Universal Basic Income: A Simple Tool to Fight Poverty

The issue of poverty is rarely brought up willingly by politicians. In speech after speech, they make constant appeals to “the middle class,” whether by promising to cut taxes, bring back jobs or any of a number of different promises. In fact, listening to most politicians, you might think that being a member of “the middle class” is as bad as it gets in the US. Unfortunately, the situation is much bleaker than that.

As of 2015, the number of Americans living in poverty was around 45.7 million people, or 14.3 percent of the total population. In the United States, the richest country on Earth, these numbers are shocking and inexcusable.

Policymakers and academics sometimes struggle to explain how to fix the crisis of poverty in the US, but one important solution is more obvious than you might think. If the problem of poverty is a problem of people not having enough money, one easy way to fix it is to simply give people money. This is the central idea of a universal basic income (UBI), a policy that is getting the attention of an increasing number of policymakers and journalists.

A UBI is a policy by which the government pays every citizen a certain amount of money every month with no strings attached. Unlike most other welfare policies, there is no work requirement and no means test. UBI has been getting a lot of attention in recent years both as a means to eliminate poverty and as a necessary safety net for the impending automation of a huge number of jobs in the US.

Unlike many other anti-poverty programs, which focus on the importance of work and increased wages as their primary tools, UBI is given to all Americans, regardless of their work status. This is critical to its effectiveness as an anti-poverty tool, because 60-65 percent of those in poverty are children, elderly, disabled or students. These people do not benefit from any poverty program that focuses on jobs because they simply are unable to work. UBI has the power to lift these people out of poverty and give them the means to provide for their needs. In fact, even a modest UBI of about $3,000 a year would cut the poverty rate in the US in half.

UBI has other benefits too. It would increase the bargaining power of labor relative to capital, provide an income for people transitioning between jobs and give people the means to pursue their passions without worrying about money. UBI has received praise from many sides of the political spectrum, from progressives like Robert Reich, to libertarians like Charles Murray, to Marxists like Erik Olin Wright.

A UBI could be paid for in a variety of ways, such as raising taxes on the rich and eliminating corporate subsidies, or alternatively, by paying out dividends from common public assets such as natural resources and the financial and telecommunications infrastructure.

The latter proposal characterizes the Alaska Permanent Fund, a program in the state of Alaska that has been distributing a basic income for decades. The Alaska Permanent Fund pays a certain amount of money ($2,072 in 2015) to every Alaska resident each year. The funds for this basic income scheme are drawn from royalties paid to the state government for drilling for oil on public land. Although progressives and leftists oppose expanded oil drilling, the basic funding structure of the Alaska Permanent Fund could be applied to a variety of different funding sources, such as a carbon tax paid by polluters. The Alaska example, in addition to showing the economic viability of UBI, also demonstrates its political viability. In some sense, UBI is the ultimate “entitlement program.” Yet, in the deep red Republican state of Alaska, it enjoys widespread public support. This is likely in large part due to the fact that, similar to other popular programs such as Social Security and Medicare, a UBI is paid out to everyone, not just a narrow group of citizens determined by a means test.

It is clear that UBI is both an effective and politically viable tool to reduce and possibly eliminate poverty. The only thing standing in the way is political will. Therefore, in the discussion of how to help the millions of Americans struggling to pay for their basic needs, a universal basic income should be at the top of every policymaker and activist’s list.