We have a problem with our welfare system. Due to unemployment and underemployment, the poor of the U.S. must jump through endless hoops of complicated systems to get a patchwork of benefits that are temporary, means tested and covered in attached strings. In addition, automation is making an increasing number of jobs unnecessary.
This is not necessarily cause for alarm, as past technology changes have tended to create more jobs and not less. For now, we are working longer hours than our parents and grandparents, and seeing less reward for our labor. The solution to these issues may be far simpler, and far bolder, than any tax cut or relief agency. A universal basic income is where every citizen receives a certain salary, not as a paycheck, but simply for existing.
As much as we like to moralize about dangers of charity and giving cash to poor people with no strings attached, people know what they need better than their self-righteous benefactors do. One issue with welfare as it stands is that once a person makes above a certain amount, they no longer qualify, so they end up poorer by getting a raise. A universal basic income is not means tested, so you receive the same amount whether you are making $10,000 a year or $100,000. No doubt some would waste it, just as some waste the money they earn. But with that extra money, all social classes are in a position where they can invest more in education, in startups, in anything that can increase the overall wealth in society.
Now before you go thinking this is a socialist pipe dream, there is a model for this already existing in the great white north. The residents of Alaska receive a check every year from dividends from oil revenues. Not enough to live on, but definitely a boost. A UBI experiment has been proposed in places as diverse as Switzerland and India. I’d personally rather see it tried in India; there is far more room for improvement to measure whether it would work. It is a welfare program than can be done by a computer, and some have suggested that it would actually cut waste by replacing all current systems of welfare. And there are multiple ways it could be funded. Some economists believe an income tax of 45 percent would be enough to fund a universal basic income. But nobody likes the prospect of raising taxes. Another option is citizen’s dividend, also called a social dividend system. Dividends would derive from a publicly-owned enterprise and would work much like the dividends for stockholders of publicly traded companies. As taxpayers and citizens, we are invested in the health of our economy and our own government, and it would be a bulwark against companies profiting off recessions. Another, albeit less universal, option was promoted by Chicago school economist Milton Friedman, and this proposal would be a negative income tax.
I am not an economist, but we all can recognize that wages are not keeping up with productivity, and that millions remain in poverty despite the fact that there is now more wealth than there ever was. I cannot say if a UBI is the answer to our economic anxiety, but it is worth studying.