Switzerland may become the first country to guarantee one by providing all adults about $2,800 each month. Danny Vinik thinks it’s an idea worth importing:
The clear [benefit] is that no American would live below the poverty line. The U.S. has been waging the War on Poverty for a generation now and still nearly 50 million Americans are below the line. This would end that war with a decisive victory. There are knock-on effects as well. Americans would have greater leverage to demand higher wages and better working conditions from their employers thanks to the increased income security. Families could allow one parent to take time off to raise their kids. Eliminating the numerous different government welfare programs would also lead to efficiency gains as adults would simply receive their check in the mail and not have to waste time filling out paperwork at numerous different offices. …
Economists have long shuddered at the thought of a basic income, because it strongly disincentives work. However, a basic income is just that: basic. Most adults would continue to work to earn extra money. The employment effects would not be non-existent and there may be an increase in part-time work. As Lowrey points out, different studies have found the disincentive effects on work are not as strong as economists feared.
McArdle is rightly skeptical:
Consider the cost of real estate, one of the sore points in Switzerland, where there isn’t a whole lot of flat land to build on. In that, Switzerland is a bit like my own home city of Washington: it’s a small area attracting a lot of new, more-affluent residents (wonks and lobbyists, in Washington’s case; international finance types for Switzerland). Many of the poorer residents don’t make enough to compete in the new bidding wars, and they don’t like it one bit.
But suppose we gave everyone in Washington a check for $2500 a month. Would that make it easier for the old residents to get nicer apartments? Not really, because everyone would be getting that check. Poorer residents would have another $2500 to commit to the housing bidding war, but so would the wealthier residents. Unless the $2,500 actually created a larger supply of housing — and that’s as much a matter of planning regulations and building codes as of demand.
She also worries what effect it would have on immigration:
[A] substantial basic income is simply and obviously incompatible with making it relatively easy for people from poor countries to become citizens. A path to citizenship for legal immigrants is one of the foundational values of American society; we are Americans because we are born here or we choose to come here, not because of some ethnic heritage. We couldn’t get rid of it even if we wanted to; the idea that anyone born on American soil is an American is enshrined in our constitution. And of course, if you had to choose between a basic income, and relatively easy immigration, the choice is obvious — at least if you’re interested in improving human welfare.
Alec Liu argues that “the problem, as with many issues economic, is that there is no historical precedent for such a plan, especially at this scale.” However, he concedes a few “isolated instances” of governments providing a minimum income:
Similar plans have been proposed in the past. In 1968, American economist Milton Friedman discussed the idea of a negative income tax, where those earning below a certain predetermined threshold would receive supplementary income instead of paying taxes. Friedman suggested his plan could eliminate the 72 percent of the welfare budget spent on administration. But nothing ever came to fruition.
It’s what makes the potential experiment in Switzerland so compelling. Developed countries around the world are struggling to address the issues of depressed wages for low-skilled workers under the dual weight of automation and globalization.
The Dish 