What if we gave everyone a guaranteed basic income?

Published February 20, 2017   Posted in How to Think

Try this one on for size: Would a basic income solve our nation’s social problems by blindly cutting checks to every person of legal working age and nixing expensive social programs like welfare and social security?

It is a profoundly interesting topic, and debatable until we are blue in the face. Studies from around the world have attempted to uncover how realistic a basic income would be, but few of them have led to any credible conclusions.

Would a basic income solve our problems?

In the United States, we have a slew of social entitlement programs and policies designed to keep people from literally dying off in our streets. Welfare exists for those who qualify, the “temporary” (but very permanent) Social Security program provides some economic stimulus for our retirement. And then we have unemployment benefits, minimum wage, food stamps and other policies that supposedly help provide a basic standard of living – funded in large part by the middle class.

Sadly, these programsย are buried underneath a giganticย mountain of bureaucracy that costs the American taxpayers billions of dollars to fund. Not only do the programs themselves cost money, but Americans also fund the administrivia required to run them. Like gas for your car.

The spending is incredible, but the bureaucracy might be even worse.

A basic income, proponents argue, would essentially remove all of these programs and replace them with a simple, non-bureaucratic solution: A monthly check, in the exact same amount, sent to all legal adults in the country – a Basic Income.

Done. No unemployment benefits because the monthly check would, technically, remove the need for a job. No social security because, once again, the basic income would continue until death. No “retirement” from the government check.

In theory, we could still work if we wanted to earn more than the basic income amount. Regardless of choosing to work, every adult still gets a monthly check.

Would a basic income destroy our society?

I have several observations, but even more questions.

At first glance, this sounds like a productive conversation. Removing our nation’s social entitlement structure simplifies government, lowers overhead and reduces fraud. Rich or poor, we all get the same check for the same amount. No qualifications. No income verification. Documentation not required. It’s automatic. Most social workers become unemployed overnight (with a basic income!).

We are no longer treated like children in our own country. We pick and choose what we do with our monthly check, and if we make bad decisions, we shoulder those consequences. The government has already done enough by providing a basic income. The rest is on us. If we fuck up, we fuck up.

But…

Would a basic income cost the American taxpayer LESSย than the cost of our current system of complicated and frequently-abused social services?

Would the American people largely quit their jobs? Who among us would work at grocery stores or Walmart if we all received free money from the government every month? This study from the 1970s did find a decrease in work effort, but only a modest reduction.

How do we handle people with disabilities? They will have requirements that not everybody has and may need additional resources to meet those requirements. Bureaucracy.

How would a basic income affect government revenue? If enough people quit work or reduce their number of hours, would revenue decrease to the point of concern? Naturally, the government would also get smaller by eliminating our entitlement structure – requiring fewer resources to function.

Would immigrants instantly become eligible for the basic income check? If so, how would the United States prevent a giant influx of immigration that may significantly reduce government resources?

Would a basic income kill innovation?

I believe that the incredible technological progress of the United States is due, at least in part, to a capitalist-based system that rewards hard (smart) work, innovation and progress with money. The more we succeed at what we “do”, the more money we earn to enjoy our lives.

Would a structured basic income kill our incentive to innovate? As our technological revolution hums along, what affect would a reduction in workers have on our ability to continue advancing as a society?

Or, perhaps we have advanced too far, too fast?

What do you think?

Let’s hear it. Do you think that a basic income would work? Is it a less bureaucratic solution than the United States government’s social entitlement structure?

Would YOU personally choose to work if the government provided you with a basic income?

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Comments

49 responses to “What if we gave everyone a guaranteed basic income?”

  1. Hey Steve – interesting article and you make some good points. I’m naturally right leaning, so the concept of basic income doesn’t make sense in my head. I do see the merits of it, namely, everyone has some sort of cash in their pocket, regardless of day job or side hustle. One factor you didn’t mention is the potential effect on inflation.

