Skip to Content
Uncategorized

Would a Universal Basic Income Be Good for the Economy?

August 31, 2017

A study from the Roosevelt Institute has concluded exactly that. It suggests that a government handout to every American of $12,000 a year, no strings attached, would boost the U.S. economy to the tune of a cumulative 12.5 to 13 percent over eight years. The report also says it would create more jobs.

Okay, time for the massive grain(s) of salt: the report's view is highly controversial, for a couple of reasons. First, the economic model it uses assumes that the U.S. economy is sitting in a state of artificially low demand. One reason for this, some economists think, is that income inequality has led a few rich people to hoard a disproportionate amount of wealth, instead of spending it, which acts to have a chilling effect on economic activity. (This is a view most notably espoused by Thomas Piketty—see "Technology and Inequality.") Assuming that's the case, a huge cash infusion from the government might be worth it because, the model suggests, it would lead to economic growth worth around $2.5 trillion, as well as the creation of millions of jobs. As Vox points out in its analysis of the report, though, this is an opinion that many economists disagree with.

A second assumption is potentially even more misleading. The Roosevelt Institute assumes that people given a basic income would not be inclined to work less. They cite several small-scale studies that support this. But as we have written before in an in-depth look at the impact a universal basic income would have in the U.S., the evidence is murky at best. That makes such a scheme incredibly risky—both from a labor standpoint and, if the return in economic activity is no guarantee, for its overall pricetag.

Keep Reading

Most Popular

Here’s how a Twitter engineer says it will break in the coming weeks

One insider says the company’s current staffing isn’t able to sustain the platform.

Technology that lets us “speak” to our dead relatives has arrived. Are we ready?

Digital clones of the people we love could forever change how we grieve.

How to befriend a crow

I watched a bunch of crows on TikTok and now I'm trying to connect with some local birds.

Starlink signals can be reverse-engineered to work like GPS—whether SpaceX likes it or not

Elon said no thanks to using his mega-constellation for navigation. Researchers went ahead anyway.

Stay connected

Illustration by Rose Wong

Get the latest updates from
MIT Technology Review

Discover special offers, top stories, upcoming events, and more.

Thank you for submitting your email!

Explore more newsletters

It looks like something went wrong.

We’re having trouble saving your preferences. Try refreshing this page and updating them one more time. If you continue to get this message, reach out to us at customer-service@technologyreview.com with a list of newsletters you’d like to receive.