In the year since the coronavirus had been declared a pandemic, the US government has issued stimulus checks to every American who earned below a certain income, as well as more for dependent children, and added $600 in unemployment benefits.

2020 became the year the US federal government simply gave people free money. But it was only temporary. The stimulus checks were a one-time payment, and the unemployment benefits eventually expired.

But why not make it permanent? Why should the government be unwilling to give people free money?

The most blatant response would be that it deters individuals from getting jobs. If people are handed free money, they would have no reason to obtain jobs. If no one is looking to obtain jobs, work does not get done. And if work does not get done, society collapses.

But does that mean we have to give people that much money all the time? In that case, people already earn free money when they go on welfare, but that lasts only six months. Why not make it permanent? Why not give everybody $100 every week? Or $200?

Assuming citizens are given, we'll say, $300 per week, that would be a little bit more than enough than if workers worked 40 hours a week at the minimum wage. Companies, worried about losing workers to free money, would be forced to raise their hourly wages. In essence, companies would be competing with the US government over providing enough money to give workers a good reason to work for them.

And with the extra money anyway, workers would have more money to spend on products, which would help other businesses grow and pay their workers.

But not only does giving free money help companies grow because they are boosting morale with raising their hourly wages, and getting more business because people have money to spend.

Giving free money empowers people.

One of the most influential political philosophers Rutger Bregman, wrote extensively why giving free money is the key to achieving a utopia. In a chapter of his book, Utopia For Realists, he cites an example in which a social worker, struggling to maintain a stable living due to a history of drug addiction, was given 3,000 British pounds. Did he spend it on more heroin, as people expect drug addicts to do? Nope. He asserted that with money given to him for free, he felt incentivized to look after himself.

Another example he cites to advocate giving free money is the government of Uganda distributing $400 to 12,000 citizens between the ages of 16 and 35. The only thing they had to do was submit a business plan. Five years later, the citizens invested the free money in their education and business ventures, causing their incomes to rise nearly 50 percent, as well as their odds of getting hired.

So, the notion that free money will be spend recklessly is incorrect.

In the wake of the pandemic that has caused numerous businesses to close, and people unable to pay their monthly rent, and also in the wake of the 2008 financial crises whose effects are still felt today, why would anyone spend free money recklessly? So many people have been negatively affected that they need money for goods and services. But they cannot get that money for goods and services because businesses are closing. Therefore, the surest way to keeping things as if nothing happened is to give people free money.

And even without taking the pandemic into account, there are still many ways individuals are hampered by their lack of resources in their amount of money. The cost of higher education is astounding. Healthcare costs are through the roof. Rent has been getting more expensive. There is only so many people that can keep up with the rising costs.

Investing free money will finally discredit the notion that poor people are poor because they are inherently lazy and recklessly spent their money. It does not have to be so much that everyone becomes an instant millionaire the moment they are born. But it can be sizeable enough that it can be start to helping individuals pay their monthly rent, save for higher education, and not be fearful of getting sick over healthcare costs. With free money, people are MORE incentivized to work because they have the resources to do so.

Free money will not singlehandedly resolve all our issues, but it will get a start. For a lot of workers, it will be enough. But for most others, it will make a significant difference in their lives.

CITATIONS

Bregman, Rutger. “Utopia for Realists: How We Can Build the Ideal World.” Utopia For Realists, Reprint, Back Bay Books, 2018, pp. 33–63.

---"Why We Should Give Free Money to Everyone.” The Correspondent, 24 Dec. 2013, thecorrespondent.com/541/why-we-should-give-free-money-to-everyone/20798745-cb9fbb39.

Kenny, Charles. “For Fighting Poverty, Cash Is Surprisingly Effective.” Bloomberg, 3 June 2013, www.bloomberg.com/news/articles/2013-06-03/for-fighting-poverty-cash-is-surprisingly-effective.

TL;DR: The concept of “free money” represents an expensive and poorly targeted social welfare program.

Having the government give free money to its citizens sounds like an attractive idea. There is only one problem. It is not really free. These programs, such as UBI, can incur a significant financial burden on the government. If the U.S. federal government gives every citizen $1000 every month, it would have to double its current tax revenues. Reasonable tax hikes are necessary for fair redistributions of social wealth. A 100% hike, however, does not fail in the definition of "reasonable".

Without significant additional revenues, how would the government pay for “free money”? The government would have to cut existing welfare programs. These cuts represent an essential harm of the “free money” idea. Proponents of the idea often cite a few economic experiments in which extra money significantly improved people’s lives. However, in these experiments, the free money comes as a supplement, not the replacement of existing welfare programs. For all their faults, programs such as SNAP and TANF target the most urgent needs of those most vulnerable in our society. “Free money” does not have such a clear target. By replacing welfare programs with free money for all, the government would essentially take money from the most vulnerable and distribute them to every member of society. This action represents a deeply regressive and harmful redistribution.

Welfare programs have specific targets. Sometimes, those targets seem too restrictive or misplaced. Such criticisms have many merits. In the United States, many of these programs do not benefit as many as they should. The attraction of free money lies in its rejection of targets. Instead, it seeks to become as expansive as possible to not miss anyone. This rejection represents an overreaction. By eliminating targets, free money becomes inefficient and wasteful as a welfare program. In the debate of safety nets, a good policy must balance precise targeting and proper coverage. Going to one extreme, as free money advocates have, invites only negative consequences.

For this reason, the government should not give people free money.