John Sutter: It's time for the United States to consider a "basic income" scheme
Sutter visits a North Carolina town where many residents get a check just for being alive
Earlier this year, I visited a town where residents are cut a check just for being alive. It’s not some Scandinavian utopia. It’s not part of some holdout communist state. It’s Cherokee, North Carolina, a town of 8,000 hidden away in the particularly misty stretch of the Great Smoky Mountains.
I went to Cherokee to explore the idea of a “universal basic income,” which is a fancy way of saying something that’s really quite simple: Give everyone cash, just for existing. The goal, according to proponents of such a policy, is to alleviate, if not eliminate, the scourge of poverty. And, more importantly, to reduce the social ills – poor health, poor educational attainment, poor job prospects and higher odds of ending up in jail – associated with kids who grow up poor.
The difference between the poor and the non-poor, according to basic income supporters (and basic logic), is just money. Give poor people more of it, and they’ll be better off.
These topics are of particular interest to me because readers of this website voted for me to cover child poverty as part of my Change the List project. In the interactive story “The poor kids of Silicon Valley,” I explored the incredible scope of childhood poverty in this rich country. I was surprised to learn that census data show one in five American kids is poor. The United States, according to UNICEF, actually has the second-highest rate of child poverty in the developed world. Only Romania fares worse on that measure.
Not even Silicon Valley – home to Facebook, Google and Apple, which is building a new campus that looks like a damn spaceship – is immune. A third of kids there – in this epicenter of wealth and prosperity – are at risk for hunger, meaning their families can’t pay all of their bills and may have to cut back on food to make it through the month, according to Caitlin Kerk, spokeswoman for the Second Harvest Food Bank.
“This is the moral shame of our community,” San Jose’s mayor, Sam Liccardo, told me.
This level of poverty among society’s most vulnerable people, as the Children’s Defense Fund and others have argued, is both immoral and expensive. Children obviously cannot choose their parents’ salaries. We can’t blame poverty on them, and yet they are statistically the group most likely to be poor in modern America. They also bear its costs most directly. The outcomes of their lives, even the chemistry of their brains, literally can be shaped by it. The rest of us pick up the tab, too. Child poverty costs the United States $500 billion per year, according to University of Chicago research. That includes lost earnings as well as health care and the cost of crime.
’Where do we go from here’
For a problem so massive – and so costly – a wholesale fix like the basic income seems appropriate. Before my trip to the North Carolina mountains, I read up on the basic income and its history. The more I learned, the more encouraged I became.
For starters: This tidy, egalitarian concept isn’t new, and its support isn’t limited to the radical political left. Dig through the Rev. Martin Luther King Jr.’s little discussed book, “Where Do We Go From Here: Chaos or Community,” published in 1967, the year before his assassination, and you’ll find an endorsement: “I am now convinced that the simplest approach will prove to be the most effective. The solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.” Milton Friedman, the Nobel-prize winning economist who was an adviser to conservatives Ronald Reagan and Margaret Thatcher, also supported a variation of the idea.
The basic income continues to have a diverse set of supporters – left, right and libertarian. They like the concept for different reasons, said Matt Bruenig, a writer and policy analyst for Demos. Those on the left tend to like it because it’s egalitarian. It helps give everyone an equal (or more equal) shot at success in our capitalist society. Some libertarians and right-wingers support the concept, meanwhile, because they see it as a way to whittle away at government bureaucracy. Some would have the basic income replace many existing social safety net programs. There’s also a conservative philosophy underlying all of this: Give people money and they, not the government, know best how to spend it. They know what they need. The feds do not.
’8 million coins’
Other countries are taking the idea more seriously. In fall 2016, Switzerland is scheduled to vote on instituting a national, basic income program. Enno Schmidt, an artist and activist behind the push, told me demonstrators dumped a pile of 5-centime Swiss francs on a public square to make the point that everyone in the nation deserves a cut of the country’s staggering wealth.
“There are 8 million people” here, he said. “There were 8 million coins.”
That’s 16 tons of money, he said.
In the United States, such discussions have been less visible.
But they are playing out in that little North Carolina town.
’I’m so thankful’
And in that little town, it starts with a casino.
