<ul class="summary-list"><li>The welfare-queen argument emerging around <keyword id="156351" type="PERSON" weightage="60" keywordseo="unemployment-insurance">unemployment insurance</keyword> originated in the 1970s.</li><li>A key anti-welfare book was 1984's "Losing Ground," but its methods were ethically questionable.</li><li>A nearly identical argument is being used by Republicans today to cancel pandemic <keyword id="414451" type="PERSON" weightage="60" keywordseo="unemployment-benefits">unemployment benefits</keyword>.</li></ul><p>Federal <keyword id="6358907" type="UNKNOWN" weightage="60" keywordseo="unemployment">unemployment</keyword> benefits doled out for more than a year are on the verge of lapsing for millions of Americans, but the reason why isn't new.</p><p>As soon as <a href="https://www.businessinsider.com/april-jobs-report-266000-payrolls-unemployment-rate-labor-market-recovery-2021-5">April's disappointing jobs report</a> was released, critics - largely in the Republican Party - began blaming the boosted support measure for disincentivizing Americans from seeking work.</p><p>This disincentive theory dates back decades, and largely comes from a Reagan-era book that argued government-support programs were the reason the US <keyword id="34412" type="ORGANIZATION" weightage="100" keywordseo="economy">economy</keyword> was falling behind.</p><p>In his 1984 book "Losing Ground," political scientist <keyword id="2535274" type="PERSON" weightage="60" keywordseo="Charles-Murray">Charles Murray</keyword> posited that social welfare leaves society worse off, as it leads participants to rely on handouts instead of encouraging them to climb the socioeconomic ladder.</p><p>That thesis has informed Republicans' economic policy for nearly half a century and is rearing its head once again as GOP governors prematurely terminate federal unemployment benefits for millions. But analysis of Murray's book shows such policy rests on morally suspect arguments and possibly does the US more harm than good.</p><h2>The origins of the welfare queen</h2><p>So far, 20 states are <a href="https://www.businessinsider.com/republican-states-cutting-unemployment-benefits-expanded-300-weekly-biden-stimulus-2021-5#alabama-1">set to end the $300-per-week federal boost to unemployment insurance</a> in the summer, months ahead of its scheduled expiration in September. That stands to cut roughly 3.4 million Americans off from some form of federal UI benefit while the pandemic still lingers.</p><p>But while the circumstances of the coronavirus recession and the 2021 reopening of the American economy are unique, the argument that the social safety net provides a "disincentive" to work is an old idea.</p><p>The viewpoint originated in 1976 when, during his first presidential campaign, President Ronald <keyword id="215676" type="PERSON" weightage="60" keywordseo="Reagan">Reagan</keyword> highlighted "welfare queens" as a new kind of fraudster plaguing the country. Reagan claimed that by slashing spending on programs like food stamps and welfare, he could run the government more efficiently and put poorer Americans to work.</p><p>"Losing Ground" was published the same month Reagan was elected to a second term in a landslide 1984 victory. America clearly liked <keyword id="11280392" type="UNKNOWN" weightage="60" keywordseo="reaganomics">Reaganomics</keyword> and wanted more. It didn't take long for Murray's book to power even stricter anti-welfare policies.</p><p>The political scientist was, indirectly, at the helm of a new economic-policy framework. The New York Times soon deemed Murray's work a "<a href="https://www.nytimes.com/1985/02/03/opinion/losing-more-ground.html">budget-cutters' bible</a>" that was used as a "philosophical base" throughout government agencies. Reductions to housing assistance, education, and programs like the Jobs Corps reflected Murray's push to eradicate welfare spending.  </p><p>The uneven reopening of the American economy shows the book's ideas are paraded just as loudly today.</p><p>Following this month's jobs report for April, Gov. Kim Reynolds of Iowa said the payments were "discouraging people from returning to work," while Gov. Mark Gordon of Wyoming said that "incentivizing people not to work is just plain un-American." Gov. Brad Little of Idaho said cutting the benefit was "based on a fundamental conservative principle."</p><p>And in 36 states, policymakers are bulking up work-search requirements for UI recipients. President Joe Biden even implicitly accepted some of Murray's ideology in comments following the jobs report, saying Americans receiving unemployment benefits "<a href="https://www.businessinsider.com/unemployment-biden-labor-shortage-job-seeking-policy-2021-5">must take the job</a>" if offered one.</p><p>Yet Murray's argument - and its decades-long influence - rest in part on shaky and ethically questionable foundations. </p><div type="image" title="kim reynolds iowa" height="1672" width="2229" msid="82748828" hostid="261"></div><h2>Murray used Black men as a proxy for all poor Americans</h2><p>Some of Murray's observations hold water. The number of Americans below the poverty line has gradually increased since the late 1960s, and, around the 1980s, poor Americans were starting to drop out of the workforce.</p><p>Other arguments from Murray are less compelling. Murray noted that, as spending on social services ramped up in the 1970s, poor Americans stopped working as a result of the support programs. This, he said, is why the federal safety net should be abolished.</p><p>Murray's argument leans heavily on the "latent poverty" statistic - individuals who are only above the poverty line due to government benefits - but ignores one of its critical drivers, according to a 1984 <a href="https://digitalcommons.law.yale.edu/cgi/viewcontent.cgi?article=1069&amp;context=ylprylpr">article</a> in the Yale Law and Policy Review.</p><p>Additionally, the political scientist focused only on Black men aged 16 to 24 to gauge poor Americans' attachment to employment over time. Murray ignores labor force participation among Black women, and also fails to address the structural forces that hinder economic development for racial minorities.</p><p>Using young Black men as a proxy for all poor Americans likely skewed rates of labor-force dropouts for reasons not acknowledged in Murray's book, author and Yale Law School graduate Edward Mattison said.</p><p>To be sure, neither Murray nor Mattison could have predicted the coronavirus crisis and its economic fallout. Both would likely be shocked to discover Congress allocated some $5 trillion to fiscal <keyword id="45304" type="COMPANY" weightage="60" keywordseo="Stimulus">stimulus</keyword>, much of it passed on a bipartisan basis, while the Federal Reserve embarked on an unprecedented level of monetary easing.</p><p>As a post-pandemic economy emerges, Democrats have proposed overhauling UI programs to match the new attitude toward stimulus, with <a href="https://www.businessinsider.com/senate-democrats-unemployment-benefits-congress-wyden-bennet-benefits-2021-4">a larger benefit and minimum 26-week payment period</a>. Such proposals would mark a major shift in the government's welfare policy and a huge step away from Reaganomics.</p><p>Republicans, meanwhile, seem to want to revert to the stripped-down UI programs seen in 2019. It's a sign that Murray and Reagan's ideas still hold significant sway, even with roughly 10 million Americans still jobless. The old debate is set to continue for some time still.</p>

The 'work disincentive' theory that will soon strip unemployment from millions comes from a racially suspect Reagan-era book

