Stanford scholar explores pros, cons of ‘basic income’

Stanford historian Jennifer Burns said that while political challenges exist to implement a “universal basic income,” this type of measure would protect workers and families against the fluidity of today’s workplace and employment worlds.

Given the flux of American politics right now, an idea like “universal basic income” could gain political traction, a Stanford historian says.

Stanford scholar Jennifer Burns, a research fellow at the Hoover Institution and an associate professor of history in the Stanford School of Humanities and Sciences, says such a program could help protect workers who hit rock bottom in an age of technological disruption.

A basic income – also called basic income guarantee, universal basic income or basic living stipend – is a program in which citizens of a country receive a regular sum of money from the government. Tech leaders Elon Musk and Mark Zuckerberg have floated the idea, and the city of Chicago is considering such a proposal as a way to reduce the disruptions of automation in the workforce.

Jennifer Burns

Jennifer Burns, associate professor of history, says a universal basic income program could help protect workers who have hit rock bottom. (Image credit: Courtesy Jennifer Burns)

Burns researches and writes about 20th-century American intellectual, political, and cultural history and is currently writing a book about the economist Milton Friedman, who supported the idea of a universal income.

 

What would be the benefits of a universal basic income if it were to become a reality?

The most attractive aspect of universal basic income, or UBI, is that it can serve to underwrite market participation, in contrast to other welfare programs that essentially require people to not be employed to receive the benefit. Some programs even require participants to have essentially zero assets in order to qualify. In effect, the programs kick in when people have hit rock bottom, rather than trying to prevent them from getting there in the first place.

 

What are the best arguments against a universal basic income?

The best argument against UBI is feasibility. You may be surprised I do not mention cost. If one multiplies the popular figure for an annual UBI – typically $12,000 a year – by the population of the United States, you get an eye-popping figure of over $3 trillion. The figure varies depending on whether children are included and at what benefit level. However, if you set this against current taxes and transfers, and conceptualize the UBI as a benefit that can be taxed for higher earners, the costs come down significantly.

The real challenge is political. First, there is significant bias against unconditional transfer programs. Most welfare programs in the United States are tied in some way to employment; for example, think of Social Security. Building popular support for a program that breaks this connection between welfare and work will require political leadership of the highest order. And then there is the enormous hurdle of integrating a UBI with the extant institutional and bureaucratic structure of the federal state. For these reasons, we may see a UBI on the state level first.

 

What did Milton Friedman think of the idea of a universal basic income?

Although he didn’t call it a UBI, the idea of a minimum income was the earliest policy proposal Friedman came up with. In his papers, I was astounded to find his first proposal for what he called “a minimum standard of living” written in 1939. This is when he was completely unknown as an economist, although he was clearly already thinking big.  Eventually, he revised it into a proposal for a negative income tax, which was enacted through the earned income tax credit, or EITC, a policy still in place today. The EITC is considered a highly successful program, with well-documented benefits for children in particular. Scholars have also found it serves to increase workforce participation among recipients.

Although he has a reputation as a radical libertarian, Friedman believed there was a clear role for the state in society. In particular, he believed there would always be persons who could not compete effectively in a market economy. He also recognized the role of luck in life, even calling the memoir he wrote with his wife, Rose, Two Lucky People. Whether it was temporary assistance or long-term support, Friedman saw a place for welfare. But Friedman was a great believer in the power of choice. Rather than give poor people specific benefits – food stamps, for example – he favored giving people cash that they could then bring into the marketplace and use to exercise individual choice.

 

Wouldn’t people stop working if they got “free money”?

That’s another common response to the idea of UBI. In most scenarios, the grant would not be enough to forsake paid employment altogether. The idea is that when combined with paid income, a UBI would lift the living standard of even low-skilled, low-income workers. This is why the EITC has been so effective. However, families could pool grants, perhaps enabling several members to leave the workforce altogether. This possibility has proven a point of interest both to conservatives, who point out that current welfare programs often incentivize fathers to live apart from their children, and progressives who want to provide cash benefits to mothers and others providing family care.

Milton Friedman had an interesting take on this issue. William F. Buckley asked him if he wasn’t worried about people taking the money and neglecting their children, etc. Friedman responded: “If we give them the money, we will strengthen their responsibility.” He seemed to be making a point that more recent social science research has fleshed out. Poverty, scholars have found, actually makes it harder to be responsible, to plan, to think about the future. When you are focused on getting enough to eat, or making rent, you don’t have many psychological resources left over to focus on anything else. And, when you can’t pay a traffic fine or afford safe housing, all the other foundations of a good life like steady employment and getting your children an education can also be out of reach.

 

What does the future hold for universal basic income in the U.S.?

If the future of UBI can be gauged from media interest, its future is bright. Also, the idea has attracted an enormous number of high-level supporters. Particularly in Silicon Valley, it’s a genuine fad, attracting adherents from entrepreneurs and tech leaders like Mark Zuckerberg and Elon Musk.

There are two challenges ahead. The first is to spread the basic idea so that it continues to move from fringe to mainstream. The second is to build it into a workable policy with a political base. Given the fluidity of American politics right now, it could be the perfect moment for a policy that is at once utopian, bipartisan and deeply rooted in American thought.

Media Contacts

Jennifer Burns: jenniferburns@stanford.edu

Clifton B. Parker, Hoover Institution: (650) 498-5204, cbparker@stanford.edu