SMALL VICTORIES (from 2009)

by Karl Widerquist | Apr 4, 2018 | Opinion, The Indepentarian

This essay was originally published in the USBIG NewsFlash in November 2009.

The political barriers to the current situation in the United States and the implementation of a full basic income are daunting. On an international basis, the outlook is much brighter. As far as I can tell, there are more basic income projects underway or under discussion worldwide now than ever before. There are small, privately funded pilot projects going on in Namibia and Brazil. Thirty basic income supporters were elected to the German Bundestag in recent elections. The Nigerian government is considering a regional basic income in the Niger Delta area. The Mongolian government has recently pledged to introduce the world’s first national basic income. (See stories below.)

Just last week, October 29, 2009, I had the honor to be present when the city council of Santo Antonio do Pinhal, Brazil (a city of about 7,000 people in the State of Sao Paulo) voted unanimously to create a small basic income from local tourist revenue. What will come of this small, locally based income remains to be seen. But remember that the Alaska oil dividend was inspired by a local basic income introduced in a small town. And the Alaska dividend may prove to be an inspiration for similar programs in places as far away as Mongolia and Nigeria.

So, progress is happening worldwide. In America, however, it is important to focus on small victories. Politics is full of opportunities to change minds toward the ways of thinking that support basic income.

Two of the most compelling reasons to support basic income are the belief that people have an equal right to the world’s resources and the belief that everyone should have the right to meet their needs. Any policy that helps establish these norms moves us (however gradually) in the direction of basic income.

People don’t discover oil every day, but some kind of new government giveaway of natural resources does happen just about every day. Every new mine, well, or beach front hotel is an opportunity to establish the norm that people have a shared right to natural resources, and that they should be compensated if private firms want to privatize it.

Two years ago we missed an opportunity when the U.S. government gave away a substantial portion of the broadcast spectrum to a few corporations at no charge; and then allowed those companies to sell it back to us. But the issue isn’t settled. A recent study by the Consumer Electronics Association found that reallocating broadcast spectrum could yield cost savings of more than 1 trillion dollars. If and when that reallocation happens, we have the opportunity to press for auctioning off that spectrum and sharing the proceeds.

Several BIG-related campaigns are under way right now. The refundable child tax credit was won a few years ago. It is essentially a very small basic income for children, but only a portion of the federal government’s child tax credits are refundable. Several groups are pushing for a larger refundable credit. The cap-and-dividend approach to greenhouse gas reduction would establish a small basic income out of taxes designed to discourage the behavior that causes global warming (www.capanddividend.org). Cap-and-Dividend is a live issue on Capitol Hill, and several Members of Congress have signed on.

Probably the biggest issue in U.S. politics right now is healthcare reform. The current debate is largely a debate over whether there should be a universal right of access to healthcare. Almost every other country has established that right in law, and the United States might finally join them this year. The versions of healthcare reform on the table right now are not as close to true universality as the healthcare systems exist in most other countries, but they clearly help to establish the norm that healthcare ought to be universal.

Once norms like this are established in law, they tend to become more popular. Although the creation of national health was controversial in many countries, I don’t believe that there is any country in the world that has the universal right to healthcare in which a majority of people would like to go back to a system in which some have health insurance and some don’t. Public education is far from equal, but few people today want to deny a basic education to the children of the poor as most countries did a hundred years ago.

Establishing a universal right to healthcare is not the same as establishing the norm that all people should have an unconditional right to other necessities, but it certainly brings us closer to that objective. The fight for universal healthcare is our fight.

-Karl Widerquist,
Begun in Santo Antonio do Pinhal, Brazil, October 29, 2009
Completed in Doha, Qatar, November 4, 2009

THE ECONOMIC LESSON OF 1938 (from 2009)

by Karl Widerquist | Mar 21, 2018 | Opinion, The Indepentarian

This essay was originally published in the USBIG NewsFlash in August 2009.

