by Karl Widerquist | Mar 6, 2019 | Opinion, The Indepentarian
The website, Revista Libertalia, recently published an article in Spanish with extensive quotes from an interview conducted with me. The article is entitled, “Voces sobre la renta básica (II): ¿Está justificada? [Voices on basic income (II): Is it justified?].” It’s author is Pablo Magaña. The Spanish version was published on February 28, 2019. The author created, but did not publish an English version of the article. The quotes below reproduce the entire English version with no additional editing.
Voices on the basic income (II): Is it justified?
The idea of a basic income raises many hopes and some eyebrows. In this article, some of its defenders will explain to us which is, in their view, the best way to justify it. However, in order to make the discussion more interesting, we also asked them to answer one common objection that is often raised against the proposal: the free-riding objection. What does this objection say? Quite simple. Unlike other social security schemes, a basic income is unconditional, which means that you can be entitled to it regardless of your socio-economic condition. And, more crucially, regardless of the extent to which you contribute to your society.
For some people, this is plainly unfair. The viability of a basic income depends upon the existence of enough contributors to a common public fund. But, as long as this scheme is already in place and working in a stable manner, if any individual decided not to contribute to it, there would be nothing we could do in response: given the income’s unconditional character, the supposed free-rider would still be as entitled to it as any other citizen. Let us suppose – so goes the classical example[i] – that I decided to spent all my time living high, surfing the waves in Malibu, playing guitar under the moonlight, driving along endless highways on the wheel of an old van. Sounds great, doesn’t it? Still, since such a plan would only be possible if others work and contribute to a common fund, my decision might look like an injustice, a clear case of free-riding. But is it really like this?
Before introducing some possible answers to this challenge, we will look first at some arguments in favor of a basic income.
According to Hillel Steiner[ii], “the best way to defend the right to UBI involves a dual strategy: (a) showing that this right is implied by some more basic and uncontested principle, and (b) showing that this right is compatible with, and does not encroach upon, other widely accepted rights”. As a left-libertarian, Steiner regards the Earth as humanity’s common possession[iii], which entails that if somebody intends to appropriate herself of any portion of it, she should compensate her fellow co-owners. If she didn’t, she would be illegitimately appropriating of something that is not really hers. In other words, she would be stealing. Steiner’s emphasis on natural resources colors both his model of basic income and his preferred justification of it:
“In my view, a right to UBI should be funded by a 100% tax on the ownership of natural resources, commonly termed a ‘Land Value Tax’ or, more accurately, a ‘Location Value Tax’. This tax would be levied on the value of those locations themselves, and not on the value of any improvements made to those locations by human labour. A right to a UBI funded in this way satisfies (a) since those taxable natural resources/locations, not being the product of any person’s labour, are rightfully available for use by everyone. So if someone wants to privatise some of them, and to exclude all others from using them, then it seems only fair that the privatizer should compensate those others. The UBI I’m proposing simply is that compensation.”
This is a fairly common way to defend the right to a basic income, also employed by Guy Standing[iv], author of Basic Income: And How we Can Make it Happen[v]. In Standing’s view, “the right to a basic income can be justified on three ethical grounds. First, it is a matter of common justice. The land, the air, water, and even ideas inherited from our ancestors are all part of the commons which belong to everybody equally. But elites and the wealthy have been given, have inherited or have used the commons for their benefit. Therefore, they should compensate the commoners who have lost the commons, and the fairest way to do that is give everybody in society a common payment, a ‘common dividend’ on our collective public wealth”.
Again, the basic income is presented as a way of compensating human beings for having deprived them of what is, in essence, a public good. However, as we have seen, Standing believes there are additional reasons on behalf of a basic income. “[A] second fundamentally ethical reason for a basic income”, he contends, “is that it would enhance individual and societal freedom. In particular, it would strengthen republican freedom — the freedom from domination by figures in unaccountable positions of power. Whether you are on the political left or right, we all claim (or most of us do!) to believe in freedom. But you cannot be free unless you have the capacity to say ‘no’ to people who can oppress or exploit you. If you do not have basic income security, you do not have that capacity.”
