The American welfare system—based on means testing and market-driven social services—which has been in place since World War II is increasingly seen as broken by both Left and Right. Progressives are frustrated because they believe the benefits are insufficient, while libertarians and conservatives dislike the model due to the excessive complexity and redundancies that arise from a bureaucratic, patchwork system.
Out of this agreement that the existing welfare system is an outdated model for the current era, a new alternative is emerging: the guarantee of a basic income, or BI, for all citizens. Simple, universal, and transparent, the BI is touted as a remedy for stagnant wages, an antidote to inequality and the rising concentration of wealth, and a booster for individual liberty.
Yet many of its advocates refuse to see its shortcomings. Economically unsustainable, politically unviable, and socially corrosive, the BI, at best, fails to solve the root problems of existing social programs and, at worst, amplifies them. True welfare reform would not only consider economics and liberty, but also solidarity and human development in building a program that actualizes the community it serves. Fortunately, there is another option.
A universal job guarantee, or JG, can transform the safety net, substituting traditional “means-tested” models in favor of a program that not only helps the needy, but also provides opportunities to build human capital and further strengthen social solidarity. A social program that is both macro- and micro-minded, and cognizant of the demand and supply side, it offers a better approach for tackling the ills of the twenty-first-century economy.
The impulse toward a better, more effective welfare state is understandable given the state of the American economy. Faith that growth alone can improve people’s livelihoods was broken by the Great Recession. The new malaise has taken many forms: greater inequality, stagnant wages, a declining middle class, and diminished labor-force participation among young adults. This decline in labor-force participation is of particular concern because of its destabilizing political effects. For the first time in recent history, parents doubt that their children will enjoy a higher standard of living than their own.1
This is not sustainable. A thriving democratic polity requires a robust network of property owners who have a stake in the system. As seen in recent events such as the Arab Spring, this cannot exist where economic conditions diminish the workforce and the middle class.
As globalization increasingly encourages the outsourcing of low-wage labor to foreign countries, so too the malaise grows deeper and more entrenched. The longer the country waits to solve this crisis, the worse it becomes: the short-term unemployed eventually become the long-term unemployed, whose productivity, earnings, and well-being are affected even into retirement age.
These trends are not uniform. Because the barriers to foreign exchange apply more to labor than to capital, globalization disproportionately harms working-class Americans. Yes, free trade has raised the overall level of income in the country, but a nation is not an aggregate statistic; it is the individuals that make it up who should be the focal point of any socioeconomic policy.
It is through these long-term trends that the share of income to capital—rather than income to labor—has hit an all-time high.2 These problems become more politically malignant as they manifest themselves across time and space, creating regional and intergenerational inequalities through low social mobility.3 While no one denies that the private sector is still the engine of economic growth in America, additional resources must be mobilized to provide for the needs of the broader nation.
What Is Basic Income?
Given that the original welfare state was devised in times of greater prosperity and equality, it is natural that changing circumstances have led to a desire for different approaches. On paper, a basic income is a simple concept: everyone is entitled to an annual monetary income that is neither means tested nor work tested. The nuances between different proposals stem from issues such as how it is funded, the amount provided, whether it should be scaled to households or individuals, and whether any kind of means testing or conditions should be applied at all.
This idea is not new. Thomas Paine in his 1797 pamphlet Agrarian Justice advocated that each adult should receive an annual benefit of fifteen pounds sterling. The broader contours of the proposal continued to receive support over the centuries from proponents as diverse as Bertrand Russell, Huey Long, and Dr. Martin Luther King Jr.4 In fact, it was nearly made policy in America by Richard Nixon and was embraced by his opponent George McGovern in the presidential election of 1972.5 That said, full implementation of the idea remains largely untested.
Why It’s Attractive
The most immediate attraction of this proposal is its simplicity. The notion that we can reduce the complexities of the welfare state into a single program is appealing to the libertarian mindset. The supplement to this is that people can use a social entitlement to fulfill their needs, as they perceive them, which is attractive from the perspective of both social justice and liberty.
