by Tyler Prochazka | Oct 12, 2016 | News, Research
After many years writing scholarship on the citizen’s income (or basic income), Malcolm Torry was constantly asked about the feasibility of the policy. A new book by Torry, The Feasibility of Citizen’s Income, seeks to answer this question.
Below is an interview with Torry on he came to write the new book and some of the conclusions he made in his research.
What prompted you to write this book?
It was about two years ago that the Citizen’s Income debate started to become seriously mainstream. I had already published Money for Everyone: Why we need a Citizen’s Income (Policy Press, 2013), a general introduction to the subject. Although the book was designed to be accessible to the general reader, a number of people had said to me that something shorter and cheaper would be useful so I wrote 101 Reasons for a Citizen’s Income (Policy Press, 2015). Both of these books were designed to show that Citizen’s Income is a good idea. They might or might not have contributed to the increase in interest in Citizen’s Income among think tanks, political parties, and the press. (Both international developments and increasing concern about the future of the employment market were probably more significant causes.) I had frequently been asked questions about the feasibility of Citizen’s Income. At both BIEN and Social Policy Association conferences I had presented papers about feasibility that built on articles about political feasibility by Jurgen De Wispelaere and his colleagues; and then, following a presentation for Cambridge economists on different kinds of feasibility, Karl Widerquist, who was the other presenter at the seminar, asked me if I would turn my presentation into a book for the Palgrave Macmillan series that he edits. Some of us had already noticed that the Citizen’s Income debate was becoming at least as much about feasibility as it was about desirability, so I agreed to Karl’s proposal.
What was the most surprising and/or interesting element you discovered while researching for this book?
A combination of related elements: that the policy process (the process by which an idea finds its way to implementation through a variety of interconnected institutions) is extremely diverse; that understandings of it are equally diverse; and that ideas can sometimes achieve implementation without passing through what we might call a normal policy process: that is, that policy accidents can occur. The book therefore contains chapters on political feasibility and on policy process feasibility, as well as a final chapter, ‘From feasibility to implementation’, in which policy accidents are discussed.
Which aspect will be most challenging to overcome in achieving a citizen’s income: political or psychological barriers? Why?
It became clearer to me as I researched and wrote the book that political feasibility relies heavily on psychological feasibility. Only if a significant proportion of a population are convinced of the case for a policy change, and significant proportions of particular groups within populations (journalists, academics, policy-makers, etc.) are convinced of the case, is there any chance of political feasibility. Psychological feasibility therefore precedes political feasibility – except when political accidents occur, and even then potential psychological feasibility is required. Psychological feasibility will not be easy to achieve because in the UK we have been means-testing benefits for four hundred years, and it takes a significant paradigm shift to recognise that in the presence of a progressive income tax an unconditional payment can do the same job as means-tested benefits and can do it a lot more efficiently and without all of the side-effects of means-testing. Given the further popular ‘deserving/undeserving’ mindset, building psychological feasibility for a Citizen’s Income for everyone is going to be difficult. However, building psychological feasibility for such ‘deserving’ groups as elderly people, the pre-retired, children, and young people, would not be so hard: so a feasible implementation method might be to implement Citizen’s Income one age group at a time, beginning with those thought most deserving. This would eventually build the psychological feasibility required for a Citizen’s Income for working age adults.
Is a citizen’s income feasible just using current revenue? If so, would this be the most desirable way to implement basic income?
A Citizen’s Income certainly is feasible just using current revenue if income tax allowances (‘standard deduction’ in the USA; ‘Personal Allowance’ in the UK) are adjusted appropriately, and Income Tax rates and other aspects of a tax and benefits system are adjusted appropriately. We have shown that in the UK a Citizen’s Income of £60 per week for working age adults (less for children and young adults; more for elderly people) would require no additional public expenditure if Income Tax Personal Allowances were reduced to zero, Income Tax rates were raised by just 3%, and National Insurance Contributions (social insurance contributions) and means-tested benefits were adjusted appropriately.