    Actually, to your last point, technological innovation could increase since more people could devote time if they had some basic income.

    What do you think would have a bigger effect: basic income or lower income taxes? Basic income increases the top line, lower taxes increase the bottom line. Most people would rather increase the top line, but tax efficiency is very important…

    • Steve says:

      I am all for lower taxes as well – and no, I’m definitely not in favor of a basic income. I just don’t believe that’s the government’s job, though I am always interested in listening (reading) people’s thoughts on the matter.

  2. whiskey says:

    Here’s a blog site where its being discussed. http://forums.rockstarfinance.com/t/universal-basic-income-yay-or-nay/1980/11
    Ill weigh in again, NO! It reeks of gov’t and dependence. One is not striving for life, independence, betterment. Sloth becomes the norm. It gives power to the payers and takes from the payees.
    Countries are already trying to move away from cash, ie cashless societies. Once again taking power away from the peoples. Time will show for those countries now experimenting with this theory, that it does not work for the people.

  3. This is a very thoughtful article and interesting question. There are countries that already do this. As you mentioned, the US is a capitalistic society, yet I feel we are inching closer and closer to socialism and to the implementation of such a program.

    I suspect that a basic income would not be a luxurious one and anyone living on that alone would still struggle to make ends meet, hence, still requiring them to strive for more in the way of supplementing their income by still working in grocery stores or similar jobs. And I firmly believe that a capitalistic and innovative mentality would still thrive because there are always people who want more. A lot more. Those people would still go out and get it. I’m assuming, of course, the monthly income wouldn’t equal 5k/mo. If so, then yes, society would not continue to hum along and even some go-getters would opt to sit on their tush and enjoy life.

    • Steve says:

      Yeah, I tend to agree – and then there’s the question of cost of living. Not every place in the country has the same cost of living or living standards. I guess there would just be a formula or something based on where you live. But yeah, if a basic income is ALL someone had, then I would think there still would be struggle. To a certain degree, though, I suppose that would be a good thing…else NOBODY would choose to work. ๐Ÿ™‚

  4. Go Finance Yourself says:

    I believe a basic income structure would definitely kill innovation. Look at socialist countries in the EU and what innovations have come about there. Not much. It mostly comes from the US because there are more opportunities to make it big by creating something new. As someone who has always lived in the US, I would hate to see us lose that. At the same time, studies have shown EU countries with higher taxes and more socialist programs have a population that is generally more happy. Their ceiling is not as high but their floor is not nearly as low. If you have your basic needs taken care of, I can see happiness increasing throughout the country. However that would be incredibly difficult to pull off. Not just from a funding standpoint, but we would lose our entire identity in the US.

    • Steve says:

      I agree 100%, it would be difficult to pull off. And like you said, our innovation is due in very large part to our monetary incentives that we have in place in this country. Like it or not, our capitalist system encourages people to innovate. To create something new. To make lots and lots of money by adding value. In general, that’s a good thing!

  5. TheRetirementManifesto says:

    I just returned from Switzerland on Friday. Last year, they had a referendum to pay every citizen ~ $2500/month. It was rejected by a vote of 77% against! (http://money.cnn.com/2016/06/05/news/economy/switzerland-basic-income-referendum/). Like anything, there’s a % of the population who would quit, and a % of the population who wouldn’t. However, the reason the Swiss folks rejected it was fear that too many would quit, and the goverment would be unable to fund the “charity” on reduced tax revenue.

    We should learn from the Swiss. Bad idea. Capitalism has proven to be a very effective economic model. Not without it’s faults, but I would argue the USA has demonstrated the power of capitalism for 200+ years, and it’s the best economic system in the world. Don’t change something that’s not broken….

  6. One thing that I wonder is if everyone had basic income if that would throw off the equilibrium of prices and basic income would continuously have to rise to meet the needs of the population. I would think at some point since there is a certain amount of income floating around that the demand curve would move up causing prices to increase. So we’d be in an endless cycle of trying to redefine what the basic income should be.

