We have been ruled for years by archaic economic ideas, particularly the claim that a healthy dose of economic austerity is the best way to get the economy’s engines firing again. It is a zombie idea, discredited almost nine decades ago when Herbert Hoover insisted on balancing the budget during a crisis, and sent the economy into a tailspin. If bad ideas are not allowed to die, good ideas slip into obscurity. Today, one of those buried ideas is enjoying a well-deserved revival: basic income—the idea that every citizen is entitled to an income sufficient to cover basic needs.
New assessments of basic income have cropped up in The New York Times, The New Yorker, The Wall Street Journal. It seems to be one of the few radical reform ideas that appeal to people on both ends of the political spectrum: The Koch brothers’ favorite think tank, the Cato Institute, has revisited the idea, and former SEIU head, Andy Stern, has written a book about it. Historically, market luminaries such as Friedrich Hayek, Milton Friedman, and Charles Murray have given rhetorical support to the idea because of their hostility to welfare-state programs (they hope to replace them with a basic income, though a punitively small one). Tech entrepreneurs have embraced basic income in anticipation of new waves of technological unemployment from robots and artificial intelligence. Those of us on the left, however, have a different vision of what basic income might achieve.
A group of European intellectuals and activists created the Basic Income European Network-BIEN (later to become the Basic Income Earth Network) in 1986, dedicated to promoting universal guaranteed-income policies. Working tirelessly over 30 years, they have won endorsements for the basic income idea by trade unions, community groups, and political parties. Since the 2008 Global Financial Crisis, support has exploded in Europe. Recently, 64 percent of respondents in a European wide poll said they would vote in favor of creating a basic income. One unexpected result of BIEN’s efforts was that political leaders in many middle-income countries such as Brazil, India, Mexico, and South Africa embraced the idea of basic income as a way of dealing with popular unrest. Across the globe, governments began to enact direct income supports to their poorest citizens. While none of these schemes amounts to a full basic-income system, cash transfers to the poor have proven to be a powerful weapon in reducing poverty. Perhaps as many as a billion people in the developing world are now receiving these cash transfers and the idea has been endorsed by the World Bank and powerful global charities. Studies have definitively shown that there is no truth to the right wing claims that giving poor people money demoralizes them; it does the opposite. Moreover, providing everyone with a basic income is an obvious way to make societies more resilient in the face of global climate change and it would slow the flow of refugees from economic hardship.
In the United States, no matter how appealing basic income is, advocates face the problem of sticker shock. Implementing a generous basic income would require raising much more revenue through the tax system. This, of course, threatens the regrettable bipartisan consensus that there must be no increase in the tax burden on middle-income households. But, like other societies, we do not have to get to a basic income in one giant leap. An intermediate step would be to significantly transform the existing Earned Income Tax Credit into a full negative income tax that provided subsistence income to all poor households. (With a negative income tax, poor households receive a monthly or weekly check from the government rather than transferring funds to the government through tax withholding.) Because such a program is highly targeted, it could eliminate poverty completely for a net cost of $250 to $300 billion—much of which could be raised by establishing a financial transaction tax.