Whether this would be the most desirable way to implement a Citizen’s Income scheme is of course debatable: but it would probably be the most feasible way to begin implementation.
What would the most significant effect of the citizen’s income be on households?
What would be the most significant effect must be a matter of personal opinion, because different households have different priorities: but among significant effects would be greater freedom to choose an employment pattern that worked for all of the members of the household; lower marginal deduction rates for all or many households, meaning that an increase in earned income would translate into a higher additional net income than under current means-tested benefits systems; and freedom from bureaucratic intrusion into the household’s relationships and circumstances.
What is the empirical evidence that universal programs are superior to means tested ones?
To decide whether one system is superior to another requires a list of criteria for a good benefits system, and then different systems need to be evaluated against those criteria. The book Money for Everyone contains a full discussion of the criteria for a good benefits system, discusses the ways in which the criteria are met or not met by different systems, and concludes that a universalist system meets the criteria more thoroughly than a means-tested one. The Feasibility of Citizen’s Income does not ask directly about the desirability of Citizen’s Income, but rather seeks evidence for Citizen’s Income’s ability to pass a variety of feasibility tests (although of course feasibility is required for desirability, and desirability for feasibility). Evidence is drawn from natural and constructed experiments, microsimulation results, and other empirical research.
What is the most desirable aspect of a citizen’s income? What is the main reason you support basic income?
Again, what is the most desirable aspect of Citizen’s Income will be a matter of opinion. Since we all have different preferences, the question then comes down to the second question asked: What is the main reason that I support Citizen’s Income? There is no main reason; there are lots of reasons: unconditionality; universality; lower marginal deduction rates; greater individual freedom; greater equality; decreased poverty; enhanced social cohesion; administrative simplicity; the absence of stigma, error, fraud, and bureaucratic interference in the lives of individuals and households.
What brought you to the citizen’s income movement?
From 1976 to 1978 I worked in the Department of Health and Social Security’s Supplementary Benefit office in Brixton in South London, administering means-tested benefits. We all knew how bad the system was, both for claimants and for the staff. The benefit that we and the claimants loved was universal Child Benefit, for its simplicity, its reliability, and the way that it reduced poverty, increased equality, and created social cohesion. Why shouldn’t the same principles and the same results be transferred to benefits for working age adults?
I was ordained, and served my first post in the Church of England’s ministry at the Elephant and Castle: the parish in South London in which the headquarters of the DHSS was located. I got to know people in the offices, and was invited to the department’s summer school. There I found the idea of a Basic or Citizen’s Income being seriously discussed. I was invited to join a group of individuals from a variety of backgrounds interested in the idea – the Basic Income Research Group, now the Citizen’s Income Trust – and have participated in its work ever since.
The motive has always been the same: to research the desirability and feasibility of an unconditional income for every individual as a right of citizenship. My new book concludes that Citizen’s Income’s implementation is feasible.
by Tyler Prochazka | Oct 6, 2016 | News
Iceland is poised to elect the Pirate Party as one of the two largest parties in the new parliament. The Cato Institute recently reported that this could be great news for Basic Income advocates.
The Pirate Party introduced a proposal last year to research the feasibility of a basic income as a replacement to the existing welfare system. This proposal falls in line with the Pirate Party’s overall focus on direct democracy and technology.
However, Halldóra Mogensen, Deputy MP of the Pirate Party of Iceland, said in an email exchange with Basic Income News that the Cato Institute “seems to be taking quite a leap.”
“We (the Pirates) have a proposal in the welfare committee proposing that UBI be looked into as a possible substitute to the current welfare programs but that’s the extent of it. Who knows what will happen in the future, but as of now, there are no concrete plans,” Mogenson said.
The Pirate Party is known for pushing for accountability in government and using technology to engage civic society. Iceland’s move toward the Pirate Party coincides with their growing distrust of institutional parties. A basic income could be a mechanism for Iceland to achieve both of the Pirate Party’s goals by reducing bureaucracy and allowing individuals to more freely participate in civic society.
