Short Answers to BIG FAQs (Part 3 of 3)

[The following is an excerpt from a book in progress, The Poverty Abolitionist’s Handbook.]

Q: Basic income seems like such a fringe idea. I do not want to waste my time on something that is not going to happen. Is a basic income politically feasible?

Image via FMDam.org.

A: In the U.S. Presidential campaign of 1972, both incumbent Republican Richard Nixon and Democratic challenger George McGovern included versions of a basic income in their campaign platforms. In 1988, two men in Indiana sued for a license to marry each other, and the judge not only threw out the case, but also levied a fine of $2,800 on the men for wasting the court’s time with a frivolous lawsuit. The judge wrote that the plaintiffs’ “claims about Indiana law and constitutional rights are wacky and sanctionably so.”(1) Today, it may seem like basic income could never be taken seriously by mainstream politicians and it is hard to remember just how much of lunatic fringe idea same-sex marriage was one generation ago. But with all of human history against it, activists moved the zeitgeist in favor of same-sex marriage in just one generation. With hard work, poverty abolitionists should be able to advance public opinion back to where it was in 1972.
And we are making progress. In 2014, the idea of basic income received more media attention and support from political leaders around the world than at anytime in the past 30 years. And as the slowly growing crisis of technological unemployment demands attention from political leaders, basic income will be discussed more and more openly as the only practical solution.
Do I really believe there is a reasonable chance of a basic income being adopted in the United States in the next five years? Sadly, no. But with hard work, adoption in the United States in 20 years is certainty feasible. And even if it takes 50 years to abolish poverty, would not that be worth it?

(1)Arthur Leonard, Judge Denies Marriage License to Gay Male Prisoners, 1988 Lesbian/Gay L. Notes 63.

Q: Would children get the basic income?
A: Why not?
Actually, there are a lot of different opinions on this. Some say yes, some say no, some think children should get a smaller basic income, and some think children should get a full basic income but all or a portion of it should be held in trust until they are adults. Some jurisdictions actually provide small basic incomes, or nearly basic incomes to children even though they do not provide them to adults, through baby bonds and child tax credits. The most common reason given for saying that children should be denied the same basic income given to adults is that it will encourage poor people to have children who will be dependent on the state, but there is little support for this. Adults with a basic income will not be poor, and birth rates decline as incomes rise. For someone not already in poverty, it is unlikely the basic income will be large enough to make having a child a financially smart move. But whatever you believe about children and a basic income, remember that children are fully human, so any deviation from what adults receive needs to convincingly answer the question, “Why not?”

Q: Would people in NewYork City get the same basic income as people in Oakley, Kansas?
A: The truth is we do not know whether or not “top ups” would be needed in more expensive areas if there was a basic income. Currently, most people are forced to live in cities because that is where the jobs are, and rents are high in cities because the property owners can extort money from people who have to live there because they need to live near their work, and retail prices are high in cities because rents are high. What would population patterns be like if people could just move to rural areas and live off of a basic income if rents got too high? Would rents go down in cities if people were not forced to live where jobs are? We simply do know the answer to those questions. So it would be best to start with a basic income that is universal, unconditional, and uniform at the national level, and be willing to revisit the idea of top ups for more expensive areas when we know what life with a basic income is like. Meanwhile, local governments can offer smaller basic incomes to their residents financed from local taxes and resources to add to a national basic income. A national basic income should not force Alaska to stop paying dividends to its residents from its oil revenues nor American Indian tribes from paying its members dividends from casinos, for example, nor any other local government from offering refundable tax credits.

Q: Would visitors to the country, whether documented or not, be entitled to the basic income?
A: The short answer is “no”. I know of no well-sussed basic income proposal that contemplates sending payments to anyone beyond citizens and legal permanent residents (LPRs), and as a practical matter, it would seem unlikely that any proposal to make payments to anyone beyond LPRs would pass. Indeed, many basic income supporters prefer the terms “Citizen’s Income” or “Citizen’s Dividend”.
However, after a basic income is established for citizens and LPRs, it may be worthwhile to revisit whether other visitors can get a basic income as a separate societal decision. Unlike for children, the burden would be on those who want to extend benefits to visitors, and there are good reasons to extend the basic income beyond LPRs, and good reasons not to extend the basic income beyond LPRs.

