by Andre Coelho | Oct 18, 2018 | News
During a lunch served at the Roosevelt House (Public Policy Institute at Hunter College, New York), on the 24th October 2018, basic income will be presented and discussed, by speakers Michael A. Lewis (Silberman School of Social Work at Hunter College), Eri Nogushi (Association to Benfit Children & adjunct Professor, Roosevelt House) and Almaz Zelleke (Department of Social Science, New York University in Shanghai), in a session moderated by Sanford Schram (Department of Political Science, Hunter College).
The event’s press release reads as follows:
“Recent research shows that, contrary to longstanding American beliefs, having a job does not guarantee a path out of poverty. With the rise of automation and stagnant wages, discussions on anti-poverty measures are more relevant now than ever. One such proposed measure is the idea of universal basic income, which would ensure that no one’s income would fall below a certain level, whether or not they were employed. Roosevelt House’s online Faculty Journal recently published commentaries on this issue, and to continue the conversation three of the authors will explore the economic, sociological, political, and philosophical dimensions underpinning this approach. This moderated discussion will include an assessment of the far-reaching implications of this important policy proposal to combat poverty and recommendations to address the entrenched structures of inequality in the United States today”
Registrations can be made here.
by Michael Lewis | Aug 24, 2018 | Opinion
Michael A. Lewis
Silberman School of Social Work at Hunter College
One of the main criticisms of basic income is that if the government gave us money we did not have to sell our labor for, we would work less. Perhaps not all of us would reduce our labor supply but enough of us would render the policy unsustainable for example, if you are in a lawsuit you won’t be able to sustain your financial status since you would be struggling, therefore lawsuit loans would be able to help you and prevent you from drowning under financial stress. This is an important criticism and much of the basic income debate is centered around it. What I want to do in this post, however, is address another related criticism. I will call it the “something for nothing” (SFN) objection to basic income.
The SFN objection goes something like this. Even if giving people money they didn’t have to work for didn’t result in a significant decrease in labor supply, we still shouldn’t enact such a policy. The reason is that it’s simply wrong to give able-bodied people money without requiring something in return. I realize there’re those who’d object to the word “nothing” in the SFN objection. Many who received a basic income would work part-time, go to school, take care of others, or engage in a host of other activities we might not think should be characterized as nothing. Although I agree with this sentiment, for the sake of this post I’ll put it to one side. That’s because I want to address the SFN objection head on and believe the best way to do so is by conceding, for the sake of argument, that recipients of a basic income would do nothing.
The wrongness of giving people something for nothing is often couched in paternalistic terms. Here’s an example from economist Isabel V. Sawhill:
“Liberals have been less willing to openly acknowledge that a little paternalism in social policy may not be such a bad thing. In fact, progressives and libertarians alike are loath to admit that many of the poor and jobless are lacking more than just cash…. A humane and wealthy society should provide the disadvantaged with adequate services and support. But there is nothing wrong with making assistance conditional on individuals fulfilling some obligation whether it is work, training, getting treatment, or living in a supportive but supervised environment.”
But, as pointed out by economist Guy Standing in his book Basic Income: A Guide for the Open-Minded, many seem perfectly fine with people receiving something for nothing under other circumstances.
Take the cases of inheritance and gifts. Wealthy parents, grandparents, etc. are allowed, upon their deaths, to transfer vast sums of money or wealth to their heirs. And while alive, they’re able to make such transfers as gifts. Yet recipients of such bequests and gifts are under no obligation to work, receive training or treatment, or live in supportive environments. It’s rare to hear basic income opponents criticize this form of something for nothing. There’re several possible reasons for this absence.
Perhaps basic income critics opposed to such transfers among the wealthy do not say much about them because they are thought to be beyond the reach of public policy. That is, perhaps these critics believe it’s wrong for the kids, grandkids, etc. of the wealthy to receive something for nothing but feel such immorality must be tolerated because there isn’t much public policy can do to stop it. But this underestimates the reach of public policy, at least from a technical point of view.
Bequests and gifts are regulated by estate and gift taxes. So, technically, we could change tax laws to make it very difficult or impossible to transfer money or wealth to one’s descendants or heirs. Alternatively, we could allow such transfers to take place but require recipients of them to provide evidence that they’re working, or receiving job training, or in school, or have graduated from school, are receiving drug treatment if necessary, etc. To my knowledge, we currently do none of these things.
