The notion of the federal government handing out free money used to be a liberal dream and a conservative nightmare. No more.
The coronavirus outbreak, which plunged the nation into an economic free fall, has created an opening for governments and nonprofits to experiment with giving money directly to Americans, with no strings attached.
In Los Angeles, thousands have been handed “Angeleno cards” — no-fee debit cards loaded with $700 to $1,500. Across the nation, food stamp recipients are getting a $1,000 check from a private effort whose leaders include former presidential candidate Andrew Yang.
The federal government, with near-unanimous support from Democrats and Republicans, is sending up to $1,200 to most people to blunt unprecedented job losses. Democrats in the Senate and the House have proposed even larger monthly payments.
During the 2020 presidential campaign, Yang proposed a universal basic income, with the U.S. providing $1,000 every month to every American adult. It seemed an unlikely proposal, but now leading Democrats have warmed to the idea.
Sure, why not?
What would happen if we all woke up tomorrow and each found $1 million under our pillow? Sounds good at first, doesn’t it?
Among other things, many of us would not bother going to work. Money would become worth a lot less, because it would be difficult to motivate anyone to do anything for amounts of money we currently consider typical. Loaf of bread for $5? Forget it.
There would be fewer goods and services, being chased by a lot more money. So prices would rise to adjust. After a period of awesome economic dislocation, life would proceed much as before — except we’d nearly all be poorer due to the inefficiency of coping with changing prices and the dislocation.
A universal basic income, or all these virus handouts, do much the same — only more slowly.