Note that this argument is slightly different from the previous one. Granted, here the argument is also premised upon the existence of an injustice. Yet in this case the injustice does not involve the illegitimate appropriation of what is commonly owned, but rather the presence of a structure of domination under which individuals cannot really be considered autonomous or free. According to this argument, justice requires that nobody ever feel the need to be subjected to another’s arbitrary will, an aim which would only be secured by implementing a right to a basic income[vi].
Political philosopher Karl Widerquist[vii], author of many books and articles on the basic income[viii], has defended a similar view. As he puts it, we need acknowledge that:
“[I]t’s wrong for anyone to come between another person and the resources they need to survive. It’s wrong for anyone to put conditions on people’s access to the resources they need to survive. Don’t ignore this fact: poverty is the lack of access to the resources you need to live a decent life. A healthy person with the right skills and access to a healthy environment can do many things that are impossible for an impoverished person in society today. They can build their own house; fish, farm, or hunt their own food; they can work with who they want. They call work alone or with whoever they want. They don’t need a boss. They never have to follow orders.”
“Our societies create poverty by interfering with people who would like to use the resources of the Earth for themselves. We do it because better off people want to control all the world’s resources. By allowing a small group to control the world’s resources without paying compensation to the people they thereby make propertyless, we put most people in the position in which “work” becomes synonymous with “a job.” Making a living means taking orders. This is not a fact of nature. It is the outcome of society’s rules. We need to change those rules.”
“UBI rectifies that problem. It says if you’re going to hold more resources than others, you have to pay something back in compensation, so that no one ever again is forced to live in poverty and no one is ever forced into the position where they must take orders to survive.”
“UBI is not the end of the market or the end of paid labor. It is simply a market where income doesn’t start at zero, and workers are freed from the threat of destitution. With UBI, workers enter the labor market as free people. Employers have to pay enough to make it worthwhile for workers to take those jobs. UBI will give us a high-wage economy that works for everyone.”
One view in this vicinity has been defended by philosopher Elizabeth Anderson[ix], who, nonetheless, does not believe that a basic income would necessarily be the best option. Now, if it was, she says, the best way to ground it would be as follows:
“The best case for the UBI is as follows. Automation, and changes in the nature of employment, are bringing about the disappearance of stable jobs and the rise of a precariat class whose members are unable to support themselves with steady employment. UBI is needed to provide the security and basis for a decent life for a rising number of people in the world. BI should be universal to ensure its political stability and to avoid the costs of means testing and intrusive investigations of people’s lives.”
Among other things, Anderson is well-known for her defense of so-called “relational egalitarianism”[x], the view that theorists of justice should focus a bit less on how resources are distributed and more on how we treat each other (the latter having obviously implications for the former). This is to say, what matters the most is not who gets what, but whether we treat each other as an equal or not – without distinctions based on social status or power asymmetries.
Before finishing this part of the article, let us look at another possible strategy to justify a basic income. Until now, the arguments we have seen have focused either i) on a compensation for an illegitimate appropriation of a common good, or ii) on the need to make sure that individuals enjoy a minimal independence, in that they ought not to be forced to choose between accepting orders or starve. But there is a third line of argument, which would stress iii) the alleged positive consequences of a basic income. This is Guy Standing’s third argument:
“The third ethical reason for wanting a basic income is that it would tend to provide basic security, which is what we call a public good. We all want basic security in our lives, and basic security is a superior public good in that if everybody in our community has basic security, it increases the value of it for everybody. Basic security has been shown to increase tolerance, resilience, altruism and mental bandwidth (or mental health and IQ).”
This is all very well, one might say. But, what happens with our Malibu surfer? Isn’t he objectionably free-riding on his fellow citizens? Isn’t it unfair that he can live a highly pleasant life while I have to break my back from 9 to 5?
In Steiner’s view, the answer is no: “[E]veryone – lazy, as well as industrious – is entitled to that compensation”. For remember that, according to him, a basic income is not just another subsidy, but the compensation that those who want to possess more than their fair share of the Earth’s natural resources have to pay to the rest of us – whether we are surfers or not.
