Is a UK basic income pilot possible?

Is a UK basic income pilot possible?

This article is based on a research project conducted by a French student, Lucas Delattre, during the summer of 2016, and updated in October 2017

Introduction

A Citizen’s Basic Income is an unconditional, nonwithdrawable income paid to every individual as a right of citizenship.

In 2016, at a discussion on Nick Srnicek and Alex Williams’ book Inventing the Future: Postcapitalism and a world without work (Verso, 2015) at the New Economics Foundation, Ed Miliband was asked what needed to happen to move us towards the implementation of a Citizen’s Basic Income scheme. ‘A pilot project’ was the answer. Others have made the same suggestion.

Existing pilot projects

Many of the projects that have been claimed as Citizen’s Basic Income pilots do not satisfy the criteria of being universal, unconditional and based on the individual. Those that do pay unconditional incomes to individuals cannot be absolutely universal, since they necessarily exclude those outside the sample. This is also an ethical issue that cannot be avoided. And the short duration of most projects enables some short-term effects to be detected, but not long-run or life-time effects. (A project in Kenya is giving 23 US$ per month to 40 villages for 12 years, which is much longer than the two years for which most experiments run.)

Some projects call for volunteers, and so are unlikely to be representative. Mandatory involvement of a representative sample is to be preferred; and even better is a saturation sample, covering a defined geographical area, which can enable effects to be picked up at a local level. Projects that compare the experience of pilot groups that receive an unconditional income to the experience of control groups that do not are preferable to experiments that do not employ control groups.

In 2008 and 2009 a privately-financed pilot project was held in the small rural settlement of Otjivero-Omitara in Namibia. 100 Namibian dollars (£7) was paid each month to every member of the population for a period of two years, and significant results were achieved in relation to health, education, crime reduction, economic activity, and poverty reduction. There was no control group with which to compare these results.

Between 2011 and 2013, similar projects in India paid 300 rupees (£3) per month to every member of several pilot villages, and in India the impressive results obtained in the pilot project villages could be compared with those in the control villages.

The Alaskan Permanent Fund (APF) is a sovereign wealth fund based on Alaska’s oil revenues, and invested in the international stock market. It gives an annual dividend payment to every Alaskan citizen, who has been resident for at least a year in Alaska. The APF has usually been able to provide a dividend of between $1,000 and $2,000 each year. Obviously, it is annual and variable, and is not sufficient to take on the role of social security: but it has had beneficial effects on the population of Alaska.

A micro-level pilot project in Germany provides Citizen’s Basic Incomes to selected individuals for one year. In Finland, a random sample of 2,000 people aged 25-58, who were unemployed at the end of 2016, are receiving €560 per month Income for two years in place of existing benefits, and the sample subjects can keep their payments after they have found employment. However, while being based on the individual and unconditional, this does not fulfil the Citizen’s Basic Income criteria of being universal. A similar approach is being considered by some Dutch municipalities. The current experiment in Ontario, Canada, is a Guaranteed Minimum Income project where a means-tested household-based benefit targeted on subjects aged 18-64 is being tested.

The Negative Income Tax experiments in the USA and Canada during the 1970s were based on the household, and so did not fulfil the criteria as a Citizen’s Basic Income pilot projects.

None of this is to suggest that the projects that have been undertaken are not of value. They are. Valuable lessons have been learnt in Namibia, India, Alaska, and the various states in Canada and the USA where Negative Income Tax experiments have taken place; and additional useful lessons will be learnt in Berlin, in the Netherlands, and in Finland. But we still await a genuine Citizen’s Basic Income pilot project. It is arguable that the Indian and Namibian experiments were as near to genuine pilot projects as possible because they were of sufficient duration to enable trends in behavioural change to be evaluated and trajectories predicted.

The UK

Might it be possible to run a Citizen’s Basic Income pilot project in the UK? A genuine Citizen’s Basic Income pilot project? Multiple problems present themselves:

  • the project would have to be for a sufficiently long period for a sufficient number of assessments of behavioural change to be made to enable trajectories to be plotted and reliable estimates made of the likely behavioural changes that would accompany a permanent Citizen’s Basic Income scheme;
  • any Citizen’s Basic Income viable in the short to medium term in the UK (and in any developed country) would have to be funded wholly or in part by changing income tax and social insurance contribution levels and thresholds. So a genuine pilot project would require government departments to make those adjustments just for the individuals involved in the project, and to recycle the savings into pilot project participants’ Citizen’s Basic Incomes – a somewhat unlikely proposition;
  • the project would need to involve a cross-section of the population if it were to stand some chance of modelling a genuine Citizen’s Basic Income; and
  • because any revenue neutral or almost revenue neutral scheme would impose losses on some households (- preferably on households in the higher income deciles), some participants in the pilot project would lose disposable income at the point of implementation.

A feasible Citizen’s Basic Income experiment

What would be feasible would be to provide a genuine Citizen’s Basic Income to a small community on top of existing benefits provisions and without altering National Insurance contributions or Income Tax payments. This would avoid government departments having to change current tax and benefits provisions: but it would require additional funding and it would not mirror the tax and benefits changes that would be required to fund a genuine Citizen’s Basic Income. This is why I have called it an ‘experiment’ rather than a ‘pilot project’. Important lessons could be learnt: but nobody would be able to regard the experiment’s results as evidence for how a Citizen’s Basic Income would work in practice.