<ul class="summary-list"><li>Half of all US states - all GOP-led - are cutting <keyword id="60973" type="PERSON" weightage="60" keywordseo="Biden">Biden</keyword>'s <keyword id="414451" type="PERSON" weightage="60" keywordseo="unemployment-benefits">unemployment benefits</keyword> early, citing a labor shortage.</li><li>But <keyword id="1760038" type="COMPANY" weightage="60" keywordseo="indeed">Indeed</keyword> data found job searches are still down in the states cutting off the benefits early.</li><li>This suggests the benefits are not disincentivizing work as much as the GOP argues.</li></ul><p><a href="https://www.businessinsider.com/republican-states-cutting-unemployment-benefits-expanded-300-weekly-biden-stimulus-2021-5">Twenty-five GOP-led states</a> have so far opted to end President Joe Biden's $300 weekly <keyword id="6358907" type="UNKNOWN" weightage="60" keywordseo="unemployment">unemployment</keyword> benefits early to incentivize residents to get back to work. But it looks like the cuts aren't motivating people to step up their job searches.</p><p>Indeed's hiring lab released a <a href="https://www.hiringlab.org/2021/06/22/job-postings-through-june-18-2021/">report</a> on Tuesday that found job-search activity is down in states that have opted to end the benefits early. The data, measured by clicks on job postings through June 18, showed increased searches in some of the states ending benefits early and decreased searches in others, but overall, total search activity was down. </p><div type="image" title="Graph showing job search activity compared to state UI cutoffs." height="638" width="1422" msid="83794086" hostid="261"></div><p>"It is unclear why search activity is below the baseline in states where federal UI (unemployment insurance) benefits have ended," the report said. "If overly generous federal UI benefits were holding back job seekers, then we would expect search activity to increase, relative to the national trend, in states where those benefits have ended."</p><p>This is the same trend seen with data on searches collected through June 4. Indeed's Jed Kolko, who authored the report, <a href="https://twitter.com/JedKolko/status/1402640644598816772">wrote</a> on Twitter on June 9 that decrease in job searches is "not what you'd expect" in states ending unemployment benefits early. </p><blockquote class="twitter-tweet blockquote" data-lang="en" data-cards="" data-conversation="">-Jed Kolko  (@JedKolko) <a href="https://twitter.com/mims/statuses/1402640644598816772?ref_src=twsrc%5Etfw">June 9, 2021</a></blockquote><p>Insider's Ben Winck <a href="https://www.businessinsider.com/unemployment-benefits-welfare-queen-reagan-book-work-disincentive-labor-market-2021-5">reported</a> in May that the "work disincentive" theory dates back decades and largely rests on a Reagan-era work, political scientist Charles Murray's 1984 book "Losing Ground," which rests on racially suspect data.</p><p>While it's unclear why job searches are down in states ending benefits early, it could suggest that unemployment benefits are not deterring people from returning to the workforce as much as Republicans argue.</p><p>The May <keyword id="11018" type="COMPANY" weightage="60" keywordseo="Jobs">jobs</keyword> report showed <a href="https://www.businessinsider.com/may-jobs-report-559000-payrolls-unemployment-rate-recovery-labor-market-2021-6">559,000 payrolls being added,</a> but Insider <a href="https://www.businessinsider.com/may-jobs-report-strong-despite-enhanced-ui-gop-cut-2021-6">reported</a> at the time that benefit cuts had not yet taken effect, more evidence that the benefits might not be disincentivizing work. </p><p>Some Democrats, like Sen. Bernie Sanders of Vermont, have criticized ending the benefits early, but White House Press Secretary Jen Psaki <a href="https://www.businessinsider.com/psaki-gop-states-federal-jobless-aid-every-right-2021-6">said</a> the states that are cutting off benefits "have every right" to do so. Separately, Biden <a href="https://www.businessinsider.com/biden-indicates-federal-unemployment-benefit-expiration-september-2021-6">said</a> it "makes sense" for benefits to expire in September.</p><p>"A temporary boost in unemployment benefits that we enacted helped people who lost their jobs through no fault of their own, and who still may be in the process of getting vaccinated," Biden said in a speech earlier this month. "But it's going to expire in 90 days - it makes sense it expires in 90 days."</p>

Job searches are down in states cutting federal unemployment benefits early, not what you'd expect to see from a 'disincentive to work'