If I use the phrase “lesson of 1938,” most people will probably think about Britain’s unsuccessful attempt to avoid war with Nazi Germany by giving away a piece of Czechoslovakia. There are important lessons in that event, but that’s not what I want to talk about.

1938 was also an important year in American economic history, and the economic lesson of that year is relevant to our handling of the global recession today. By 1937, the Great Depression had been going on for eight years. Franklin Roosevelt’s New Deal programs had been stimulating the economy for five years, and they began to show significant signs of working. Industrial production and national income were coming back up. Employment was going back down. The economy appeared to be just about out of the depression—

—and then—

Roosevelt and Congress decided to balance the budget. They raised taxes. They reduced government spending. They contracted the money supply and helped send the economy back into depression by 1938, and it remained in recession for three more years. Unemployment was still 10 percent when the United States entered World War II at the end of 1941. At that point, the government started spending massive amounts of money. They worried less about the budget deficit and more about spending what it takes to do the job. The depression disappeared almost overnight.

The economic lesson of 1938 is that the government cannot balance the budget during a major recession—even in the early stages of recovery. A depressed economy needs a stimulus. Although politicians usually won’t say it out loud, a stimulus often requires not only spending but deficit spending. One of the things that turn a financial crisis into a recession is that people and businesses stop spending in a reinforcing cycle. They can’t afford to spend because they’re not making money. They’re not making money because no one else is spending. Only the government has the size and budget flexibility to break the cycle. In a financial recession, concern for the government’s budget deficit can wait.

The government can get away with deficit spending because the government budget doesn’t work like an individual’s budget or even a corporation’s budget. Government creates the money supply; its spending is not limited to what it takes in or what it can borrow. If you or I spend more than we can get, we will go broke. The government doesn’t have to “get” money. It creates money. If the government creates too much money at any given time, it will overstimulate the economy and create inflation. If inflation becomes a problem, we can take action, by say, taxing some of that money back, but for now it is not a major concern. At a time like this, when resources are going unused because no one’s buying, the government as a lot of leeway to create and spend money without worry of inflation.

We should be more concerned with making sure that the direct beneficiaries of government stimulus are the people most in need. Too often the government stimulates the economy by helping corporations (such as investment banks, automobile manufacturers, and defense contractors), telling us that the stimulus will indirectly make its way to help those who actually need help.

A more effective way to stimulate the economy and help people is with universal programs. Universal healthcare or a universal basic income guarantee would be excellent ways to do so.
-Karl Widerquist, Doha, Qatar August 9, 2009

FOUR OBITUARIES: MILTON FRIEDMAN, ANTONIO MARIA DA SILVEIRA, RICHARD CLEMENTS, AND LEONARD GREENE (from 2006)

by Karl Widerquist | Feb 21, 2018 | Opinion, The Indepentarian

This essay was originally published in the USBIG NewsFlash in December 2006.

Four basic income advocates died in November 2006. Noble-Laureate Milton Friedman (Nov. 16), Brazilian economist Antonio Maria da Silveira (Nov.21), former director of the Citizens Income Trust (Britain) Richard Clements (Nov. 23), and inventor and philanthropist Leonard Greene (Nov. 30). Below is a short discussion of the role of each in the debate over the basic income guarantee.

MILTON FRIEDMAN
Milton Friedman, the economist who most popularized BIG in the United States, died November 16, 2006. Friedman was on the most influential economists of the Twentieth Century. His work has been influential in diverse areas of economic theory, but most particularly in the area of monetary economics. Although his proposal of a strict rule for increasing the money supply each year by a given percentage has been largely discarded, his critical work on the mistakes made by the central bank that led to the Great Depression and other economic downturns has simply become part of common knowledge.

More than his contribution to the science of economics, Friedman is known for popularization of free market libertarianism in numerous books, articles, and a television show on the Public Broadcasting System. He opposed government regulation of industry and the privatization of state-owned industries right up to and including the Post Office. He was an early advocate of public school choice and of the privatization of Social Security. Thus, he became known as a spokesperson for conservative republicanism, but his libertarianism was never quite in line with traditional American conservatism. As early as the 1960s, he opposed the military draft and supported the legalization of drugs. None of his proposals seemed more out-of-line with the 1980-2006 conservative revolution than his advocacy of the basic income guarantee under the name of the negative income tax (NIT).

