One of the persistent criticisms of the Universal Basic Income is that it would either entice people to purchase addictive substances, such as alcohol, or enable existing addictions through the added cash benefit. Dr. Katarzyna Gajewska, an independent scholar researching the UBI, has studied this question in the past. Her unique insights deserve further exploration. I recently had the opportunity to interview Katarzyna on the subject.
In the interview, Katarzyna discussed her conclusion that it is “improbable” that a UBI would cause someone to become an addict. She believes that “abrupt measures,” such as taking away an individual’s basic income, should not be how the state manages addictions; instead, the state should find ways to “protect” them from spending their income on addictive substances. This could mean funding more places that provide help for those struggling with addiction, like the services at ARC Rehab for example.
In order to win the political argument, Katarzyna said it is important that the UBI movement advance a “human argument,”. According to her, “the more we de-mystify and understand the unemployed and addicted by telling their stories, the more empathy will be created.”
Katarzyna also believes that the UBI movement should place greater emphasis on how a UBI would transform society:
One can think of the basic income project as a way of transforming culture and daily practices by exiting the competition and alienation that employment system boosts.
If one is liberated from addictions and non-meaningful consumption, basic income could make it possible to engage in the projects that one finds worth pursuing and bring joy into working together.
The entirety of my email interview with Gajewska is reproduced below. Some sections were slightly modified for clarity.
1. A World Bank study found that in Latin America, Asia and Africa cash transfers had little impact on “temptation goods,” such as alcohol. Do you think these findings are applicable to Western countries as well, or what are the limits from this type of study?
Definitely, it is a research question to pursue. The Finnish experimental study on basic income that is about to be produced or the Dutch experiment in the city of Utrecht could be an interesting opportunity to generate several PhD projects on such a question. I would go for a meticulous sampling of addicted (or prone to addiction) individuals with basic income, including as much diversity of individuals as possible in terms of variables like demographic, job history, and variables relevant to addiction. Such a study could be an opportunity to gather a lot of qualitative data and get a new understanding about the relation between income and addiction. The research would reveal whether the UBI contributes to or rescues individuals from addiction, and under what conditions. It seems improbable to me that one would fall into an addiction because of the UBI. A healthy, emotionally fit individual would not be tempted by an excessive substance use in the first place. However, one can address this question in the general survey. Revealing the influence of monetary allowance on addiction (positive or negative), while taking into account other contributors to addiction, would be an important finding to inform social policy makers. Instead of deciding in favor or against a UBI, further adjustments informed by experimental research need to be formulated.
2. How should a basic income scheme handle relatively extreme instances of alcohol and drug addiction? That is, is there a point when the state should intervene and remove an individual’s basic income for undesirable behavior, even if it only causes individual harm?
With or without a basic income scheme, the state should prevent further individual harm by providing therapy measures. Depriving an addict of subsistence may lead to a criminal behaviour, harming family members or friends. A person in an advanced stage of addiction will find all possible means to get a fix while remaining in denial of the addiction. So the costs may become much higher than providing the addict with therapy. Instead of employing someone to detect who is an addict in order to deprive them of their basic income, the state could make a better use of this money and invest in therapists that specialist in addiction. Additionally, there is a whole problem of defining at what stage the addiction justifies such a decision and the administrative procedures involved in it. A more constructive measure would be to offer psychological therapy and organize addicts in work collectives within subsidized enterprises as Johann Hari reports was done in Portugal. Furthermore, physiological deregulation needs to be accompanied by therapy. I have heard of a foundation in Budapest that accompanied addicts with massage therapy. Instead of withholding subsistence means from an addict, one could think of protecting an addicted individual from spending all their income on the addiction. Such measures can include public housing and other basic services such as going to somewhere like this drug rehab in New Jersey, or one that is closer to home.
However, financial resources are relatively irrelevant in pursuing addictive behaviour. In France, a woman who held a high position in a big company became an alcoholic. Alcohol use was widely accepted and even promoted in this male-dominated environment. Once she fainted because of alcohol overuse. Then she got fired and company management informed her that her problem was widely known within the company for quite some time. No one in the company had talked to her about it. She stopped drinking and wrote a book. A person in such a position has probably enough savings not to worry for a while, so it was not the fact of losing money that made her stop in the first place. What protects an alcoholic’s self-illusion is the taboo culture around addiction and others’ fear of confronting the addict about it.
In developed countries where social networks are very loose, it would be difficult to recreate such a structure of belonging to a group that would motivate an isolated addicted person to undergo treatment. It is recommended that alcoholics seek support and treatment from somewhere like DayHab alcohol rehab. In the research on addiction, this is one of the theories that the lack of deep social ties boosts a withdrawal into addictive behaviours. So instead of “healing” an addiction with punishment, social policy needs to take into account the basic human need of belonging to a community. Bruce Alexander, the author of Rat Park experiment that demonstrated the impact of the social isolation on addiction, identifies the main reason for addiction in dislocation, which he defines in the following way: “On a social level it is the absence of enduring and sustaining connections between individuals and their families and/or local societies, nations, traditions, and natural environments. In existential terms, it is the absence of vital feelings of belonging, identity, meaning, and purpose.” While recovery movements addressed this void by creating local initiatives to help people create new ties and feel more integrated, Alexander considers that this is not enough a remedy and advocates transforming the entire society to prevent the conditions that bring isolation and the lack of meaning that push people into addiction.
Addiction poses an enormous challenge on policy makers, us individually and as a society. Taking away an income, or considering that the state should take care of the money is searching an easy way out that turns against us in the long run. Punishment is a sign of hopelessness and helplessness. To question this policy, it is essential to reconnect to our emotions – to understand why punishment appears as the sole solution. Anyone who has had an opportunity to talk to an addicted person, as I have several times, knows how emotionally draining and painful it is to see an addict. Personally, when walking through a town, I would not give money to a person that is obviously going to use it on addictive substances. I look away because I feel powerless. We do it individually and we do it as a society. This is probably why the political solution easiest to envision is not to see it, not to address it, or address it with abrupt measures such as withdrawing income. UBI movement needs to address this reticence that probably is common to many potential supporters.