Another reason for lack of criticism of SFN transfers among the wealthy might be the view that we shouldn’t tell wealthy people what to do with their money and assets. If they want to leave a million dollars or a couple of homes to their kids, who are we to tell them not to? This raises a complicated economic and moral question: how much of the money and wealth we possess is ours? This may seem like a strange question to ask because the answer seems so obvious: all the money and wealth we possess is ours. But now consider the following autobiographical story.
I am currently a professor at a public university in New York City. I worked very hard to get where I am, having spent almost 25 years in school, culminating in a PhD. I’m not exactly wealthy but neither am I poor. I’m currently living, as many say, “comfortably,” as a result of making a “decent” salary. And I own (well co-own with a spouse) a home. Now here’s a question: what supports did I require to get to this point?
First, I was raised within a family. People don’t get to become professors, or anything else for that matter, without being socialized by a caring family of some kind, whether biological or not. Second, I spent 13 years in K-12 educational institutions. I, of course, did not teach myself but was taught to be a dedicated teacher. This continued throughout college and graduate school. Third, not only was I taught by teachers, but I took part in a number of group study sessions. This resulted in me learning a great deal from my classmates, as well as from teachers. Fourth, the things I learned were, in most cases, neither invented/discovered by my teachers nor my classmates. None of my teachers or classmates were Isaac Newton, Albert Einstein, Emile Durkeim, Adam Smith, Marie Curie, Shirley Ann Jackson, Rosalind Franklin, Ada Lovelace, etc. That is, a host of people no longer with us played an indirect role in helping me get to where I am today.
I could go on but suspect I’ve made my point: any income or wealth I currently possess is not an individual accomplishment. On the contrary, it is a collective one in which many others, dead and alive, played a role. And it’s very difficult to quantify how much of what I have now is due to what I did and how much a result of what others did. That is because what I have been able to do is so intertwined with what others helped make it possible for me to do. This doesn’t just apply to me; it applies to all of us, no matter how wealthy or successful.
To be clear, I am not saying people should have no say in how they allocate the money or wealth they possess. Perhaps they should have more say in deciding this than anyone else. That is, the point of my autobiography was not to support the assertion that the government can just confiscate people’s money/wealth for whatever purposes it sees fit. But it was intended to support the conclusion that government may have more of a claim on “our money” than many of us typically think. That is because government plays a big role in creating the legal/cultural environment which allows for the various collective accomplishments I spoke of earlier. It helps to define and enforce property rights, “nurtures” markets, and helps to curtail acts of violence and aggression, acts which could be quite destabilizing for any socioeconomic system. Thus, basic income opponents who worry about something for nothing transfers among the wealthy may have more room to maneuver than they think.
A third possible reason for reticence when it comes to criticizing SFN transfers among the wealthy may be their voluntary nature. When wealthy folks make transfers to heirs, this is something they’ve chosen to do. Current social welfare benefits (and this is likely to be true of any enacted basic income) are financed by taxes. If people do not pay taxes, they can be fined, jailed, or both. That is, social welfare SFN transfers are involuntarily financed. Perhaps this gives taxpayers the right to demand something in return from social welfare beneficiaries, a right they do not have when it comes heirs of the wealthy.
This is a fair point. But I think it implicitly takes us back to the question of whose money and assets wealthy people are transferring to their heirs. That is, implicit in the voluntary transfers argument is the notion that wealthy people can transfer any money or assets they want to their heirs because it’s their money and assets to do with what they please. But if what I said earlier about how achievements are collective, as well as individual, achievements facilitated in part by the government, perhaps the rest of us do have some say in what children of the privileged have to do in return for gifts and bequests from their rich friends and relatives.
There’s another point to raise about this voluntary transfers argument. The U.S. federal government currently has in place a number of tax expenditures. These are policies where the government allows people to reduce their taxable incomes or, in some cases, their actual tax bills. Those which allow people to reduce their taxable incomes are called deductions. Those which allow taxpayers to reduce their tax bills, that is, the amounts they owe in taxes, are called tax credits. I can make the point I want to make here by focusing on deductions, one in particular.
