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A Basic Income Should Be the Next Big Thing

Stashed in: @sama, YCombinator, Poverty, Silicon Valley!, EITC, Economics!, Basic Income, Economics, Poverty

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Makes sense to me. 

The rest of the world is taking the lead. 

Switzerland will hold a June 5 referendum on whether to give every adult citizen 2,500 Swiss francs (about $2,600) a month. Ontario, Canada, will conduct an experiment with a basic income later this year. The city of Utrecht in the Netherlands is conducting a pilot program, and Finland is planning a two-year trial. A British proposal is gathering interest. In May, a nonprofit group will start giving 6,000 Kenyans a guaranteed income for at least a decade and follow the results.

Basic-income proposals come in many varieties, and have myriad rationales.

Some progressives see it as the ultimate expression of what a developed economy can achieve: a way to lessen poverty and inequality, and ease the pain of job loss and economic stagnation. But in the U.S., many liberals see it as naive and a distraction from more practical priorities, such as a $15 minimum wage and paid family leave.

For conservatives, the attraction is smaller government. Dozens of social-welfare programs now costing U.S. taxpayers about $1 trillion a year could be folded into a basic-income program, they argue.

With no eligibility criteria or enforcement needed, administrative costs would be bare-bones. Waste, fraud and abuse would be greatly reduced, the argument goes, if not close to zero.

In the 1960s, a basic income was part of the mainstream political discussion. President Richard Nixon even proposed an income floor, based on ideas developed by Daniel Patrick Moynihan, then a domestic-policy adviser. The proposal died in part because of liberal opposition to a work requirement and obstruction by a well-organized welfare lobby, Moynihan would later write.

The earned-income tax credit, a form of basic income, took its place, but only to supplement the earnings of the working poor. The tax credit was first proposed in 1962 by conservative economist Milton Friedman. One of his aims was to end the "earnings cliff," in which government aid disappears once income exceeds a cap. Such a limit discourages recipients from working, a consequence that keeps them poor and dependent.

The tax credit is still around and widely considered an effective anti-poverty program, but the earnings-cliff issue has only gotten worse: The U.S. now has 80-plus low-income programs, each with its own eligibility rules and earnings caps.

The idea of a universal basic income is enjoying a renaissance today, not only in Washington think tanks but in Silicon Valley, as my Bloomberg View colleague, Justin Fox, has written. Y Combinator, a venture-capital firm, is launching a five-year research project, for example. The goal is to give a randomly selected group of people a monthly check to see if they sit around and play video games or create economic value.

Why does Silicon Valley care? It can see the role of technology in accelerating job losses in the U.S. Two Oxford University professors wrote recently that about 47 percent of U.S. jobs are at risk of being replaced by automation. If that happens, the economy would shrink, and fewer and fewer people would be able to buy the goods that Silicon Valley creates.

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