    • Steve says:

      That’s actually a very excellent point. In fact, I’ve thought about the very same phenomenon if we were to go the route of “free 4-year degree”. If everybody had a degree, then the standards would simply elevate, where a Masters degree would then be where a bachelor’s degree is now in terms of value.

  7. I believe it would be a bad thing for society as a whole. First would someone like you who wants to retire early leave the workforce early because they have additional needs met by basic income? Likely even before we talk about those who would just never work at all. That disincentive to work hurts our societies production and innovations. Those two are the only parts that ultimately matter in the economy as they drive our overall well being. So as a whole it would be bad for society.

    • Steve says:

      I think you’re right on, FTF. While you definitely wouldn’t get rich off of a basic income, it might be just enough to encourage more people to quit Walmart and other minimum wage jobs. Then, who would do those?

  8. Joe says:

    I don’t like basic income. We know it doesn’t work from China and USSR. People have no incentive to work hard and productivity would drop.
    It might be feasible if a very small percentage of the population can support the rest, but that is a long way off. Star Trek and the Expanse series for example.

  9. brian503 says:

    I believe it ultimately depends on the individuals. I’m sure there would be a percentage of the population that would take this income and do nothing more. Others, would take it and use it to fund small business, inventions, etc. Still others might use it as a spring board for better education. So it’s hard to generalize such a broad topic.

    • Steve says:

      Yep, true that. But on a whole, would a society collapse or flourish when everybody’s basic income needs are theoretically met? Hmm…me thinks probably not.

  10. Our current capitalist system is optimized for monetary benefit, not happiness, most inventions created, or even new pieces of artwork.

    Such a system would really turn our capitalistic system on it’s head. Without a financial incentive, people might be more free to choose the work they want, instead of whichever profit mosts. That could be a good thing, or a bad thing depending upon what economic output you value.

    For one, it could create workers that output nothing of “economic” value, but higher social value.

    I’d like to be positive and believe that people would choose their passions and the world would turn out OK, but obviously I have no proof to this effect. Maybe they would just lie around and do drugs all day!

    • Steve says:

      Hah! Yeah, I’m not entirely sure either. But you are right that economic value would definitely change, and it would probably depend on your perspective before determining whether or not that’s a good thing or not.

  11. I don’t know it would do for society, but I know what it’s done for us (in a sense). Garrett and I worked to reduce our expenses to about $25k per year. Twist our arms and I think we could do less without huge sacrifices. We’re pretty lucky that we don’t need to earn a lot of money to cover our expenses. As such, we derive our “basic income” from the handful of clients we serve each month. That means we can save everything else we earn. But that’s not the best part. I only realized the best part of this equation a couple of weeks ago. The best part is innovation. It means we have the time and space to create, to innovate, and to take huge risks. No debt and having this “basic income” means we CAN innovate. It means I was able to leave my job to grow our business. It means Garrett can work on the various projects he’s had on his mind. Take away the stress of money and what can people create? You’ll see. ๐Ÿ™‚

    • Steve says:

      That’s awesome, Claudia. It’s true – take care of people’s most basic needs and you free up time for them to explore their world and take more risks. While not everyone would do that, those who DO will definitely reap the benefits – like you guys. I think you’re a good example of the good that could result under such a program. ๐Ÿ™‚

  12. This idea of simplified support goes back at least to Nixon’s negative income tax idea. The elimination of the bureaucratic overhead, complexity and fraud is a big argument in favor. The unknowns are the ill-effects of idleness or lack of incentives to rise. The social ills of the last forty years seem pretty clearly tied to idleness as the Devil’s playground. The biggest argument for a basic income support is that there may simply be far fewer jobs available in the future due to automation and robotics to meet the basic needs of society. We’re not there yet, but the entry threshold for mindful work is clearly rising. Working America doesn’t like the fraud and gamesmanship it sees in Idle America or its supposedly well-intended government enablers. We still haven’t figured out how to protect those truly unable to care for themselves without enabling a lot of abuse. I suspect a simple basic income support and a return to, “Spend it well, there won’t be more,” at least has the virtue of cultivating individual responsibility. There will still be challenges around protecting the most vulnerable. The current system is not producing good results and is ultimately unsustainable both economically and politically.

