by Genevieve Shanahan | May 12, 2017 | Opinion
David Piachaud, Emeritus Professor of Social Policy at the London School of Economics, last November put forward a four-pronged case against basic income – on the grounds of justice, simplicity, economic efficiency and political feasibility. While the argument, I believe, fails on all four counts, I’ll here focus on the justice argument.
To summarize, Piachaud outlines Philippe van Parijs’ famous argument for basic income from his 1991 paper “Why Surfers Should be Fed: The Liberal Case for an Unconditional Basic Income” and claims that the fatal flaw of van Parijs’ argument is that he does not take into account a crucial distinction between the voluntarily and involuntarily unemployed.1 The former value their leisure, it is posited, at least as much as the lowest wage paid to their employed counterparts. In this way, only redistribution of income to the involuntarily unemployed can be justified on Rawlsian grounds. Unfortunately, Piachaud overlooks or underestimates van Parijs’ lucid explanation of why both are entitled to the basic income. In what follows, I’ll try to show why van Parijs’ argument is unaffected by Piachaud’s critique.
The Difference Principle
Both van Parijs and Piachaud begin their arguments from the Difference Principle – a key concept in political philosophy since its first presentation in John Rawls’ seminal A Theory of Justice in 1971. Briefly, the Difference Principle states that social and economic inequalities (or inequalities in terms of “primary goods”) are justified only insofar as they benefit the least advantaged. The most important consequence of this principle, on Rawls’ account, is that it justifies inequality in wages to the extent that offering higher wages for valuable work, or steep rewards for successful innovation, incentivises the types of behaviour that generate economic growth and thereby increase the standard of living for all.
A crucial point for the Difference Principle, of course, is determining who counts as “the least advantaged”. One of the first criticisms of Rawls’ theory was that, if the least advantaged are just the people who have the least wealth, it would unfairly favour people who prefer smaller incomes and a lot of leisure over those who prefer to work hard and earn vast sums. If we imagine that the “least advantaged” in our society are those who can only find minimum wage employment (leaving aside other clear forms of disadvantage, like chronic illness and disability, or marginalization), it can seem intuitively perverse to treat those who choose not to take up that minimum wage job as more disadvantaged, and therefore more deserving of public assistance, than those who do. It’s pretty natural to think, “Well, if the surfer doesn’t do the best he can to get that job at McDonald’s, that’s his look out. We can’t be expected to support him when he’s perfectly capable of supporting himself.”
To avoid counterintuitively lavishing taxpayer money on the surfer, then, Rawls proposed that leisure time be treated as a primary good:
“[T]wenty-four hours less a standard working day might be included in the index as leisure. Those who are unwilling to work would have a standard working day of extra leisure, and this extra leisure itself would be stipulated as equivalent to the index of primary goods of the least advantaged. So those who surf all day off malibu must find a way to support themselves and would not be entitled to public funds.”2
This basically gets us to the social welfare system as we (aspire to) have it now: public funds are used to support the least advantaged, who are those who cannot find employment, whether due to incapacity or a lack of jobs. To ensure this support only goes to those who are the least advantaged, conditions and testing are applied – recipients of benefits must prove that they cannot work or that they are actively looking for work. And while basic income advocates often point to the inefficient costs associated with conditionality, such that it may be better for everyone if we just accept and absorb the cost of free-riders, van Parijs points out that people are likely to be willing to forgo efficiency gains to preserve their view of fairness. That is, if we are to gain the requisite political support, we must show that basic income is not merely efficient but also just and fair on a reasonably intuitive view of fairness.
Philippe Van Parijs (photo credit: Enno Schmidt)
Twenty years after Rawls introduced the Difference Principle, van Parijs took this idea and extended it. While most of us basic income advocates aren’t primarily motivated by concern for surfers who can’t possibly take a 9-to-5 job because it wouldn’t leave them adequate time to catch the perfect, most righteous wave, van Parijs’ strategy is strong. If it can be shown that even surfers – capable but unwilling to work – deserve a basic income sufficient to live on, it would seem to follow that everyone else does, too. How, then, does van Parijs get from Rawls’ support for conditional income support to the full, universal, unconditional basic income that would be paid even to the surfer?
Is Leisure Time a Resource?
Van Parijs argues that it is in fact unfair to treat leisure time as a primary good. As a liberal theory of justice – that is, a theory that is neutral regarding what constitutes a “good life” – the Difference Principle should not favour those who prefer working over those with other values. This means that, while we might say that people have to work to pay their own way on the grounds of justice, we can’t say people should work simply because hard work and self-denial is virtuous. Van Parijs shows, by means of a thought experiment, that such discrimination is the result if we follow Rawls and treat the value of leisure time as equivalent to the wage one could earn in the same time if one were working.
This thought experiment involves examining what the consequences of the approach would be in the case of an “exogenous windfall”, such as the state discovering valuable oil and gas reserves off its coast. In the case of such a windfall, the incomes of those who are working or deemed deserving of income support would (ideally3) increase, but the surfer’s set of primary goods would stay the same (i.e., he would have his day of leisure and empty pockets both before and after the windfall). The surfer is thus excluded from the benefits of the windfall – to which he is equally prima facie entitled as a citizen of the state – simply because his leisure time is deemed to be equivalent to the wage earned in a standard working day.
Here Piachaud enters the fray, defending Rawls’ suggestion that the voluntarily unemployed must value their leisure at least as much as the wages they forgo. If the surfer continues to shirk employment at the new, higher wage permitted by the exogenous windfall, the argument goes, it must be because the value of his leisure, to him, was all along at least equivalent to the new higher wage. In this way, the surfer’s share of primary goods continues to be at least equivalent to that of the least advantaged worker.
Piachaud’s argument here relies on a distinction between the voluntarily and involuntarily unemployed, drawn on the grounds of the value of leisure time to them – measured by their willingness or not to take up work where it is available. This is a mistake, however, though one very easily made (I feel its pull constantly in these discussions). It is a mistake because leisure time, like any other primary good, should not be valued at the level of the individual. It doesn’t matter that I value my leisure time a lot and you don’t. What matters is the value of this resource as determined by the market – that is, as van Parijs puts it, “in terms of competitive equilibrium prices.”4 Van Parijs here draws upon another widely influential theorist of distributive justice, Ronald Dworkin, who elegantly shows in “Equality of What? Part 1: Equality of Welfare” that what egalitarians must be concerned with is not equality of happiness, or preference satisfaction, or welfare, but rather equality of resources.5
Let’s illustrate the surfer’s evaluation of his leisure time with a more concrete example. Say I *love* lager. If you hand me a glass of the finest champagne at a party, I’ll hand it back and say “thanks, but please, give me a bottle of lager instead”. If it happened that it was incredibly expensive to make lager, such that one bottle cost $100, I would still buy cases, forgoing many other pleasures. That I live in a world where lager is pretty cheap is lucky for me. But should I be charged more so that the price I pay better reflects its value to me personally? No – that would be unfeasible (how, exactly, would vendors measure each customer’s preferences to ensure they were charging the right price?) and nonsensical (by the same logic, I could pay $5 for the champagne since I only get $5 of enjoyment from it, despite its massively higher market price).
