by Karl Widerquist | Jan 26, 2014 | News, Research
[Michael W. Howard]
In this column, Velasquez-Manoff summarizes ground-breaking research by Duke University epidemiologist Jane Costello and UCLA economist Randall Akee on the effects of regular unconditional cash disbursements to every member of the North Carolina’s Eastern Band of Cherokee Indians, as equal shares of some of the profits of their casino. There have been many casinos build within Native American communities, which is sometimes controversial. However, gambling can be a fun and safe past time when casinos are run well. Visitors might want to read this article by the South Florida Reporter to learn how to find a reputable casino. Furthermore, casinos provide much-needed jobs and income for those living nearby. After five years, by which time the yearly profits per person amounted to $6000, the number in poverty declined by half, a surprising result for Costello. “The expectation is that social interventions have relatively small effects,” Costello told Velasquez-Manoff. “This one had quite large effects.” Other effects included a decline in minor crimes by youth, an increase in high school graduation rates, and, especially when the income arrived early in a child’s life, better mental health in early adulthood. The study thus tends to support the view that poverty can cause mental illness, rather than poverty being explained by mental illness. It is thought that the income facilitated better parenting by reducing the stresses of poverty. Even income arriving for 12-year-olds, according to Akee, has benefits that in five to ten years exceed the cost of the extra income.
Harrah's Cherokee Casino -via Daily Kos
Velasquez-Manoff does not mention the relevance of this study for basic income policy, but it is particularly relevant. First, even major studies like the Mincome pilot program in Manitoba were of fixed length. Critics could say that behavior was affected by the expectation that the income would end. Here, the payments are ongoing. Second, the payments, although not sufficient to cover basic needs, are substantial. By 2006, the yearly stipend had risen to $9000 per person. So, unlike Alaska’s Permanent Fund Dividend, these payments have been a more substantial percentage of individual incomes among poor families. Yet, as basic income advocates would expect, there appears not to have been a substantial work disincentive. Rather, the steady supplements to wages have relieved the stresses of seasonal, irregular employment, with numerous benefits to family and community life, and this, as Charles Karelis has argued, in The Persistence of Poverty, enables work. Akee “calculates that 5 to 10 years after age 19, the savings incurred by the Cherokee income supplements surpass the initial costs – the payments to parents while the children were minors.”
The study also raises interesting questions. The source of the funding is a business owned by the tribe; it is a “bottom-up” initiative. Would it make a difference to the outcomes if the source were publicly owned resources or tax revenues? Not all of the casino revenue went to cash payments. Some went to infrastructure and social services.
There are some questions regarding the long-term sustainability of these policies. For example, the growth of online casinos like https://thisisstory.com which may cut into the Cherokee casino profits if they continue to grow. But for the most part, these policies look like they will continue.
Were the positive outcomes due to the complementarity of these policies? Could there have been better outcomes if more had been spent on in-kind goods, or if more had been disbursed in cash? Whatever the answers, this study shows the positive potential of substantial universal unconditional cash payments in the fight against poverty.
Moises Velasquez-Manoff, “What Happens When the Poor Receive a Stipend?” Opinionator, New York Times, January 18, 2014.
EDITOR’S NOTE: In reaction to Velasquez-Manoff’s article, several other authors wrote articles about the project, some making the connection to BIG:
Matt Bruenig, “A Cherokee Tribe’s Basic Income Success Story,” Policy Shop, January 19, 2014.
Jared Bernstein, “The Transfer of Income to Poor Families with Children Can Be An Investment with Long Term Payoffs,” On the Economy, January 19th, 2014.
Dave in Northridge, “What Happens when Poor People get Cash? An Empirical Study,” Daily Kos, Jan 20, 2014.
by Karl Widerquist | Jan 8, 2014 | News
This video is a group discussion in which host Chris Hayes talks to his panel about the idea of giving Americans money just for being citizens. The discussion is inspired mostly by Alaska’s Permanent Fund Dividend.
