Let's Fix This Country

Why Not a Basic Income for Everyone?

"If you want to end poverty, just give people money"

With growth stalled at 1.5%, with wages flat for decades and household income $4,000 less than when Bill Clinton left office, with a Federal Reserve survey finding
that 46% of Americans could not cover a $400 emergency expense without borrowing or selling something, here's an idea that's often floated. How about the government just paying everyone a basic income every year?

That surely must top the list of nutty ideas that bleeding-heart liberals have come up with.

Except they didn't. It's a Republican scheme, going back at least to Richard Nixon and Milton Friedman before him. Nixon proposed in a 1969 address on domestic programs that "the Federal Government build a foundation under the income of every American family". There were limitations, but the idea was given voice and it persists.

The Finns are considering the idea and the Swiss just voted on it in a referendum. It lost by a huge margin — 77% against to 23% in favor — but how much of that might have been the whopping amount proposed?: $2,500 a month to be paid to every citizen.

On these shores, the latest is an essay in the weekend Review section of The Wall Street Journal by Charles Murray, a libertarian political scientist at the American Enterprise Institute, preceded by his 2006 book on the subject. In his essay, Murray proposes that every American citizen age 21 or older receive $13,000 a year from the federal government. Of that, $3,000 must be used for health insurance. Persons earning under $30,000 a year keep the rest free of taxes. For those earning over $30,000 a graduated payback to the government sets in — up to half the original payout for someone who makes $60,000 a year or more. But all would be left with a minimum of $6,500 no matter how high their income.

what's the catch?

One of the reasons a universal basic income is attracting renewed interest is the fear that the mix of robotics, artificial intelligence and other technologies will take away millions of jobs. Large corporations will have no compunctions about getting rid of payroll. Machines ultimately cost far less. So there is the question of what will happen to those millions of idled workers? How will they be able to support their families if there is no work?

But putting food on their table is not Murray's mission. He at first is more preoccupied with arguing against those who fear that free money will cause people to "idle away their lives" as if the problem for the future will be jobs aplenty that will go begging and it will be industry that is idled for lack of workers.

But he does later in his article bring up the grim prospect of jobs vanishing, except one gets the picture that he is using that looming future as justification for what he really hopes to accomplish, a motive revealed in the title of the book just mentioned: "In Our Hands: A Plan to Replace the Welfare State". In a jobless future when one would think safety net programs would be more essential than ever, his deal is that, in exchange for receiving an annual income, we get rid of all social programs. And he does mean all. Here's his list:

Social Security, Medicare, Medicaid, food stamps, Supplemental Security Income, housing subsidies, welfare for single women and every other kind of welfare and social-services program, as well as agricultural subsidies and corporate welfare.

If the basic income program took their place, Murray claims an annual saving of $200 billion.

not so fast

Eduardo Porter of The New York Times writes of a growing interest in a guaranteed income on both left and right, but has a problem with the arithmetic. An annual payout of $10,000 a year — less than Murray's $13,000 — to 300 million Americans amounts to more than $3 trillion a year, almost the entire amount the government collects in taxes. His recent piece is not a response to Murray, so he doesn't figure in the funds recovery of up to half by the government from those who earn more than $30,000.

Even so, the American public would never agree to a tax hike to cover even a fraction of the added cost, so to pay for government' s new largesse, Murray would indeed get his wish: every safety net program would have to be abolished.

That his proposal would leave everyone with at least $6,500 a year — half the $13,000 — says that his is an underhanded plan to divert money upward to those who don't need it while leaving the poor in dire straits. The $3,000 that Murray allocates to health insurance would not buy much of a policy leaving the indigent with potentially huge medical costs in the total absence of Medicaid or Medicare should a major illness strike. For older people the average social security benefit is $16,020 a year compared to the $10,000 that Murray's plan would provide instead. And there's nothing else. No food stamps, rental assistance, nada.

Murray's answer to that? He would leave it to local organizing to pick up the slack. We would return to an earlier time, reviving the town-level groups, religious and secular, that once came together to take care of their own, a "key feature of American exceptionalism" that so impressed the reliable guide to 21st Century America, Alexis de Tocqueville. Murray says this fabric of society was displaced by Franklin Roosevelt's New Deal and Lyndon Johnson's Great Society war on poverty. He concludes by saying that the universal basic income plan "would say to people who have never had reason to believe it before: 'Your future is in your hands.' And that would be the truth". It would indeed. Put another way, "Sink or swim, you're on your own".

1 Comment for “Why Not a Basic Income for Everyone?”

  1. Al Rodbell

    Well thought out analysis. This issue is a clear illustration of the differences between the left and the right. In a nutshell, the right believes that the “invisible hand” of Adam Smith does manage to best match needs with production, based on the rewards to creators and the punishments for imprudence of a free market. Liberals-socialists look at the dark side of this, the incentive to mislead the poor into deeper poverty, with the profit motive too frequently bringing obscene enrichment along side of growing poverty.

    I happen to respect Charles Murray, from his co-authoring “The Bell Curve” reviled by the left, to his recent article in National Review excoriating Donald Trump. For this reason, while this article points out the serious defects of his plan it would be most useful to try to incorporate it into thinking about this epochal challenge. There is a reality, that just like John Henry could not compete with the steam drill, we are on the cusp of the humans being like Johns muscles. All of his energy and strength simply could not compete, and he died trying.

    The headline of Murray’s position is he is accepting half the socialist view, that government must take from the rich and give to the poor, but still retain the part of the conservative ethos that government should not micromanage how the poor use their government revenue.

    My concern is whether our political system, where each side exaggerates the benefits of their approach and condemns the other’s, will provide the venue for best addressing this historic disconnect between human effort and reward, This ending of this broad equation between effort-talent and survival-prosperity is the challenge that must be addressed.

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