The Power of Universal Basic Income.

This is the introduction to my full report titled the Legal, Economic, and Moral Potential of Universal Basic Income. If you are interested in learning more, or have any questions please do not hesitate to contact me!

On December 15, 2017, Philip Alston, the United Nations Special Rapporteur on extreme poverty and human rights, published a report centered on the income and wealth disparity in the United States. Alston, citing data from the Stanford Center on Inequality and Poverty, noted in his report, “in terms of labor markets, poverty, safety net, wealth inequality, and economic mobility, the United State comes in last of the top most well-off countries, and 18th among the top 21.” Over the course of his research, Alston met with “senior state and federal government officials and talked with many people who are homeless or living in deep poverty.” Depressingly, the United States’ economic prospects would not see a positive change after Alston’s visit and report.

Alston’s visit coincided, ironically, with a dramatic, negative change in United States economic policy, the Tax Cuts and Jobs Act (TCJA). Shortly before it pass into law, Alston said, “[t]he proposed tax reform package stakes out America’s bid to become the most unequal society in the world, and will greatly increase the already high levels of wealth and income inequality between the richest 1% and the poorest 50% of Americans.” Despite Alston’s condemnation, President Trump signed the tax reform bill into law just five days after Alston’s report was published. After the TCJA was passed, the Brookings institute also analyzed its potential impact. The institute came to the same conclusion as Alston. The legislation will “make the distribution of after-tax income more unequal. . . raise federal debt and impose burdens on future generations. . . making most households worse off. . .” The passage if the TCJA was further evidence of Alston’s and other experts’ contention that while there exists “no magic recipe for eliminating extreme poverty. . . [b]ut at the end of the day. . . in a rich country like the USA, the persistence of extreme poverty is a political choice made by those in power.” (emphasis added). If poverty is a political choice, then, we the people of this nation only need act upon them via our representation. In this paper, I will introduce one such solution to systemic poverty, one with great potential a Basic Income for all citizens.

We live in an economically unequal society. The issue becomes apparent while comparing the economic holdings of the Baby Boomer generation to the Millennial generation. Baby Boomers, defined as people born between 1946-1965, and Millennials, as people born between 1981 and 1996, own vastly different amount of wealth. The Federal Reserve conducted a study entitled, “Distribution of Household Wealth in the U.S. Since 1989,” which calculated the wealth distribution between the four major living generations. Graph 1, a visual display of the Federal Reserve’s study, contrasts the four majors, living generations’ aggregate wealth per quarter starting in 1989. Each point represents how much wealth was owned by that generation at that quarter. Even though the generations are at different stages of life, comparing and contrasting wealth ownership by generations shows the wealth disparity between the generation, and, particularly, how Millennials (and Gen X to a lesser extent) have struggled and are struggling to accumulate wealth.

Comparing Baby Boomers at age 35 to Millennials today reveals a relatively shocking result. At age 35, Baby Boomers owned 21 percent of wealth in the United States, however, Millennials, whom have an average age of 32, own only 2.9 percent of the wealth in the United States. That means that Baby Boomers—at roughly the same age—owned more than seven-times the wealth than do Millennials today. This difference reveals a fact that over the years, wealth and income disparity has grown; Millennial’s own less than 2.9 percent of wealth while Baby Boomer’s today own over 57 percent. Notably, the graph reveals that the wealth of Millennials’, just entering their 40s, wealth peaked in quarter three of 2018 at just 3.1 percent wealth owned, despite making up almost 25 percent of the total population. While there are many causes for the disparity, Millennials, Gen X, and the newest generation reaching adulthood Gen Z, are understandably frustrated. These generations openly opine for swift and efficient wealth redistribution. Basic Income could be the hoped-for and desperately needed method of wealth redistribution. As I will show, Basic Income is both legally and economically feasible.