A further feasible option would be to give a Citizen’s Basic Income to all sixteen to eighteen year olds and not give them an Income Tax Personal Allowance. This approach would create minimal problems for the tax and benefits authorities and for employers, and it would result in almost no losses at the point of implementation. The important question would be whether to promise permanence – in which case it would be a genuine pilot project; or whether to limit the experiment to a stated number of years – in which case it would be an experiment. (Microsimulation research on such a pilot project/experiment can be found in a recent working paper. )

The Basic Income Guarantee Experiments of the 1970s: a quick summary of results

So many countries are currently conducting or seriously talking about starting Universal Basic Income (UBI) experiments that it’s becoming hard to keep track. These are not the first experiments in UBI or other forms of Basic Income Guarantee (BIG). Namibia and India conducted UBI experiments in the late 2000s and early 2010s. And between 1968 and 1980, the U.S. and Canadian Government conducted five Negative Income Tax (NIT) experiments. They were the world’s first major social science experiments of any kind. They are worth reviewing because they provide not only inspiration and precedent but also relevant data and important lessons for the current experiments.

I’m working on a book (tentatively titled Basic Income Experiments: The Devil’s in the Caveats) drawing lessons from the ’70s experiments for the current round of experiments. This blog post previews a chapter from that upcoming book providing a review of results from the 1970s experiments. The chapter, in turn, draws heavily on my earlier work on BIG experiments including “A Failure to Communicate: What (if anything) Can We Learn from the Negative Income Tax Experiments” and “A Retrospective on the Negative Income Tax Experiments: Looking Back at the Most Innovative Field Studies in Social Policy.” Next week, I’ll make a blog post showing how poorly understood the NIT experiments were in the media at the time.

Labor market effects

Unfortunately, most of the attention of the 70s experiments was directed not at the effects of the policy (how much does it improve the welfare of low-income people) but to one potential side effect (how does it affect labor hours of test subjects). And so that issue takes up most of the discussion here.

Table 1 summarizes the basic facts of the five NIT experiments. The first, the New Jersey Graduated Work Incentive Experiment (sometimes called the New Jersey-Pennsylvania Negative Income Tax Experiment or simply the New Jersey Experiment), was conducted from 1968 to 1972. The treatment group originally consisted of 1,216 people and dwindled to 983 (due to dropouts) by the conclusion of the experiment. Treatment group recipients received a guaranteed income for three years.

The Rural Income Maintenance Experiment (RIME) was conducted in rural parts of Iowa and North Carolina from 1970 to 1972. It began with 809 people and finished with 729.

The largest NIT experiment was the Seattle/Denver Income Maintenance Experiment (SIME/DIME), which had an experimental group of about 4,800 people in the Seattle and Denver metropolitan areas. The sample included families with at least one dependent and incomes below $11,000 for single-parent families or below $13,000 for two-parent families. The experiment began in 1970 and was originally planned to be completed within six years. Later, researchers obtained approval to extend the experiment for 20 years for a small group of subjects. This would have extended the project into the early 1990s, but it was eventually canceled in 1980, so that a few subjects had a guaranteed income for about nine years, during part of which time they were led to believe they would receive it for 20 years.

The Gary Income Maintenance Experiment was conducted between 1971 and 1974. Subjects were mostly black, single-parent families living in Gary, Indiana. The experimental group received a guaranteed income for three years. It began with a sample size of 1,799 families, which (due to a large drop-out rate) fell to 967 by the end of the experiment.

The Canadian government initiated the Manitoba Basic Annual Income Experiment (Mincome) in 1975 after most of the U.S. experiments were winding down. The sample included 1,300 urban and rural families in Winnipeg and Dauphin, Manitoba with incomes below C$13,000 per year. By the time the data collection was completed in 1978, interest in the guaranteed income was seriously on the wane and the Canadian government canceled the project before the data was analyzed.

 

Table 1: Summary of the Negative Income Tax Experiments in the U.S. & Canada

Name Location(s) Data collection Sample size:

Initial (final)

Sample Characteristics G* t**
The New Jersey Graduated Work Incentive Experiment (NJ) New Jersey & Pennsylvania 1968-1972 1,216 (983) Black, white, and Latino, 2-parent families in urban areas with a male head aged 18-58 and income below 150% of the poverty line. 0.5

0.75

1.00

1.25

0.3

0.5

0.7

The Rural Income-Maintenance Experiment (RIME) Iowa & North Carolina 1970-1972 809 (729) Both 2-parent families and female-headed households in rural areas with income below 150% of poverty line. 0.5

0.75

1.00

0.3

0.5

0.7

The Seattle/Denver Income-Maintenance Experiments (SIME/DIME) Seattle & Denver 1970-1976,

(some to 1980)

4,800 Black, white, and Latino families with at least one dependant and incomes below $11,00 for single parents, $13,000 for two parent families. 0.75, 1.26, 1.48 0.5

0.7,

0.7-.025y,

08-.025y

The Gary, Indiana Experiment (Gary) Gary, Indiana 1971-1974 1,799 (967) Black households, primarily female-headed, head 18-58, income below 240% of poverty line. 0.75

1.0

0.4

0.6

The Manitoba Basic Annual Income Experiment (Mincome) Winnipeg and Dauphin, Manitoba 1975-1978 1,300 Families with, head younger than 58 and income below $13,000 for a family of four. C$3,800

C$4,800

C$5,800

0.35

0.5

0.75

* G = the Guarantee level.

