Economist Milton Friedman once said that there is no such thing as a free lunch and for many years this idea made perfect sense. But not anymore. These days people have a different way of thinking. They want money for nothing, believe they are entitled to this, and expect the government to ante up. This idea is called basic income and it’s catching on in the U.S. and many other countries.
Basic income is a government program that guarantees citizens a specific amount of money on a regular basis, usually paid every month. The goal: to help the unemployed, the underemployed and the working poor pay for their basic needs, but even the very wealthy would be eligible. Basic income is given with no strings attached and recipients can use these monies any way they desire.
If the idea of the government giving people money for nothing sounds preposterous it shouldn’t. The government already helps tens of millions pay their rent, medical expenses, utility bills and for the food they put on their tables, among other needs. But rather than being called basic income, these programs have other names such as Medicaid, Section 8, food stamps and HEAP.
In these times, when necessities are so expensive and so many people are suffering from the consequences of the virus, would it really be terrible to give people a guaranteed income? The answer depends on whom you ask.
Opponents warn that basic income could create inflation because it would drive up demand but wouldn’t increase supply; those at the bottom of the economic pyramid would suffer the most from the higher prices. Oren Cass, a Senior Fellow at the Manhattan Institute, says the idea itself could make work seem optional. Recipients might try to live on their monthly government checks rather than get a job or learn new skills.
Critics also warn that with no restrictions on how the money is used, it could go for alcohol, gambling, drugs or related items. The plan might add trillions to the already ballooning government deficit.
Ready Or Not
Like it or not, a growing number of cities, states and countries either have already adopted a form of basic income or are considering doing so. Here in the U.S., basic income has some very powerful and influential supporters. Chris Hughes, a co-founder of Facebook and author, wrote in his book Fair Shot that workers, caregivers, students and anyone making less than $50,000 a year should get a guaranteed $500 a month.
Sir Richard Branson, a business tycoon and investor, said that a guaranteed income is inevitable. Elon Musk, head of Tesla and Space X, said robotics could take away most people’s jobs and that a guaranteed income is the only solution. The idea has also been endorsed by Facebook’s Mark Zuckerberg, Bill Gates, the co-founder of the popular image website Flickr and the CEO of Twitter, among many other powerful people.
In politics Andrew Yang and Sen. Bernie Sanders both are strong supporters. Earlier this year, House
Speaker Nancy Pelosi said a guaranteed income “may be worthy of attention now.”
Many ordinary people agree. The pandemic has ravaged their incomes and savings and they see a guaranteed basic income as a step toward resolving their financial woes and stabilizing their lives.
Some form of basic income has either already been adopted or is being seriously considered in Sweden,
Finland, Germany, Spain, India, Norway, Greece and other countries in Europe and around the world.
Here in the States, Alaska has established a widely praised basic income plan. In addition, mayors of more than a dozen cities all have joined Mayors For A Guaranteed Income, a coalition advocating basic income.
New York City’s Council Speaker Corey Johnson urged the city to adopt a basic income plan. Last year the New York State Senate directed the attorney general to establish a basic income pilot program for the state.
Not too long ago, basic income was considered an extreme idea, but the pandemic has changed people’s thinking and support for it is clearly gaining momentum. More and more the question appears to be not if the idea is warranted but whether the benefits proposed are substantial enough. Lunch may not really be free but hungry people want to eat and they don’t care who pays for the meal.
Sources: www.bakersfield.com; www.centerforfinancialinclusion.org; www.forbes.com; www.futurism.org; www.Investopedia.org; www.marketwatch.com; www.thebalance.com; www.wikipedia.org.
Gerald Harris is a financial and feature writer. Gerald can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it.
