Why Is Everyone Suddenly in Favor of Universal Basic Income and Why They’re Wrong

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By Nahema Marchal | 7:13 am, May 6, 2016

Universal basic income is en vogue right now.

The idea is simple: in addition to, or in lieu of, the panoply of social allowances known as the ‘welfare state’, the US government should send every citizen a fixed amount of money every year, irrespective of their status. No strings attached.

Tech elites love it (it’s the linchpin of their dreamed post-work society); the liberal media won’t stop singing its praises; the thought of it makes progressive policy wonks wiggle in joy.

Interestingly, as of late it has also garnered quite a lot of attention on the right, with a number of conservatives coming out in favor of it. Even ultra-conservative Fox News host Stuart Varney endorsed it as “one fine idea”.

The appeal is understandable. The US’ supposedly ‘lean’ welfare model is arcane and onerous — even to a European citizen like myself.

Over the last 30 years, the government has been devoting more and more resources to support the poor and the powerless. Yet inequality has never been so pronounced, with those trapped in poverty showing little prospect of upward mobility.

A universal basic income would change that by streamlining welfare payments, lessening government interference and giving people more choices while avoiding “poverty traps”.  What’s not to like? Quite a few things, actually.

 

graphic basic income

To be fair, some of the most blatant criticisms of universal basic income are not exactly warranted. There is an undeniable risk that regular and unconditional cash transfers could disincentive some people to work, for example – but that is still very much a moot point.

The main problem is that, as appealing as it sounds, universal basic income wouldn’t do much to decrease economic inequality.

Imagine if everyone, absolutely everyone, received the same check from the government. That’s you, me… but also Floyd Mayweather, the Koch brothers and, yes, even Donald Trump, rewarded with an extra cash bonus to fund his feisty bodyguards and manufacture more stingingly ugly hats. It actually amazes me that such an regressive approach would be so popular on the left.

Flat payments that aren’t tapered off would redistribute money to people on high incomes who do not need it without making a significant dent in the wealth gap, depending on how it’s funded.

A better approach would aim to simplify the current system (by merging different means tested benefits into a single payment) while seeking to maximize opportunities for the least well-off — folks with very little to no earnings. And that means putting preconditions on the payment of income.

Only those in need would qualify for the golden ticket, which would be gradually abated based on income, until a certain point at which they would begin to be taxed. A good example of that is the UK’s Universal Credit idea. (The theory is great – the practice, not so much.)

It has also been called the Negative Income Tax. Like the welfare benefits system, it’d provide a safety net in the form of a guaranteed income to those who need it most  —  while encouraging self-sufficiency and eliminating the ‘benefit trap.’

 

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