OCTOBER 20 20 FORBES.COM
19A Paycheck for Everyone?
FACT & COMMENT
By Steve Forbes, Editor-in-Chief“With all thy getting, get understanding”It’s called universal basic income, and
the idea is gaining ground here and in Eu-
rope, especially with Covid-19 hitting econo-
mies so hard. The government would pay ev-
ery adult a certain amount of money every
month, whether you work or not. Democrat-
ic party activists love the idea. So do some
Republicans. The Pope came out in favor of
the notion. A candidate for the Democratic
presidential nomination, Andrew Yang, ad-
vocated paying every adult $1,000 a month.
He didn’t win, but his idea is catching on.
Italy has a minimum-income measure that
tops up one’s income if it falls below a certain level. Spain is
mulling over something similar.
While Yang’s proposal sounds enticing—who wouldn’t
want an extra $12,000 a year?—it would do real harm.
Let’s make clear that we are not talking about such safety-
net programs as food stamps, unemployment benefits or
Medicaid. A guaranteed income would be corrosive to peo-
ple’s work ethic, especially as politicians raised the bene-
fits whenever elections rolled around. It would eat away at
the crucial link between effort and reward and would lure
many people away from pursuing more productive lives.
This is wrong, morally and economically.
Work is critical to making our lives meaningful. It gives
us purpose. It provides structure and encourages discipline,
helping us to look beyond the immediate moment and think
Every Drop of Blood: The Momentous Second Inaugu-
ration of Abraham Lincoln—by Edward Achorn (Atlantic
Monthly Press, $28). Abraham Lincoln’s second inaugural ad-
dress, delivered March 4, 1865, is the finest speech in Ameri-
can history, the only possible exception being his Gettysburg
Address. President Lincoln surprised all by not being trium-
phant over having kept the nation together after a terrible
war and by not outlining his postwar policies. No rousing pa-
triotic oration here. Instead, in 700 often harrowing words,
Lincoln told the nation that this horrific conflict was God’s
punishment for the original sin of slavery and that both
North and South were guilty parties:
“Fondly do we hope—fervently do we pray—that this
mighty scourge of war may speedily pass away. Yet if
God wills that it continue until all the wealth piled by the
bond-man’s two hundred and fifty years of unrequited
toil shall be sunk, and until every drop of blood drawn
with the lash shall be paid by another drawn with the
sword, as was said three thousand years ago, so still it
must be said ‘the judgments of the Lord are true and righ-
teous altogether.’ ”
Now was the time for mercy and reconciliation, not hate
and vengeance. To Lincoln, the Civil War was one of transcen-
dental importance, a momentous test of whether a nation
based on the consent of the governed could endure.
Lincoln was not a churchgoer, and more than once during
his life he expressed skepticism about religion. He loved read-
ing the King James Bible, not for reasons of faith but because,
as Achorn puts it, “To him it was a practical source of enlight-
enment, a moving, beautifully written, profoundly wise book,about the future. It encourages the can-do
spirit that is unique to the American culture.
Work produces the resources that we con-
sume and the innovations that improve our
standard of living.
Then there are the major practical prob-
lems of implementing such a program. It
would be hideously expensive. It’s estimated
that Yang’s scheme would cost $3 trillion a
year. He would impose a 10% national su-
persales tax on top of all the other taxes you
pay. And, realistically, that rate would have
to be considerably higher. A car that current-
ly costs $30,000 would set you back $35,000 to $40,000
under Yang’s plan.
These new and very heavy tax burdens would damage
the economy by destroying capital, thereby hurting the pro-
ductive investments that are essential for higher incomes
and a better standard of living. A stagnant economy would
worsen opportunity and exacerbate inequality.
A more constructive approach would be to reform and
expand the Earned Income Tax Credit, which is, in effect,
a rebate of the payroll tax. This would give lower-income
individuals higher take-home pay, tax-free.
And creating the conditions for a booming economy—
such as tax cuts—would be the most beneficial plan of all.
Remember, before Covid-19, the pay of lower-income work-
ers was rising at a faster pace than that of anyone else.An Impressive History and a Great Adventure