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Looking for the next big political idea? How about this: Let’s scrap our entire social welfare system, including all of our anti-poverty programs, unemployment insurance, Medicare and even Social Security. In its place, just send every American a no-strings-attached check for enough money to ensure that no one falls below the poverty line.
Controversial? Absolutely. Politically explosive? Almost certainly. Crazy? Maybe not. In fact, a growing and diverse group of people from across the political spectrum have been debating just such an approach to revamping the safety net.
The latest is Facebook founder and CEO Mark Zuckerberg, who told graduating Harvard students last week that we should blow up the existing New Deal-based social contract and replace it with a universal basic income (UBI). To be sure, there is a fair degree of self-interest in the tech community’s call for a universal basic income. There has been growing concern in some arenas that advances in automation and artificial intelligence could lead to widespread job loss, especially for low-skilled workers.
But there may be other reasons to consider replacing the existing welfare state with a universal basic income. The most obvious one is that current welfare programs have so clearly failed to help people escape poverty.
The federal government currently funds more than 100 separate anti-poverty programs, at an annual cost of nearly $700 billion per year.
Finally, and perhaps most importantly, a UBI would provide far better incentives when it comes to work, marriage and savings. Because current welfare benefits are phased out as income increases, they, in effect, create high marginal tax rates that can discourage work or marriage. In contrast, a universal basic income would not penalize someone who left welfare for work.
Advocates of free markets and welfare reform should not dismiss the idea out of hand. The current welfare state is a clear failure. A universal basic income may or may not provide a better alternative, but it’s almost certain we will hear a great deal about in the next few years.