Combating Poverty with the Guaranteed Basic Income

This Friday, we’re going to get a little wonky and look at the idea of a Guaranteed Basic Income/Basic Income Guarantee (The terms are used pretty interchangeably, as far as I can tell.) It’s a cool concept that’s been implemented in several countries around the world, from Denmark to Namibia, and even in certain forms in parts of the U.S.

Crash Course: Guaranteed Basic Income

The first question that comes to mind when people hear the term Guaranteed Basic Income is: how is that different from a minimum wage?

Easy. You don’t have to work for the GBI.

Now, I know that might sound crazy to some people, but hear me out. There are several benefits to this idea when you compare it to other welfare or income assistance programs.

The first and most obvious is that every citizen of a country will get it. That makes it much more efficient to administer. There are no caseworkers to check in and make sure recipients abide by conditions, because those conditions do not exist. That actually can save on a lot of overhead costs because it streamlines implementation so much more than other plans.

It also prevents another major problem plaguing current welfare and poverty alleviation plans: that of people falling through the proverbial cracks. People who aren’t aware of how to qualify for benefits, or who don’t know where to go, or who just get turned away for myriad other reasons will not face that same problem with the GBI.

The biggest reason people might oppose this idea is that providing a basic income would be a disincentive for people to actually work.

But supporters argue that the GBI would actually force more innovation in the workplace, because it would make executives have to develop a business practices that make it worth the extra effort to work for them.

The most obvious form this would take would be higher wages. Sure, people would have a basic income already, but it would be just that: basic. Enough for rent somewhere, groceries, and maybe some sort of public health insurance. But few people are happy with only those things. We want to have discretionary income. And that would push people to enter the workforce.

Employers could also use other benefits, such as healthcare packages and various perks, to incentivize workers.

The GBI would also allow for greater mobility in the workforce. Having a basic income to fall back on, no matter what, would allow people to leave unsatisfying jobs to pursue more fulfilling ones, possibly after getting a higher education.

So instead of being a disincentive to work, the GBI would set conditions for a more dynamic, innovative economy.

Current Examples

Brazil was the first country to approve a law for a basic income, and have been gradually working on implementing it.

Namibia has also implemented a pilot program and so far has reported positive results.

In the U.S., Alaska has a partial GBI, called the Alaska Permanent Fund. Essentially, the state has declared that every Alaskan (defined as a resident who has lived there for one year or more,) is a partial owner of the state’s oil resources. As such, they all get an annual check for their share of the profits made from them.

This qualifies as a partial GBI because it is not sufficient for a person to live on (in 2012, the average payout was $878.) However, it is an example of how such a program could be funded: through the revenue from state-owned resources and enterprises.

Looking Forward

Based on the fact that some people seem to have missed the end of the Cold War and still fear the creeping threat of communism, the GBI is likely to be opposed if it gets brought up for a debate in the next few years, along with basically every other attempt to strengthen the social safety net.

However, polls do show that younger generations tend not to view the social safety net as negatively as some of their elders. Within a generation or two, I think it is possible that the GBI could gain more traction in the U.S. and around the world.

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