The Costs to Others of Our Choices
This isn’t a simple question of efficiency. What we’re looking for, from a justice perspective, is that no one impose costs on others. It would be wrong from me to pay only $5 for the champagne, despite my personal judgement of its value, because of the vastly greater cost to others of producing it. Dworkin puts it this way – as a matter of justice, “people must pay the actual cost of the choices they make […] measured by the cost to others of those choices.”6
Returning, then, to the distinction between the voluntarily and involuntarily unemployed, van Parijs argues that it is welfarist – that is, mistakenly pursuing equality of welfare rather than equality of resources – to apply willingness-to-work conditions to the basic income. This approach “charges” for leisure time based on whether the able-bodied potential worker enjoys the time off or not (as clumsily measured by Jobcentre assessments of employment search efforts). As we’ve outlined here, the correct price to “charge” for leisure time is its cost to others – the worth of what others might have to give up for us to have that leisure time.
Doesn’t a basic income immediately violate this principle, requiring the rest of society to hand over a portion of their earnings to the voluntarily unemployed? Van Parijs says it does not, because the basic income, fundamentally, is just the individual’s share of the world’s resources he was entitled to from the start, by virtue of being a person.
It should be noted that van Parijs does distinguish between voluntary and involuntary unemployment in a way that affects the level of the basic income. Piachaud and van Parijs both agree that, where there is involuntary employment (i.e. not enough jobs to go around), there are employment rents that are properly subject to redistribution. That is, in a perfectly competitive, idealised labour market – where everyone has access to all relevant information, there are no geographical limitations to what jobs an individual can apply for, and there are no costs associated with hiring and firing, or regulations like minimum wage – supply and demand would balance. Workers’ wages would simply be the actual market price of their labour, and there would be no unemployment attributable to lack of jobs. By contrast, in any real labour market there is friction – due to imperfect access to information, geographical limitations, hiring and firing costs, and regulations – which means that many workers are paid more than would be necessary in a perfect market for their labour, and many eager potential workers are left without a job. In this way, on van Parijs’ account, the level of the basic income can rise and fall in accordance with the level of employment rents in a labour market.
“[…] in the case of scarce jobs, let us give each member of the society concerned a tradable entitlement to an equal share of those jobs. […] If involuntary unemployment is high, the corresponding basic income will be high. If all unemployment is voluntary, no additional basic income is justified by this procedure.”7
As another way of understanding this point, van Parijs suggests that we think of jobs as resources in themselves (though Piachaud does not seem to entertain this line of reasoning). Perhaps the classic way of thinking of a job is as labour one expends in exchange for resources (a wage). Yet we know that jobs are much more than that – many jobs have value beyond the wage earned, whether in terms of meaning, enjoyment, community, status, etc. This is part of the reason why one might not value the increase in leisure time afforded by unemployment: even where conditional unemployment benefits are generous, most people still prefer work. Since available employment is limited due to the market inefficiencies outlined above, the surfers are doing the aspiring workers a favour, correctly assigning themselves to the ranks of the unemployed so that more jobs are available for those who want them.
If we return, then, to the idea of justice as not imposing costs on others, we can see that the surfers are in the clear. The lowest level of basic income simply corresponds to each individual’s rightful share of the world’s natural resources. Then, where there are additional resources to be redistributed due to the existence in a labour market of employment rents, this is to compensate for the costs imposed on the unemployed by the employed in taking up scarce jobs. There is no distinction between the voluntarily and involuntarily unemployed in entitlement to this level of the basic income – each equally provides a benefit to the employed by freeing up their share of jobs and the various non-monetary benefits that go with them. Directly anticipating and defusing Piachaud’s claim that such rents should only be redistributed to the involuntarily unemployed, van Parijs warns:
“adopting a policy that focuses on the involuntarily unemployed amounts to awarding a privilege to people with an expensive taste for a scarce resource. Those who, for whatever reason (whether to look after an elderly relative or to get engrossed in action painting), give up their share of that resource and thereby leave more of it for others should not therefore be deprived of a fair share of the value of the resource. What holds for scarce land holds just as much for scarce jobs.”8
Arguments about distributive justice like these, that drill down to the fundamentals of the way our economies and societies work, are necessarily abstract. It’s therefore important to be wary of directly inferring real-world policy from such idealised thought experiments. Nevertheless, amidst the complexity of our modern interlocking economic systems, the core argument – that everyone is entitled to their share of the world’s natural resources – is a guiding light.
Reviewed by Tyler Prochazka and Kate McFarland
Read More:
David Piachaud, “Citizen’s Income: Rights and Wrongs,” Centre for Analysis of Social Exclusion, LSE, November, 2016.
Hilde Latour, “UNITED KINGDOM: David Piachaud Calls Basic Income a Wasteful Distraction from Other Methods of Tackling Poverty,” Basic Income News, February 9, 2017.
Philippe van Parijs, “Why Surfers Should be Fed: The Liberal Case for an Unconditional Basic Income,” Philosophy and Public Affairs, 1991.
John Rawls, “A Theory of Justice,” Harvard University Press, 1971.
John Rawls, “The Priority of the Right and Ideas of the Good,” Philosophy and Public Affairs, 1988.
Ronald Dworkin, “What is Equality? Part 1: Equality of Welfare,” Philosophy and Public Affairs, 1981.
Ronald Dworkin, “What is Equality? Part 2: Equality of Resources,” Philosophy and Public Affairs, 1981.
Ronald Dworkin, “Sovereign Virtue Revisited,” Ethics, 2002.
Main Photo: The photographer reading John Rawls’ ‘A Theory of Justice’, CC BY-NC-SA 2.0 Dana Hilliot
1. A parallel argument, unexplored here, would address the important question of whether employment is voluntary or involuntary. Under most of today’s welfare systems for able-bodied adults, conditionality and sanctions are used to “incentivise” recipients to take up any job available. This threat of destitution has moral implications, in that it calls into question the consensuality of such employment.
