I was browsing around fivethirtyeight.com, one my favorite websites right now. I came across an article discussing the idea of basic income. The article itself details the journey of a man who devoted his career to studying such a measure. I would definitely recommend that you read the original article, right NOW. Now before I explain what basic income is and why it may be a viable replacement to socialism, I want to say that there is no replacement for free market capitalism. No matter how you look at it, free market capitalism is the most successful type of economy. Also if you read this blog on any sort of regular basis you will often find me ripping and shooting holes through socialists ideas and policies. The only thing I have against socialism is that it just does NOT work. You may think after I explain that I’m proposing an socialist policy, but I’m not. I am merely suggesting a completely re-thought social welfare policy that could actually eliminate some of the problems that socialism presents.
Basic Income as explain by this article on fivethirtyeight is an no-strings attached, government funded check to each citizen of certain amount per month or annually. Now in the article they don’t get into many specifics on who actually receives this basic income check. They only say that whether your rich or poor, you get a check. Sounds really crazy right? Why the hell do people like Donald Trump need a free check from our government? Won’t it deter people from working? At first, I had come up with many questions like these. But then I started to think about it in a more realistic way. Now, if the government was cut a check each month for each citizen then we would obviously have to cut some other sources of spending. Naturally, when you think of a free check from the government you think: Welfare. So what counts as welfare?
So as defined by the article, welfare includes old age, health, family, disability, housing and a few random others like food stamps, government funded services. Let’s say the US government would cut all welfare which according to this chart made with data from OECD (To read more click on it). The chart is shown below:
So as you can see the US spends about 700 billion dollars on welfare related expenses per month per capita. This is all taxpayer funded money. So now the questions that I need to answer are who receives this check and how much should it be? The article does offer some light on how much. A proposed Swiss Basic Income law had the amount set around 1700 dollars a month. As you can see that the Swiss spend a similar 650 billion or so on welfare also. So let’s say the US will set it at 2000 dollars per month. And based on US census data from 2014, I have estimated that there 244 million people above the age of 18. I feel like once your 18 you should entitled to basic income. If your under then you’re probably not responsible enough, it should reasonably match with the voting age.
So here is my estimation by somewhat rough numbers:
Basic Income: $2000
Population over 18: 244 million
Monthly cost of Basic Income: $488,000,000,000 billion
Monthly cost of welfare: 700 Billion
Savings by Government:$212,000,000,000 Billion dollars.
I believe that my numbers although rough can easily justify a basic income as a cost cutting and effective way to reduce welfare costs. Now I could be wrong about any number of things in my calculations. However, let’s just take with a grain of salt and say that this is how it would be. Let’s be honest that the government has too much power over us through welfare. The government programs are usually poorly managed and very costly. Also who knows the best way to help you if your in poverty? The government? Or YOU! I think that people honestly know what they need to survive. Now many skeptics including myself will still call bullshit on this whole thing. This: Won’t this just deter people from working?
Honestly, I can say that it might deter some. But those same people are the ones who don’t work now and are on welfare. So in reality that problem can’t be fixed by an basic income. However, I think the war on poverty thus far has failed. Lyndon B. Johnson started it in the mid 1960s and we have been trying to fight it ever since. Unfortunately, the government is pretty ineffective at providing the poor help. So what makes me think that this measure could work? I think that this measure could work because it provides people the freedom to do what they will do. Let me give you two different situations that would probably occur across the country.
First situation: John Doe is a mid-level manager of a fortune 500 company. He makes a decent salary of about 90,000 dollars a year. When a basic income proposal is passed, his income increases to 114,000. John decides that instead of buying a fancy new car or going on a shopping spree with his wife, that he will invest the money and save some for retirement.
Second Situation: Paul Smith is a construction worker who has been in and out of work. He makes enough to get by, about 45,000 dollars a year. When a basic income proposal is passed his income increases to 69,000 dollars a year. Paul decides that instead of saving that extra he would rather go to the bar and party. He also decides that a fancy new car is in order.
Obviously, people of all incomes will do different things with their basic income. I don’t think its necessary wrong to go out and spend all your basic income on cars and drinks at the bar. I think its fiscally irresponsible and maybe immature. However, it still stimulating the economy. I believe the greatest asset of a basic income is that it allows people the freedom to do whatever they want. It allows you the freedom to quit a job you don’t like without losing all your income. Let’s face it 24,000 dollars isn’t a lot but its better than nothing. It may increase productivity because people would spend time searching or improving themselves for the jobs they want to do. Just imagine as a parent, if you that extra 24 thousand you can afford to pay for your kids college education. Of course, many will argue “it doesn’t close the wealth gap”. You are right, but the point is not to close that gap. The closure of the wealth gap is not really possible, sorry to break it to you.
My conclusion is that basic income may be a better alternative to socialism. Basic income is almost definitely better than our current welfare system. If you think our current system is unfair, then here you go, there is nothing more fair then everybody getting a piece. Now is basic income a realistic political idea in America? That I can’t tell you. However, I can tell you that basic income is a form of a welfare that could replace the costly and expensive welfare system currently in place without restraining our economy. I am also sure that if income is weighed right by inflation and standard of living, then it could save us billions in welfare each month, trillions a year. Our national debt isn’t getting any smaller.
I know I didn’t talk about how taxes would be effected. I would assume it would come with a small flat tax or more likely be added to your income tax. I think because of freeloaders you would have to tax it, otherwise you have many taxpayers disappearing off the tax roll.
Thank you for reading! Let me know what you think!