3. You mentioned there needs to be a “broader vision and a movement needs to stand behind the UBI”. Can you elaborate on this point?
This is my criticism of the UBI movement. We are a movement of many visions and versions of a UBI. This deters potential supporters. For example, during citizen debates I participated in here in France, sometimes we find ourselves not knowing which proposition we are talking about. I believe that it is a high time to elaborate a vision not only of giving people money but also the transformation that we want to achieve by it. For example, the p2p, Transition Towns, and de-growth movements* could join forces together with (at least some parts of) the basic income movement. The vision to elaborate would be less about the logistical and technological solutions and more about the transformation of human relations, organizational structures and dynamics, the trade relations between Western consumers and workers in developing countries, and individuals’ lifestyles. In all of this, the way of organizing production and consumption is crucial. I do not think that giving people money so that they can pursue their shopping addictions, buying imported cheap stuff produced by exploited workers and with high environmental costs, is a political project that can motivate enough people. The capitalist system generates a set of conditionings. We need to heal our relation to work and consumption (including addictive forms of consumption) so that work is a source of meaning and belonging. One can think of the basic income project as a way of transforming culture and daily practices by exiting the competition and alienation that the employment system boosts. If one is liberated from addictions and non-meaningful consumption, basic income could make it possible to engage in the projects that one finds worth pursuing and bring joy into working together. Starting from there, a less consumerist and more communal lifestyle could develop. Western civilization has advanced so much in technology and so little in community living and emotional healing.
To advance the UBI proposal, the movement needs to give a taste of this transformation. Create stories and enact this new way of being together. There are already such examples in place: Rainbow Gatherings are a way of enacting a different way of being together; Occupy Wall Street experimented with organizing logistics; intentional communities generate a new way of living together. Another such example is a free cafeteria, People’s Potato at Concordia University in Montréal where volunteers can drop in and contribute their work. In the interviews I have conducted, some pointed to the integration and breaking of isolation that this project induces. Multiplying experiments of living without conditions and questioning other capitalist premises could become the movement’s agenda. And through these experiments, activists can touch the deeper questions like the healing of addictions and the reflection on the policies and organizational structures that should accompany the introduction of a UBI. Many people in the movement see the potential that would be liberated and the new cultural shift thanks to a UBI, but we can already begin working on this new culture and accelerate the realization of the UBI implementation as a result.
4. Even if evidence suggests the basic income would not have a significant impact on undesirable behavior, the fact that some individuals may abuse the system is a political liability. How does the basic income movement win the political argument?
The argument for or against a basic income (one that effectively liberates citizens from the necessity to be employed to have a decent life standard) is a debate about human nature. So the movement needs to focus on confronting people with the image of human nature they hold and where it comes from. The movement’s strategy should be to help individuals arrive at a deeper understanding of such judgements. The debate needs to be informed by research findings on trauma therapy, addiction, and epigenetics. Bringing scientists from these disciplines on board would be a great strategic choice. When engaging with the political process, the movement should come up with additional research-informed measures to accompany the UBI. The winning argument would be a more specific proposal of the reform to be introduced.
It would be great to mobilize money for academic research, future empirically and qualitatively informed research studies. A senior researcher would need to be enchanted by the idea. Applying the case study method, scientific inquiry should select individuals facing unemployment stigma, addiction, or other difficulties in the Western context. Research funding could be allocated as a UBI to several well selected individuals to study their behaviour under this condition and test other conditions such as basic income combined with therapy.
There are these crowd-funded basic income projects: one in Germany and other for Scott Santens in the US. These are great projects, but why not bring the idea to the next level and allocate such an allowance to a typical “strawman” or scapegoat in the debate who has not even heard of a basic income before? Great material for a documentary. This would also be an occasion to explore the idea of unconditionality and trust. These are the psychological and cultural preconditions to implementing a UBI.
People tend to consider political attitudes or support for a reform as an effect of logical-rational reasoning, so one searches for an argument. But there is some scientific evidence that emotions define our “rational” decisions. So more work needs to be done at this level instead of winning any argument. My take on the reason why the gay movement has experienced many successes is not political process or winning an argument but cultural shift within the society. Gay people came out and took pride in who they are. And they were visible in our friend’s circles and among work colleagues. The same can apply for the strategy for UBI. The more we de-mystify and understand the unemployed and addicted by telling their stories, the more empathy will be created. We should work more on the human argument, the emotional side of it. Like with gay rights, the UBI may be supported by a silent not mobilized majority.
5. Any other important comments?
It is very important to address this question and to learn more about it within the movement. To arrive at any substantial change, we need to meet people at where they are, address their fears. And this requires a better understanding of addiction and healing. Also the problem of alcoholism and addiction is not well understood in our society. By remaining silent about it, we deprive the affected and their close circle from taking action. Media outlets have a role to play. Thank you for bringing it up!
Katarzyna Gajewska (PhD) has contributed, among other publications, articles on unconditional basic income and alternative ways of organizing production. You can find her non-academic writing on such platforms as Occupy.com, P2P Foundation Blog, Basic Income UK, and LeftEast. For updates on her publications, you can check her Facebook page or write to her to get updates by e-mail: k.gajewska_comm AT zoho.com.
