Fare Well with Wealth-fare

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What if there were a simple way to reduce poverty in America? In this scenario, the government would give everyone money, so that no one would be poor. Outside of proving your U.S. citizenship, there would be no screening mechanism or ‘need’ test required. Everyone would be provided with the same monthly amount, even if they were middle class or wealthy.

This is the essence of a new policy model being proposed which is called Universal Minimum Income or Guaranteed Basic Income where, in lieu of myriad government assistance programs, there would be just one program dispensing a monthly or annual payment to all citizens, irrespective of income level, background, social status or other factors. While this idea seems nutty at first, given the federal budget deficit, it does offer some interesting arguments when you consider its full implications.

Personally, I have never been a fan of government handouts. But this one caught my curiosity because of its egalitarian approach. Besides, who wouldn’t want a little (or a lot) more money in their pocket each month for basic necessities like rent, food, gas and booze. I added booze in there because life in a society of equals would be truly boring.

Of course, the use of a handout for alcohol consumption would pique the wrath of those who believe that poverty is largely the result of an irresponsible lifestyle. As one of my Twitter trolls commented, responding to my recent tweet on guaranteed basic income:

“So there’s no reason to improve yourself? You have nothing to worry about? That has never worked. It didn’t work for the French. It didn’t work for the USSR. It won’t work now. I’d rather be free and poor than a slave to a State that meets my needs. Any liberal/progressive program will ALWAYS have the opposite outcome of it’s stated goal.”

What’s the Rationale for Guaranteed Basic Income?

At the risk of being branded a Bernie Sanders socialist, for kicks let’s explore the arguments in favor of Guaranteed Basic Income. For starters, today’s jobs economy is not what it used to be. Many workers are powering through 50+ hour work weeks, despite the fact that it’s still not providing them with enough money on which to live. Some might attribute this to greed on the part of employers; others might believe that it’s directly related to the decline of unionization. Nevertheless, a fact is a fact: for many, employment no longer provides a sustainable income because the wages of most American workers have stagnated or declined since the 1970’s. Moreover, about a quarter of all workers rely on some form of public assistance to supplement what they earn. Ultimately, advocates of the Guaranteed Basic Income proposition claim that it offers all Americans the opportunity to create a foundational base for living akin to the bottom level requirements of Maslow’s Hierarchy of Needs. “

Additionally, technology is slowly replacing many menial tasks; a trend that is predicted to impact many white collar tasks well in the future. Sure (so the argument goes), those who lose their jobs will be able to find alternative ones that are created in the new economy. But there is also the argument that the supply of jobs simply won’t meet the demand from job seekers.

Then there is the prevailing long view that current government programs like welfare are woefully inefficient. And vitriol abounds around the ideas associated with social program recipients receiving a check without having to do something in return. The bottom line is that today’s social welfare system has become an expensive and complex albatross to manage, with little in the way of return on investment for the poor.

Is there a Practical Solution?

Hypothetically, let’s just say that every American, whether in poverty or wealth, receives a monthly $2,500 basic income check. I begin to ask myself “What would that look like, for the person who………:”

– Needs seed funding for an entrepreneurial idea.

– Has to scramble around to find money to purchase books for college.

– Is retired and wants to volunteer for a meaningful cause, instead of having to work a full-time job in order to survive.

– Is poor but is not on a government assistance program due to earning slightly more than the maximum income threshold.

– Is homeless, but lacks a physical home address.

– Is gainfully employed in San Francisco making $50,000 a year, but is barely able to pay for rent.

– Wants to have a whiskey party with 20 of their closest friends because they are in an end-of-life situation with little or no chance of survival.

– Would like to put a down payment on a car in order to have a reliable form of transportation for work.

– Is a single mom working two jobs who desires to have a little extra money to feed herself and her kids while returning to college to improve her job prospects.

– Wants to pool money with three others for a down payment on an investment property that shows promise.

A Favorable Initiative or a Prescription for Sloth?

One argument that has long been made against providing subsidies for those struggling financially is that it perpetuates complacency and laziness and creates a lack of incentive to better oneself. While that argument certainly has merit, I truly believe that those who are without the means to adequately take care of themselves would rather not remain that way.

It is for this reason and others that the idea of a basic income for all has been gaining some traction over the years. There has been a tsunami of media buzz about it of late, and, surprisingly, it has supporters across the political spectrum. By way of example, a few on the libertarian right are in support of it because of their disdain for government bureaucracy and the belief that all Americans should find ways to become self accountable. Here, the argument goes that instead of food stamps and government health care subsidies, people would be given cash to use as they see fit without public controls. Maybe some would use it to pay for rent or an out-of-pocket health care expense. Or in the case of the wealthy, maybe they might decide to use it for a night out at a luxury restaurant in Manhattan. We would all be free to use it as we saw fit.

The political left likes Guaranteed Basic Income because of the belief that the playing field – in terms of wealth – is unequal. The argument here is that just a little bit could go a long way in terms of giving those a lift up who aspire for a more productive and better life.

All this being said, the prevailing question seems to be whether Guaranteed Basic Income would perpetuate a state of laziness and a lack of individual responsibility, especially among those who come to depend on it as their predominant source of income. Other questions abound as well. For example, does the fed’s generosity give them license to exert greater controls over our lives? And will pumping money like this into the economy lead to price inflation for everything from food to rental housing?

Perhaps the most intriguing question for me is whether the uber wealthy would take their gain and voluntarily redistribute it back to some charitable cause, or would they take a luxury vacation instead? To me, this underscores the greatest benefit of Guaranteed Basic Income which would be the opportunity to do with it whatever one chooses. But wait, the government would be distributing the money so maybe this utopian notion of freedom wouldn’t necessarily be the case.

Michael Scott is a freelance journalist specializing on the the intersection between free markets and economic freedom. He can be reached on Twitter @biz_michael

 

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