OPINION: The Liberal Case for a Basic Income

basic-income-poster

Max Sawicky’s post on the liberal case against a universal basic income (UBI) characterizes the rationale for UBI as poverty elimination at low overhead cost. While he’s right that this is one of UBI’s benefits, he misses its much larger goal. What distinguishes UBI from the anti-poverty programs we already have in the US is that it eliminates poverty through redistribution that is explicitly unconditional and universal—it goes to everyone, whether or not they work or are looking for work. Low overhead costs are simply a bonus of abandoning the means-testing and monitoring of work effort that are the foundation of all the programs Sawicky wants to expand.

The idea of unconditionality is counterintuitive. Work makes our riches possible, and all should contribute, if they can, to that work. UBI does not reject this principle of reciprocity, but challenges the priority of that contribution: should subsistence be conditional on work first, or should subsistence be guaranteed to all first, and work for anything more come after basic needs are met? Clearly, throughout most of human history, when life was dominated by scarcity of resources, the answer was the former. But why should that be the case in post-scarcity societies?

For some, the problem with unconditionality is not the fear of freeriding, but of abandoning efforts to provide meaningful and rewarding work for all. It’s easy to imagine the dystopic scenario in which millions are mailed monthly checks to stay home so we don’t have to create jobs for them, or provide childcare, or invest in the infrastructure required for a thriving economy. Just let the bankers do the work and pay the taxes that fund everyone else’s UBI. But that’s not so different from the welfare state we have now in the US—except that without the UBI, 50 million Americans live below the federal government’s wholly inadequate poverty threshold.

Advocates of UBI envision a society in which absolute poverty is eliminated and productive and rewarding work is defined and shaped by individuals, not the government. Anyone who wants more than the minimum provided by the UBI will need to work, but the UBI will give them what sociologist Erik Olin Wright calls “a permanent strike fund.” They’ll come to the labor market with leverage to negotiate better wages and working conditions for unappealing work, and with funds that make more rewarding but lower paying work feasible. Those who perform unpaid care or voluntary work will have an income without the government monitoring their performance in exchange for a stipend. Time spent on education and vocational training will no longer have to be weighed against earning an income to live on. Entrepreneurs will have a bit of venture capital with which to support themselves while they try out a business. Higher wages at the bottom of the wage scale will cause more automation of the most routine jobs, but the labor savings are shared with all through the UBI.

A utopian fantasy? Hardly—but a more democratic and pluralistic version of what we have now. Income inequality remains, but those at the bottom of the income scale have their basic needs met without having to prove their deservingness. Gender inequality remains, but women receive, on balance, a redistribution of income from higher earning men whether they work or not. Children go to school with full stomachs and warm clothes, and have more of a chance to use their education to improve their lot in life. Most importantly, citizens are no longer divided into groups vying for a bigger share of a stigmatized social assistance budget, but a unified force with the political clout to defend and expand the UBI. Individuals freed from the constraints of poverty help shape the contours of the economy through their inalienable and renewable economic “votes,” as they do in the political sphere. Like political democracy, it’s not perfect, but it’s better than the alternatives.

How do we get there? Not by expanding the programs Sawicky lists, which even if expanded and more generously funded will inevitably exclude some from coverage. Instead, we should push for a UBI modeled on the one he doesn’t mention but which happens to be the strongest anti-poverty program in the US—Social Security. Social Security is the closest thing we have to a universal benefit in the U.S. It’s not unconditional, but it’s inclusive eligibility rules mean that almost 90% of seniors are covered by it. Because it’s paid individually, it provides an independent income to spouses of covered workers even if they’ve never been employed themselves. Because it’s not means-tested, it doesn’t create a disincentive toward other forms of retirement savings or earned income. And because it’s nearly universal, it creates a powerful solidarity among its recipients that has successfully resisted calls for its defunding in the name of deficit reduction or “privatization”—unlike the fragmented, stigmatized, and politically powerless recipients of the programs Sawicky thinks we should expand.

The UBI should be universal, unconditional, individual, and untaxed. Income above the UBI should be taxed progressively, with steeper increases above median income. To more effectively target child poverty than a $10,000 adult-only UBI would do, the UBI should go to children as well and be pegged to the poverty threshold of a family of four—a minimum of $6,000 per person. To the extent that they pay lower benefits than the UBI, other programs can be eliminated and their budgets used to fund it. For those that pay higher benefits than the UBI, as Social Security does for many recipients, their budgets can be reduced to the supplemental amounts alone, with the savings used to fund the UBI. Additional funding can come from phasing out the $100 trillion in tax credits that go overwhelmingly to taxpayers with incomes far above the poverty line. And yes, we’d probably still have to raise taxes on the wealthiest Americans. But, as with the payroll taxes that fund Social Security, we’d know exactly where those taxes are going—to eliminate poverty.

