A Basic Income Should Be the Next Big Thing

A Basic Income Should Be the Next Big Thing

by eliteug_umydf

Now and then a worthy economic proposal comes along that seems as politically unattainable as it is sensible. Then, on closer inspection, you see that it’s more than a policy-wonk’s fantasy. And you wonder whether it could actually prevail.

This may be happening with the concept of a universal basic income. The notion that government should guarantee every citizen an annual stipend of, say, $10,000 — no strings attached, no questions asked — is being studied by politicians, economists and policy experts worldwide.

Think of it as Social Security for all. In the social democracies of Europe, Canada and South America, experiments are planned or underway. In the U.S., it’s still little more than a concept — one that appears to have more conservative backers than liberal ones.

Bernie Sanders says he’s “sympathetic” to the theory behind a universal basic income but stops well short of advocating it. Hillary Clinton seems even less enthusiastic. By contrast, conservative economists, politicians and think-tank scholars are not as hesitant. Marco Rubio, for example, proposed the beginnings of a basic income in his 2015 tax plan.

The rest of the world is taking the lead

Switzerland will hold a June 5 referendum on whether to give every adult citizen 2,500 Swiss francs (about $2,600) a month. Ontario, Canada, will conduct an experiment with a basic income later this year. The city of Utrecht in the Netherlands is conducting a pilot program, and Finland is planning a two-year trial. A British proposal is gathering interest. In May, a nonprofit group will start giving 6,000 Kenyans a guaranteed income for at least a decade and follow the results.

Basic-income proposals come in many varieties, and have myriad rationales.

Some progressives see it as the ultimate expression of what a developed economy can achieve: a way to lessen poverty and inequality, and ease the pain of job loss and economic stagnation. But in the U.S., many liberals see it as naive and a distraction from more practical priorities, such as a $15 minimum wage and paid family leave.

For conservatives, the attraction is smaller government. Dozens of social-welfare programs now costing U.S. taxpayers about $1 trillion a year could be folded into a basic-income program, they argue.

With no eligibility criteria or enforcement needed, administrative costs would be bare-bones. Waste, fraud and abuse would be greatly reduced, the argument goes, if not close to zero.

In the 1960s, a basic income was part of the mainstream political discussion. President Richard Nixon even proposed an income floor, based on ideas developed by Daniel Patrick Moynihan, then a domestic-policy adviser. The proposal died in part because of liberal opposition to a work requirement and obstruction by a well-organized welfare lobby, Moynihan would later write.

The earned-income tax credit, a form of basic income, took its place, but only to supplement the earnings of the working poor. The tax credit was first proposed in 1962 by conservative economist Milton Friedman. One of his aims was to end the “earnings cliff,” in which government aid disappears once income exceeds a cap. Such a limit discourages recipients from working, a consequence that keeps them dependent.

Post from Bloomberg

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