Universal basic income is a controversial proposal under which the government provides regular, permanent cash payments to each citizen with the intent of lifting everyone out of poverty, encouraging their participation in the economy and covering the costs of their most fundamental needs including food, housing and clothing. Everyone, in other words, gets a paycheck – whether they work or not.
The idea of setting a universal basic income has been around for centuries but remains largely experimental.
Canada, Germany, Switzerland and Finland have launched trials of universal basic income variations. It gained some momentum among some economists, sociologists and tech industry leaders with the advent of technology that allowed factories and businesses to automate the manufacturing of goods and to reduce the size of their human workforces.
How the Universal Basic Income Works
There are many variations of the universal basic income. The most basic of these proposals would merely replace Social Security, unemployment compensation and public-assistance programs with a basic income for every citizen. The U.S. Basic Income Guarantee Network supports such a plan, stating that the system of trying to force Americans into the workforce as a way of eliminating poverty has not proven successful.
“Some estimates show that approximately 10 percent of people who work full time all year around live in poverty.
Hard work and a booming economy have not comes close to eliminating poverty. A universal program like the basic income guarantee could eliminate poverty,” the group states.
Its plan would provide a level of income “necessary to meet their most basic needs” to every American, regardless of whether they worked, in a system is describes as an “efficient, effective, and equitable solution to poverty that promotes individual freedom and leaves the beneficial aspects of a market economy in place.”
A more complicated version of the universal basic income would provide about the same monthly payment to every American adult, but it would also require that about a quarter of the money be spent on health care insurance. It would also impose graduated taxes on the universal basic income for any other earnings over $30,000. The program would be paid for by eliminating public-assistance programs and entitlement programs such as Social Security and Medicare.
Cost of Providing a Universal Basic Income
One universal basic income proposal would provide $1,000 a month to all 234 million adults in the United States. A household with two adults and two children, for example, would receive $24,000 a year, barely hitting the poverty line. Such a program would cost the federal government $2.7 trillion a year, according to economist Andy Stern, who writes about the universal basic income in a 2016 book, “Raising the Floor.”
Stern has said the program could be funded by eliminating about $1 trillion in antipoverty programs and reducing spending on defense, among other methods.
Why Universal Basic Income Is a Good Idea
Charles Murray, a scholar at the American Enterprise Institute and the author of “In Our Hands: A Plan to Replace the Welfare State,” has written that a universal basic income is the best way to maintain a civil society amid what he described as ” a coming labor market unlike any in human history.”
“It will need to be possible, within a few decades, for a life well lived in the U.S. not to involve a job as traditionally defined. … The good news is that a well-designed UBI can do much more than help us to cope with disaster. It also could provide an invaluable benefit: injecting new resources and new energy into an American civic culture that has historically been one of our greatest assets but that has deteriorated alarmingly in recent decades.”
Why Universal Basic Income Is a Bad Idea
Critics of a universal basic income say that it creates a disincentive for people to work and it rewards non-productive activities.
States the Mises Institution, named for the Austrian economic Ludwig von Mises:
“The struggling entrepreneurs and artists … are struggling for a reason. For whatever reason, the market has deemed the goods they are providing to be insufficiently valuable. Their work simply isn’t productive according to those who would potentially consume the goods or services in question. In a functioning marketplace, producers of goods the consumers don’t want would quickly have to abandon such endeavors and focus their efforts into productive areas of the economy. The universal basic income, however, allows them to continue their less-valued endeavors with the money of those who have actually produced value, which gets to the ultimate problem of all government welfare programs.”
Critics also describe the universal basic income as a wealth-distribution scheme that punishes those who work harder and earn more by directing more of their earnings to the program. Those who earn the least benefit the most, creating the disincentive to work, they believe.
History of Universal Basic Income
The humanist philosopher Thomas More, writing in his seminal 1516 work Utopia, argued for a universal basic income.
The Nobel Prize winning activist Bertrand Russell proposed in 1918 that a universal basic income, “sufficient for necessities, should be secured for all, whether they work or not, and that a larger income should be given to those who are willing to engage in some work which the community recognizes as useful. On this basis we may build further.”
Bertrand’s view was that providing the basic needs of every citizen would free them up to work on more important societal goals and live more harmoniously with their fellow man.
After World War II, economist Milton Friedman floated the idea of a guaranteed income. Friedman wrote:
“We should replace the ragbag of specific welfare programs with a single comprehensive program of income supplements in cash — a negative income tax. It would provide an assured minimum to all persons in need, regardless of the reasons for their need…A negative income tax provides comprehensive reform which would do more efficiently and humanely what our present welfare system does so inefficiently and inhumanely.”
In the modern era, Facebook founder Mark Zuckerberg has forward the idea, telling Harvard University graduates that “we should explore ideas like universal basic income to make sure that everyone has a cushion to try new ideas.”