Many on the right object to redistribution on any terms, but as Sawicky notes some on the right see UBI as the form of redistribution least disruptive to the market, and so prefer it to minimum wages, closed union shops, and employment stimulus programs that favor certain industries over others. This “market efficiency” aspect of a UBI could be the key to a bargain between the left and the right to guarantee all Americans economic security. It would be ironic if it turned out that the left was more attached to a punitive and stigmatizing welfare state than the right.

About Yannick Vanderborght

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16 comments

  • Almaz,

    I have a fully developed plan for an Open Source Software Platform for states to administer a Guaranteed Income plan with a work requirement. One supported publicly by Konczal.

    Note, it is a very broad work requirement called Choose Your Boss:

    http://www.morganwarstler.com/post/44789487956/guaranteed-income-choose-your-boss-the-market-based

    It’s important to get over the binary approach to a work requirement.

    Work, to a free marketer or small govt. conservative, means: someone / anyone using their own private accrued value, will trade some of it for what you do.

    I set the bar at $40 wk.

    So if you want to play piano for a living, you only need to find someone ANYONE who will part with $40 to earn your GI ($280) for the week.

    I also use the “work requirement” to directly benefit minorities in their community.

    It’s very hard for some people on the left, to stop worrying about exploitation of the poors, and to instead focus maniacally on CONSUMPTION.

    And microeconomics is the simple easy true economics…

    To wit, if the poor must work for one another in their own community, to receive their GI, then the costs of the goods and services in poor areas will drop IMMENSELY.

    Meaning, if two guys on GI decide to open hamburger stands next to McDonald’s in their neighborhood, they will be able to CRUSH McDonalds on quality AND price.

    The poor, if they must work for one another, will end up with the very things that the upper middle class have:

    farmer markets, yoga studios, food trucks, flipped homes, glass blowing studios, etc.

    The poor are only different bc they have less money to spend.

    Giving them GI is not enough – bc they will STILL be priced out of middle class lifestyles.

    IF they have to work, and they can choose their job, any job, then that GI + the drop in prices will make them middle class.

    My math shows that consumption amongst the poor goes UP by AT LEAST 30% if there is a work requirement.

    You can’t look a 30% bump in poor consumption OVER AND ABOVE GI, in the face and say no…

    You just can’t.

    • Morgan, thanks for your comment. Any program with a work requirement necessarily excludes some people and puts the leverage in the hands of the employers rather than the workers, which is why I favor an unconditional basic income. If BI recipients want more income they will have to work, but they’ll have more control over the work they take since they don’t have to work to meet their basic needs.

    • Stephen Stillwell

      People can be encouraged to trade services in any case, without government coercion, and with a BI they will have some money to do that with. (The possibility of false reporting and expense of verification are cons)

      If people think retaining meta data is too intrusive, why should anyone accept the government scrutinizing every bit of economic activity?

      I like that this could keep family farms solvent, and maybe draw more people back to productive sustainable lifestyles.

  • Max Sawicky

    I’m happy to engage Dr. Almaz Zelleke (‘AZ’) on the Universal Basic Income again. Thanks to all for reading and writing.

    Let’s start on some positive notes, where we agree. I fully support as a general matter some arrangement for guaranteeing an income to all. I do not think such guarantees, including a UBI, incur ‘free-rider’ or ‘shirker’ problems. As Dr Zelleke says, the provision of guarantees usefully strengthens the bargaining power of labor. The real issue for me is how to secure such a guarantee, not whether to secure it.

    Here is where utopianism comes in. There is good utopianism, and not-as-good. The better sort of utopianism is supported by a more or less tangible path to its fruition. I see no path to a UBI. Historically, the struggle has always been about a more or a less ample safety net.

    In the U.S. and modern social-democracies, the greatest part of the safety net is social insurance, comprised of benefits associated with the returns to labor. All such safety nets have holes, and those in the U.S. are egregious, and growing. (Though in one important case — health care — the hole is contracting.)

    Dr Zelleke would “model” a UBI on U.S. Social Security. This really does not follow. There is no similarity between the two. Social insurance is profoundly conditional, not universal. It is “inclusive,” in AZ’s term, because most people need to work to live. It is also durable, and it has proven susceptible to expansion. I would expand it further. I would also provide more support to care-givers, and by re-Federalizing AFDC in the form of an NIT-style family allowance. Note that, contrary to AZ, expanded Social Security and a family allowance do not require a “monitoring of work effort” beyond the usual reporting associated with income taxation (much of which could be eliminated with automatic filing).

