The Economist - USA (2020-08-08)

TheEconomistAugust 8th 2020 United States 27

C

olette smith and her husband are

bothoutofwork.Theyhadexhausted

theirsavings,whenshereceived aone-

time $1,000 cash infusion as part of a

schemerunbyNeighbourhoodTrust,a fi-

nancialcoachingnon-profit,andHuman-

ityForward, anorganisationdevoted to

building support foruniversal basicin-

come(ubi) foundedbyAndrewYang.ubi

wasthecentrepieceofMrYang’srunforthe

Democratic presidential nomination, in

whichheadvocateda guaranteedincome

of$1,000a month,a “FreedomDividend”,

ashecalledit,foreveryAmericanadult,re-

gardlessoftheirfinancialcircumstances.

Therearetwobighurdlestointroduc-

ingubiinAmerica.Oneisbuildingsup-

portforsomethingthatsounds,tomany,

alarminglysocialist.Theotherisworking

outhowtopayforit.MrYang’scampaign

fortheDemocraticnominationmayhave

failed.Butononeofthesepointshehas

beenwildlysuccessful.ArecentStanford

studyshowedthatpeoplearewarmingto

theubiidea.InApril88%ofliberalsbacked

it,whilesupportamongconservativesrose

from28%beforecovid-19to45%.Universal

benefitscanbeeasierforpoliticianstosell,

becausetheyarelessvulnerabletothera-

cialpoliticsthathaveunderminedsupport

forwelfarespendinginthepast.

Dreamsofaubihavea peculiarhistory

inAmerica.In 1967 a coalitionofwelfarere-

cipients,ledbyAfrican-Americanwomen,

demanded“decentincomeasa right”.Mar-

tinLutherKingwroteaboutitinhisfinal

book.Attheotherendofthepoliticalspec-

trum,DonaldRumsfeldandDickCheney

drewupaguaranteedminimum-income

proposalforPresidentRichardNixon.Mil-

ton Friedman and Friedrich Hayek, be-

lovedoflibertarians,wereenthusiaststoo.

Morerecently,ubihasbeentakenupby

technologists who believethat software

willleavea largenumberofAmericansjob-

less,leadingtosocialunrest.Ithasalso

beenpromotedbysomeoftheorganisa-

tionswhichmakeuptheBlackLivesMatter

movement,whoseeit asa waytomendra-

cialdisparitiesinwealth.

MrYangpointsoutthattheapproval

ratingforubiwasonlyabout25%whenhe

beganhispresidentialrun,butbythetime

heendedit,inFebruary,itwas66%.“The

energyarounduniversalbasicincomehas

skyrocketed,andit’sgoingtoremainele-

vateduntila billpasses,”saysMrYang,who

believesthejoblossescausedbycovid-19

willnotquicklybereversed.InJuneJack

Dorsey,Twitter’sboss,gaveMrYang’sorga-

nisation$5mtobuildthecaseforubi.

Funding a generous ubi has always

seemedimpossible.Butmanyseemingly

impossibleeconomicpolicieshavebeen

enacted recently, opening the door to

wackierideas.UnderAmerica’seconomic-

stimulusplantodealwiththefalloutfrom

thepandemic,forexample,Congresssent

$1,200toeveryadult.Theschemewasso

generousthat, combinedwith extended

unemploymentbenefits,aggregatehouse-

holdincomeisforecasttorisethisyear.

InMaymorethandozencities,includ-

ingAtlanta,LosAngeles,NewarkandSt

Paul, along withthe EconomicSecurity

Project,launchedMayorsfora Guaranteed

Income,a networkofmayorsexperiment-

ingwithubi-likeschemes.MrDorseyhas

alsogivenmoneytothisgroup.InFebruary

2019 Stockton, California, began an 18-

monthexperimenttogive$500to 125 ran-

domlyselectedpeople.Thisisbeingex-

tendedforanothersixmonthstohelppar-

ticipantsweathertheslump.

InJackson,Mississippi,theMagnolia

Mothers’ Trust provides poor African-

American mothers with $1,000 in cash

monthly,nostringsattached,fora year.It

recentlybegana largerexperimentwith 75

moreparticipants.Hudson,a smallcityin

upstateNewYork,recentlyannounceda

five-yearschemetogivea monthly$500

payment to 20 people. In Newark, New Jer-

sey, Ras Baraka, the mayor, is hoping to get

a pilot programme up and running. A third

of Newark’s residents live in poverty and

have to make tough decisions, Mr Baraka

says, like “heat or eat.” Nearly 60% of New-

ark households carry delinquent debt. But

to introduce a proper ubiin Newark, he

says, would require federal funding.

For all the enthusiasm about ubiex-

periments, they remain problematic. It is

hard to fully evaluate their effect because

they are not universal (in the sense of re-

ceived by everyone). Most take the form of

occasional cash payments to poorer Amer-

icans. Nor are they generous enough to live

on, which is what true ubibelievers advo-

cate. Finally, because they tend to be fund-

ed by philanthropy, the experiments do not

factor in the substantial tax rises that

would be needed to pay for them.

The proposal Mr Yang ran on would

have cost $2.8trn annually, which is about

what the federal government spends each

year on Social Security (pensions), Medi-

care (health care for the elderly) and Medic-

aid (health care for the poor) combined.

Even then it would provide adults with no

more than $12,000 a year—not enough to

lift a workless family with two adults and

two children above the federal poverty line.

A more targeted effort that did not aim

to be universal could do much more on that

score. Ms Smith, along with 1,000 other

residents of the Bronx, received a one-off

$1,000 grant from Mr Yang’s outfit. This al-

lowed her to buy food and to restore the in-

ternet, which her 14-year-old son needed

for remote learning. This helped a great

deal. But ubiadvocates still have to explain

why it would not be better to give families

such as hers larger sums rather than a

smaller payment that also goes to those

who do not need it. 7

NEWYORK

Guaranteed-incomeschemesgainmomentum,thankstoAndrewYang,covid-19

andAmerica’smayors

Taxingandspending

Fromunthinkabletouniversal

Radical policies for radical times