Goa Foundation and the Goenchi Mati Movement advocate for a fair mining and intergenerational equity model defining it as commons, which you can read in this article and the other resources. They develop a vision of maintaining the wealth coming from selling inherited minerals to serve the broader community and not just the privileged few. One of their proposals is citizens’ dividend, which, they argue, will “create a strong bond between the citizen and their commons“. According to the calculation mentioned by the Research Director of Goa Foundation, Rahul Basu, every citizen in Goa would receive a commons dividend of thousand rupees a month if the fund were managed according to their proposals. I outline how this proposal may be enhanced by deepening the commons as a philosophy and governance model, which is already incorporated in their blueprint. Instead of focusing on just giving cash transfers, I would ask how the money can create sustainability. This is a big issue in the context of environmental disruption by short-term thinking. Wealth distribution can liberate from the incentives that poverty produces. You have the chance of posing and giving space to these important questions.
The answer may need a long time and a lot of expertise but the results may be not only aligned with but strengthen the basic tenets of intergenerational justice. This reflection is relevant to the broader debate on a UBI, citizen’s dividend, and accountability.
I develop in my writing a broader vision of UBI going beyond just cash transfers. I believe that the reform needs complementing measures to be added to create a real alternative to the current system. As part of this vision, I want to inspire creating organizational structures that will enable people to access high-quality basic services and be an alternative to the monopoly of the current market system which has many disruptive externalities. You can see examples of such an organization of work in my articles.
I propose to focus on building sustainability to maintain the health of the community and yield long term advantages for future generations.
Agriculture and correcting market food supply
It is difficult to free farmers from the vicious cycle of the past mistakes and the short-term planning that living in poverty imposes. Therefore, the best way to use resources is through giving subsidies and knowledge transfer to enable advanced low-tech agricultural methods such as permaculture, wild agriculture, or agro-forestry. The abundance in the food supply, which such a change of direction promises, can benefit various forms of organizing food distribution. This can have both forms of targeting farmers in particular as their practices pollute the environment around them as well as the broader community to enable the poor to produce their food in community gardens. One can think of a hybrid solution such as the one described in the case of a small farmer who invites consumers to participate in food production. Such methods require a long-term commitment and the resources to invest in developing soil but with time they will produce abundance that can be redistributed among citizens. It will also contribute to sustaining the natural resources in the region. With this kind of approach, you not only redistribute wealth (nutritional wealth) but multiply it.
The influences that have destroyed agriculture all over the world are taking a toll on India. A recent initiative by the government wants to foster organic agriculture but the project resembles the commercial, export-oriented type of intervention, which may not benefit the poor directly. How can you protect the soil from land grabbing and the interests of monopolies like fertilizer producers and other branches of the agricultural industry? The answer needs to mobilize various actors, also consumers.
While in India, I talked to a 19-year old woman who studies sociology and has all this critical thinking and discourse pouring out of her. At the same time, she eats at McDonald’s and thinks it is cool. Industrially processed food is particularly dangerous for India due to ineffective recycling and waste management. Cash transfers may add freedom but the one promised by the interests of the multinational companies at the cost of sustainable health and agriculture.
Collective rather than individual approach
While I understand the argument against taxing citizens by transferring real income from the Permanent Fund to the government instead of giving individual dividends, this type of redistribution may also be as short-sighted as the extractive industry is. We can imagine a different approach, which is neither former nor the latter option but something in between. Definitely, the government has shown limits in governing resources, which calls for other than tax solutions. By building up robust structures and practices that will sustain collaboration capacities of the population, you are enabling the population to multiply rather than only consume resources. And this is something that benefits the entire population so the dividend has a universal effect in the long run.
Nowadays, there are many instances of technologies that create abundance, for example, solar energy; think of community solar stove in neighborhoods. Think of all sorts of circular economies that could change the mindset about how resources are used and produced. There is this magic thing about nature that once you work with (and not against) nature, including human nature, you can create abundance.
Instead of atomizing the resources, I propose to give them at collective disposal so that people can make collective investments to share resources: building collective kitchens, gardens, and other commons. Giving money into collective hands as opposed to just individual transfers, which you don’t know how people will end up spending and whether their spending will actually be good for the community and for their health, will produce cumulative results.
The problem with cash transfers is that if you just give money but there is no consciousness, no awareness of how to spend money in a sustainable way then the money will be just spent on things that actually contribute to the damage of the region and the future generations. Cash transfers are intermediated by mentality and culture. Therefore, it is important to build this intermediating fabric in the community. For example, how could you enable creating public spaces where self-organization happens, where connection happens, where people are brought back to responsible and sustainable consumption?
Culture and community
Another building block of creating sustainability is preserving culture and community. It is important to ask what organizations, what projects, what knowledge could preserve the indigenous and original Indian culture to protect it from erosion? The dying out of traditional cultures will lead to spreading addiction and other social dysfunctions. The question is how to prevent Western style of capitalism and cultural and relational poverty from imbuing your region. Investing in protecting the community is a form of creating a commons, which foster public health outside of the pharmacological approach and dependency on extractive industries.
If we look at the intergenerational equity in structural and cultural context, giving out cash transfers appears as delivering the region to the tyranny of near-sighted vision and forgoing a deep social change. Cash may enable and encourage consumption that fits well into the interests of hegemonic actors and ideologies. Before enabling consumption, we need to transform the underpinning culture and underpinning patterns which brought obesity and other health problems in the West.
Rahul Basu’s comment
We wholeheartedly agree that fostering communities is necessary. Our structure has been designed to deal with the serious issues that arise from the misgovernance of mineral extraction. One aspect particularly important for India is the large number of power hierarchies – class, caste & gender being just a few – and which permeate even traditionally self-governing villages. This enables politicians to develop winning coalitions using a divide and conquer strategy. The Citizen’s Dividend is essential to connect people to their mineral inheritance and the equality of the dividend prevents the division of the people.