    Although the idea is not drawn out, lurking in AZ’s essay seems to be the idea that subsistence needs can be met without human labor in some kind of post-scarcity setting. Perhaps I am misinterpreting. But I can say forthrightly there is no such post-scarcity society in view. Anywhere. Quite the contrary — even non-market amenities are becoming more scarce. Frontiers with resources for the taking are disappearing. We find more oil but we produce a more inhospitable (and expensive) environment.

    Somebody will need to work to help produce sustenance for basic needs, and much of this work will be unpleasant. And if you had a UBI tomorrow and Americans were able to turn down such jobs, there would be no shortage of immigrants willing to take them.

    Dr. Zelleke invokes the interest in the UBI on the part of some on the right. In the circles in which I travel, such interest cuts no ice. Not even a little bit. The malign political basis for such interest, moreover, is obvious: the UBI discourse provides an opportunity to attack our existing, flawed safety net by invoking a fantastical scenario of redistribution. The very thing that makes our social insurance as substantial as it is — the political support for benefits conditioned on work — is discarded in arguments for a UBI.

    UBI proponents would be better employed illuminating the sad failure of the 1996 welfare reform that abolished AFDC — currently the most glaring gap in U.S. social welfare.

    • Max, I appreciate your thoughtful response. Let me clarify four of the points I wanted to make.
      1. Social Security is not unconditional, but it is broadly inclusive, which is the key to its political invincibility. It’s not only the seniors who get it who defend it, but younger workers who know how important it is to their parents and grandparents. The universality of BI is one of the keys to its likely durability if it is enacted—a big “if,” admittedly, which I’ll get to below.
      2. The need for labor does not disappear as scarcity decreases, but it does decrease, and the question is whether we as liberals welcome that change or fight against it. The answer depends on whether we can envision a way to share the labor savings with everyone or allow them to be captured completely by owners of capital, and whether workers have more or less leverage to push for higher wages for the work that remains. I don’t see how any employment-based scenario will lead to the outcomes that liberals should want.
      3. Is some of the interest in BI on the right disingenuous? Of course. But given the U.S.’s political structure, there’s no way to move forward without an alliance across party lines, and more particularly without solutions that appeal to the states whose voters and legislators are responsible for the gutting of AFDC, TANF, and Food Stamps, and the rejection of Medicaid expansion.
      4. Both BI and the expansion of the existing safety net are equally Utopian right now. But surprising, progressive change happens. Political power was once inherited, then limited to wealthy men, and is now universal. Serfdom and slavery were once seen as necessary to meet our consumption needs, and are now reviled. Only a few years ago, gay marriage was a fantasy in the U.S., and is now sanctioned by a conservative Court. Liberals should be ambitious and fight for something worth achieving—not a patched-up safety net, but a safety net with no holes.

    • Max Sawicky

      The very thing that makes Social Security inclusive is the universal need to work — the very thing you reject in a UBI. So there is nothing about the inclusivity of SS that is relevant to the UBI.

      The struggle for a shorter work week — less labor, as you put it — is old, and it has always been led by workers. Unfortunately the modern organized labor movement has drifted away from this, but it is from labor that any such movement will revive.

      I see no useful compromise with the Right on income guarantees (unlike other issues, such as NSA spying). The Right must be vanquished, not compromised with.

      Cheers.

    • Michael Howard

      Max Sawicky writes, ” I would also provide more support to care-givers, and by re-Federalizing AFDC in the form of an NIT-style family allowance. ”

      Would this NIT go to families with children only, or would other adults be eligible? If the former, then there will still be many in poverty. On the other hand, a true negative income tax is very close to a basic income. With a NIT, the tax rebates phase out as one earns above the poverty line. A basic income goes to all, but progressive taxes are higher on the incomes of middle and upper income recipients. So the net income is the same.

      For Almaz Zelleke, is a NIT a more politically sellable version of a guaranteed income in the US? While the net cost of BI and NIT are nearly the same, the apparent large cost of a BI, and the greater changes in the tax code, and the initial apparent absurdity of giving grants to the wealthy, only to tax it back from their other income, are obstacles in the path for basic income advocates. These problems have answers, but do the advantages of a BI over a NIT warrant creating the political challenges? The path to a NIT is simply expanding the Earned Income Tax Credit. I’m genuinely puzzled about this, so would enjoy discussion.

    • Mike, thanks for your comment. I do prefer the universal grant recouped through progressive taxes to the NIT version, mainly because 1. it should be a monthly payment, not an lump-sum amount; 2. NITs require steeper phaseout rates on lower levels of income than universal grants do, and I’d rather have any earnings disincentive kick in at higher rather than lower incomes.

