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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 [email protected]

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

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