2. John Rawls, “The Priority of the Right and Ideas of the Good,” Philosophy & Public Affairs (1988) p. 257
3. At present, incomes generated from natural resources are directly distributed to citizens in only a handful of cases (the Alaska Permanent Fund and Norway oil fund spring to mind). More commonly, states channel incomes from natural resources into the general budget, or such natural resources pass into the realm of private property. While arguments can be had regarding direct versus indirect distribution – whether each citizen gets their share of the windfall directly, or instead indirectly through government spending – that all citizens should benefit in some way seems uncontroversial.
4. Philippe van Parijs, “Why Surfers Should be Fed: The Liberal Case for an Unconditional Basic Income,” Philosophy and Public Affairs (1991), p117
5. For a quick run-down of the problems with equality of welfare, see this summary from the Stanford Encyclopaedia of Philosophy.
6. Ronald Dworkin, “Sovereign Virtue Revisited,” Ethics 113.1 (2002), p111
7. Philippe van Parijs, “Why Surfers Should be Fed: The Liberal Case for an Unconditional Basic Income,” Philosophy and Public Affairs (1991), p124
8. Philippe van Parijs, “Why Surfers Should be Fed: The Liberal Case for an Unconditional Basic Income,” Philosophy and Public Affairs (1991), p126
by Furui Cheng | Apr 18, 2017 | Opinion
Furui Cheng
In the discourse of global basic income debates, China provides the most recent example of a social dividend-style basic income, similar to the Alaskan model. In discussions surrounding Nixon’s welfare reform in the 1970s, which was a quasi-basic income proposal, four different anti-poverty paradigms competed for influence. None of them can well explain today’s social dividend examples. We need a new paradigm in the current round of worldwide basic income debates.
China’s new facts
In November of last year I introduced the Huaidi case from China, in which villagers cooperated in urbanization and received high levels of welfare from their collectively owned land. This is not the only such case in China, however. The Chinese Famous Villages Influence Ranking was published in 2016, and 300 villages were selected from thousands in a joint effort by the Working Committee of Chinese Village Development Association, the Modern Village and Town Development Research Center of Tongji University, the Chinese Council of APCRD (the Chinese Association for Rural Community Development) and the Chinese Reputation Center (CPPC). The evaluation of the influence of Chinese villages in 2016 was mainly based on the comprehensive evaluation of the following factors: the village development index, people’s livelihood index, management index, charm index, green index and reputation index. In this way, the evaluation depends not only on per capita GDP or income, but also on living conditions, security conditions and interpersonal relationships, as well as the temperament of the villagers, including their mental state, sense of ownership and so on. This evaluation incorporates the well-being of the people and promotes the comprehensive development of further villages. The Zhejiang province has 37 villages in the ranking list, the most of all the provinces. Huaidi is one of the Hebei province’s 15 ranking villages, which ranks 77th of the total 300.
In addition to the regional welfare from land, China’s fiscal contribution by national state-owned enterprises (SOEs) has increased in recent years. In the past, Chinese SOEs only paid tax to the budget, but kept all their after tax profits. Since 2007, SOEs have increasingly paid part of their net profits to the national budget. This proportion will rise to 30% of total profits in 2020. There are four different categories of SOEs. The first type includes tobacco, petroleum and petrochemical, electricity production, telecommunications, coal and other resource monopoly industries and enterprises, which pay 20% of their net profits to the state. The second type includes steel, transportation, electronics, trade, construction and others in the competitive industries, paying a proportion of 15%. The third category includes the military and scientific research institutes, contributing 10%. The fourth category encompasses policy companies, including the Chinese Grain Reserves Corporation and the Chinese Cotton Reserves Corporation, which are exempt from turning over their net profits. Of interest, the proportion of the China National Tobacco Corporation’s net profits to be paid to the state has increased to 25%, singling the corporation out as a fifth category of its own. Part of the revenue from SOEs’ profits has been injected into the national social security system to benefit the majority.
Regardless of the origin of the social dividend – whether public land or SOEs – it is similar to Alaska’s Permanent Fund Dividend (PFD) model.
A new paradigm?
What are the key elements in the current global discussions about basic income? Is it simply an anti-poverty strategy, just like any other kind of social assistance program in operation? Or is it a comprehensive overhaul of the welfare system, like the New Deal transformation was in the 1930s, which came to form the very basis of the current social security system? The most controversial elements of debates surrounding present public welfare systems and basic income proposals include work ethic, fiscal affordability, a culture of desert and civil rights, among other aspects. The latter has been reviewed in detail in recent history, especially since Nixon’s Family Assistance Plan (FAP) legislation. The main characteristic of FAP is that people can receive the benefit without work requirement, and independently of their family structure. This is very similar to today’s unconditional basic income definition, although FAP is not universal.
At the outset of the Nixon administration, proponents of four fundamentally different anti-poverty paradigms, each of which contained a different causal story, competed for influence. Three of these paradigms supported Guaranteed Annual Income (GAI) plans. Proponents of an economic citizenship paradigm identified the economic system, especially structural unemployment and the wage structure, as the source of poverty. For proponents of this view, the objective of GAI policy was to alleviate poverty and provide citizens with basic income security.
The family stability paradigm identified the social system, especially changing family structures within poor, typically black communities, as the source of poverty. Proponents of this view hoped that GAI policies would decrease poverty by providing additional support for maintaining two-parent families, since rates of marital breakup appeared to be correlated with poverty rates.
The laissez-faire paradigm, which GAI supporters with a libertarian orientation invoked, identified the welfare system and its alleged perverse incentives against work as the root of the problem. Laissez-faire proponents felt that GAI plans would rationalize the welfare system by creating stronger incentives for labor market participation while also granting the poor greater freedom.
The main opposition to GAI proposals within the administration came from officials who saw the behavior of the poor themselves as the primary cause of poverty and believed that welfare reform should rehabilitate the poor by exposing them to the discipline of the labor market. This rehabilitation paradigm argued that limiting eligibility for social provisions and requiring recipients of government benefits to work would be the best path to eliminating poverty.
Is Alaska’s PFD or China’s current social policy context embedded in any of the above paradigms? I don’t think so. At least, that is to say, the four paradigms that undergirded this decade-long debate half a century ago are not sufficient to underpin a new round of worldwide debates on basic income. For example, many countries are considering levying a tax on various kinds of resources, including land, minerals, oil and gas, internet infrastructure, etc. (1). But if we want to justify these different kinds of taxes for financing basic income, the world need a new paradigm. As Philippe Van Parijs says: “It needs to recognize fully that the bulk of our real incomes is not the fruit of the efforts of today’s workers (let alone of the abstinence of today’s capitalists), but a gift from nature increasingly combined with capital accumulation, technological innovation and institutional improvements inherited from the past.”