    • Steve says:

      Well said. There are a ton of issues at play, and many of them are simply unknown. Even if this kind of system would work in another country doesn’t mean it would work here. We are different people. We are used to different things. Our “standards” are much different – for good or for bad! ๐Ÿ™‚

  13. RootofGood says:

    I lean libertarian but find it hard not to want to dole out some government bennies given how wealthy our society is. And I hate government inefficiency. ๐Ÿ™‚

    Our ridiculous bureaucracy in charge of handing out our current welfare must number in the millions of employees (when you add local, state, federal, and non-profits w/ grants). That might add up to $100-200 billion or more in overhead costs. What if simply gave that extra $100-200 billion away?

    I think there’s some latitude to have differential basic incomes instead of a one size fits all. Wouldn’t have to be super complicated (no more than the household info you submit on your 1040 each year such as # dependents, marital status, age 65+, blind/disabled, etc). After helping several family members access our byzantine social welfare system, it’s obvious that we are stuck using 1950’s technology in spite of the fact that it’s 2017. Basic income would go a long way in fixing the overly complicated system.

    • Steve says:

      I lean hardcore Libertarian. I despise government encroachment in our lives and almost everything they do. The more government gets involved, the more expensive things get for those of us who actually produce. But you’re right, a simplified system – even if it includes the government doling out monthly checks – might be less expensive than the alternative…which is a bureaucratic mess of a system.

      • RootofGood says:

        I guess I like things like roads, parks, and public schools too much to go hardcore libertarian ๐Ÿ™‚ I’ll still vote for Gary Johnson though.

  14. less4success says:

    Quite a mix of responses on here! I’ll throw in my opinion that basic income is inevitable–maybe not soon, but eventually. Once we have robots doing most of the jobs required to supply food, shelter, and other essentials, there just won’t be enough work available for everyone to have a job and basic income will be what keeps people from taking to the streets to overthrow the capitalists class ๐Ÿ™‚

    I don’t buy that basic income will increase inflation since it is redistributing money and not creating it. I also think it will boost innovation because ANYONE will be able to start a company instead of just those who already have enough money to take risks. I also expect crime and lifestyle health problems will fall dramatically because people won’t be stressed out over trying to put food on the table.

    Yes, I’m an optimist ๐Ÿ™‚

    • Steve says:

      I definitely like your optimistic tendencies! And like we see with Claudia above, innovation would very well increase with some people because they don’t have to worry about their basic needs. People could take more risks. That is definitely a good thing!

  15. I definitely lean towards social good, but I don’t agree that this is a viable solution.I was at a conference once and was talking with some folks from a tribal community. These tribes are cashing out with the casinos and then every person starts getting income at the age of 18. Apparently it causes many problems with people not wanting to work and getting into trouble. However, on the flip side, I would definitely continuing working. When I was 14, I begged my parents to let me take a job that a friend told me about. I always want to do some kind of work, just not full time.

    So, with that said, instead of a basic income, I’d like to see a shift in how we use tax dollars so that people can get their basic needs satisfied. Right now, big ag is subsidized to produce corn, wheat and soy, all of which are high calorie, low nutrient foods that get turned into junk food or animal feed for factoring farming mass amounts of meat. I’d rather see the subsidies go to the small, local community farming efforts to provide cheap or free healthy food for all.

    Being a pacifist, it floors me to see how much we spend on the military. We could use that money to provide low cost universal health care. Additionally, I’d love to see the government promote more tiny houses, so that people can afford to have more reasonable housing costs. And put more money into public transportation to allow easy local and national travel, similar to the Eurail.

