EDITORIAL: ‘Free’ money isn’t always a panacea

Creating and promoting dependence has long been a feature of the progressive agenda, perfectly embodied in the push to impose a “universal basic income,” under which all Americans would receive a monthly stipend from Washington.

Back in the real world, however, a trio of new studies concludes that such handouts will do little to achieve their objectives and may even be damaging.

A pair of studies out of the University of Michigan tracked the outcome of an experiment involving two rounds of $1,000 cash grants distributed through a charity to hundreds of low-income U.S. households in 2020. The researchers then surveyed recipients, along with a control group that received no stipends, and concluded there was no difference between the two in terms of material hardship, mental health outcomes, parenting challenges or child behavior.

The third study — out of Harvard and Exeter — involved 2,000 low-income participants, some of whom received $500 and others who received $2,000. Some recipients allowed researchers to monitor their bank accounts. When compared with those in the control group, who received nothing, the study concluded there was no evidence the money “had any positive impacts on our pre-specified survey outcomes at any point.”

In fact, the study reported several negative outcomes for those who got the free cash, including increased spending, fewer hours on the job and less work satisfaction.

“It’s no surprise that people who received a large percentage of their monthly income for doing nothing were less motivated to work and less satisfied with their work,” Allysia Finley of The Wall Street Journal wrote this week. “Earning a paycheck can give workers a sense of personal agency that encourages them to make better financial and health decisions.”

The studies — while not entirely on point — should be cold water in the face for Democrats who continue to insist that generous pandemic-related unemployment benefits had nothing to do with the nation’s labor shortages. As Ronald Reagan famously put it, if you want more of something, subsidize it, and if you want less of something, tax it.

While a safety net for the poor and unfortunate is necessary in a healthy and compassionate democratic republic, the ultimate goal of policymakers should be to foster the economic conditions that promote job creation and self-reliance rather than creating a system of cradle-to-grave reliance on the government. A universal basic income — combined with the current array of federal and state assistance programs — would probably do more harm than good for the very people it is supposed to help.