      But I’m not sure that the political fortunes of a BI ride on whether it’s in the form of a universal grant or an NIT. The big obstacle is unconditionality, and supporters of BI have to work through the objections to unconditionality first and foremost.

      That said, my own opinion is that a BI packaged as a refundable tax credit for all in exchange for a radically simplified tax code with few or no other deductions might have some success–in other words, making the personal exemptions and standard deduction fully refundable, and then progressive tax rates on all income above that amount.

      Call it the “Personal Investment Tax Credit” rather than a basic income. What do you think?

    • Max Sawickhy

      For the record, I’d prefer an NIT available to all, with or without children, but at higher rates for children, like the income tax. Basically the NIT extends the logic of the income tax’s exemptions and standard deduction into negative territory.

  • DHFabian

    The argument that poverty relief efforts kill the incentive to work, to strive, to excel, is a false argument. Contrary to the demeaning notion that people must be forced to be productive, this is actually a basic human drive. We need to be of use, to have a purpose. What fragments of the “welfare state” still exist are based on an elitist philosophy that “the little people” are lazy, useless creatures that must be under threat to be productive. Americans were taught to equate poverty with human inferiority; after all, our economic system is so superior, they say, that “there is no excuse” for being jobless. False, yet even what passes for a “left” in post-Reagan America can’t grasp this. They can recognize that we’ve shipped out the bulk of our jobs, and they recognize that the lack of jobs results in poverty. Yet they can’t quite grasp that poverty itself keeps people trapped; at the least, how do you get a job without a home address, phone, bus fare, and when you are ill from stress and the lack of basic human needs? Not wanting to deal with such questions, this generation merely chose to wave the Middle Class Only banner, ignoring poverty.

    • Thanks for your comment. The key to BI’s potential success is that it provides support to the poor and the middle class, rather than dividing them. As you note, building that alliance requires that we stop blaming the poor for their poverty. As more of the middle class experiences the economic insecurity of the “jobless recovery” perhaps we’ll get there.

  • Bill Cash

    I see this as a step for planning a future with automation and robots. Automation is taking more jobs each year and will add to the problem of insufficient jobs, at first (now) small but growing quickly and soon will be a major contributor.
    Right now I favor the Employer of Last Resort because we have so much work that needs to be done. But the basic income guarantee should be part of the planning.

    • BI and government-provided jobs are not incompatible, but I’d rather see economically secure individuals create their own markets and work instead of having the government do it. BI helps the market function better–meaning more in tune with individual preferences–when individuals have choices that are not constrained by desperation or lack of alternatives.

  • Jason Burke Murphy

    Part of the discussion included the charge that BIG proposals from the right are just a device in their campaign to undermine existing provisions for, well, the poor and the majority. I have taught Basic Income and a very large number of conservatives genuinely like it.

    Like Sawicki, I think they overstate the costs (emotional and financial) of means-tested low-income support but, once they see that BIG is low on bureaucracy and could actually help the poor they get interested.

    Milton Friedman (not a student of mine) stuck to his NIT proposal arguing it promotes freedom.

    And a large number of self-identified liberals think say things like BIG is “communism” or that the poor need to be watched.

    BIG provokes just the sort of political thinking that needs to be provoked.

  • Jason, thanks for your comments. Just to be clear, I don’t object to the costs involved in means-testing, but the monitoring of the behavior and actions of people getting such a modest amount of income support. We provide a lot more financial support to wealthy homeowners in the form of the mortgage interest tax deduction, but we don’t do home visits or ask them to take drug tests in order to get it. And yes, there are both supporters and opponents of basic income on both ends of the ideological spectrum, with many liberal egalitarians (like Rawls, Dworkin, Thompson and Gutmann, and others) as against the idea of unconditionality as those on the right are against redistribution.

  • Francisco G Nobrega

    Dear Dr. Zelleke:

    Congratulations for this article. You raise the important point that the UBI is in line with the free society while fulfilling the basic right to subsistence, independent of work. I guess your point about UBI for all is general solidarity and the avoidance of antagonism between recipients and non-recipients. Now we would appreciate your comment about our recent suggestion* to move everyone that receives social help in terms of food stamps, unemployment benefits, etc. to the UBI and use the current bureaucracy that provides means-tested social help to monitor everyone that loses his job and/or enters the “precariat” and move them to the permanent UBI. We think that this strategy is easier in terms of budget, will not raise the opposition of the bureaucracy, will attend unconditionally the most in need and is open to anyone through the surveillance of the state.

    Francisco and Marina from Brazil

    * http://binews.org/2014/01/opinion-a-suggestion-for-all/

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