    These items together would go a long way to allow people to work part time, take time off between projects, retire early, etc… But, it wouldn’t deter people from completely not working at all. After all, if the majority stopped working, then the rest of the people would have to pay a ridiculous amount of taxes to support those who don’t want to work.

    Additionally, if someone wants a big house, multiple cars, eat out often or buy food beyond basic needs, then they could work more hours to pay for that.

    • Steve says:

      I think there is a lot of wisdom in your words, Primal. I’m right there with you in your criticism of our spending as a nation. Short of a basic income, we could definitely save a great deal of money on things that we probably don’t need to be spending much money on anyway. Across the board.

  16. Mrs. BITA says:

    I think the bigger motivator for universal basic income is not going to be to reduce government spending but to deal with the AI revolution. I don’t think we gain much my randomly trying to guess what might occur if this gets implemented. Our guts may say something, but guts are known to be extremely flawed. I look forward to actual studies done in the area, over the long term. Give Directly recently launched a large scale pilot in Kenya that should run for over a decade.

  17. Psst, I love the redesign!
    Basic income is tricky. On one hand it would be a big leg-up for people living in poverty. But in many ways it can also encourage poor financial decisions, much like any windfalls or “free money.” I guess my question is how taxes would work with this system. We’d all pay into taxes and then receive a basic income? In that case, it’s almost like we’re just cycling the same check between ourselves and the government. I guess I’m not sure how cash flow between citizens and the government would work.

    • Steve says:

      Thanks Mrs. Picky Pincher! And I definitely agree – it is very, very tricky. Maybe we wouldn’t be taxed on the basic income threshold, but anything beyond that, we would be? Hmm… ๐Ÿ™‚

  18. jasonedwards57 says:

    I think that we are moving toward this anyway. For example, people who advocate for a national sales tax argue that you send people a rebate check every month and then we just tax whatever they spend. I think that with the innovation in technology and the potential for huge displacement that some form of basic income guarantee will eventually come. And you pay for it, as Bill Gates said this weekend, by making robots pay taxes.

    • Steve says:

      I think in many ways you are right – we may not call it a “basic income”, but there are propositions that seem to be heading in that exact direction.

      “And you pay for it, as Bill Gates said this weekend, by making robots pay taxes.”

      Ha! That’s great. ๐Ÿ™‚

  19. It depends on how much more I can earn AFTER earning the basic income. If the answer is unlimited, give me the basic income so I never have to worry about money again!

    Sam

  20. morgne says:

    First, obviously we could dedicate thousands and thousands of words to these concepts but… I am conservative and I am supportive of the concept of a ‘basic income’. Ultimately, a basic income set at a national level of approximately 600 per month (50% of poverty level might be a good way to place the number) issued to every citizen electronically every month (from a national bank – call it AmeriCash – that can be linked with a private institution of your choice). Taxation occurs as usual with the basic income not taxed and the personal deductions dropped. This keeps the taxation fairly level as far as tax free income. The BI issued to minors can be issued in halves. 50% to the parent/guardian, the other 50% held in reserve for the age of majority. Each child then has an income irrespective of it’s parent that can be used for support while providing for a basic beginning at age.

    This does not replace social security or disability programs. At retirement age the ‘basic income’ doubles to poverty level and becomes social security. There cannot be an expectation that BI would lay the responsibility for long term planning on the general populis. Tagging it to poverty level would mean that a very clear expectation would be provided for each person: Poverty level retirement unless additional work was generated.

    There are strong positives for a program that allows movement away from the cities and into the country. 600 a month would barely make a dent in many cities but the same funds in Nebraska could go a long way towards covering the bills. A husband and wife, at 1200 a month tax free could own a home in many parts of the country. The ability for the lower income tiers to move towards less expensive areas, the movement of such would then create new jobs in those areas, could be an incredible boon. I think of it as the reverse ‘diaspora’, spreading out to fill only our continent.

    At this point the questions is not: Will the wealth be redistributed BUT how best to handle that redistribution? If we have already made, as a society, the decision to provide any type of protection/security/ect then we have to examine HOW to do it. While I might debate the ‘why’ of it, there is little doubt that the how of it is currently a non-starter. PS Don’t even get me started on the weird things I think we should do with insurance!

  21. What a fascinating debate and thought experiment… One I have been wanting to write an article on for a little while. I’m gonna take a little bit of the “pro” side, even though I can see the pitfalls

    I actually think:
    A) We’ll eventually be forced into such a situation by automation
    B) if done right it could work and probably has to work (we simply won’t need as many workers)
    C) It could actually unleash a whole bunch of pent up creativity leading to a next level of human innovation. Sure many people would sit on their butts and waste away. But many more would finally find the free time away from the drudgery 9-5 work to pursue creative passions using technology that makes it easier than ever to create things

    Optimistic, I know. Sure, I think there would be an initial (maybe long) period of struggle in society as the economy and our work habits adjust, but eventually, I think we’d adapt. “Job” will just mean something else, other than something we have to do to survive.

    Great article! Fun conversation

  22. I think we’re a long way from a basic income being politically feasible in the U.S., not to mention that it’s never been tried at scale or in such a wealthy country. It’s an intriguing idea and I’m fascinated by the way it’s drawn people from so many different political viewpoints together. I think it remains to be seen how quickly technology and automation will displace human workers, but I understand why many people think this may become the financial model of the future. It very well could be.

    I love the work being done right now by an organization called GiveDirectly, a not-for-profit that’s trying to transform foreign aid into its simplest form: cash giving to the world’s poorest. The idea might appeal to your libertarian feelings on bureaucracy; they point out that most aid organizations are inefficient and can’t anticipate the exact needs of individuals, while individuals who receive cash can optimize its use for exactly what will benefit them most. There’s a great NY Times Magazine piece on it that just came out today, which points out that it is also a testing ground for a universal basic income — and that the poorest parts of the world might be natural places for demonstrations of that model: https://www.nytimes.com/2017/02/23/magazine/universal-income-global-inequality.html

    • Steve says:

      I tend to agree, Matt – we are a LONG way off from a basic income. Our country wasn’t designed to provide THAT kind of assistance. We push through social entitlements so our politicians get re-elected, but in terms of building an actual and lasting infrastructure to support such spending? Not even close.

  23. Jef says:

    Massive question Steve! I’d say while it could be great in theory like some political systems in practice may not work all that well. It’d probably also create greater innovation though wouldn’t it? If people’s basic needs were satisfied wouldn’t they then have the time to focus on new innovations and ideas?

    Not sure this one is black and white although it’s very interesting!

    • Steve says:

      I agree – massive question indeed. Some people probably would innovate more if their basic needs were met, but then others might just sit around and really do…nothing. More the former than the latter? I would hope!

      • careercrusader89 says:

        Yeah although if you started putting conditions or measuring it wouldn’t that defeat the purpose of a basic income? I’d agree with you and it would be unlikely we’d sit around and do nothing!

  24. I actually love the idea of universal income, as it removes incentives to pick political winners and losers with social programs like we do now. It is the one idea far left liberal socialists and hard core libertarians might actually agree on. The devil is in the details. It has to be low enough to still encourage people to work, but high enough to actually be a safety net. You would still likely need social programs, but effectively most welfare and social security could be eliminated.

    People will always want to work and make more money. We are designed to spin on the hamster wheel. I don’t believe UI will actually cause too many people to work less, and even if they do there will be plenty to take their place. Wages will rise as people drop out of the workforce, causing inflation, which will make people want to work…etc. There will be a natural equilibrium.

    One could argue we already have a UI for a segment of the population – we just call it social security disability.

    • Steve says:

      Yup – the income number would be, naturally, highly important. I wouldn’t even know where to begin with figuring that out. But as a Libertarian, I am intrigued by the idea!

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