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viewpoint

The case for a basic income

| Wednesday, September 16, 2015

Welfare is corrupt. The Supplemental Nutrition Assistance Program (SNAP) is easily exploited. The earned income tax credit encourages irresponsible parenting. Problems with anti-poverty programs have been piling up ever since the New Deal. Republicans despair at these programs’ astronomical costs, while Democrats try to cover up some of their obvious inefficiencies.  Both sides agree entitlements need fixing, but we have seen few solutions emerge from this agreement. Since proposing serious entitlement reform is political suicide, programs continue to bloat and the federal bureaucracy continues to grow for the sake of maintaining some level of a social safety net.

But inefficiency and entitlement programs don’t have to go hand in hand. A possible solution I propose to solve the bloat of entitlement programs is a basic income.

The mechanism by which a basic income works is simple. Rather than provide welfare or unemployment to impoverished citizens, the government simply pays every citizen a lump sum regularly. Restrictions can be added to this basic income, such as denying it to prisoners or citizens under the age of 21 or over the age of 65. Then, citizens are free to spend the money however they like. The amount provided is dependent on the minimum quality of life the government wants to provide.

A basic income appeals in a moral sense to both liberals and conservatives. Democrats support it because of its empowering effect on the lower class. In a modern economy, you have to work in order to live. Employers can exploit workers into producing more value than they are compensated for since the workers don’t have the choice to not work. Although competition between businesses helps mitigate this problem, workers are still at the mercy of the job market. However, with a basic income, workers are better able to bargain for what their work is worth.

Republicans like the basic income idea because it eliminates stifling bureaucracy from government anti-poverty programs. There would be no ham-fisted evaluations or exceptions siphoning away valuable time and money from the taxpayer. Distribution would be efficient and lead to a smaller government. Innovation would also increase, since people can take a chance in starting a business knowing they will at least have some steady income if the business fails.

The idea of providing people with money for not working is offensive to many conservatives. However, the basic income is actually more fair than the current systems we have in place since every American, not just lower-income Americans, would receive this money. Rather than attempt to shrink the wealth-gap, a basic income elevates all groups. The progressive income tax has been criticized for punishing people who work harder to make more money while being moved into a higher income bracket as a result, gaining nothing. A basic income actually embodies the conservative ideal that people who work hard deserve to be rewarded. With a more even playing field, people will succeed or fail based more on their abilities rather than the circumstance of their birth.

The case for an unconditional basic income can be made by the numbers. In order to provide every American between the ages of 21 and 65 a basic income equal to the poverty line, it would cost $2.14 trillion, around 13 percent of the GDP. This basic income would allow the elimination of almost $1 trillion worth of benefits for low-income Americans. The basic income would then have a final price tag of $1.2 trillion in extra spending to keep all Americans above the poverty line. This amount is not insignificant, but reallocating money from Social Security, raising taxes and excluding prisoners would make a dent. A more complete solution would be to shrink the payments to $6,000 a year. This system wouldn’t lift all Americans out of poverty, but it would greatly empower workers, streamline government and encourage innovation.

Dauphin, a city in Manitoba, Canada, implemented a basic income in the mid-1970s. Research of this city indicated there was minimal disincentive to work, high school graduation rates increased and hospitalization rates went down. Alaska also has a basic income based off assets. Nearly every Alaskan citizen receives around $1,900 a year from a portion of oil revenues. This form of basic income has been credited with keeping many households out of poverty.

I know basic income is a radical policy. And I understand the odds of it being passed in Congress are slim to none. But by discussing it, we can better picture the America we want rather than the one to which we are resigned.

Curtis Stokes is a sophomore political science and finance major. He lives in Stanford Hall and can be contacted at cstokes4@nd.edu

The views expressed in this column are those of the author and not necessarily those of The Observer.

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  • https://plus.google.com/u/0/101185396509765294964/about rebecca

    So in a UBI (Universal Basic Income) universe, would there be health care like under the ACA? What would happen to Medicaid? Medicare? Prescription drug coverage? WIC? CHIP (Children’s Health Insurance Program?) Food stamps? Heating and fuel assistance? Internet subsidies to rural areas? Student loan subsidies? Social Security for the disabled between the ages of 21 and 65? What “entitlements” would be protected and what would be eliminated?

    Also, are these the dollar amounts used in the $2.14 trillion calculation, as provided by HHS, to determine just what the “poverty level” is: $11,770 for individuals, $15,930 for a family of 2, $20,090 for a family of 3, $24,250 for a family of 4, $28,410 for a family of 5, $32,570 for a family of 6, $36,730 for a family of 7, $40,890 for a family of 8? Would a ratio be used to raise or lower this figure depending on where one lives, e.g., $24,250 for a family of 4 could be viable in Mishawaka but not Manhattan. {Not to mention perhaps using the more accurate and realistic Living/Sustainable Wage, which takes into account geography and other factors.}

    Furthermore, what would happen to automatic deductions on Federal and State Tax forms, would these be kept or eliminated? For everyone? Or only those receiving a UBI? {If the later, then “separate but unequal” lawsuits will, most assuredly, work their way through the courts.}

    And more acutely, would a UBI be considered income, and hence taxable income? If so, then those flat amounts mentioned in a prior paragraph, or any UBI yet to be determined, would actually be less than the amount given – $24,250 for a family of 4 might only actually be $20,000, or less. And then what about health coverage, fuel assistance, food assistance….