Welfare state policy in the United States, and to some extent across the industrialized world, has been dominated by an uneasy marriage of the liberal desire to help the poor with the conservative desire to force the poor to become better people. So, we have a hugely complex system that is stingy with some of the people who need it most, generous with people who fit into arbitrary categories, and makes everyone jump through hoops to meet the conditions of eligibility. One might expect a free-market libertarian to oppose using the tax system either to help or to improve the poor, but to a free market libertarian it is clear which of the two is the greater danger.

To a libertarian, government interference, control, and humiliation of the poor is a waste of time and money and whatever it might do to improve the poor, it does not make them more free. Through this kind of reasoning, Friedman became a supporter of the basic income guarantee.

“He believed that if you wanted to fight poverty you should give the poor more money and let them figure out how to use it,” as Renée Montagne of National Public radio summarized his thinking. He, therefore, advocated BIG in the form of the NIT: a small in-cash grant to everyone who had a low income with a low “marginal tax” rate that would give them plenty of incentive to earn money on the private market if they could.

Friedman did so much to popularize BIG that many BIG supporters today tend to forget that he never lost his free market attraction to the idea that perhaps the government should do nothing for the poor. Friedman’s support for the NIT almost always came with the disclaimer to the effect that as long as we are spending money to help the poor, we might as well use the most efficient method to help them. He even sometimes described the negative income tax as a transitional program toward the complete abolition of all government assistance to the poor—not quite what most BIG advocates hope for.

Nevertheless there is good reason to think of Friedman as a champion of the BIG movement. Friedman’s NIT was broad and generous to those who needed it most. Daine Pagen, of the Caregivers Credit Campaign complained that many recent articles on Friedman treated the NIT as the precursor to the Earned Income Tax Credit (EITC). Although the EITC is a form of negative tax that was an outgrowth of the NIT movement, it is actually a very narrow and water-down alternative. Friedman’s NIT was a comprehensive solution to poverty aimed at everyone, not only at low-income workers as the EITC is.

Under the NIT, the government would make no judgment about why a person was poor. It would help everyone in need, and create an incentive system so that everyone who worked more had more a higher take-home pay. It would leave it up to the individual to decide whether that was in their best interest. This kind of thinking is diametrically opposed to “welfare reform” under Temporary Assistance to Needed Families, which is designed to force ever single parent into the labor market whether or not she believes the needs of her children make that impossible.

Friedman wrote extensively on the NIT between 1960 and 1980, but he paid less attention to the topic in the last 25 years of his life. However, in an interview with Brazilian Senator and economist Eduardo Suplicy in 2000, Friedman reiterated his support for BIG. When Suplicy asked what Friedman thought of basic income as an alternative to the NIT, Friedman responded, “A basic or citizen’s income is not an alternative to a negative income tax. It is simply another way to introduce a negative income tax.”

A quick web search will produce thousands of articles on Friedman. For a broad view of his career and contributions, see Samuel Brittan in the Financial Times: https://www.ft.com/cms/s/cb74eef8-7599-11db-aea1-0000779e2340.html

ANTONIO MARIA DA SILVEIRA
Antonio Maria da Silveira, professor of economics at Universidade Federal do Rio de Janeiro, died on November 21. According to his long-time friend, Eduardo Suplicy, “Antonio Maria was the first Brazilian economist who proposed the institution of a guaranteed minimum income program through a negative income tax. It was in the article Redistribuição de Renda (Redistribution of Income), published in Revista Brasileira de Economia, in April 1975.” Drawing inspiration from Economists as diverse as J. M. Keyns and F. A. Hayek, Antonio Maria argued that it would soon become feasible for the government to secure a decent living for everyone. Suplicy credits him with being a consistent voice in favor of a basic income guarantee right through the passage of a bill to gradually phase in a basic income in Brazil. Suplicy’s tribute to Antonio Maria da Silveira is in the December issue of the BIEN NewsFlash (www.basicincome.org).

