While Baltimore attempts to ban the destitute from its streets and those who rely on food stamps to meet their basic needs face cuts, a radical experiment in poverty reduction is being contemplated an ocean away. In Switzerland, one of the world’s richest nations, voters will soon go to the polls to decide whether every Swiss citizen should receive a “basic income.” Under its terms, the only thing a Swiss citizen over the age of 18 would need to receive around $1,000 U.S. a month is a pulse. Yes, you read that correctly. You only need to be alive, merely exist, and you get $1,000 cash.
This idea has sparked a great deal of debate here in the states, setting the tongues of the chattering classes a-wagging with equal parts indignation and inspiration. Many dismiss the idea as impractical, madness. But the question that needs to be asked is, if the Swiss can do it, why can’t America — the richest and most powerful country in human history? And whether, given the way our economic system works now, we might not be the ones who are crazy.
Meet Jake
But don’t we already have welfare for those in need? Work harder and you will get somewhere, goes the American mantra. Well, lets take a hard look at the welfare system … Meet Jake, a 25 year old male with no dependents. Jake has a job working at Walmart. Luckily enough, he gets to work 40 hours a week at minimum wage. Unlike some of his colleagues, he earns $13,920 a year pre-tax in the state of Maryland. Between the current benefit programs, which include SNAP (Supplemental Nutrition Assistance Program), EITC (Earned Income Tax Credit), and Section 8 housing credits, Jake receives about $590 a month. If Jake wasn’t eligible for Medicaid, which in Maryland he would be, another $180 a month from the Affordable Care Act would come his way to get health insurance. Jake would only get a few hundred bucks extra under the Basic Income plan. And a large number of these programs are means-tested; creating a perverse incentive for those most in need — the less poor you get, however incrementally, the worse off you are. By supplying a basic income, work would actually pay off for Jake, and he would have a reason to strive for better pay and advancement.
But the problem of welfare isn’t just the amount of money but the message that’s sent in how it’s distributed. Stores that accept SNAP benefits have large signs stating what they can and can’t be used for. No hot food, no prepared food, no booze or tobacco. So on SNAP Jake can’t head to the deli counter and get a hoagie to-go or some of Eddie’s Mac and Cheese to share with his kids for dinner. The system assumes that the poorer you are the worse your choices will be, which is being proven wrong in many countries around the globe. The fact of the matter is that cash payments, with little to no strings attached, work. A majority of recipients in such programs spend the money on fixing their house, better food, expanding or creating small businesses, and their education.
Try to do any of this under the current regime, and Jake will get a rude awakening. Section 8 housing vouchers, while they are supposed to be universally accepted, are often refused by landlords. That is assuming you are getting them in the first place because the process for those benefits can take months or years. SNAP benefits need to be reapplied for every six months and don’t you forget! Because if you do you are going to spend at minimum a whole day down at the welfare office getting it straightened out. How is someone working hourly on minimum wage, who has kids or has to go to school supposed to do this? The amount of red tape is astounding. Think of how much energy would be saved — and unleashed — by simply replacing all of this with a basic income.
Free Money and The Protestant Ethic
“But it is still free money and why would you work if you get free money? We will all get lazy!” yells my inner economist. But what if I told you that wasn’t the case? When Canada ran an experiment in the town of Minocome, productivity and work rates only dropped by 1 percent on average. The groups that dropped the most were new mothers and teenagers supporting their families. The mothers spent more time with their children and the teens spent time in school. That sounds like a win-win to me. Our friend Jake could go back to school part-time to become a carpenter, finish his GED, or gain other skills. American productivity levels are off the charts, while the share of profits for most Americans has declined. It is about time the American Worker got their fair cut of the pie.
The best part is that a basic income is financially doable. All we need is the political will. Jake would no longer have to cut through red tape to try to make a better life for himself. Every American would get a bigger cut of the productivity they already put into the system. The cash payouts would empower renters to become homeowners, single mothers to spend more time with their children, and give young adults in this struggling economy the security to start their own business. A basic income could be the fuel that allows America to thrive in the 21st century.
