Question

Question 4 in Chapter 13: "A vintage idea is a guaranteed annual income. Would guaranteeing people an annual income eliminate the need for the various welfare programs described in this chapter? Would it be a good idea?

Rycroft, Robert S. 2018. Economics of Inequality, Discrimination, Poverty, and Mobility, 2nd Ed. NY: Routledge.

Answer 1

Guaranteed annual income is a program to ensure that the poor section of the society has minimum cash to buy basic food etc. However, the welfare is a vast subject which include housing for the poor, health care facilities, assisted living facilities for the aged and disabilities.

Antipoverty is not so simple. There is a downside of providing a lot of facilities also, which discourages people to work and save money for the future. There were many schemes which were tried by the government. After which the guaranteed annual income was proposed.

The government is also planning to help the poor by offering reduced interest rates for the poor. However, the basis on which the poor will be segregated has not been worked out.

Providing guaranteed annual income to the poorest 10-20% of the population will be a good idea as they are below the line of minimum income. Again, if the poorest class of the society gets some money it will be spent by them which will increase the economic activities. For example, if the person is buying food, clothes or any essentials, he/she is spending. Previously, they may not have the power to spend, now they do. Due to increased economic activities the tax revenue will also increase. The circulation of money in the market will increase by a small percentage..