Would a Universal Basic Income help eradicate poverty in the US?
Posted July 19, 2016
Economic and political leaders around the world have rekindled the debate about whether a universal basic income would eliminate poverty, or if it would even be possible to implement within the U.S. economy.
Y Combinator, an Oakland company that provides seed funding for startups, announced in January it would experiment with a basic income by giving 100 people a monthly income between $1,000 and $2,000 with no guidelines on how it must be spent.
“I think that, combined with innovation driving down the cost of having a great life, by doing something like this we could eventually make real progress towards eliminating poverty,” Y Combinator president Sam Altman said in an announcement for the project.
A universal basic income is an “income unconditionally granted to all on an individual basis, without means test or work requirement,” according to the Basic Income Earth Network. Unlike many federal welfare programs, a UBI is based on — and given to — individuals rather than households. It doesn’t look to other sources of income or employment for reference.
Past activists have voiced support for a basic income, like Martin Luther King Jr. who supported the idea in one of his books. It’s been proposed before by politicians and lawmakers — including Richard Nixon and Jimmy Carter — but never gained enough support to last.
Altman is attempting to give it another shot, and said that if this pilot program in Oakland goes well the group will expand the project into a bigger study. If the pilot goes poorly, they’ll try again with a different approach.
On May 31, he announced Elizabeth Rhodes as its research director and that it intends to begin the project soon.
“We think everyone should have enough money to meet their basic needs — no matter what, especially if there are enough resources to make it possible,” Altman said. “We don’t yet know how it should look or how to pay for it, but basic income seems a promising way to do this.”
Some economists, like Charles Murray of the American Enterprise Institute, say this would level the playing field and start everyone off above the poverty line. In a rerelease of his 2006 book "In Our Hands" (AEI Press), Murray explains how his plan of implementing a $13,000-a-year UBI would benefit the poor by replacing the current welfare state, which he said currently prevents some people from joining the workforce.
“You’ve got a lot of people who are already out, and the point is a lot of them do not get jobs because if they do get a job, they lose their current benefits,” Murray said. “If you’re on disability, you can’t get a job or else you lose your disability benefits. Under the basic income, you don’t lose anything.”
In his plan, $3,000 would have to be spent on health care, and any federal program “that takes money from taxpayers and gives it to individual Americans in the form of cash or services” would be eliminated. The extra $10,000, he said, could actually be incentive to keep a job.
“Suppose you’re making $15,000 a year, and the UBI is $10,000 of disposable income,” Murray said. “That means you go from an income of $15,000 to $25,000 a year if you keep your job, or you have a choice of going back to an income of $10,000, and that’s just not attractive. So even for people who are making low incomes, they are in effect getting a $10,000 raise if they just keep their current job.”
But others argue a UBI is too idealistic or too “simplistic.” According to president of the Center on Budget and Policy Priorities Robert Greenstein, using a system like the one Murray describes could result in an increased poverty.
“If that’s what you did, you would actually increase poverty because you would be taking a number of supports that focus on people who need them," Greenstein said. "You would be taking the money from them and converting them into equal dollar payments that went from people at the bottom to multimillionaires.”
But recent discussions of possible basic income implementations in Europe have pointed to a renewed interest in the idea, according to Greenstein.
Earlier in June, Sweden was the first to hold a national vote on such a plan. Swiss voters gathered enough signatures to send a plan that would award each of its citizens about $2,500 U.S. every month up to a vote, but it was shut down with 77 percent opposing the idea.
Finland will also consider a plan to implement a basic income soon, which Prime Minister Juha Sipila told the BBC would mean ultimately “simplifying the social security system."
Despite the attention UBIs are garnering there, Greenstein said western European countries have tax revenue systems that are better suited for a universal basic income and that it “just isn’t going to happen” in the United States.
“Western Europe has a much more expansive social safety net than we do,” Greenstein said. “It lifts far more people out of poverty than we do and gives more support to middle-income families. I just don’t see U.S. political culture levels of tax revenue — even if we raise them some — close to approaching western European levels.”
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