RICHARD CLEMENTS
Richard Clements, former director of the Citizens Income Trust (CIT), died November 23, 2006. According to the CIT, “The Citizen’s Income Trust has been sorry to hear of the death of Richard Clements. After being editor of Tribune and running Neil Kinnock’s office, Richard was Director of the Citizen’s Income Trust from 1993 to 1996, when sadly he had to retire because of his own ill health and to look after his wife Bridget. He was a most effective Director, and we were very sorry when he had to leave. Not surprisingly, he was particularly good at raising the profile of the Citizen’s Income debate in the press.” Clements was also a campaigner against nuclear weapons and editor of the British left-wing newspaper, the Tribune. The British newspaper the Guardian article on Clements is on the web at: https://www.guardian.co.uk/obituaries/story/0,,1955580,00.html.

LEONDARD GREENE
Can you imagine a better way to make a fortune than to invent a product that saves lives? Can you imagine a better thing to do with a fortune than use to fight poverty and disease? Leonard Greene made his fortune inventing safety products for airplanes. His stall warning device (a safety feature that is now standard equipment on commercial aircraft) has saved an uncountable number of lives. After Greene was a well established business owner with dozens of patents and a multimillion-dollar business to his credit, he founded the Institute for SocioEconomic Studies, which funded research on healthcare policy and on the Basic Income Guarantee. Greene wrote two books on the Basic Income Guarantee, Free Enterprise Without Poverty and The National Tax Rebate. Greene’s BIG idea was simple: What if they United States replaced everything it is now doing to maintain someone’s income and replaced it with a basic income in the form of a tax credit or tax rebate? Greene found that the revenue currently devoted to tax deductions, welfare policies, farm subsidies, and many other programs could be redirected to a basic income large enough to virtually eliminate poverty in the United States. His ideas have not caught on with mainstream politicians, but they have continuing appeal. His idea for redirecting all U.S. income support spending into a basic income has been virtually reinvented by Charles Murray in his latest book, In Our Hands, and the idea of BIG in the form of a tax credit is very much the idea behind the BIG bill submitted in the 109^th Congress by Representative Robert Filner. He is survived by eight children. He son, Donald Greene died in United Flight 93 on September 11, 2001. Leonard Greene died November 30, 2006 at the age of 88.

EDITORIAL NOTE
When I volunteered to write the USBIG Newsletter in 2000, I did no realize how many obituaries I would have to write. It is a particularly sad duty that I have never quite gotten used to. Friedman’s death, following Herbert Simon in 2001, James Tobin in 2002, John Kenneth Galbraith early this year, marks the end of an era when the great economists who seemed to disagree on everything else, all seemed united behind the guaranteed income as the best way to reform anti-poverty policy. Friedman was first among these because of long-term efforts to popularize the idea. Although Friedman considered himself a liberal (or libertarian) who believed freedom was the overriding value that should guide policy and who believed that freedom conflicted with egalitarianism and economic equality, he had something to teach egalitarians. His logic (if you really want to help the poor, give them money and let them decide how to use it) leads me inevitably to the belief that unconditional assistance, in the form of some kind of basic income guarantee, must be the centerpiece of any truly egalitarian program. It has also made me suspicious of anyone who calls himself egalitarian but advocates conditional assistance to the poor. There can’t be egalitarianism without respect for the poor, and how can we say we respect the poor if we advocate policies designed to promote “equality but…”? For example, I support equality but only for the truly needed. I support equality but only if they are willing to work. I support equality butnot one of them is going to get their hands on one red cent of my tax dollars if they’ve ever refused a job. I can’t help but be suspicious. I can’t help but come back that that idea, if you really care about the poor, if you really want to help them, you will give them money unconditionally, with no supervision, without asking for anything in return. Sometimes it takes a libertarian spot a true egalitarian.
-Karl Widerquist, New Orleans, LA, December 20