** t = the marginal tax rate

Source: Reproduced from Widerquist (2005)

 

Scholarly and popular media articles on the NIT experiments focused, more than anything else, on the NIT’s “work-effort response”—the comparison of how much the experimental group worked relative to the control group. Table 2 summarizes the findings of several of the studies on the work-effort response to the NIT experiments, showing the difference in hours (the “work reduction”) by the experimental group relative to the control group in foregone hours per year and in percentage terms. Results are reported for three categories of workers, husbands, wives, and “single female heads” (SFH), which meant single mothers. The relative work reduction varied substantially across the five experiments from 0.5% to 9.0% for husbands, which means that the experimental group worked less than the control group by about ½ hour to 4 hours per week, 20 to 130 hours per year, or 1 to 4 fulltime weeks per year. Three studies averaged the results from the four U.S. experiments and found relative work reduction effects in the range of 5% to 7.9%.[i]

The response of wives and single mothers was somewhat larger in terms of hours, and substantially larger in percentage terms because they tended to work fewer hours, to begin with. Wives reduced their work effort by 0% to 27% and single mothers reduced their work effort by 15% to 30%. These percentages correspond to reductions of about 0 to 166 hours per year. The labor market response of wives had a much larger range than the other two groups, but this was usually attributed to the peculiarities of the labor markets in Gary and Winnipeg where particularly small responses were found.

 


 

Table 2: Summary of findings of work reduction effect

Study Data Source Work reduction*

in hours per year ** and percent

Comments and Caveats
Husbands Wives SFH
Robins (1985) 4 U.S. -89

-5%

-117

-21.1%

-123

-13.2%

Study of studies that does not assess the methodology of the studies but simply combines their estimates. Finds large consistency throughout, and “In no case is there evidence of a massive withdrawal from the labor force.” No assessment of whether the work response is large or small or its effect on cost. Estimates apply to a poverty-line guarantee rate with a marginal tax rate of 50%.
Burtless (1986) 4 U.S. -119

-7%

-93

-17%

-79

-7%

Average of results of the four US experiments weighted by sample size, except for the SFH estimates, which are a weighted average of the SIME/DIME and Gary results only.
Keeley (1981) 4 U.S. -7.9% A simple average of the estimates of 16 studies of the four U.S. experiments
Robins and West (1980a) SIME/

DIME

-128.9

-7%

-165.9

-25%

-147.1

-15%

Estimates “labor supply effects.” It goes without saying that this is different from “labor market effects.”
Robins and West (1980b) SIME/

DIME

-9% -20% -25% Recipients take 2.4 years to fully adjust their behavior to the new program.
Cain et al (1974) NJ -50

-20%

Includes caveats about the limited duration of the test and the representativeness of the sample. Notes that the evidence shows a smaller effect than nonexperimental studies.
Watts et al (1974) NJ -1.4% to

-6.6%

Depending on size of G and t
Rees and Watts (1976) NJ -1.5 hpw**

-0.5%

-0.61% Found anomalous positive effect on hours and earnings of blacks.
Ashenfelter (1978) RIME -8%

 

-27% “There must be serious doubt about the implications of the experimental results for the adoption of any permanent negative income tax program.”
Moffitt (1979a) Gary -3% to -6% 0% -26% to -30% No caveat about missing demand, but careful not to imply the results mean more than they do.
Hum and Simpson (1993a) Mincome -17

-1%

-15

-3%

-133

-17%

Smaller response to the Canadian experiment was not surprising because of the make-up of the sample and the treatments offered.

* The negative signs indicate that the change in work effort is a reduction

** Hours per year except where indicated “hpw,” hours per week.

NJ = New Jersey Graduated Work Incentive Experiment

SIME/DIME = Seattle / Denver Income Maintenance Experiment

Gary = Gary Income Maintenance Experiment

RIME = Rural Income Maintenance Experiment

Mincome = Manitoba Income Maintenance Experiment

SFH = Single Female “head of household.”

Source: Reproduced from Widerquist (2005)

 

 

All or most of the figures reported above are raw comparisons between the control and experimental groups: they are not predictions of how labor market participation is likely to change in response to an NIT or UBI. There are many reasons why these figures can’t be taken as predictions of responses to a national program. The many difficulties of relating experimental results to such predictions is a major theme in the book I’m writing. I’ll mention just four of them now.

First, the study participants were drawn only from a small segment of the population: people with incomes near the poverty line, about the point at which people are most likely to work less in response to an income guarantee because the potential grant is high relative to their earned income. Thus, the response of this group is likely to be much larger than the response of the entire workforce to a national program. One study using computer simulations estimated that the work reduction in response to a national program would be only about one-third of reduction in the Gary experiment (1.6% rather than 4.5%).[ii] Although simulations are an important way to connect experimental data with what we really want to know, the more researchers rely on them the less their reports are driving by their experimental data.