While it is desirable that this income be pooled in ways that foster communities, we believe that this should be left open to the recipients of the dividend. Indeed, in the SEWA pilot of UBI in India, one group pooled their dividends and jointly took up fish cultivation. If on the other hand, this money is mandated for community creation through the legally recognized legal structures like villages / cities, we will neither have a community nor will we have resolved the misgovernance of the mineral inheritance.
“(…) mental health cannot be defined in terms of the “adjustment” of the individual to his society, but, on the contrary, that it must be defined in terms of the adjustment of society to the needs of man,[highlighted in original version] of its role in furthering and hindering the development of mental health. Whether or not the individual is healthy, is primarily not an individual matter, but depends on the structure of his society. A healthy society furthers man’s capacity to love his fellow men, to work creatively, to develop reason and objectivity, to have a sense of self which is based on the experience of his own productive powers. (…) Society can have both functions; it can further man’s healthy development, and it can hinder it; in fact most societies do both, and the question is only to what degree and in what directions their positive and negative influence is exercised.” Erich Fromm (1956/1959)
This is the third and last part of a series of articles published on BI News, in which I call for accompanying a UBI with reforms in the domain of public interest services (please see the first and second parts). The analysis will help one to imagine how the work experience could be transformed to contribute to happiness in a UBI society.
In the current employment system, work organizations are rarely adjusted to human needs, such as self-fulfillment and meaning. In the article on Bullshit Jobs, David Graeber (2013) observes that the more a job is useful for society and able to provide a sense of meaning, the less it is rewarded in monetary terms. Furthermore, employment is an exclusive form of work organization. UBI could help transform work if accompanied by initiatives to create frameworks for useful and meaningful contributions. This paper draws on empirical research of a cooking collective known as People’s Potato. There are similar initiatives where work is distributed among volunteer – for example, the global movement, Food Not Bombs, Les Petites Cantines, which are participative restaurants in poor neighborhoods of Lyon, or the Brooklyn-based food cooperative, Park Slope Food Coop, with about sixteen thousand member-peers.
Example of People’s Potato as a project of regaining work and producing commons
People’s Potato distributes vegan lunches for free at Concordia University in Montréal. It is managed by a workers’ cooperative. However, much of the work is done by volunteers, who can come and go without notice and choose from available tasks. Three other publications provide more details (Gajewska 30 June 2014, Gajewska 2014, Gajewska 10 April 2017). In September 2014, I interviewed several students and non-students helping out in the kitchen. In this article, I will analyze the elements that attract volunteers to People’s Potato to illustrate the potential of advancing human happiness by creating spaces of spontaneous work contribution in the domain of services of general interest.
Work as source of meaning and belonging
Gerald Hüther (2015) defines work as a system of relationships (Beziehungsgefüge) that integrates an individual into society. In order to develop, our brain needs experiences created with other people, a shared undertaking and it is structured by these experiences. Many people simply are deprived of the opportunity to contribute work that has meaning with tangible results, that might enrich the lives of other people. Gallup data shows that only 13 percent of people are emotionally invested in their work. 63 percent are “not engaged”—in other words, simply unmotivated and unlikely to exert extra effort. The remaining 24 percent are “actively disengaged,” or truly unhappy and unproductive. The United States and Canada actually have the highest engagement rate in the world. 29 percent of respondents from these countries reported that they are invested in their work, whereas only 14 percent of Western Europeans are (MacGregor 2013).
Volunteers that I interviewed indicated that doing something useful was an important reason to join People’s Potato. One woman mentioned that giving out food for free generates a spiritual satisfaction in her. Many participants stressed that they contribute because they believe in the cause. For one, the integration of handicapped volunteers, working with the other volunteers in the kitchen, was especially important.
The importance of having fun
How can work be organized so that no coercion is needed? Despite all the developments in the domain of technology and entertainment, Western societies seem to have lost the capacity and the conditions to play. In my view, this lack is one of the fundamental obstacles for changing the economic system. Therefore, it should become the subject of political debate and in-depth research to determine how to create a society based on play, not as a form of consumption but as a joy of engagement. Bob Black describes play in the following way: “Play is always voluntary. What might otherwise be play is work if it’s forced. (…) Playing and giving are closely related, they are the behavioral and transactional facets of the same impulse, the play-instinct. They share the aristocratic disdain for results. The player gets something out of playing; that’s why he plays.” (Bob Black 1996: 239).
Organizing work processes so that volunteers have fun is an important element of People’s Potato’s philosophy. For example, people often perform tasks in groups, close to each other, so that talking is possible. Once when we chopped the same vegetables for quite a while, the coordinator asked: “Are you guys still having fun?”
One participant in People’s Potato mentioned that he would continue to contribute at the cooking collective only if it retains its current non-hierarchical structure. Another volunteer said that she would not participate if the involvement felt like her regular job in a commercial gastronomy where she worked part time at the time of the interview.
Alternative work spaces for a healthier society
Loneliness is a health issue. Therefore, government should also think about policies that might limit the extent of isolation in our modern atomized society instead of subsidizing pharmacology and conventional medicine as the only solutions for health problems. Being a critic of modern civilization, Helena Norberg-Hodge demonstrates in her book “Ancient Futures” how the different organization of work in indigenous Ladakh society includes (or used to include) older people. Since there is no pressure, people can contribute at their pace and be part of a joyful community. She observed that, in this society, typical old-age diseases were rare and elders were well-integrated in this society, throughout their lives.
People’s Potato also creates conditions for different types of people to contribute and enjoy a community. Meeting people and interacting with folks outside of one’s studies were important reasons to come and help out. A Brazilian woman had been coming to the kitchen to integrate in Montreal, her new home, at the beginning of her stay. Eventually busy with new friends and activities, she came less often. For her son, an artist suffering from depression, volunteering at the People’s Potato gives structure to his days. Two women in their early twenties told me that they feel more at ease to meet and interact with people by joining collective work rather than going to a party. A young woman said that one of the reasons why she keeps coming to the People’s Potato is that they know her and she can keep in touch with people through helping out.