Widerquist, in his reply, invites us to cast some doubt on the value judgments and the assumptions presupposed by the objection:
“The thing that most detracts people from UBI is the belief that prosperous people have the right and responsibility to tell less prosperous people what to do. We, the prosperous, want to think we are better than the less prosperous. We want to think our virtue—rather than a less-than-perfectly-fair system—is the reason people are less prosperous than we are. We like to think that we know what the less prosperous need to do to become prosperous—even though the vast majority of us have no idea what it is like to grow up poor and how different people’s circumstances can be.”
“Not only are these beliefs unfounded, they are not good for the middle class. Because we want to put the very poor in the position where they have to do what more prosperous people want, we put the vast majority of people in the position where they have to do what the wealthiest few want. Probably well more than 90% of people in every country have no choice but to take a job for a living. The vast majority of us—even some very prosperous people—are unfree to work for ourselves. And so, we must go to an employer—most of whom represent very wealthy corporations—get a job, and take orders all day. That is neither freedom nor fairness.”
“UBI will put the middle class in a much better bargaining position. In most countries, the middle class is not significantly better off than they were 40 years ago. Virtually, all the benefits of the last 40 years of economic growth have gone to the wealthiest 1%. UBI will help the other 99% command the better wages and the shorter working hours that they have earned.”
Another way to answer the free-riding objection involves calling into question its relevancy. Why should we care so much, the rejoinder goes, about something that is actually very unlikely? A rejoinder of this type has been endorsed by Guy Standing:
“The normal human condition is to want to work, to improve ourselves, to improve our living conditions, to improve the life prospects of our children and so on. I would feel sorry for somebody who would not work because he or she had a modest basic income. But of course this is not what happens or is likely to happen to more than a tiny number of people. We have found in our pilots that people with a basic income work more, not less, and are more productive, not less.”[xi]
Indeed, Standing believes that even if free riding was as likely as the objection assumes, the good consequences of a basic income would probably outweigh its potential defects or unfair aspects. As he puts it, a basic income “would encourage more of us to spend more time doing work that is not labour, such as caring for elderly frail relatives or children or doing community work. Most of us will go into old age wishing we had done more of that type of work and less of labour”.
Finally, one can accept the core of the objection – namely, that justice requires some degree of reciprocity – while denying that one’s contributions to society must be measured solely according to their market value. In Elizabeth Anderson’s words: “Everyone ought to contribute to society. But not all positive contributions to society need be via paid employment on the market. Much of women’s work taking care of children and elder dependents is not paid, although it is socially necessary. Much nonprofit work makes a huge difference for others, but it is also not paid. Most people want to make a positive contribution and will do so in one way or another. Society should expand opportunities to make a contribution, but not insist that they survive a market test”.
What this view suggests is that Californian surfers needn’t be free-riding on us. Though their economic contribution to society may border on nothingness, this wouldn’t necessarily imply that they cannot contribute in other ways, nor that they are unable to provide us with valuable things. Suppose we discovered that no member of the Rolling Stones has ever paid a dollar in taxes since they became famous. Would that mean they haven’t contributed to society as much as they should? Probably. Would it also mean they haven’t contributed anything at all? That seems harder to stomach. For many people, listening to their songs, going to their concerts, or simply learning to play guitar by imitating Keith Richards or Roon Wood are in themselves valuable experiences that would not vanish of a sudden.
Are these arguments convincing? Do they answer adequately to the free-riding objection? Do they really succeed in justifying a basic income? That is something for the reader to decide.
—————-
[i] This objection was famously formulated by John Rawls in his article “The Priority of Right and Ideas of the Good” (1988), Philosophy & Public Affairs 17(4): 257, n. 7. For an equally well-known response, see also Philippe van Parijs,“Why Surfers Should be Fed: The Liberal Case for an Unconditional Basic Income” (1991), Philosophy & Public Affairs 20(2): 101-131.
[ii] https://www.manchester.ac.uk/research/hillel.steiner/
[iii] See, for instance, Steiner’s article “Left Libertarianism and the Ownership of Natural Resources” (2009), Public Reason 1(1): 1-8.