Second, the figures do not include any demand response, which economic theory predicts would lead to higher wages and a partial reversal of the work-reduction effect. One study using simulation techniques to estimate the demand response found it to be small.[iii] Another found, “Reduction in labor supply produced by these programs does tend to raise low-skill wages, and this improves transfer efficiency.”[iv] That is, it increases the benefit to recipients from each dollar of public spending.

Third, the figures were reported in average hours per week and very often misinterpreted to imply that 5% to 7.9% of primary breadwinners dropped out of the labor force. The reduction in labor hours was not primarily caused by workers reducing their hours of work each week (as few workers are able to do even if they want to). Moreover, few if any workers simply dropped out of the labor force for the duration of the study, as knee-jerk reactions to guaranteed income proposals often assume.[v] Instead, it was mainly caused by workers taking longer to find their next job if and when they became nonemployed.

Fourth, the experimental group’s “work reduction” was only a relative reduction in comparison to the control group. Although this language is standard for experimental studies, it doesn’t imply that receiving the NIT was the major determinate of labor hours. In fact, in some studies, labor hours increased for both groups, and the labor hours of both groups tended to rise and fall together along with the macroeconomic health of the economy—implying that when more or better jobs were available, both groups took them, but when they were less available, the control group searched harder or accepted less attractive jobs.[vi]

As I’ll show in my next article about the NIT experiments, most laypeople writing about the results assumed any work reduction, no matter how small, to be an extremely negative side effect. But it is not obviously desirable to put unemployed workers in the position where they are desperate to start their next job as soon as possible. It’s obviously bad for the workers and families in that position. It’s not only difficult to go through but also it reduces their ability to command good wages and better working conditions. Increased periods of nonemployment might have a social benefit if they lead to better matches between workers and firms.

Non-labor-market effects

The focus of the 1970s experiments on work effort is in one way surprising because presumably, the central goals of a UBI involve its effects on poverty and the wellbeing of relatively low-income people, and assessing these issues requires look at non-labor-market effects.

The experimental results for various quality-of-life indicators were substantial and encouraging. Some studies found significant positive influences in elementary school attendance rates, teacher ratings, and test scores. Some studies found that children in the experimental group stayed in school significantly longer than children in the control group. Some found an increase in adults going on to continuing education. Some of the experiments found desirable effects on many important quality-of-life indicators, including reduced incidents of low-birth-weight babies, increased food consumption, and increased nutritional content of the diet. Some even found reduced domestic abuse and reduced psychiatric emergencies.[vii]

Much of the attention to non-labor market effects focused not on the presumed goals of the policy but on another side effect: a controversial finding that the experimental group in SIME-DIME had a higher divorce rate than the control group. Researchers argued forcefully on both sides with no conclusive resolution in the literature. The finding was not replicated by the Manitoba experiment, which found a lower divorce rate in the experimental group. The higher divorce rate in some studies examining SIME-DIME was widely presented as a negative effect, even though the only explanation for it that researchers on either side were that the NIT must have relieved women from financial dependence on husbands.[viii] It is at the very least questionable to label one spouse staying with another solely because of financial dependence as a “good” thing.

An overall comparison?

Most of the researchers involved considered the results extremely promising overall. Comparisons of the control and experimental group indicated that the NIT was capable of significantly reducing the material effects of poverty, and the relative reductions in labor effort were probably within the affordable range and almost certainly within the sustainable range.

But experiments of this type were not capable of producing a bottom line. Non-specialists examining these results might find themselves asking: What was the cost exactly? How much were the material effects of poverty reduced? What is the verdict from an overall comparison of costs and benefits?

Experiments cannot produce an answer to these questions. Doing so would involve taking positions on controversial normative issues, combining the experimental results with a great deal of nonexperimental data, and plugging it into a computer model estimating the micro- and macroeconomic effects of a national policy. The results of that effort would be driven more by those normative positions, nonexperimental data, and modeling assumptions than by the experimental results that such a report would be designed to illustrate.

Whichever strategy experimental reports take, nonspecialists will have difficulty grasping the complexity of the results and the limits of what they indicate about a possible national policy. No matter how well the experiment is conducted, the results are vulnerable to misunderstanding, misuse, oversimplification, and spin. My blog post next week will show how badly this happened when the results of NIT experiments were reported in the United States in the 1970s.

[i] G. Burtless, “The Work Response to a Guaranteed Income. A Survey of Experimental Evidence,” in Lessons from the Income Maintenance Experiments, ed. A. H. Munnell (Boston: Federal Reserve Bank of Boston, 1986). M.C. Keeley, Labor Supply and Public Policy: A Critical Review (New York: Academic Press, 1981). P.K. Robins, “A Comparison of the Labor Supply Findings from the Four Negative Income Tax Experiments,” Journal of Human Resources 20, no. 4 (1985).

[ii] R.A. Moffitt, “The Labor Supply Response in the Gary Experiment,” ibid.14 (1979).

[iii] D.H. Greenberg, “Some Labor Market Effects of Labor Supply Responses to Transfer Programs,” Social-Economic Planning Sciences 17, no. 4 (1983).

[iv] J.H.  Bishop, “The General Equilibrium Impact of Alternative Antipoverty Strategies205-223,” Industrial and Labor Relations Review 32, no. 2 (1979).

