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You Want A Basic Income? Here's How We Might Actually Do It

Andy Stern, former head of the SEIU, makes the case for a universal payment to end poverty—and offers a strategy for how we get there.

You Want A Basic Income? Here's How We Might Actually Do It

[Images: Photobank gallery, cepera via Shutterstock]

The idea of a universal basic income (UBI) potentially solves a lot of problems at once. By sending a regular payment to all citizens, we could end abject poverty, deal with technological unemployment, reduce the overall cost of government, give more autonomy to people, and gain support from across the ideological divide as we do it (in theory, anyway). In its long history, some form of UBI has been supported by everyone from Martin Luther King to the libertarian economist Milton Friedman, indicating its unusual appeal.

But, as yet, no government has ever introduced a UBI at significant scale, and, as such, there are a lot of unanswered questions. For example, how much would a UBI cost overall? Should everyone get it, or just people who really need it (then it's not so universal)? How should it be distributed exactly? And, should people have to do anything in return to get it? While there are a lot of compelling reasons to implement UBI, there are obviously a lot of trade-offs to consider.

One of the nice things about Andy Stern's new book, Raising the Floor, is that he gets into some of this nitty-gritty. In the last chapter, he offers a blueprint for introducing UBI, covering the funding side, the politics side, and the out-in-the-streets mobilization side. Not everyone will agree with the choices he makes (Stern, a former president of the Service Employees International Union, is a man of the left). But at least he's asking the sort of questions that need to be asked if we're going to introduce UBI.

Stern would pay all American adults (234 million people) $1,000 a month, which is roughly the federal poverty line ($24,000 a year for a family of four). The idea is to meet people's fundamental needs (food, housing), rather than make them rich and discourage them from ever working again. Probably, there would need to be regional variations to reflect cost-of-living differences, and perhaps additional payments for under-18s, but Stern says we could discuss that later once we've got the main program established. Future increases to the monthly $1,000 would be tied automatically to GDP growth, ensuring politicians can't prevent the dollar amount from increasing with the times, as has happened with the minimum wage.

Paying everyone $1,000 a month would cost roughly $2.7 trillion a year, which is about 15% of the GDP and four to five times the size of the defense budget. To pay for this, Stern would cash out most existing antipoverty programs, which cost about $1 trillion a year, including food stamps ($76 billion a year), housing assistance ($49 billion), and the Earned Income Tax Credit ($82 billion). Then, he would cut military spending and phase out most tax expenditures (tax breaks), which currently cost $1.2 trillion a year. In addition, he also supports a federal sales tax (which we currently don't have) and a financial transaction tax (which some European countries are now introducing).

He is also sympathetic to an idea inspired by Thomas Paine: that we all, to a certain extent, have a right to income from wealth that "we inherit or create together." As argued by the entrepreneur Peter Barnes in his book With Liberty and Dividends for All, our water, air, electromagnetic spectrum, and collective intellectual property (the inventions passed down from Edison and others) have enormous value that's largely unrealized. We could charge companies a fee for using these public goods (and not allowing others to infringe on their rights), which would go into a "Sky Trust" modeled on the Alaska Permanent Fund. According to Barnes, this could pay a dividend of $5,000 per person every year.

Stern supports a UBI for everyone, even though paying fewer people—like focusing only on those made unemployed by automation—would obviously be cheaper. He gives two reasons. One, a universal payment would have a greater effect on the labor market, allowing more people to move between jobs, projects, and gigs. And two, universal systems, like Social Security, tend to be more popular and enduring, as everyone benefits and nobody gets jealous. They are also easier to administer because you don’t have to track people’s income and check up on their status all the time.

As for distribution, Stern supports paying people in the form of a monthly check or bank account transfer. In 1968, Milton Friedman proposed a Negative Income Tax, where people earning below a certain level receive a payment, rather than having to pay taxes. In other words, it’s a way of paying a basic income through the tax system rather than the welfare system, which, according to its proponents, means it’s simpler to understand and manage. The disadvantage, according to Stern, is that it’s an annual payment, like the EITC, making it more like a windfall payment than a living wage. "Writing frequent checks, like Social Security, makes it more economically viable for people who are trying to pay rent and eat every month," Stern says in an interview. "There’s less complication and less chance for fraud."

The simplicity of UBI is precisely what attracts so many people to the idea. It’s a flat payment to everyone, irrespective of need, no questions asked. As soon as you start means testing, or placing conditions on it, it becomes diluted and open to debate that can be corrosive and self-defeating. Some say we should ask people to "give back" before they receive money (maybe by volunteering) or not engage in certain behaviors (like taking drugs). But these inevitably add a contentious moral element (not everyone thinks taking drugs is wrong) and yet more bureaucracy. The whole attraction of UBI is to do away with complexity and give power back to citizens rather than pencil pushers.

Of course, it’s unlikely that the federal government will want to rip up hundreds of programs overnight to implement something that’s still untried. But cities and states could experiment with UBI first, as they’re now doing in the Netherlands and Canada. "I think that we’ll see mayors of governors at some point asking for waivers to experiment, which will [set the stage] before we do a universal or national program," Stern says. He also hopes to see political candidates adopt UBI—or even a UBI party—and the equivalent of the Townsend Clubs that mobilized support for Social Security in the 1930s. In short, UBI can become a post-political rallying point for remaking government in the age of extreme automation and technological unemployment.

"Any time you try to write specific laws, all of the weeds tend to grow larger and people don’t necessarily see the grass," Stern says. "But I think there will be a huge conceptual agreement at some point that the best way to end poverty and prepare for the future is some kind of guaranteed income. In 10 or 15 years, there’ll be a stronger sense, particularly for people born in the 21st century, to just let people make their own choices, which is what the Internet has allowed us to do already."

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