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Guaranteed Income as a Replacement for the Welfare State

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  • 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
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    References listed on IDEAS

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    1. White Stuart, 2006. "Reconsidering the Exploitation Objection to Basic Income," Basic Income Studies, De Gruyter, vol. 1(2), pages 1-17, December.
    2. Philippe Van Parijs, 1997. "Reciprocity and the Justification of an Unconditional Basic Income. Reply to Stuart White," Political Studies, Political Studies Association, vol. 45(2), pages 327-330, June.
    3. ., 1999. "International Integration: Theory and Practice," Chapters,in: North American Economic Integration, chapter 2 Edward Elgar Publishing.
    4. Stuart White, 1997. "Liberal Equality, Exploitation, and the Case for an Unconditional Basic Income," Political Studies, Political Studies Association, vol. 45(2), pages 312-326, June.
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    Cited by:

    1. Boettke, Peter, 2010. "Exchange, production, and Samaritan dilemmas," MPRA Paper 33199, University Library of Munich, Germany.
    2. 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, pages 1-18.

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