Chirs Hayes, “Money for being a US citizen?” All In With Chris Hayes, MSNBC Television, January 7, 2014.
by Craig Axford | Nov 24, 2013 | Research
Maniza Naqvi is a Senior Social Protection Specialist working on Safety Nets in Malawi and Ethiopia.
[Craig Axford]
According to the Word Bank’s Maniza Naqvi, Alaska and Iran have something important in common: they both use revenues generated from their mineral resources to provide direct payments to their citizens.
Marcelo Giugale, World Bank’s Director of Economic Policy and Poverty Reduction Programs for Africa
World Bank economist Marcelo Guigale, also supports directly transferring money generated from oil, gas, and mineral development into the pockets of people. He argues this both strengthens the economy and reduces corruption. African nations in particular currently stand to see the greatest income gains by sharing the wealth generated from their rich mineral deposits with their citizens.
Maniza Naqvi, “Mining Mineral Revenues”, Nasikiliza “I am listening”: Stories of development from the World Bank in Africa, June 22, 2013.
Marcelo Giugale, “A Latin Solution to an African Problem“, The Huffington Post, May 30, 2012.
by Citizens' Income Trust | Nov 15, 2013 | Opinion
Allan Sheahen, Basic Income Guarantee: Your right to economic security, Palgrave Macmillan, 2012, xv + 204 pp, 1 137 00570 0, pbk, £17.50, 1 137 34788 6, hbk, £62.50
Each adult who files an income tax return receives an annual ‘BIG’ [Basic Income Guarantee] or ‘refundable tax credit’ of $10,000 – just under the official 2010 poverty level of $11,139 for one person. The ‘refundable tax credit’ is available to everyone … All income other than this credit is taxed. If a person has no income at all, he or she keeps the full credit and pays no taxes. … If a person’s income is high, the amount to be paid in taxes will be larger than the credit received and … the person will pay out the difference in positive taxes. … the system is universal – everyone files a tax return, everyone gets a tax credit, and everyone with any income pays taxes. There is no means test, no work requirement, and no explicit eligibility criteria. No one receives a net transfer from the government unless the taxes on the person’s income from all sources are lower than the tax credit. (p.86)
Sheahen suggests on page 3 that different people use the term ‘Basic Income Guarantee’ in different ways, and indeed he offers different definitions on pages 3 and 86. I am assuming that the definition above from page 86 is the one that Sheahen wishes us to employ: and, if that is so, then in this revision of a book that he published in 1983 Sheahen has given us an accessible (in fact, quite chatty) book on Tax Credits: the genuine kind, and not the separately administered means-tested household benefits labelled ‘Tax Credits’ by the UK Government.
Sheahen sets the scene by offering a brief history of the recent US debate on poverty and the benefits system. He goes on to show that employment can no longer provide everyone with a subsistence income (because manufacturing and other processes are increasingly automated), and that inequality is becoming a serious problem; and he rightly suggests that a Basic Income Guarantee would contribute to the solution of these problems. Objections are tackled (such as ‘Is it moral for people to be given income that they haven’t earned …?’ (p.63) and whether people would continue to work: they would). Sheahen studies alternative approaches – such as the Government as the employer of last resort: an idea dismissed as impractical.
A Negative Income Tax (NIT) would be almost identical to Sheahen’s Basic Income Guarantee/ Tax Credit, so he studies NIT experiments undertaken in the USA between 1968 and 1979, and suggests that the fact that a NIT was associated with an increase in the divorce rate should not be regarded as a reason not to establish one. Sheahen studies the Alaska Permanent Fund Dividend, and he also studies discussions on benefits reform in a variety of countries and asks how the benefits reform debate might evolve in the US. Appendices explore affordability, describe the US’s current benefits provisions, and offer additional historical material.