[iv] https://www.guystanding.com/.
[v] For the Spanish tradition, see: https://www.marcialpons.es/libros/la-renta-basica/9788494769474/.
[vi] Let us remember that a similar argument was put forward by Matt Zwolinski in this article’s predecessor: https://www.revistalibertalia.com/single-post/2019/02/09/Voces-sobre-la-renta-basica-I-La-renta-basica-y-el-libertarismo.
[vii] https://www.qatar.georgetown.edu/profile/karl-widerquist.
[viii] See, for instance, https://www.amazon.com/Independence-Propertylessness-Basic-Income-Exploring/dp/1137274727.
[ix] https://www-personal.umich.edu/~eandersn/.
[x] The locus classicus of this discussion is “What is the Point of Equality?” (1999), Ethics 109(2): 287-337.
[xi] These results are discussed in chapter 8 of the book mentioned in note iv.
“Voces sobre la renta básica (II): ¿Está justificada? [Voices on basic income (II): Is it justified?]” by Pablo Magaña, Libertalia, February 28, 2019
by Michael Lewis | Mar 5, 2019 | Opinion
In principle, I’m a UBI supporter and have been for about 20 years. I qualify my support by saying “in principle” in order to signal that I recognize there are questions surrounding how such a plan would work in practice. At least some of them will need some pretty clear answers before we should take the plunge and implement the plan. And it may be that if we can’t answer some key questions, such as how to finance a UBI in a way that wouldn’t make currently low-income people worse off, we shouldn’t implement a UBI at all. As someone who supports UBI and who’s read most of Widerquist’s book, I’m worried about some of the commentary I’ve seen on the recently released findings from Finland’s basic income experiment.
For the full article, please visit the USBIG Blog.
by Karl Widerquist | Feb 19, 2019 | Opinion, The Indepentarian
The hardest thing for any society to do is to avoid oppressing its least advantaged people. Politics everywhere is an insider game: people with political, economic, and social advantages make policy for their own benefit not just neglecting outsiders, but oppressing them. Most theories of justice understandably want to eliminate this insider-outsider problem by building a consensus around a true “social contract” or an undeniable sent of “natural rights.” Unfortunately, you can never get everyone to agree to anything. How can you eliminate the insider-outsider problem, if you can’t bring every outsider into consensus?
More than 200 years ago, Immanuel Kant gave the world an overconfident solution that, I would like to argue, has helped justify oppression ever since: create a basic social-political structure that, in Thomas Scanlon’s words, “no one could reasonably reject.”
Obviously, no matter how fair and just social arrangements are, some unreasonable people—call them recalcitrants—will reject them because of their selfishness, irrationality, or ignorance. But if we create a social structure that truly incorporates everyone’s needs or rights or concerns, we can effectively eliminate the insider-outsider problem even without a literal consensus. Any reasonable objectors—call them dissenters—will have been brought into the coalition.
If you could do such a thing, the social contract would resemble (if only superficially) an insider contract. Some people—call them the ruling coalition—would establish a basic structure. Other people would object. The ruling coalition would say that the objectors were unreasonable, and they would be right. The coalition would speak for the recalcitrants, truly bringing them inside the contract, knowing that if they were rational they would know (and if they were reasonable they would admit) that they are not really outsiders.
If the social contract of the reasonable looks so much like an insider contract, how will we know which it is? Most theories of justice try to bypass this how-do-we-know question by focusing on the what-do-we-do question. If we thought there were reasonable objections, we would change the basic structure to one that had no reasonable objections. Many philosophers have written extensive theories about the kind of structure that they believe could not reasonably be rejected.
Great. But then we’re in the same situation where the ruling coalition says its reasonable. How do we know that the ruling coalition is the one that’s reasonable and the objectors are the ones that are unreasonable rather than the other way around? No one is infallible. Philosophers make mistakes. So do ruling coalitions. One could reasonably characterize all of recorded history as the March of Folly of ruling coalitions. So, if we’re fallible, how will we know when and whether we’ve succeed in this great and worthy quest to create social arrangements “that no one could reasonably reject?”
