by Tyler Prochazka | Dec 19, 2015 | News
Interest in the Universal Basic Income (UBI) is sweeping across Europe, with British think tank RSA coming out in support of the UBI in a new report launched on December 17 at a public debate. The Royal Society for the encouragement of Arts Manufactures and Commerce, also known as RSA, is a prestigious institution founded in 1754 and granted Royal Charter in 1847.
Report authors Anthony Painter and Chris Thoung said the current approach to welfare “is no longer fit-for-purpose” and requires a new approach.
“The major concern is ultimately people: the lives we are able to lead, our ability to have a sense of security so we can pursue our ambition, and our ability to contribute to supporting one another, innovating, and developing the creative potential of society,” the report said.
“That is where Basic Income has the potential to be so much stronger than our current welfare state.”
The RSA endorsement follows another high-profile British think tank, the libertarian Adam Smith Institute. They published a report earlier this year also advocating for a basic income in the form of a negative income tax.
The RSA proposal for a British basic income
The RSA report suggests replacing the current welfare state with a UBI that would cost an additional 1 percent of UK’s GDP. RSA’s proposal is modeled after the Citizen’s Income Trust (CIT), an affiliate of BIEN, and derives most of its figures from this framework – read the CIT proposal here.
Under the RSA, citizens between 25 and 65 would receive an annual income of 3,692 British pounds, or £308 per month. People between 5 and 24 would get an annual payment of £2,925, or £244 per month. Citizens over 65 would receive an annual pension of £7,420, or £618 per month. Parents of children under 4 would receive an additional annual payment of £4,290 for their first child, or £358 per month. They would fetch £3,387 annually, or £282 per month, for additional children under 4.
It suggests potentially gradually rolling out the basic income to different demographics, such as those above age 55 and those below age 25. At the same time, a small basic income could be introduced while gradually reducing other benefits.
Regarding housing, the report notes that housing benefits should not be folded into a basic income because of the high cost of real estate in the UK. It proposes a Basic Rental Income. The idea is to utilize property taxes as a means to ensure universal housing income, but the report does not delve into the specifics. Nonetheless, this novel approach does deserve more discussion in UBI circles.
In offering these policy specifics, the RSA illustrates that a UBI is not simply a utopian ideal, as some of its critics claim. In fact, the report points out that far more radical changes to taxes and benefits have been implemented in the past.
Painter and Thoung note that a UBI would help society confront challenges created by rapidly improving technology and an aging population, a point that most other UBI proponents stress as well.
One of the attractions of the UBI, and why even conservatives and libertarians have been drawn to the policy, is its simplicity compared to the current system. Substituting current welfare policy with a UBI would eliminate its “perverse incentives, intrusion and complexity entirety.”
Since the UBI is universal there would be less fraud, they contend. And it would not undermine relationships and families because a UBI would not punish individuals for cohabitating as the current system does. This “strengthening of the family” aspect will likely win over more conservatives to the UBI cause over time.
More entrepreneurship and more time for family and community
From an economics perspective, the report argues that a UBI is the best system to incentivize work and avoid the welfare trap. In the current system, benefits quickly diminish as incomes rise, discouraging beneficiaries from taking up work. The report also claims that a UBI’s safety net allows individuals to pursue risks and creative endeavors. Instead of taking the first menial job available, a worker can spend more time searching for the work most suited to increasing their productivity.
This argument has been borne out by empirical studies on the UBI, such as the basic income trial in India that substantially increased entrepreneurship.
One of the criticisms of a UBI is that it lets some individuals take more time off from work. The key is whether their free-time activities are more valuable to society than their work hours. “Basic Income is a foundation for contribution. It incentivizes work but supports other forms of contribution too,” the report said. It suggests that the UBI would allow individuals to care for the elderly and other vulnerable individuals, which is especially important as society ages.
The actual work disincentive effect has been found to be small. The report briefly reviews evidence from experiments with a negative income tax carried out in the US and Canada between 1968 and 1980. The loss of labor hours for men was minimal. Women did lower their workload more substantially. They chose to spend more time with their family or newborns, activities of high social value. In Alaska under the Permanent Fund Dividend, a policy similar to a UBI, inequality fell in the 1990s and 2000s, while it increased in every other American state.
Another key issue is who qualifies for basic income and whether it would be extended to migrants. RSA’s proposal states that EU nationals should have first “contributed to the system for a number of years” before receiving the basic income. International migrants would be subject to current rules to access benefits. Individuals serving custodial sentences would have benefits restored once their sentence was concluded.
