Basic income programs address economic distress by guaranteeing some form of cash payments to households. Researchers appear to be probing the effects of guaranteed basic income through several field experiments. These experiments seem to be probing the effects of relatively modest cash payments over a limited time on rather small scales, but you have to start somewhere and I look forward to seeing the results.
I harbor doubts that guaranteed basic income — or income redistribution more generally — is sufficient to resolve much of Americans’ economic distress. In addition to income-side pressures, US household finances are also pressured by expenditure- or consumption-side forces. Expenditure-side pressures — like healthcare, higher education, child care and parental leave, or perhaps even housing in a community with reasonably good living standards — can eat into whatever income gains people make. Their costs have been rising faster than general costs, and they have been eating away the costs savings that Americans have resulted of automation, international trade, and other advances in production and distribution.
This ends up being my qualm with guaranteed basic income: rising costs seem bound to eat up these transfers as well. Let’s say we give everyone an extra $2000 a year, or $10,000 a year, or whatever. If the personal, out-of-pocket costs of accessing quality essentials like healthcare or education continue to rise, who is to say that they won’t quickly outstrip that $2000 or $10,000 transfer? You have to control costs as well as increase incomes.
To my mind, this is where the idea of guaranteed basic income runs into the same limitations as simple laissez-faire. It assumes somehow that the dynamics of the market will eventually result in costs savings like the ones we’re experiencing elsewhere. We’ll get MOOCs for college, robot doctors and nurses, robot nannies and elderly companions, and maybe even robot police. To my mind, however, these are all fanciful scenarios. Why not just turn them into freely-distributed public services, like we do highways or K12 schooling? Why not give them away — like they do many of the world’s most developed economies? It’s clearly doable, as a lot of countries with highly-developed economies and high living standards do it.
Instead of income transfers, why not just absorb the biggest life-cycle shocks that press people into a lifetime of under-savings: their higher education, their healthcare, their childcare, their access to quality school districts, medical treatment, or elderly care? Let people compete for dollars in a free and competitive market system, but make the stakes of that competition an person’s access to bigger-screen TVs, and not chemotherapy.