Unfortunately, I want to argue that virtually all contemporary theories of justice are based on the overconfident assumption that the theorist who wrote it actually knows how to solve the insider-outsider problem.
Immanuel Kant
The danger of a theory based on that piece of overconfidence is revealed by the answer to this question, who must we convince that we’ve created a structure “that no one could reasonably reject”? The only possible answer is that the ruling coalition only has to convince itself. They have to treat potential objectors well enough to keep them from rebelling, but they don’t really have to justify the structure to anybody; they don’t have to get objectors to agree to anything, because they can dismiss them as “unreasonable.” My reading of recorded history indicates that insider coalitions can be incredibly unjust without doubting their own reasonableness or creating a serious risk of rebellion. (For example, the Texas state legislature once passed a resolution claiming, “the servitude of the African race … is mutually beneficial to both bond and free.”)
Modern philosophers can reasonably claim that they are far more reasonable than the 1861 Texas Confederate state legislature, and they can propose a structure that gives voice and concern to many out groups, but they are dangerously overconfident if they ignore this observations that I believe our obvious: A privileged majority can never speak for an underprivileged minority. A male-dominated government can never claim to speak for women. A white majority can never speak for black or any other non-white minorities. A Christian majority can never claim to speak for non-Christian minorities. A secular majority can never claim to speak for religious minorities. A heterosexual majority can never claim to speak for queer minorities, and so on and so on.
The insider majority must give out-groups voice and try to accommodate their concerns, but the majority also has to rule, and they will make mistakes that advantage insiders over outsiders. The job will never be done. Justice is in the pursuit of accord, not in the assumption that we’ve done enough, and objectors are just unreasonable.
My latest academic article, “The Pursuit of Accord: Toward a Theory of Justice with a Second-Best Approach to the Insider-Outsider Problem,” discusses this issue at greater length. It gives ten reasons to believe that all ruling coalitions are insider coalitions rather than true “social contracts.” It discusses four strategies to create consensus, and argues that although they must be tried, they’re likely to fall short of establishing a genuine consensus even if everyone is reasonable.
Finally, it discusses an alternative theory called “justice as the pursuit of accord” (JPA), which offers a second-best approach to the insider-outsider problem under the working assumption that consensus is impossible to achieve even if everyone is rational and reasonable. The ruling coalition has to make the laws, but it can never presume to speak for dissenters. It must both try to get as many people into accord as possible and try to minimize negative interference with people who can’t be brought into accord. Basic Income plays a significant role in the minimization of negative interference and other aspects of JPA. My earlier book, Freedom as the Power to Say No, outlined JPA’s theory of freedom. My article (“The Pursuit of Accord”) and the future book I’m hoping to develop from it will discuss JPA as an overall theory of justice and outline its accompanying property theory.
“The Pursuit of Accord: Toward a Theory of Justice with a Second-Best Approach to the Insider-Outsider Problem,” Raisons Politiques, forthcoming in 2019
by Karl Widerquist | Feb 6, 2019 | Opinion, Research, The Indepentarian
When people ask me where to find empirical research on the effects of Basic Income online, I tend to recommend the following sources, both for the sources themselves and for the many more sources you’ll find in their bibliographies:
Karl Widerquist A Critical Analysis of Basic Income Experiments for Researchers, Policymakers, and Citizens, Palgrave Macmillan, December 2018. In case you can’t find my book at your university library, I posted an early draft of it (and as far as I know everything I write) for free on my personal website.
Karl Widerquist “A Failure to Communicate: What (If Anything) Can we Learn from the Negative Income Tax Experiments?” The Journal of Socio-Economics (2005). You can find an early free version here.
Calnitsky, D. (2018) ‘The employer response to the guaranteed annual income’, Socio-Economic Review, 25, 75–25.
Kangas, O., Simanainen, M. and Honkanen, P. (2017) ‘Basic income in the Finnish context’, Intereconomics, 52, 2, 87–91.
Karl Widerquist, “The Cost of Basic Income: Back-of-the-Envelope Calculations,” Basic Income Studies, 2017. Again if you don’t have access through your university, you can find an early version of The Cost of Basic Income on my personal website.