Notes:
(1) Karl Widerquist and Michael W. Howard (edited), “Exporting the Alaska Model: Adapting the Permanent Fund Dividend for Reform around the World”, Palgrave Macmillan, 2012
More information at:
Furui Cheng, “Cooperative Society and Basic Income: A Case from China”, Basic Income News, November 10th 2016
Brian Steensland, “The Failed Welfare Revolution: America’s Struggle over Guaranteed Income Policy”, Princeton University Press, September 2007
Philippe Van Parijs, “Basic Income and Social Democracy”, Social Europe, April 11th 2016
[in Chinese]
The editor, “The Chinese Famous Villages Influence Ranking”, The Orientation News, December 16th 2016
HEB101, “Famous Villages in Hebei Province”, Hebei News, December 14th 2016
About the author: Cheng Furui is undertaking a post-doctoral program in the Institute of American Studies of the Chinese Academy of Social Sciences. She got her PhD from Tsinghua University and her research interest is public policy. “Social Assistance and Poverty Alleviation Divergence: A Capability Approach” is her first published book based on her doctoral dissertation, which explores the Chinese social safety net in detail. She is now a voluntary news editor of BIEN, and also one of the organizers of China Social Dividend/Basic Income Network: bienchina.com.
Article reviewed by André Coelho and
by Citizens' Income Trust | Apr 14, 2017 | Opinion
Philippe Van Parijs and Yannick Vanderborght, Basic Income: A radical proposal for a free society and a sane economy, Harvard University Press, 2017, 384 pp, 0 6740 5228 4, hbk, $29.95
This book revolves around two focal points: freedom, and Basic Income; and it might best be understood as a meditation on the relationship between them.
The introductory first chapter outlines what a Basic Income is and how it would tackle poverty, unemployment, and the quality of employment, and how it would enhance an individual’s freedom: freedom within the household, freedom in the employment market, freedom from bureaucratic intrusion… The relationship between ‘universal’ and ‘unconditional’ needs more work, and a Basic Income that varied across a country would not achieve the kind of redistribution that the authors would like to see achieved across Europe in chapter 8, as it would be conditional and therefore not a Basic Income, and would pose considerable practical difficulties: but otherwise this chapter offers a reliable discussion. Persistence with the significant amount of detail will reward the reader.
Chapter 2 discusses such alternatives as Negative Income Tax, Earned Income Tax Credits, and wage subsidies, all of which fare badly in a variety of respects when compared to Basic Income. Basic Income is preferred to a Basic Endowment because it protects our lifelong freedom against freedom badly exercised in our youth; and a reduced working week is criticised on the grounds that it would control the number of hours of paid employment that we were permitted to work, whereas a Basic Income would enhance our freedom at the same time as offering the possibility of a shorter working week. A Participation Income ought to have been tackled here as an undesirable alternative to Basic Income rather than later in the book as a feasible step on the way to Basic Income.
The following two chapters contain some of the relevant history: chapter 3 the history of social insurance and means-tested benefits, and chapter 4 the history of the Basic Income debate. Then chapter 5 argues that a Basic Income would be both ethical and just, with both of those criteria focused on the notion of individual freedom, and in particular on the freedom not to seek paid employment. Among the dialogue partners are John Rawls, Ronald Dworkin, Amartya Sen, Brian Barry, and Karl Marx. This is a chapter that the ‘philosophically inclined’ (p.113) reader will greatly enjoy, although whether the unphilosphically inclined will find that it satisfactorily answers the objections to Basic Income listed at the beginning of the chapter is an interesting question. Rather more likely to do that would be the fact that the lower marginal deduction rates that a Basic Income would deliver would make it more likely that someone would seek paid employment, not less. More practical considerations are permitted to intrude when a land value tax is found to be impractical; and the reader is plausibly counselled to seek a more just society rather than a happier one.
In chapter 6, on funding, experiments, and transitions, there is a usefully detailed discussion of the different marginal deduction rates that would be experienced by individuals at different points on the earnings spectrum if income tax rates were raised to pay for a Basic Income. The discussion suggests that such increases need to be kept to a minimum. A variety of natural and constructed experiments are discussed, and the difficulty of employing their results in debate on Basic Income is well argued. There is an equally useful discussion on the difficulty of transferring labour market models and empirical results from contexts within current tax and benefits systems to the context of the Basic Income debate. A number of taxation options are discussed: taxes on capital, on land, on other natural resources, on financial transactions, and on consumption. When the authors turn to implementation options, they correctly recognise that a ‘partial Basic Income’ (which ought in relation to their original definition of Basic Income to have been called a ‘small Basic Income’) would need to be the first step. They then consider options for how such a Basic Income might be implemented, and suggest that implementing it first for a single age cohort would create unfairness between cohorts (p.160). However, if the Basic Income replaced income tax personal allowances and other benefits then members of the relevant cohort would not necessarily receive any immediate financial advantage, and any perceived unfairness relating to a Basic Income’s various advantages over existing benefits systems would result in pressure to extend the Basic Income to neighbouring cohorts. This implementation method has more to be said for it than the authors realise.
Chapter 7 tackles political achievability. A survey of opinion poll results finds the public broadly in favour, except for Swiss, most of whom voted against the referendum resolution on Basic Income because they were not convinced that it would be possible to pay for the high Basic Income recommended by the campaigners. The chapter goes on to find growing understanding of the advantages of Basic Income among trades unionists ( – the UK’s Unite receives an honourable mention). The complexity of feminist, socialist and Green Basic Income debates is well understood. Somewhat incongruously the UK’s Liberal Democrats and Charles Murray are located together in a section titled ‘Liberals’. Separate sections on ‘Liberals’ and ‘Neoliberals’ would have made more sense. Similarly, the section entitled ‘Christians’ should have been two sections: ‘Christian Democrats’ and ‘Christians’. Social movements such as Occupy and the movement that promoted the European Citizens’ Initiative on Basic Income are correctly seen as significant locations for future debate on Basic Income.
The latter half of chapter 7 evaluates social policies that the authors believe would be useful steps on the way to a Basic Income. They recognise that a Participation Income (an income conditional on the recipient’s ‘participation’ in society) would face administrative challenges, and believe that these would result in the participation condition being phased out. They would not. The participation-testing of the entire population would be so unpopular that the Participation Income would soon be abolished along with any thought of it becoming a Basic Income. A Negative Income Tax, which the authors also believe could be a step towards a Basic Income, could suffer the same fate. As the authors recognise at the end of the chapter, the only viable first step on the way to a Basic Income would be a Basic Income paid at an easily fundable level to a single or multiple cohorts. Unfortunately, the last line returns to the possibility of ‘participation’ conditions. The temptation to suggest this should be resisted.