Bringing people together around useful tasks does not, however, automatically translate into deeper ties, even if they are crucial for health. Longitudinal research has shown that the quality of relationships does determine possible health advantages. One of the interviewees, an aged unemployed man, comes to volunteer to be part of a community. Yet, during eight years of volunteering, he has not managed to build stronger ties with other participants of the project. He wishes that people would notice him and be interested in keeping in touch outside of the kitchen. Unfortunately this did not happen.
Experimenting with work organization to prepare the ground for a UBI
People’s Potato’s alternative work organization exemplifies how a post-capitalist system of production could look and feel. In order to change the perception of and feelings about work shaped by the employment system, neurobiologist, Gerald Hüther (2015), proposes to re-condition the brain by creating positive work experiences. This is what People’s Potato’s team does. New forms of work organization can rewire society to manifest new ways of approaching work. These could be considered as laboratories of inner transformation to induce those attitudes and behaviors necessary to build a new kind of society. This new understanding of work could foster the ideological and mental foundation needed for an unconditional basic income society. In the interview published on basicincome.org (Gajewska 2016), I argue that a transformation of work and social relations to prevent substance addictions is a crucial element to prepare the ground for a UBI. We can convince opponents by prefiguring the well being that we strive for.
Black, Bob (1985): The Abolition of Work, “The Abolition of Work and Other Essays”, published by Loompanics Unlimited,
Fromm, Erich (1956/1959) : The Sane Society. London : Routledge & Kegan Paul Ltd.
Gajewska, Katarzyna (2014): Peer Production and Prosumerism as a Model for the Future Organization of General Interest Services Provision in Developed Countries Examples of Food Services Collectives. World Future Review 6(1): 29-39.
Katarzyna Gajewska is an independent scholar and a writer. She has a PhD in Political Science and has published on alternative economy and innovating the work organization since 2013. You can find her non-academic writing on such platforms as Occupy.com, P2P Foundation Blog, Basic Income UK, Bronislaw Magazine and LeftEast. For updates on her publications, you can check her Facebook page or send her an e-mail: k.gajewska_commATzoho.com. If you would like to support her independent writing, please make a donation to the PayPal account at the same address!
The following is a critical response to Brookings’ “Money for nothing: Why a universal basic income is a step too far,” by Isabel Sawhill.
Isabel Sawhill wrote a short essay about basic income, arguing that it may be a step too far. To me, what has been “too far” is precisely this present day Kafkaesque system of oppression, where poverty runs rampant (even in the so-called “rich” countries), levels of inequality are breaking records, all while societal and environmental stress reach all-time highs. Nonetheless, the article deserves a response because Sawhill manages to aggregate the most common criticisms/preconceptions regarding basic income: that we cannot afford it, that the wealthiest should not be “helped” and that without obligation people do not meaningfully contribute to society (a nuance on the trendy “people will just be lazy” argument).
So let us deconstruct each of these arguments.
“(…) logic is inescapable: either we have to spend additional trillions providing income grants to all Americans or we have to limit assistance to those who need it most.”
This logic is not inescapable. In fact, it is wrong. Financing a basic income does not just amount to thinking of an amount for the grant (say $1000 per month), multiplying it by the country’s population (319 million people) and then paying the bill (in this case, $319 billion per month, or $3.828 trillion per year). That is very bad math. A more sensible tax policy will transfer a part of the taxes collected from the relatively wealthier to those relatively poorer. Actually, the former will be net-payers of basic income, and the latter will be net-receivers of basic income. Depending on the taxation levels at a certain moment in time, this redistribution of income can even be done without any supplementary cost.
Another fallacy is this idea that a basic income could “limit assistance to those who need it most”. How would that even be possible, if the basic income is enough for basic human needs, and is universal and unconditional? Would it not then provide the assistance to those in need?1 It will, but only in a much better way than in the present system: it would do it without policing, without stigmatizing, without controlling and with much less bureaucracy. In fact, part of the money necessary to finance basic income will come from savings in conditional social assistance grants that have become obsolete, mainly because beneficiaries no longer meet their requirements (mostly means-tests). Furthermore, there are too many targeted social safety net policies in the US, which nevertheless fail to effectively eradicate poverty. In an analysis by Karl Widerquist, around 7 percent of workers live in poverty, as do 22 percent of children. The idea is that basic income can circumvent all of these conditional assistance programs, providing universal unconditional support, and reducing social assistance complexity, bureaucracy and cost.
“One option is to provide unconditional payments along the lines of a UBI, but to phase it out as income rises”
As long as one looks at basic income as an income redistribution scheme, this is just stating the obvious. As income rises, and taxes paid also rise, then on a net basis people will of course be paying for basic income, not receiving.
“Liberals fear that such unconditional assistance would be unpopular and would be an easy target for elimination in the face of budget pressures.”
Fear has never been a wise consultant, but, philosophy aside, there is no evidence that basic income would be unpopular in the US, even considering the precocious opposition from leading political figures. Plus, in the face of budgetary pressures, I do not see why basic income would be any more likely to be subject to cuts or to be targeted for elimination compared to other social security policies. Actually, as a wider policy than targeted programs, and one that would make some of these targeted programs obsolete, basic income would likely be more difficult to eliminate since more would be at stake (in comparison to just losing a tax benefit or food stamps eligibility).
“(…) poor and jobless are lacking more than just cash. They may be addicted to drugs or alcohol, suffer from mental health issues, have criminal records, or have difficulty functioning in a complex society. Money may be needed but money by itself does not cure such ills.”
Now let’s think a bit about this. What can bring on addiction or addictive behaviours? What can cause mental health issues? What can lead to criminal behaviour?