In addition, the program appears to nudge a person’s psyche towards a more desirable way of living. By securing a person’s right to live and establishing a psychology of abundance rather than scarcity, the BI can promote entrepreneurialism, trust, and solidarity. It can also foster other virtues by grounding the desire to work on sources other than money, such as pleasure, pride, and recognition.6
One’s inner Hayekian is also pleased by the fact that it mitigates issues stemming from the knowledge problem of government. Because governments lack direct access to the price mechanism and to each individual’s personal desires, a BI transfers decisions about social spending to the entity most capable of making these effectively: the individual. It also reduces the implicit political bias between paid and unpaid work, such as care work and volunteering, as well as between different sets of natural human endowments, without interfering with personal freedom.7
Politically, the BI has several other attractive features. By consolidating multiple forms of social spending that already constitute an implicit “guaranteed minimum,” the program is harder for special interest groups to steer towards rents. By providing cash instead of specific goods, it would also be more transparent on costs.8
Some thinkers further argue that the program can be justified on moral and theoretical grounds. By guaranteeing the income to everyone, the program is less stigmatizing than traditional welfare and liberates citizens from dominating control by political elites.9
Has It Been Done Before?
While a livable, nationalized BI has not been implemented yet, there are smaller-scale policies that can give an idea of the impacts. For example, the New Democratic Party of Manitoba, Canada, implemented a “Basic Annual Income Experiment” that provided an inflation-adjusted annual income of $20,000 to a family of four.10 The end result was an 11.3 percent reduction in labor-market participation, about one-third of which was attributable to “community-context” effects. This implies that there is a cultural impact of creating a basic annual income that increases the likelihood of voluntarily leaving the labor force. This withdrawal was primarily among young adults who went into care work, disability, or higher education.11
In America, Alaska provides an annual BI of $1,000 to its residents from a permanent fund financed by revenue from its natural resources.12 However, this clearly does not fall under the traditional definition of a BI that supports a minimum standard of living.
The most recent national effort to provide a BI was in Finland. Instead of providing a universal benefit, however, the national social insurance institute, Kela, randomly selected two thousand individuals who were already receiving some form of unemployment benefits. Subsidies of approximately $645 per month were offered to people who had been unemployed for at least a year or had less than six months worth of work experience. In short, the program in its actual implementation was not a BI model at all, but an unconditional unemployment subsidy.13
Efforts elsewhere have mostly been defeated. For example, voters in Switzerland defeated a 2016 referendum calling for a BI of $30,000 per year to every citizen.14
Of the above, only the Manitoba plan would fit the traditional definition of BI. However, since the plan was neither permanent nor likely perceived as such, empirical insights from it are of limited value. A credibly permanent BI program would probably affect incentives in a different manner than such a small-scale, short-run experiment.
The widespread appeal among academics and policymakers of otherwise differing philosophies masks the deeper underlying disagreement over how BI should be implemented. Progressives view the BI as a complement to the welfare state, a way of enhancing it and making up for its various shortcomings. However, libertarians and market-oriented thinkers view the program as a substitute for the existing welfare state, a way of consolidating several different programs under one roof. In any event, due to existing budget constraints and the high financial cost of this program, as will be discussed below, this article focuses on BI as a substitute for existing welfare programs. If it is unviable or undesirable even in that state, it is surely not sustainable as an additional complement to the existing welfare state.
Before assessing whether BI is a viable or desirable plan, it is worth noting the fundamental paradox in its implementation. Any policymaker or advocate supportive of a BI must have three constraints in mind: first, that it is affordable; second, that it is universal; and third, that it is large enough to constitute a living wage. The reason for the third is that a non-livable income supplement would not be significant enough to actually change how individuals use their labor time or perceive economic risk.
Only two of these three are sustainable in any given policy, however.15 For example, let us assume that a livable income is $20,000. Clearly an understatement, but even this policy would lead to annual welfare spending of over $6 trillion dollars in the United States. To pay everyone in the country even $10,000 per year, America would have to raise the government revenue share of GDP by nearly ten percentage points.16 A welfare program of that size would vastly exceed the entire American welfare state in its current form.
On the other hand, a program that is affordable and universal would have to be much smaller in size, similar to the Alaskan Permanent Fund. Alternatively, a large, affordable program would have to be means-tested, which would eliminate one of its advertised benefits: avoiding the “welfare wall”—the implicit tax for working, which arises when programs are means tested.17
The Politics of a Basic Income
Some support a BI because the consolidation of several welfare programs into one can potentially raise its political profile and therefore secure popular support. This would theoretically make the program more difficult to weaken or eliminate.18 But this hypothesis is not borne out by the history of other welfare programs. Large, universal programs, such as Social Security and Medicare, are always part of the political discussion when it comes to budgetary cuts. The key reason they have been able to resist cuts in the past is that their largest benefits are concentrated among a particular group of constituents—the elderly.