“Basic Income: An Anthology of Contemporary Research” is helpful, although only a small part of it is empirical.
Widerquist, K., Howard, M. (Editors) Alaska’s Permanent Fund Dividend: Examining Its Suitability as a Model and Exporting the Alaska Model: Adapting the Permanent Fund Dividend for Reform around the World, two books both published by Palgrave Macmillan in 2012. Contact the editors (karl@widerquist.com) if you have trouble locating the books.
Evelyn Forget, “The town with no poverty: The health effects of a Canadian guaranteed annual income field experiment,” Canadian Public Policy, 2011
Go to Google Scholar: search “basic income” and/or other names for the concept with our without additional key words to narrow it down. Scroll through as many pages of links as you have time for.
Go through the tables of contents for each issue of the journal Basic Income Studies.
Go through the news on Basic Income News, as far back as you have time for, looking for mentions of and links to new research.
Go to the “Basic Income FAQ/wiki,” on Reddit and look for the empirical articles.
I’m leaving out a lot of good stuff because I can’t find it online, but those things together should give you a good idea of the current state of UBI research.
What links would you add (please answer only if you can give the full information about it including an actual links to it)?
by Karl Widerquist | Jan 22, 2019 | News, Opinion, The Indepentarian
Erik Olin Wright, a long-term advocate of Universal Basic Income and one of the most influential sociologists today, recently announced that his doctors have advised him that he has only a few weeks left to live. (Update: he passed away on January 23.) He is best known for his work on social stratification, egalitarian alternative futures to capitalism, deep democracy, and interstitial revolution.
But he has also had an important influence over the Basic Income movement. He was the first to describe basic income as “a permanent strike fund for all.” He wrote about it and provided platforms, such as the Real Utopias project that allowed other people to write about it when few people thought it had any chance.
Wright announced his diagnosis in a very brave and optimistic statement:
strange state of existence
Journal entry by Erik Olin Wright — Jan 5, 2019
I have roughly three weeks left of existence. Three weeks. Let’s call that January, 2019. January 2019: my month, my last month. There can be surprises — both ways of course. My liver is the main source of leukemia’s havoc. It is greatly enlarged now, filled with AML. This is why I need transfusions of platelets and red blood cells every day. The graft did not survive the return of AML so it produces no products, and the AML-clogged liver seems to be filtering out some of the transfusions so I am not getting full benefit from those. The result is that my platelets remain extremely low even after a platelet transfusion and my hemoglobin remains very low even after a hemoglobin transfusion. So, eventually these become too low to sustain life, or an opportunistic infection does me in. The doctors say “a few weeks” — a nice surprise would be to slide into February; my birthday is February 9. We’ll see what happens.
This is all hard to take in fully. I am not in great turmoil over dying. I am sad about many things, desperately sad about those connected to my family. But I’m not afraid. I wrote about this early on; my feelings haven’t changed: I am stardust that randomly ended up in this marvelous corner of the milky way where some stardust ended up in conditions where it became complexly organized in a way we term “alive.” And then even more complexly— conscious stardust that is fully aware that it is conscious: amazing — stardust, inanimate products of exploding supernova, organized in such a complex way that it is conscious of its own aliveness and consciousness — the greatest privilege in the whole, immense universe. It may be for a limited time — this complex organization ends and the stardust that is me will dissipate back to the more ordinary state of matter. Nothing to do about that. As creative fanciful minds, we humans are good at inventing ways for our existence as conscious beings to continue after the stardust dissipates. It would be nice. I don’t believe in that sort of thing, but I’ll find out by some time in February.
Some of his works on basic income include:
I am one of the many people who have been influenced by his work, and his talents affected me personally. He was the editor of my first published academic article, “A Reciprocity Argument for the Guaranteed Income,” in 1999 (before the name Basic Income became standard). His ability to see my intuitive leaps and to explain how to fill them in was amazing. That kind of ability takes not only strong intellect, but strong empathy. A combination that even many great academics lack. It’s the mark of an exceptional person.
