Poverty is a complex problem that can only be solved, according to conventional wisdom, with a complex solution. But what if we tried to solve the problem of some people not having enough money by giving those people… more money?
That answer seems almost childish in its simplicity and laughably naïve at first glance. The first reaction to the idea of giving cash directly to poor people is the same as the reason lots of people hesitate to fork over some spare change every time they see a panhandler: you don’t know what they’re going to spend it on. Sure, this thinking goes, you’d love to help, but is it really helping them if you’re just giving them money to enable an addiction?
But just as you don’t know what people will spend the money on, it’s just as likely that you don’t know what people need to spend their money on. This way of thinking is the basis of a charity called GiveDirectly. The founders of GiveDirectly assume that no one knows better than the recipients of charity what they actually need the most. So they identify needy families and send them a monetary donation, with no strings attached. Poor families in the Kenyan and Ugandan villages receive $1,000, which is about one year’s worth of income.
The results so far have been mostly positive. GiveWell.org, an independent organization, calls GiveDirectly one of their top-rated charities. The on-the-ground results are also encouraging.
Several villagers used the money to start their own businesses. Many others used the cash to buy metal roofs, which have to be replaced less often than thatched ones, making them a good long-term investment. The purchasing of the roofs is the kind of thing only those receiving the money knew they needed, demonstrating how giving cash directly really might be a viable alternative to giving goods distant charities deem necessary. Michael Faye, one of the co-founders of GiveDirectly, said: “This puts the choice in the hands of the poor, and not me. And the truth is, I don’t think I have a very good sense of what the poor need.”
What if that same kind of thinking was applied to government assistance programs in the United States? It may seem appalling to those conservatives that fill their days with rage-fantasies of “welfare queens” living in luxury on the government dime, but the idea, in the form of a Universal Basic Income, is gaining some traction.
A Universal Basic Income, or UBI, would be a check – most proposals have the amount in the $10,000 range – given from the government every year to every man, woman and child in the US regardless of income or any other qualifier. Of course, with the national debt as high as it is, few politicians are making UBI a central part of their platform, but many intellectuals are saying it’s worth considering.
The basic argument is this: there are not enough jobs for unskilled people and this problem is only getting worse. As technological advances continue to be made, more and more people will be phased out of the labor market, creating more poverty, more crime, and more problems overall.
UBI would give those people the ability to live comfortably – not luxuriously, but comfortably – and would force them to spend that money on what they know they need, and perhaps most importantly, allow them to pursue their lives’ goals – whether those goals are education, art, knitting, or whatever – without spending most of their time as wage slaves.
Besides instantly lifting fifty million people out of poverty, UBI would also give temporary relief for those between jobs. Plus, the thinking goes, since they no longer have to work to live, UBI gives workers better leverage in salary negotiations.
Let’s get one thing straight before we continue here: while I’ve never been in love with the idea of welfare, I must acknowledge that it’s necessary. UBI is decidedly a radical proposal, and if we’re being honest, it stands little chance of gaining real traction – at least until this country learns to balance its checkbook. But consider this: imagine how much more straightforward our lives would become if every government welfare program was immediately, and unceremoniously dismantled, and replaced instead with this flat-rate check for every American citizen. It’s exciting, right? We’d be looking at a truly level playing field for the very first time, and it would cost us a tiny fraction of what we’re currently spending.
The most obvious question to ask, of course, is Who’s going to pay for this? Some estimate the total would be in the trillions, and others in the hundreds of billions, but at least part of that cost would be mitigated by the fact that UBI would replace all other government assistance programs. Even though it seems like the ultimate “government handout,” it stands a chance of actually making the federal bureaucracy much smaller. Plus: no more welfare, food stamps, disability, or unemployment means people don’t have to worry about jumping through a bunch of hoops to get the help they need.
The most obvious criticism though, has to be that UBI would be a major disincentive for people to work. But the truth is most people would not be happy to live on $10,000 a year. And the fact that it’s universal means you gain nothing but lost wages by not having a job. You don’t get more if you’re unemployed, so why not keep the job you have? Besides, few people with good careers would give up their current standard of living to lie around all day. Most people would welcome the supplement to their income and spend it in a way that they know benefits them the most.
It’s hard to predict what effect such a massive program would have on the economy, but Dauphin, a small town in Canada, tried out something like UBI in the 1970’s. For a limited amount of time, 1,000 poor families received a monthly check. The results were very encouraging: poverty disappeared, high school graduation rates went up, and hospitalization rates went down.
It’s not a sure thing that a country as huge and diverse as the United States would see the same results as a tiny town in Canada. But it’s an idea well worth tucking away for that far-off future where the U.S. puts its tax revenue to work for its citizens, rather than spending it on corporate welfare or costly foreign wars in the name of “freedom.”
Image credit: Graeme Law
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