Thoughts on Universal Basic Income

Review:

A year or two ago, I had never heard of the concept of universal basic income, but it’s a very popular idea on reddit (a site where I spend far too much of my time) and I’ve been seeing increasing buzz about the idea elsewhere as well, so I’ve started looking into it more seriously in an attempt to determine where I stand on the issue.

I’ll be honest: at this point, I’m still not sure. In many ways, it seems like a very promising idea, and I definitely think it’s something that we as a nation should be examining very seriously as a possibility. But I’m not 100% sold on the idea either.

What is Universal Basic Income?

Universal basic income is a sum of money granted unconditionally to ALL adult citizens in addition to any income they might receive from jobs or other sources. Some basic income proposals include smaller allowances for children and some do not. Unconditional basic income proposals have been around for hundreds of years (Thomas Paine advocated for the idea way back in 1797 and there was a pilot program even earlier in Berkshire, England) and are generally designed to provide a bare minimum standard of living (figures of $12,000-15,000 per year are often cited in recent proposals) for all citizens. They are intended to replace most or all existing welfare programs, including unemployment, disability, food stamps, and Social Security. The exception: most basic income supporters seem to favor the continued existence of Medicare, and in fact its expansion into a single-payer system for all, comparable to that of the United Kingdom or Canada.

What Are the Benefits?

There are some obvious advantages:

  • EVERYBODY gets it, from the homeless guy digging through the dumpster behind your favorite deli to Bill Gates, so it’s a lot harder to whip up class and race resentments and accuse people of mooching or being “takers.”
  • Because EVERYBODY gets it, unconditionally, it greatly reduces bureaucracy, because there’s no need to examine incomes, health reports, job seeking efforts and all the other hoops current welfare applicants have to jump through to prove that they’re “deserving” of taxpayer assistance.
  • It will give people more security, flexibility, and freedom. For example, parents can stay home with their kids without sacrificing 100% of the stay-at-home partner’s income, entrepreneurs can start a business without worrying about losing everything if it goes belly-up, and job seekers can hold out for a better opportunity without worrying about going hungry or losing their home in the meantime. It could also make it easier for people to escape abusive relationships, since many abusers rely on the financial dependence of their victims to help maintain control.
  • It incentivizes work. “Wait, what?” you might say. “If I can get paid to sit around in my pajamas watching soaps all day, how does that incentivize work?” Under the current system, many welfare recipients lose their benefits once they get a job. Since many are unskilled and likely to end up in minimum wage jobs anyway, they can often get almost as much by not working as they can by getting a job. With basic income, on the other hand, they will keep their basic income when they get a job, so getting a job can actually provide a significant increase in quality of life. For example, a current welfare recipient might get $12,000 in benefits per year, and be capable of getting a job that pays $15,080 per year (the equivalent of a full-time job at federal minimum wage). An extra $3080 per year isn’t that much of an incentive to go to work all day instead of staying home and doing what you want, but if the welfare benefits were swapped for unconditional basic income of $12,000, getting a job that paid $15,080 per year would more than double the person’s annual income – from $12,000 to $27,080!

There have also been several pilot basic income programs in different countries that have shown promising results in terms of improved health and nutritional status in the community, reduced debt/increased savings, and more.

What Are the Problems?

My concerns tend to focus around children in a basic income society. Although the pilot programs have actually found that little or none of the money was used for things like drugs, alcohol, and gambling, in a nationwide system there will inevitably be cases of people with such severe addictions that they will blow it all that way. Under the current system, these people can receive funds that are specifically ear-marked for things like food and housing and can ONLY be used on those items. In a basic income system, there’s no such protection. When you’re talking about adults, basic income actually makes it easier to say, “look, we gave you every opportunity, your suffering is entirely on you now” (especially if a single payer health system with adequate mental health and addiction services is implemented at the same time) and leave such people to private charities to deal with. But when there are children involved, there are certain advantages to having some funds restricted in how they can be spent as a way to ensure basic levels of food and shelter for growing children. Poor nutrition in childhood is especially damaging to children’s long-term prospects, as it has been found to literally reduce the children’s IQs, as well as their ability to concentrate in class. How do you solve this problem without either losing some kids through the cracks or reducing the benefits of basic income by working some bureaucracy back into the system?

So that’s my moral quandary about the issue. From a practical perspective, the more important issue is almost certainly, how do we pay for it? The adult population of the US in 2013 was 242,542,967. Multiply that by $12,000 and you’ve got a $2,910,515,604,000 bill – almost $3 trillion dollars. The US federal budget that year contained $2.902 trillion in receipts and $3.803 trillion in outlays, so while you’d save a lot of money on current welfare and social security programs, you’d still be running a slight deficit on basic income payments alone, before you even got into stuff like military spending, infrastructure, and the National Parks, let alone that single payer health system that I and so many other progressives also have on our wishlist.

There are some similar but alternative proposals such as the so-called Negative Income Tax (NIT) that would be much cheaper to implement, but that starts adding bureaucratic complexity (and class tensions) back into the equation. I’ll talk more about NIT proposals in another post.

Meanwhile, as I said above, I support a thoughtful national discussion over a universal basic income policy and will continue to research the idea to clarify my own position and preferred proposals.

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