by Kate McFarland | Jul 21, 2016 | News
In the 1970s, Denver, Colorado and Seattle, Washington were selected by the United States federal government as sites for experiments of the negative income tax (NIT), an idea then popularized by Milton Friedman and Richard Nixon.
Like a basic income, a NIT involves the distribution of unconditional cash transfers sufficient to ensure a minimum standard of living — independent of whether recipients are employed or looking for work. (The NIT differs from a universal basic income in that the transfers are not universal, but only given to those whose income falls below a certain level, and such cash benefits taper off with earnings.)
A main purpose of these experiments was to test whether the cash transfers would have a disincentivizing effect on work. In the end, the results did show a decline in average working hours, of about seven percent, which contributed to policymakers giving up on the idea of NIT.
Last month, Sam Brasch of Colorado Public Radio interviewed BIEN Co-Chair Karl Widerquist about the NIT experiments conducted in Denver and Seattle, and their alleged ill effects on the workforce. Widerquist explains that the studies in fact pointed to many beneficial effects of the cash transfers, and argues that concerns about their disincentivizing effect on work have been overblown:
The group that wasn’t receiving a negative income tax record worked relatively less per week than the experimental group receiving the negative income tax. But that was because the people who received the negative income tax took more time to find a good job, not because anybody actually dropped out of the labor force. They didn’t find any evidence of that whatsoever.
The 10-minute audio segment is available online, at the link below:
Sam Brasch, “What if Government Just Gave Poor People Cash? It’s Been Tried In Denver?” Colorado Public Radio, June 2, 2016.
Photo of Denver, CO (1972) CC Bruce McAllister.
by Kate McFarland | Jul 6, 2016 | News
A recent survey of economists at leading institutions purports to show that 58% oppose a universal basic income, while only 2% support it. However, the survey asked specifically about a UBI that replaces all other social insurance programs and is paid only to adults over 21. Many opposed these qualifications, not UBI itself.
On Tuesday, June 28, the IGM (Initiative on Global Markets) Forum released the results of a survey on “universal basic income” distributed to the Economic Experts Panel — a panel consisting only of “senior faculty at the most elite research universities in the United States” chosen to be diverse in their specializations, locations, and political orientations.
Out of these economics experts, 58% either “disagreed” or “strongly disagreed” with a description of a specific universal basic income policy, while only 2% “agreed” and none “strongly agreed”. (The remainder were either “uncertain” or had no opinion on the matter.)
At first blush, such results are apt to shock and disappoint supporters of basic income. However, as with any survey, attention to the detail is key: what, exactly, were respondents asked?
In this case, respondents were asked to rank their opinion on the following statement on a five-point scale (or declare no opinion):
Granting every American citizen over 21-years-old a universal basic income of $13,000 a year — financed by eliminating all transfer programs (including Social Security, Medicare, Medicaid, housing subsidies, household welfare payments, and farm and corporate subsidies) — would be a better policy than the status quo.
Presumably, this particular policy proposal comes from Charles Murray, who endorsed exactly this in a recent Wall Street Journal feature.
Even before looking at the survey responses, we should take pause here: Charles Murray is a controversial figure even among — perhaps especially among — supporters of UBI. Left-leaning advocates tend to regard Murray and his proposals as “downright undesirable”, to use the phrase wielded by Daniel Raventós and Julie Wark in their June 15th article in CounterPunch.
Last January, to give another example, an article in Jacobin argued that a UBI “could do little to achieve egalitarian objectives — or even backfire badly” if the policy poorly designed. The author presented Murray’s proposal as an example of “non-liveable” basic income, due to its low amount and concurrent elimination of Medicaid, Medicare, and Social Security.
With this in mind, then, it should not be too surprising that several economists in the IGM Forum also took issue with the proposed elimination of all other benefits — but not UBI per se — when explaining their votes of “Disagree” or “Strongly Disagree”. Some even expressed support of policies closely related to UBI. For instance, Richard Schmalensee (MIT) said, “A properly designed negative income tax could be part of a better policy, but replacing everything is a bad idea.” Similarly, Eric Maskin (Harvard) replied, “A minimum income makes sense, but not at the cost of eliminating Social Security and Medicare.” And Christopher Udry (Yale) opined that UBI could work if “coupled with universal health care and tax reform … but we are far from that.”
Larry Samuelson (Yale), who responded as “Uncertain”, stated, “There is much to recommend a universal basic income, but specifically a 13k income while ending all other transfers is difficult to assess.”
The proposed restriction of the UBI to adults over 21 worried other economists — such as William Nordhaus, who said, “And the children get nothing? The basic idea is sound but too simplistic as stated.” Likewise, Robert Hall (Stanford) simply offered, “Limitation to people over 21 can’t be the right answer.”