<ul class="summary-list"><li>London-based YouTube star Nicole Thea died at 8 months pregnant along with her unborn child July 11. </li><li>The family said they believe the cause of death was a "massive heart attack." </li><li>In the UK, Black women are five times more likely than white women to die during <keyword id="6357793" type="UNKNOWN" weightage="60" keywordseo="pregnancy">pregnancy</keyword> and postpartum. </li><li>Many factors likely contribute to the disparities, but one OB-GYN is encouraging doctors to "check [their] implicit bias" and women of color to speak up. </li></ul><p>Nicole Thea, a London-based social media star, died July 11 along with her unborn child at 8 months pregnant.</p><p>Thea, who had more than 230,000 Instagram followers and whose <a href="https://www.youtube.com/watch?v=ipC5MYLMqRY">YouTube videos</a> could garner more than a million views, had been documenting her pregnancy, sharing what she and her partner were packing in their hospital bag June 28, for example, and writing "I can't wait to meet you little man" on June 29. </p><p>The dancer and accessories designer, who had already named the child Reign, was 24. </p><blockquote class="instagram-media" data-instgrm-captioned="" style="background:#FFF; border:0; border-radius:3px; box-shadow:0 0 1px 0 rgba(0,0,0,0.5),0 1px 10px 0 rgba(0,0,0,0.15); margin: 1px; max-width:540; padding:0; width:99.375%; width:-webkit-calc(100% - 2px); width:calc(100% - 2px); data.width~540;"><div style="padding:8px;"><div style="background:#F8F8F8; line-height:0; margin-top:40px; padding:62.4537037037% 0; text-align:center; width:100%;"><div style="background:url(data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAACwAAAAsCAMAAAApWqozAAAABGdBTUEAALGPC/xhBQAAAAFzUkdCAK7OHOkAAAAMUExURczMzPf399fX1+bm5mzY9AMAAADiSURBVDjLvZXbEsMgCES5/P8/t9FuRVCRmU73JWlzosgSIIZURCjo/ad+EQJJB4Hv8BFt+IDpQoCx1wjOSBFhh2XssxEIYn3ulI/6MNReE07UIWJEv8UEOWDS88LY97kqyTliJKKtuYBbruAyVh5wOHiXmpi5we58Ek028czwyuQdLKPG1Bkb4NnM+VeAnfHqn1k4+GPT6uGQcvu2h2OVuIf/gWUFyy8OWEpdyZSa3aVCqpVoVvzZZ2VTnn2wU8qzVjDDetO90GSy9mVLqtgYSy231MxrY6I2gGqjrTY0L8fxCxfCBbhWrsYYAAAAAElFTkSuQmCC); display:block; height:44px; margin:0 auto -44px; position:relative; top:-22px; width:44px;"></div></div><p style="margin:8px 0 0 0; padding:0 4px;"><a href="https://www.instagram.com/p/CCBmHDnjg5z" style=" color:#000; font-family:Arial,sans-serif; font-size:14px; font-style:normal; font-weight:normal; line-height:17px; text-decoration:none; word-wrap:break-word;" target="_blank">Can’t wait to meet you little man, soon to be 3 of us  __ This was a spontaneous home shoot shot by @kymages__  #8monthsPregnant</a></p> <p style=" color:#c9c8cd; font-family:Arial,sans-serif; font-size:14px; line-height:17px; margin-bottom:0; margin-top:8px; overflow:hidden; padding:8px 0 7px; text-align:center; text-overflow:ellipsis; white-space:nowrap;">A post shared by  Nicole Thea - QR2 (@nicoletheatv) on Jun 29, 2020 at 9:00am PDT<time style=" font-family:Arial,sans-serif; font-size:14px; line-height:17px;" datetime="2020-06-29T16:00:31+00:00">Jun 29, 2020 at 9:00am PDT</time></p></div></blockquote><p>While the autopsy report is still pending, Thea's uncle <a href="https://www.dailymail.co.uk/news/article-8522271/Nicole-Thea-24-died-unborn-son-suspected-heart-attack-family-reveal.html">told the Daily Mail</a> the family thinks she died from "a massive heart attack." </p><p>"Nicole was saying that she was struggling to breathe. She was struggling with her chest — she had a pain in her chest," Charles Murray told the Mail. "It is so surreal as she was so young. It is such a shock. It has really, really shaken us all up." </p><p>The tragedy is part of a larger trend: While pregnancy- and childbirth-related deaths are rare, women of color are disproportionately susceptible. </p><h2>Racial disparities persist in maternal mortality rates </h2><p>In the US, Black women are three to four times more likely to die in pregnancy, <keyword id="31250" type="PERSON" weightage="60" keywordseo="childbirth">childbirth</keyword>, or immediately postpartum than white women. In the UK, black women's maternal mortality rates <a href="https://www.bbc.com/news/uk-england-47115305">are five times higher</a> than white women.  </p><p>Doctors and researchers have <a href="https://www.businessinsider.com/half-pregnant-women-in-uk-coronavirus-black-ethnic-minorities-2020-6">pointed to a variety of factors that could help explain the outcomes</a>, including socioeconomic status, access to prenatal treatment, racial bias in the medical system, a culture that doesn't encourage Black women to speak up about their <keyword id="6354750" type="UNKNOWN" weightage="100" keywordseo="health">health</keyword> concerns, and medical complications during pregnancy like pre-eclampsia. </p><p>"To this day, Black people are less likely to get the same treatment in terms of pain medication, they're more likely to wait longer in the ER, they're less likely to be taken seriously — it's a holdover from the days of slavery," Dr. Jennifer Lincoln, an OB-GYN, <a href="https://www.tiktok.com/@drjenniferlincoln/video/6835696093255322886">said on TikTok</a> in response to Thea's death. </p><p>She pointed to a study showing that 50% of doctors and residents surveyed falsely <a href="https://www.statnews.com/2016/04/04/medical-students-beliefs-race-pain/">believe Black people experience pain differently than white people</a>, leading to inappropriate treatment. </p><p><div type="image" title="beyonce pregnant" height="1338" width="1080" msid="76988558" hostid="261"></div></p><p>Celebrities of color have also spoken out about their difficult pregnancy and childbirth experiences. </p><p>Beyonce's preeclampsia, a complication involving high blood pressure and protein in the urine, for one, put her on bed rest for more than a month prior to an emergency C-section. </p><p>Serena Williams also had an emergency C-section, followed by a pulmonary embolism that almost killed her, she <a href="https://www.insider.com/serena-williams-almost-died-during-birth-of-daughter-olympia-2018-2">wrote for CNN</a>. Both women have emphasized that not many black women, and those in poorer countries, aren't so lucky to receive the kind of life-saving treatment they did. </p><p>"Every mother, everywhere, regardless of <keyword id="15024" type="ENTERTAINMENT" weightage="60" keywordseo="Race">race</keyword> or background deserves to have a healthy pregnancy and birth," Williams wrote. </p><p>In her TikTok, Lincoln told healthcare professionals "check your implicit bias" and urged women of color to speak up if they feel they're not getting appropriate care. </p><p>"If this is happening to you, ask to speak to a different nurse, a different doctor, report them, speak up," she said. </p><ul class="read-more-links"><li><strong>Read more:</strong></li><li><a href="https://www.businessinsider.com/what-pregnant-women-should-know-about-the-coronavirus-2020-3">What pregnant women should know about the coronavirus</a></li><li><a href="https://www.insider.com/is-viagra-more-accessible-than-birth-control-supreme-court-ruling-2020-7">People are saying Viagra is now more accessible than birth control because of a Supreme Court ruling — here's the reality</a></li><li><a href="https://www.insider.com/many-us-women-want-fewer-children-because-of-coronavirus-pandemic-2020-6">Many US women say they want fewer children because of the coronavirus pandemic</a></li><li><a href="https://www.insider.com/coronavirus-linked-high-rates-depression-anxiety-pregnant-women-new-moms-2020-6">Pregnant women and new moms are experiencing 'shocking' rates of anxiety and depression during the pandemic</a></li></ul>

The death of pregnant YouTube star Nicole Thea highlights a tragic trend affecting women of color

Liberal colleges are recruiting conservative professors to 'stir up some trouble'

<p><div class="KonaFilter image-container float_right"><div class="image on-image"><img src="http://static4.businessinsider.com/image/52c970c7ecad0424714f26dc-1200-924/occupy-wall-street-protesters-march-along-47th-street-in-new-york-september-17-2013-two-years-after-getting-its-start-in-a-downtown-manhattan-park-occupy-wall-street-the-populist-movement-protesting-economic-inequality-marked-its-second-anniversary-on-tuesday-with-a-protest-3.jpg?maxX=480" border="0" alt="Occupy Wall Street protesters march along 47th Street in New York September 17, 2013. Two years after getting its start in a downtown Manhattan park, Occupy Wall Street, the populist movement protesting economic inequality, marked its second anniversary on Tuesday with a protest. " width="480" /><p class="source"><span>REUTERS/Joshua Lott</span></p></div><p></p></div>A story by Jesse A. Myerson in Rolling Stone titled <a href="http://www.rollingstone.com/politics/news/five-economic-reforms-millennials-should-be-fighting-for-20140103">Five Economic Reforms Millennials Should Be Fighting For</a> has conservatives on Twitter flipping out.</p>
<p><a href="http://reason.com/blog/2014/01/04/rolling-stones-5-economic-reforms-millen">Nick Gillespie at Reason.com</a> has a breakdown of the conservative backlash, but if you actually read the article it's really baffling trying to figure out why the piece is generating such controversy.</p>
<p>Myerson identifies five things that should be done, and admittedly, his titles for each idea sound provocative. They are:</p>
<p style="padding-left: 30px;">1. Guaranteed Work for Everybody<br /><span style="line-height: 1.5em;">2. Social Security for All <br />3. Take Back The Land <br />4. Make Everything Owned by Everybody <br />5. A Public Bank in Every State</span></p>
<p><span style="line-height: 1.5em;">A number of economists have argued that something like a jobs guarantee or a basic income for everyone - having the government literally give everyone money on a non-temporary basis - is a viable concept to explore as a way of addressing unemployment and the safety net. Milton Friedman favored a negative income tax, so that if you were poor you got money from the government, and the conservative <a href="http://www.amazon.com/In-Our-Hands-Replace-Welfare/dp/0844742236">Charles Murray endorses the idea as well</a>.</span></p>
<p><span style="line-height: 1.5em;">The idea to "Take Back The Land" sounds radical unless you read further that the main idea is more aggressive property tax and for the government to provide more affordable housing.</span></p>
<p><span style="line-height: 1.5em;">The "Make Everything Owned By Everybody" is again just a dramatic way of saying that there should be  a US sovereign wealth fund, as exists in many other countries. Think this idea is so radical? Here's it being discussed in the conservative publication <a href="http://www.nationalreview.com/agenda/359097/usa-sovereign-wealth-fund-revisited-reihan-salam">The National Review</a>.</span></p>
<p>And as for a public bank in every state, there's one of these in North Dakota, which seems to be doing fine. Basically it's a publicly owned lending fund designed to subsidize certain projects.</p>
<p>You can disagree with all of these - all have various drawbacks and benefits - but the idea that this is some insane communist raving looks like an example of people just deciding to be outraged over something they didn't actually read.</p>