Both chapters 6 and 7 contain material on implementation routes. To have brought this material together into a single chapter titled ‘roads to Basic Income’ would have been helpful. As it is, issues relating to implementation look as if they are of secondary significance. They are not. They are where the debate is now going.
Chapter 8 ponders the difficulties that globalisation, immigration and emigration could pose for a Basic Income in a single country, and the authors speculate about the possibility of a global Basic Income. They suggest that a Europe-wide Basic Income funded by a financial transactions tax or a carbon tax would reduce the economic pressures that give rise to migration within Europe, and would therefore reduce levels of migration, and make it more likely that freedom of movement would survive. Such a Basic Income would also help to preserve the Euro’s viability.
This book is a triumph, and will remain the definitive liberal argument for a Basic Income for many years. At its heart is a utopia in which every individual experiences the maximum possible freedom, and Basic Income as a means to that end. ‘Equality’, ‘inequality’ and ‘social cohesion’ are missing from the index, and Basic Income’s promise of a more equal and more cohesive society might have been given a little more attention alongside the ubiquitous emphasis on individual freedom: but readers from a wide variety of ideological commitments will still find this book useful. It is well written, well referenced, and generally well organised, and it tackles many of the issues central to the current debate.
There will be a lot more books on Basic Income, as there should be given the increasingly diverse and widespread debate. Some of those books will be from the same standpoint as this one, others will be from a different ideological standpoint, and some will be from a more pragmatic point of view. Whatever standpoint they come from, they will find it difficult to exceed the intellectual quality of Basic Income: A radical proposal for a free society and a sane economy.
by Guest Contributor | Apr 10, 2017 | News
People’s Potato as an example of alternative work organization in the world of Unconditional Basic Income (UBI)
This is the second part of a series proposing a reform of public services to be included in the UBI reform package (first part here). This article presents a model of organizing production based on spontaneous work contribution to the commons so that citizens’ participation is facilitated. Re-organizing work in such a way so that people want to contribute, but without being forced by the necessity to earn a living, should become part of the UBI movement’s agenda.
Certainly, citizens living solely from UBI would need to contribute somehow to sustain support for UBI among working populations that may resent those not working. So far, no viable solutions have been proposed. An “approved” citizen contribution1 or rewarding of such contributions2 implies wasting resources on monitoring, control3 or operating a system of remuneration, which would undermine the entire project and philosophy behind UBI. I propose an alternative to generating such unsatisfying administrative jobs (also known as “Bullshit Jobs” – a term coined by David Graeber) and intruding citizens. The state (“Partner State” – a concept developed by Michel Bauwens) should allocate instead resources and liberate spaces where commons are produced and work is a source of fulfillment.
In this article, I will elaborate on the elements of work organization that would turn making contribution attractive to citizens. A new logic of work organization, which could be generalized for the domain of services of public interest, will be exemplified with the case of a cooking collective, People’s Potato, distributing lunch meals for free at the Concordia University in Montréal. One can define the mode of operation in this collective as a peer production project. Access to the service is not conditional based on involvement as a volunteer. The production is financed by fee levies, but the meals are distributed for free and broadly accessible. One does not need to be a student at the Concordia or have paid the levy to receive a meal. The Annual General Meetings are accessible to the stakeholders and the public.4
In September 2014, I volunteered in the kitchen and interviewed several other volunteers, as well as a coordinator, to learn more about work organization at People’s Potato.
Contributing work without barriers
Members-employees of the worker cooperative that manages People’s Potato coordinate volunteers’ work. Since economic survival does not depend on the volunteers, this removes the pressure typically found in commercial gastronomy or other traditional employment systems. Volunteers join the work process spontaneously and are assigned a task. It is possible to join or leave at any moment. Preparing food is organized in a modular way so that coordinators can easily find something to do for a volunteer. Inclusion is also fostered by the fact that each participant can decide their degree of involvement. For example, one can choose whether to contribute to governance decisions or not.
This very flexible way of organizing work at People’s Potato generates more inclusion in work participation, opening it up to those who might not be able to work as an employee, nor find their place in worker cooperatives. Among volunteers, there are people with physical and mental handicaps. Part of People’s Potato’s anti-oppression policy is to create an environment of tolerance so that everyone can work at one’s own pace. Many volunteers appreciated the flexibility that is possible in the involvement. For example, one volunteer – a busy student – enjoyed the fact that the project can go on without her if she does not show up. She does not need to take on additional responsibility.
Organizational framework for p2p production in the physical world
Coordination is a crucial factor in sustaining spontaneous work. Cooking (and other services of general interest) requires time management, as well as obeying safety and hygiene regulations. In Montréal, past non-professional cooking collectives, which managed to peer produce food, were short-lived (see the article by Silvestro5). However, some chapters of the international movement Food Not Bombs are quite successful. Certainly, these non-professional initiatives help advancing the practice and attitude of non-conditionality, both as a principle for redistribution and as a way to organize work contribution.
A worker cooperative runs people’s Potato. The cooperative takes care of administration, logistics, and financial tasks. Coordinators who are members of a worker cooperative provide a framework for spontaneous work contribution. They decide what meals to prepare and guide the process of food preparation. They are also responsible for volunteers’ training, information events, and celebration parties.
Fulfilling a coordinator’s job at People’s Potato requires a higher level of social skill than in traditional employment settings. One of the most important factors attracting volunteers is the kindness of coordinators and the perception that contributing at People’s Potato is different from traditional employment. This is reflected in the way volunteers are addressed. Staff always asks whether one “feels like doing” a certain task. Volunteer contribution is not taken for granted. However, one of the long-term volunteers that I interviewed said they felt unappreciated, and another one wished for more warmth. The former said that People’s Potato’s staff tends to forget that the volunteers are not paid for their contribution.
Space and work process organization to accommodate volunteers
Because of the flexibility of volunteer involvement, the number of volunteers fluctuates during the day. Just to illustrate with an observation of one Monday: at 11 am there were 8 volunteers in the kitchen, at the noon – 14, at 12:40 – 29, at 13:30 – 13, and at 14 – three volunteers were working. Altogether, the kitchen space can accommodate up to 40 volunteers.
