Universal Basic Income for America?

We have previously commented on proposals by economists and political scientists that would substitute universal income policies as credible alternatives to existing social programs such as unemployment insurance. (See blogs dated 2015-12-17, 2016-11-22, 2018-05-02 and 2019-02-21).

The idea is straight forward: Provide citizens with a minimum allowance, without means-testing, that would give everyone the wherewithal to live with a basic level of dignity.

Recently, whether they call it a freedom dividend or baby bond, some 2020 Democratic contenders have embraced the concepts of a universal basic income. However, these proposals seem to depart from some of the basic tenets of the programs implemented by recent experiments by several, generally smaller, countries.

While the devil is in the details, recent U.S. proposals appear to be both means-tested and in addition to existing safety net policies, rather than a substitute. Investors may want to look at the details as the costs associated with any net, new additions could be substantial.

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA