What is Basic Income?

Basic income is the idea that we provide all citizens with a base level of support that would help to provide food, shelter, health care through a monthly check or tax rebate.

With this one check, we’re pulling everyone in our society above the poverty line with no strings attached. And what about Welfare, WIC and many of the other government programs aimed at reducing poverty? Its generally thought that a Basic Income takes their place. With a Basic Income program, you get rid of all of them.

A lot of people doubt that this could ever actually work. Others have an aversion to giving people money with no strings attached. This was one of the major points of contention when Richard Nixon tried to pass a Basic Income program in the United States.

Basic Income in the United States

The heyday of the idea in the US was in the 1960s and 70s. This was after the Great Society had started. There was a broad interests among American political elites in an anti-poverty policy. There was a sense especially by late 1960's and early 1970s that some of Lyndon B Johnson’s initiatives might not have gone far enough.

And this administration, Here and Now, declare unconditional war on poverty in America…

- Lyndon B Johnson

In this time there’s a lot of interest across the political spectrum around the idea of a Basic Income. At the time it was referred to as a Demogrant or guaranteed minimum income. People like Kennith Galbraith & James Tobin, who would win a Nobel Prize in Economics, were backers of this. On the right Milton Friedman was a huge advocate for a basic income program.

Economist Milton Friedman

The proposal for a negative income tax. Is a proposal to help poor people by giving them money which is what they need rather than is now by requiring them to come before a governmental official detail all their assets and their liabilities and be told that you may spend X dollars on rent Y dollars on food et cetera and then be given a handout. The idea of a negative income taxes to treat people who are poor in the same way as we treat people who are rich. Both groups would have to file income tax returns and both groups would be treated the same.

— Milton Friedman

Richard Nixon (Left)

The 1972 election was between two candidates, Richard Nixon and George McGovern, who both had Basic Income plans. Richard Nixon’s family assistance plan was the closest to passing.

A basic federal minimum would be provided the same in every state. What I am proposing is that the federal government build a foundation under the income of every American family with dependent children and cannot care. And wherever in America that we may live For a family of four now on welfare with no outside in the basic sixteen hundred dollars a year. States could add to that. Most states would have no place would any one present level of benefits be lowered. At the same time this foundation would be one on which the family itself could build. Outside earning would be encouraged not discouraged.

— Richard Nixon

Unfortunately, It got watered down in the legislative process. It actually passed the U.S. House of Representatives with a work requirement added to it with the basic idea being that it was a negative tax that would top of people’s income and help them get out of poverty. It then died in the Senate for a variety of reasons but mainly, Russell Long, who led the Senate Finance Committee, was very skeptical of giving cash no strings attached for people.

Guaranteed Jobs Scheme

While a Basic Income plan wasn’t passed, it did lead to interest in a guaranteed jobs scheme known as the Humphrey–Hawkins Full Employment Act which would have mandated 3% unemployment at all times. Coretta Scott King and the Unions were very active in promoting this idea, but it diminished the degree of favor in which economists held the idea of Basic Income and ultimately killed its appeal for a generation.

Basic Income Today

Today the interest in Basic Income is largely driven by a frustration around jobs and our workforce. Innovations in AI, robotics and machine learning that could eliminate even more jobs, leaving us to wonder — what do we do to take care of the poor and the unemployed.

Dylan Matthews of Vox.com

“There’s a movement that’s referred to as fully automated luxury communism” Dylan Matthews of Vox described as “The idea that everything is fully automated and then none of the income goes to wages because there’s no wage labor that hasn’t been automated out of existence. So the only thing income is capital income and so you just spread the capital across the population and you have pure quality, which sounds awesome but, I have no idea if it will ever actually happen.”

Scott Santens, a journalist and basic income advocate, became interested in Basic Income because of “the angle of automation and where that’s leading us. The more I looked into this the more I got concerned about this forked path that we’re headed towards. Where everything could get really bad or everything can get much much better than it is now. It’s kind of like another climate change that’s ahead of us that people are ignoring on the one hand or just not really talking about on the other.”

Mark Zuckerberg has been a recent advocate for basic income stating at a recent Harvard commencement address that “we should explore ideas like universal basic income to make sure that everyone has a cushion to try new ideas.”

Rutger Bregman, a Dutch historian and basic income advocate, gave a TED talk on basic income recently on Why do the poor make such poor decisions? His famous line “Poverty is not a lack of character. Poverty is a lack of cash,” echoed the sentiment of Milton Friedman before him. The 1,000 person TED audience gave him a stand ovation, once again legitimizing that the idea of a basic income for all citizens is again being given legitimate consideration amongst pundits and influencers.

“It’s really a mindset change to enable society to flourish.” — Scott Santens, Journalist

Basic Income and the poverty line

Priya Kothari, an economist in San Francisco, writes that “the freedom to choose is a privilege of the wealthy” in her article “Free to choose (unless you’re poor of course).” In my discussion with her, she laid out the argument that poverty acts as a mental tax on the poor, preventing them from living out their full potential in life. Sendhil Mullainathan and Eldar Shafir in their book “Scarcity,” cite research that shows the effect poverty has on the mind.

In their research they took two groups of people at different income levels and they gave them each a bill that was well within their means to pay and they measured their IQ. There was really no difference.

They then took the same two groups of people and gave them a bill that would have been very difficult for them to pay. What they found was under that stress their IQ level in that moment dropped 14 points.

We have millions of people in this country living under this amount of debilitating stress and thus we’re preventing them from ever reaching their full potential.

By lifting people above the poverty line, we’re opening up the opportunity for them to live, and contribute, to society in a more meaningful way.