Adam Kaiser ’19
It has become a common refrain of late on both sides of the aisle that our welfare system is in dire need of reform. Only 16% of Americans feel the government is doing an adequate job addressing poverty. The left generally feels our current programs don’t provide enough assistance; the right is convinced that such programs are wasteful and encourage the perpetuation of poverty. The truth is both are accurate criticisms. Giving a homeless unemployed person food stamps worth on average $1.50 a meal does nothing to help their plight. At the same time the U.S. government (federal, state and local) spends $1.03 trillion a year on different types of welfare payments excluding Social Security and Medicare, making welfare the single largest cost to the government according to the Senate Budget Committee. Adding these two social support programs the U.S. spends a total of $2.3 trillion on its social safety nets. The welfare system in this country is wasteful, ineffective and in dire need of reform. The solution is a comprehensive basic income.
It is crucial to stress this is not a “leftist” idea. Many notable conservative and libertarian limited government thinkers such as Milton Friedman, F.A. Hayek and Thomas Pain have advocated for different types of basic income. I am not advocating adding this to the pre-existing social safety system, but rather replacing it entirely, including welfare, social security, Medicare/Medicaid, food stamps, The Affordable Care Act, etc. To be clear, this not a perfect idea there several notable drawbacks which I will touch on. It does, however, provide a host of advantages to our current system- even if it strikes some people as extreme.
First, the current welfare state is unnecessarily complex and extremely wasteful. According to CATO Institute, the federal government supports 126 anti-poverty programs, many of which overlap needlessly creating large bureaucracies that essentially do the same thing. For example, there are eight different federal health care programs, 21 food assistance programs, 27 general cash assistance programs and 33 separate housing programs! All these are spread out over seven cabinets and six independent agencies. This creates a tangled mess of anti-poverty measures that are hard to monitor for abuse and even harder to navigate as an impoverished person seeking assistance. Ronald Reagan was correct when he claimed there was sufficient help available for anyone who sought it out but the help is so inaccessible that it creates a poverty trap where you have to spend so much time accessing assistance that you are forced to choose between seeking it out, applying for it, completing all the paperwork or working a job to productively contribute to the economy. Not only are we wasting taxpayer dollars managing dozens of overlapping programs, but we also waste human capital that could be working, who have to spend their time jumping through bureaucratic hoops instead.
Second, our current method of fighting poverty through giving out essentially compartmentalized subsidies for specific needs is paternalistic and demeaning. It assumes poor people are incapable of spending their money wisely and unable to manage their own resources; that they somehow lack to cognitive skills or self control to do so. The compartmentalized proccess was designed to be a safety mechanism to try to prevent people from using public assistance for drugs and luxury items but it makes the common and rather authoritarian assumption that the federal government always knows what’s best for someone; It implies the need for a large powerful government to take care of everyone. The danger of this is it allows the government the power to coerce people into acting a certain way under the threat of withholding benefits. No one likes to see taxpayer dollars squandered on ridiculous things but our current means testing is equally wasteful while at the same time casts the shadow of the federal government further into the daily lives of society’s most vulnerable,- something that should worry everyone.
Another huge advantage of a basic income would be the ability to rollback the government’s interference in other aspects of society. While redistribution of wealth for its own sake is effectively theft and extremely bad for the economy (see Soviet Union) most people generally accept that in order to fulfill John Locke’s ideas of life, liberty and property we should try to prevent the few people unable to care for themselves from starving to death or dying on the street from exposure. Again, this is not a call for massive social assistance but there is a convincing moral case to be made towards the pro-limited government crowd that the cost of imposing a private property system on everyone in a world of scarce resources is the duty to at least provide enough to ensure the literal survival of people unable to function in such a system. This has been the justification behind a great number of federal actions, which often do more harm than good. Alternatively, if we satisfy this requirement by simply giving people the monetary resources necessary to feed themselves, find shelter and maintain a basic healthcare plan, we could rollback other more harmful social assistance programs. For instance if people were guaranteed a livable amount of money, there would be no need for destructive minimum wage laws that kill jobs and are most harmful to the more vulnerable members of society including teenagers, the elderly, minorities and immigrants. The holds true for health care: if we provide a basic income suitable to purchase emergency coverage we have satisfied our obligation and can repeal the ACA, privatize Medicare/Medicaid and deregulate the industry. Doing so would allow the forces of competition to ensure a higher quality of care at a lower price.
Now that the obvious advantage of a basic income over the current welfare state has been established, there are a few sobering facts that must be considered. First, a basic income would be politically impossible to achieve today. Republicans, while eager for welfare reform would likely balk at allowing people so much choice with how to spend public assistance and the Democratic establishment is much too heavily invested in defending the current welfare state to admit that it badly needs to be overhauled (even if the reform is better for the people they claim to support). Also, a completely universal basic income would be prohibitively expensive. Providing enough cash to every man, woman and child to keep them above the poverty line would cost nearly a trillion dollars more then what we currently spend on our current social safety net. Various alternative proposals such as limiting the benefit to adults, providing it as a negative income tax or creating a “income floor” would manage to drop the cost below our current spending but at the risk of disadvantaging poorer families with children or creating a new poverty trap. Another consideration, like our current welfare state, this doesn’t take into account the two most ignored impoverished groups- poor people in other countries and poor people in the future. In America even our neediest citizens are “well off” in comparison to people in many other regions in the world. In fact, an annual income of $34,000 is all that is required to put someone in the richest 1% of the world’s population. Seventy percent of Americans fall into this category. Simply put, the best way to help out the global poor is free trade and allowing them to immigrate here. Unfortunately, open borders and a large social safety net do not mix well. In order to provide our own citizens with a basic income we would have to continue to significantly restrict legal immigration, thus denying the U.S. the economic benefit of the labor and skills they would bring. This also excludes the poorest citizens in the world from accessing the best welfare program in human history- the ability to live in a modern free market society. As poor people not born yet, it is common to forget that our actions today will have a huge impact of what the future will look like. By far the most effective weapon against poverty is economic growth, but the taxes required to fund either a basic income or our welfare programs significantly retard economic progress. In fact a study by the National Bureau of Economic Research found that an exogenous tax increase of 1% of the GDP lowered real GDP by 2-3%. This is not a good tradeoff. We can choose to tax and spend hundreds of billions of dollars now on a social safety net, but that will give the proverbial shaft to all Americans in the future. Less growth equates to less jobs, lower wages and less innovation.
Regardless of one’s thoughts on the justice of welfare most people will agree that a more efficient safety net is better than a less efficient one. Our current system has become an overgrown tangled mess, wasteful for the taxpayer and inaccessible to the needy. It is time for reform, preferably one that will streamline the process, respect the dignity of the recipient and hopefully save some money in the process. By forcing needy people to jump through means testing hoops and fill out a dozen different applications for enough assistance to simply get by, we encourage poverty and treat low-income citizens like children. It is time to just give them the money.