As the Cato Institute notes, the current welfare system in Iceland deters work and a basic income may “reduce these work disincentives” depending on how it is constructed.
by Tyler Prochazka | Aug 29, 2016 | Opinion
Gary Johnson recently told me he is “open” to the Universal Basic Income (UBI). Based on some of the comments on the story (calling me slanderous and Johnson a statist), you might think he just endorsed a socialist takeover of the government.
Understandably, there is hostility among many libertarians toward the idea of the Universal Basic Income. The UBI is not just a pragmatic step to eliminate government bureaucracy. In fact, it is a desirable policy outcome because it will likely help usher in a new era of free markets and civil society.
Much has been said on the pragmatic libertarian case for replacing the current social safety net with a UBI. Primarily, it eliminates government paternalism and enhances the efficiency of welfare delivery.
Moreover, a Universal Basic Income removes the poverty trap created by the loss of welfare benefits as individuals move out of poverty. This incentivizes recipients to remain in poverty to retain these benefits. A UBI has no such incentive and allows recipients to choose the course of action that actually provides the greatest real benefit.
Through the basic income, recipients are also fully in control with how to spend the money, eliminating welfare’s distortions on the marketplace.
Most libertarian UBI advocates take Milton Friedman’s view of the basic income, approving of it as a substitute given that government welfare already exists (and is unlikely to go away). Instead, libertarians should consider wholeheartedly endorsing the UBI as a way to expand free markets.
The last century has shown us that free markets and free trade have been the greatest source for prosperity and peace the world has ever seen. However, the free market consensus seems to be eroding at a frightening pace, even in the Western world.
Free market’s savior? The basic income.
If libertarians are being honest, free markets are the best source for lowering poverty, but they alone are not sufficient. For example, Hong Kong has the freest economy in the world, but also a good amount of debilitating poverty. While visiting McDonalds throughout Hong Kong, it was hard not to notice the McRefugees (as they are called in local media) that were sleeping at tables.
There is good evidence that conditions outside of one’s control, such as whether one’s parents are wealthy or married, have a substantial influence on one’s success.
Socialism is not the answer to the poor’s woes, as we saw with devastating consequences in the human trials of socialism in the Soviet Union, Mao’s China and still today in North Korea and Venezuela.
Instead, the answer is to open up the free market to everyone through the basic income.
Pilot programs have shown that the basic income increased entrepreneurial and market activity (among other positive social benefits, such as improved health). Individuals previously locked out of the free market can now be active participants. The understandable worry that people would stop working is not only overblown, but the opposite was actually shown to be true in Namibia, as business activity dramatically picked up.
The largest meta-analysis of cash-transfers ever further illustrated that the risk of reduced work is nil and in fact it has the potential to increase work hours and intensity. Some parents reduced work hours to care for their children, but this likely brings a positive long-term outcome to society.
Work brings dignity and the basic income does not eliminate the basic desire to contribute to society. When polled, most Americans say they would still work even with a financial windfall.
Basic income gives recipients free choice, unlocking the market’s full potential. People do remarkable things when given freedom and opportunity.
Additionally, poverty is one of the biggest factors when determining a child’s likelihood to succeed in education. Just giving parents money substantially improved their child’s educational outcomes and behavior. The same was shown under the basic income.
The basic income is not a pragmatic giveaway to socialists. It is precisely the opposite: it is the essential element for sustaining the durability and expansion of free markets.
Beyond opening up the market to new participants, it is likely that a basic income would allow society to reevaluate the necessity of a whole host of government policies.
Human beings are born with a natural inclination to be empathetic toward others. And there are individuals that are also inclined (perhaps hardwired) toward government solutions for society’s ills. No matter how effectively free markets lower poverty, there will always be calls for a government backstop.
As libertarians know, these calls for government “solutions” often do more harm than good and end up impeding the very forces that allow the free market to lift individuals out of poverty (e.g. the minimum wage).