At this point in their lives, Millennials are no longer children, and the majority are no longer students, or part-time employees. Rather, they are getting deep into careers, starting or maintain families, and are attempting to make capital intensive investments such as buying real estate, starting businesses, or purchasing vehicles for commercial or family use. However, an invisible ceiling, an upper limit, on attainable wealth has capped Millennial’s upward mobility. This cap ensures Millennials and younger generations will never own as much as their parents or grandparents. What is worse is there is real floor to how poor one can be in the United States. While most economists concur that this wealth inequality is due, in part, to racial and educational inequalities, further contributing factors include incomes not rising in half a century while, at the same time, the costs of housing, school, and healthcare have all increased. The harmful nature of the wealth cap—the inability to amass wealth--does not only effect Millennials; increased costs of living in tandem with wages stagnation detrimentally impacts the poor regardless of generation. The detrimental effects on display in Graph 1, clearly show that the wealth cap has impacted Generation X, who as of 2019, still own less than the Silent Generation and Baby Boomers.

Wealth redistribution could solve many issues tied to economic standing, and it would improve the economic future of the United States. Today, fear of job loss due to automation, exacerbated by the internet’s ability to allow firms the ability to replace or change many current places of employment is, unfortunately, not as unlikely as once thought. Increasingly, scholars are publishing articles warnings about how jobs are and will be replaced with “new digital technologies and artificial intelligence,” which will “make it possible to minimize the need for many jobs currently providing wide employment.” To account for the issue of job loss, many economists, philosophers, and political theorists have offered a myriad of Basic Income schemes ranging from as little as 63 euro per week ($284.76/month) to $1,000 per month.

Support for Basic Income in not a new concept. Indeed, in his pamphlet entitled Agrarian Justice, which was published in 1797, Thomas Paine, offered his ideas for a Basic Income dubbed the “citizen’s dividend” in his pamphlet titled Agrarian Justice. Paine proposed a one-time payment by the State to every person when they turned 21; and that every person age 50, and all other who arrived at that age be paid 10 pounds annually for the rest of their lives. Paine imagined a system of wealth distribution based on commonly produced commodities such as natural resources or accumulated knowledge, a revolutionary concept. Paine was ahead of his time, he frequently professed and promulgated revolutionary ideas. Famous revolutionary John Adams once said, “without the pen of the author of Common Sense [Paine], the sword of Washington would have been raised in vain.”

Similarly, other economists, philosophers, and political theorists of the past have proposed their version of Basic Income such as: Milton Friedman’s negative income tax (NIT), Friedrich Hayek’s guaranteed minimum income, and Martin Luther King Jr.’s guaranteed income proposal. , , Furthermore, this support for Basic Income has again surfaced. Most recently and noticeably by former presidential candidate Andrew Yang. Yang proposed what he called the “Freedom Dividend,” or, “Universal Basic Income” (UBI), which would give $1000 a month to all United States citizens eighteen years and older.

This paper will provide a critical analysis and overview of the feasibility of Basic Income schemes. Hopefully in reading this paper, you gain a better understanding of the potential, and desperate need for, a Basic Income, as well as a desire to overcome the hurdles and pitfalls ahead. It feels appropriate to close this introduction with the words of revolutionary Thomas Paine:

“Perhaps the sentiments contained in the following pages, are not YET sufficiently fashionable to procure them general favour; a long habit of not thinking a thing WRONG, gives it a superficial appearance of being RIGHT, and raises at first a formidable outcry in defense of custom. But the tumult soon subsides. Time makes more converts than reason.” 

 Please contact me with any questions! Implemeting a Basic Income is not a matter of feasiblity, it only requires the political will. If we fight for Basic Income we can seize it, the poor will recieve protections from homlessness, starvation, education-deserts, and will be able to move upwards. Even, what being poor means could be redefined.  Together we can make Basic Income a reality. Together we can ensure the continued sucess of our great nation but, more importantly, we can ensure that stability and happieness spread to all families in our tired, overworked country.  

Banned credit: https://www.wired.co.uk/article/universal-basic-income-y-combinator-andrew-keen