Back in September I wrote an article titled “Entitlement reform: an attitude problem?” I went into detail about the wrong attitudes prevalent in the area, and made this suggestion.
Do you want meaningful entitlement? Here’s one way to do it. I’d dismantle the entire welfare and entitlement system, including unemployment benefits and Social Security, but excluding medical insurance (although that needs reform too). In its place I’d offer every citizen of the USA (not non-citizens, please note!) a flat sum of money every year. It would be enough to live at a basic level, without much in the way of luxuries – say, $1,500 to $2,000 per month, or $18,000 to $24,000 per year. Let’s make it tax-free, too. The total cost would be a lot less than what we, as a nation, currently spend every year on welfare and entitlement programs. Even better, because everyone would get this, we wouldn’t need the plethora of government departments, bureaucrats and administrators that currently manage the existing dysfunctional system. We could shrink government substantially and save even more money!
By doing that, we’d all start with a level playing field, rich and poor alike. Those who are prepared to work hard will earn more than that, with which they can live at a higher standard. Those who aren’t prepared to work will at least be able to support themselves at a basic level. The ‘entitlement culture’ will be overturned, because success will once again depend on your own efforts. What’s not to like?
There’s more at the link.
My suggestion aroused quite a bit of criticism, not least because some respondents calculated that the cost of such largesse would be too high. Nevertheless, I continue to believe that it might be a better way forward than our current morass of entitlement programs and culture.
Switzerland could soon be the world’s first national case study in basic income. Instead of providing a traditional social net—unemployment payments, food stamps, or housing credits—the government would pay every citizen a fixed stipend.
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The proposed plan would guarantee a monthly income of CHF 2,500, or about $2,600 as of November 2014. That means that every family (consisting of two adults) can expect an unconditional yearly income of $62,400 without having to work, with no strings attached. While Switzerland’s cost of living is significantly higher than the US—a Big Mac there costs $6.72—it’s certainly not chump change. It’s reasonable income that could provide, at the minimum, a comfortable bare bones existence.
The benefits are obvious. Such policy would, in one fell swoop, wipe out poverty. By replacing existing government programs, it would reduce government bureaucracy. Lower skilled workers would also have more bargaining power against employers, eliminating the need for a minimum wage. Creative types would then have a platform to focus on the arts, without worrying about the bare necessities. And those fallen on hard times have a constant safety net to find their feet again.
Detractors of the divisive plan also have a point. The effects on potential productivity are nebulous at best. Will people still choose to work if they don’t have to? What if they spend their government checks on sneakers and drugs instead of food and education? Scrappy abusers of the system could take their spoils to spend in foreign countries where their money has more purchasing power, thus providing little to no benefit to Switzerland’s own economy. There’s also worries about the program’s cost and long term sustainability. It helps that Switzerland happens to be one of the richest countries in the world by per capita income.
The problem, as with many issues economic, is that there is no historical precedent for such a plan, especially at this scale, although there have been isolated incidents. In the 1970s, the Canadian town of Dauphin provided 1,000 families in need with a guaranteed income for a short period of time. Not only did the social experiment end poverty, high school completion went up and hospitalizations went down.
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In 1968, American economist Milton Friedman discussed the idea of a negative income tax, where those earning below a certain predetermined threshold would receive supplementary income instead of paying taxes. Friedman suggested his plan could eliminate the 72 percent of the welfare budget spent on administration. But nothing ever came to fruition.
Again, more at the link.
I still maintain that a system of this kind would be far fairer than current entitlement programs, and would put everyone on a common economic foundation. Those prepared to work hard would make a lot more money, and deserve it. Those who aren’t, wouldn’t, and would deserve that too. Best of all, we’d eliminate almost all of the huge administrative overheads – costs, personnel, bureaucratic inertia, etc. – that plague our present system.
I’d like to see it tried. I think the results might surprise naysayers.