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Here’s One Way to End Poverty

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The government should pay you to do this all day, even if it's not totally clear what "this" is.

CREDIT: Chris Lewis

There’s been a lot of hand-wringing lately about bloating, excess, and abuse of government assistance programs like disability insurance and food stamps. For taxpayers anxious about whether public assistance dollars are well spent, there’s a lot to keep track of: SSI, SSDI, Social Security, SNAP, unemployment, TANF, WIC—it’s a veritable alphabet soup.

Here’s an idea: Get rid of them all and instead just give cash assistance to everyone. Yes, literally everyone.

It’s not as radical as it may sound. The concept goes by several names, but here we’ll call it Guaranteed Basic Income (GBI). The basic idea is that every citizen receives a monthly stipend of enough value to cover all of their basic living expenses, regardless of financial need, employment status, criminal history, or any other factor. The grant would be funded through taxes on non-GBI earnings. (And of course, calling it “free money” is a bit of a misnomer—many people would contribute more to the program in taxes than they gain in benefits.)

Although GBI has seen some high profile advocacy lately from the likes of MSNBC’s Chris Hayes and Wonkblog’s Mike Konczal, it would likely take a long time for the program to become politically feasible. But from the standpoint of justice, the merits should be obvious. GBI lifts everyone above the poverty line by default.

“It gives people exit options because their basic core standard of living doesn’t depend upon staying with an abusive spouse or staying with an unpleasant employer,” said Erik Olin Wright, Vilas Professor of Sociology at the University of Wisconsin, who has written on GBI.

The grant should “be viewed as just a human right if the society can afford it,” Wright told Campus Progress.

Free money for everyone, no strings attached, sounds awesome in theory. But would it work?

One common criticism is that GBI would be wildly expensive, and therefore not worth the trouble. Of course, the cost of the program depends on how much income is guaranteed, but GBI would at least partially pay for itself.

The idea is that GBI would replace most current government income subsidies. Not just the alphabet soup programs, but also “the massive deductions and exemptions that currently exist in the tax code,” said Meg Wiehe, state policy director for the Institute on Taxation and Economic Policy. For the cost left over, we would have to “reconfigure the income tax in a way that raises the appropriate amount of revenue,” she told Campus Progress.

We probably shouldn’t fear that too much, though. “We’ve had really great economic booms in times when we’ve had significantly higher tax rates than we have now,” Wiehe said.

Another objection: If people could feed at the government’s trough with no obligation to perform labor of any kind, wouldn’t the economy train-wreck? (Indeed, this is similar to the conservative objection to the public assistance programs we do have.)

“If it’s true that most people actually want to live at the no-frills basic income—that most people’s life ambition is to live just above the poverty line—then it’s true, the system collapses,” Wright said. “I just don’t think it’s plausible that that’s the way people want to live.”

It’s probably true that the labor force would shrink somewhat. “In a GBI world, an employer has to make work somehow appealing enough to get employees even though everyone’s guaranteed a basic minimum whether they work or not,” Matthew Yglesias wrote at Slate earlier this year.

But the point is that unappealing, low-paying jobs (fast food and janitorial work come to mind) depend upon people’s desperation in the first place. With GBI cutting down on that desperation, McDonald’s might have to provide higher wages and better working conditions. But even if they had to bump dollar menu prices as a result, their workers would boost the overall economy with the extra cash in their pocket.

Other perks of GBI are less tangible. The grant would provide institutional acknowledgement that “work” and “employment” are not the same thing. “One of the reasons I like the basic income as a proposal is that it makes it easier for us to pose the question politically of ‘How many of the jobs that we currently have need to exist?'” said Peter Frase, an editor of Jacobin magazine and proponent of GBI. “Not from a standpoint of ‘people need the income,’ but from the standpoint of ‘this is actually something beneficial for society.'”

For example, some jobs in the health insurance industry exist solely to do the clerical work associated with denying coverage. Frase called them “redundancies of the bureaucratic private insurance system.” Meanwhile raising children, creating art, or civic activism are all examples of productive activity that currently goes unmeasured in dollars and cents. GBI would effectively allow anyone to make any of those things their “job,” albeit for a very low wage.

“Just imagine the amount of interesting theater and dance and music that would grow up around the country,” Wright said.

Still skeptical of GBI? Well, there have been some real-world tests of the idea.

As an experiment, some residents of Dauphin, Manitoba were given basic income grants in the 1970s—about $17,000 a year in current U.S. dollars, according to Wright. The result was a slight decline in labor force participation, but also fewer high school dropouts, less crime, and better health indicators for people receiving the grant.

The initiative was scrapped in 1978 due to a lack of national political support, but it’s not the only empirical test of GBI.

“There are plenty of places in the world which in practice, through a patchwork of non-unconditional grants and programs, virtually everyone ends up with a basic income,” Wright said. Think of Scandinavian countries with generous welfare states; above-poverty income is nearly guaranteed and the nations’ economies still manage to function.

It’s easy to imagine that a society with GBI would be a little bit less productive, at least in the conventional sense of the term. But perhaps we’re worried too much about productivity in the first place.

“If you believe that we need to move from an economy that’s mainly oriented toward the growth of material consumption as its driving engine, to an economy that’s much more anchored in human activity,” Wright said, “unconditional basic income makes it much easier for people to decide on the kind of balance between stuff and activity they want.”

If people can’t be compelled by desperation into economic activity, the result might not just be a more ecologically sound society, but also a more free society.

As Wright said, paraphrasing GBI theorist Phillippe Van Parijs: “Real freedom is the ability to say no.”

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