Has The Time Come For Universal Basic Income?
Last year the city of Oakland launched a program called Resilient Families to provide 600 low-income families with $500 a month for 18 months without any limitations on how the money can be spent. The funding came from donations from a philanthropic partnership (Blue Meridian Partners) and the program is run by a non-profit (UpTogether). The goal is to reduce poverty and wealth inequality. Can it work?
The Oakland program is one of many variants of a concept known as universal basic income (UBI). The idea is to provide all citizens of a country or municipality a small periodic stipend in order to reduce poverty and improve everyone’s quality of life. Unlike welfare programs there are no requirements regarding employment or any other criteria, it is paid to all citizens, and it is distributed in cash rather than as vouchers.
You might be surprised to learn that the concept of UBI has been around for centuries. It arose after the Renaissance when the responsibility of looking after the welfare of poor people began shifting from the Church to municipal governments. Most early programs focused on old-age social insurance, including one proposed by Thomas Paine as early as 1795 and another implemented in Germany under Bismarck in 1889. By the latter half of the 20th century broader UBI experiments had been started in various U.S. states and in various countries, although most of them, like the Oakland model, were limited to low-income individuals. Today there are more than 48 programs active in various U.S. cities, some publicly funded. The state of California has set aside $35 million for city-run pilot programs.
Opponents assert that there’s not enough public money to fund such a program on a national scale without raising taxes significantly. They are also concerned that, because there is no employment requirement, UBI may act as a disincentive for people to work. Supporters point to the fact that unemployment was actually reduced under many of the UBI pilot program. Other pilot benefits cited include increased school attendance and improved health, the latter likely due to greater financial stability as well as the elimination of the stigma of welfare. And supporters also argue that if UBI were to replace government welfare programs, the elimination of the massive welfare administration bureaucracies could free up a significant amount of government money.
UBI also has the potential to address another concern shared by many these days. It’s the acceleration of job losses as a result of artificial intelligence being applied more ubiquitously in many fields. Could UBI act as an effective safety net?
There’s not enough evidence yet to conclude that the American public is politically ready to embrace UBI, nor whether or not the most successful pilot programs could be scaled up nationally (or at least statewide). Nor do we have a definitive answer to the question posed in the title of this blog. But the possibilities are intriguing.
And also get rid of the welfare programs built into the tax code (so that they don’t look like welfare!) What a nightmare of ineffective complexity.