    Clear cutting, “zeroing out and starting from scratch” if you will, makes sense, at times, in certain clearly defined situations, and the simplicity of “one size fits all” is enticing in and of itself…yet…all varieties of pumpkins are not good for making pies.

    For very specific groups of people, a highly proscribed UBI *might* work, but not for everyone, everywhere.

    • Hologrammar

      Moot questions. Ask one instead: “What is everyone entitled to as a right?”

      https://www.youtube.com/watch?v=JqlOCoOgQ7E

      • https://plus.google.com/u/0/101185396509765294964/about rebecca

        “Given the huge costs associated with providing citizens with an unconditional state income, we should also be concerned that the scheme could compete for funding with other government funded services, such as healthcare, education, childcare support and social housing. Together, comprehensive welfare services such as these ensure that certain basic needs can be universally met without having to rely on commercial alternatives. Rather than implementing new basic income schemes, the aim should perhaps be to scale up social protection along the lines of a proposal by Barbara Bergmann, who recommends that a universal basic income is only considered after a well-funded ‘Swedish-style’ welfare state has first been established. This would include, for example, far more generous allowances for children, pensioners, the unemployed, and those with a disability, or even more generous work leave policies and free university education.”

        And

        “The policy could ultimately play into the hands of those whose idea of individual freedom includes minimising government programs and further deregulating markets, which would ultimately work against the ethic and practice of sharing.”

        http://www.sharing.org/information-centre/articles/basic-income-social-dividend-sharing-value-common-resources

        Also, any video that opens with the words “As a Libertarian…”, dissembling radar pings high.

        Try again.

        • Hologrammar

          You quoted a lot of things and made a link without making an actual statement, so it’s impossible for me to tell what you’re trying to argue.

          Did you even watch the video I posted past the first few words? The video makes the (Geo)Libertarian case for a Citizens’ Dividend, which is a human right. Assuming the quotes and links you posted represent your point of view, that means you actually agree with the video.

          That’s the point to be made here: Instead of mindlessly telling libertrians to Eff Off, you should try engaging them and converting them into Geolibertarians. An equal share of the value of land is a human right, and it morally nullifies all the silly questions you asked, which imply the need for subjective value judgments. One equal income for everyone. It’s a right. Simple.

          From an economic perspective, government should be funded purely out of land values, and therefore out of the Dividend; taxes on productive activity (labor and capital) constitute theft. Your questions can be summarized as, “What services should government provide?” The answer is that they should administer natural monopolies like money creation and utilities, and then whatever other services society decides are best in the hands of the public sector … this question is sort of independent of UBI or a Citizens’ Dividend. If society feels health care and elderly care should be provided by government from tax proceeds — regardless of where they come from — then they can vote for that. Not really dependent on whether UBI exists or not. You seemed to be posting a lot of questions for the sake of implying that UBI raises complicated issues where it doesn’t, which is why I take issue with your post.

          • https://plus.google.com/u/0/101185396509765294964/about rebecca

            Sweden is often used as an example where a UBI can/should/does work. The issue that those who want to co-opt the concept and apply it here in the USA don’t also see is that in Sweden health care for all, etc. do & will still exist alongside the UBI. It is not simply a matter of eliminating all “entitlements” then replacing them with a flatline UBI, which appears to be what Mr. Stokes {the writer of the original op-ed here} is suggesting. Which is what the long-excerpted quotes above are made in response to – it’s not as simplistic as saying “X now equals Y”, “X” being “entitlements” and “Y” “UBI”. {Incidentally, “long-excerpted” to pre-empt any commentator making a response like “you just edited a few words out of something longer”, you know those cranks, right?}

            As for telling Libertarians to “Eff off”, nothing remotely close to that was suggested. From my work in “public affairs” on the national and state level, anytime any ad, movie, lecture, conference, etc. is sponsored by a group, it’s important to know who and what the group is about. The word “Libertarian’, like the words “Liberal” and “Conservative”, can mean lots of things. There are “reasonable” “Libertarians” just as much as there are “wacko” “Libertarians”. Taken as a whole, “Libertarians” of all stripes share common ideological tenets, so going in, hearing the phrase “As a Libertarian…” as the first three words addressing a topic, “dissembling radar pings high” – what “strain” of “Libertarianism” are we going to be pursuing on the large continuum of “Libertarianism”? If the video began “As a Conservative…” or “As a Liberal…”, heck even “As a Notre Dame graduate…”, all manners of radar would ping high – “Conservative”, “Liberal”, and “Notre Dame”.

  • deacc

    There should be no entitlement programs and there should be no basic income either. We, as adults, should be responsible for ourselves and our family. Money doesn’t go on trees. If you want to share your own income so that another family can get what you labeled a basic income, go for it. The more power to you.