The only perk for volunteers is the opportunity to eat in the kitchen rather than wait in the line outside. Many interviewees complained that there is not much space for the volunteers to eat lunch together. However, some contribute very little and eat in the kitchen. Coordinators must find a balance between disciplining and building an atmosphere that does not feel like a workplace. Too many rules may deter people from volunteering, and too little may frustrate committed volunteers.
Since volunteers associate People’s Potato with having fun and meeting people, some volunteers may forget that it is a space for work. One of the coordinators complained that people were kissing each other in the kitchen. The staff is also worried about too many people coming to the kitchen during lunch distribution. Working as a coordinator has distinct challenges, due to the number and fluctuation of people involved in cooking. They manage stress by rotating tasks between the kitchen and the office.
Anti-Oppression work at People’s Potato
People’s Potato defines itself as a hate-free space to bring people together without judgment or discrimination. For one interviewee who belongs to a racial and gender identification minority, this aspect of People’s Potato was crucial in choosing involvement. This person trusts that coordinators would react in cases of oppressive behavior in the kitchen. This person has experienced harassment in similar jobs as an employee in commercial gastronomy.
As I reported in another article, coordinators have a role to play in sustaining a positive atmosphere:
“The involvement of a high number of volunteers may be a challenge at times. There are situations when staff need to intervene because of an oppressive behavior among volunteers: instances of verbal aggression, offences, discriminatory comments, etc. Some volunteers, when asked to stop oppressive behaviour, may become frustrated or become quiet. Sometimes this results in volunteers getting upset and leaving the kitchen, though there is an attempt to establish the anti-oppressive politics without rejecting community members who don’t understand it fully.”6
Creating spaces for a new paradigm in work organization
Sustaining work organization based on spontaneous contribution requires infrastructure, employment for coordinators, and developing skills for running this kind of project. The example of People’s Potato’s work organization helps us imagine how production of the commons could be organized. My interviewees suggested further measures that would make an involvement in spontaneous work more attractive:
– A board with the list of tasks to be done, so that one can easily find one’s project
– Concerts accompanying work
– A place to relax and lay down close to the working space (suggested by an older person suffering from back pain).
UBI may become a reality in the future, but the goal of creating a new vision of work and using human potential can already be pursued now.
The ideas expressed do not necessarily represent those of Basic Income Earth Network or Basic Income News.
About the author:
Katarzyna Gajewska is an independent scholar and a writer. She has a PhD in Political Science and has published on alternative economy and innovating the work organization since 2013. You can find her non-academic writing on such platforms as Occupy.com, P2P Foundation Blog, Basic Income UK, Bronislaw Magazine and LeftEast. For updates on her publications, you can check her Facebook page or send her an email: k.gajewska_commATzoho.com. If you would like to support her independent writing, please make a donation to the PayPal account at the same address!
More information on People’s Potato
David Bernans on the Founding of The People’s Potato : https://www.youtube.com/watch?v=vZXfTRVdGAU
Jamiey Kelly on The History of The People’s Potato : https://www.youtube.com/watch?v=PXFI2w6LOLA
The People’s Potato and the Concordia Administration : https://www.youtube.com/watch?v=oGO236oiZow
Gajewska, Katarzyna (2014): Peer production and prosummerism as a model for the future organization of general interest services provision in developed countries: examples of food services collectives. World Future Review 6(1): 29-39.
Gajewska, Katarzyna (30 June 2014): There is such a thing as a free lunch: Montréal Students Commoning and Peering food services. P2P Foundation Blog, https://blog.p2pfoundation.net/there-is-such-a-thing-as-a-free-lunch-montreal-students-commoning-and-peering-food-services/2014/06/30
Endnotes
1 Anthony B. Atkinson, “The Case for a Participation Income,” Political Quarterly 27 (1 1996), 67-70; Anthony B. Atkinson, Poverty in Europe (Oxford: Blackwell, 1998); Jeremy Rifkin, The End of Work, (New York: G.P. Putnam’s Sons, 1995).
2 Colin C. Williams and Sara Nadin, “Beyond the market: The case for a citizen’s income,” Re-public: re-imagining democracy, November 23, 2010, URL to article: https://www.re-public.gr/en/?p=3070.
3 Brian Barry, “UBI and the Work Ethic,” in What’s Wrong with a Free Lunch? Ed. Philippe van Parijs (Boston: Beacon Press, 2001). Bill Jordan, The New Politics of Welfare: social justice in a global context (London: Sage, 1998); Bill Jordan, “Efficiency, Justice and the Obligations of Citizenship,” in Social Policy in Transition: Anglo-German Perspectives in the New European Community, (Aldershot, UK: Ashgate, 1994, pp. 109-113); Jurgen DeWispelaere and Lindsay Stirton, “The Public Administration Case Against Participation Income,” Social Service Review 81 (3 2007): 523-549; Jurgen DeWispelaere and Lindsay Stirton, “A Disarmingly Simple Idea? Practical Bottlenecks in Implementing a Universal Basic Income,” International Social Security Review 65 (April-June 2012): 103–121.
4Gajewska, Katarzyna (2014): Peer production and prosummerism as a model for the future organization of general interest services provision in developed countries: examples of food services collectives. World Future Review 6(1): 29-39. Gajewska, Katarzyna (30 June 2014): There is such a thing as a free lunch: Montréal Students Commoning and Peering food services. P2P Foundation Blog, https://blog.p2pfoundation.net/there-is-such-a-thing-as-a-free-lunch-montreal-students-commoning-and-peering-food-services/2014/06/30
5Silvestro, Marco (2007): Politisation du quotidien et récupération alimentaire a l’ère de la bouffe-minute, Possibles 32(1-2).
6Gajewska, Katarzyna (30 June 2014): There is such a thing as a free lunch: Montréal Students Commoning and Peering food services. P2P Foundation Blog, https://blog.p2pfoundation.net/there-is-such-a-thing-as-a-free-lunch-montreal-students-commoning-and-peering-food-services/2014/06/30
by Stanislas Jourdan | Mar 25, 2017 | Opinion
Spurred by Milton Friedman, the concept of “helicopter money” – under which central banks would distribute money to citizens – is making headway in economic debate, but is often confused with the idea of basic income. This article intends to clarify the distinctions and overlaps between these two concepts.
“Let us suppose now that one day a helicopter flies over this community and drops an additional $1,000 in bills from the sky, which is, of course, hastily collected by members of the community. Let us suppose further that everyone is convinced that this is a unique event which will never be repeated.”
