Editor’s note: This article was first published in November 2013. The Swiss basic income initiative went to a referendum in June 2016 and was rejected by a large majority, so “it will depend on the result in Switzerland” is now outdated.
A few weeks ago, Matt Bruenig and Elizabeth Stoker, writing in The Atlantic, put forward an idea to cut poverty in the United States in half. It is an approach that may provoke strong disagreement among government economists, but it may genuinely be the solution that nobody wants to study seriously or approve. The idea Matt and Elizabeth propose is not innovative at all: it is also on the table in Switzerland, where it will be put to a referendum.
The same thing is happening in many countries around the world, including the United States: they are taking on debt and even printing money, but that money is not reaching families, and the gap between rich and poor keeps growing more visible. The situation is already becoming unsustainable in the short term and is likely to turn chaotic in the long term. The idea being proposed is for the government to send a cheque to every adult.
How would it work?
It would work exactly as it sounds. The government would send every American or Swiss resident over the age of 21 a cheque every month, regardless of their income. That’s it. Everyone is free to do whatever they want with that money. They can spend it, save it, invest it, and so on.
This way, the homeless would have the chance of a roof over their heads. After all, our governments like to boast about devoting part of our taxes to charities and social aid to fight poverty. All of that would go. This way, the money is sure to arrive.
Whether you earn €3,000 a month or nothing at all, you would receive your cheque every month, and that money would, on its own, boost consumption and therefore create jobs.
This process would probably change the direction in which the economic wheel turns (currently destructive), and through its own momentum it would bring the economy to a better state.
This is what would be called a compulsory basic income for every citizen, and in principle it could put an end to the poverty of the 50 million people in the United States who live below the poverty line.
(Read: Are the poor really being robbed to give to the rich?)
Drawbacks of this initiative?
Every economic initiative has drawbacks. If we are talking about a basic income available to every adult, some economists think that person might lose the motivation to look for a job. That makes no sense, because when people have money they become more ambitious. In many cases it is extreme poverty itself that makes you poorer.
Other economists talk about inflation or call it madness, when the real madness is putting a country into debt to pay off debts while pushing its citizens even deeper into debt, and with none of the money reaching those citizens in any way. Madness is printing billions without a single dollar reaching the public.
In principle, whether some countries adopt this measure will depend on the result in Switzerland. And in case anyone has any doubts, this measure is entirely viable.
It is clear that in Europe it would be quite complicated even to raise this kind of idea, which could be the solution for the countries of the South but which the countries of the North would not agree with.
Further reading
- Tulip mania: the first speculative assets in modern history
- The best books on getting rich are more than 70 years old
Featured image: Stefan Bohrer, Public domain, via Wikimedia Commons.