The Harrah’s-operated casino is owned by the Eastern Band of the Cherokee Nation, which also owns the land beneath the mountain town. In 1996, according to Larry Blythe, vice chief of the tribe, the local tribal council voted to do something rather unorthodox: It decided to split half of the casino’s profits evenly among its members, which now number 15,000. The goal: Let the community share in the wealth that would be generated from gambling.
The payouts were modest at first – about $500 per person per year, Blythe said.
Now the annual sums are more like $10,000 per person.
Talk your way around town and you’ll meet people like Kaitlin Blaylock, a debt-free 23-year-old who used the money to pay for her education. “I honestly don’t think I would have been able to go to grad school without it,” she told me. Or James Sanders II, a 34-year-old bald guy with a beard. He told me he spends the money on his two young boys and on a welding and auto repair business, which he uses to supplement his job as a security guard. “I don’t have to worry if I’m going to be able to put food on the table or clothes on their backs,” he told me. James’ sister, Lori Sanders, 46, operates a beauty salon, Lori’s Beauty Box, out of a trailer on the family’s land. She’s saving the “per cap” payments, as locals call the biannual distributions, to send her son on a school trip to Europe. “I’m so thankful for the opportunity it affords me – to do what I love,” she said, referring to her salon, the interior of which is decorated with images of Wonder Woman.
These folks aren’t just anecdotes. I talked with Jane Costello, a Duke University researcher who has been studying the effects of these payments on 1,420 Cherokee-area children over the course of 20 years. The subjects started out as children and now are in their 30s. The results of Costello’s longitudinal studies, which compare the lives of children who got the “per cap” payments with those of locals who did not, are staggering. The poorest kids who received the payments were one grade year ahead in school, compared with those who didn’t, when researchers checked in with them at age 21. Kids who were lifted out of poverty by the payments saw behavioral problems decrease 40%. For the poorest families, the payments reduced by 22% the odds that children would commit minor crimes by their late teenage years.
How much would it cost?
Bruenig, a basic income proponent who has written about this topic for The Atlantic and other publications, told me implementing a basic income easily could halve the poverty rate in the United States. He developed an online “basic income calculator” to evaluate the costs and benefits. Using his math, based on 2012 figures, we could pay every man, woman and child in the United States $1,610 per year, reducing the overall poverty rate from 15% to 10.8%, for about $500 billion. That’s what child poverty, alone, costs the United States each year.
Bruenig suggests paying more – $3,000 per year – to cut the overall poverty rate in half. I’m less concerned with who would be paid how much than the financial ballpark: Considering how much poverty costs, this out-there solution can be seen as affordable. It could be paid for with a progressive tax system and distributed much in the way Social Security is today, Bruenig suggests. The payments might go to everyone, but because the rich would be paying more in taxes they would not be getting as much benefit from the program as low-income people who need the help. Less expensive, still, would be targeting families with children, specifically. In a way, the concept also builds upon – and makes more meaningful – tax credits that this country already gives to low-income people and families with children.
The United States won the war on poverty among older Americans, Bruenig told me, by investing in Social Security. Consider this Social Security for the young – or for all of us.
’Just give them the money’
The way Cherokee collects and distributes money to residents is particular to the town, and could not be replicated nationwide. But that doesn’t seem to bother Costello. She’s interested in what happens when poor families get money for free. And, based on what she’s seen in Cherokee, she’s convinced these families use the money to buffer their kids from the worst of poverty.
She told me the work has made her more convinced of an argument certain political thinkers have been making for 100 years: “Stop trying to micromanage the poor and dividing up the ‘deserving poor’ from the ‘undeserving poor.’ Just give them the money.”
There’s something simple, charming and fair about this approach.
What’s most important, from my perspective, is that we do something – and something big – to combat the scourge of child poverty. There are viable solutions, and the universal basic income should be a front-running candidate. Other ideas to be considered – and which could reduce child poverty by 60% – are deftly presented in a recent Children’s Defense Report titled “Ending Child Poverty Now.” I dissect some of the report’s ideas in my Change the List story.
The broader point is this: It doesn’t have to be this way.
We live in one of the richest countries on Earth.
We can’t afford to let our children grow up poor.