Proof that Basic Income Works — Market Mad House

The U.S. government’s coronavirus response offers surprising proof that basic income works.

Some economists think America’s poverty rate fell slightly in April and May 2020, The Economist claims. In detail, a University of Chicago and University of Notre Dame paper found a slight drop in poverty despite the highest unemployment rate since the Great Depression. For instance, 22 million Americans lost jobs between February and April 2020, Forbes estimates.

American nominal disposable household income; the amount of cash the ordinary household has, grew by 4% between June 2019 and June 2020, Goldman Sachs (NYSE: GS) estimates. In contrast, the U.S. Bureau of Economic Analysis (BEA) estimates America’s gross domestic product (GDP) shrank by 5% in 1st Quarter 2020.

That’s right, Americans’ incomes grew and poverty fell when the GDP was shrinking. We need to investigate the cause of this discrepancy because it shows we can cut poverty even in times of economic decline.

Trump and Congress just showed us Basic Income Works

Household incomes grew and poverty fell because of the federal government’s response to the coronavirus depression.

First, Uncle Sam sent most Americans a $1,200 cash payment in April. Second, Congress guaranteed most job losers $600 a week in unemployment insurance.