How to end poverty?

The free market creates prosperity.

It makes things cheaper and better.

But some people can’t even afford “cheap” so in the richest country in human history should We the People just let struggling individuals go without basic necessities like food, healthcare, and housing?

If your answer's “yes” well then most voters have thus far disagreed with you whereby since the New Deal, no matter who’s been in office, the welfare state has only ever grown, therefore, for better or worse, Americans will not accept “yes” as an answer so then the question becomes, “What’s the best way to provide basic necessities?”

The answer has thus far been to make them free for those who can’t afford them.

But I think rather than a hodgepodge of anti-poverty programs, which just exacerbate poverty, we should eliminate poverty itself!

The poverty line is about $12K per year so let’s guarantee people can get that amount…

NIT
Milton Friedman supported a Negative Income Tax, which is where “earners above a certain level pay money to the state while earners below it receive money.”

If Person A has an income of $50K and Person B has an income of $10K then if the break-even income was $24K with a 50% NIT then Person A would pay taxes whereas Person B would receive $7K. If a person had no income they’d receive $12K.

"In my opinion, the negative income tax is more compatible with the philosophy and aims of the proponents of limited government and maximum individual freedom than with the philosophy and aims of the proponents of the welfare state and greater government control of the economy."

Proponents say it would effectively eliminate the welfare trap, poverty, and streamline benefits.

The US has a version of NIT in the Earned Income Tax Credit, but one has to work to qualify for it. A political compromise could be to abolish Medicaid, SNAP, Housing Assistance, TANF, and CHIP in order to repeal the work requirement and increase the credit, therefore, making EITC into a full NIT.

In 2000, Milton Friedman said that a universal basic income was "simply another way to introduce a negative income tax.”

UBI
A Universal Basic Income is where the government gives money to every citizen on a monthly or annual basis.

But I think there’s five key structural differences between NIT and UBI:

The first is a person receive’s less money the more one earns with NIT, which could disincentivize work more than UBI.

The second difference is that NIT would theoretically cost less than UBI because if the goal is to eliminate poverty then only people with no income would receive the full $12K whereas with UBI everyone would.

The third difference is that with NIT there’d be more political pressure to keep it low because fewer people would be receiving it whereas with UBI since everyone would be receiving money it’s easier for people to think “we should make those people over there pay for it!"

The fourth difference is in terms of payouts NIT is a bit more abstract where politicians could more easily jiggle with the level & rate without the same visceral response as giving everyone a higher or lower standard check.

The fifth difference is in terms of pay-ins UBI has greater flexibility. The taxes received from NIT should be more than enough to cover the cost of those who get money whereas for better or worse UBI’s funding source could come from anywhere.

Andrew Yang wanted to pay for his UBI proposal with a VAT tax, which is in my opinion a terrible tax because it’s overcomplicated and hidden from customers so it’s easier for politicians to evade responsibility for higher prices. In my opinion, a better funding source would be the rising value of a natural resource like oil or land.

But the problem with NIT and UBI is every election cycle there’ll be politicians who promise to give out more money. Elections would increasingly turn into auctions with other people’s money. If payouts are tied to pay-ins then at least it’d be harder for politicians to cave to voters’ short-term desires, but just like with Social Security, which is a version of UBI, it now takes 2.3 workers to pay for one current beneficiary so the government has a poor track record of limiting its spending to what it receives in taxes.

Job Guarantee
My preferred way to effectively eliminate poverty is through a job guarantee.

Anyone who wants a job should be able to get one even if it’s something so simple as sweeping the streets.

As long as there are problems in the world there is a job to be done!

Anyone who pays taxes should support this policy over our existing system because if you had to work for your money then shouldn’t those who effectively take your money by force?

But not all Job Guarantees are created equal!

CHARACTER LIMIT MAXED. You can read the full essay at AnthonyGalli.com.