People Are Freaking Out About This 'Rolling Stone' Plan To Fix The Economy

<p><span style="font-size: 15px; line-height: 1.5em;"><div class="KonaFilter image-container float_right"><div class="image on-image"><img src="http://static3.businessinsider.com/image/528d11646da811c36998523f-898-673/paul-ryan-30.jpg?maxX=480" border="0" alt="paul ryan" width="480" /><p class="source">Getty Images</p></div><p></p></div>The idea of giving every American an </span><a href="http://www.businessinsider.com/giving-all-americans-a-basic-income-would-end-poverty-2013-11">unconditional basic income</a><span style="font-size: 15px; line-height: 1.5em;"> is flying around the blogosphere, but has not been picked up by any major politicians.</span></p>
<p>The idea is simple: the government would mail a check to every American each month. That's it. It would replace all other government benefit programs. </p>
<p><span>This is not a policy that is popular only on the left. Many conservatives have supported it as well. The idea of eliminating all of those programs and simply mailing people a check would cut down on the bureaucratic waste that conservatives hate about government. </span></p>
<p><span><span>In fact, just this past weekend, </span><a href="http://knowmore.washingtonpost.com/2013/11/16/a-fox-news-anchor-just-endorsed-something-youd-never-expect/">Fox News host Stuart Varney was extremely supportive of the idea</a><span>. The American Enterprise Institute's Charles Murray has written </span><a href="http://www.amazon.com/In-Our-Hands-Replace-Welfare/dp/0844742236">an entire book</a><span> on it. Milton Friedman was a huge proponent of a </span><a href="http://www.econlib.org/library/Enc1/NegativeIncomeTax.html">negative income tax</a><span>, which is a very similar idea.</span></span></p>
<p><span><span>But it will not take off on the right until a major conservative figure with policy credentials supports it. <keyword id="555950" type="PERSON" weightage="60" keywordseo="Paul-Ryan">Paul Ryan</keyword> should become that figure.</span></span></p>
<p><span style="line-height: 1.5em;">Here's why:</span></p>
<p>1. <a href="http://www.businessinsider.com/paul-ryan-poverty-plan-2013-11">Ryan is creating an anti-poverty plan</a>.<br />2. Ryan hates big government programs.<br />3. A basic income for every American would end poverty.<br />4. A basic income would eliminate gaggles of big government programs.</p>
<p><span>Instead of unveiling an anti-poverty platform that is complicated, he should think simple. Conservatives will love the idea of eliminating dozens of government programs and liberals will love the idea of eliminating poverty. In addition, </span><a href="http://cega.berkeley.edu/assets/cega_events/53/WGAPE_Sp2013_Blattman.pdf">more and more research</a><span> is showing that the best way to help out poor people is to simply give them money. They know what they need the most so let them decide. An unconditional basic income does exactly that.</span></p>
<p><span style="font-size: 15px; line-height: 1.5em;">There are of course a couple of roadblocks. </span></p>
<p><span style="font-size: 15px; line-height: 1.5em;">First, he'd have to find a way to fund it. I laid out some ways in </span><a href="http://www.businessinsider.com/giving-all-americans-a-basic-income-would-end-poverty-2013-11">my previous piece</a><span style="font-size: 15px; line-height: 1.5em;"> for how to do that. The elimination of all the other benefits helps, but he still must find more revenues. I'm not holding my breath that he will sign on for a carbon tax anytime soon, but he could look to other ways to raise money while trimming down the level of the guarantee. For instance, instead of $1,000 per month, he could make it $800 and trim 20% off the cost.</span></p>
<p><span>Second, he'll face backlash from conservatives who believe that a basic income will disincentivize work. This is the number one reason that some wonks oppose an unconditional basic income. If people earn money for doing nothing, they'll choose not to work. Economists however are not certain that this is how it would play out. A basic income of $800 a month is still a paltry sum. In addition, workers can gain more bargaining power and push for higher wages if they have the security of a basic income to fall back on. Finally, making the benefits universal eliminates steep marginal tax rates that low-income workers face as they move up the income ladder. All of these will have a major positive effect on the economy that Ryan should emphasize.</span></p>