[v] Robert Levine et al., “A Retrospective on the Negative Income Tax Experiments: Looking Back at the Most Innovative Field Studies in Social Policy,” in The Ethics and Economics of the Basic Income Guarantee, ed. Karl Widerquist, Michael A. Lewis, and Steven Pressman (Aldershot: Ashgate, 2005).

[vi] Karl Widerquist, “A Failure to Communicate: What (If Anything) Can We Learn from the Negative Income Tax Experiments?,” The Journal of Socio-Economics 34, no. 1 (2005).

[vii] Levine et al, 2005.

[viii] Levine et al, 2005; Widerquist, 2005.

Public Reaction to the Basic Income Guarantee Experiments in the 1970s: a case of misunderstanding, misuse, oversimplification, and spin

This post is one of several previewing the book I’m writing on Universal Basic Income (UBI) experiments, and it is the second of two reviewing the five Negative Income Tax (NIT) experiments conducted by the U.S. and Canadian Government in the 1970s. This post draws heavily on my earlier work, “A Failure to Communicate: What (if anything) Can We Learn from the Negative Income Tax Experiments.”

Last week I argued that the results from the NIT experiments for various quality-of-life indicators were substantial and encouraging and that the labor-market effects implied that the policy was affordable. As promising as the results were to the researchers involved the NIT experiments, they were seriously misunderstood in the public discussion at the time. But the discussion in Congress and in the popular media displayed little understanding of the complexity. The results were spun or misunderstood and used in simplistic arguments to reject NIT or any form of guaranteed income offhand.

The experiments were of most interest to Congress and the media during the period from 1970 to 1972, when President Nixon’s Family Assistance Plan (FAP), which had some elements of an NIT, was under debate in Congress. None of the experiments were ready to release final reports at the time. Congress insisted researchers produce some kind of preliminary report, and then members of Congress criticized the report for being “premature,” which was just what the researchers had initially warned.[i]

Results of the fourth and largest experiment, SIME/DIME, were released while Congress was debating a policy proposed by President Carter, which had already moved quite a way from the NIT model. Dozens of technical reports with large amounts of data were simplified down to two statements: It decreased work effort and it supposedly increased divorce. The smallness of the work disincentive effect hardly drew any attention. Although researchers going into the experiments agreed that there would be some work disincentive effect and were pleased to find it was small enough to make the program affordable, many members of Congress and popular media commentators acted as if the mere existence of a work disincentive effect was enough to disqualify the program. The public discussion displayed little, if any, understanding that the 5%-to-7.9% difference between the control and experimental groups is not a prediction of the national response. Nonacademic articles reviewed by one of the authors[ii] showed little or no understanding that the response was expected to be much smaller as a percentage of the entire population, that it could potentially be counteracted by the availability of good jobs, or that it could be the first step necessary for workers to command higher wages and better working conditions.

The United Press International simply got the facts wrong, saying that the SIME/DIME study showed that “adults might abandon efforts to find work.” The UPI apparently did not understand the difference between increasing search time and completely abandoning the labor market. The Rocky Mountain News claimed that the NIT “saps the recipients’ desire to work.” The Seattle Times presented a relatively well-rounded understanding of the results, but despite this, simply concluded that the existence of a decline in work effort was enough to “cast doubt” on the plan. Others went even farther, saying that the existence of a work disincentive effect was enough to declare the experiments a failure. Headlines such as “Income Plan Linked to Less Work” and “Guaranteed Income Against Work Ethic” appeared in newspapers following the hearings. Only a few exceptions such as Carl Rowan for the Washington Star (1978) considered that it might be acceptable for people working in bad jobs to work less, but he could not figure out why the government would spend so much money to find out whether people work less when you pay them to stay home.[iii]

Senator Daniel Patrick Moynihan, who was one of the few social scientists in the Senate, wrote, “But were we wrong about a guaranteed income! Seemingly it is calamitous. It increases family dissolution by some 70 percent, decreases work, etc. Such is now the state of the science, and it seems to me we are honor bound to abide by it for the moment.” Senator Bill Armstrong of Colorado, mentioning only the existence of a work-disincentive effect, declared the NIT, “An acknowledged failure,” writing, “Let’s admit it, learn from it, and move on.”[iv]

Robert Spiegelman, one of the directors of SIME/DIME, defended the experiments, writing that they provided much-needed cost estimates that demonstrated the feasibility of the NIT. He said that the decline in work effort was not dramatic, and could not understand why so many commentators drew such different conclusions than the experimenters. Gary Burtless (1986) remarked, “Policymakers and policy analysts … seem far more impressed by our certainty that the effective price of redistribution is positive than they are by the equally persuasive evidence that the price is small.”[v]

This public discussion certainly displayed “a failure to communicate.” The experiments produced a great deal of useful evidence, but for by-far the greatest part, it failed to raise the level of debate either in Congress or in public forums. The literature review reveals neither supporter nor opponents who appeared to have a better understanding of the likely effects of the NIT and UBI in the discussions following the release of the results of the experiments in the 1970s.[vi]

Whatever the causes for it, an environment with a low understanding of complexity is highly vulnerable to spin with simplistic if nearly vacuous interpretation. All sides spin, but in the late 1970s NIT debate, only one side showed up. The guaranteed income movement that had been so active in the United States at the beginning of the decade had declined to the point that it was able to provide little or no counter-spin to the enormously negative discussion of the experimental results in the popular media.

