Uncommon Common Sense – February 2014



By Bill Frayer

Public Assistance with Dignity?




Bill-Frayer-2010Leave it to the Swiss. Activists in Switzerland recently organized a referendum vote to decide on what seems to be a rather drastic alternative to public assistance programs: guarantee everyone an income. 

It’s a simple proposal. Every adult citizen would receive a “basic income” sufficient to pay for their necessary living expenses. The Swiss proposal would provide monthly payments of 2500 Swiss Francs, or about $2800US (over $33,000 a year) to provide a safety net for all adults.  Everyone would receive the payment from the state whether they were working or not.   

This may sound preposterous to many people, but it’s not a new idea.  In 1973, Daniel Patrick Moynihan, a Democrat working as Assistant for Urban Affairs in the Nixon administration, proposed what would come to be known as the Family Assistance Plan.  Every family with children, whether there was a man in the house or not, would be eligible for a guaranteed annual cash payment as a way to simplify the fight on poverty.  Surprisingly, the proposal was endorsed by the House Ways and Means Committee with 21 votes in favor (three conservative Democrats against).  It was passed by the House, but was never passed by the Senate.  Later, after much modification, the Earned Income Tax Credit was passed as a much watered-down version of a guaranteed income law.   

By today’s standards, this proposal may seem extremely radical.  Paying people not to work would go against the values of many Americans, liberal and conservative alike. Yet it was proposed by a conservative president. Some conservatives like the idea because it would replace existing government programs.  If you guaranteed every adult a livable income, expensive bureaucratic welfare programs like Medicaid, food stamps, unemployment insurance, housing assistance, disability payments, etc. could be eliminated.  It would essentially get the Federal Government out of the welfare business altogether.  

Liberals would presumably support such a proposal because it would address the poverty issue in an effective and dignified way.  Poor people would be able to live comfortably and would not be stigmatized as they are now.  It would be a huge step towards addressing the income inequality issue as well.    At its basic level, it could be a win-win solution to poverty.  It would enable all people to enjoy a reasonable standard of living while reducing the size and scope of government.  There would be something for everyone to love.   

Of course, to fund such a program, even if existing programs were eliminated, would require additional tax revenue.  There has been much talk recently about simplifying the tax code and eliminating many popular deductions.  It might require the implementation of a VAT, a value added tax similar to what many European countries already use.  It would indeed require those at the highest income levels to fork up more taxes.  This would be reasonable considering the fact that they are paying historically low taxes now.  People don’t like taxes, of course, but would they mind paying taxes if they knew they would have guaranteed economic security for life?   

Of course, the Nobel Prize-winning economist Daniel Kahneman’s research has suggested that people’s decisions about money are not always rational.  It is likely that people would be against this idea, regardless of whether it made economic sense for them, simply because it would be giving money to other people for not working, a moral affront. It would be a hard sell, for sure.  But isn’t it about time we start thinking outside the box?  Thinking inside the box hasn’t been working that well.




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