Monday, January 13, 2014

Universal Basic Income - An Idea Worth Considering?

As I mentioned earlier this week, January is the 50th anniversary of America's War on Poverty. There are arguments as to whether or not it's been worthwhile. I believe it has and I believe if one looks fairly at the evidence we can see that. What's changed is the nature of poverty and our attitude toward it...

Jonah Goldberg is a fellow at the American Enterprise Institute and editor-at-large of National Review Online, has a column in the Dallas Morning News that has yet another idea. 

If we want to defeat poverty, why not just give the poor money?

"Charles Murray, my colleague at the American Enterprise Institute and a legendary libertarian social scientist, wrote a wonderful book a few years ago, In Our Hands, in which he proposed an annual grant from the federal government of $10,000 for every American over 21 who stayed out of jail and still had a pulse. He was building on arguments made by two titans of libertarianism, Friedrich Hayek and Milton Friedman, who also supported some version of a UBI (Universal Basic Income).
"On the left, the idea has been popular for generations. So what’s the catch? Some cite the cost, which obviously would be hefty. But the real sticking point is that the libertarian argument is largely an either/or proposition, while the left-wing version is a both/and deal. The libertarians want to liquidate much of the welfare state and convert it into cash payments. The left’s version is that the money would, for the most part, augment the welfare state.
"New York University professor Lawrence Mead identified the chief flaw with both the libertarian and the left-wing approaches to fighting poverty, either through existing welfare programs or through a UBI: the “competence assumption.” This is the presumption that the intended beneficiaries of government anti-poverty programs always “behave rationally enough to advance their own self-interest.”
"The problems afflicting many poor people are often of their own making, at least in part. Having children before getting married, dropping out of high school, etc., are transparently bad choices that millions of people make. (Also, some anti-poverty programs create incentives that make bad decisions seem rational.)
"But many poor people have just had rotten luck. There’s good reason to believe that, with a little help, they can work their way up the economic ladder.
"And for countless others, the truth probably lies somewhere in between."

Jonah's idea is not original. Nearly 50 years ago, Martin Luther King, Jr. had the same idea.This article in The Atlantic  laid it out succinctly "...he wanted the government to eradicate poverty by providing every American a guaranteed, middle-class income -- an idea that, while light-years beyond the realm of mainstream political conversation today, had actually come into vogue by the late 1960s.
"To be crystal clear, a guaranteed income -- or a universal basic income, as it's sometimes called today -- is not the same as a higher minimum wage. Instead, it's a policy designed to make sure each American has a certain concrete sum of money to spend each year. One modern version of the policy would give every adult a tax credit that would essentially become a cash payment for families that don't pay much tax. Conservative thinker Charles Murray has advocated replacing the whole welfare state by handing every grown American a full $10,000.
"King had an even more expansive vision. He laid out the case for the guaranteed income in his final book, 1967's Where Do We Go From Here: Chaos or Community? Washington's previous efforts to fight poverty, he concluded, had been "piecemeal and pygmy." The government's believed it could lift up the poor by attacking the root causes of their impoverishment one by one -- by providing better housing, better education, and better support for families. But these efforts had been too small and too disorganized. Moreover, he wrote, "the programs of the past all have another common failing -- they are indirect. Each seeks to solve poverty by first solving something else.""

King went further to say, "The poor are less often dismissed from our conscience today by being branded as inferior and incompetent. We also know that no matter how dynamically the economy develops and expands it does not eliminate all poverty...We must create full employment or we must create incomes. People must be made consumers by one method or the other. Once they are placed in this position, we need to be concerned that the potential of the individual is not wasted. New forms of work that enhance the social good will have to be devised for those for whom traditional jobs are not available."

One's may brand King's idea as a type of 'democratic socialism'. I say it's worth discussion.

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