Basic Income Guarantee program solution for social welfare

Brian Westrick

The social safety nets in the United States of America are broken. Unemployment insurance pays out billions of dollars to people who are ineligible for benefits; millions of dollars are incorrectly denied to people who are eligible. All of this is happening in an agency that uses 85 percent of its budget on administrative costs.

A program this inefficient is simply unsustainable, especially when compared to other government insurance programs without such strict rules on eligibility. One such example is Social Security, which has administrative costs under one percent.

With this efficiency consideration, what could be simpler than a government insurance program for which every American citizen is eligible?

This is the basic principle behind the Basic Income Guarantee (BIG), a revolutionary system in which every citizen of a country, by virtue of being a citizen, is eligible to receive a set amount of income, regardless of any other factors.  A very basic proposal put forth by Karl Wilderquist of Oxford University in 2005 sets, simply due to being easy to divide and describe tax brackets for the BIG at $10,000 and simply includes a negative tax rate for all income earned before $20,000, at which point a progressive tax bracket takes over for all income after that amount.

BIG is the only system, due to its remarkable simplicity, where it is an absolute truth that everyone willing to work will be better off than those who are not.

While the thought of simply paying people who are too lazy to work may trouble many Americans, the fact remains that laziness will still be punished by keeping those unwilling to work living on the bare minimum. What also must be considered is the harm caused to people by forcing those unwilling to work into the workforce; negligent health care officials, uncaring teachers, lousy mechanics, as well as doctors who are just “riding it out” until retirement.

We would no longer have to worry that our children are being educated by teachers who would rather not be doing anything, that our brakes are being repaired by someone who wants to just tell his boss to “take this job and shove it,” simply because that option would now realistically exist for them.

The BIG simply removes the desperation in people to find work, replacing it with a desire to work. Increasing the quality of goods and services rendered to everyone.

BIG prevents the forms of extreme poverty that cause otherwise good people to turn to crime out of necessity.

It also addresses the inherent problem that ex-convicts face as they get out of prison. While possibly not fitting into the “otherwise good people,” qualifier mentioned previously, people who have paid their debt to society, but are unable to find work will have an alternative to immediately returning to the life of crime, nullifying the cycle of criminal behavior and giving those people an honest opportunity to show that they are reformed.

It empowers the workforce, removing the advantage that employers have in negotiations. It allows labor unions to strike without fear they will simply be waited out by those who lack the desperation that the workers feel to work. As it stands, businesses will almost universally survive without the workers for a much lengthier time period than the workers can survive without work.

It also incentivizes people to work. As it stands, some part-time jobs actually pay less than the government payments awarded to those who are not working. An example provided by Dr. Wilderquist in his paper is a simple one.

“Suppose a recipient received $200 a week in unemployment insurance. If they were offered a $250 a week job, they would lose all of their unemployment benefits, and start paying income taxes leaving them little better off and possibly worse off than staying on unemployment. A person in the same situation with a basic income guarantee could take the job and see their after tax income rise from $200 to $325 a week without risking that they won’t be able to get their benefits back if they have to quit their job. The basic income guarantee ensures that the more one works the more one makes while ensuring that no one fears complete destitution.”

Isn’t it possible that there are so many Americans unwilling to work that a BIG would lead to a collapse American society? As well as can it be guaranteed that there will be enough working Americans making enough income that the taxes on the working can sustain the grants to those who are not?

The theoretical answer to the first problem is that it simply stands that jobs will have to become tempting enough to bring those people into the workforce, either by higher salaries or increased benefits.

The demonstrable answer to both problems is the “Mincome” experiment which was carried out in Dauphin, Manitoba. Mincome was a temporary implication of a BIG system.

The labor market did see modest decreases, largely citizens seeking education and mothers affording more appropriate care for their children.

Students were no longer cramming for their exams after working late or, more destructively, dropping out of high school or university. In this time frame students showed an increase in graduation rates, in both high school and university settings, as well as decreased dropout rates. Also, mothers were no longer spending time away from their children due to a need for income.

Both are net gains for society, as an educated society is capable of great innovation and wondrous advances, and a home in which a parent can be more present is a great buffer in a child’s criminal behavior, according to a 1995 study by Dr. Patrick Fagan.

The BIG isn’t perfect, but between incentivizing harmful workers out of the workforce, making dependence on the government less tempting, equalizing the balance of power between employers and employees, and allowing the populace to both become more educated and commit more time to raising children, it makes a strong case for consideration.