Under certain conditions, people who borrow money to buy a house can deduct the interest they pay on the loan used to finance that purchase. That is, when it comes to calculating their income which is subject to taxation, taxpayers in this situation can subtract the amounts they paid in interest before determining their taxable incomes. This could put them in a lower tax bracket and cost the government, that is, taxpayers lots of money in forgone revenue. The policy is arguably a kind of housing subsidy. Yet people do not have to work, take part in job training, prove they are staying off drugs, etc. to receive it. That is, this looks a lot like a “subsidy for nothing” policy. Why allow this one, as well as others like it, but not a basic income?
For the sake of discussion, let us put aside some of the things I have been saying in the past few paragraphs. That is, let’s assume any money or wealth people have is solely theirs to do whatever they please, and government has no claim whatsoever on these resources. Where does that leave us? Well it might leave us in the following situation.
The wealthy could continue transferring something for nothing to their kids because we would have no right to shape public policy to stop it. We could, by enacting a basic income, create a more equal playing field by allowing all of us the opportunity for a similar transfer. Yet if we could not tax people (wealthy or not) who did not want to be taxed, we might not be able to obtain enough revenue to enact a basic income. In fact, we might even be able to obtain enough revenue to enact the kind of conditional system Sawhill advocates. That is, if people had the right to decide what they wanted to do with their money/wealth and government had no claim on these resources, we might not be able to finance a social welfare system at all. That’s because folks might not want any of their money and wealth taken to finance such a system. So, the something for nothing objection to basic income, if taken seriously, could lead to the “free market Libertarian’s” first-best paradise. I wonder if something for nothing objectors to basic income have thought about this possibility.
Acknowledgements: I’d like to thank Michael D. Tanner and Eri Noguchi for their helpful comments on this piece. In contrast to what I said in the essay about accomplishments, I take full responsibility for any errors that remain.
by Kate McFarland | Aug 23, 2018 | News
Photo: Newberry Building in downtown Stockton, CC BY-NC-SA 2.0 Onasill ~ Bill Badzo
A new discussion paper, released on Monday, August 20 by Mayor Michael Tubbs and the Stockton Economic Empowerment Demonstration (SEED) team, reveals details of the design of the basic income pilot planned for launch next year.
Stockton Mayor Michael Tubbs
Following in the heels of Silicon Valley’s Y Combinator, the mid-California City of Stockton announced in October 2017 that the municipality was readying a privately financed basic income pilot.
The project arose out of collaboration between Mayor Michael Tubbs and the Economic Security Project (ESP), an initiative founded in California in the previous year to support work related to basic income and cash transfers in the US.
Called the Stockton Economic Empowerment Demonstration or “SEED”, the program will provide approximately 100 Stockton residents with unconditional cash payments of $500 per month for 18 months.
ESP supplied a $1 million foundational grant to launch SEED, which would be followed by major contributions from such donors as the Future Justice Fund, the Goldhirsh Foundation, tech entrepreneur Serkan Piantino, and Facebook co-founder Andrew McCollum.
To prepare a study of the effects of the cash payments, the project has recently enlisted the assistance of two scholars: Dr. Stacia West of the College of Social Work at University of Tennessee, who gained press in the basic income community last year for her study of Dolly Parton’s My People Fund (which provided no-strings-attached cash support to wildfire survivors), and Dr. Amy Castro Baker of Social Policy and Practice at the University of Pennsylvania.
A new discussion paper from SEED, published on August 20, 2018, lays out newly disclosed details about the process of selecting and enrolling participants. The design is one that has been informed by feedback received from Stockton residents, consulting researchers, and others since the project was unveiled.
Seeding SEED (Participant Selection)
As described in the discussion paper, participants in SEED’s basic income trial will be chosen from the population of legal adults (at least 18 years of age) who reside in any Stockton neighborhood in which the median household income is no more than $46,033, the median household income of the city as a whole. The latter provision is intended to allow the project “to be inclusive of residents across the city while ensuring that resources reach those who are in need”.
Although eligible participants must reside in a neighborhood in which the median income is at or below the city’s median, there are no limits on the individual or household income of participants. An adult resident earning above $46,033 is still be eligible to participate in SEED.