Firstly, we would like to encourage anyone reading this who is suffering from an addiction to reach out to someone and get assistance in whatever way you can. This could mean asking for help at a homeless shelter, going to recoverydelivered.com in Florida, or just reaching out to your family. Addiction is crippling and the fact it’s being used to counter an argument is despicable. Addictions may come into a person’s life for a multitude of reasons: past traumas, family issues, health problems, professional pressure…and poverty. Poverty has been extensively shown (ex.: A primer on Social Problems, Effects of Poverty) to be a generator of many social problems, including malnutrition, health issues, and distress. So it is obvious that poverty bears a feedback relation to trauma, family unrest, health and professional pressure, although it is not the only cause of social ills — rich people also share some of society’s problems.
Addiction specialists, like Katarzyna Gajewska, are also not convinced that basic income can have an exacerbating effect on addictive behaviour, due to its multifaceted nature. It is just not the monetary facet that is affected, but there is also a need for emotional healing from addiction that is needed for the ones facing this problem. Meanwhile, no basic income trial test to date has found significant increases in the use of addictive substances due to unconditional cash transfers (Scott Santens, 2016). As for mental health issues, in fact, the Canadian “Mincome” experiment has found a correlation between basic income and reduced hospitalizations due to mental illness, as described in the relatively recent report by Evelyn Forget. And as for crime, hard data from the basic income pilot study in Namibia has shown a 42 percent decrease in the crime rate attributable to the distribution of an unconditional basic income for nine months.
Somehow Isabel resists the idea of a basic income on the grounds that it stems from a flawed assumption that money alone can cure society. But, looking at this evidence from the “cause” perspective, lack of money – that is poverty – is indeed at least partially causing these problems of addiction, mental illness and crime. And so money, although not a cure in itself, is bound to substantially reduce these social illnesses.
“A humane and wealthy society should provide the disadvantaged with adequate services and support. But there is nothing wrong with making assistance conditional on individuals fulfilling some obligation whether it is work, training, getting treatment, or living in a supportive but supervised environment.”
There is, actually, something wrong about a conditional social programs. Social Security in the US is very complex, particularly due to means-tested criteria. Plus, there is evidence that social security programs can lead to stigmatization (to which political and media discourse also contributes in an important way). Moreover, the worry that people will just stop working without a work obligation is unfounded – all basic income experiments to date have shown little to no work reduction on average. That’s despite the fact that most research tells us that people work too much (particularly in the US), and that is a bad thing generally. So a cut in average worked hours would actually be welcomed. And this is not even discussing the type of work performed (useful or not, meaningful or not, benefiting society or not). Every workplace should have health and safety precautions in place to prevent staff from overworking at all. In fact, this extends to so many health and safety measures such as fire exit signs and hazard precautions in general (look these up here for example). Although these are the obvious forms of health and safety in the workplace, sometimes people forget that overworking along with stress and mental health can also be a contributing factor to the ill health of employees within a business. Some do try to relax and find pleasure by watching adult videos (check these porn site reviews, for example) and other similar recreational activities. However, overworking still tends to be a cause for concern.
“In the end, the biggest problem with a universal basic income may not be its costs or its distributive implications, but the flawed assumption that money cures all ills.”
Indeed. Money is not everything. But too many people suffer the consequences of not having enough of it on a daily basis (around 24 million in the USA alone), which is totally unnecessary and utterly avoidable. And while not having enough money makes people stressed and desperate to find more of it just to meet their basic needs, they are not enjoying the non-monetary parts of life: quality time with family and friends, leisure, acquiring meaningful knowledge, participating in public/cultural life, volunteering and so on.
1 – That’s not to say that special needs would not be attended to, like disabilities or disease supplements. For those special needs, basic income just needs to be topped up with an extra amount which can satisfy them.
How a World Basic Income can be sort of mostly free.
The economic downturn associated with the coronavirus is causing a humanitarian and economic disaster. Now is the time to push for a World Basic Income (WBI) paid to every human on the planet. It should be high enough to cover the cost of living, at least in the developing world. This payment would not just stave off hunger and extreme poverty, but also work as a general stimulus for the global economy, which faces a potentially catastrophic contraction.
While the greatest benefits of this payment would be felt in the developing world, where the increase in income would be bigger in proportion to their current income, it would also provide important benefits to the developed world.
A WBI would pump demand into the global economy by raising the non-wage incomes of the population as a whole, including workers. This would reshape the global labour market, lessening migration pressures and the severity of cross border wage competition, because workers in and from the developing world, protected from absolute destitution, would be less inclined to work in appalling conditions for miserable wages.
There would also be a dramatic increase in consumer spending power in developing nations, which would increase the number of workers required to meet domestic demand for goods and services, meaning fewer still would be available to work producing exports to the developed world. At the same time the market for exports from the developed world would expand.
This would compound the original effect, and further strengthen the position of workers in the US “rust belt,” and equivalent populations in other developed countries, whose jobs would become harder to send offshore.
WBI would do this without the implementation of tariffs, which might spiral into a trade war, further contracting the global economy. A WBI is a mechanism that can achieve the same goals in terms of protecting developed world jobs and wages, without adding to the contractionary pressures that the global economy faces.
A payment like this is not a new idea, it even has a dedicated NGO, simply called “World Basic Income.” They propose a payment of $30 USD a month. Which they say could be funded using “rents” on global commons like airspace, and “international taxes” such as a carbon tax.
But it is a mistake to assume that we have to first “gather up” the money before we can pay it out.
Since the pandemic began, they are also starting to question this. Having recently pondered whether in “emergency times such as these, borrowing or currency creation could also be used to quickly generate the money needed.”
