Short Answers to BIG FAQs Part 1 of 3

[The following is an excerpt from a book in progress, The Poverty Abolitionist’s Handbook.]

Someone who offers a question that is really a challenge, like “Why would you believe something like that?”, will likely maintain their attention for about a minute. But someone who asks a more thoughtful question, even in a social situation, will likely maintain their attention a little longer, maybe three to five minutes. Nevertheless, brevity is a virtue, and the shorter the answer, the easier it is to understand and remember. So I have limited the speaking time of all of these answers to two minutes, and most are much shorter than that.

Q: Shouldn’t we lower the cost of a basic income through means testing? How does it make sense for the government to send free money to Bill Gates?

A: The taxes that pay for a basic income are the only sensible means testing, and Bill Gates would pay far more than he received. Means testing is itself a tax on the middle class that traps people in poverty by creating a strong disincentive to work and save for those already at the margins of employment. Means testing a basic income would transform a system of just predistribution into a redistributive welfare program. Means tested welfare programs are a way for the rich to make the middle class pay to stop the poor from revolting.

Q: Can we afford a basic income?

A: The gross domestic income for the United States last year was over $16 trillion and the total population was just under 320 million, giving us a mean average income of more than $50,000 per person. The 1950s and 1960s were known as decades of great economic growth in the United States. For most of the 1950s we had a top marginal income tax rate of 90 percent, and for most of the 1960s we had a top marginal rate of 70 percent. Our current top marginal rate is 39.5 percent. We could fund a basic income of $10,000 per person on top of all our other spending with an across-the-board income tax increase of 20 percent, and our top marginal rate would be 59.5%, still less than during the 1960s. That might not be the entire way we want to fund the basic income, but it does show we can afford it, and the cost would only go down from there as we started to cut now unnecessary welfare programs and began spending less on law enforcement and health care.

Q: What other government programs would we eliminate if we had a basic income?

A: Politics would not end if we had a basic income, and this is a point of contention among basic income advocates. There are socialists who see a basic income as just one of a large number of new government programs they want to implement, and there are libertarians who believe that their arguments for lower taxes, spending, and regulations will be more compelling if there are literally no poor people who need taking care of. But there is a quick and dirty compromise that could be implemented at the initiation of a basic income that would greatly reduce other welfare spending without raising or lowering our current welfare commitments. We could leave all current welfare programs on the books, but declare that the basic income will be treated as “unearned income” for purposes of determining benefits. For a basic income of $10,000 per year, federal SSI spending would cease, and food stamps likely would as well, and subsidies for housing, education, and health care would fall dramatically. Essentially, we would be treating everyone the same as we would now if they all started to receive an annual annuity, because they would.

Q: Wouldn’t giving everyone free money cause severe inflation?

A: It would if we just printed the money and gave it away. But as long as we pay for it through taxes, the money supply would remain stable and it would be no different than if everyone got more money from working. Alaska has a small basic income and there is no evidence that it has affected their inflation rate, nor is there evidence that prices rise when the minimum wage is raised. There is a potential for a basic income to cause a rise in the price of fixed assets such as land, but that is again no different from what would happen if everyone earned more money from wages, and those gains can be recaptured through land taxes.

Potential follow up Q: But if everyone were earning more money from working, wouldn’t the inflationary pressure resulting from greater demand due to higher wages be countered by the deflationary pressure resulting from the increased production due to more work? And wouldn’t giving free money to people who do not work tip that balance?

A: A market economy is not a Field of Dreams: Customers do not come because you build things, rather things get made because customers want them. Most items that would see a surge in demand due to a basic income are food or consumer goods that see reductions in prices from the economics of mass production. The exception would be where a seller has a monopoly, or in the case of fixed assets such as land, which I discussed before. Again, Alaskans do not work for their dividends, and when the minimum wage is raised there is no corresponding rise in production, yet neither of those causes inflation.

Q: Why do you want the government to give able-bodied people the same monetary benefits as the disabled? Shouldn’t people with special needs be entitled to more money to offset their tougher lot in life?

A: No. The communist idea of “to each according to their need” is patronizing in theory and degrading in practice. Currently in the U.S., disability payments are for the survival needs of those who cannot work. They are not intended to compensate for how bad your life is with a disability, and the amount you receive is not determined by what type of disability it is or even how bad it is, as long as it is bad enough that you cannot work. How could it be otherwise? Should a blind person get more or less than a paraplegic? Should a person bed-ridden from pain six hours per day get twice as much as a person bed-ridden three hours per day? How do you prove it?

