UNIVERSAL BASIC INCOME

ubi

Melissa Davis – Contributing Editor – 11/17/16

The discussion on Universal Basic Income (UBI) is becoming more prevalent across the globe. Countries including Canada, the Netherlands, as well as the Dutch city of Utrecht are developing pilot programs to test its effectiveness. FinlandIndia, and France are considering UBI as an option to streamline government welfare programs. Though there are still many unknown variables, an incremental approach may prove to be a viable solution to resolving the disastrous mess that is our welfare system here in the United States.

According to an article posted by FiveThirtyEight: What Would Happen If We Just Gave People Money?  The “U.S. government spends nearly $1 trillion across dozens of separate programs at the state and federal level…This all requires enormous administrative oversight on the part of the government, and it requires the ability to navigate multiple agencies on the part of recipients.” “In the U.S., we’re left with a patchwork benefits system, an indecipherable alphabet soup of programs: SNAP, TANF, CHIP, Section 8, EITC, WIC, SSDI.” “The problems with this system go beyond its complicated structure. Because eligibility for most social assistance is based on income (or is “means-tested”), recipients lose their benefits as they earn more income — this is often labeled the “welfare trap” or “poverty trap.”

We are all aware of the “poverty trap” where recipients on such programs cannot earn income in addition to the assistance they receive from the government, discouraging work even if one is capable in slight capacity. This leads to either hiding extra income through “under the table” cash payments or non-efforts by the recipient to seek extra income elsewhere. With UBI, these limitations would not be relevant. Therefore, if one chose to seek extra income, to better their life through education, and so on, they would not be penalized by losing the safety net their families rely on for basic living expenses.

Switzerland rejected the idea of UBI earlier this year citing fears that “disconnecting the link between work done and money earned would have been bad for society.” However, so far, studies have shown the opposite to be the case. One Study led by Johannes Haushofer (Princeton) and Jeremy Shapiro (Princeton) “documented large, positive, and sustainable impacts across a wide range of outcomes including assets, earnings (from sources other than our transfers), food security, mental health, and domestic violence, after on average four months. The study found no evidence of impacts on alcohol or tobacco use, crime, or inflation.”  Another U.K. based program, the Universal Credit Pathfinder Evaluation, cited by Cato Institute claims that “recipients of the cash payment were more likely to look for work and believed that the program offered a “better reward for small amounts of work“.

In an interview with CNBC Elon Musk of Tesla Motors says “there is a pretty good chance we end up with a universal basic income, or something like that, due to automation. He based his assessment on the prospect of increased automation in society. Given that his companies use robots and automation extensively in their products and that he has started a non-profit to explore judicious uses for artificial intelligence, Musk should know a thing or two about such matters.”

Silicon Valley agrees, “If technology eliminates jobs or jobs continue to become less secure, an increasing number of people will be unable to make ends meet with earnings from employment. UBI becomes a consolation prize for those whose lives are disrupted. Benefits still accrue to the designers and owners of the technologies, but now with less guilt and pushback about the collateral damage.”

While factors still need to be considered, including the counter argument from a libertarian perspective that it would be a form of socialism, perpetuating the “slave to the system” mentality, a slippery slope to communism; the overall concept of providing a universal basic income implementation gets complicated. How would it be distributed fairly across states with varying costs of living?

While It would eliminate the current complex government welfare system which has proven to be a dramatic failure, it would provide opportunity to those who wish to better themselves sans penalty for their efforts.

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