Mancur Olson’s classic analysis of government programs states that the political sustainability of a program is a function of how concentrated or diffuse its costs and benefits are. Programs that benefit a narrower, more homogenous group of recipients, while spreading costs among the broader population, are more sustainable than programs that do the opposite. A program like the BI would have the most diffuse benefits possible, to the entire political community or “universe.” While the revenue could come from the broader population, the implicit costs would be most heavily borne by existing labor institutions such as unions, who would therefore have an incentive to fight and weaken the program. The high-profile nature of the program also makes it a target for modification and adjustment when governments are under pressure to make cuts, as was seen in Finland’s implementation.
The Policy Implications of a Basic Income
The actual impacts of BI center around three different aspects: how it impacts individuals, the community, and those beyond the nation’s borders.
In terms of its individual impacts, economic theory and the limited case studies available (such as Manitoba) clearly demonstrate that a BI disincentivizes work and reduces participation in the labor force. Income, like any other good, is subject to diminishing marginal utility. You and I may claim that we would continue working simply because of the joy we find in it, but, chances are, we do not represent the general population. For the working-class American who performs difficult, manual, or more repetitive labor, the chance to escape work would carry great allure. Therefore, an initial endowment of income, regardless of employment status, reduces the incentive to seek further employment.
When viewing the BI as a transition from, and at least partial substitution of, the status quo, the program has even worse distributional effects. In pursuing universality, advocates of a BI would actually redistribute wealth upwards.19 This would not only be undesirable from a policy perspective, but would surely be used as a political argument for transforming the program into something means-tested, thereby defeating its original purpose.
And this is just the economic analysis. Due to difficulties in experimental design, social scientists have not considered social impacts nearly as much as economic ones. Yet it is the social impacts in particular that could prove most disastrous. Standard economic theory focuses on how individuals make decisions given a particular set of institutions and desires or “utility functions” that stem from one’s identity. What is left out of the model is how a given set of institutions can shape and transform those desires through “culture” over time. If a program like BI “emancipated” individuals from the drudgery of work, then it could reshape a society into one where work is undervalued. This is not an exaggeration if one takes seriously the claim that a key feature of these programs is that they can “liberate” individuals from work. Individuals who grow up in such a world would be shaped by a community that says the good of “work” should be less of a priority than it is today. A conservative opposed to untested, radical change should be skeptical of this kind of social transformation.
In the age of wonkery and data, the policy discussion above is where the analysis often ends. But in the long term, it is politics that determines whether a program will survive or work as intended. If one takes a tripartite view of society, with a public, private, and civil sector, then a BI could further shrink one of the most important elements of civil society—labor unions. After all, a BI is an individualistic policy: by raising each individual’s own personal bargaining power, it diminishes the need for collective bargaining and social solidarity.20 When individuals have a stronger exit option, they are less likely to voice collective opposition towards an organization or institution than to simply leave it.21 This is why unions have expressed concerns that a livable BI will render them superfluous. By further weakening this core civil society institution, the BI removes yet another of Burke’s little platoons that play an active role in intermediating between society and an ever-centralizing bureaucracy and advocate on behalf of the community beyond the ballot box.22
This is why highly unionized countries, such as Belgium, fought against proposals for a BI. Belgium operates under the “Ghent system,” in which unions receive the revenue for subsidized unemployment insurance programs and operate voluntarily. An independent BI would weaken unions at the expense of an even stronger federal government. Since at least a portion of the American welfare system is funded by social contributions and not general taxation, a movement towards a generalized BI could be perceived as a massive expansion of welfare.23
And all of this presumes that individuals would grow to like the program in the first place. Career and work form a key part of a person’s identity. A society with a livable BI will invariably split the working classes into those who continue to work and those who choose not to. This kind of intra-class conflict would damage social solidarity and create new artificial divisions amongst individuals at a time when national solidarity and a sense of common community have fallen to an all-time low.
An economic response to all this is that by increasing flexibility and freedom for individuals, those same individuals can seek out new opportunities elsewhere. This results in a classic prisoner’s dilemma, however, for communities as a whole: large numbers of individuals relocating in search of new opportunity diminishes the social capital of some communities. Depreciated social capital and trust can result in outcomes that reduce the productivity of every aspect of a community and the broader economy.