As jobs are increasingly automated, it is especially crucial that libertarians guide political discourse toward a light-touch approach to resolve the disruption robots will cause in the marketplace. There needs to be a permanent method to alleviate the fears of the market place, rather than relying on the eternal vigilance of Congress to do the right thing.
A robust basic income would mute many of the calls for government intervention because it gives employees greater freedom to choose their employment situation, rather than being forced into employment by the threat of poverty.
The fears felt by those inclined toward government intervention would be lowered and libertarians would have a far more persuasive case to make for allowing individuals to shape the market instead of the government. Indeed, it would allow libertarians to push for removing many of the excesses of government intervention.
The Universal Basic Income is not just a pragmatic compromise to lower welfare bureaucracy. It is the essential prerequisite to usher in a new era of free markets. And libertarians would be well suited to be at the forefront of this movement.
by Tyler Prochazka | Aug 24, 2016 | Opinion
One of the most visible libertarian advocates of the basic income is Dr. Matt Zwolinski. Zwolinski is a professor of philosophy at the University of San Diego and has written extensively on the libertarian case for the basic income.
In my interview with Zwolinski, he said a basic income “can help protect the freedom of certain vulnerable people,” although he recognizes there is a trade-off due to the coercive nature of taxes.
Zwolinski also dismissed some of the common libertarian objections to the basic income, saying it is a hard moral sell to claim taxation to help the poor is indistinguishable from a mugger stealing for himself.
“I think there’s a moral case, based on freedom and a correct theory of property rights, that justifies some form of economic redistribution,” he said.
For those libertarians that think basic income disqualifies them from the libertarian label, Zwolisnki said this does not make much sense since many libertarian thinkers throughout history have advocated for the basic income approach.
“Libertarianism is and should remain a pretty big tent,” Zwolinski said.
As a libertarian, what is the best reason to support UBI?
I don’t think that there’s a single best reason. I’m a pluralist in my moral philosophy, and so I think that a lot of different kinds of reasons are usually appropriate in assessing the case for or against a particular piece of public policy.
But, basically, I think there are two strong libertarian arguments in support of a basic income, one broadly deontological in nature and the other broadly consequentialist. The deontological argument has to do with the limits to the libertarian case for private property. For reasons that I think were very well laid out by Herbert Spencer in 1851, I don’t think the standard Lockean story about self-ownership and labor mixing gets us very far in justifying private property in land and other natural resources. For starters, that account simply doesn’t match the historical reality in which most private property originated in force and theft rather than peaceful homesteading. But, more fundamentally, I just don’t see how mixing your labor in a natural object gets you a property right in the whole economic value of that object, as opposed to a right to that portion of the value created by your labor. Basically, I think Henry George was right. And so I think that there’s a strong case to be made for a basic income funded by a “Single Tax” on “land rent” – the economic value of unimproved natural resources such as land.
The more consequentialist case has to do with protecting individual freedom. I call it a consequentialist case rather than a utilitarian one deliberately. The idea is that a basic income can help protect the freedom of certain vulnerable people. But I recognize that a basic income that’s large and broad enough to do that might have to be funded by taxes that violate the freedom of others. So we’re trading off freedom for freedom. That might sound scary to some libertarians, but I think that unless you’re an anarchist you’re already willing to accept something like this. Tax-funded police services, after all, protect individual freedom but are funded by coercive taxation.
I think the seeds for a freedom-based defense of a basic income are present in the writings of Friedrich Hayek, especially in his Constitution of Liberty. Hayek himself defended a kind of basic income, but was never entirely clear about what he saw the justification for it to be. I’ve tried to work out what a plausible Hayekian justification might be, at least in terms of broad outlines. Basically, I see Hayek as embracing a kind of republican account of liberty, where freedom means not just not being subject to the initiation of force but, more generally, not being subject to the arbitrary will of any other person. Once you take that account of freedom on board, I think you can justify a basic income as a way of protecting the economically vulnerable. The idea is that people who might otherwise have to accept any offer an employer makes or else starve aren’t really free. A basic income gives them the ability to say “no,” and thus protects them from being bossed around by the economically powerful.
