Giving Compass' Take:

· Melissa S. Kearney and Magne Mogstad explore the concept of a universal basic income program in the U.S. and argue it would do little to reduce inequality.

· How can funders work to effectively close the wealth gap in the United States?

· Learn more about universal basic income.

In recent years there has been renewed interest in the concept of a Universal Basic Income (UBI) provision. In its most basic form, a UBI is a guaranteed cash benefit that the government provides to all citizens. This is not a new idea, but one that has historically resurfaced from time to time. In the 1960s the economist Milton Friedman suggested and the Nixon administration considered a Negative Income Tax (NIT), which is a related policy idea that would give everyone some guaranteed level of income that would gradually be taxed away as own income increases. The longevity of such proposals can be attributed to the fact that various elements of UBI proposals appeal to both conservative and liberal political thinkers.

Three trends appear to be driving a renewed interest in UBI. First, some view a UBI as a reasonable response to growing inequality, to stem both economic and political unease. The American entrepreneur Andrew Yang claims the ratio of CEO pay to worker pay has risen from 20 to 1 in 1965 to 271 to 1 in 2016 (Yang, 2018). He notes that current levels of wealth and income inequality can be economically and politically destabilizing, and a UBI would provide a boost to the lowest-earners that could mitigate the effects of this inequality.

Second, some worry about the widespread elimination of well-paying jobs for many workers in the U.S. due to robots and other technological advancements. For this reason, the idea seems to have caught on among a number of tech futurist personalities. This also seems to be a main motivation behind the call for a UBI in the book Give People Money by American journalist Annie Lowrey. She writes that it was not a question of “whether self-driving cars and other automated technology would start putting people out of work. It was when – and what would come next” (Lowrey, 2018). A universal basic income, Lowrey concludes, will provide a minimum standard of living for those shut out by automation and other forces, such as international trade.

Read the full article about universal basic income by Melissa S. Kearney and Magne Mogstad at The Brookings Institution.