Lastly, changes in a country’s social institutions and policies change the type of people who wish to immigrate there. A policy that promises future citizens freedom from work would attract a very different type of immigrant than the classic entrepreneurial types of yesteryear. In becoming a magnet for individuals who may not want to work, the BI undermines itself.24
Simple ideas often have a seductive allure, promising that society’s many ills can be cured with policies that seem intuitively desirable. Such policies, however, must withstand the scrutiny of rigorous analysis and historical evidence. In this regard, the BI fails on multiple counts. It is not sustainable in the form advocated by its most ardent supporters. In fact, in the few cases of attempted implementation, BI models were almost immediately overturned or altered beyond recognition.
The biggest cause for concern, however, transcends its basic sustainability issues. Epistemic restraint should make one wary of attempts to transform society in ways that we neither understand nor have any prior context for. This humility tends to discourage any adoption of a BI proposal.
But what to do instead? The ills of the modern economy will continue to exist under the status quo. Is there a program that effectively addresses these issues, while operating through existing social institutions and norms?
How Would a Job Guarantee Work?
Versus the BI, a job guarantee (JG) is a superior option, both in terms of policy efficacy and political feasibility. While it is also a relatively new concept, having emerged in the past few decades, it is preceded by various forms of public works programs. Like the public works program, it involves the government directly providing jobs to people, particularly in times of high unemployment and low labor-force participation. Unlike the traditional public works program, however, a JG tackles unemployment and poverty at both a macro and microeconomic level.
So how does it work? The government determines whether there are unfilled jobs in society—usually because the value add of such work is a public good. It then provides a fixed wage to any and all who are qualified and interested in performing the job. This can be both the unemployed and people employed in other industries. The point is that the job is universally provided at a fixed wage. In doing so, the government can operate as an “employer of last resort” that uses the price of labor to regulate its quantity.25
One current proposal for establishing JG is offered by the Center for Full Employment and Price Stability. The proposal is to offer a job to all, regardless of the state of the economy and each applicant’s demographic characteristics. By offering a living wage, the proposal would hire from the bottom of the labor pool and stabilize lower-level wages. As such, this policy could be a mechanism for implementing labor-market reforms alongside labor market stabilization.26
Addressing Demand- and Supply-Side Issues
Unlike BI, a JG program would tackle both supply- and demand-side issues related to labor, and therefore be a tool of both macro- and microeconomic policy. The age-old question of macroeconomic policy is whether policymakers should fix the level of employment and deal with inflationary or exchange-rate pressures, or fix the inflation rate and deal with unemployment. Given that evidence suggests unemployment costs are asymmetrically higher than the costs of inflation, it would be sensible to focus on the former.27
Instead of the traditional scenario, where a reserve level of the structurally unemployed exists under a stable inflation rate, the JG creates a reserve level of individuals employed under the guarantee. This ratio of JG employment to overall employment is the buffer employment ratio, or BER, and is targeted by the government through the compensation instrument. When inflation exceeds the target, the government can increase the BER through fiscal and monetary tightening, thereby transferring workers from the inflating private sector to attenuate the inflationary spiral. Conversely, the program can also cut wages to pull workers out of the public JG pool and back into the private sector to balance labor shortages and public finances.28
Although a JG policy is clearly counter-cyclical, it does not manage the level of aggregate demand. On the other hand, it does free the Federal Reserve to pursue a more technocratic role in managing aggregate demand, while leaving the management of employment in the hands of an institution that can be placed, more directly, under the control of Congress.29
It is worth noting that this policy avoids the Lucas Critique, a heuristic for the idea that many macroeconomic policies assume individual ignorance or irrationality when, in reality, people typically behave to thwart those very same policies. Because this policy operates on consent and transparency, it actually operates more effectively when workers are better informed about the policy.
Beyond the perspective of labor economics, it is important to remember that unemployment and underemployment are social phenomena with cultural consequences—just as real as their economic ones. Since these phenomena involve issues best decided by the broader polity, an institution directly under the purview of Congress should exercise authority over them.
On the supply-side, the JG can also be a vehicle for improving long-term structural inefficiencies in the labor market, which stands to see over 47 percent of current jobs being automated in the future.30 While some criticize the JG as a “make-work” program, there is no reason this has to be the case. There are many underprovided public goods, whether in education, R&D, or infrastructure. It is far from being “make-work” when the American Society of Civil Engineers gave the United States a D+ and said that $3.6 trillion will be needed to make the necessary fixes to our infrastructure.31
The JG could structure its employment offerings and provide the training needed for unemployed workers to find work in socially beneficial positions.32 This program can develop infrastructure capital and human capital at the same time, while promoting greater macroeconomic stability.