One interesting thing to note about these two arguments is that they’re not just different in terms of where they start – the moral premises on which they’re based. I think they’re also different in terms of where they end up – in the kind of basic income they justify. If the Georgist argument works, I think that justifies a truly universal basic income. The earth belongs to all of us, and so all of us have an equal claim to the economic value of unimproved natural resources. Now, depending on how much of present wealth you think is due to labor, rather than raw natural resources, the value of this kind of basic income might not be very large. So, on this argument, what you might end up with is a very broad but relatively small basic income. Everybody gets something, but nobody gets much.
The freedom-based argument, on the other hand, doesn’t give us any reason to write a check to Bill Gates. His freedom is already protected by his economic power, so there’s no real point in giving him any more money. And the same will be true of a lot of other people, not just the rich but probably most of the middle class as well. So if the case for a basic income is based on the protection of individual freedom, I think what that gets you is something less than a universal basic income. Not everybody gets something, but what those who need it get will be large enough to effectively protect them against economic domination by others.
What would your ideal UBI look like?
Designing a policy like a universal basic income is obviously a complicated task. And I think it’s a task that should be highly sensitive not only to the kinds of moral considerations with which I spend most of my time as a philosopher, but to empirical considerations of the kinds studied by economists, sociologists, and the like. So I don’t want to claim that I’ve got anything close to the final word on this. I have some ideas, but this is definitely not a one-person project.
That said, I think that given the two distinct moral considerations that justify a basic income, there’s a case to be made for having two distinct basic income type policies that respond to those considerations. One would be a small, truly universal cash grant based on the economic value of unimproved natural resources. Think of this as something like the Alaskan Permanent Fund writ large. The other would be a less universal but more generous grant directed toward those individuals who fall below a certain specified threshold of economic sufficiency. I think the best way of implementing this second program is probably something like Milton Friedman’s Negative Income Tax, though I also like the proposal set forth by Charles Murray in his book, In Our Hands. In both cases, people earning less than a certain amount of money get a cash grant from the government, with which they can do whatever they wish; while people earning more than that amount get nothing. That conditionality makes the program less than truly universal. But I think you’ve got to do something like that in order to make a basic income economically feasible. Many basic income enthusiasts want a grant that is (1) universal, (2) large enough to provide people with an adequate level of income, and (3) economically affordable. But you can’t satisfy all three of those conditions at once. A Negative Income Tax satisfies conditions (2) and (3), which to my mind are the most important conditions, morally speaking. Condition (1) might be politically important in terms of generating and sustaining support for the program. I’m not sure. But it seems to me that something has to give, and I think there’s a strong case to be made for keeping (2) and (3) and relegating (1) to the land-tax component of the joint program.
Many libertarians say removing all welfare would be superior to replacing welfare with the UBI. Do you agree with this sentiment?
No, I don’t think so. But before I explain why, let’s be clear about two different conversations we could have about this question. One is a conversation about ideals – what is the best kind of society we could imagine as libertarians, regardless of how different that society might look from our own? The other conversation is about pragmatics – what should libertarians advocate here and now, given all the injustices, imperfections and disagreements with which any practical political proposal has to deal?
Now, as it happens, I don’t think either of those conversations gets you to the conclusion that all state-based welfare ought to be eliminated. That’s certainly not something that has any practical chance of being implemented in a world where, after all, most people aren’t libertarians. But I don’t think it’s very attractive as an ideal, either. I think there’s a moral case, based on freedom and a correct theory of property rights, that justifies some form of economic redistribution. Obviously, we’ve had a lot of bad redistribution in our society. We’ve have redistribution to the poor that’s made their lives worse, rather than better. And we’ve had a lot of straightforwardly regressive redistribution that actually takes money and opportunities away from the poor and channels it toward the better off. And libertarians have rightly criticized those programs. But the idea that anytime the state takes money from the well-off and gives it to the poor, that’s morally indistinguishable from a mugger on the street taking your wallet at gunpoint, well, that’s a hard sell. And not, I think, simply because non-libertarians are being thick-headed.