–Karl Widerquist, Doha, Qatar, January 9, 2019; revised Cambridge, UK, January 12, 2009
by Sarath Davala | Jan 6, 2019 | Opinion
Written by: Sarath Davala [1]
In the last two weeks, there has been much speculation in some sections of media about Prime Minister Narendra Modi seriously considering Universal Basic Income (UBI) as a policy option. This comes on the heels of the electoral debacle Modi’s party faced in the recent elections in four states, and coincidentally just months ahead of the 2019 parliamentary elections.
This is the second wave of interest the current government has shown toward the idea of Universal Basic Income (UBI). The first wave was in early 2017 when the then Chief Economic Advisor to the Government of India, Dr. Arvind Subramanian, included a substantial chapter [2] on UBI in his annual Economic Survey (2016-17) which was presented to the Indian Parliament. The chapter explored the concept of UBI and observed that it could be a way forward to address poverty. Subramanian stated that a full-fledged UBI may not be feasible in India immediately, though it was possible to think of a Quasi UBI (QUBI) which would identify specific demographic groups in the population and give them an unconditional basic income. One of his speculations was that a QUBI could be to all women citizens, which would ensure that every household will receive a basic income. The discussion within the government did not proceed beyond this point, apparently as the Prime Minister was not convinced at that time of the political dividends flowing from this policy route.
The immediate trigger for the second wave of interest in basic income is the recent elections in the states of Telangana, Rajasthan, Madhya Pradesh and Chhattisgarh. At the time of these elections, the financial crisis affecting farmers became center-stage and the Congress party promised that they would waive farm loans as soon as they came to power. And they did so when they took charge of three states.
In the state of Telangana, the ruling party TRS went a step further by implementing several months before the elections a scheme called Rythu Bandhu, (Farmer Investment Support) which gives to the farmers Rs. 8000 (USD $115)[3] per acre per annum[4]. The cutting edge of the scheme is that it is unconditional, a feature that is considered central to the idea of basic income. Irrespective of whether farmers take up cultivation or not, the investment will be transferred to the farmers. The scheme benefited about 5.8 million farmers who own a total of 14 million acres of cultivable land in Telangana.
In 2017, responding to farmers’ agitation in the state, the Madhya Pradesh government implemented a different kind of scheme for farmers. It was called Bhavantar Bhugtan Yojana (BBY) which originally intended to pay farmers the net difference between the actual sale price and the Minimum Support Price announced by the government. Subsequently, however, the government introduced the notion of a modal rate which is the average of the sale price of a given crop sold in Madhya Pradesh on any given day, and in markets of two other neighboring states.
Both the schemes ran into controversy, particularly the latter. Regarding the Rythu Bandhu scheme, the criticism was that the scheme does not give any benefit to the tenant farmers who actually cultivate the land. Secondly, the scheme was criticized as regressive since it was paying rich farmers as well. The government then appointed J-PAL, a reputed international group based in the Massachusetts Institute of Technology in the United States to monitor and evaluate the scheme. In the initial survey conducted by it after the first round of transfers were made in June 2018 revealed that most cheques were for less than Rs.20,000 (USD $287), and only 0.8% of the farmers received more than Rs.50,000 (USD $718). A follow-up survey by J-PAL revealed that farmers spent the money judiciously with over 77% purchasing crop inputs, and 92% percent saying that they were satisfied with the scheme.
The Madhya Pradesh scheme was criticized because it brought in the notion of a modal rate which was far above the actual sale price. Ordinary farmers, who were unaware of the critical distinction between the actual sale price and the modal price, were in for a shock. Assuming the government would compensate them the difference between MSP and Sale Price, many of them also made distress sale of their produce and then realized that they would get much less compensation. Disappointed with this conditionality, many farmers were unwilling to sign up for the subsequent crop. This was not the only conditional aspect of this policy. The sale must take place during a prescribed window of three months. There was a cap on the volume that a farmer can get compensated per hectare. There was also a proposal that if a farmer sells his produce for less than 50% of the MSP, he becomes ineligible since it is the poor quality of his produce that is the reason for the low sale price, and that government should not compensate the farmer for producing low quality produce. And lastly, the scheme was applicable to only seven specific crops.