The BI doesn’t have these benefits. As an unconditional, universal guarantee, BI has zero impact in the arena of macroeconomics: its purpose is purely at the individual level. Mainstream economic thought responds that individuals are most fit to determine how they can build their human capital when provided with a cash infusion. The addendum to this argument is that governments have only limited ability to predict the long-term direction of the broader economy.
There are some merits to these arguments. However, even putting aside the side effects for social capital and culture, they presume individuals can tack on social costs and benefits as part of their own internal calculus. Human cognitive biases and hyperbolic discounting in favor of the present over the future undermine the claim that decentralized individuals can understand and direct the broader national interest.
The idea that markets alone have been the dominant force in driving long-term economic growth is also undermined by historical evidence. Nearly all nations that have industrialized and escaped the poverty trap have done so with the state operating as an agenda-setter for broader industrial policy. This is the case in South Korea, Japan, and the United States. Fields such as the internet and nanotechnology only exist because the state acted as an investor and an incubator for ideas that led to their creation.33 While the state is no substitute for the innovation and competitiveness of markets, it can use a program, such as the JG, not only as a tool for helping the indigent, but also as a broader strategic platform for creating future markets that workers can participate in and add value to. In building these innovation centers under a JG program that has congressional oversight, the government can also further democratize the pursuit of solutions to pressing economic and social problems.
Has It Been Done Before?
Have JGs been implemented in the past? While no such program has been attempted for a population as large as America’s, there are several significant case studies. One attempt was the Humphrey Hawkins Full Employment and Balanced Growth Act of 1978, which in its inaugural form stated that individuals have a legal right to a job backed by the power of litigation. However, due to inflationary fears, this power was later stripped from the bill.34
The Department of Labor also enacted the Youth Incentive Entitlement Pilot Projects (YIEPP) program under the 1977 Youth Employment and Demonstration Projects Act (YEDPA). In this program, children aged 16 to 19 in low-income households who had not yet graduated from high school were offered minimum-wage jobs that were part time during the school year and full time in the summer. While the jobs were offered universally to anyone in the demographic sample, they were conditional on remaining in and returning to school and meeting academic and job performance standards. The program did not improve existing graduation rates, school enrollment, or other social outcomes, but it did lead to large increases in employment, labor-force participation, and earnings among the sample size.35
A nationwide example is India’s Mahatma Gandhi National Rural Employment Guarantee Act, the world’s largest public works program. Offering a universal JG in the agricultural sector, it reduced poverty in the affected community by nearly 50 percent during the agricultural lean season. In doing so, the program improved consumption among affected households over the long run.36
In examining these programs, it is worth noting that all of them operate through traditional, existing institutions surrounding work and communal efforts. Unlike the BI, which implicitly relies on weakening existing institutions and moral norms, the JG improves society by allowing it to pursue that which it already values: public goods, a common work ethic, and human development.
A Moral Approach
A common problem in modern political thinking is its neglect of the telos, or desirable end state, for both individuals and communities. Freedom and justice are of course important values, but they must ultimately be understood in light of what they can guide us towards: the properly ordered or “good” life.
Like many libertarian solutions, the BI leaves the question of the good life blank, prioritizing the means as ends in themselves. The paucity of this idea is, historically, not a radical notion. Traditional ethics were oriented towards the community, which would determine what constitutes the desirable or preferable life, and correspondingly guide its constituents towards that life.
In Aristotle’s conception of the body politic, political communities, including America, are formed with an ideal or desirable society in mind. Therefore, policies ought to be structured towards achieving that end. Basic income, as its advocates prefer, is intentionally directionless and therefore ill suited to building solidarity and community in pursuit of the national interest.
This Aristotelian tradition is the benchmark of Western civilization and its descendant nations. In the sphere of work, it manifests itself in several forms depending on a nation’s particular culture, such as the “Protestant work ethic” or the dignity of labor under the principles of Catholic social teaching. As an example, Catholic social teaching as articulated by Pope John Paul II in Laborem Exercens (1981) speaks of the dignity of work as a fundamental aspect of the human identity. It follows from this that a role of government is to coordinate planning among key institutions of society to encourage and provide meaningful, full employment for the general population. Tied to this is the importance of intermediary institutions, such as labor unions, which limit the scope of government and provide a voluntary means by which workers can seek to fulfill their potential and improve their livelihood.37
This tradition even finds secular advocates in Amartya Sen and Martha Nussbaum’s “Capability Approach.” This model also subordinates wealth maximization, in favor of improving human capabilities that many communities would grant as fundamental to a well-functioning society. Some of these are material, such as food and health care, but many are habitual, such as sense of community, democratic participation, critical thinking, and social solidarity.38
It is in the context of these ideas that a particularly ambitious JG program could use its labor purchasing power as an agent of moral change to reduce discrimination in the private sector labor market against ex-offenders, military veterans, and other groups, as well as improve labor conditions in the private sector by setting the agenda on proper hiring practices.39 In effect, the JG program would be a public option for labor, indirectly spurring more pro-worker policies, without coercion.
