Universal Basic Income: The Fruitful River Eroding Cliffs
In the status quo, people around the world live in a system of inequality where they are broadcasted the false promise of security through welfare systems. Instead, they are forced into a system in which millions are condemned into the brutal cycle of poverty, chained by a lack of alternatives. Thankfully, innovative fiscal policies can serve as a key to escaping these terrible effects. One such policy is a Universal Basic Income which is “an unconditional, periodic cash payment that the government makes to everyone,” (Investopedia). A UBI would play a powerful role in reforming global governmental policies as it provides economic prosperity and equality where current welfare systems have failed.
It is integral to not deliberate the positives and negatives of a universal basic income in a vacuum, wherein it is compared against no existing economic safety net. In reality, the nations that are most able and willing to consider implementing UBI already have welfare systems. A comprehensive analysis of UBI ought to contrast it with such systems. Many would argue that a means-tested welfare system is superior to a universal basic income as it can target those who need help most, and avoid spending money on those that can live prosperously with their income. Unfortunately, determining a fiscal threshold for who ought to receive welfare remains relatively arbitrary. The United States serves as an example of the extreme shortfalls of means-testing.
Despite being targeted at those in poverty, means-tested welfare in the United States doesn’t come remotely close to actually helping everyone who needs it. Due to the complexity of filing for support and proving necessity, many are locked out of integral welfare. Scott Santens of TechCrunch finds in 2016, only about one in four American families living underneath the federal poverty line received fiscal welfare through the Temporary Assistance for Needy Families program (Santens). And it isn’t just discretionary income that impoverished Americans are being rejected from. The Organization of Health Insurance reported in 2019 that in states that haven’t expanded Medicaid, able-bodied adults without dependent children are rendered ineligible for health-based welfare regardless of how low their income remains (OHI). So it’s no surprise that Professor Leah Hamilton, President of the North Carolina ACLU, calculated that 1.46 million US households, including 2.8 million children, live on less than $2 per person, per day (Hamilton). Under the current system, a majority of Americans who try to apply for welfare are outright denied, forcing them to stay trapped in poverty without assistance. Acknowledging that people are unfairly prevented from obtaining welfare en masse indicates that we need a fundamental change in the way governments support their citizens. A system like UBI, that unconditionally benefits citizens, sidesteps this logistical nightmare.
Even for those who do receive assistance, welfare systems still exacerbate the catastrophe rather than solve it. Those that do currently receive welfare are trapped in their current economic situation due to the fear of losing fiscal support. Experts call this phenomenon, “the cliff effect,” in which a citizen will be immediately cut off from all welfare if their income exceeds an insufficient fixed level. Director of the Center for Social Policy in the University of Massachusetts Susan R. Crandall examines that oftentimes, low-wage workers depend on public benefits that are only available to people in need to manage their expenses and sustain their families well-being (Crandall). Means-tested programs like Medicaid and housing vouchers closely monitor one’s fiscal situation in order to determine whether they can continue to stay members of the respective program. Unfortunately, this means that if a person succeeds in earning more to improve their life, they may boost their income to the point where they lose access to some or all of those benefits: trapped in a middle ground where they are not completely self-sustainable, but also cannot receive welfare. This is not just an economic theory, but rather a guiding principle that hurts real people.
Josie, a secretary who receives housing assistance under welfare worries, “My supervisor wants to promote me,” “[but] If my pay goes up, my rent will go up too. I don’t know if I’ll be able to afford my apartment,” (Crandall). Worse, Americans like Josie are not only punished for promotions, but oftentimes lose the ability to even pursue employment. Professor Hamilton finds that in states with strict limitations on recipient assets, some only allowing up to $1,000 worth, impoverished families are far less likely to own a vehicle, making it nearly impossible to remain employed in regions lacking public transportation (Hamilton).
Ultimately, three-fourths of Americans presently living in poverty are excluded from fiscal welfare, and out of the remaining Americans, millions have lost all chance of economic mobility and are trapped in a system where they will never have the chance to seek a better life. Through a wider lens, we see this alarming trend reflected around the world. Fortunately, under a universal basic income, the global poor are not excluded. A universal basic income helps everyone, without cutting off assistance to those attempting to improve their economic condition and escape the poverty trap.
With so many in extreme poverty, it becomes clear that means-tested welfare is tenuous and unreliable, two horrible qualities when determining social programs that directly impact quality of life and a family’s ability to feed their children and keep a roof over their heads. Luckily, a universal basic income directly solves our issues. A UBI inherently addresses the cliff effect by ensuring that every citizen of a nation can gain access to a basic income. Thus, none can be cut-off from the cash flow when exceeding a certain amount. In addition, bureaucratic failures plaguing our current welfare system can be essentially eradicated due to the far greater simplicity in implementing a universal basic income. An unconditional income ensures that families do not need to stress about meeting every condition and stipulation (with the paperwork to boot). Means-testing is most certainly well-intentioned, but a universal basic income is far superior in effectively helping every person that needs assistance without trapping them in poverty.
