Should the Government Give Everybody Money?

If you go by the rhetoric exchanged in the current presidential race, you’d think poverty was a phenomenon invented in the last fifty years – or maybe just the last eight years. Ask the Democrats, and they’ll swear Wall Street created poverty. Ask the Republicans, and they’ll insist Bernie Sanders has recently reclassified middle-class Americans as poverty-stricken just so they can get free college tuition for their kids.

But anybody who’s read a Charles Dickens novel, seen or read Les Misérables—or the Bible—knows poverty has been around as long as humankind has. But in this current debate it also depends on how you define who’s poor, and who’s not.

According to New York Times economic columnist Eduardo Porter, the official poverty line logs in at twenty-five thousand dollars a year for a family of four (actually $24,300 according to 2016 guidelines, slightly higher for Alaska and Hawaii). Below that line, you’re poor.  Above it, you’re apparently either middle class or rich.

In that same article, Porter takes up the long-mulled-by-economists question of whether it makes sense for the government to just write a check to everybody.  Proponents of the idea, like The Global Basic Income Foundation, claim such a strategy, if implemented worldwide, will eliminate poverty. Others, like Harvard professor and former Secretary of the Treasury Lawrence Summers and Porter himself, feel, even for the United States alone, the idea is ill-advised and unworkable.

For a planet of a hundred and ninety-six countries with diverse resources and per-capita incomes, it’s difficult to discuss the issue in any way that’s not absurdly hypothetical. But we do have enough information to entertain such a “Universal Basic Income,” the current phrase for such a subsidy – as a possibility for us here in the States.

Much as the mouth waters at the thought of a fat check in the mail, think of what it would mean.  A truly “Universal” Basic Income program means not just the poor receiving a regular government check, but everybody– you, me, Bill Gates, actor Matt Damon, plus the CEO of the company who ripped you off on your last online purchase—and we’d all get the same amount.

Just imagine the elegance of it all! No more political arguments about who deserves what and why, and no more shame and stigma targeting one economic class of people.  We’re all in this together – right?

Not so fast, cautions Porter. He insists the happy-money scheme won’t work because there’s just not enough money in the U.S. kitty: “Where would that money come from? It amounts to nearly all the tax revenue collected by the federal government. Nothing in the history of this country suggests Americans are ready to add that kind of burden to their current taxes.”  Plus, if you had to pay more taxes it kind of cuts into the whole “free money” thing, doesn’t it?

Additionally, Porter points to insights from Harvard scholar, Lawrence Katz, who wrote that work isn’t simply a matter of earning a living; it’s a way we organize our lives, define ourselves, and measure our progress. Our government can’t legislate its citizens’ psychological development by issuing checks.  Nor can citizens feel secure or accomplished by receiving them.

Perhaps another problem with the scheme is how we define poverty, and how we view our personal resources.  Of course income is basic to any definition of poverty.  Still, what about assets?

If a self-made billionaire loses her four-and-a-half-billion-dollar fortune in one year, is she now poor?

If you have no income, and your rich uncle dies and leaves you his million-dollar house, are you still poor?

Now think of some not-so-distant future when Universal Basic Income is the law of the land.  If your government check buys only half of what bought five years earlier (and you’re five years older, with associated escalating healthcare needs), and your only asset is the several hundred ounces of physical gold you’ve accumulated over the years, are you still poor? (Hint: No, no you’re not…)

All food for thought.