Q: What are some good reasons to extend a basic income beyond legal permanent residents (LPRs)?
A: Some possibilities:
* Any humane society will provide at least some social benefits to the poor within their borders, however they got there, and cash payments might simply be more efficient.
* Poorer immigrants either spend their incomes or send a portion to poor relatives back home, so cash payments to them will either stimulate our economy or act as foreign assistance well targeted to the needy in nations with intimate ties to ours.
* Immigrant workers who do not receive a basic income are more easily exploited as cheap labor and would be unfair competition for citizens and LPRs who do receive a basic income.

Q: What are some good reasons not to extend the basic income beyond citizens and legal permanent residents (LPRs)?
A: Some possibilities:
* The basic income could be a magnet drawing an unsustainable number of immigrants. It would be easy to be overly skeptical of this concern, because anti-immigrant voices have been claiming for decades that immigrants come here for welfare benefits, and that is simply not true. Immigration tends to rise and fall with jobs, not availability of welfare benefits. However, the general utility of cash benefits may make them so qualitatively different from welfare benefits that people might start coming here just to receive them.
* Granting cash benefits to other poor visitors might interfere with the alternate humane policy of trying to extend LPR status to as many of them as possible, reducing both the pressure on other immigrants to become LPRs, and the pressure on politicians to extend LPR status to far greater numbers of people.
* Rather than extend the basic income beyond citizens and LPRs via unilateral legislation, we might choose to do so via reciprocal treaties, encouraging other nations to establish a basic income and/or leading the establishment of a global basic income.

Q: How can you possibly think it is moral for some people to live off of the work of others?
A: What I find immoral is *forcing* some people to work for the benefit of others. That is why I support a basic income guarantee. It was Vladimir Lenin in Bolshevik Russia who stated, “Those who don’t work don’t eat.” Whether that sentiment is expressed by Lenin or by Charles and David Koch in 21st century America, it is powerful members of society demanding that the government use its guns to enforce a Utopian ideology that benefits them personally on the masses that did not consent. If everyone had a basic income, then no one would be forced to work for others. With a basic income, producers would have to be induced to work voluntarily, either by appealing to their good nature or by offering them special benefits such as recognition or extra money.

Q: If everyone received a basic income, would not employers simply reduce salaries by the amount of the basic income, since their employees would need that much less money to live on?
A: Wage substitution from a basic income should only occurs at the lowest subsistence level wages. Because no one will work for less than they need to live, supply drops off at that point. Giving those people other regular income that is not sufficient to live off of reduces what they need to live from employers. This is why a minimum wage will still be necessary until we have a basic income that is higher than what people need to live. However, a wage substitution effect should not occur once there is a basic income above subsistence level, since recipients would be empowered to leave jobs where they did not believe they were being paid adequately.
There should be no wage substitution effect on skilled labor. Everyone making over subsistence level is getting paid based on the supply of and demand for their specific skills. There are plenty of people willing to do the work of a nurse for much less than nurses make, but they cannot because they do not have the skills. At subsistence level, the “supply” in the supply and demand labor curve is the supply of bodies. Above subsistence, the “supply” is the supply of skills. A UBI at less than subsistence level can allow bodies to supplied for less, but no basic income will directly change the supply of skills.

Q: Do we currently have any empirical evidence of what the effect of a basic income would be on wages at the macro level?
A: No. The Alaska Permanent Fund and the Earned Income Tax Credit do not appear to have affected wages either positively or negatively, while the Speenhamland System in England in the early 19th Century does appear to have generated a wage substitution effect. However, none of these cases is illustrative. The amount of Alaska Permanent Fund payments is too variable for employees to count on what they might receive, and it pays people in a state where the supply of even unskilled labor is consistently tight. The Earned Income Tax Credit is means tested, applies primarily to workers with children, and is too complicated for most of its recipients to understand for them to rely on it. The Speenhamland System was an extremely heavily means-tested income support program conditional on work. No basic income experiments have been conducted at a massive enough scale to see effects on labor markets.