Universal Basic Income
Introduction An unconditional, individual, and universal basic income would indisputably boost the economy and allow many low-income Americans to
climb the ladder of social mobility. It would not only lift people above the poverty line and reduce income inequality, but
create jobs, lower school dropout rates, improve health, and raise overall economic
output. A UBI would enable, rather than trap, those with unfortunate financial situations
as it would provide *everyone* money to work with; all would have the fiscal leverage
to progress forward when they otherwise wouldn’t. Our current welfare programs, in
contrast, do the opposite of what they’re intended for. They encourage passive behavior
and inhibit productivity. The means-tested programs withdraw benefits as soon as a
certain income is reached, and are burdened with high marginal tax rates so long as
their income is below a certain level. Others require people to exhaust nearly all
their assets until they become eligible for aid. With so many strings attached, and
the overall counter-productive nature, welfare programs simply are inferior to a UBI,
and have too many downfalls. Economic/Societal Impacts There are several instances
of cash transfers, or UBI trials, working. The following examples turn up multiple
benefits: Namibia tried out a UBI program, the Basic Income Grant, in 2007-2012. After just one year into the program, household poverty
rates dropped from 76% to 37%. Other effects were noted too: income-generating activities
rose from 44% to 55% over the time period. Parents were enabled to purchase school
uniforms, afford school fees, and encourage attendance because of this problem, and
as a result, school dropout rates dropped from 40% to nearly 0% in a year [2]. India
tried a cash transfer project from 2013-2014 too. The result was that sanitation improved,
medicine could be afforded, clean water became more accessible, and participants could
eat more regularly [3]. Uganda’s UBI trial enabled participants to invest in skill
training. The findings were that “relative to the control group, the program increases
business assets by 57%, work hours by 17%, and earnings by 38%” [4]. Kenya has an
ongoing trial, and it has so far reportedly let to increased happiness and life satisfaction,
and reduced depression and stress [5]. If we are to quantify the effect this would
have in the US, we should look at the current poverty levels. Currently, the poverty level is a $12,140 income
for individuals [1]. With my proposed UBI of $10,000, this would pull everyone with
an income of a few thousand or more above the line. That’s potentially *millions*
of people. The Failure of Welfare Programs The current welfare programs do *not* provide
overall work incentives. Most are means-tested, meaning that if you demonstrate that
your income and capital are below specified limits, you’re eligible. This can lead
to what some call the “cliff effect”: once someone passes an income threshold, that
aid is withdrawn, and climbing further up the income ladder becomes more difficult.
This issue is maximized when we understand how disadvantaged the poor are tax-wise
under welfare. In fact, the Congressional Budget Office, “[found] that the marginal
tax rate climbs to 40 percent when a worker earns slightly more than about $12,000,
and then to nearly 50 percent in the mid-$20,000 range.” [6] These programs impose
high marginal tax rates, essentially trapping these recipients into a large income
hole that they can’t climb out of. To put this into better perspective, here’s a graph
[7] that shows tax-less income in respect to income earned: These welfare programs
are creating a clear poverty trap. Under a universal basic income, this wouldn’t happen. A UBI would extend to *every* person, regardless of
what their incomes are, enabling them to have more social mobility than they would
under the incredibly flawed welfare programs that are burdening so many lower-income
people. But that’s not all. Many welfare programs also have asset limits, meaning
that one must have almost no assets to be eligible for benefits. Programs like Temporary
Assistance for Needy Families (TANF) have asset limit ranges from $1,000 in states
like Georgia and Texas to $10,000 in Delaware [8]. This is problematic because it
discourages the importance of saving and self-reliance; only those who exhaust just
about all of their assets become eligible for aid. Savings are very important because
they provide cushion against anything that goes wrong. Just having under $2,000, for
instance, is enough to protect against eviction, missed meals, or the loss of utilities
during a financial setback. To force such recipients to go to the point of being broke
to receive benefits in no way incentivizes them to increase their income. To sum,
a UBI would (1) significantly reduce poverty and boost economic output, and (2) incentivize
people to work in ways our current welfare programs cannot. Thus, I affirm. =Sources=
[1] https://www.healthcare.gov... [2] http://www.bignam.org... [3] http://sewabharat.org...
[4] https://www.povertyactionlab.org... [5] https://www.princeton.edu... [6] https://www.urban.org...
[7] https://www.economist.com... [8] https://www.americanprogress.org...
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