When Milton Friedman wrote those lines in 1969, he probably never thought that “helicopter money” would become a buzzword in the 2000s post-crisis era. Friedman’s thinking was indeed quite radically unorthodox. How did the prominent neoliberal advocate come to suggest people should receive free money and that we would all be better off as a result? Far from philanthropic thinking, Friedman was in fact simply trying to illustrate his theory of the neutrality of money. If you need to make more money, you should consider renting out your spare room.
What would happen if we were to drop freshly printed notes over a population from a helicopter, just like rain? Nothing other than inflation, suggested Friedman, one of his main beliefs being that any increase in the money supply automatically leads to a proportional increase in consumer prices. Through this thought experiment, Friedman drew the conclusion that central banks can always avoid deflation by producing money and causing it to circulate in the economy.
In fact, however, the idea that we could create money and distribute it to the people goes back much farther than Friedman. In 1924, British engineer Clifford Hugh Douglas elaborated his theory of the “social credit”, its main component being the distribution of a monthly “national dividend” generated from money creation, the level of which would vary according to national production.
Although Douglas did gain some notable following at the time, especially in Canada, the idea was ultimately consigned to the oubliettes of history, leaving Friedman with the alleged paternity of the idea, centre-staging the helicopter analogy with it.
The concept wasn’t much thought of for 30 years following Friedman’s discussion, however, and it might have been forgotten again if it hadn’t been brought back to public attention in 2002 by one of the most influential voices of monetary policy. In a famous speech, the Federal Reserve chair Ben Bernanke alluded to this concept, making the case that, under important deflationary trends like that seen in Japan, the central bank could resort to helicopter money-style instruments to achieve its 2% inflation target.
Yet, far from initiating serious consideration, these remarks only caused Bernanke to endure mockery and “helicopter Ben” as a persistent nickname.
This is probably because the concept runs counter to the whole ideological turn of the 20th century in terms of monetary policy. Starting from the 50s, money creation has been gradually shifted from the sphere of public sovereignty into the quasi-monopolistic realm of the private banking sector. This process ultimately resulted in the outright prohibition, in most jurisdictions, of monetary financing of government budgets. Helicopter money sounds very much like a reversal of this trend, and a dangerous one to the ears of many mainstream economists.
An alternative form of money creation
There is recurring confusion around the exact meaning of helicopter money, which is probably caused by the simple fact that the alleged proponent of the idea, Milton Friedman, never seriously intended to implement it.
Thus, the concept finds itself often described in very diverse terms, ranging from the old-fashioned monetization of public debt to its purest form (and probably the one Friedman actually had in mind): the distribution of money directly to all citizens by central banks. The latter will be the one we assess in this article.
Helicopter money can thus be defined as the creation of money, without corresponding assets, and its distribution into citizens’ bank accounts.
It is therefore an alternative form of money creation, which is strictly different from the most common way in which money is created today: through the banking sector’s credit issuance functions. It is worth clarifying this point here: as the Bank of England has clearly demonstrated, today’s monetary supply is almost entirely controlled by private banks issuing credit into the economy. This is sometimes referred to (somewhat misleadingly) as the “fractional reserve banking system”. Although the benefits and pitfalls of such an arrangement are subject to never-ending controversy between academics, the way in which this system functions is nowadays largely undisputed.
Money tree sculpture in front of the Central Bank of Ireland.
The key advantage of helicopter money resides precisely in the fact that it would bypass banks as money creators, and is therefore one way for the central bank to maintain the money supply regardless of whether banks play their role as suppliers of money into the economy. In its purest form, helicopter money also bypasses governments’ treasuries, and is therefore not legally prohibited under the monetary financing rule (Art. 123 of the EU Lisbon Treaty).
A second clarification is also required at this point: helicopter money is also different from the so called “quantitative easing” (QE) policies that have been implemented by several central banks, although they pursue a similar objective: boosting the money supply to avoid deflationary pressures.
Under QE, central banks create money (the so called central bank’s reserves) and mobilize those reserves to purchase financial assets on a large scale and over a certain period of time. Usually, central banks purchase sovereign bonds with the intention of pushing down interest rates on those bonds, to encourage the financial sector to move away from investing in sovereign bonds and to instead lend money to riskier projects under the so-called “portfolio rebalancing effect”. This type of money creation is therefore targeted to the financial sector, with assets as collateral on the central bank’s balance sheet and, more importantly, is a temporary operation: the central bank destroys the money once the bonds it holds come to maturation.
Helicopter money is therefore very different from QE. In fact, it is precisely because of the many shortcomings of QE that helicopter money is being presented by a growing number of people as a superior alternative.
Helicopter money as an alternative to quantitative easing
The assessments of QE programmes in the US, Japan, and the UK have been subject to a wealth of contradictory conclusions. In Europe, the ECB’s QE programme was first applauded as progress, after years of speculation and resistance to implementation of QE when it was desperately needed – when the Greek crisis hit. However, it is becoming clear that QE recipes, in Europe and elsewhere, never really do the trick.
Generally speaking, QE does cause lending conditions to improve, but it does not automatically lead to an increase in bank lending. In other words, the “transmission channel” of monetary policy does not work so well under QE. To be fair, this is not the banks’ fault: there is little banks can do when conditions are so bad that virtually no companies or households want to take on debt because the economy is already over-indebted.
Economists talk of a “liquidity trap” whereby injections of cash into the private banking system by a central bank fail to stimulate the real economy. QE doesn’t overcome this trap.
Even worse, QE is often accused of creating asset bubbles and increasing wealth inequality, because the massive injection of money is narrowly targeted towards financial asset disproportionately owned by the rich. The Bank of England itself estimates that its own QE programme has increased by 40% the wealth of the richest 5% of Brits.
Against this background, helicopter money is experiencing a comeback, perhaps with even more strength than Friedman could ever have imagined. Since the start of the crisis, prominent economists and commentators, including Martin Wolf, Steve Keen, Anatole Kaletsky, Willem Buiter, Adair Turner, John Muellbauer, Bradford Delong and Martin Sandbu, have advocated for central banks to implement some form of helicopter money. Anatole Kaletsky and Steve Keen almost simultaneously proposed re-branding the concept “QE for People”, which later became the name of a European campaign (for which the author currently works).
Conference about “Quantitative Easing for People” at the European Parliament
The case for QE for People is quite straightforward: since the banking sector is not currently able to “transmit” the central bank’s monetary policy accommodation by increasing their loan’s issuance, why shouldn’t the central bank do it by itself? If the main task of central banks is to maintain inflation at around 2%, certainly the most effective way would indeed be to distribute money to people so they can spend it.
