Universal basic income is an idea that many progressives have been considering for quite some time. In her memoir, Hillary Clinton mentions that she considered adding it to her platform during her 2016 presidential run but ultimately decided against it. Andrew Yang decided to make it central to his 2020 campaign platform. Yang’s dedication to the idea of a UBI, or the Freedom Dividend as his campaign referred to it, has excited many young people for a future in which the staggering inequalities of today become a thing of the past. However, as exciting as this idea may be, in practice it could be much less glamorous. There is little evidence to say that such a large-scale program would work in the United States, and even if it did, the price our society would have to pay is not worth the benefits that a UBI might provide.
Many supporters of the plan cite examples of where UBI experiments have yielded positive results, such as in India or Kenya. However, it’s important to remember that these programs were rolled out in areas of extreme poverty. In other words, the areas where the UBI has worked in Kenya and India were areas where the working wage was nothing close to the wage needed to live. Each cent that people earned went to basic necessities such as food, water and shelter, so the introduction of a UBI did not change their working patterns. In more advanced economies like the United States, where many people are considered middle class and have the money to spend on things that go beyond necessities, a UBI might not work as well. It has also been noted by researchers that programs on such a large scale in the U.S. would result in less of an incentive to work and lead to significant reductions in earned income.
Proponents of the UBI respond with examples of experiments done in Canada or Finland — advanced economies that could be compared to the U.S. And while many people benefited from these programs in health and happiness, these UBI experiments were shut down because the cost was too great. The U.S. would encounter a similar problem. Even if everyone was paid just $1,000 per month, it would cost around four trillion dollars per year to implement. As a result of budget constraints, there would likely have to be an incredibly deep cutting, if not an entire erasure, of the social safety net and welfare systems that we already have in place, as well as potential increases in taxes.
These examples are not to say that a simplistic, automatic benefits system has no merits, just that such a system should not be universal. In the U.S., there have been several experiments with simple benefits systems that work great. One is the Magnolia Mother’s Trust in Mississippi, which provides 20 African American mothers a $1,000 per month stipend. Another is taking place in Stockton, one of California’s poorest cities. Stockton is in the midst of an eighteen-month experiment to see how $500 per month impacts residents. Both of these programs are working as a welfare system should, helping those who need assistance provide a decent quality of life for themselves and their families. But that does not mean we should upscale these efforts to a national, universally-guaranteed program. In fact, one could argue that these examples show why that should not be done. These examples, while they are defined by a “no questions asked” monthly stipend that the recipient can use on whatever they choose, are not universal. These programs are targeted at specific demographics — already poor, vulnerable and disadvantaged communities. For this reason, these programs are not an example of a UBI; rather, these programs are wonderful examples of guaranteed minimum income programs.
Guaranteed minimum income focuses resources on those who need it — those who would be making less than the stipend given out — and is, therefore, more cost-friendly and more efficient rather than giving a universal payment of the same amount of funds to everyone. If we want to make our welfare program one that gives more liberty to the individuals receiving the assistance, then a guaranteed minimum income program would be the way to go rather than a universal program of benefits to everyone.
In a world of limited resources, we do not have the capacity to pay everyone, nor should we. Paying everyone the same amount ignores the complex face of poverty in America and may in fact retract valuable resources as we struggle to finance the program overall. If a UBI comes with drastic cuts in the existing social safety net, it could be very detrimental. For example, retired married couples could be getting $8,000 a year less under a UBI-only program. And there are some problems that giving someone extra money will not fix. Welfare programs such as drug rehabilitation and veterans assistance, among others, will not have their needs met with just cash. There are working relationships and assistance that takes place within these programs that money cannot buy, nor replace. It must also be taken into consideration that many people do not value the help that they need at a rate high enough for them to actually spend their extra money on it. Some government paternalism in these situations can be beneficial to increasing their quality of life and the general well-being of society.
While it is undeniable that our current welfare system has its problems, our focus should be on fixing it, rather than implementing an expensive and less effective system like UBI. There is no band-aid fix, nor one-size-fits-all solution. We must fix the leaky bucket so that it can effectively help those who need it to the degree that they need it.
Image by Sharon McCutcheon is licensed under the Unsplashed License.
