Basic Income as Inheritance

Rich kids start with millions.[1] Poor kids start from near zero. And starting from near zero today is worse (in some ways) than it was for hunter-gatherers.[2]  At least then the earth itself provided a natural inheritance of game, roots, berries, and materials for shelter. You rarely fell too far behind your tribe mates, and people didn’t criminalize your attempts to forage for food or construct your own shelter from things you found lying around.

But why should some inherit millions while most inherit next to nothing? Why should anyone start from near zero in a nation as prosperous as the United States? Why not provide a modest natural inheritance to all citizens?

Some people think of a universal basic income as a kind of welfare. But what if we think of it differently? What if we think of it as investment income generated by a natural inheritance? While many people are uncomfortable with the thought of poor people getting money without having to work for it, almost everyone is comfortable with the idea of investors receiving passive investment income without having to work for it [3].

Some UBI proponents (including yours truly) strengthen the inheritance analogy by defining the benefit in terms of national income. For instance, we might set the benefit at 10% of per capita national income. Currently that comes to about $450/month, and it would go up with every rise in inflation or national productivity. This is like giving people a modest inheritance of 10% of an average individual share of the nation’s wealth, and letting them draw the interest on that investment once they reach adulthood. So construed, it’s like we’re very slightly de-skewing the lottery of birth and inheritance. Rich kids will still inherit millions, but at least everyone will inherit something.

This is why I prefer the label “Prosperity Dividend” over “Basic Income”. If we frame a universal basic income as a stake in the nation’s prosperity, we create a sense of belonging and investment in every citizen who receives it. And we restore some of the natural inheritance we lost when we removed the ability to forage for a living.

 

Notes:

[1] They also have more social capital and margin for taking risks.

[2] Of course some things are better for today’s poor than for the average hunter-gatherer. We have antibiotics, vaccines, video games, and a greater understanding of how the world works. I personally wouldn’t trade modern life for the life of a forager. But why not try to have our cake and eat it too?

[3] Investors do put their money at “risk”. This is framed by some as “working” for the money. But the wealthy don’t actually have to take on very much risk to earn a return that matches the rise in per capita national income.