Sheahen’s scheme is similar to that proposed by the Conservative Government in the UK during the early 1970s. The difference is that the UK proposal assumed that employers would administer the Tax Credits alongside Income Tax, whereas Sheahen’s scheme would be administered by the US Government, which for everyone with a tax liability lower than the Tax Credit would pay the difference into their bank account. These two administrative options suffer from different difficulties. If an employer is to administer the Tax Credit then the employer needs to know details of the employee’s income and tax liability relating to sources other than the employer’s payroll; and they need to know how such other incomes and tax liabilities change from month to month. If the Government is to pay the monthly difference between the Tax Credit and the total tax liability accurately each month, then it needs to know how all of that citizen’s incomes from different sources are changing from month to month. Whichever option is chosen, the administrative demands are considerable, as they would be for the similar Negative Income Tax.
Terminological clarity might have been helpful. The BIG scheme proposed is a Tax Credit scheme, and it might have been helpful to call it that (in the same way as Negative Income Tax is correctly described). The BIG described is not a Basic Income (or a Citizen’s Income), which will be confusing for people coming to this book thinking that ‘Basic Income Guarantee’ means ‘Basic Income’: it doesn’t. A Basic Income is an unconditional, nonwithdrawable income paid to every individual as a right of citizenship. Sheahen’s BIG is withdrawn as income rises, it is completely withdrawn at the break even point where tax liability equals the BIG, and it is not paid above that point. It is not a Basic Income, but it would have effects similar to one.
As long as readers approach this book with an understanding of these terminological issues, they will find it a useful contribution to the debate on the reform of tax and benefits systems.
by Yannick Vanderborght | Nov 11, 2013 | Opinion
The 81 senators, representing the 27 units of the Federation, 16 political parties, including two former presidents of the Republic, one current and two former presidents of the Senate, two likely candidates for the Presidency, 20 ex-governors and 18 ex-mayors, have signed a letter to president Dilma Rousseff, handed in by me on October 25th, with a proposal: she should appoint a working group with the purpose of paving the way for the institution, step by step, starting with those most in need, of the Citizenship Basic Income (CBI), according to Law No. 10.835/2004, approved by all political parties in the Brazilian National Congress. It is the first country in the world where the parliament has approved a law to that effect.
On October 30th, in the Museum of the Republic, in Brasilia, there was a ceremony to commemorate the tenth anniversary of the Bolsa Família Program implementation, which has crucially contributed to the eradication of extreme poverty and to the reduction of inequality in Brazil. This program can be seen as a step towards the CBI.
Next January 8th, the law establishing the CBI will celebrate its tenth anniversary. It is important, therefore, that people who have contributed to the study of income transfer programs can collaborate for this purpose, such as Professor Paul Singer, Secretary of the Solidarity Economy of the Ministry of Labor and Employment since 2003.
Professor Singer will be able to work in close cooperation with ministers Tereza Campello (Social Development), Miriam Belchior (Planning) and Marcelo Neri (Strategic Affairs) and with Ana Maria Medeiros da Fonseca, first Executive Secretary of the Bolsa Família – people who have contributed to its creation and to the formulation of policies in the area.
International experts may also be invited. One of them could be Professor Philippe Van Parijs, who founded the “Basic Income Earth Network” and follows the development of international experiences of implementing the CBI in the European Union, India, Iran, Namibia, Alaska, Switzerland, and other countries. The pioneer 30-year experience in Alaska has made it the most equal of American States.
The proposal, enthusiastically signed by each and every senator, including the opposition leaders and presidential candidates, is consistent with what has been formulated by some 300 scholars from Brazil and from abroad, who have recently participated in the International Conference of the Center for Psychopathology and Public Policy, at the University of São Paulo, on Democratic Inventions: Constructions of Happiness, and who have also signed a letter to president Dilma with the same purpose. Professor Marilena Chaui was one of the most enthusiastic subscribers.
We have had great achievements in the Workers Party’s last ten years of government, featuring the improvement of the disadvantaged populations’ living conditions. The 81 senators’ voices will allow the president to take a leap and achieve her goal of eradicating extreme poverty, building a fair nation, strengthening women’s safety and providing dignity to all Brazilians.