Why Paul Ryan Should Support Having The Government Give Free Money To Everyone

<p><span style="line-height: 1.5em;"><div class="KonaFilter image-container float_right"><div class="image on-image"><img src="https://static-ssl.businessinsider.com/image/550ef55f69bedde4781866f6-1200-924/child-reading-book.jpg?maxX=600" border="0" alt="Child Reading Book" width="600"><p class="source"><span><a href="https://www.flickr.com/photos/w4nd3rl0st/5350439257">Via Flickr</a></span></p></img></div><p></p></div>The most important divide in America today is class, not race, and the place where it matters most is in the home. </span></p><p><span style="line-height: 1.5em;">Conservatives have been banging on about family breakdown for decades. Now one of the nation's most prominent liberal scholars has joined the chorus.</span></p><p>Robert Putnam is a former dean of Harvard's Kennedy School of Government and the author of "Bowling Alone" (2000), an influential work that lamented the decline of social capital in America. In his new book, "Our Kids", he describes the growing gulf between how the rich and the poor raise their children.</p><p>Anyone who has read "Coming Apart" by Charles Murray will be familiar with the trend, but Mr Putnam adds striking detail and some excellent graphs (see below). This is a thoughtful and persuasive book.</p><p>Among the educated elite the traditional family is thriving: fewer than 10% of births to female college graduates are outside marriage--a figure that is barely higher than it was in 1970. In 2007 among women with just a high-school education, by contrast, 65% of births were non-marital.</p><p>Race makes a difference: only 2% of births to white college graduates are out-of-wedlock, compared with 80% among African-Americans with no more than a high-school education, but neither of these figures has changed much since the 1970s.</p><p>However, the non-marital birth proportion among high-school-educated whites has quadrupled, to 50%, and the same figure for college-educated blacks has fallen by a third, to 25%. Thus the class divide is growing even as the racial gap is shrinking.</p><p>Upbringing affects opportunity. Upper-middle-class homes are not only richer (with two professional incomes) and more stable; they are also more nurturing.</p><p>In the 1970s there were practically no class differences in the amount of time that parents spent talking, reading and playing with toddlers. Now the children of college-educated parents receive 50% more of what Mr Putnam calls "Goodnight Moon" time (after a popular book for infants).</p><p>Educated parents engage in a non-stop Socratic dialogue with their children, helping them to make up their own minds about right and wrong, true and false, wise and foolish. This is exhausting, so it helps to have a reliable spouse with whom to share the burden, not to mention cleaners, nannies and cash for trips to the theatre.</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><img src="https://static-ssl.businessinsider.com/image/550ef88769bedd357a1866f9-1200-924/family-dinner-father-children-cooking.jpg" border="0" alt="Family Dinner Father Children Cooking"><p class="source"><span>REUTERS/Elijah Nouvelage</span></p><p class="caption">Carl Krawitt makes dinner for his son Rhett, 6, left, and daughter Annesley, 8, center, in their home in Corte Madera, California January 28, 2015.</p></img></div><p></p></div></div></p><p>Working-class parents, who have less spare capacity, are more likely to demand that their kids simply obey them. In the short run this saves time; in the long run it prevents the kids from learning to organise their own lives or think for themselves.</p><p>Poor parenting is thus a barrier to social mobility, and is becoming more so as the world grows more complex and the rewards for superior cognitive skills increase.</p><p>Mr Putnam's research team interviewed dozens of families to illustrate his thesis. Some of their stories are heart-rending. Stephanie, a mother whose husband left her, is asked if her own parents were warm. She is "astonished at our <span>naïveté</span>".</p><p>"No, we don't do all that kissing and hugging," she says. "You can't be mushy in Detroit...You gotta be hard, really hard, because if you soft, people will bully you."</p><p>Just as her parents "beat the hell" out of her, so she "whups" her own children. She does her best, but her ambitions for them go little further than not skipping school, not becoming alcoholic and not ending up on the streets.</p><p>At every stage, educated families help their kids in ways that less educated ones do not or cannot. <span style="line-height: 1.5em;">Whereas working-class families have friends who tend to know each other (because they live in the same neighbourhood), professional families have much wider circles. </span></p><p><span style="line-height: 1.5em;">If a problem needs solving or a door needs opening, there is often a friend of a friend (a lawyer, a psychiatrist, an executive) who knows how to do it or whom to ask.</span></p><p>Stunningly, Mr Putnam finds that family background is a better predictor of whether or not a child will graduate from university than 8th-grade test scores. Kids in the richest quarter with low test scores are as likely to make it through college as kids in the poorest quarter with high scores (see chart).</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><img src="https://static-ssl.businessinsider.com/image/550ef5df6bb3f78a7c295740-1190-1176/20150321_bkc528.png" border="0" alt="Economist Class Divide Charts"><p class="source"><span><a href="http://www.economist.com/news/books-and-arts/21646708-social-mobility-depends-what-happens-first-years-life-minding-nurture-gap">Via The Economist</a></span></p></img></div><p></p></div></div></p><p>There are no obvious villains in this story. <span style="line-height: 1.5em;">Mr Murray suggested that the educated classes preach the values they practise by urging the poor to get married before they have children. </span></p><p><span style="line-height: 1.5em;">But the record of those who tell other people how to arrange their love lives is hardly encouraging. Both George W. Bush and Barack Obama preached the virtues of responsible fatherhood, to no obvious effect.</span></p><p>Mr Putnam sees "no clear path to reviving marriage" among the poor. Instead, he suggests a grab-bag of policies to help poor kids reach their potential, such as raising subsidies for poor families, teaching them better parenting skills, improving nursery care and making after-school baseball clubs free.</p><p>He urges all 50 states to experiment to find out what works. A problem this complex has no simple solution.</p><p>Click <a href="https://subscriptions.economist.com/nwcd">here</a> to subscribe to The Economist</p><p>This article was from The Economist and was legally licensed through the NewsCred publisher network.</p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/drunk-driving-checkpoint-regulation-hack-2015-2">A lawyer in Florida has come up with an ingenious way for drivers to evade drunken-driving checkpoints</a></h3>        <div>            <div>    <script src="http://player.ooyala.com/v3/6e12e8b3387a44daacfb73afba25a76e"></script>    <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="EwZXE5czqobpJLXsPUCBDsxSm8XxaRw0" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>    <script>    if (typeof RunFunctions === 'undefined') { var RunFunctions = []; }     RunFunctions.push(function()    {         var ooyalapopvideo = OO.Player.create('ooyalaplayer_popvideo', 'EwZXE5czqobpJLXsPUCBDsxSm8XxaRw0',{ autoplay: 'false' });     });    </script>    <noscript><div>Please enable Javascript to watch this video</div></noscript></div>        </div>        <script>(function() { function createPlayer() { OO.ready(function() { RunFunctions.forEach(function(ooyalaFunction) { ooyalaFunction(); }); RunFunctions = [];}); } createPlayer(); }()); </script>    </div>

