Guaranteed basic income: catchy slogan, but shoddy policy?

The Atlantic explains that, despite Supe Ellenberg's plan to give homeless high schoolers $1,200/month to “break the cycle of poverty,” guaranteed income and other salary subsidies tend to keep poor folks poor. Why? Employers aren't incentivized by the free market to raise wages, so low-income individuals become more reliant on gov't bailouts. A case study on Speen's "Speenhamland" wage subsidy laws below.

In 1793 Britain was at war with France. War crippled the flow of agricultural products to England from Europe and this, combined with a poor harvest, forced skyward the price of food -- bread in particular. To ward off food riots, the magistrates of the small Berkshire village of Speen agreed to supplement the wages of day laborers, scaling the subsidy to the price of bread. The higher bread prices climbed, the greater the subsidy.

The so-called "Speenhamland" laws, wildly popular at first, were quickly adopted throughout the south of England. But there were problems. Among the most serious of these was that wealthy land owners had no incentive to raise wages. Indeed, under the Speenhamland scheme, wages dropped ever lower as subsidies, paid by taxpayers, grew ever higher. Eventually, some landowners were paying next to no wages, transforming farm workers from independent agents to wards of the state.

"In the long run, the result was ghastly," wrote political philosopher and economist Karl Polanyi, in his 1944 classic The Great Transformation. ...

The outcome of the Speenhamland law, Polanyi wrote, "was merely the pauperization of the masses, who almost lost their human shape in the process." In essence they became ghosts, dependent on government largess to feed their families. They had no control over their lives, and no motive to work harder -- or better.

This article originally appeared in the Atlantic. Read the whole thing here.

Read more on guaranteed basic income here.

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