A BI cannot hope to solve any of these problems, especially if it substitutes existing, more “paternalistic” welfare programs. Welfare programs should be constructed to aim towards what a person ought to be in the context of what a person actually is. A JG program can play a key role in supplementing existing institutions to guide people and their communities further towards that purpose.
A Market-Coordinated Approach to Implementation
In recent months, the JG has picked up steam in left-wing policy circles. The Center for American Progress has already put out a proposal for a large-scale, permanent program focused on public employment, infrastructure investment, and education support in the form of “public apprenticeships.”40
While the proposal is light on specifics, it would move the country further towards federalization and centralization of labor policy. In doing so, the proposal would run into several issues that entail bureaucratic policymaking.
As with any major social program, policy-makers must take care to ensure that key aspects are structured in a manner that avoids the classic pitfalls of public policy: rent-seeking and knowledge problems. To incorporate competition and market dynamics into the actual projects supported by the JG program, the government should act as a labor intermediary between private contractors and JG employees. These private contractors would be selected through a competitive, blind auction, thereby creating a project partnership steered by entrepreneurial leadership, built by American labor, and overseen by a government referee.
An even more radical innovation that could complement the above program is to create private firms whose goal is to help the long-term unemployed, and then give prizes to the most successful firm.41 This system can apply to a wide cross section of projects, related to public goods—from caring for the elderly, to R&D, to transportation infrastructure. While these JG jobs should be universal, policymakers must also put rules in place that disincentivize opportunities to shirk. One option would be to suspend individuals without pay for temporary periods of time if they underperform. Another would be to reward employees based on performance to incentivize quality in the workplace.
Since the goal of a JG is at least partly macroeconomic, it should be standardized in a way that allows it to avoid time lags in response to changes in macroeconomic conditions. This means targeting specific BERs and using the total real monetary value of the compensation package as an instrument for reaching that ratio. At the same time, the Fed can implement a policy, such as nominal income targeting, to manage the level of aggregate demand. Congress would oversee the composition of the compensation package, and determine the types of projects and jobs of the JG program. This would allow for political oversight with independent administration. The hiring process would also need to be independent to prevent the program from becoming a patronage system.
There is also a potential circumstance in which cutting the compensation package to target a particular BER would be politically unfeasible because it would be below a perceived “livable” level of compensation. In that case, the leadership of the JG program may have to adjust nonpecuniary benefits to reach the appropriate BER.
Striking a balance between markets and the state is an ever-present conundrum when designing major policies. It is important to get the balance right with a new social program in order for it to be successful and accrue long-term political support.
Political Concerns and Sustainability
In its politics, a JG is a superior option to BI in many respects. Today, people make a mental distinction between what they perceive as “welfare” and “entitlements.” “Welfare” is perceived as frivolous and unearned, but “entitlements” are viewed in the language of rights and obligations. Food stamps are seen as “welfare,” but Social Security is seen as an entitlement, since people pay into it. By providing goods to workers as a payment for adding value to necessary public projects, policy-makers can increase the likelihood that a program is viewed as a genuine entitlement. An unconditional, no-strings-attached cash grant to everyone is much more likely to be viewed as “welfare” and is therefore harder to defend in the political arena.
Related to the welfare-entitlement dichotomy are the power dynamics between different class groups. At a time of rising social polarization, new social programs should strive to balance and raise interclass, national solidarity. An unconditional BI that divides working-class people into those who work, and those who choose not to, would raise these divisions. These nonworkers would also be more beholden to the elite classes and could, therefore, be more of an impediment to further reform.42
A JG program, however, can build supporting coalitions across industrial and regional lines. Because the JG program can use private contractors to support various public projects, it can secure the support of various industries to help build and sustain the program. A BI program would face much greater difficulties because its benefits are diffuse across the general population and, therefore, less likely to create a focused constituency.
Regions of the United States most affected by long-term employment problems, such as the Rust Belt, would benefit most from a targeted JG program, designed to build human and social capital in the most blighted regions.43 By building public projects in these regions and coordinating their efforts through the local government and public-private partnerships, the federal government can foster a culture of production and work to build the social capital needed to create a thriving commercial ecosystem.