The most important divide in America today is growing

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><img src="http://static6.businessinsider.com/image/5282995969bedd943d5f3d50-1024-768/poverty-pruitt-igoe-housing-project.png" border="0" alt="poverty pruitt igoe housing project" /><p class="source">Screenshot via The Pruitt-Igoe Myth</p></div><p></p></div></div>A simple idea for eliminating <keyword id="45057" type="UNKNOWN" weightage="60" keywordseo="Poverty">poverty</keyword> is garnering <a href="http://www.theatlantic.com/business/archive/2013/10/how-to-cut-the-poverty-rate-in-half-its-easy/280971/">greater attention</a> in recent weeks: give every adult a basic income.</p>
<p>Real wages have been stagnant in America for decades now and income inequality has grown immensely.In the aftermath of the Great Recession, it's only gotten worse. The Census Bureau reported in September that the 15 percent of Americans (46.5 million) live below the poverty line. Government benefits like food stamps and TANF help lift some of them above the line, but millions still live below it.</p>
<p>So here's what you need to know about it.</p>
<p><strong>How would it work?</strong></p>
<p>It's exactly how it sounds. The government would mail every American over the age of 21 a check each month. That's it. Everyone is free to do what they like with it.</p>
<p><strong>How would it be funded?</strong></p>
<p>In 2012, there were 179 million Americans between the ages of 21 and 65 (when Social Security would kick in). The poverty line was $11,945. Thus, giving each working-age American a basic income equal to the poverty line would cost $2.14 trillion. For some comparison, U.S. GDP was almost $16 trillion in 2012 and the defense budget was $700 billion.</p>
<p>But a minimum income would also allow us to eliminate every government benefit as well. Get rid of SNAP, TANF, housing vouchers, the Earned Income tax credit and many others. Get rid of them all. A <a href="http://www.budget.senate.gov/republican/public/index.cfm/files/serve/?File_id=0f87b42d-f182-4b3d-8ae2-fa8ac8a8edad">2012 Congressional Research Service report</a> found that the federal government spends approximately $750 billion each year on benefits for low-income Americans and that rises to a clean trillion when you factor in state programs. Eliminate all of those and the net figure comes out to $1.2 trillion needed to pay for a universal basic income, still a hefty sum.</p>
<p>That doesn't mean there aren't ways to pay for it. The CBO found that a carbon tax would bring in nearly $100 billion a year for instance. Revenue would also increase automatically since everyone would have a basic income on which to pay taxes. The government could also offer a basic income of $6,000 a year instead of up to the poverty line. Funding a basic income for all working-age adults would not be easy and would require a substantial increase in the size of government, but it's not impossible either.</p>
<p><strong>What are the benefits of a basic income?</strong></p>
<p>The clear one is that no American would live below the poverty line. The U.S. has been waging the War on Poverty for a generation now and still nearly 50 million Americans are below the line. This would end that war with a decisive victory.</p>
<p>There are knock on effects as well. Americans would have greater leverage to demand higher wages and better working conditions from their employer thanks to the increased income security. Families could allow one parent to take time off to raise their kids. Eliminating the numerous different government welfare programs would also lead to efficiency gains as adults would simply receive their check in the mail and not have to waste time filling out paperwork at numerous different offices.</p>
<p><strong>What are the drawbacks of a basic income?</strong></p>
<p>Economists have long shuddered at the thought of a basic income, because it strongly disincentives work. However, a basic income is just that: basic. Most adults would continue to work to earn extra money. The employment effects would not be non-existent and there may be an increase in part-time work. <a href="http://www.nytimes.com/2013/11/17/magazine/switzerlands-proposal-to-pay-people-for-being-alive.html?pagewanted=2&amp;ref=annielowrey">As Annie Lowrey points out today</a>, different studies have found the disincentive effects on work are not as strong as economists feared.</p>
<p><strong>Are there any real world examples?</strong></p>
<p>Perhaps in the near future. Switzerland's citizens will soon vote on a referendum to give each working-age adult in Switzerland a basic income of $2,800 (2,500 francs). Supporters of the initiative unloaded a dump truck of eight million coins, one for every Swiss citizen, after they successfully gained 125,000 signatures and triggered the referendum. Other countries have experimented with basic income in small areas, but none has done so throughout an entire country as Switzerland is considering. If the referendum passes, economists will certainly watch intently to see its effects.</p>
<p><strong>Does it have a chance in Congress?</strong></p>
<p>No. Congress can't even keep the government open or pass a budget, much less revamp our entire benefits program into a basic income. However, there is some bipartisan agreement in academic circles on the idea of a basic income. The American Enterprise Institute's Charles Murray has written a <a href="http://www.amazon.com/In-Our-Hands-Replace-Welfare/dp/0844742236">book on the subject</a> and liberals have long dreamed of a guaranteed basic income. Nevertheless, it will not be coming to the U.S. anytime soon.</p>

Everyone's Talking About This Simple Solution To End Poverty By Giving People Free Money