Invitations to participate in the basic income demonstration will be sent to 1000 households randomly selected from neighborhoods meeting the income condition. Approximately 100 recipients will then be chosen at random from those who reply to the invitation and give consent to participate. Those who are not selected will be eligible to join the control group. Members of the control group will share the same type of information with the researchers (e.g. information about their financial security, health, and well-being), and they receive compensation in cash for their participation in supplying data, but they will not receive the $500 monthly income.
The invitations are to be mailed by January 2019, with first payments anticipated in February.
Project Assessment
Lead researchers West and Castro Baker will publish a pre-analysis plan in October, which will present the study’s methodology in depth.
But SEED’s latest discussion paper does provide a few new details: the project will examine outcomes including “financial security, civic engagement, and health and wellness” through a combination of surveys, interviews, and focus groups, and the research team will compare outcomes among the cash recipients to those of a control group (which, as mentioned above, will be composed of others from the population of eligible participants).
Although SEED is now to include a controlled experiment, the project still calls itself a “demonstration” instead of an “experiment”, and this not due (merely) to the attractiveness of “SEED” as an acronym rather than “SEEE”; the generation of stories and anecdotes remains a core purpose of SEED.
As also described in the recent discussion paper, Mayor Tubbs and his team aspire to produce stories about how a modest guaranteed income impacts individual lives, as well as how a social experiment impacts a city.
The demonstration will track the individual experiences of a small group of participants who volunteer to speak publicly about the effects of the program on their lives. Artists will also assist in delivering the narrative. For example, the paper indicates that a public event featuring poetry and spoken word performances is to be held at the conclusion of the project.
In addition to telling the stories of individual recipients, the SEED team intends to set the project “in a larger framework for a broader vision for a new social contract”, presenting it “as part of the larger story of Stockton, a trailblazing city on the rise”.
Motivation
The Stockton project is motivated by the belief that an unconditional basic income is “one of the most effective tools” to reduce poverty and mitigate economic insecurity. SEED states, “We are motivated to test a guaranteed income in Stockton because we believe it is to combat poverty. Unconditional cash can supplement and enhance the current social safety net.”
Inspired by Dr. Martin Luther King Jr.’s endorsement of a guaranteed annual income, Mayor Tubbs developed an interest in basic income as part of a broader program to help his city recover from economic devastation. Hit badly by the economic collapse of 2008, Stockton was declared “America’s most miserable city” by Forbes in 2011 and filed for bankruptcy in 2012, becoming the largest US city to have done so at the time (although soon surpassed by Detroit).
Tubbs was elected to Stockton’s City Council in 2012, at the age of only 22, and in 2016 defeated incumbent Anthony Silva to be elected as mayor of the city of 300,000 — the youngest mayor in the city’s history and the first African American.
Since assuming office, Tubbs has pursued a range of initiatives to combat the effects of economic devastation. He led Stockton in creating a Housing Mitigation Fund to reduce financial risk for landlords who rent homes to the homeless, for example, and he secured a philanthropic grant to launch another privately funded initiative, Stockton Scholars, which provides scholarships to help Stockton high school students attend college or university. Mayor Tubbs also spearheaded a partnership with the city and Advance Peace, a controversial program that aims to reduce gun violence by providing cash assistance and other personal support to those most likely to commit violent crimes. In addition to heading SEED, he is currently constructing a re-skilling program to help close the skills gap between employers and Stockton job-seekers.
It is against this background that SEED declares it is “taking place within a larger collective impact model to build a world-class cradle-to-career pipeline of education, public safety, and opportunity”.
A “Basic Income” Trial?
Past articles in Basic Income News have stressed that many existing so-called “basic income” experiments are constrained in ways that call into question their resemblance to a universal and unconditional basic income. In many cases, for example, participants have been selected only from pools of individuals with low incomes (Ontario, Y Combinator), who are unemployed (Finland), or who are currently receiving other welfare or social assistance benefits (The Netherlands, Barcelona). In some cases, moreover, the cash payments are reduced with earned income (e.g. Ontario, The Netherlands).
The design of the Stockton pilot is notable in that there is no requirement that individual participants be low-income, unemployed, or receiving government assistance. As mentioned above, participants must reside in neighborhood with an average income at or below the city median; however, participants themselves needn’t have an income below this level (e.g., in principle, invitations to participate could be sent to affluent investors who has purchased homes in low-income Stockton neighborhoods with the hope of later turning a profit).
