Universal Basic Income: Money for Everyone in America, Is This a Reality and Who Will Pay for it?
Many are talking about Universal Basic Income, UBI, some wanting it to be implemented in America while others are pointing out the facts of how this would not work. Money for everyone sounds great but who would pay for it? We break this down for you with the help from knowledgeable people on the subject.
First, Larry Summers who has held many different positions in his lifetime which has given him much experience shares his opinion on UBI. He is the Charles W. Eliot University Professor and President Emeritus at Harvard University. He also served as the 71st Secretary of the Treasury for President Clinton and the Director of the National Economic Council for President Obama. We join Summers at the New York Times Conference.
“Question is, why am I negative on Universal Basic Income. One possibility is that I just lack imagination and that I’m wrong…I’m open to the possibility that I’m wrong. That said, I think there are two big things you have to think about with Universal Basic Income. One is just the sheer cost. How big should the Universal Basic Income be? $10,000 per person doesn’t seem like an immense number. $10,000 per person means $3.3 trillion for the United States. To finance that you would have to double every tax we collect; every tax the federal government collects. It just doesn’t feel to me like doubling all the taxes, sending the top income tax rate to 90% before you get to state taxes. It just doesn’t feel to me like that is going to happen…if it did happen to a small universal basic income but if you had a $3,000 basic income it would only cost $1 trillion a year, and it would only be a $3,000 income on which nobody could live. I think the first problem with it is the sheer immensity of the cost.”
Summers continues speaking with the second problem he sees with UBI, “I don’t think it embodies the right values. Everything I know of the human experience, I’m really stepping out of economics now, tells me that people derive satisfaction from vocation, and they derive satisfaction from work. And a society that is designed to pay a large number of people for not working is going to be a very unhappy society…the evidence is that they are not happy, they are not satisfied, they are not healthy. I don’t think of Universal Basic Income, which is paying people not to work, is the right thing. I think of it in a different way…I look at our society, and there are vast amounts of work to be done.” He points out different areas in society that can provide a job where someone is truly needed.
“I would much rather think about how to provide employment opportunity for people who do not have employment opportunity, doing the vitally important work of society, then I would be writing people off by giving them checks. I think it’s better for the people; I think it’s better for the work they are able to contribute, and I think it’s healthier for the unity of the society.”
This recalls the fact that computers are replacing people because it is cheaper, and it has already affected jobs. There are many different arguments as to why UBI will work with one argument being that computers are replacing human jobs but as Summers said people find value in their work and it is even written of in the Bible!
“I have seen what is best for people here on earth. They should eat and drink and enjoy their work, because the life God has given them on earth is short. God gives some people the ability to enjoy the wealth and property he gives them, as well as the ability to accept their state in life and enjoy their work. They do not worry about how short life is, because God keeps them busy with what they love to do.” Ecclesiastes 5:18-20 NCV
Just work! Be involved in something like volunteering and find enjoyment in life! God created us to find enjoyment in our jobs. God has way more to give than government anyway! All the government can have is what they take from you. Slavery is a tax rate, for example, if you are taxed at 50% of your income, then you are 50% a slave. We can look at other societies that have implemented something like UBI and see the decline in their culture. We can also look at capitalism and see how it has pulled billions of people out of poverty in the last 20 years! It is powerful what can happen when we allow God to be over a nation.
Ben Shapiro spoke at Young America’s Foundation about UBI and answered a question about what he thinks about more money being put into the hands of people versus the government.
“There is a distinction between different types of Universal Basic Income. Sometimes by Universal Basic income people just means the government is going to sign a check just in addition to the current means-tested program that exists. Sometimes they mean like Milton Friedman meant a negative income tax. Meaning we get rid of all of the welfare systems and instead we just sign you a flat check. That flat check is basically going to be for whatever you want it to be for. I think that the record for the Universal Basic income has not been particularly successful. They tested it in Ontario; they had to stop it because it was incentivizing people not to work. They tried it in Norway; it was also not practically effective. It was incentivizing people to be unwilling to work. It’s an idea that only makes sense under the supposition that there is a group of legitimate unemployables. That seems to be the growing perception these days that technology is going to take over. There’s going to be a permanent underclass of people who simply can’t get a job…that they won’t literally have a means to live unless we sign them a check.” Shapiro shares how he is skeptical about this line of thought because this has been a worry with every technology breakthrough. Job loss does happen temporarily, but it is not permanent! In America, there are 7 million unfilled jobs! He doesn’t think that America is at the point of need for UBI.