It appears that these two schemes and the farm loan waivers are the three primary options that the central government is discussing in order to find an effective response to the distress farmers all over the country are experiencing. Let us consider each one of them.
First, the loan waivers. All the three new Congress governments have announced loan waivers within days after assuming power. Even as these announcements have been taking place, experts from different locations have criticized loan waivers as harmful to the economy. Following these announcements by the new Congress governments, the former RBI Governor Dr. Raghuram Rajan released a document entitled ‘An Economic Strategy for India’ which he co-authored with 12 other well-known economists including the IMF Chief Economist Gita Gopinath and Sajjid Chinoy of JP Morgan, among others. The report advises the government to “… eschew loan waivers that divert resources from needed investment.” Arvind Subramanian in a recent interview severely criticized farm loan waivers as “an inefficient, retrograde and even perverse method of addressing farmers’ distress”. He further added that nearly 50% of the small and marginal farmers cannot and do not borrow from formal banks and they are completely left out of this mode of addressing farmers’ issues. Dr. Urjit Patel who had recently resigned as the RBI governor criticized farm loan waivers as corrupting the credit culture in the country. Addressing his party workers in Karnataka, PM Modi himself called Karnataka government’s farm loan waivers as a “cruel joke on farmers”, and that it benefits only a handful of farmers.
It is clear the farm loan waiver is not likely to be part of PM Modi’s new grand electoral narrative. This now brings us to the other two options. Between the two, the Rythu Bandhu seems to be a clear winner not just because of the electoral gains that the TRS party reaped from its introduction. It is because of certain essential features it has that are unique and demonstrate a clear transformation in the very grammar of welfare policymaking in India.
Firstly, it is an entitlement without having numerous conditionalities. The only conditionality is that the recipient must have a clear title. The curse of various welfare schemes in India is that each one comes with innumerable conditionalities thereby giving extraordinary discretion to inspectors who administer it. Rythu Bandhu makes a departure from this welfare practice. This is based on the assumption that any support given by the government must be given only to the deserving and that we need to ensure that it is spent only for the purpose it is given. Who deserves and who does not is decided by the government. And so is the purpose. Secondly, Rythu Bandhu is a proactive policy and not relief after the calamity has occurred. In fact, some economists such as Ashok Gulati, Arvind Subramanian, Bimal Jalan, etc., have said that it could be a potential agricultural policy for the entire country. The main point is that it is defined as an investment rather than welfare. Thirdly, because it is unconditional and a cash transfer, it is very easy to deliver. The record of delivery of Rythu Bandhu has been very impressive. Except in those cases where the land ownership is in dispute, the majority of farmers in the state have received cash in their bank accounts.
In addition to these innovative features, the TRS government has also added an additional scheme to all farmers called Rythu Bima, a life insurance scheme which provides coverage of Rs. 500,000 (USD $7,179). The annual premium of Rs.2272 (USD $33) per farmer is to be paid entirely by the state government.
This is this grand electoral moment that PM Modi is facing. What is he likely to do? Given that farmers have become quite vocal and that there is hardly any time before the Model Code of Conduct would come into operation around March 2019, he must respond in some form in the interim budget. Most likely, he will implement some version of Rythu Bandhu in combination with an insurance scheme for farmers. While this cannot be called a true UBI, it does carry the spirit of the idea of basic income because of its unconditionality. Normally we would be inclined to dismiss this is an electoral gimmick. We should not forget that in an electoral democracy, change comes in a clumsy way. We must be clear when we are positively moving forward and when we are not. In this case, the Indian political parties are embracing the spirit of basic income. This shift in India’s policy grammar should be seen as a welcome move in our journey to build a better society.
[1] Sarath Davala is the Vice-Chair of BIEN and Coordinator of India Network for Basic Income (INBI).
[2] Universal basic Income: A Conversation with and within the Mahatma
[3] To make sense of these amounts, it is useful to know that the rural poverty line in India is defined on the basic of per capita expenditure, which is half a dollar a day.
[4] This amount will be disbursed twice in a year, one just before Rabi crop season and one before the Kharif crop season.