Additionally, the $500 payments will not be clawed back with additional earned income. That said, however, other benefits might. SEED is currently working with government benefits agencies to determine how the unconditional cash grants will impact recipients’ eligibility for means-tested benefits. Under current US policy, such a $500 per month of “reasonably anticipated income” would generally need to be reported as household income. However, Tubbs hopes to secure waivers for participants to prevent or mitigate potential loss of benefits during the trial. SEED states that it will provide potential recipients with detailed information about the effect of participation on public benefits, as well as providing opportunities to consult with benefits eligibility counselors prior to consenting to join the project.
More Information
Official Paper: “Our Vision for SEED: A Discussion Paper” (August 20, 2018).
Official Website: www.stocktondemonstration.org.
by Guest Contributor | Jun 29, 2018 | Opinion
Written by: Leah Hamilton, MSW, PhD
Democrats and Republicans don’t see eye to eye very often, but they can safely agree on one point: welfare doesn’t work. Liberals are concerned that an ever-shrinking social safety net reaches fewer and fewer families in need. Republicans worry that welfare benefits create dependence. They are both right.
The primary cash assistance program in the United States, Temporary Assistance to Needy Families, served 68% of low-income families in 1996. Today, only 23% of poor families receive assistance. This change has been largely brought about by the imposition of five-year lifetime limits (states are allowed to set lower limits) and stricter eligibility criteria. Welfare caseload reductions have been solidly linked to the rise of deep poverty in America, family strain and increased foster care placements. 1.46 million US households (including 2.8 million children) now live on less than $2 per person, per day (the World Bank’s measurement of extreme poverty).
Meanwhile, welfare eligibility rules designed to encourage independence have achieved the opposite effect. For example, though many states impose strict work requirements, states which loosen these rules actually see recipients move to higher wage, higher benefit work, presumably because they have the breathing room to search for a good job rather than take the first one that comes along. Similarly, in states with strict limitations on recipient assets, poor families are less likely to own a car, making it nearly impossible to maintain employment in areas without public transportation. Even worse, some researchers are discovering a “cliff effect” in which welfare recipients immediately lose all benefits (including child care assistance) after a small increase in income. As a result, many parents turn down promotional opportunities because they would be ultimately worse off financially. Any parent would make the same decision if it meant the ability to feed their children and afford quality childcare.
We must redesign this entire system. In the most prosperous nation in the world, it is ludicrous that children are growing up in the kind of deprivation we normally associate with developing countries. Simultaneously, we must ensure that no one is discouraged from growing their income or assets. One potential solution is a universal basic income, which would provide an annual benefit to every citizen. However, this idea comes with a hefty price tag and would either increase our national deficit or increase the marginal tax rate, both of which might be political non-starters. The simpler solution is a Negative Income Tax (NIT) which is potentially cheaper than our current poverty alleviation efforts. An NIT is a refundable tax credit which brings every household to the federal poverty level. The most effective way to do this is to decrease the credit slowly (for example, a $0.50 reduction for each $1.00 increase in earned income) so that there is never a penalty for hard work.
Researchers at the University of Michigan calculated what this might look like in practice. If a family had no income, their tax credit would be 100% of the poverty line ($20,780 for a family of three). If the family’s earned income increased to half the poverty line ($10,390), their tax credit would decrease to $15,585. The credit would phase out completely once the family’s income reached twice the poverty level ($41,560). This plan would cost roughly $219 billion per year and could be almost completely paid for by replacing most or all of our current poverty programs.
With this one simple policy, we can achieve many goals of both the left and right. Poverty would be eliminated overnight. Work disincentives would be removed. American bureaucracy would be significantly reduced. Families would be free to make financial decisions without government intrusion. And in the long run, we would save money. Childhood poverty alone costs the US $1.03 trillion (yes, trillion) per year. In the 21st century, eradicating poverty isn’t complicated. We’re just going about it in the worst possible way.
About the author:
Leah Hamilton, MSW, PhD is an Assistant Professor of Social Work at Appalachian State University. She received a BSW from Metropolitan State University of Denver, an MSW from the University of Denver and a PhD in Public Policy at the University of Arkansas. She served as a Foster Care Case Worker and trainer for five years in Denver, Colorado. Dr. Hamilton’s research interests include poverty, economic justice, and social policy.
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