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Guaranteed Income as a Replacement for the Welfare State

Author

Listed:
  • Murray Charles

    (American Enterprise Institute)

Abstract

A guaranteed income (GI) that replaces the welfare state is not currently on the political agenda, but it offers the possibility for a grand compromise that could attract a majority political coalition. Any large-scale GI cannot be economically feasible in addition to current welfare programmes. Financial constraints in both Western Europe and the United States require that the money for funding a GI comes from the existing Social Security budgets. Using conservative assumptions, the proposed GI is demonstrably superior to the current system in enabling the elderly to accumulate comfortable retirement incomes. Furthermore, the proposed GI effectively ends involuntary poverty, even assuming minimum-wage jobs and high unemployment. The work disincentive effects of the proposed GI are diminished by a high payback point that begins at US$25,000 of earned income. The proposed GI may be expected to bring about a substantial reduction in extramarital births, and to increase, to an uncertain extent, labour force participation among young males currently outside of the labour force.

Suggested Citation

  • Murray Charles, 2008. "Guaranteed Income as a Replacement for the Welfare State," Basic Income Studies, De Gruyter, vol. 3(2), pages 1-12, November.
    • Handle: RePEc:bpj:bistud:v:3:y:2008:i:2:n:6
    DOI: 10.2202/1932-0183.1115
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    Cited by:

    1. Tim Jackson & Peter A Victor, 2021. "Confronting inequality in the “new normal”: Hyper‐capitalism, proto‐socialism, and post‐pandemic recovery," Sustainable Development, John Wiley & Sons, Ltd., vol. 29(3), pages 504-516, May.
    2. Jan Mertl & Radim Valencik, 2017. "Modelling Titanic and Clash of Clans Games: Theoretical Definition and Application in Current Social Systems," ACTA VSFS, University of Finance and Administration, vol. 11(2), pages 160-185.
    3. Martin Josh, 2016. "Universal Credit to Basic Income: A Politically Feasible Transition?," Basic Income Studies, De Gruyter, vol. 11(2), pages 97-131, December.
    4. Boettke Peter J. & Martin Adam, 2012. "Taking the "G" out of BIG: A Comparative Political Economy Perspective on Basic Income," Basic Income Studies, De Gruyter, vol. 6(2), pages 1-18, January.
    5. Andrew Bibler & Mouhcine Guettabi & Matthew N. Reimer, 2023. "Universal Cash Transfers and Labor Market Outcomes," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 42(1), pages 198-224, January.
    6. Fouksman, E. & Klein, E., 2019. "Radical transformation or technological intervention? Two paths for universal basic income," World Development, Elsevier, vol. 122(C), pages 492-500.
    7. Preiss Joshua, 2015. "Milton Friedman on Freedom and the Negative Income Tax," Basic Income Studies, De Gruyter, vol. 10(2), pages 169-191, December.
    8. Boettke, Peter, 2010. "Exchange, production, and Samaritan dilemmas," MPRA Paper 33199, University Library of Munich, Germany.
    9. Büchs, Milena, 2021. "Sustainable welfare: How do universal basic income and universal basic services compare?," Ecological Economics, Elsevier, vol. 189(C).
    10. Hristo Prodanov, 2018. "Political Economy of Robotization," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 1, pages 69-86.

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