In recent years, the welfare system has lost public support as people demand more rules and conditions for the poor to receive assistance. However, benefit sanctions are becoming increasingly “inhumane,” the authors said. In order to detect tax credit abuse, the system has become overly intrusive into citizens’ lives and activities.
The RSA makes a few recommendations for how the UBI will be applied to the youth, including requiring young adults between 18 and 25 year old to declare how they would use the income. They would sign contracts “with their local community” and not the government, and there should be “no state monitoring” of the contracts, the authors noted. Additionally, those over 18 would have to register to vote in order to receive the UBI.
In suggesting tying the basic income to the community, rather than the government, the RSA report shows precisely the unique potential of the UBI to move away from the impersonal welfare state and toward a more relationship-oriented society. These arguments parallel that of free-market economist Charles Murray in defense of his own UBI scheme.
This report is a serious and comprehensive look at how a UBI could realistically be implemented in the UK. It provides a persuasive look into the economic, societal and moral underpinnings of the basic income. As the debate over the UBI continues to simmer across Europe, the UK will be hard-pressed to ignore this pragmatic approach for a radical overhaul of its welfare system.
Anthony Painter & Chris Thoung, “Creative citizen, creative state: the principled and pragmatic case for a Universal Basic Income,” RSA, December 16, 2015.
Anthony Painter, “In support of a universal basic income – introducing the RSA basic income model,” RSA, December 16, 2015.
Citizen’s Income Trust, “Citizen’s Income: a brief introduction,” 2013.
Andrew Walker, “Think tank floats ‘basic income’ idea for all citizens,” BBC News, December 16, 2015.
Tyler Prochazka, “Would a universal basic income be the ‘death’ of civil society?” Basic Income News, November 21, 2015.
Maz Ali, “Money. For free. It’s been tested in Canada and India. Now one Dutch city wants to give it a whirl,” Upworthy, September 4, 2015.
by Tyler Prochazka | Dec 16, 2015 | News
With supporters such as Charles Murray and Friedrich Hayek, the Basic Income has been a rare example of a welfare policy that transcends ideological boundaries. Sam Bowman recently reiterated his support for the basic income in a short article on the Adam Smith Institute blog.
“I’ve long made the case for a basic income (aka a Negative Income Tax) on the basis that it would simplify the welfare system and make sure people always have an incentive to work,” Bowman says.
In addition to noting the economic impact of a basic income, Bowman points to Charles Murray’s argument that a basic income could jump-start civil society. According to Murray, a basic income would help civic organizations become “much more vital, helpful and responsive” to the needs of the community. Bowman concludes that, if Murray is correct, a basic income could be a solution to both “primary poverty” and “secondary poverty”.
Sam Bowman, “Would a basic income reinvigorate civil society?”, Adam Smith Institute, December 8, 2015.
by Tyler Prochazka | Nov 29, 2015 | News
“Tom Woods by Gage Skidmore 3” by Gage Skidmore. Licensed under CC BY-SA 3.0 via Commons – https://commons.wikimedia.org/wiki/File:Tom_Woods_by_Gage_Skidmore_3.jpg#/media/File:Tom_Woods_by_Gage_Skidmore_3.jpg
Libertarians are known for their general skepticism toward government programs. However, some libertarians have still flirted with the idea of a Basic Income Guarantee (BIG) as an alternative to the current welfare state. Tom Woods, a noted advocate of libertarianism, recently debated BIG advocate Matt Zwolinski on his podcast.
Zwolinski argued that a BIG can be defended from the standpoint of pragmatic politics from the standpoint of justice. He suggested a plan in the vein of that recommended by libertarian economist Charles Murray: an annual $10,000 cash payment to every American adult.
Woods challenged Zwolinski on the basis that a BIG would violate an individual’s right to the fruits of their labor.
Zwolinski responded that many libertarians hold “idealized” accounts of how individuals accumulated property in the past, ignoring the injustices created as property was and is distributed. A BIG could alleviate some of the inequality caused by these injustices, Zwolinski argued.
Taking on a Georgist position, Zwolinski said that property cannot be fully owned. Ignoring the unjust way property came about and failing to rectify it through a policy like a BIG is a “rationalization of privilege,” he said.
For the full YouTube video of the podcast, click here.
by Tyler Prochazka | Aug 16, 2015 | Opinion
Addressing the issue of the universality of the basic income guarantee
by Tyler Prochazka
I recently asked American Enterprise Institute President Arthur Brooks about his thoughts on the Basic Income Guarantee (BIG). He told me that he was against the idea because there are some people in society that cannot be trusted to spend the money wisely.
