Basic Income

We live in a disruptive world. This has been painfully brought home by the coronavirus pandemic. But disruption also happens from technological change, trade and business cycles. We need a way to handle disruption in an efficient, comprehensive way, not with the effusion of haphazard half-solutions we currently have. Basic income offers that way. If we had basic income, everyone threatened by the pandemic would already have basic coverage and would be receiving cash, without the need for McConnell to agree with Pelosi. Which would reduce pressure to rush through trillions upon trillions of haphazard bailout money, and allow us to focus on fighting the virus.

Not all disruption is net bad. Capitalism’s creative destructiveness, it ability to find innovative solutions to our society’s needs and disrupt less efficient establishment ways of doing things, is what creates society’s wealth. It is what has allowed us to produce 1000 times more steel with the same labor as in 1900, why we can look forward to a future of ubiquitous, zero-emission, almost costless energy, why we will have cleaner, cheaper, automated vehicles and subways, and why we can source the best the world has to offer at the best price due to our wonderful international trading system. Done properly, it will give us all the wealth we need and end poverty.

But even good disruption upends traditional job and careers and threatens people’s means of support. This will only get worse as technology accelerates.

Don’t we already have programs to address poverty and disruption? And can’t unions help?

We have 79 federal means-tested programs to address poverty, enough to baffle a policy specialist, much less the intended recipients. This is not efficient. And unions, with their focus on protecting traditional ever less valuable jobs from trade and technology, are totally missing the point.

How about instead of wasting money on bureaucrats and needless complication, we just give people a basic safety net of cash and allow them to decide the mix of food, shelter, transport, education, that best suits their needs?

In addition to allowing bureaucrats to find actual economically productive jobs, we get huge bonuses from greater economic flexibility with things like minimum wage and tariffs. If everyone has a safety net, we can keep minimum wages lower. Which reduces the strain on businesses which might go bankrupt (and destroy jobs), or cut back on hours and leave people poorer.

Ditto trade. Since we know our workers are protected, we can allow our businesses and consumers full scope to purchase the best the world has to offer at the base prices available. Which means more competitive firms and more consumer purchasing power.

Ditto farm subsidies, the Jones Act and every other policy where “protecting jobs” is part of the calculus.

The implementation of Basic Income I prefer is the Negative Income Tax, similar to the Earned Income Tax Credit. For instance, at an income threshold of $30K and reimbursement rate at 50%, someone earning $0 would get $15K. Someone earning 20K would get an additional 5K. Anyone above $30k, including Bill Gates and Jeff Bezos, would not receive anything. That said, I am open to any solution, including UBI, provided it fulfills the goal of providing a safety net and we are able to pay for it.

The main objections to Basic Income and that they will deter work and be unaffordable. Both of these issues are addressed here.