Whether the low information content of the discussion in the media resulted more from spin, sensationalism, or honest misunderstanding is hard to determine. But whatever the reasons, the low-information discussion of the experimental results put the NIT (and, in hindsight, UBI by proxy) in an extremely unfavorable light, when the scientific results were mixed-to-favorable.

The scientists who presented the data are not entirely to blame for this misunderstanding. Neither can all of it be blamed on spin, sound bites, sensationalism, conscious desire to make an oversimplified judgment, or the failure of reports to do their homework. Nor can all of it be blamed on the people involved in political debates not paying sufficient attention. It is inherently easier to understand an oversimplification than it is to understand the genuine complexity that scientific research usually involves no matter how painstakingly it is presented. It may be impossible to communicate the complexities to most nonspecialists readers in the time a reasonable person to devote to the issue.

Nevertheless, everyone needs to try to do better next time. And we can do better. Results from experiments in conducted in Namibia and India in the early 2010s and late ’00s were much better understood, as resulted from Canada’s Mincome experiment that sadly did not come out until more than two decades after that experiment was concluded.

The book I’m working on is an effort to help reduce misunderstandings with future experiments. It is aimed at a wide audience because it focuses the problem of communication from specialists to non-specialists. I hope to help researchers involved in current and future experiments design and report their findings in ways that are more likely to raise the level of debate; to help researchers not involved in the experiments raise the level of discussion when they write about the findings of the experiment, to help journalists understand and report experimental findings more accurately; and to help interested citizens of all political predispositions see beyond any possible spin and media misinterpretations to the complexities of the results of this next round of experiments—whatever they turn out to be.

[i] Widerquist, 2005.

[ii] Widerquist, 2005.

[iii] Widerquist, 2005.

[iv] Widerquist, 2005.

[v] Burtless, 1986.

[vi] Widerquist, 2005.

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Basic Income’s Third Wave

Basic Income’s Third Wave

This essay is reprinted from OpenDemocracy, 18 October 2017

Support for unconditional basic income (UBI) has grown so rapidly over the past few years that some might think the idea appeared out of nowhere. In fact, activists have been floating the plan — and other forms of a basic income guarantee (BIG) — for over a century. It experienced a small wave of support between 1910 and 1940, followed by a down period in the 40s and 50s. A second and larger wave of support happened in the 60s and 70s, followed by another down period in most countries until the early 2000s. Today’s discussion began to take off around 2010 and has increased every year since. It is UBI’s third, and by far its largest, wave of support yet.

Pessimists might think that this wave will inevitably subside, just as prior movements did. History, however, doesn’t always stick to patterns. In a 2016 interview with Wired, Barack Obama predicted that “we’ll be having [the UBI debate] over the next 10 or 20 years”. He may be right.

The history of the UBI movement shows that today’s political context points to an increase in support. More and more activists – from more and more diverse political formations – are calling for UBI. They can now cite evidence from a number of empirical studies, conducted over years in a variety of locations, to demonstrate the programme’s benefits.

Rising inequality and an economic system that seems designed against ordinary people has radicalised voters in recent years. Nationalist-populist movements are trying to redirect this frustration against immigrants and people of colour, but the left can take advantage of this moment to build support for UBI and create a truly universal welfare state.

The first wave

UBI dates back more than two hundred years, but enough people were discussing it in the early twentieth century to constitute a wave – or at least a ripple – of support. The idea was still new enough that most advocates had little knowledge of each other and all tended to give their versions of the programme a different name.

Some supporters of Henry George’s land tax suggested that proceeds be distributed in cash. Bertrand Russell and Virginia Woolf both praised the idea in their writings without naming it. In 1918, Dennis and E. Mabel Milner started the short-lived ‘State Bonus League’, and, in 1920, Dennis Milner published what was likely the first full-length book on UBI, Higher Production by a Bonus on National Output. James Meade and G. D. H. Cole – who coined the phrase “basic income” – wrote favourably about it in the 1930s.

Major C. H. Douglas called it a national dividend and included it in his ‘social credit’ programme. In 1934, the Louisiana senator Huey Long debuted his ‘share the wealth’ programme: he seems to have come up with the idea on his own, as there’s no evidence he was influenced by the ideas spreading around the United Kingdom in those years. The plan might have served as the basis for his presidential run had Long not been assassinated in 1935.

These early UBI advocates managed little direct influence on legislation. In 1935, the Social Credit Party of Canada took power in Alberta, but did not move to implement Douglas’ proposed dividend. After World War II, most welfare states adopted a conditional model, which provides assistance only to those who fit into some category of need, such as old age, disability, unemployment, single-parenthood, absence of market income, and so on. Truly universal programmes are few, far-between, and small. Discussion of a full UBI programme largely fell out of mainstream political discussion for more than two decades.