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><img src="https://static-ssl.businessinsider.com/image/586df508dd0895f2158b4628-1600/guystanding.jpeg" alt="Guy Standing UBI" data-mce-source="Wikimedia Commons" /><p class="source"><span>Wikimedia Commons</span></p><p class="caption">Professor Guy Standing</p></div><p></p></div></div>In 2011 Guy Standing, then an economist at the University of Bath, prefaced <a href="https://www.ecosia.org/search?q=guy%20standing%20book%202011&amp;addon=chrome">his new book</a> with a warning.</p><p>He described a growing class of "precariat" workers, alienated by a western political agenda which had, since the 1970s, promoted market-led competition above job security. <a href="http://www.economist.com/news/finance-and-economics/21615589-throughout-rich-world-wages-are-stuck-big-freeze">Real wages across the west had stalled for decades</a> and "flexible" work was becoming the norm, leaving many millions around the world in "without an anchor of stability."</p><p>This precariat, he said, "are prone to listen to ugly voices, and to use their votes and money to give those voices a political platform of increasing influence." Such conditions had created "an incipient political monster," and action was needed "before that monster comes to life."</p><p>Five years on, Standing says, "that monster has arrived."</p><p>"The precariat I've written about consists of several factions," he told Business Insider from his home in Switzerland.</p><p>"I call one of those groups atavists: people who have fallen out of old working class communities into a life of insecurity. They tend to look backwards into an imaginary past - if not a real one - and this part of the precariat is not very well-educated."</p><p>"So they listen to the sirens of neo-fascist populism, and their current trumpeteer is [US president-elect] Donald Trump. He's been playing on their fears."</p><p>Not just Trump: Standing says that similar forces have driven the <keyword id="6354868" type="COUNTRY" weightage="60" keywordseo="UK">UK</keyword>'s vote to leave the European Union, and the rise of far-right European populists such as Marine Le Pen and Geert Wilders.</p><h2>Universal Basic Income: The solution?</h2><p>Standing, now professor of development studies at the School of African and Oriental Studies (SOAS), believes he has at least part of the solution. In 1986 he co-founded the Basic Income Earth Network (BIEN), one of the earliest groups to advocate Universal Basic Income (UBI) in its modern form.</p><blockquote class="pullquote float_right">In the last few years there has been a deluge of conversions among economists, commentators, and politicians - on the right and the left</blockquote><p>The idea is simple: a regular state payment to every adult (some variations also involve payouts to children), regardless of working status. Advocates say it would provide a vital safety net for all citizens and remove inefficient benefit systems currently in place; critics say it is unaffordable and would serve as a disincentive to work.</p><p>Standing says that for a long time, he and his fellow proponents were considered "crazy," and advocating the idea was "quite a lonely struggle," but no more. "In the last few years there has been a deluge of conversions among a huge number of economists, other commentators, and politicians, on the right and the left," he says.</p><p>Insurgent left-wing politicians from <a href="https://medium.com/basic-income/on-the-record-bernie-sanders-on-basic-income-de9162fb3b5c#.bpob6ofpr">Bernie Sanders</a> to <a href="https://www.theguardian.com/politics/2016/sep/14/jeremy-corbyn-to-launch-review-into-universal-basic-income">Jeremy Corbyn</a> have voiced tentative support for the idea, <a href="http://basicincome.org/news/2016/02/international-christopher-pissarides-a-nobel-economist-argues-for-ubi-at-a-debate-in-davos/">Nobel Prize winners have called for its introduction</a>, huge pilot studies have been rolled out in countries <a href="https://www.theguardian.com/technology/2016/jun/22/silicon-valley-universal-basic-income-y-combinator">including the USA</a> and <a href="http://uk.businessinsider.com/finland-launches-basic-income-experiment-2016-12?r=US&amp;IR=T">Finland</a>, and Standing reports that the Indian government will endorse the idea - as a principle - within a few weeks, after <a href="http://www.guystanding.com/files/documents/Basic_Income_Pilots_in_India_note_for_inaugural.pdf">a series of successful pilots which Standing was closely involved with</a>.</p><h2><strong>"Basic income is a matter of social justice"</strong></h2><p>Standing says that he supports the idea for three principal reasons. Primarily, he believes it is a matter of social justice.</p><p>"People like me go back to Thomas Paine, who argued that the land is owned by everybody, that the wealth created by generations should be shared to some extent, and that everyone should have social dividends," he says (Paine argued in 1795 for a "<a href="http://piketty.pse.ens.fr/files/Paine1795.pdf">citizen's dividend</a>" paid to all US citizens as compensation for "loss of his or her natural inheritance, by the introduction of the system of landed property.")</p><blockquote class="pullquote float_right">We are in an era of chronic insecurity and growing inequality. We need to have new mechanisms for income distribution</blockquote><p>Secondly, Standing says, "it would enhance individual liberty. It would give people a sense of control over their lives and would provide them with freedom."</p><p>Finally, "we are in an era of chronic insecurity, and growing inequalities. In that context, we need to have new mechanisms for income distribution which give people a sense of security."</p><p>If those arguments sound like left-wing orthodoxy, it is interesting to note that the concept is also attracting growing support from other ideological factions. Some of them are on the libertarian right, particularly in the USA, arguing that it would minimise state involvement with welfare payments and replace the illiberal system of means-tested benefits.</p><p>Others drawn to UBI believe that <a href="http://uk.businessinsider.com/ippr-automation-robots-could-destroy-15-million-uk-jobs-in-next-two-decades-2016-12">exponential improvements in new technologies</a> - such as machine learning, driverless cars, and artificial intelligence (AI) systems - will drive an age in which "robots will replace everybody," and think UBI could serve as an effective form of income distribution if wealth is concentrated by the process. Standing does not subscribe to that argument, but is happy for others to because it has "galvanised a lot of support" for the idea.</p><h2>Cost - the sticking point?</h2><p>Standing acknowledges two arguments often made by opponents of UBI. The first is affordability: how to fund a scheme which would cost a significant chunk of any country's GDP.</p><p>Take the US. According to the 2013 census, its adult population was 242 million. If UBI provided each American adult with a yearly stipend of $10,000, <a href="http://www.wsj.com/articles/a-guaranteed-income-for-every-american-1464969586">as libertarian political scientist Charles Murray has proposed</a>, the annual cost of the programme would be $2.42 trillion - almost three times current US welfare spending, a figure that is unpalatable to many.</p><blockquote class="pullquote float_right">The argument that basic income is unaffordable is quite easily refutable</blockquote><p>Standing says the cost argument against UBI is "quite easily refutable." Firstly, he says it would replace a number of other forms public spending, including means-tested benefits and "the huge number of regressive subsidies" that are paid out in both advanced and developing economies. That would account for a portion of the new spending figure.</p><p>Secondly - perhaps inevitably - it would mean raising taxes.</p><p>Standing puts most faith in a third approach: the establishment of capital funds, sometimes known sovereign wealth funds. He mentions the <a href="http://www.businessinsider.com/r-alaska-residents-to-receive-record-payment-from-oil-royalty-fund-2015-9?IR=T">Alaska Permanent Fund</a>, a huge capital fund set up in 1976, derived mostly from oil revenue. It has gradually been built up through investments and pays out to every legal resident of Alaska each year a basic income. He also mentions Norway's sovereign wealth fund, which in 2014 made every Norweigan citizen a "krone millionaire" when the country's oil revenues ballooned.</p><p>How would countries without oil fund such a system? Standing believes other revenue streams could be tapped. The subject of his latest book, "The Corruption of Capitalism," is the "rentier" class. It critiques the growing number of wealthy citizens who live on rental income from property - including copyright and patents - and investments. This, he believes, is a root cause of the <a href="http://www.bbc.co.uk/news/business-32824770">growing gap between the rich and the poor in OECD countries</a>.</p><p>Standing fleshed out his ideas in a <a href="https://www.reddit.com/r/IAmA/comments/24s0gc/i_am_guy_standing_copresident_of_the_basic_income/">Reddit AMA two years ago</a>. "It is not yet realised to what extent global capitalism has become rentier capitalism," he said. "Last year [2013] was the first year ever when more than two million new patents were registered, each guaranteeing a rental flow that lasts, on average, 20 years."</p><p>He believes that states could finance those rental flows for the creation of capital funds, and supplement it with revenues from natural resources, <a href="https://www.theguardian.com/commentisfree/2014/sep/04/fracking-for-many-oil-wealth-exploited-for-few">including emerging processes like fracking</a>.</p><h2>Would a basic income remove the incentive to work?</h2><p><a href="http://uk.businessinsider.com/ubi-universal-basic-income-trump-2016-12">Many believe that UBI would remove the incentive to work</a>, an argument that Standing describes as "ridiculous."</p><p>"In every industrialised country, we currently apply means-tested benefits. That means you're targeting the poor. Means-tested benefits have one incredible feature, in that they impose huge poverty traps. That means anybody going from low benefits, if they get them, into low-wage jobs face marginal tax rates of over 80%."</p><blockquote class="pullquote float_right">In every industrialised country, we currently apply means-tested benefits. That means you're targeting the poor</blockquote><p>The "welfare trap" argument is the idea, <a href="http://blogs.spectator.co.uk/2011/10/the-welfare-trap/">more commonly advanced by the right,</a> that means-tested benefits systems keep people on social insurance, because the withdrawal of benefits that comes with entering low-paid work causes there to be little increase in overall income.</p><p>Standing says it is this system, not basic income, which is a disincentive to work. "If you had a basic income, it would mean that everybody would have a base, on top of which their earned income would be taxed at the standard rate of tax. That would increase the incentive to take low-wage jobs. The claims that it would act as a disincentive is the actual opposite."</p><p>Standing says the numerous pilot schemes he has worked on have borne out this theory. "From our pilots in various places, we have found that people who have basic security work more, not less. And they're more productive when they work, not less." In particular, <a href="http://www.guystanding.com/files/documents/Basic_Income_Pilots_in_India_note_for_inaugural.pdf">Standing cites the pilot schemes he helped to set up and run in India</a>.</p><h2>What next?</h2><p>Standing has come a long way since his lonely advocating of basic income in the 80s. Last year he spoke at the Bilderberg Group, <a href="http://www.businessinsider.com/everything-you-need-to-know-about-the-secret-bilderberg-meeting-of-the-worlds-top-bankers-2011-6?IR=T">a secretive conference attended by the global political elite</a>.</p><blockquote class="pullquote float_right">The old system has broken. Wages will continue to decline. Insecurity will continue to grow. That is a recipe for economic instability</blockquote><p>In January, he will deliver a speech on UBI in Davos before a similarly elite group of world leaders and financiers, and he continues to advise on an ever-expanding number of pilot studies.</p><p>"I don't see basic income as a panacea, but we must have a new income distribution system," he says.</p><p>"The old one has broken down irretrievably. Real wages will continue to decline in OECD countries, insecurity will continue to grow, and rental incomes will continue to go to the top. That is a recipe for economic instability, political extremism, and a lot of other nasty things."</p><p>He is now "genuinely optimistic" about the prospect of basic income being rolled out. "I don't know where it's going to come first, that's one we just can't predict. But I think it's reached the point where we desperately need it," he says.</p><p>"I see no reason why we will not have it within the next ten years - and maybe sooner."</p>      <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/royal-mint-new-twelve-sided-one-pound-coin-queen-elizabeth-hologram-2017-1">Take a look at the new 12-sided £1 coin</a></h3>        <div>            <div>    <script src="http://player.ooyala.com/v3/6e12e8b3387a44daacfb73afba25a76e"></script>    <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="N0aW1wODE6jQB25FprTUffuW8b_d13GC" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>    <script>    if (typeof RunFunctions === 'undefined') { var RunFunctions = []; }     RunFunctions.push(function()    {         var ooyalapopvideo = OO.Player.create('ooyalaplayer_popvideo', 'N0aW1wODE6jQB25FprTUffuW8b_d13GC',{ autoplay: 'false' });     });    </script>    <noscript><div>Please enable Javascript to watch this video</div></noscript></div>        </div>        <script>(function() { function createPlayer() { OO.ready(function() { RunFunctions.forEach(function(ooyalaFunction) { ooyalaFunction(); }); RunFunctions = [];}); } createPlayer(); }()); </script>    </div>

