In Our Hands

1. Universal Basic Income (UBI) as a replacement for the welfare state

The solution is to give the money to the people.

Revolutionary concept. The UBI proposes a radical shift in social policy by replacing the current welfare state with a single cash payment to all adult citizens. This approach aims to address the inefficiencies and complexities of existing transfer programs while providing individuals with greater autonomy and responsibility.

Key features:

• $13,000 annual grant for every adult citizen aged 21 and older
• $3,000 of the grant must be used for catastrophic health insurance
• Progressive surtax on incomes above $30,000
• Elimination of all existing welfare programs, including Social Security, Medicare, and Medicaid

The UBI simplifies the system, reduces bureaucracy, and puts decision-making power directly in the hands of citizens. It offers a potential compromise between libertarian ideals and social democratic goals, aiming to provide a safety net without the drawbacks of the current welfare state.

2. UBI's financial feasibility and potential cost savings

A universal basic income of $13,000 a year for every adult American system is not only within our reach. It is cheaper than the system we have in place and will become much cheaper in the years to come.

Economic viability. The UBI proposal is not just a theoretical concept but a financially feasible alternative to the current system. By consolidating existing transfer payments and eliminating administrative overhead, the UBI could potentially save billions of dollars annually.

Key financial aspects:

• Total cost of UBI in 2014: $2.58 trillion
• Cost of current transfer programs in 2014: $2.77 trillion
• Projected savings by 2020: $931 billion

The UBI becomes increasingly cost-effective over time due to demographic changes and the rising costs of current programs. This financial advantage makes the UBI a compelling option for policymakers seeking to address long-term fiscal challenges while maintaining support for citizens.

3. Ending involuntary poverty through UBI

The UBI lowers the rate of involuntary poverty to zero for everyone who has any capacity to work or any capacity to get along with other people—which means just about everybody.

Eliminating destitution. The UBI provides a universal income floor that ensures no one falls below the poverty line involuntarily. This approach addresses poverty more effectively than the current system, which often leaves gaps in coverage.

Impact on poverty:

• Guaranteed minimum income of $10,000 per year (after health insurance)
• Couples receive $20,000, allowing them to surpass the poverty threshold without working
• Working individuals can easily exceed the poverty line with minimal employment

The UBI's universality ensures that no one is left behind due to bureaucratic complexities or eligibility requirements. It provides a foundation for financial stability while maintaining incentives for work and personal responsibility.

4. UBI's impact on health care and retirement planning

Suppose that our young man gets the average for the most recent 45-year period, a 6.1 percent annual real return over that 45 years. In that case, his accumulation will be about $829,000, purchasing an annuity worth about $57,000 per year.

Financial security. The UBI fundamentally changes the approach to health care and retirement planning by providing individuals with more control and potentially better outcomes than the current system.

Key benefits:

• Mandatory catastrophic health insurance ensures basic coverage for all
• Freedom to choose additional health care options based on individual needs
• Potential for significantly higher retirement income through personal investment

By requiring catastrophic health insurance and providing cash for additional coverage, the UBI creates a more flexible and potentially more efficient health care system. For retirement, the UBI allows individuals to potentially accumulate more wealth than they would receive from Social Security, even with conservative investment strategies.

5. Addressing the underclass and work disincentives

The UBI does not exhort the young man to go out and get a job. It does not urge the young woman to delay childbearing. It does not do anything that tries to stage-manage their lives.

Empowering choices. The UBI approach to social issues differs fundamentally from traditional welfare programs by providing resources without dictating behavior. This strategy aims to address underclass issues and work disincentives through individual empowerment rather than top-down management.

Potential effects:

• Reduced births to single women under 21 due to changed economic incentives
• Increased economic pressure on young men to contribute to child support
• Greater flexibility for individuals to pursue education or start businesses

The UBI's non-prescriptive nature allows individuals to make choices based on their circumstances and aspirations. This approach may lead to more sustainable behavioral changes and social mobility than directive welfare programs.

6. Revitalizing civil society: work, family, and community

The existence of vital, extensive networks of voluntary associations engaged in dealing with basic social needs benefits all of us for two other reasons.

Social renewal. The UBI has the potential to reinvigorate key institutions of civil society by returning responsibility and resources to individuals and communities. This shift could lead to a more vibrant and engaged society.

Areas of impact:

• Work: Greater flexibility to change jobs or pursue vocations
• Family: Increased financial stability for married couples and support for stay-at-home parents
• Community: Revival of voluntary associations and local problem-solving

By reducing dependence on government programs, the UBI could foster a renewed sense of personal and community responsibility. This change might lead to more diverse and effective solutions to social problems, tailored to local needs and values.

7. The pursuit of happiness in an age of plenty

The real problem for most people in advanced societies has nothing to do with the historic ills of poverty and injustice. Those are on the road to being solved. For most people today, the problem is how to live meaningful lives in an age of plenty and security.

Existential challenge. As material needs are increasingly met in advanced societies, the focus shifts to finding meaning and purpose in life. The UBI addresses this challenge by providing resources that allow individuals to pursue fulfilling activities beyond mere survival.

Components of happiness:

• Intimate relationships with other human beings
• Vocation or self-fulfillment
• Self-respect

The UBI facilitates the pursuit of these components by providing a financial foundation that allows individuals to take risks, invest in relationships, and engage in meaningful work or activities. This approach aligns with the evolving needs of society as it moves beyond basic material concerns.

8. Transitioning to UBI: political feasibility and implementation

Even just 16 years away from retirement, after having paid the maximum into Social Security and Medicare since their first job, the choice between moving to the UBI or staying in the current system is likely to be close even if the government offers no compensation at all for giving up their right to Social Security and Medicare benefits.

Practical transition. While the UBI represents a significant change from the current system, its implementation could be more feasible than it initially appears. Many individuals, even those close to retirement, might benefit from switching to the UBI system.

Transition considerations:

• Option for individuals to choose between UBI and current system
• Potential benefits for middle-aged and older workers under UBI
• Gradual implementation to address concerns and adjust as needed

The transition to UBI could be managed through a voluntary opt-in system, allowing individuals to make choices based on their circumstances. This approach could build support for the system over time while addressing concerns about disruption to existing benefits.

Last updated: September 23, 2024