A BI, however, would not be targeted to address any of the above concerns. In fact, its key mechanism for improving welfare, individual freedom, would likely lead to relocation of individuals out of these blighted communities, thereby reducing social capital and exacerbating the prevailing problems.
We have reached a point where existing solutions are no longer sufficient to solve the largest problems of the day: unemployment, stagnant incomes, and crumbling infrastructure. Big, invasive problems demand big, innovative solutions.
Modern economic thought has already produced its proposal: give people money. But large-scale issues require national will and coordination. Economics alone cannot account for social costs and benefits, as well as factors of culture, identity, and norms.
A truly holistic plan for tackling the great social ills of today requires an approach that is social and cultural as much as it is economic. A JG can fulfill that need. Actors on the left have already begun to support the program because they see its potential to nudge the nation towards their desired end state.
The Right must seize this unique opportunity and incorporate the needed reforms to correct its riskiest excesses. In doing so, they can transform the nature of the welfare state from one of take and transfer to one of collaborate and create.
This article originally appeared in American Affairs Volume I, Number 4 (Winter 2017): 140–59.
The opinions expressed in this essay are the author’s own and do not necessarily reflect the views of Ernst & Young.
3 John Cassidy, “American Inequality in Six Charts,” New Yorker, Nov. 18, 2013, https://www.newyorker.com/news/john-cassidy/american-inequality-in-six-charts.
4 Andrew Flowers, “What Would Happen If We Just Gave People Money?,” FiveThirtyEight (blog), April 25, 2016, http://fivethirtyeight.com/features/universal-basic-income/.
5 Erich Fromm, “Psychological Aspects of the Guaranteed Income,” in The Guaranteed Income: Next Step in Economic Evolution?, ed. Robert Theobold (Garden City: Doubleday, 1966), 29–34.
7 Robert van der Veen, “The Morality of the Universal Grant Versus the Ethics of Paid Work,” in Basic Income: An Anthology of Contemporary Research, ed. Karl Widerquist, et al. (Chichester, UK: Wiley Blackwell, 2013), 134–40.
8 Milton Friedman, “The Case for a Negative Income Tax: A View from the Right,” in Basic Income, 11–16.
9 Philip Pettit, “A Republican Right to Basic Income,” in Basic Income, 26–31.
10 Colby Cosh, “Can Giving Everyone Free Money Reduce the Stigma of a Guaranteed Income?,” National Post, July 19, 2017, http://nationalpost.com/opinion/colby-cosh-can-giving-everyone-free-money-reduce-the-stigma-of-a-guaranteed-income.
11 David Calnitsky and Jonathan P. Latner, “Basic Income in a Small Town: Understanding the Elusive Effects on Work,” Social Problems 64, no. 3 (2017): 373–97.
12 Robert Tracinski, “Alaska’s ‘Universal Basic Income’ Is a Case Study In How To Bamboozle Mark Zuckerberg,” The Federalist, July 11, 2017, http://thefederalist.com/2017/07/11/alaskas-universal-basic-income-case-study-bamboozle-mark-zuckerberg/.
13 Antti Jauhiainen and Joona-Hermanni Mäkinen, “Why Finland’s Basic Income Experiment Isn’t Working,” New York Times, July 20, 2017, https://www.nytimes.com/2017/07/20/opinion/finland-universal-basic-income.html.
14 Robert Tracinski, “Switzerland’s Basic Income Idea Was Democratized Aristocracy,” The Federalist, June 7, 2016, http://thefederalist.com/2016/06/07/switzerlands-basic-income-idea-was-democratized-aristocracy/.
15 Tracinski, “Alaska’s ‘Universal Basic Income.’”
16 R. A. [pseud.], “Universal Basic Incomes: Why Plans to Give Money to Everyone Are Gaining Ground,” Economist, June 6, 2016, https://www.economist.com/blogs/economist-explains/2016/06/economist-explains-4.
17 Tracinski, “Switzerland’s Basic Income.”
18 Noah Smith, “Basic Income Is Good Because It’s Basic,” Noahpinion (blog), Aug. 9, 2014, http://noahpinionblog.blogspot.com/2014/08/basic-income-is-good-because-its-basic.html.
19 Eduardo Porter, “A Universal Basic Income Is a Poor Tool to Fight Poverty,” New York Times, May 31, 2016, https://www.nytimes.com/2016/06/01/business/economy/universal-basic-income-poverty.html.