How can you judge who is “disabled enough”, and how do you compare one disability against another? Currently the process of applying for disability is long, arduous, arbitrary, humiliating, and demoralizing. We think we can easily tell who *really* needs our help, when the truth is that many – but certainly not all – people with traditional and obvious disabilities like blindness, deafness, and being confined to a wheelchair lead easier and more fulfilling lives than many people with invisible disabilities like depression, fibromyalgia, or chronic fatigue. We force people who cannot work to convince skeptical judges about how pitiful their lives are and then we label them as being either lazy frauds or useless burdens. You really cannot know what another person’s life is like. To make someone prove they are disabled is to make them convince themselves they have no hope.

Health insurance should include paying for specific items that are needed for a specific disability, such as a motorized wheelchair for someone with severe neuropathy or para-transit services for people with epileptic seizures that make it dangerous to drive. But for our basic living expenses, we all deserve them equally, and no one should be forced to prove it.

Q: If we gave everyone an unconditional income, would not some people just waste it, or spend it on stuff that is bad for them?

Confrontational answer: Maybe. It is their money. Do you want everyone telling you what to do with your money?

Likely follow up: But it’s *my* money. It is the money that I pay in taxes that will go to the people who do not work.

Confrontational response: First, probably not. Unless you earn significantly more than median income, you will likely be a net *recipient* of the basic income. Second, the taxes you pay are your fee for the benefits of government, such as infrastructure, protection of your life and property, and use of legal structures such as contracts, corporations, and various forms of property. Your basic income is part of your personal dividend as an equal owner of the government. Do you worry about whether your landlord will misspend what you pay for rent, or whether McDonald’s will misspend what you pay for a Big Mac?

Utilitarian answer: Maybe. But there is no evidence that the government can run people’s lives better than they can run their own. The government can cause people to make better decisions by educating them and providing resources. But when the government imposes regulations, demands paperwork, and takes enforcement action against people, the burden and stress discourages personal improvement. And experiments with direct cash transfers to the poor show they often come up with useful and responsible things to do with the money that the experts never thought of. Finally, the sanction of taking away money is counter productive. Becoming homeless almost never causes addicts to give up drugs, teenagers to study more, or the overweight to buy more nutritious foods.

Q: Wouldn’t a lot of people just stop working if they received free money?

A: Would you? A major goal of the basic income is to eliminate the poverty trap of welfare by paying people whether they work or not. Most lottery winners work. Most trust fund babies work. Basic income trials for families in poverty in the U.S. in the 60s and 70s did show a 14% work reduction. The largest cause of the reduction were teenagers who stopped working and secondary workers who became homemakers; these reductions were likely responsible for the extraordinary gains in education and health outcomes produced by the cash grants. Some primary workers with two jobs quit one, and unemployed workers took longer to find work, perhaps being more picky about finding a job that paid better and suited their skills more. Not a single case was found of a primary worker quitting all jobs and living solely off the basic income. In fact, the primary workers in recipient families still worked more than full time on average. More recent cash transfer experiments in nations with extreme poverty such as Uganda have shown *increases* in work, as people without jobs often use the money to start their own businesses. The pattern seems to be that almost all people want to spend a significant amount of time engaged in productive work, and a significant amount of time in leisure activities, and they will use whatever money they have to achieve that balance.

Q: It seems like you are striving for a BIG at a level to satisfy Maslow’s first two tiers (Physical and Safety needs). If those two are met without effort what is the incentive for a person to be societally productive instead of simply working on fulfilling their higher tier needs?

A: The ideal level of a needs-based basic income would include access to some things that go beyond Maslow’s first two levels in a strict sense, but could be conceived as being included in them in the modern world, such as transportation, communication, and gyms and parks. But roughly, yes, we would be looking at providing the first two tiers on the hierarchy.

The higher level needs are things that the government can not, or should not, provide for people. The only way the government can provide self-esteem to individuals is to give them privileges that elevate them over others. In past times and places, some people have be able to meet their self-esteem needs simply by remembering that they are an aristocrat or a Roman citizen or a Catholic or a man or a white person. But in a legally egalitarian market society, the primary path to self-esteem is financial independence. People working on meeting their self-esteem needs in a market society will want to achieve financial independence far beyond simply having their survival and safety needs met, and they will be the primary candidates for doing all of the jobs needed by society, but only at the fair wages that will not hurt their self-esteem by making them feel exploited, which they would be willing to work at to meet survival and safety needs.

Self-actualization needs are highly idiosyncratic, and whether people working on fulfilling those needs will do other productive work society demands depends on the requirements of their respective projects. If fulfilling your self-actualization needs requires you to write a novel, you can probably live off of your basic income, and you may not be motivated to do other work. If your self-actualization requires you to sail a boat to the Galapogos Islands, you probably will be motivated to go earn some extra cash. For some, their self-actualization involves building a business. These people will be actively seeking out needs of society to fill.

Those who reach transcendence will be devoting most of their time to helping society almost by definition.