This is an encouraging sign. But they still seem to be of the view that money creation or borrowing as inherently problematic, if perhaps necessary given the current situation. This is the wrong way of thinking about it. Money creation and deficit spending are not signs of desperation, foolishness, or failure. They are necessary tools for good economic management, in relatively “normal” times as well as emergencies. It is not that, as it is sometimes put, “deficits don’t matter”, it is that deficits are good. The theory behind this is a little complex but it can be summarised as it is here by Cory Doctorow:
Government debts are where our money comes from. Governments spend money into existence: if they “balance their budgets” then they tax all that money back out again. That’s why austerity always leads to economic contraction — governments are taxing away too much money.
There’s one other source of money, of course: bank loans. Banks have governments charters to loan money that they don’t actually have on hand (contrary to what you’ve been taught, banks don’t loan out their deposits).
When there’s not enough government money in circulation, people seek bank loans to fill the gap. Unlike federal debts, bank loans turn a profit for bank investors. The more austerity, the more bank loans, the more profits for the finance sector (at everyone else’s expense).
The empirical case is pretty simple, and arguably even stronger: The US government has run deficits nearly every year since the early 30s. For all its current woes, the US is in a far better economic state now than it was then. In fact, some of the best years, like the “post-war boom,” were immediately preceded by the highest levels of deficit spending (the largest injections of cash into the real economy).
The same is true for most developed economies. Governments always promise budget surpluses, but rarely deliver. And that’s a good thing, because what they practice is better than what they preach.
So when it comes to a universal basic income, even in the “good” times, the best answer to the question: “how will we pay for it?” is that we will not pay for it.
At least not all of it, not directly, and certainly not upfront. If we do pay for it upfront, we suck as much money out of the economy as we pump in.
A “costed” or “revenue neutral” UBI plan would help protect the poorest from the effects of the crisis, but it would stunt the stimulatory effect we are also aiming to achieve. There would still be some stimulatory effects. Transferring income to poorer people leads to a greater portion of that income being spent, so the velocity of money (the overall rate of spending in the economy) increases and with it GDP. But expanding supply and velocity simultaneously, as a fiat-funded UBI could, would work much better.
In essence, we should just get the money the same way we ultimately get all money: We just collectively believe it into existence. This has the advantage that it doesn’t require us to convince or compel anyone to pony up in advance. And it would mean we could pay a higher WBI, starting perhaps at $1.90 USD a day, the UN’s “internationally agreed poverty line” , and then, when the sky doesn’t fall, rising further, perhaps to as much as five or ten dollars a day over the course of several years or a decade.
Of course, no one can predict in advance how people, and therefore the world economy, would really respond to a payment of this level. No one knows what the ideal level for a WBI is. But there’s no reason to think it is zero.
The global charity and advocacy organisation Oxfam does not back a WBI, but does explicitly recommend a kind of fiat money creation, or something very much like it. In a recent media briefing entitled Dignity Not Destitution it lays out suggestions for responding to the hardship caused by the pandemic. The plan includes the allocation of a trillion dollars worth of Special Drawing Rights, which are interest-bearing assets, a bit like treasury bonds, created by the IMF. SDRs are defined in relation to five major global currencies and can be used by nations to pay back debts to the IMF, or traded with each other for liquid currency.
By rapidly increasing the supply of this “paper gold”, as they did following the 2008 financial crisis, the IMF could help nations around the world increase their liquidity, allowing them to spend money to help the needy. This has also been requested by a number of nations and the IMF has said it is “exploring” that option.
Here we see a pattern emerging at the global level which resembles closely that developing at the level of national policy discourse.
Modern Monetary Theory advocates like Stephanie Kelton argue that the US government cannot run out of money any more than a sports arena can run out of points. But they do not support UBI, arguing instead for a Federal Job Guarantee. UBI advocates like Andrew Yang want a UBI but think they need to pay for it pretty much upfront with increased tax revenues.
But a growing cohort of thinkers are beginning to examine what happens when these herecies intersect. UBI advocate Alex Howlett is one of them. He coined the term Consumer Monetary Theory or CMT to distinguish his view from MMT. Another is Geoff Crocker, who talks of “Basic Income and Sovereign Money”. Martin Wolf, associate editor and chief economics commentator at the Financial Times, also backs both soft money theory and a UBI, as does Australian heterodox economist Steve Keen.
The four thinkers listed in the bottom right square all have unique perspectives, and among them only Howlett identifies their work with the CMT title. However it seems useful to me as an umbrella term for those who agree with MMT regarding the nature and constraints of government spending, but who promote a Basic Income rather than a Job Guarantee.
It is important to note that both MMT and CMT do think tax policies matter, just not in the ways we are usually told they do. One role they see for taxes that is relevant to this proposal is the idea that taxes demanded by a government in a specific currency help ensure the value and widespread acceptance of that currency, another is the way taxes help manage the build-up of currency and the amount of spending in the economy to prevent inflation.
In conventional thinking, taxes fill a bucket, the “government coffers”, and spending is a hole in that bucket, through which money escapes. In soft currency thinking, spending is the inflow of money, the bucket is a flower-pot — representing the economy — which requires frequent watering. Taxes are the drainage holes, there to stop the soil getting too saturated.
If we were to look clearly at the flowerpot representing the world economy, we would see the soil is bone dry. It is worst at the edges, where the dieback has already started, but the center, where the roots are thickest and thirstiest, is not far behind. The plant is starting to wilt. The good news is that the water is free. It is time to get the hose, attach a spray nozzle, and spray.
The Great Global Monetary Hack
The world lacks a true global reserve. The US dollar is the main currency of global trade, but that role is diminishing, and in any case it is managed by a government and central bank who are only mandated to pay attention to the needs of the global economy as and when these needs affect their domestic goals.