The second wave

The second wave took off in the early-to-mid 1960s. At that time, at least three groups in the United States and Canada began promoting the idea. Welfare rights activists mobilised people frustrated by inadequate and often demeaning conditional programmes. Futurists saw UBI as a way to protect workers from disruptions to the labour market caused by the computer revolution. Finally, many prominent economists – some leftists and some from the burgeoning libertarian movement – agreed that a basic income guarantee represented a more effective approach to poverty than the conditional and means-tested programmes of the New Deal era. BIG would simplify and streamline the welfare system while also making it more comprehensive.

The mainstream media first noticed UBI around the time Lyndon B. Johnson declared a “war on poverty”. Politicians and policy wonks began taking up the idea, and the Canadian government released several favourable reports on the “guaranteed annual income” in the 1970s.

For a short time, many saw some kind of guaranteed income as an inevitable next step in social policy: a compromise everyone could live with. Leftists viewed it as the culmination of the welfare system that would fill in the remaining cracks. Centrists and conservatives saw it as a way to make the social safety net more cost-effective.

In 1971, the US House of Representatives overwhelmingly passed a bill introducing a watered-down version of the ‘negative income tax’ (NIT), yet another variant of the idea. It missed becoming law by only ten votes in the Senate. The next year, presidential nominees from both major parties endorsed some form of BIG: Richard Nixon supported NIT, and George McGovern UBI. Interestingly, the fact that both nominees’ held essentially the same position made BIG less of an issue in the campaign than it might otherwise have been.

Nixon’s NIT never got another vote. It died partly because it had no groundswell of support outside of the welfare rights movement. None of its proponents made a serious push to sell the proposal to the public at large. Even BIG supporters viewed Nixon’s version with scepticism, seeing it as a top-down, centralised initiative. Letting it die cost the politicians who backed it very little, so they allowed the idea to fade from public discourse.

While neither the United States nor Canada introduced full UBI programmes, the second wave of UBI support had some major successes. Both countries conducted five implementation trials, and the United States created or expanded several more limited programmes, like the Earned Income Tax Credit and the Alaska Dividend. These policies not only helped a lot of people, but their relative success provided convincing evidence to push social programmes toward universality.

Politicians like Ronald Reagan and Margaret Thatcher dramatically changed the conversation around the welfare state in the early 1980s. They successfully vilified recipients as frauds. As a result, many people stopped talking about how to expand or improve the welfare system and started talking about how to cut it. The left largely went on the defensive in response, and stopped criticising the conditional model.

In 1980 the United States and Canada cancelled the last of their implementation trials, Canada stopped analysing the data it had spent years and millions of dollars collecting, and for the next 30 years mainstream American politics engaged in virtually no discussion of any form of BIG. Fortunately, as I discuss below, the results of those trials eventually re-emerged as important proof of the idea’s potential.

Between the waves

While discussion waned in North America, it slowly grew in other parts of the world. In 1977, a small Dutch party started a trend when it endorsed UBI in parliament. The next year, Niels I. Meyer’s book Rebellion from the Center launched a substantial wave of support in Denmark. The proposal gained traction in other countries as well, including post-apartheid South Africa. For the most part, however, discussion of UBI programmes took place outside the political mainstream, where its slight upward trend attracted little notice.

Academic attention began to grow in this period, especially among European scholars. The Belgian philosopher Philippe Van Parijs reinvented UBI in 1982 with no prior knowledge of the previous waves. He eventually connected with other supporters – including Guy Standing, Claus Offe, Annie Miller, Hermione Parker, and Robert van der Veen – and together they established the Basic Income European Network (BIEN) and convened the first BIEN Congress on 4-6 September 1986. From this point on, UBI, rather than NIT, dominated the political discussion of BIG.

The academic debate grew substantially between the mid-1980s and the mid-2000s, especially in the fields of politics, philosophy, and sociology. In 1984, supporters launched the first national UBI network in the United Kingdom; by the time BIEN changed its name to the Basic Income Earth Network 20 years later, activists had organized at least two dozen national groups.

Yet UBI stayed mostly outside the political mainstream, making the movement feel more like a discussion group than a political action network. Even the activist contingent concentrated more on discussion than action, believing that they had to increase public awareness before they could implement their proposals. This feeling actually distracted supporters from how much their movement had grown.

 

The third wave takes off

The third wave of basic income activism hit the mainstream in 2015 or 2016, but volunteers at Basic Income News had been noticing substantial increases in media attention since at least 2011. And in some places, the crossover began even earlier than that.

In 2006, at the BIEN Congress in South Africa, Zephania Kameeta, then the Lutheran Archbishop of Namibia, slammed his fist on the podium and announced, “Words, words, words!” UBI conferences had seen many passionate calls for action, but they were almost always accompanied by appeals for someone else to take action. This time, the speaker already had an action plan under way: the Namibian BIG Coalition was raising funds to finance a two-year implementation trial.

This project coincided with a smaller one in Brazil, and a much larger one followed in India in 2010. These tests attracted substantial media attention and helped inspire the privately and publicly funded experiments now under discussion or underway in Finland, Scotland, Canada, the United States, and Kenya.

At about the same time that Kameeta spoke in Cape Town, a national UBI wave was beginning to swell in Germany. Prominent people from across the political spectrum –Katja Kipping, Götz W. Werner, Susanne Wiest, and Dieter Althaus – all began to push different basic income proposals in a very public way.

