Universal basic income may be next big thing


Now and then a worthy economic proposal comes along that seems as politically unattainable as it is sensible. Then, on closer inspection, you see that it’s more than a policy wonk’s fantasy. And you wonder whether it could actually prevail.




The rest of the world is taking the lead.


Basic-income proposals come in many varieties and have myriad rationales.






The tax credit is still around and widely considered an effective anti-poverty program, but the earnings-cliff issue has only gotten worse: The U.S. now has 80-plus low-income programs, each with its own eligibility rules and earnings caps.

The idea of a universal basic income is enjoying a renaissance today, not only in Washington think tanks but in Silicon Valley, as my Bloomberg View colleague, Justin Fox, has written. Y Combinator, a venture-capital firm, is launching a five-year research project, for example. The goal is to give a randomly selected group of people a monthly check to see if they sit around and play video games or create economic value.

Why does Silicon Valley care? It can see the role of technology in accelerating job losses in the U.S. Two Oxford professors wrote recently that about 47 percent of U.S. jobs are at risk of being replaced by automation. If that happens, the economy would shrink.

The fear that people with a guaranteed basic income would become slackers may be unfounded. One economist who studied trials conducted in the 1970s in Canada found the opposite: Recipients were healthier and finished high school at higher rates. Adults with full-time jobs worked the same number of hours with one exception: Women took off more time after having a baby, an utterly reasonable outcome.

Yes, the costs of guaranteeing 322 million Americans $10,000 a year would be prohibitive — a whopping $3.2 trillion a year.

But by excluding 45 million retirees who already receive a basic income through Social Security, the cost falls to $2.7 trillion. And if the benefit is phased out for households earning more than $100,000 (that would be 20 percent of the U.S.’s 115 million households, or about 70 million people, assuming three to a household), the cost declines to about $2 trillion.

Now we’re getting close to the $1 trillion cost of all those unemployment checks, tax credits, food stamps, housing vouchers and myriad other means-tested benefits that a basic income could supplant.

Here is where liberals start to get queasy. They don’t like that a basic income would replace the safety net, even when assured that some programs, including education, job training and entitlements like Medicare, would be maintained. They worry that the civil servants who now run programs would be laid off. And they fear that a basic income would, in the end, be less than what many people get when all the federal government’s cash and social-service programs are combined.

Those are valid concerns. But as other countries test the idea and seek improvements in their social-welfare systems, will it make sense for the U.S. to maintain an expensive crazy-quilt of programs, many of which have not lifted people out of poverty and dependence? A Social-Security-for-all approach might not seem like such a fantasy after all.


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