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Universal Basic Income Might Fix Our Broken Welfare System — Give It the Serious, Scholarly Debate It Deserves

March 23, 2019 in Economics

By Michael D. Tanner

Michael D. Tanner

One of the most controversial ideas in political circles today
is a Universal Basic Income (UBI). If Newark, New
Jersey Mayor Ras Baraka has his way, his state will be at the
center of the debate.

Baraka announced last week that Newark will soon launch a pilot program to study the
impact of a UBI on the city’s poverty rate. Unfortunately, he
provided few details for his plan, making it difficult to
evaluate.

The idea of a UBI has drawn increasing interest from both the
left and right as either a replacement or supplement for our
existing welfare system. It calls for everyone to receive a cash
grant from the government without any strings attached. The same
check would be available to rich and poor, working or not.

This idea is not as crazy as it initially sounds.

The taxes necessary to
fund such a program would crush any hope for Newark’s economic
revitalization.

The one thing experts from across the political spectrum agree
on is that our current welfare system fails to help people escape
poverty, become self-sufficient and flourish as full participants
in society.

Federal, state and local governments spend roughly $1 trillion
every year on anti-poverty programs, yet cities like Newark are not
thriving. Maybe it’s time to consider a different approach.

A UBI has several things to recommend it over traditional
welfare.

First, a UBI would be far simpler and more transparent than the
current hodgepodge of more than 100 existing federal and state
programs. With overlapping and often contradictory eligibility
levels, work requirements and other restrictions, our existing
welfare system is a nightmare of unaccountability.

Second, a UBI is far less paternalistic than traditional
welfare, which often treats the poor like 10-year-olds receiving an
allowance. Rather than provide them with cash — which is what
poor people actually need — we dole out a variety of
specialized benefits, such as food, housing and health care.
Government decides how the poor should budget and spend their money
— not the poor themselves.

Perhaps most importantly, our current welfare system gets the
incentives wrong. For example, it discourages work and marriage.
The nation’s highest marginal tax rates are not on the wealthy, but
on a poor person who leaves welfare for work. The loss of benefits,
combined with taxes and the cost of employment, can leave some
people worse off financially if they take a job.

A UBI could solve many of those problems. That’s why some
version of the idea has drawn interest from diverse ideological
bedfellows, including American Enterprise Institute scholar Charles
Murray, Facebook CEO Mark Zuckerberg and Sen. Cory Booker, D-N.J.
Booker …read more

Source: OP-EDS