20 Koen Raes, “Basic Income and Social Power,” in Basic Income, 246–54.
21 Yannick Vanderborght, “The Ambiguities of Basic Income from a Trade Union Perspective,” in Basic Income, 497–508.
22 Bill Cavala and Aaron Wildavsky, “The Lack of Political Support for an Income by Right,” in Basic Income, 485–96.
23 Vanderborght, “The Ambiguities of Basic Income from a Trade Union Perspective.”
24 R. A. [pseud.], “Universal Basic Incomes.”
25 William. F. Mitchell and Warren B. Mosler, “Fiscal Policy and the Job Guarantee,” Centre of Full Employment and Equity, University of Newcastle, Callaghan, Working Paper no. 01-09, Aug. 2001.
26 Pavlina R. Tcherneva, “Job or Income Guarantee?,” Center for Full Employment and Price Stability, University of Missouri, Kansas City, Working Paper no. 29, Aug. 2003.
27 Mitchell and Mosler, “Fiscal Policy and the Job Guarantee.”
29 Pavlina R. Tcherneva, “Job or Income Guarantee?”
30 Carl Benedikt Frey and Michael Osborne, “The Future of Employment: How Susceptible Are Jobs to Computerisation?,” Technological Forecasting and Social Change 114, issue C (2017): 254–80.
31 Mark Paul, William Darity Jr., and Darrick Hamilton, “Why We Need a Federal Job Guarantee,” Jacobin, Feb. 4, 2017, https://www.jacobinmag.com/2017/02/federal-job-guarantee-universal-basic-income-investment-jobs-unemployment/.
32 William Mitchell and L. Randall Wray, “Full Employment Through Job Guarantee: A Response to Critics,” Center for Full Employment and Price Stability, University of Missouri, Kansas City, Working Paper no. 39, Jan. 2005.
33 Mariana Mazzucato, “An Entrepreneurial Society Needs an Entrepreneurial State,” Harvard Business Review, Oct. 25, 2016, https://hbr.org/2016/10/anentrepreneurial-society-needs-an-entrepreneurial-state.
34 Dylan Matthews, “Universal Childcare, a Basic Income, and 4 Other Radical Policies That Almost Became Law,” Vox, July 1, 2015, https://www.vox.com/2014/8/13/5990657/basic-income-jobs-guarantee-child-care-flag-burning-btu-tax-balanced-budget.
35 Judith M. Gueron, “Lessons from a Job Guarantee. The Youth Incentive Entitlement Pilot Projects,” Manpower Demonstration Research Corp. (1984).
36 Stefan Klonner, “Safety Net for India’s Poor or Waste of Public Funds? Poverty and Welfare in the Wake of the World’s Largest Job Guarantee Program,” University of Heidelberg, Department of Economics, Working Paper no. 564, 2014.
37 Pope John Paul II, Laborem Exercens, encyclical letter (1981), http://w2.vatican.va/content/john-paul-ii/en/encyclicals/documents/hf_jp-ii_enc_14091981_laborem-exercens.html.
38 Aleski Neuvonen, Satu Korhonen, and Lari Hokkanen, “The Nordic Model Is Not about Well-Being—It Is about Capabilities,” Business Insider, July 25, 2017, http://nordic.businessinsider.com/the-nordic-model-is-not-about-well-being-it-is-about-capabilities-2017-7/.
39 Paul, Darity, and Hamilton, “Why We Need a Federal Jobs Guarantee.” See also, Victor Quirk, et al., “The Job Guarantee in Practice,” Center of Full Employment and Equity, University of Newcastle, Callaghan, Working Paper no. 06-15, 2006, http://e1.newcastle.edu.au/coffee/pubs/wp/2006/06-15.pdf.
40 Neera Tanden, et al., “Toward a Marshall Plan for America: Rebuilding Our Towns, Cities, and the Middle Class,” Center for American Progress, May 16, 2017, https://www.americanprogress.org/issues/economy/reports/2017/05/16/432499/toward-marshall-plan-america/.
41 Dylan Matthews, “Why a Romney Economic Adviser Wants the Government to Just Hire People,” Wonkblog, Washington Post, June 10, 2013, https://www.washingtonpost.com/news/wonk/wp/2013/06/10/why-a-romney-economic-adviser-wants-the-government-to-just-hire-people/.
42 Raes, “Basic Income and Social Power.”
43 Quirk, et al., “The Job Guarantee in Practice.”