested programs and simple cut everyone a check, that would be approximately $7,137 per year, per individual. Of course, that isn't enough to live on by itself. But in many cases, neither are the benefits received by some individuals and families. However, you wouldn't just give everyone the same check. Rich people would get a lot less. Children would get less, and parents of children more. The disabled would get more. Retired citizens would get more. There could be a higher payment for those with chronic illness. Your Basic Income check amount would be determined by a variety of factors, and it would not be taxable.
Think, just for a moment on the amount of money the country could save in the administration of all of these programs. I was unable to find exact figures on the amount of money spent administering the various social safety programs, but I did find a few articles referring to a Government Accountability Office (GAO) study (that I could not locate) indicating approximately .20 of every welfare dollar goes to the cost of administration. If that is accurate, then the cost in administration of all of the above means tested programs is somewhere near $460 Billion on the state and federal levels. Think about that for a moment.
Now, of course, there are going to be some programs that either the Federal Government or States run that might not be able to be replaced by a check payment. And there is the small matter than our elected representatives cannot even agree on simple matters, much less a complete overhaul of the welfare system. But other countries are already moving in this direction.
Ontario, Canada is planning to try it out. Ontario is suggesting an amount of ￡308 ($437) a month to all working age adults age 25 to 63. They argue, and I agree, that this will actually inspire people who currently do not seek out work because doing so will disqualify them from their benefit payments. However, if they receive $437 no matter what, why wouldn't they go out and get a job to increase that amount if they wouldn't be penalized for it?
In fact, there have been articles and discussion here in the U.S. about families who receive more in benefits than minimum wage would earn them, and that this encourages them to not go out and get a job. After all, why go out and work when doing so will cause you to make less money in the end? Think of what a Basic Income could do to the discussion of minimum wage!
Finland is considering scrapping all welfare programs and just giving everyone 800 Euros ($865) a month. On June 6th, the Swiss will vote on a referendum to give every adult about $2,500 a month (2500 Swiss Francs), and kids about $625 a month. There have been discussions to look at similar programs in the European Union. Ann Lowrey at the New York Times wrote an excellent article on the subject that I highly suggest you read. In it, she makes some excellent points:
A single father with two jobs and two children would no longer have to worry about the hassle of visiting a bunch of offices to receive benefits. And giving him a single lump sum might help him use his federal dollars better. Housing vouchers have to be spent on housing, food stamps on food. Those dollars would be more valuable — both to the recipient and the economy at large — if they were fungible. - Ann Lowrey, NYT
Liberals love the fact that a basic human wage could reduce poverty, contribute to a "living wage" medium. Conservatives love the fact that it could drastically shrink the size of government. Could it be a win-win if implemented right? Or are the risks that the amount will never be enough, and will result in a constant overspend? It could even offer the fiscal kick in the pants the economy needs to get moving, and relieve the burden from much overused and over depended on monetary stimulus.
I'd love to hear your thoughts, and as always, thank you for reading.
-Chris
Business coach for solopreneurs since 2009. Author of 4 books & 20 courses about creating an authentic business aligned with one's soulful expression. Authentic Marketing, Joyful Productivity, Soul Gym.
8 年Great post! I found it by searching "basic income" here on LinkedIn. Today -- May 1 -- is #BasicIncome Day: https://www.thunderclap.it/projects/40698-basicincome-day-is-1st-of-may
Chief Data Officer at AgWest Farm Credit
8 年It might not if the new money purchases a combination of domestically produced ag goods and Chinese made household goods. Outsourcing household goods manufacturing to Asia has broken the linkage between increased consumption and inflation that existed in the 1970. Unfortunately we're choosing the alternative of a new stock market and housing market bubbles at the moment.
Presentation Specialist
8 年>The government cannot create any wealth. All it does is redirect existing assets. That's just the beginning. By redistributing existing, PRESENT assets, it distorts private decision-making regarding FUTURE assets; i.e., assets that have yet to come into existence.
Presentation Specialist
8 年>the idea of a Basic Income is merely to replace existing systems. The idea of a publicly-owned subway system in New York was to prevent a rise in fares, which were five cents at the time the subways were privately owned. Did that work? Did fares stay low, or did they rise inexorably? Tax-consumers will obviously want both the Basic Income *and* any other dole programs they're already on, so the notion that it will merely replace existing safety net programs is Utopian dreaming. And what will government do when there's another economic recession — cut payments on the Basic Income? That's precisely when recipients — which will be the entire population of the US — will demand increases in payments. And what will you do when people say, "Hey, thanks for the guaranteed minimum income, Big Government! As long as you're doing that, how about a guaranteed paid vacation? Studies prove X, Y, and Z about such programs, so we know it's a workable idea. And while you're at it, as long as you're guaranteeing us an income and a vacation, what about a single-payer health care plan guaranteeing us free, on-demand medical care? There was a big study in _______ showing pretty convincing evidence that Q, R, S, and T were true of such programs. And what about a minimum basic food stipend? We all deserve a minimum number of calories just for being alive, right? So provide it. There's plenty to go around! What about free day-care? Etc. The left just isn't happy until there's all-round central economic planning. And when the economy crashes (as it always does under central planning) they will enthusiastically start accusing a variety of scapegoats.