In terms of a truly global, globally managed, reserve, SDRs are the closest thing we’ve got. We cannot use them directly for a WBI, since they can only be held by nation states and other “designated holders”. But these are considered durably credible enough that their value held in 2008, even as the total stock increased roughly 10 fold, from around $20 billion to $200 billion. The additional trillion Oxfam have recommended be created, divided by 8 billion is $125 per person, or 34 cents a day for a year. It is not enough. But we’re getting somewhere.
Since individual human beings cannot hold SDRs, which are, formally, not money. We could issue a new currency, tied to these. A People’s Bancor, in honour of Keynes’s proposed global currency.
The basic framework would be:
The IMF announces it will be holding an auction of SDRs starting in say, three months time, and continuing at regular intervals from then onward, that these auctions will be conducted using the new currency: the People’s Bancor.
The IMF creates digital wallets for the citizens of all participating nations and starts to issue these new digital credits (which may be cryptographically minted) at regular intervals directly to every adult individual on the planet.
Governments exchange national currency to obtain PBs. Either directly or by accepting them as a means of (partially) paying (some) taxes. This would cause businesses, individuals and exchanges to gain confidence in the new currency.
Governments buy SDRs from the IMF with PBs, which are then taken out of circulation.
Poorer nations, especially, could be guaranteed a certain quota at a set price, separate to the portion auctioned in batches.
Another way to validate this currency would be by charging global taxes in it.
A United Nations could create a world tax authority and through it could demand taxes in this new currency. These should be demanded, at least at first, from the national governments themselves, who would thus be compelled to buy PBs using local currency.
So long as the monetary metabolism can be kept active, substantially more can be issued in currency than is collected in taxes.
A carbon tax is, of course, an important idea. And so is a tax on military budgets, if you think about it. This is a great opportunity to go after tax havens and the many billions held there illegitimately?
We must avoid this temptation to fix everything at once, and stay focussed. The number one priority is for these global taxes to validate the currency. And we need it to happen fast. We do not have time for nations to enter into complex multilateral bargains over the rules of such a system. We need something that is equally attractive to all parties.
What I suggest is that, at least at the start, we tax the money itself. At the end of each financial year, the government could be liable for a sum of PBs equal to, for example, 20 percent of the amount received by their population over the previous 12 months.
As it happens, this stands in stark contrast to the position taken by Howlett, who as I mentioned before coined the term Consumer Monetary Theory. He says that “tax revenue is meaningless” and that we should therefore focus on taxing the specific behaviours and phenomena we want to discourage. Since we want economic activity, money is the worst thing to tax. This is a rule I generally agree with, but this is one case (and there are others) where it makes sense to make an exception.
By removing the complications implicit in attaching these initial taxes to anything in particular, we remove reasons for various countries to say no. If we view the government as an extension of the population, which it rightly should be, then all we are asking them to do is accept a dollar, on the basis they will later have to pay back 20 cents.
Imagine a simplified example where a country’s population receives 100 PBs a year in total.
Here’s how that would play out over the next twenty years:
As the graph shows, the national stock of PBs would grow over time as the amount received by the population outpaces the amount the government has paid in global taxes. So long as the rate of taxation is less than 50 percent, this will be the case.
This rate wouldn’t, obviously, be something that we could “set and forget” but would be a policy lever, similar to central bank interest rates, which could be adjusted in response to real world results. If the currency starts to lose value, the rate should be increased, if its value is too high relative to national currencies, it should be decreased.
Such an agreement would be most perfectly championed by the G20, then implemented by the IMF and UN in concert, with the IMF issuing the currency and the UN collecting (and destroying) it.
But any group of nations collectively representing a significant chunk of world product could also create their own version of this through a treaty outside existing global structures. This currency club could grow gracefully, one new member country at a time. Countries should be free to opt out at any time, making joining the obvious choice.
It would have to have a central administrative office, with dedicated staff alongside observers and advisors from member nations working to regularly assess the effectiveness of the current settings, and adjust UBI levels, taxes due, the number and type of SDR sales (assuming IMF cooperation), and so on.
Perhaps the best thing about this plan is the lack of downsides. It is, I contend, counterintuitively plausible that national governments would sign up for such a plan, especially as the economic crisis, likely to be the worst in a century, deepens.
If it does not work, then the currency will be stupidly cheap and the participant governments will easily be able to get enough to cover their obligations.
If it does work, and the value of the currency holds, then their economy is experiencing a sudden inflow of valuable currency, equivalent to a steady and substantial increase in remittances. There would be, inevitably, some cost to the local governments, in that they would either exchange their national currency for PBs, or accept it in taxes (instead of their national currency). But every dollar, pound, yen, rupee or dinar spent in this manner would have many times the stimulatory effect of normal spending, since when you buy one PB, you validate the rest out there in circulation. They could also just just print the money with which to make these transactions, since their own citizens will in most cases accept this as payment.
Governments that do not want to do this, or could not for some reason (a lack of their own currency, for example) could simply introduce a new tax on the wealthy and/or high-income earners, payable in PBs. This would compel these better-off members of society to exchange some of whatever currency they have for PBs. The effect of this transfer would be similarly multiplied as the other PBs in circulation were validated by it. Whether it is stimulatory spending or this tax-driven redistribution, you get much more bang for your buck this way than you would usually.
If it works too well, and the new currency is valued too highly against local currencies, making it difficult for governments to meet their tax obligations without inflating their own currencies, that means we can print and distribute more, until the price of a PB falls (while the value of the basic income increases), or lower these tax obligations.
This plan will not solve every problem, but it would be the biggest economic stimulus, and the greatest step towards ending deprivation, so far in the history of humanity. It is of course optimistic to imagine that our leaders are capable of seeing clearly enough, and acting boldly enough, to set a plan like this in motion. But sometimes a crisis can bring out the best in people, and the economic crisis, which will extend beyond the pandemic, may not give them the option of sticking to conventional responses.
