Why universal basic income is gaining support, critics
Why universal basic income is gaining support, critics
By Kathleen PenderJuly 15, 2017 Updated: July 17, 2017
11:49am
The idea of a universal basic income — monthly cash
payments from the government to every individual, working or not, with no
strings attached — is gaining traction, thanks in part to endorsements from
Silicon Valley celebs.
Some see it as a way to compensate for the traditional
jobs with benefits that will be wiped out by robotics, artificial intelligence,
self-driving vehicles, globalization and the gig economy. Others see it as a
way to reduce income inequality or to create a more efficient, less
stigmatizing safety net than our current mishmash of welfare benefits.
“I think ultimately we will have to have some kind of
universal basic income, I don’t think we are going to have a choice,” Tesla CEO
Elon Musk said at the World Government Summit in Dubai in February.
In a commencement speech at Harvard University in May,
Facebook CEO Mark Zuckerberg said, “We should explore ideas like universal
basic income to give everyone a cushion to try new things.” And in a July 4
blog post, Zuckerberg praised Alaska’s Permanent Fund Dividend, the nearest
thing to universal income in this or any country. Since 1982, Alaska has been
distributing some of its oil revenue as an annual payment, ranging from about
$1,000 to $3,000, to every resident including children.
Facebook co-founder Chris Hughes, venture capitalist Marc
Andreessen and Y Combinator president Sam Altman have all said it’s worth
exploring. Y Combinator’s nonprofit research lab started a basic income pilot
with fewer than 100 people in Oakland last fall with the goal of gathering
information to structure a larger research proposal, its director, Elizabeth
Rhodes, said.
The concept has been around, with different names and in
different countries, for centuries, said Karl Widerquist, co-founder of the
Basic Income Earth Network.
It enjoyed a wave of U.S. popularity in the 1910s and ’20s
and again in the ’60s and ’70s when it was championed by free-market economist
Milton Friedman, Martin Luther King and, for a while, Richard Nixon.
It resurfaced again after the 2008 financial crisis, when
soaring unemployment and corporate bailouts focused attention on the “99
percent.” The concept picked up steam in recent years as studies started
predicting widespread unemployment because of automation.
Basic income has fans across the political spectrum, but
for very different reasons. Libertarian backers would replace all or most
welfare programs with a monthly cash payment as a way to prevent poverty,
reduce government bureaucracy and let people decide for themselves how to use
the money.
By contrast, “those left of center like the idea of using
(basic income) as a supplement to the existing safety net,” said Natalie
Foster, co-chairwoman of the Economic Security Project, a two-year fund devoted
to researching and promoting the idea of unconditional cash.
In a “utopian version,” the money would “sit alongside
existing programs” and go to every man, woman and child, Foster said. But if
you made it enough to keep people above poverty — $1,000 a month is a popular
number — “it starts to add up to a very significant portion of the GDP,” Foster
said.
That’s why some proposals would reduce or eliminate
payments to children or to adults over 65 if they are getting Social Security
and Medicare. Some would limit the benefits going to high-income people, either
directly or indirectly by raising their tax.
“In the simple model, everyone in the lower half (of the
income distribution) would be a net beneficiary, everyone in the upper half
would be net payers,” Widerquist said.
Charles Murray, a libertarian political scientist with
the American Enterprise Institute, has proposed a basic income plan that would
replace all transfer payments including welfare, food stamps, housing
subsidies, the earned income tax credit, Social Security, Medicare and
Medicaid. It would also eliminate farm subsidies and “corporate welfare.”
In exchange, each American older than 21 would get a
monthly payment totaling $13,000 a year, of which $3,000 would go to health
insurance. After $30,000 in earned income, a graduated tax would “reimburse”
some of the grant until it dropped to $6,500 at $60,000 in income. However, the
grant would never drop below $6,500 to compensate for the loss of Social
Security and Medicare.
Murray admitted that many seniors get more than $6,500
worth of benefits a year from those two programs, which is why it would have to
be phased in.
“What I’m proposing would actually be cheaper than the
current system,” Murray said. It would give adults a “living income” and
“liberate people” who are tied to a job or welfare program in a particular city
because they can’t risk leaving to pursue a new opportunity.
Tesla CEO Elon Musk favors universal basic income to
compensate workers displaced by automation. "I don’t think we are going to
have a choice," he said at a February event in Dubai.
Andy Stern, a senior fellow at the Economic Security
Project, has proposed a “left-of-center” plan that would give every adult 18 to
64 a monthly cash payment of $1,000. It would replace welfare programs such as
food stamps, the earned income tax credit, unemployment and Supplemental
Security Income. But it would keep Social Security, Medicare, Medicaid and
Social Security disability.
He figures the plan would cost about $1.75 trillion a
year. Ending welfare programs would save about a third of that. Another third
could come from ending the tax deduction for mortgage interest and other
write-offs. The remaining third could come from new sources such as a tax on
carbon emissions or financial transactions.
Stern would not reduce payments to the rich or raise
their taxes because that would bring back the problem he is trying to eliminate
— determining who is “worthy and unworthy” to receive benefits. But many of the
tax increases he envisions “would have a disproportionate effect on
higher-income people,” he said.
Some opponents of guaranteed income say it will encourage
laziness. Proponents say the current system discourages work by taking away
some benefits as income goes up.
Zipcar founder Robin Chase, now a speaker and author,
said universal income would encourage and reward important work that “does not
get monetized,” such as child care and volunteer work. It would also spur
business creation. “I had the luxury of taking risks because I had a husband
who had a full-time job with health care. A majority of the population cannot
take any risks in pursuing innovation or higher-value, non-remunerative
things.”
Some believe the answer to income inequality and
automation is not guaranteed income but a guaranteed job. Jared Bernstein, a
senior fellow at the Center on Budget and Policy Priorities, has said the
federal government should provide a job with benefits to anyone who wants one
and can’t get one. “A job guarantee could simultaneously lower un- and
underemployment while providing critically needed labor in fields ranging from
infrastructure to education to child and elder care,” Bernstein, who was an
economist in President Barack Obama’s administration, wrote in the American
Prospect.
Jason Furman, who chaired Obama’s Council of Economic
Advisers, doesn’t like guaranteed jobs or guaranteed income. Furman, now a
professor at the Harvard Kennedy School, said universal income suffers from
three problems.
“One is that it’s very hard to make the numbers add up.
To get to (incomes) like $12,000, you need huge increases in taxes. Two, there
are a lot of benefits to targeting. You only get unemployment if you don’t have
a job and are looking for a new job. If anything, I might toughen the work
search requirement” to receive unemployment.
Finally, he said, “I believe there is no reason that
people can’t be employed in the future. We have thousands of years of
experience of technological progress not leading” to mass unemployment. He
pointed out that technologically advanced countries do not have higher
unemployment rates than those that are less advanced.
“We should put more effort into how to create jobs and
prepare people for jobs in the future,” he said. Universal basic income “is
giving up on work and giving up on people. I’m not prepared to do that.”
Kathleen Pender is a San Francisco Chronicle columnist.
Email: kpender@sfchronicle.com Twitter: @kathpender
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