This is notable since Brooks is one of the leading conservative voices advocating for a social safety net. And the simplicity of the BIG is what typically attracts many conservatives and libertarians to the idea, including Brooks’ colleague Charles Murray.
As many Americans would find objection to the universality of the BIG, it is important to address this issue head-on and either defend universality or at least offer some proposals to mediate this issue.
One of the most common objections to a BIG is that there are some people that will take the income and drop out of the workforce altogether.
Economist Ed Dolan states the evidence is actually to the contrary. He gives the example of Bruce, who lives on a boat and does odd jobs throughout the year. When given a BIG, Bruce may choose to work less so that he can play guitar and watch birds.
Although people like Bruce certainly exist, Dolan provides persuasive research to show that they are outliers; most individuals would respond to a universal BIG by working more, not less. This is because if a BIG replaced the current entitlement system, there would be greater incentive to work more since most entitlements quickly drop off as one earns more income.
However, Bruce is not necessarily the most difficult example. There are certain individuals that have lived in poverty for so long they do not necessarily know how to sustainably manage their finances and may spend BIG funds on destructive habits. Some may have severe drug or alcohol addiction, which is where the help of places like The Ohana Hawaii could be of great assistance to their health. No one wants to continue living like this, so making the most out of the specialists who can help you out could be worth it and keep you on the right path, by double checking that you aren’t taking the drugs you are addicted to (through things like this 12 panel test) and just being there if you need them, is a great help for people who are fighting their addiction!
Others may have mental disorders that could impede their ability to make positive choices.
“Irresponsible usage” of the BIG may pose a challenge to the idea of universal income, both politically and pragmatically.
On the political side, there is a paternalistic streak, for good or ill, that runs through much of the American electorate. This is why welfare reform with work requirements was passed in the 1990s. This is also why food stamps restrict the purchase of alcohol.
Thus, the main feature of the BIG – its simplicity – may also be its political downfall.
On the other hand, there is a legitimate concern about how to assist individuals that engage in what society deems “irresponsible behavior.”
A University of Pennsylvania study showed that 85 percent of homeless individuals that were placed in a home still had a home two years later and were unlikely to fall back into homelessness. In fact, the study suggested that this sort of assistance was cheaper than all of the other funds that are used to manage the homeless, such as emergency room visits and jail.
This is not perfectly parallel because it is a specific assistance–housing, in this case. However, it does illustrate that even the most vulnerable in society, the homeless, will not squander their assistance and end up back on the street.
Image via CreditCards.com.
The 100,000 Housing Campaign targets homeless people that that are most likely to die if they remain on the street. The campaign has been able to keep the vast majority of those served out of homelessness. One lesson from this campaign, though, is that they use regular checkups by social workers to ensure that these individuals are still on track.
This is one possible area where a BIG could be improved. Since most administrative costs of entitlements would be saved under a BIG, a small portion of the program could entail social work to provide free checkups and assistance to vulnerable populations that receive the BIG. The social workers could help individuals set up bank accounts, find jobs, and receive healthcare.
The form that would be used when verifying eligibility for the BIG could include questions that would be used to determine who receives automatic regular checkups by social workers.
In extreme cases where a social worker or a police officer finds individuals using their BIG to pay for debilitating alcohol or drug addictions, the BIG could be contingent on whether the individual undergoes treatment. This does not mean that the BIG recipients should undergo random drug tests, which is a failed policy. Although tests such as ehrlich reagent as well as others may still be in order for heavy users. Rather, this proposes that it may be prudent in limited instances to use the BIG as an incentive to help bring people that have clearly destructive addictions to get treatment.
In instances where an individual may have extreme mental illness or some other issue that prevents them from using their BIG to acquire basic necessities, such as housing and food, then social workers should help this individual find a caretaker of some sort and request that the BIG be administered by the caretaker on their behalf. This type of scheme should be closely monitored to ensure that most of the money is used to assist these individuals and could mandate a low ceiling for compensation of the caretaker.
Nonetheless, individuals that would completely squander the opportunity that a BIG would provide are likely to be rare. Even absent further tinkering of the BIG to prevent “irresponsible behavior,” it is still preferable to the status quo. No government system meant to alleviate poverty will be perfect. However, a BIG is probably the closest we can get.
One of the criticisms of a UBI is that it lets some individuals take more time off from work. The key is whether their free-time activities are more valuable to society than their work hours. “Basic Income is a foundation for contribution. It incentivizes work but supports other forms of contribution too,” the report said. It suggests that the UBI would allow individuals to care for the elderly and other vulnerable individuals, which is especially important as society ages.