This is not to suggest, of course, that all of the economists surveyed were inclined to support a basic income (but just not Charles Murray’s version). Some did express opposition to UBI itself, and for reasons that we might expect: it’s too expensive, it might discourage work, it’s not necessary given current welfare programs, and “Bill Gates would get 13k, which is crazy.”
Nonetheless, it’s striking that many explanations of “Disagree” responses did not criticize UBI per se, and were sometimes even implicitly (or explicitly!) supportive.
Not all respondents gave explanations of their answers. However, looking through the list of economists surveyed, it’s further notable that the Murray-inspired UBI proposal elicited disagreement and uncertainty from some others who have previously expressed support of basic income. For instance, the Nobel Laureate Angus Deaton voted “Disagree”, despite having recently come out in favor of “basic income grants”. Even distinguished MIT Professor Abhijit Banerjee — who is an advisor for GiveDirectly’s basic income pilot and recently wrote a compelling case for UBI in The Indian Express — voted “Uncertain”.
Thus, supporters of UBI — and especially those on the left-side of the political spectrum — should not be discouraged by this particular poll, despite its purportedly showing that only 2% of a forum of economics experts “support a universal basic income”.
If there’s anything to concern us about this survey, it should be the implicit conflation (in its headline) of the general idea of UBI with Charles Murray’s specific, and very controversial, proposal.
On the other hand, the economists themselves do not make this conflation — and, indeed, their responses serve as a reminder of the danger of tying the idea of UBI to any one particular policy implementation.
As basic income researcher Jurgen de Wispelaere writes in a recent blog post,
Agreement at the level of the general idea amongst opposing political factions is often hailed as a virtue of the basic income proposal. However, once we move from idea to policy implementation, persistent disagreement may return with a vengeance.
This is an important message, and one which the IGM Forum survey illustrates well.
Reference:
“Universal Basic Income,” IGM Forum, Chicago Booth, June 28, 2016.
Thanks to Asha Pond for reviewing a draft of this article.
Thanks to my supporters on Patreon. (To see how you too can support my work for Basic Income News, click the link.)
by Kate McFarland | Jul 4, 2016 | News
In a column originally published in the Volkskrant on May 31, Doekle Terpstra — former chair of the CNV trade union federation, an independent grassroots organization with over 350,000 members — declared that it’s “time for a new social contract, a new balance between economic and social interests.”
To continue to put our faith in the current approach and the institutions that go with it is not an option. It would be natural to call upon the social partners – unions and employers – to work together and draw up a future-proof social agenda.
A new social contract could bolster their credibility but it takes courage to leave the trodden path. I have my doubts about the innovative power of the consensus economy and the discussion will have to take place elsewhere. The partners in this discussion will have to be prestigious economists, entrepreneurs, workers and a commission of wise men. It’s time to roll up our sleeves and prepare a social contract for a new cabinet.
Terpstra suggests that such a contract could include, among other elements, a basic income or “some form of negative income tax” to secure a “viable financial basis” for all persons regardless of employment status.
Reference
Doekle Terpstra, “It’s time for a new social contract, says a former Dutch union boss,” DutchNews.nl, June 27, 2016.
Photo of Terpstra (Mar 2007) CC Bernd Out
Thanks to my supporters on Patreon. (To see how you too can support my work for Basic Income News, click the link.)
by Kate McFarland | Jun 15, 2016 | News
The Australian Pirate Party has officially endorsed a “basic income policy” (more precisely, a negative income tax), according to an announcement published on June 14th, 2016.
In the announcement, Sam Kearns and Darren McIntosh — New South Wales senate candidates from Pirate Party Australia — elaborate on the need for a basic income, focusing on concerns about automation, the “inefficient, patronising and punitive bureaucracy” of Australia’s current welfare system, and the advantage of basic income in facilitating care work as well as new business and innovation.
As described in the party’s Wiki, the policy is a negative income tax designed to result in a minimum income of $14,062 per year for adults (aged 18 and over) who have completed school. This baseline amount would be “topped up” in certain cases, including parents, caregivers, aged and disabled persons, veterans, and low-income earners who lack public housing.
Pirate Party Australia was founded in 2008 and legally recognized by the Australian Electoral Commission in 2013. According to Wikipedia, it claimed approximately 1300 members as of 2015.
by Josh Martin | Jun 3, 2016 | News
Mestrum’s article critiques basic income from the left, accepting that poverty needs to be abolished through a minimum guaranteed income for poor people, but asking why basic income should be given to all citizens instead of a benefit closer to a negative income tax that would only benefit those who need it. Further, she believes the gross cost of a basic income scheme will hurt funding for other social security programs that will still be necessary with a basic income.
Francine Mestrum, “Why Basic Income Can Never Be A Progressive Solution“, Social Europe, 14 April 2016.
