Should America provide a universal basic income?

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Should America provide a universal basic income?

Imagine a world where citizens are just given money by the government.

I don’t mean a tax refund, where you’re getting back money you already paid, or a supplemented healthcare plan. I mean you live in a place and the government sends you a check every month.

You don’t have to imagine it. You can just look at Alaska. Using its oil money, the state is able to provide a yearly stipend to its citizens. Alaskans get money for being Alaskans.

But what if that was expanded to all 50 states? What if every American citizen was cut a check every month or year because they were part of the United States of America, and that was a service that the United States of America provided?

A universal basic income (UBI) is just that. But can it actually be done? And should it be?

What is a universal basic income?

A UBI is "an income unconditionally granted to all on an individual basis, without means test or work requirement."

You might think that sounds a lot like welfare programs we have here, like the Supplemental Nutrition Assistance Program (SNAP), the program formerly known as food stamps. The important part of the definition above is "without means test." With a true UBI, there’s no determination of whether or not you qualify. You simply do.

You also get support in the form of cash. It’s not a restricted "currency" like food stamps and it isn’t, for example, giving a family food directly so they don’t have to buy their own. Everyone simply gets an equal set stipend each month, and that money goes into your bank account – no one telling you how to spend it or where it’s accepted. It’s an allowance for adults.

The idea of a UBI has been around for a while. Thomas Paine called for a similar system in his pamphlet Agrarian Justice (because the man loved writing pamphlets) and in the 1960s Milton Friedman advocated for a negative income tax, which is a system where, instead of owing taxes, people who make under a certain income receive money from the government.

But a true UBI system has never been seriously considered in America (save for the Alaska model). It could be because of our insistence on the American Dream and the ideal of people pulling themselves up by their bootstraps or the aversion many people have to the support systems we already have in place or the tax implications a UBI system would have (more on that later), but the closest we’ve gotten is Richard Nixon’s guaranteed annual income proposal in the 1970s, which was still a means-tested program, and which was passed in the House of Representatives but killed in the Senate.

But the idea has been coming back into focus in recent years. The economy has recovered to record levels since the 2008 recession, but people are working longer hours and wages have stagnated, making many question the equality of their working situation. A big push is coming from Silicon Valley, prompted primarily from the rise of (and continued advancement of) automation. Fewer jobs means income will have to be replaced, or at least supplemented, by another source of money.

America has been slow to jump on the UBI bandwagon, but other countries are are least testing the waters. Namibia instituted a UBI and saw lower rates of poverty, crime, and unemployment. That last measurement is particularly important, because some people fear that simply giving people money will cause them to stop seeking work altogether. In Namibia, at least, that wasn’t the case.

Finland is starting their own program, with other Scandinavian countries doing their own studies, and Ontario will begin providing a UBI soon. Startup incubator Y Combinator, the birthplace of many of the tech companies responsible for our tech-heavy economy, launched a research fund to investigate the feasibility of a UBI in America.

The benefits of a universal basic income

A lot of people think that the social safety nets that we have in place right now are costing us too much money. But they’d be more expensive if all of the people eligible for them actually used them.

A quarter of Americans eligible for SNAP didn’t sign up for it. There could be a lot of reasons for this: people don’t know they’re eligible, the process for applying is confusing and cumbersome, and there’s a stigma surrounding people who use these programs.

A UBI removes the confusion and stigma because there’s no application process and, since everyone is getting the same thing, there’s no social scarlet letter attached to it. If someone needs $1,000 to help pay for food, rent, and clothes for their kids, they’re just getting the same $1,000 everyone else is.

It’s also potentially cheaper than the welfare system we currently have in place. Right now it’s a mishmash of credits and programs used to help certain groups of people. If we can eliminate or at least pare down these programs, the cost of implementing a UBI becomes substantially less.

There’s also the argument that a UBI is better for capitalism, which is a strong selling point for a system that’s seen as socialist or, worse, communist. If people who want to buy things actually have the money to do so, the theory goes, it gives a truer picture of supply and demand and lends more accuracy to markets (whereas now, many people don’t have the ability to purchase things they want or need, leading the free market to believe that the number of people who want a product is lower than it actually is).

A UBI (probably) wouldn’t replace income-by-employment entirely. But it would help prevent people from falling into the "welfare trap" in which getting a job – one that’s likely low-paying, and with taxes, travel time, childcare costs, and more added on top – isn’t a worthwhile option versus just staying on government support.

Finally, a UBI ostensibly would allow people to pursue their passions and interests. Instead of taking a side gig that they don’t like just because it pays a few hundred extra dollars, you could hone a hobby or learn a new skill. Increased leisure time has long been one of society’s utopian goals.

(Remember when John Maynard Keynes said we’d be working 15 hour weeks by now? Way to miss the mark, JMK.)

So this would be great, right? But could it actually become reality?

The drawbacks of a universal basic income

The biggest issues around a UBI questions its practicality in the most obvious sense: how the heck are we going to pay for it?

The answer, of course, is taxes.

I mentioned before that proponents argue that scaling back welfare programs will free up money to allocate to the UBI budget; in addition to that, they also think that if people will be getting money from the government, it makes the tax increase easier to swallow (if you’re paying an extra $8,000 a year in taxes but getting $12,000 annually in UBI, you’re still coming out on top).

Even if that’s true, most people really don’t want to hear that taxes are being raised. And there will have to be some form of tax increase – probably along the lines of land-value tax, carbon tax, and/or value-added tax (VAT).

And then, of course, you get into the more existential questions the UBI pose.

Especially in America, so much of our lives revolve around the workplace. It’s how we make money to get the things we want and need, we’re increasingly spending more and more time in the office, and when you first meet someone it’s common to ask "So, what do you do?" And that question usually doesn’t concern hobbies.

So what does an America look like where income is at least partly disconnected from employment? What do people do with the free time they have now that they don’t have to work a second job just to make ends meet or spend 60 hours a week in a cubicle? Do people take up hobbies or volunteer or start their own businesses, or do they just binge watch more Netflix? There’s already a "lazy welfare recipient" stereotype that permeates our society, and starting a system that hands out cash is unlikely to change that perception.

We’d basically be upending the society we’ve spent decades building. And even with Namibia as a case study or the fact that Uganda saw work hours increase by 17% after instituting a UBI, it’s hard to say what would happen in America, a country that’s in such a different position – economically, socially, and culturally – than any country that’s tried it so far.

Whether you’re for or against it, a UBI won’t be coming to America any time soon. No presidential hopeful – not even Bernie Sanders – has advocated instituting a UBI. The closest we’ll get in the foreseeable future are fights over the current welfare system and minimum wage.

But there’s no question that the idea is gaining steam. Think of how quickly the workplace has changed over the past few years; with more and more automation and the support of Silicon Valley behind it, it might not be too much longer before it’s more than just a dream.