“In 1965, President Lyndon Johnson famously declared a War on Poverty. Half a century later, the poverty rate, the percentage of people the government declares to be living in poverty, has barely changed. Why? Are we not spending enough money?
“The federal government funds 126 separate anti-poverty programs. Seventy-two of these provide benefits either directly or indirectly to individuals. The cost? $680 billion in 2013. Add in state and local government spending on poverty programs, another $280 billion, and the total comes to nearly $1 trillion. That’s for one year. If just spending money was the solution, our poverty problem should be solved. But clearly, it’s not. We need a better answer. And that answer, upon a few moments of reflection, should be obvious. Work. Only 2.5% of Americans working full time are, by government standards, considered poor. Given, then, that work is the road out of poverty, shouldn’t we be doing everything we can to encourage people to get on that road? Of course, we should.
“Unfortunately, however, we are doing just the opposite. Our welfare benefits are frequently so generous that they discourage people from working. We have created, perhaps with the best of intentions, what economists call a perverse incentive – in this case, against work. This is not to suggest that poor people are lazy. Most certainly aren’t. But they also aren’t stupid.
“In a recent study for the Cato Institute, we looked at what a typical family on welfare could receive in benefits and compared that to what that recipient would need to earn in wages to maintain the same income. Our study looked at a typical welfare family with two children under the age of five. We assumed that this family receives benefits from the 7 most common welfare programs: Temporary Assistance for Needy Families (TANF) – a straight cash program, Medicaid, Food Stamps, Women Infants and Children nutrition program or WIC, public housing vouchers, utilities assistance, and the Commodity Supplemental Food Program or CSFP which provides staples such as cheese, milk, canned vegetables and other basic dietary items.
“Of course, not every welfare recipient gets all these benefits, but some get benefits from even more programs. With 72 programs involved, there is a buffet of options. For example, if our hypothetical family had children older than 5, they wouldn’t receive benefits from the Women Infants and Children program, WIC. Instead, they would get free school breakfasts and lunches. Our study found that the value of these benefits vary from a low of $16,984 in Mississippi to an astonishing high of $49,175 in Hawaii. And keep this in mind: welfare benefits are not taxed, while wages are. That means that in many states welfare recipients would have to earn even more by working than they receive in benefits for not working in order to come out even. In fact, taking taxes into account, in 33 states a welfare recipient would receive more income through benefits than a worker could from working full time at a minimum wage job. In 13 states a mother on welfare with two children would receive more in benefits than by earning $15 per hour at a job. And, in the 8 most generous states, she could get more in benefits than by working at a $25 per hour job. And that’s without having to get to a place of business at a specific time, having to work eight hours, or deal with a boss and fellow employee.
“But don’t people who receive many of these benefits have to be working in some capacity or at least actively searching for work? Not really. In 2009, work requirements, the centerpiece of the Republican Congress/Clinton Administration Welfare Reform Bill of 1996, were severely eroded. Nationwide, fewer than 42 percent of recipients are participating in what are called, “work activities.” In some states, such as Missouri and Massachusetts, fewer than one out of five welfare recipients are “working.” And that uses a very broad definition of “work activity.” Going to college can be considered work. Job training can be considered work. Even just looking for work can be considered work. Yet, less than half of welfare recipients meet even these definitions.
“Many poor people are making what would seem to be a rational economic decision by not working. It’s pretty simple: If welfare pays better than work, why choose to work? But in the long run that tempting choice is a bad one – because it will end up keeping those in the welfare system trapped in poverty. Only working for wages — even minimum wages – (or marrying someone who works) puts you on a path out of poverty. If we are serious about reducing welfare dependency and helping Americans climb out of poverty, we need to establish a clear policy preference for work over welfare. But our current welfare benefits are so generous that not working too often seems like a better deal. It is no wonder, then, that even after 50 years of trying, we are still losing the War on Poverty.”
We can encourage young people to do these following three things to stay away from poverty! This is according to the Brookings Institute: finish high school, get a full-time job, and wait until the age of 21 to get married and have children. Their research showed that American adults who were able to follow these three rules, only around 2% are in poverty and close to 75% have joined the middle class which would be earning around $55,000 or more a year. This is following God’s plan for family and marriage. When we put God at the center of our lives, He is for us and not against us and we will be blessed! What are your thoughts on Universal Basic Income? What do you think about the welfare system in America? We want to hear from you! Write to us at [email protected]. Greg and John shared in this segment.