10-Point Expert: Basic Income

Income

The idea of basic income is being talked about more-and-more, but are people willing to keep an open mind about it?

 

 

A few weeks ago a Silicon Valley seed investment firm, Y Contributor, announced details of a social experiment they plan on doing in Oakland. It revolved around the idea of giving everyone in the specified area a set amount of cash each year from the government. This idea is known as basic income. Proponents of basic income believe it could potentially be a powerful tool to eliminate poverty. So what is basic income and what are its pros/cons? Let’s take a look!   

 

 

Point 1: The core idea of “basic income” is to give everyone a base income on a regular basis without any eligibility requirements. In other words, you wouldn’t have to be registered as unemployed or be eligible for disability to receive base income; just by having residence (or citizenship) in a certain area is all the eligibility you would need!

 

Point 2: While the idea might seem a little far-fetched, many well-known liberal economists like Emmanuel Saez and Jonathan Gruber believe implementing a basic income could battle poverty more effectively than the current systems that are put in place today.

 

Point 3: The idea of a basic income has been around for a while now. Here’s a 1968 interview of famous economist Milton Friedman talking about basic income through the idea of “negative income tax.”

 

 

Point 4: However not everyone subscribes to the idea of basic income being an effective tool to fight poverty. Many critics believe basic income would have the opposite effect on society and destroy the incentive for people to actually work. Or worse, it could cause the federal government to forgo traditional safety nets like subsidized healthcare for the poor or basic education services, which would ironically hurt those in society that are the most vulnerable.

 

Point 5: Many critics against basic income point to an academic study which shows that work effort greatly decreased when negative income tax (ie basic income) was implemented. Critics claim the study proves what many have always feared about basic income; that if people don’t have to work, they won’t. Many of the participants ended up being unemployed for a lot longer due to the government benefits.

 

Fainting

“Critics hearing that basic income was almost amended into the Swiss Constitution.”

 

Point 6: Proponents of basic income however look at it very differently. Their biggest argument for basic income revolves around the philosophy that it would eliminate one of societies biggest problems; poverty. They claim a basic income would reduce income inequality and give those in poverty a better chance of getting out.

 

Point 7: In fact the same study that is used by critics to show the ineffectiveness of basic income, is touted by proponents claiming critics are interpreting it all wrong! While they would admit the study on implementing basic income did create a reduction of labor, they would also argue that many of these individuals ended up seeking higher education because of it. That meant many who were beneficiaries of the basic income experiment ended up waiting for better job opportunities, which proponents would argue eventually creates a wider middle-class and stronger overall economy.

 

Point 8: The closest that a country has come into adopting basic income was Switzerland earlier this year. It came as a referendum that would have amended the Swiss Constitution to make basic income a fundamental right among its citizens, but was voted down by the public in a one-sided defeat (only 22% voted for the measure). While the result wasn’t necessarily surprising, proponents look at it as the first step towards public acceptance of basic income, because just getting on the ballot to them was a significant victory.

 

Point 9: Generally speaking, many have been wary about the idea of basic income in the past. While social safety nets aren’t anything new in Western societies, programs like Social Security and Medicaid have been around forever, a concept like basic income has never been implemented on such a large scale. These basic income programs have generally been limited to local levels in government (like what Y Contributor is trying to do in Oakland).

 

Point 10: Considering the backlash that programs like the Affordable Care Act (aka Obamacare) or welfare assistance has gotten in the US, it’s hard to see a majority of Americans embracing the idea of basic income. Fundamentally speaking, our idea of what “earned income” means would have to change for something like basic income to be accepted. Otherwise, the best advocates can hope for are local government experiments like the one in Oakland.

 

 

(Photo Credits: Pixabay.com, Google Images)

 

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