The debate on helicopter money took another turn when it was mentioned by the ECB’s chief Mario Draghi, under the spotlights of a press conference on March 9th 2016 and later by other senior ECB officials. “Helicopter money is a very interesting concept” Draghi said, while adding that the idea was not yet being considered by the ECB. Whether one think this was sincere curiosity or a clumsy statement on Draghi’s part, the fact is this single sentence provoked a historic tide of comments and debate on the idea, including within policymaker spheres.
How about basic income?
Similarities between helicopter money and basic income have led some commentators to offer very confused explanations, claiming, for example, that Finland was already undertaking a “helicopter money” programme (the basic income experiment).
Undeniably, there are resemblances between the two concepts, as both involve making unconditional payments to all citizens and usually without means-testing. Basic income’s principles of universality and unconditionality can also be found in helicopter money.
Key differences quickly emerge under careful analysis, however. Under a helicopter money regime, there is no clear commitment from the central bank to make payments periodic. Quite the contrary in fact, as most proponents of helicopter money (read the prolific Eric Lonergan for example) are keen to be clear on the fact that this should be an exceptional measure, to be used on a one-off basis, with the possibility (but not the commitment) to renew if necessary.
There is nevertheless some theoretical overlap with basic income. In addition to Douglas, several key advocates of basic income have put forward the case that money creation could be used to finance the benefit, either as a “boot” phase or as a way to supplement the fiscal means to finance basic income schemes. The French economist Yoland Bresson made the case that perpetual low interest sovereign bonds could be used to kick off the basic income in a first stage, thus leaving time for the government to implement all the necessary reforms of the tax-benefit system to make UBI fully functional.
These theories relate to the understanding of basic income as a mechanism of pre-distribution (as opposed to redistribution), whereby basic income is a recognition of the intrinsic value of all participants in society, or even as common inheritance. If all citizens create value “because they exist”, then it makes sense to “pre-validate” this economic value using money creation. If we are all richer today because of our predecessors’ work and heritage, then one can argue that more money should be introduced into circulation to recognise this added wealth.
These are, however, only marginal justifications today, put forward to support neither helicopter money nor basic income. Beyond some theoretical common ground, the differences between the two policies are most clear when one understands that they pursue different objectives.
Put simply, helicopter money can be framed as a punctual measure (extreme, one may say) with a rather narrow purpose: to stimulate economic activity by boosting people’s incomes under some strict circumstances, that is, when the economy is under threat of deflation.
Basic income, on the other hand, pursues a very wide range of objectives from poverty alleviation to work emancipation, gender balance incentivization, social protection modernization, more aggressive redistribution and so on. In contrast, stimulating people’s purchasing power is certainly not the main argument for doing basic income.
From those different objectives also stem different institutional frameworks. If the objective of helicopter money’s proponents is merely to stimulate demand, then transfers to citizens is only one practical means by which to achieve this single clear goal. From this viewpoint, it also makes sense to give independent central banks the legal capacity to distribute a citizens’ dividend as a new instrument in the monetary policy toolbox.
If basic income pursues more numerous and complex objectives, by contrast, it then makes sense that it should be the responsibility of elected governments to design and implement it, just like any other fiscal policy.
In conclusion, helicopter money could be seen as one of many “partial basic income” proposals: schemes that share some of the characteristics of basic income but not all of them. Yet given the very clear institutional distinctions just covered, it does not make sense then to associate too closely the two concepts. In this light, it might be more meaningful to refer to helicopter money payouts as “social dividends” or “monetary dividends” as opposed to “basic income”.
Can helicopter money lead to basic income?
Despite all the institutional and practical distinctions drawn above, it is quite enlightening to recognize the political porosity between the two proposals. Helicopter money proponents tend to also favor basic income (though not all do) and vice versa.
This is probably because the two ideas, to some extent, share some common strategic interests and help one another in the struggle for cultural acceptance of each proposal, especially in regards to unconditionality and the disconnection of money from labor.
From a basic income viewpoint, the rise of the helicopter money discussion is a useful addition to basic income’s financing question. If central banks can create money, then surely it would be easier to finance a basic income.
On the other side, it is also convenient for helicopter money proponents that the basic income discussion is making headway in the argument for universal payments to citizens: it levies an important moral blocage.
Even more strategically, perhaps, there is a case for seeing helicopter money as a necessary step to the implementation of a full-fledged basic income policy.
This is a particularly relevant argument when it comes to the European Monetary Union, which is currently deprived of any significant common fiscal policy. Because of this, it will probably take years before we might see something like a eurodividend (an EU basic income scheme financed by an EU budget) as articulated by Philippe van Parijs.
Speech by Philippe van Parijs on the Eurodividend at the European Social and Economic Committee in Brussels.
To circumvent this cumbersome and very long-term political route, Slovenian economist Jože Mencinger has repeatedly suggested the use of helicopter money as an “ideal experimental possibility” to kick-start a form of basic income in the EU.
Instead of QE, the ECB could start a helicopter money scheme by giving 200 euros per adult citizens for one year – no strings attached, no taxes involved, simply courtesy of the ECB’s (digital) printing presses. This would involve about three times less money printing than under QE and yet would be more likely to fulfill the ECB’s objective.
If this works and garners favorable public opinion, there would be even greater political momentum for implementing something like a permanent eurodividend scheme. The ECB’s temporary scheme would allow some time for EU policymakers to create the institutional and fiscal infrastructure for such a eurodividend to be functional.
In the long run, nothing forbids us from thinking that the ECB could permanently fund such a eurodividend scheme at a certain level, as Kevin Spiritus and Willem Sas have sketched. Yet such funding cannot be seen as an obligation for the ECB under the current legal framework. More intellectual debate will be required before policymakers come to the conclusion that some form of permanent helicopter money is necessary and desirable.
There is still much work to be done before either basic income or helicopter money can be put in place. However, 10 years after the financial crisis, it is clear that central banks’ models have not delivered as they were expected to. There is clear mismatch between the massive size of their balance sheet interventions and the bleak outlook of the economy.
There is a growing case that the whole central banking theoretical framework must be revised. Helicopter money is certainly one idea that is usefully challenging the monetary policy status quo. It will surely take another leap of determination and audacity for central bankers to take this step forward, but we should not rule out that it might also be the most pragmatic thing central banks can do at some point in the future. When things get to this point, the basic income movement must stand ready to play its part in facilitating the move towards helicopter money, while making sure to build upon this gigantic central bank experiment towards a permanent and sustainable basic income.
Thanks to Genevieve Shanahan for proofreading this article.
Credit pictures: Courtesy Financial Times; Positive Money, picturesbyJOE, UBI-Europe