Unlike most previous waves of support, this one inspired broad activism, which has only grown. In 2008, UBI networks in Germany, Switzerland, and Austria jointly organised the first International Basic Income Week, which has subsequently grown to become a worldwide event with actions taking place as far away as Australia and South America.

The financial meltdown and subsequent Great Recession sparked a new climate of activism. Public attention turned to poverty, unemployment, and inequality, and UBI supporters suddenly had a much better environment for activism.

Two citizens’ initiatives got under way in Switzerland and in the European Union in the early 2010s. In the former, Daniel Häni and Enno Scmidt successfully collected enough signatures to trigger a national vote. The EU movement eventually recruited organisers in all member states. Although neither ultimately won, they built an infrastructure to support activism across Europe and brought a tremendous amount of attention to the issue, which in turn sparked additional activism and attracted more support.

One of the contemporary movement’s most important features is that support now comes from many different places and from people who do not necessarily work together, follow similar strategies, or adhere to the same ideology. Indeed, today’s activists are motivated by a number of different issues and sources.

Mirroring the 1960s futurism discourse, many advocates point to automation and precariousness as reasons to enact the programme. High unemployment, the gig economy, and the pace of automation threaten large segments of the labour force. Whether or not the need for human labour is decreasing, the labour market has become extremely unstable. Labour leaders, activists, academics, and tech entrepreneurs have all proposed UBI in response, making this issue one of the prime drivers of recent interest in UBI.

For the first time, environmentalism has played a major role in this activism. Two of the most popular proposals for combating climate change are the tax-and-dividend and cap-and-dividend strategies, both of which involve setting a price on carbon emissions and distributing the revenue to all citizens. Other environmental groups, such as “Degrowth” and Canada’s “Leap Manifesto,” see UBI as a way to counteract excessive consumption and the depletion of resources.

Two additional proposals, called ‘quantitative easing for the people’ and ‘helicopter money’, are pushing central banks to stop giving money away to private banks and start giving it directly to every citizen. They believe their proposal would constitute a more equitable and effective economic stimulus programme. Although they do not use the term, distributing money directly to the people is essentially a temporary UBI.

Some private groups are trying to bypass central banks entirely by creating non-government digital currencies, and some of these groups have announced their intentions to provide their users with a UBI in the new currency.

At the same time, new evidence has convinced people of UBI’s radical potential. Evelyn Forget, of the University of Manitoba, received grant funding to analyse the data from Canada’s NIT experiment. She released her findings in 2011, just as new implementation trials and citizens’ initiatives were getting off the ground. They received a great deal of press attention and helped spark new interest in the programme in Canada and beyond. This increased media attention has built the movement even further. Seemingly every major news outlet has published something about UBI. And, in a sure sign of the movement’s newfound strength, opponents have started attacking it.

A couple of years ago, it remained unclear whether the third wave would match the size and reach of the second. Now the answer is obvious: grassroots support and international media attention are larger than ever, and the third wave represents the first truly global basic income movement. According to Philippe Van Parijs, “the big difference between the first two waves and the third one is that the third one quickly became international”. The first two did not extend beyond the United States, Canada, and the United Kingdom, but the third wave already involves major campaigns on all six inhabited continents.

How far can the third wave go?

The left should recognise that past UBI movements entered mainstream conversation when people worried about inequality and unemployment, and then subsided when public attention turned to other issues or when other ways of addressing poverty became dominant. The second American wave ended in the United States not in the prosperous economy of the mid-1980s but in the troubling times of the late 1970s, when right-wing politicians convinced large numbers of people that redistributive programmes had become overly generous.

The biggest danger to the third wave appears to be growing nationalism. If politicians can convince voters to blame immigrants for growing inequality, they can effectively distract people from mobilising around better social policies.

Despite these dangers, basic-income activists should feel encouraged: each wave has been larger than the last. With every resurgence, UBI has had a more developed proposal than the time before, and activists have been better prepared to address people’s concerns about poverty, inequality, and unemployment. The fact that academics had continued to study and activists had continued to promote UBI during its unfashionable years gave it recognition as a viable alternative when inequality once again became a dominant policy discussion.

Meanwhile, dissatisfaction with the conditional welfare model has been growing for over a century. This system is based on the idea that everyone who can work should and only those who really cannot work should receive help. All others are undeserving.

Conditionality has not made the welfare state more generous or less vulnerable to attack. Many who work still live in poverty, as do many who receive benefits. Opponents have successfully chipped away at welfare for more than 40 years, largely by vilifying any group that meets the conditions for need.

The conditional system also hurts workers. By making welfare requirements so stringent, we have made all employees more dependent on their employers. Dependent workers have less power, making it harder to demand good wages and decent working conditions. It is no coincidence that middle-class income has stagnated over the same period that the welfare system has declined. Despite enormous productivity gains, most workers now work more hours for less pay.

Conditional welfare systems are built on paternalistic assumptions that force people to prove their right to survival. UBI might not always gain steam as fast as it has in the last few years, but those shortcomings won’t disappear, and they provide a good reason for people to look seriously at UBI.

-Karl Widerquist, writing in Doha, New Orleans, and Morehead City in 2016 and 2017

Occupy Oakland “We are the 99%” protests in 2011.