Commentary: Generation Z must fear a guaranteed income | Local
It is a simple and utopian idea. If we give everyone a monthly check, we can eradicate poverty and eliminate the inefficiencies of our cumbersome and flawed welfare state. Minneapolis is the latest city to try a “universal basic income” (RBI). It offers 150 of its low-income residents $ 500 per month for 18 months with no work or expense restrictions.
But others worry that it is not that simple. A universal basic income would be expensive, and if it discourages people from working, which could inadvertently increase inequalities and lead to social instability? A new article suggests that skeptics may be right: UBI can do more harm than good at a very high cost.
Testing UBI is not easy. What makes UBI universal and basic is that everyone gets the money, and the flow of money is predictable and sustainable. UBI advocates report a few experiences that show that giving people checks doesn’t make them work less.
But the Minneapolis experience and other studies aren’t really UBI because they’re short-term; payments only last a year or two. And this impermanence fundamentally changes the way people will react. Most financial and business decisions are based on lifetime income prospects, not a few dozen months of extra cash.
The way the payments are structured is also important. Another widely cited study examines the income paid out each year by the Alaska Permanent Fund. Economists say the payments have not prompted Alaskans to reduce their work and may even encourage beneficiaries to work more part-time. But the permanent fund is also not the real UBI as the payments are based on the state’s oil revenues and therefore vary widely from year to year. So, permanent fund payments actually increase the income risk of Alaskans, which is the opposite of what UBI is supposed to do.