In my experience, many libertarians have called me a statist and denied me the label of libertarian for supporting the UBI. Have you had similar experiences and what is your reaction?
Sure, I get that all the time. Some people seem to think a desire to eliminate the welfare state is just part of what it means to be a libertarian. But what’s their basis for that? That Murray Rothbard thought so? Or Ayn Rand? But why should we take them as the final say on what libertarianism is or isn’t?
As I’ve written about before, there are a number of people who fall pretty squarely in the libertarian intellectual tradition – Milton Friedman, Robert Nozick, Friedrich Hayek, and Herbert Spencer, to name a few – who don’t hold that view. Why should their views count any less toward defining what libertarianism is than Murray Rothbard’s?
I’m finishing up a book on the history of libertarian thought with John Tomasi. And one of the themes of that book is that the libertarian intellectual tradition is incredibly pluralistic. Some libertarians are consequentialists, some are deontologists, and some are ethical egoists. Some are anarchists, some are minimal-statists, and some are classical liberals. Of course, not all of those views can be right, and libertarians should (and do!) argue amongst themselves about which view is the best libertarian view. But I think it’s silly – and more than a little ironic! – for libertarians to try to write people with whom they disagree out of libertarianism altogether on the basis of some putative ideological authority. Libertarianism is and should remain a pretty big tent.
by Tyler Prochazka | Aug 21, 2016 | Research
The Overseas Development Institute just released the largest meta-analysis of cash transfer programs ever, spanning 15 years of data and 165 studies. The main takeaway is that studies show a consistent reduction in poverty measures. Perhaps an even more important conclusion is that most evidence showed an increase in work participation after receiving the basic income.
The Overseas Development Institute is an independent think tank based in the United Kingdom. The meta-analysis reviewed tax and donor financed cash transfers to individuals and households. Retirement and unemployment were not included in the analysis. The studies had to meet “methodological rigor” to be included in the analysis.
Though these cash transfers differ somewhat from a pure basic income, the study provided the strongest evidence yet that a basic income-type approach is a crucial tool to eliminate poverty.
“There is strong evidence that cash transfers are associated with reductions in monetary poverty,” The report noted. “The evidence consistently showed an increase in total expenditure and food expenditure and a reduction in poverty measures.”
The few studies that did not find a statistically significant impact were possibly due to low transfer levels or because the transfer was only for limited time-frame, the report said.
One of the most heated disputes regarding the basic income is its effect on work participation. The report provided robust evidence that concerns about lowered work participation are unwarranted.
Most of the studies found no statistically significant effect on work participation, and those that found an effect largely found increased work participation and intensity.
Those studies that found decreased work were due to the elderly and individuals with dependents lowering their work participation. Several studies also found lower rates of child labor. As basic income advocates have said, this is likely a socially desirable effect.
Several other positive effects were found among the studies:
- Health service use and dietary diversity improved
- School attendance increased and several studies found positive effects on cognitive development test scores
- Women had greater decision-making power and less instances of physical abuse
- Savings and investment improved, improving recipients’ autonomy
The study has some caveats regarding the overall positive results. But the review said concerns regarding unintended negative effects are not supported by the evidence.
“The vast majority of studies reporting statistically significant results showed that cash transfers contribute to delivering the outcomes that policy-makers intend to achieve. This finding is particularly impressive given its consistency across the critical outcome areas and high number of indicators covered by this review,” the report said.
Jessica Hagen-Zanker, Francesca Bastagli, Luke Harman, Valentina Barca, Georgina Sturge and Tanja Schmidt, “Understanding the impact of cash transfers: the evidence”, Overseas Development Institute. July 2016.
