Is giving government cash to every American the best way to deal with poverty?
Giving 300 million Americans $10,000 to $12,000 a year would cost more than $3 trillion to $4 trillion annually, according to varying estimates. Many people understandably ask: Where would all that money come from?
To end poverty, the government should just give people cash until they’re not poor anymore.
That’s the essence of so-called Universal Basic Income (UBI), the controversial notion of handing money to every American regardless of need.
It’s being discussed more these days, as politicians, business leaders, and academics try to figure out a way to short-circuit poverty, and to make up for job loss resulting from increased automation, which is said to be replacing workers and leading to stagnating wages.
Democratic presidential candidate and tech entrepreneur Andrew Yang pushes the idea — the Freedom Dividend, he calls it — saying each American should be given $1,000 a month.
Aspects of UBI have been implemented as pilot programs in places including Finland, Canada, and Namibia, as well as Stockton, Calif., and parts of Mississippi.
But, said John Iceland, professor of sociology and demography at Pennsylvania State University, “the demonstrations have been too few for anyone to claim they know how it works.”
An old idea
UBI is not exactly a new suggestion.
Thomas Paine wrote in 1797 that citizens should be paid a “ground rent” to offset poverty.
Republican President Richard Nixon, economist Milton Friedman (who advised conservatives Ronald Reagan and Margaret Thatcher), and libertarian academic provocateur Charles Murray (denounced as a racist in many circles) have endorsed different aspects of UBI.
And entrepreneurs such as Tesla’s Elon Musk, as well as Facebook’s Mark Zuckerberg, also have spoken up for the idea of doling out cash to folks, as Silicon Valley technology eats up traditional jobs.
Giving 300 million Americans from $10,000 to $12,000 a year would cost more than $3 trillion to $4 trillion annually, according to varying estimates.
Many people understandably ask: Where would all that money come from? More taxes? That can seem like a non-starter, especially to conservatives who say the government safety net is already too generous.
UBI stipulates that every American — food-stamp recipients along with mansion dwellers — would get cash, so the “program would be free of the cumbersome assessments required to determine eligibility,” the New York Times reported.
Because it costs so much to process the forms that people must fill out to get government help, and it’s difficult for them to come up with all the information needed to apply, UBI is seen as a double panacea: It will lower administrative expenditures, and remove the stigma and bother experienced by those asking for help.
But some liberals worry that even if you give people $12,000 a year — roughly the federal poverty level for a single person — it may not be enough, especially if it’s replacing Social Security or other programs.
To counter that argument, some point out that the money could be enough to cover basic bills, thus allowing a low-income person to breathe easier, maybe even come up with an idea for a business, or help a sick relative.
A leading conservative argument against UBI holds that such a program would inspire people to drop out of the labor force, induce laziness, or at least rob them of the structure and meaning work provides, according to Robert Reich, a former secretary of labor.
Still others worry that giving the well-off a stipend would take money away from those in poverty.
Beyond that, UBI could theoretically cost so much, it could preclude paying for infrastructure refurbishment, including the building of hospitals and affordable housing, Forbes reported.
On the fringes
Maria Kefalas, a sociologist at St. Joseph’s University, called UBI an idea that’s “interesting, although still on the fringes of academia.”
But, she added, some see it as “an inevitability.”
Kefalas said that as more jobs become automated, increasing numbers of people will be thrown out of work. UBI is seen as “a way of blunting the destabilizing, harmful brutalities of progress,” she said. “We’re not going to need accountants, toll-booth operators, printers, even journalists. We need to have a system in place to not” undermine society.
“UBI is seen as the way to protect capitalism.”
Rather than indulge in UBI, analysts at the conservative Heritage Foundation noted, why not expand the earned income tax credit (tax refunds for low-income people who work)?
“Supporting work through the earned income tax credit is consistent with American values of dignity and self-sufficiency,” a foundation report opined.
Ultimately, wrote the left-leaning Center on Budget and Policy Priorities, political and fiscal priorities are such that the chances of making UBI a national reality “are very low.”
The center’s commentary concluded: “That’s not the world we live in.”