The economist behind Universal Basic Income: Give all citizens free money to help combat a 'neofascist wave of populism'

<p>This weekend, Jesse Myerson advanced <a href="http://www.rollingstone.com/politics/news/five-economic-reforms-millennials-should-be-fighting-for-20140103">five economic reform ideas</a> that he thinks millennials should champion, and various conservative readers' heads <a href="http://thefederalist.com/2014/01/06/sorry-comrade-didnt-just-discover-secret-making-communism-work/">exploded</a> for reasons I don't fully understand. Particularly, I don't see what's <a href="http://www.slate.com/blogs/moneybox/2014/01/06/definining_communism_down.html">supposed to be "communist"</a> about Myerson's proposals.</p>
<p>His five big ideas are:</p>
<ol>
<li>Guaranteed jobs for everyone.</li>
<li>A universal basic income.</li>
<li>Imposing a land-value tax, or maybe having the government own a lot of land.</li>
<li>"Make everybody own everything," the specific proposal for which seems to be a sovereign wealth fund.</li>
<li>State lending banks like North Dakota's.</li>
</ol>
<p>Conservatives dismiss this agenda at their peril. Myerson's ideas are aimed at very real problems: Returns to labor are declining relative to returns to capital; America's economy is vulnerable to shocks that sharply raise unemployment; returns to economic growth are accruing disproportionately out of the top, leaving most people out of their share of progress.</p>
<p>Not all of the ideas in Myerson's piece are good approaches to these problems. And since Myerson <a href="https://twitter.com/JAMyerson/status/420307313342554112">describes his "political aspirations"</a> as communist, he obviously has some bad ideas that aren't contained in the piece. But the ideas in the piece aren't crazy and should be evaluated on their merits.</p>
<p>The most promising of Myerson's ideas is an unconditional basic income, which is a policy of sending checks to Americans simply for existing.</p>
<p>This policy would have several advantages; for one, it would lift people out of poverty. Unlike means-tested welfare programs, it wouldn't act like a tax that penalizes poor people for working more. It might also reverse the sliding labor share of national income; by allowing people to exit the labor market, it would tighten labor supply and allow workers to bargain for higher wages.</p>
<p>On the other hand, by allowing people to exit the labor market, it might lower GDP. And it would be very expensive to finance. <span style="line-height: 1.5em;">Despite these drawbacks, conservatives including Charles Murray and Milton Friedman have endorsed a UBI. The policy isn't a slam dunk, but it's definitely not communist.</span></p>
<p>Or consider a land value tax. Myerson frames this idea as "Take Back The Land," but a tax on land doesn't actually take it back. Such a tax would raise revenue in a way that is friendly to the economy; taxes discourage the creation of the thing that is taxed, but the amount of land can't be increased or reduced. This tax would actually foster economic growth by making it harder for landowners to keep their land unproductive; you could expect to see a lot fewer vacant lots in New York City.</p>
<p>This idea has drawbacks, too. For one, federal property taxes sure look like unconstitutional "direct taxes" to me, though at least one Yale Law School professor <a href="http://books.google.com/books?id=CxZSx5klWUAC&amp;pg=PA126&amp;lpg=PA126&amp;dq=bruce+ackerman+land+tax&amp;source=bl&amp;ots=YWqpYcP5k1&amp;sig=XnmrkwAFlW1evxLRx2oZsFT2ZzA&amp;hl=en&amp;sa=X&amp;ei=rSPLUrq8HJPJsQSN4oHoDQ&amp;ved=0CFUQ6AEwBA#v=onepage&amp;q=bruce%20ackerman%20land%20tax&amp;f=false">disagrees</a>. (States and localities could still impose such taxes, even if the federal government can't.) Land is also illiquid; people who own valuable land and few other assets might be forced to sell it, which would be harmful to retirees and small farmers. Contrary to what I suspect are Myerson's goals, such a tax might actually lead to the consolidation of land ownership in the hands of wealthy landlords with sufficient cash flow to pay the taxes.</p>
<p>Meyerson's idea for public land trusts seems like a worse idea. Meyerson introduces this idea by complaining that landlords "blow" because "They don't really do anything to earn their money. They just claim ownership of buildings and charge people who actually work for a living the majority of our incomes for the privilege of staying in boxes that these owners often didn't build and rarely if ever improve."</p>
<p>That's wrong - most of what landlords own isn't land but improvements, which are a consumer product like any other except that they can't be moved. <span>Meyerson at least implicitly understands this, since he calls for a tax specifically on land value, which is designed to encourage and reward the construction of improvements. Putting land in communal trusts would be harmful to the construction of improvements, because governments are not very good at being real estate developers - it's the government that gives you unsafe, decaying housing projects and grim office developments like </span><a href="http://en.wikipedia.org/wiki/Empire_State_Plaza">Empire State Plaza</a><span>.</span></p>
<p>I'm also not keen on a public bank, though I don't think it would be the end of the world. A lot of capitalist countries have institutions like this, including the U.S., where most home mortgage capital is provided by the federal government. State banks are also key parts of the financial system in Germany and Spain; you won't be surprised to learn that system has worked out O.K. in Germany and pretty badly in Spain.</p>
<p>My view is that state banks would tend to become a vehicle for subsidizing borrowing, encouraging excessive leverage. <span>(Non-government banks also often encourage excessive leverage when they're regulated incorrectly, by the way.) </span>They could also, as happened in Spain, become political slush funds. But I think they could be part of a well-functioning financial system, and they particularly might be useful for getting cash-management services to the underbanked. </p>
<p>Similarly, I don't see the appeal of a sovereign wealth fund for the U.S. <span>We're already sort of in this business: state and local pension funds are like mini-sovereign wealth funds. The investment sides of those operations are mostly pretty satisfactory, but problems arise when governments count on high expected returns on equity as a justification to incur fixed multi-year obligations. I see lots of risks from the federal government getting into this game (what promises might it make on the back of expected stock returns?) and few benefits.</span></p>
<p><span></span>In general, countries establish such funds because they have huge public natural resource wealth which they want to diversify. They sell oil and buy stock. How would such a fund fit into the U.S. fiscal picture, since we're not a petrostate?</p>
<p>And while I favor policies to tighten the labor market, I'm not sure how a job guarantee would work. What if you can't do anything useful? What if you're terrible at your guaranteed job? There are things the government could be doing to foster job creation in recessions - deficit spending, nominal GDP targeting, a higher default level of inflation, countercyclical infrastructure investment - that strike me as likely to be much more efficient than a job guarantee.</p>
<p>So, I'm not ready to sign up for Myerson's agenda. But I'm not sure why people are treating it like it's silly, or Soviet.</p>

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