American Basic Income: An End to Poverty?
Danny Vinik, Slate: American Basic Income: An End to Poverty?
What are the benefits of a basic income?
The clear one is that no American would live below the poverty line. The U.S. has been waging the War on Poverty for a generation now and still nearly 50 million Americans are below the line. This would end that war with a decisive victory.
There are knock on effects as well. Americans would have greater leverage to demand higher wages and better working conditions from their employer thanks to the increased income security. Families could allow one parent to take time off to raise their kids. Eliminating the numerous different government welfare programs would also lead to efficiency gains as adults would simply receive their check in the mail and not have to waste time filling out paperwork at numerous different offices.
What are the drawbacks of a basic income?
Economists have long shuddered at the thought of a basic income, because it strongly disincentives work. However, a basic income is just that: basic. Most adults would continue to work to earn extra money. The employment effects would not be non-existent and there may be an increase in part-time work. As Lowrey points out, different studies have found the disincentive effects on work are not as strong as economists feared.
A basic income would basically abolish recessions, since adults would always have income to spend to keep aggregate demand high. It would also greatly increase freedom and decrease bureaucracy by eliminating all the restrictions and red tape involved with social welfare programs. Money being hoarded by the 1% is doing nothing for anyone since they already have vastly more money than they need to satisfy every desire they could have, so putting it into the hands of people who need it and would use it has virtually no downside.